Many lesser-known chip makers are increasingly able to choose which customers get how many of their scarce chips
Ganesh Moorthy, chief executive of Microchip Technology, holds an example of his company’s product at headquarters in Chandler, Ariz., Nov. 2, 2021. Low-profile chip makers with aging factories have become surprisingly powerful, leading to industry changes that may outlive the pandemic-fueled supply crunch. (Tomás Karmelo Amaya/The New York Times)
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.
Now a global chip shortage has elevated the company’s profile. Demand for Microchip’s products is running more than 50% higher than it can supply. That has put the company, based in Chandler, Arizona, 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.
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