A semiconductor manufacturer announced Monday it will close its Tempe, Arizona factory in September of next year. The announcement came less than one year after the Biden-Harris administration announced $164 million in incentives to convince the company to expand its facilities in other states.
Microchip Technology Inc. announced in a Monday quarterly call that the company would shut down its semiconductor manufacturing facility in Tempe, which will reportedly impact about 500 employees, as a cost-saving measure as executives instead look to the company’s facilities in Colorado and Oregon.
According to Bloomberg, Microchip interim chief executive officer Steve Sanghi cited high semiconductor inventory, as well as identical product lines being created in Colorado and Oregon, when announcing the plan to close the factory, stating, “inventory levels are high and the company has ample capacity in place and the ability to expand capacity in the other facilities in the future.”
The company will reportedly begin seeing financial benefits from closing its Tempe factory in June 2026, though it expected the winding-down process at the facility would help Microchip “moderate our inventory levels beginning in the March 2025 quarter.”
Their decision to close the factory, citing their ability to scale up other facilities, was announced just under 11 months after a Biden-Harris administration official said the $164 million in CHIPS Act incentives for Microchip to expand its Colorado and Oregon factories would “advance the President’s goal of making semiconductors in America again,” while simultaneously reducing the United States’ reliance on semiconductors build in foreign countries like China and Taiwan.
According to the Department of Commerce, the government’s investment in these facilities could also create up to 700 jobs.
This would result in a possible 200 net gain in semiconductor jobs after the anticipated losses from the Tempe factory, and would mean the government authorized about $820,000 worth of incentives per new job at Microchip.
Microchip’s announcement was made just weeks after President Joe Biden and his administration celebrated distributing another $6.6 billion in CHIPS Act funds to the Taiwanese Semiconductor Manufacturing Company (TSMC), which is building multiple new factories in Phoenix with federal support.
Despite Biden’s abortive presidential campaign briefly bragging about its CHIPS Act investments in Arizona television advertisements, the TSMC factories have similarly been the subject of controversy, largely stemming from the company’s reliance on Taiwanese workers, and not American citizens, to build its new factories.
The company eventually reached an agreement with Arizona laborers, but is now the subject of a discrimination lawsuit from American citizens who claim the company has created a hostile work environment that favors employees based on Taiwanese or Chinese descent.
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Tom Pappert is the lead reporter for The Tennessee Star, and also reports for The Pennsylvania Daily Star and The Arizona Sun Times. Follow Tom on X/Twitter. Email tips to [email protected].
Photo “Microchip Technology Inc. factory” by Microchip Technology Inc.
