Microchip Technology Inc Pauses Application for CHIPS Act Funding

Microchip Technology Inc (NASDAQ:MCHP) has paused its application for government subsidies under the CHIPS Act, according to Bloomberg. This decision follows the company lowering its revenue forecast and announcing plans to close a factory in Arizona.

The company was set to receive $162 million in grants to support its facilities in Oregon and Colorado. However, Microchip had already furloughed workers twice in Oregon and now plans to shut down the Arizona factory, affecting around 500 employees.

Microchip’s CEO, Steve Sanghi, confirmed the decision to halt the CHIPS Act application during an address at a UBS conference on Tuesday evening. This follows a recent announcement of a cut to their third-quarter revenue forecast due to slowing orders for automotive chips and rapidly increasing inventories. The company stated it has enough inventory and spare capacity in its Oregon and Colorado operations, making an additional facility in Arizona unnecessary.

Following these developments, shares of Microchip fell approximately 7% on Tuesday and remained steady in after-hours trading.

The CHIPS Act, passed in 2022, authorized around $280 billion in funding to enhance semiconductor manufacturing in the United States. Notable recipients of this funding include TSMC (NYSE: TSM), which is constructing a facility in Arizona, and Samsung Electronics Co Ltd (KS:005930), which is building a factory in Texas.