Microchip Technology to lay off 2,000 employees
What's the story
Microchip Technology has announced plans to cut its workforce by about 2,000 employees, nearly 9% of its total staff.
The move comes as part of a strategic restructuring to tackle the declining demand from automakers.
The Arizona-based semiconductor company has been witnessing sluggish demand from automotive clients who are struggling to manage their existing chip inventory.
Impact
Job cuts to affect production facilities
The job cuts will mainly affect Microchip's production facilities, or fabs, in Gresham, Oregon and Colorado Springs, Colorado.
The company also intends to implement layoffs at its backend manufacturing plant in the Philippines.
These layoffs are expected to cost between $30 million and $40 million due to cash severance and related restructuring costs.
Closure
Operations to cease at Arizona facility
Along with the layoffs, Microchip Technology will also suspend operations at its Arizona chip manufacturing plants in May, months ahead of the original schedule.
These steps are expected to reduce the company's ongoing operating costs by around $90 million to $100 million on an annual basis.
The company had previously revealed about $90 million in annual cash savings from closing the Arizona fab last December.
Charges
Microchip to incur charges due to cancelation
Microchip Technology also anticipates charges of about $45 million from the cancelation or modification of long-term supply contracts with wafer foundries.
The company has not given further details on which segments will be impacted by these layoffs, but it has confirmed that staff reductions will be made in various business units and support groups.