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Location: Home / Technology / Chip Shortage Creates New Power Players

Chip Shortage Creates New Power Players

techserving |
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SAN FRANCISCO — Since 1989, Microchip Technology has operated in an unglamorous backwater of the electronics industry, making chips called microcontrollers that add computing power to cars, industrial equipment and many other products.

Chip Shortage Creates New Power Players

Now a global chip shortage has elevated the company’s profile. Demand for Microchip’s products is running more than 50 percent higher than it can supply. That has put the company, based in Chandler, Ariz., in an unfamiliar position of power, which it began wielding this year.

While Microchip normally lets customers cancel a chip order within 90 days of delivery, it began offering shipment priority to clients that signed contracts for 12 months of orders that couldn’t be revoked or rescheduled. These commitments reduced the chances that orders would evaporate when the scarcity ended, giving Microchip more confidence to safely hire workers and buy costly equipment to increase production.

“It gives us the ability to not hold back,” said Ganesh Moorthy, president and chief executive of Microchip, which on Thursday reported that profit in the latest quarter tripled and that sales rose 26 percent to $1.65 billion.