Employees work at the former Atmel plant on Colorado Springs’s southwest side in 2016, when the facility was taken over by Arizona semiconductor manufacturer Microchip. THE GAZETTE FILE

Colorado Springs’ once mighty semiconductor industry, which has dwindled to almost nothing, is taking another hit.

Microchip Technology, an Arizona-based semiconductor manufacturer, is cutting 200 to 275 jobs early next year at its plant on Colorado Springs’ southwest side, which the company acquired nearly four years ago when it purchased rival Atmel.

The job cuts will reduce Microchip’s workforce at the plant, 1150 E. Cheyenne Road, to more than 500, down from over 800, Dan Malinaric, a Microchip vice president, said via email.

The reductions are a mix of layoffs, voluntary resignations and transfers, he said.

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The layoffs will take place in the first quarter of 2020, Malinaric said. How many employees will be laid off isn’t known; Malinaric said 67 workers at the plant have agreed to resignations and 15 have accepted transfers to Microchip plants in Arizona and Oregon.

Microchip is making “generous severance offers” to employees who voluntarily quit, while also offering relocation packages to transferees, Malinaric said in his email.

The company also has hosted two job fairs to help employees catch on with other companies and will host another after layoffs take place, he said.

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Microchip might be the last computer chipmaker standing in Colorado Springs.

In the 1980s and ‘90s, more than a half-dozen local plants employed thousands. But they shuttered as manufacturing shifted overseas. Dirk Draper, president and CEO of the Colorado Springs Chamber & EDC, said he’s unaware of any semiconductor manufacturer left in town other than Microchip.

Microchip acquired Atmel in April 2016 for $3.56 billion. At that time, the acquisition made Microchip the world’s third-largest producer of microcontrollers — tiny computers on a chip used in industrial, consumer, communications, computing, automotive and other industries.

The Atmel plant had about 1,000 employees when it was taken over by Microchip. A company executive said in 2016 that Microchip would invest several million dollars in the 400,000-square-foot facility and move many production processes to the plant.

In his email, however, Malinaric said that products produced at the plant “have experienced some long-term decline” as companies have transitioned to products that are run on more advanced technologies.

As a result, the remaining “high-volume products” produced in Colorado Springs are being transferred to Microchip’s Arizona and Oregon plants, Malinaric said.

But the Colorado Springs plant isn’t going away; instead, its mission will change, he said.

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In 2018, Microchip purchased Microsemi, a supplier of military and aerospace semiconductor equipment.

Products and technologies from older Microsemi plants now are being transferred to Colorado Springs, Malinaric said. Those transfers involve investments of $10 million by Microchip to enhance production in the Springs, he said.

“These transfers will transform (the Colorado Springs plant) into a specialty or boutique fab focusing on manufacturing automotive, military and aerospace products,” he said.

“This transformation provides a long-term runway for (the plant) to be successful for years to come. The layoffs are resizing (it) to its new role.”

Draper, of the Chamber & EDC, said job losses hurt, though Microchip has gone to “extraordinary lengths” to minimize the effect on employees.

“But if you are in the tech industry or if you have manufacturing skills, Colorado Springs is a good market in which to be seeking work right now,” Draper said. “We have a near-record low unemployment rate, and many companies are having difficulty finding talent.”

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