NEW YORK (Reuters) - Shares of Microchip Technology ( MCHP ) fell more than 3% on Wednesday after the chipmaker announced plans to raise capital by offering $1.35 billion of convertible stock.

The shares, which had closed up 0.7% at $54.57, dropped 3.2% to $52.79 in after-hours trading. Microchip has a market value of about $29 billion with 537.82 million shares outstanding.

Microchip said it plans to use net proceeds from the offering to pay the cost of capped call transactions, which are derivatives used to limit share dilution, and to repay existing debt, including outstanding notes from its commercial paper program.

Earlier this month, Microchip announced it would slash around 2,000 jobs, or about 9% of its workforce, as it faces excess inventory and slowing demand from car manufacturers.

The Chandler, Arizona-based chipmaker said the headcount reductions will be concentrated in its factories in Gresham, Oregon and Colorado Springs, Colorado, and would cut about $100 million from its annual operating expenses.