Steve Sanghi, CEO of Microchip Technology Inc., announced a 90-day review of the company’s operations during his presentation at the UBS Global Technology and AI Conference. The review comes after the news of the shutdown of the company’s Tempe factory. Sanghi, who recently returned as CEO, outlined plans to restructure the company, according to ABC 15.
Sanghi, back as CEO in late November, is working on a plan to improve Microchip's operations. Part of the plan is closing the Tempe, Arizona factory, which will "save the company $90 million annually" without affecting production. He is also focused on reducing the company's high inventory, which reached 246 days last quarter, well above the 135-day supply he managed before. "Enough is enough. ... Our inventory is too high," he said, as stated by Phoenix Business Journal reported and ABC 15.
Microchip has paused talks on receiving CHIPS Act funding, which was originally requested to help expand factory capacity. However, with excess production capacity now available, the funding is no longer needed. As Sanghi explained, "The grant was applied for almost a year ago when everyone thought that the factory capacity was never enough … today, we have too much capacity." This shift reflects a change in direction from the company’s previous plans under former CEO Ganesh Moorthy, as Microchip focuses on efficiency and cost-cutting in a challenging economic environment, as reported by Phoenix Business Journal.
