Microchip Technology adjusted its revenue expectations for the third quarter on Monday, predicting figures near the lower end of its $1.03 billion forecast. This revised outlook falls short of analysts’ predictions of $1.06 billion, according to LSEG data. Alongside the forecast, the company announced plans to close its wafer manufacturing facility in Arizona by the September 2025 quarter, a move aimed at restructuring under interim CEO Steve Sanghi.
The decision to shutter the Arizona plant, known as Fab 2, comes as Microchip faces declining demand for its automotive chips. Automakers, contending with a shaky economic environment, are reducing orders and clearing surplus inventory built during prior supply chain disruptions. Interim CEO Sanghi cited high inventory levels and sufficient capacity at other facilities as key factors behind the closure. He also highlighted expected annual cash savings of approximately $90 million once the transition is complete.
The closure will impact about 500 employees. Microchip plans to transfer production from the Arizona plant to its factories in Oregon and Colorado, both of which have room for expansion. The company anticipates the restructuring will help normalize inventory levels starting in the fourth quarter.
Following the announcement, Microchip shares fell over 3.5% in extended trading, reversing earlier gains of around 3%. Year-to-date, the stock has dropped by 22%.
Sanghi, who assumed the interim CEO role after Ganesh Moorthy’s retirement at the end of November, emphasized the company’s strategy to balance capacity and streamline operations during this period of slower demand.
Featured image courtesy of CNN.com
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