Microchip restructures as it sheds fab, 2000 jobs
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Microchip Technology has announced a nine point recovery plan that will see up to 2000 job losses even as it sees the market recovering along with a restructuring
The restructuring will see the 8 and 32-bit microcontrollers and development tools business units combined in one group to streamline decision making and one MCU strategy as well as to offer a new generation of AI development tool support.
The company has also formed a central business unit for AI and machine learning (ML) to drive a common architecture and tools among all Microchip business units following the acquisition of Neuronix AI Labs last year.
The Power over Ethernet (POE) business will be combined with the Ethernet Connectivity business unit and moved the 16bit dsPIC into the analog power business to address the intelligent high-power markets.
At the same time the company has bought itself out of long term supply agreements with foundries, and sees inventory levels returning to normal in the middle of the year. It has also paused its application for support under the CHIPS Act.
“We believe our distribution net sales will bottom out in the March 2025 quarter. This means that we are getting close to having our distribution inventory corrected,” said the company. “The quantity of direct customer inventory is more difficult to pin down. We believe that we are at or near the bottom of this prolonged inventory correction.”
This comes as it closes Fab 2 in Tempe, Arizona, early and announces 10% job cuts from its 22,000 staff which will save up to $100m. The last wafer starts in Fab 2 were made a week ago and the closure has been brought forward from September to May 2025. The fab and equipment are available for sale.
At the same time staff at fabs 4 and 5 will face layoffs as well as temporary closure. Fab 4 is the company’s largest fab, running 200mm wafers, and is based in Gresham, Oregon. Fab 5 is a backend assembly fab in Colorado Srpings.
The company is also planning layoffs at its assembly plant in the Philippines.
The company is also looking to protect itself from the increasing trade war with China. It has found a Chinese company as part of a strategy it calls ‘China for China’.
This company has prior experience in assembly/test of ICs and Microchip will sell its chips to them to get the die assembled and tested at Chinese assembly/test subcontractors. The Chinese company will sell the finished product to the Chinese market through distributors and direct customers with a Chinese brand, Chinese owners, Chinese website, Chinese data sheets, Chinese logo and Chinese development tools.
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