Microchip Technology Inc MCHP halted its application for U.S. semiconductor grants, Bloomberg cited chief Steve Sanghi at a UBS conference Tuesday.

The chipmaker was a contender for $162 million in grants from the Chips Act.

Microchip stock plunged 29% year-to-date, emerging as one of the dampeners in the Philadelphia Stock Exchange Semiconductor Index.

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Multiple Wall Street analysts slashed their price targets on the stock in November and December after its second quarterly print failed to impress the Street. Then CEO Ganesh Moorthy highlighted macro weakness for manufacturing businesses, including European Industrial and Automotive businesses.

The struggling chipmaker had to downsize its workforce twice at facilities in Oregon.

Earlier this week, Microchip slashed its third-quarter revenue guidance and announced restructuring plans, including closing its Tempe, Arizona, wafer fabrication facility, which will affect 500 workers.

Sanghi expects its December 2024 revenue to be close to the low end of $1.025 billion (down from the prior outlook of $1.025 billion-$1.095 billion) versus the analyst consensus of $1.090 billion due to slower turn orders than anticipated.

Sanghi cited high inventory levels and overcapacity as the reason for the facility’s shutdown, which could generate annual cash savings of $90 million.

He justified withdrawing from the U.S. subsidies, citing their minuscule contribution to factory costs and the commercial sense behind the facility’s construction.

Microchip’s downward guidance revision followed the U.S.’s third semiconductor embargo on China, which affected advanced chip equipment manufacturers. China retaliated by exercising tighter controls on the export of critical minerals used in advanced chip manufacturing, including gallium, germanium, and antimony.

Investors can gain exposure to Microchip through iShares Semiconductor ETF SOXX and First Trust Nasdaq Semiconductor ETF FTXL.

Price Action: MCHP stock is down 3.38% at $59.56 at the last check on Thursday.

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