Microchip Technology Moves to Sell Facility, Launches $1.35B Stock Offering

Microchip Technology (MCHP) shares fell Thursday as the struggling semiconductor firm said it hired Macquarie Group to help sell its Fab 2 wafer fabrication plant in Arizona, and launched a $1.35 billion convertible stock offering.

The company explained that Fab 2 will be "marketed and sold under the guidance of the semiconductor and technology team within Macquarie’s Commodities and Global Markets business." It did not indicate how much it expects to receive from the sale. 

Microchip Technology announced last December that it planned to offload the Tempe facility to restructure its manufacturing operations. At that time, newly installed interim CEO Steve Sanghi explained that the decision was made with "inventory levels high and having ample capacity in place." The site produces installed and operational chip equipment, and its product manufacturing and technologies are being transferred to Fabs 4 and 5 in Oregon and Colorado, respectively. 

Michael Finley, senior vice president of fab operations, called the closure and sale "the latest development in our ongoing restructuring, demonstrating our efforts to resize our manufacturing footprint." The company said in December that it anticipated the shutdown would occur in the September quarter and create annual cash savings of about $90 million. 

Microchip Technology has been hurt by falling demand. Last month, it reported that third-quarter fiscal 2025 net sales tumbled 42% year-over-year, with Sanghi noting that the performance reflected "the need for the decisive steps we are taking to realign our business."

Moody's Downgrades Microchip Technology Rating

In response to Microchip Technology's issuing the convertible stock, Moody's Ratings on Thursday downgraded its senior unsecured rating to "Baa2" from "Baa1." "The rating downgrade reflects Microchip's weak financial profile resulting from a sharp erosion in earnings," Moody's said. 

Microchip Technology shares, which fell about 5% Thursday afternoon, have lost about 40% of their value over the last year.

UPDATE—This story has been updated with the stock offering, Moody's downgrade, and latest share price information.