Microchip Production Will Shift to Oregon and Colorado After Closing Arizona Plant
Microchip Technology said on Monday that it will close its factory in Tempe, Arizona, next year. The microchips that were made in the Tempe facility will now be produced at the company’s plants in Oregon and Colorado.
The shutdown in Arizona will affect 500 workers and is due to decreased sales, according to the company. By shutting down this facility, Microchip aims to save approximately $90 million each year.
Preliminary Deal for Expansion Will Help Oregon and Colorado
Earlier this year, Microchip and the Biden administration made a preliminary deal to enhance its Oregon and Colorado facilities with $162 million in financial aid. This funding is part of the CHIPS Act of 2022, designed to boost domestic semiconductor production and strengthen supply chains.
Microchip Technology makes semiconductors used in many fields, such as automotive, aerospace, telecommunications, healthcare, and manufacturing.
The Commerce Department has stated that it is in discussions with Microchip about its long-term plans under the CHIPS Act but has not provided further details on the subsidy talks. Microchip has chosen not to comment on the issue.
The company has projected revenue of around $1 billion for the current quarter, which is at the lower end of its previous forecasts and shows a 40% drop compared to the same quarter last year.