Microchip Technology Launches a $1.35B stock offering and opens a sell facility

Key Takeaways

• Microchip Technology announced that Macquarie Group has been hired to assist in the sale of its Tempe, Arizona manufacturing facility.
• The semiconductor firm also launched a $1.35 billion convertible stock offering, which led to a Moody's downgrade of its senior unsecured rating.
• Microchip Technology sales dropped 42% last quarter, a sign of a declining market.

Microchip Technology shares fell on Thursday after the struggling semiconductor company announced that it had hired Macquarie Group for help in selling its Fab 2 wafer manufacturing plant in Arizona and launched a convertible stock offering of $1.35 billion.

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 no indicate how much the company expects to earn from the sale. 

Microchip Technology announced that it was planning to sell the Tempe facility in order to restructure their 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 chip equipment that is installed and operational. The manufacturing and technologies of the site are being transferred from Fabs 4 to 5 in Oregon and Colorado. 

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 announced in December it expected the shutdown to take place in the September quarter, and that it would generate annual cash savings in the amount of $90,000,000. 

Microchip Technology is suffering from a drop in 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’s shares, which fell 5% on Thursday afternoon, lost 40% of their worth over the past year.

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