Chandler semiconductor supplier announces 200 layoffs as part of restructuring tied to slowing chip demand

Microchip Technology Inc., a semiconductor supplier headquartered in Chandler, Arizona, announced in March 2025 it would lay off about 2,000 employees, including 200 in the Chandler area, as part of a companywide restructuring. Officials said the workforce reduction was tied to slowing chip demand, particularly from automakers, and aimed to save tens of millions of dollars annually.

The layoffs are part of a companywide restructuring announced in March 2025 that will reduce Microchip Technology Inc.’s global workforce by about 9%, or roughly 2,000 employees, officials said. The company projected operating-cost savings between $90 million and $100 million, along with reductions in employment-related expenses of approximately $25 million, according to company filings and business reports.

The Chandler-based semiconductor supplier indicated the cuts were primarily driven by slowing demand for chips, especially from automotive clients, and aimed at saving tens of millions of dollars annually.

Among the affected locations, about 200 layoffs will occur in the Chandler area, where Microchip is headquartered and maintains multiple manufacturing operations, sources confirmed. The company also plans significant job reductions at its manufacturing plants in Gresham, Oregon, and Colorado Springs, Colorado. A WARN notice filed with the state of Colorado on March 3, 2025, detailed 238 permanent layoffs at the Colorado Springs facility, with affected employees expected to begin paid leave around May 3. In the Philippines, Microchip also announced planned layoffs at its backend manufacturing site, according to company disclosures.

Microchip is accelerating the closure of some Arizona chip manufacturing operations, including its Tempe fabrication plant, earlier than previously expected. Business reporting indicated the Tempe plant will cease operations by May 2025, months ahead of prior timelines. An Arizona WARN notice filed for the Tempe facility cited 330 affected workers, underscoring the company’s broader operational shifts in the state.

The restructuring follows a period of declining chip demand, particularly from automakers, which Microchip officials linked to inventory reduction efforts and repositioning of the business to better align with market conditions. Reuters reported that the company aims to reduce inventory by more than $300 million by March 2026 and recorded an $82 million write-off of surplus inventory in the December quarter. These measures are part of a larger turnaround plan to improve efficiency and lower costs amid a weaker semiconductor market, sources said.

Financially, Microchip anticipates severance and restructuring expenses related to the layoffs to total between $30 million and $40 million. The workforce reduction is expected to be implemented by the end of the June quarter, according to Reuters and company statements. The cuts focus primarily on manufacturing-related roles and support the company’s strategic shift in operations.

The layoffs at Microchip should not be confused with separate job reductions recently reported at other semiconductor companies in Chandler, including Intel and NXP, which involve different timelines and circumstances. Microchip’s announcement and related WARN filings emphasize that the workforce reductions are permanent and part of a coordinated effort to adjust to evolving market demands.

The company’s restructuring reflects broader trends in the semiconductor industry, where demand fluctuations, particularly in the automotive sector, have prompted several firms to realign their operations. Microchip’s decision to accelerate facility closures and reduce headcount aligns with its stated goal of achieving sustainable cost savings and maintaining competitiveness in a challenging market environment.