Investing.com– Microchip Technology Inc (NASDAQ:MCHP) has paused its application for government subsidies under the CHIPS act, Bloomberg reported on Tuesday, after the chipmaker lowered its revenue forecast and said it will close an Arizona factory.
The chipmaker was set to receive $162 million in grants from the government to support facilities in Oregon and Colorado. But Microchip had furloughed workers twice in Oregon, and now plans to shutter a factory in Arizona, which stands to affect around 500 employees.
Bloomberg reports said Microchip CEO Steve Sanghi confirmed plans to halt the CHIPS act application during an address at a UBS conference on Tuesday evening.
The move comes just a day after the firm cut its third-quarter revenue forecast, as it grapples with slowing orders for its automotive chips and rapidly growing inventories. The firm said it had ample inventory and enough spare capacity in its Oregon and Colorado facilities, negating the need for an additional facility in Arizona.
Shares of the firm sank around 7% on Tuesday and were steady in aftermarket trade.
The CHIPS Act was passed in 2022 and authorized about $280 billion in funding to boost semiconductor manufacturing in the U.S.
High-profile recipients of funding under the act include Taiwan’s TSMC (NYSE:TSM), which is currently building a facility in Arizona, and Samsung Electronics Co Ltd (KS:005930), which is building a factory in Texas.