Microchip Technology (NASDAQ:MCHP) is making aggressive moves to cut costs as demand for its chips continues to weaken. The company just announced plans to slash 2,000 jobsroughly 9% of its workforcetargeting its fabs in Oregon and Colorado, along with backend operations in the Philippines. On top of that, it's accelerating the shutdown of its Arizona chip manufacturing plant, now set to close in May, months earlier than expected. These cuts are expected to save Microchip between $90 million and $100 million annually, as it scrambles to manage excess inventory and its fifth straight quarter of revenue declines.

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The numbers tell the story. Third-quarter net sales dropped to $1.026 billion, down 11.8% from the previous quarter and a brutal 41.9% year-over-year decline. Microchip is also eating $45 million in charges from canceling or modifying long-term supply agreements with wafer foundries. The company had previously been in line for $162 million in CHIPS Act funding, but in a surprising pivot, it pulled its application due to oversupply issues. The downturn isn't unique to MicrochipIntel's Hillsboro campus in Oregon also slashed 1,300 jobs last year, signaling broader turbulence in the semiconductor space.

Microchip is betting that these cost-cutting measures will help stabilize its business, but the near-term outlook remains rough. Automotive chip demand is still sluggish, and bloated inventory levels aren't helping margins. Investors will be watching closely to see if these moves actually translate into financial reliefor if this is just another painful chapter in a tough semiconductor cycle.