Microchip Technology Cuts 2,000 Jobs Due to Slumping Auto Demand

Microchip Technology announced that it will lay off nearly 2,000 employees, or roughly 9% of its staff, as it reorganizes its operations to meet the declining demand from automakers.

The Chandler, Arizona-based business has been dealing with weak demand from automakers that are having trouble selling off their current chip stock, which caused Microchip's stock to drop more than 36% last year.

The company's semiconductor factories, often known as "fabs," located in Gresham, Oregon, and Colorado Springs, Colorado, will be the primary locations for the personnel reductions. Layoffs would also be implemented at its Philippine backend manufacturing site.

The company estimates that the costs of the layoffs, including cash severance and associated restructuring charges, will range from $30 million to $40 million. Employees will be informed of the layoffs this month, and by the end of the June quarter, they will be fully executed.

Additionally, several months ahead of schedule, the business will be closing its chip manufacturing facilities in Arizona in May. According to the corporation, these measures should lower its recurring operational costs by between $90 million and $100 million annually.

The extra layoffs at various facilities will lower its employment-related costs in its factories by an additional $25 million, on top of the approximately $90 million in annual cash savings associated with the shutdown of the Arizona fab that was revealed in December.