In the latest news, Microchip Technology plans to furlough employees at its Gresham plant for two weeks in March and possibly again in June due to a sharp drop in sales. Workers learned the news this week, just days after Microchip received $72 million in federal funding to expand its Gresham plant.

Microchip said the furloughs would not change the company's plans to expand its Oregon factory, but reflected short-term issues related to customer inventory backlogs. Microchip said there will be no layoffs.

"During times of business uncertainty, we sometimes ask our teams to collectively make shared sacrifices, such as short-term shutdowns, so that we can stay staffed and avoid layoffs," Microchip CEO Ganesh Moorthy said in a statement.

The Arizona company warned investors that its customers cut orders or closed their own factories late last year, delaying shipments into 2024 and reducing Microchip's quarterly revenue. The company said sales in the final three months of the year fell 22% from the previous quarter.

Microchip's latest financial report will be released on February 1, 2024. The company is expected to post earnings of $1.09 per share, down 30.13% from the year-ago period. Additionally, fourth-quarter revenue is expected to be $1.86 billion, down 14.15% from the same period last year. Revenue is expected to be US$8.07 billion in 2023, a decrease of 4.34% from last year.

Moorthy believed on Monday that customers and dealers were affected by the weakening economic environment in the December 2023 quarter, leading many of them to take action to further reduce inventory levels.

Microchip specializes in the production of microcontrollers and analog semiconductors, which are important in many automotive, aerospace, communications and industrial products.

Microchip announced plans to expand its Gresham factory to meet long-term growth in demand for its products as the company's sales surged following pandemic-era supply chain shortages. Sales rose 13% in the first six months of the fiscal year.

It is reported that Microchip described the upcoming March furloughs as a temporary measure designed to help the company survive a brief downturn. The company has about 900 employees in Gresham.

Founded more than two decades ago, the facility remains Microchip's largest and most advanced in-house manufacturing facility and is an integral part of the company's long-term microcontroller and analog business strategy.

Some commentators believe that Microchip's vacation is undoubtedly a major blow to the MCU industry.

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