Microchip Reacts: Oregon Factory to Halt for Two Weeks

In a recent official communication dated January 15th, Microchip, a leading manufacturer in the microcontroller (MCU) sector, revealed significant developments impacting its operations. Despite the global semiconductor industry showing signs of recovery, Microchip faces challenges leading to a series of strategic initiatives.

Microchip recently issued a revenue warning, citing inventory reductions by key customers. The company anticipates a 22% sequential decline in revenue for the third quarter of the fiscal year 2024, ending on December 31, 2023. To address these challenges, Microchip has unveiled temporary measures, including a two-week employee leave at its Gresham factory in Oregon, USA, scheduled for March, with potential further shutdown considerations in June.

Notably, Microchip secured substantial funding through the U.S. Chip Act, totaling $83 million, aimed at expanding and enhancing production capabilities at the Gresham facility. However, current sales challenges have necessitated short-term operational adjustments.

With approximately 900 employees at the Gresham facility, Microchip emphasizes that these measures do not impact its long-term plans for expanding production capacity in Oregon. The decision reflects a response to short-term challenges related to customer inventory levels, with no imminent plans for employee layoffs.

CEO Ganesh Moorthy, in an official statement, highlighted the necessity for collective efforts during periods of business uncertainty, including temporary shutdowns, to maintain a stable workforce and prevent layoffs. Acknowledging the cyclical nature of the industry, Microchip remains committed to stability across diverse business environments.

Microchip's preliminary financial report for the third quarter, released on the 8th local time, indicates a 22% decline in revenue, surpassing earlier estimates. This performance falls below Wall Street predictions of a 17% decline.

Microchip specializes in the production of microcontrollers (MCUs) and analog semiconductors, vital components in various industries such as automotive, aerospace, communication, and industrial sectors. Analysts suggest that these strategic measures may have broader implications for the MCU industry. Stay tuned for further updates on Microchip's strategic initiatives in response to evolving market dynamics.