(Reuters) – Microchip Technology lowered its third-quarter revenue forecast on Monday and announced the closure of its wafer manufacturing factory in Arizona, as the chipmaker looks to restructure under interim CEO Steve Sanghi.
Microchip has been through a tumultuous few quarters, grappling with slowing orders for its automotive chips as carmakers, navigating an uncertain macro economy, clear existing inventory which they built up to avoid a supply crunch.
The company now expects revenue to be close to the lower end of its previous forecast of $1.03 billion, below analysts’ expectations of $1.06 billion as per data compiled by LSEG.
Shares of Microchip fell over 3.5% in extended trading after being around 3% higher at close. The company’s stock has fallen 22% so far this year.
Microchip expects to shut down the Arizona facility in the September 2025 quarter and generate annual cash savings of around $90 million.
“With inventory levels high and having ample capacity in place, we have decided to shut down our Tempe wafer fabrication facility that we refer to as Fab 2,” said interim CEO Sanghi, who came into the role after Ganesh Moorthy retired from the top job at the end of November.
The company said the closure should help the company moderate its inventory levels beginning in the fourth quarter and will affect around 500 employees.
The company said that its other factories in Oregon and Colorado have ample space for expansion and plans to transition product manufacturing from the Arizona plant to other such facilities.
(Reporting by Zaheer Kachwala in Bengaluru; Editing by Krishna Chandra Eluri)
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