Gresham’s chip leader
Portland Business Journal - by Aliza Earnshaw Business Journal staff writer
As Oregonians lament the closure of Hynix Semiconductor Inc.’s Eugene plant — and the layoff of 1,400 people — another chip manufacturer is quietly hiring.
Microchip Technology Inc., based in Chandler, Ariz., has been hiring since the beginning of the year at its Gresham plant. The company has 350 local employees, and is planning to more than double that over the next several years.
That’s welcome news for Gresham, said Janet Young, who works in economic development for the city.
“These are very well-paying jobs, which makes the impact of the company even more significant in Gresham,” Young said. “The growth of those technology jobs over time is exactly what was planned for that campus.”
Microchip received a seven-year property tax break from Multnomah County and Gresham when it agreed six years ago to purchase the plant from Fujitsu Microelectronics Inc. for $183.5 million.
At the time, the county and city thought Microchip would employ 350 to 400 people by 2010. At its peak, Fujitsu employed 1,000 people. That was down to 600 when the Japanese firm suspended operations in 2001 and laid off all its workers.
Microchip’s growth strategy will rely heavily on Fab 4, as Microchip now calls the plant, as it produces the company’s most advanced products, said CEO Steve Sanghi.
“Our internal plans call for doubling the output for Gresham,” Sanghi said. “That will double employees to more than 700 over the next several years, dependent on our product mix and the economy.”
Microchip makes microcontrollers for 63,000 customers in a wide range of industries. The company’s products are included in automobile systems, tools, consumer electronics, laptop computers, home security systems, garage door openers, and are even in the Segway personal transporter.
The company’s revenue grew rapidly and steadily for years, reaching a peak of $1.04 billion in fiscal 2007. Microchip posted a record profit of $357 million, or $1.62 per share, for that fiscal year, which ended in March of 2007.
Microchip’s stock price hit a brief peak just exceeding $40 per share in June of last year. The stock has been trading between $30 and $38 most of this year.
The company’s shares plunged in late July to below $30 after it announced a 5 percent decline in earnings for its first fiscal quarter ended June 30, due to swooning sales in housing and consumer goods. These same troubled markets also caused Microchip’s annual revenue to decline slightly — less than 1 percent — for the full fiscal year 2008.
Earnings for 2008 also suffered, falling nearly 17 percent, an unprecedented decline for Microchip.
Sanghi told investors during a late-July conference call that Microchip’s employees quickly shifted attention to other areas of the business that don’t sell into the housing market, picking up new customers. The recent increase from 60,000 customers to more than 63,000 also helped compensate for the fact that many customers trimmed their orders, though not nearly as drastically as customers in housing, automotive and other troubled industries.
Microchip’s June quarter signaled that the company is now recovering from the economy-driven sales declines. Revenue increased 3 percent over the prior fourth quarter, to more than $268 million. First quarter sales also showed a 1.6 percent increase compared to the same quarter a year ago.
New product development will bring Microchip back. That’s where the Gresham plant comes in. Sanghi, however, declined to say how soon Gresham’s employee count will reach the 700 figure he mentioned.
Despite the Hynix closure in Eugene and Intel Corp.’s recent layoffs in Hillsboro, Microchip faces competition for workers from Solarworld AG, which is hiring for its new Hillsboro plant. Other solar cell plants are also moving to Oregon or contemplating moves.
Solar cell manufacturing is similar enough to microcontroller manufacturing that Microchip could have difficulty recruiting workers, said Kathy Clevenger, vice president of Microchip’s Gresham plant.
But Gresham is far enough from Hillsboro, and gas is expensive enough, that hiring may not be a problem, she added.
“I hear from new employees that live in Gresham/East Portland that one reason they applied to work at Microchip is its proximity to their home, in comparison to their previous employers on the west side,” Clevenger said.
aearnshaw@bizjournals.com | 503-219-3433
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