Microchip Technology plans to furlough employees at its Gresham factory for two weeks in March, and possibly again in June, amid an unexpectedly steep drop-off in sales.
Workers got the news this week, just days after Microchip won $72 million in federal funding to expand the Gresham plant. The company also locked up $11 million in state funding.
Microchip said the furloughs don’t change the company’s plans to expand the Oregon factory but reflect short-term issues related to customers’ inventory backlogs. Microchip said it isn’t cutting any jobs.
“During times of business uncertainty, we sometimes ask our team to collectively participate in shared sacrifices such as short-term shutdowns so that we can remain fully staffed and avoid layoffs,” Microchip CEO Ganesh Moorthy said in a statement to The Oregonian/OregonLive.
The Arizona company warned investors Monday that its customers cut their orders or shut down their own factories at the end of last year, delaying shipments into 2024 and reducing Microchip’s quarterly revenue. It said sales in the last three months of the year were down 22% from the prior quarter.
Microchip makes microcontrollers and analog semiconductors, relatively low-tech electronic components that are nonetheless essential in many automotive, aerospace, communications and industrial products.
The company’s sales boomed following the pandemic-era supply-chain shortages and Microchip announced plans to expand its Gresham factory to accommodate long-term growth in demand for its products. Sales were up 13% in the first six months of its fiscal year.
On Thursday, Microchip characterized the pending March furloughs as temporary measures designed to carry the company through a brief downturn. The company has about 900 employees in Gresham.
“We know that our industry and our business is cyclical, there are upcycles and downcycles, and it is the tenacity and agility to persist through these cycles that allows Microchip to stay steady through various business environments,” Moorthy said.
In the past two years, the federal government and Oregon have moved to subsidize the domestic chip industry in hopes of restoring U.S. electronics manufacturing and reducing the country’s dependence on factories in Asia and other parts of China.
Oregon’s chip subsidies require companies to meet hiring targets and follow through on their expansion plans. If they do not, they are required to immediately repay their state funding.
-- Mike Rogoway | mrogoway@oregonian.com | 503-294-7699
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