Microchip Technology has announced plans to reduce its workforce by about 2,000 positions, representing about 9% of its staff.

This decision is a response to declining demand from the automotive sector, which has led to sluggish sales and excess inventory.

The layoffs will primarily impact manufacturing facilities in Gresham, Oregon, and Colorado Springs, Colorado, along with a backend manufacturing plant in the Philippines.

Arizona-based company expects to incur restructuring costs between US$30 million and US$40 million for severance and related expenses.

Finalization of the job reductions is anticipated by the end of the June quarter.

Additionally, Microchip plans to expedite the closure of its Arizona chip manufacturing operations, now set for May, which is earlier than the previously announced timeline.