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What's going on with Microchip?

Started by Tsvetan Usunov January 22, 2004
I just received this letter from our microchip's distributor. it seems
they will lost their one advantage amoung other uC manufacturers -
their uC were always available in stock or 3-4 weeks.

Any comments? Did you get the same letter?

Best regards
Tsvetan

---letter---

Dear Customer, December 15, 2003
About 2 months ago I wrote a letter to you that was also posted on
Microchip's
web-site informing you that the semiconductor industry is going
through an up-cycle. I advised you that because of a strong demand
environment there is a risk of longer lead-times.
Because of that risk I requested all our customers to review their
requirements and place an order with Microchip for up to 12 weeks of
your product consumption. Many of you listened to that genuine request
and acted accordingly, and I want to thank you for helping us help
you. For the rest of our customers who have not responded to my
request, I make that request again. Please review your needs and place
an order with Microchip for the next 8 to 12 weeks of your
requirements. For most of our products the lead-time is 3 weeks, so
many of the products are still available for your manufacturing needs
in January 2004 and beyond.
Many of the customers that did not respond to my request a couple of
months ago
are now finding it difficult to live with even 3 to 4 week lead-times.
We are bombarded with expedite requests from such customers. It is
hurting our productivity as it costs more to expedite. Therefore,
starting January 1, 2004 Microchip will be instituting a new policy to
manage the demand in this environment. Microchip will charge a 20%
expedite charge for improving the delivery performance from our
published lead-times. The lead-times
themselves are a moving target because they are demand dependent.
Therefore, to
create a comfort zone for the customers, we will not charge an
expedite fee as long as the requested delivery date is more than 8
weeks beyond the date ordered.
We feel that this policy is fair for everyone. The customers who are
unable to
plan their requirements should bear the extra charge of expedites
instead of being subsidized by those customers that are placing their
orders well ahead of time. I request again that you review your
requirements and place an order with Microchip for at least 8 weeks of
your production needs.
We are continuing to add capacity in all areas of our business. We
feel that we
will be able to maintain lead-times in the range of 4 to 6 weeks.
However, lead-times are always product mix sensitive. By getting
visibility of your requirements, we will be better able to build
product in exact mix and maximize our capacity.
Once again, I would like to thank you for your business.
With best regards,
Steve Sanghi
President and CEO
Microchip Technology Inc.

---end letter---
Tsvetan Usunov wrote:
> I just received this letter from our microchip's distributor. it seems > they will lost their one advantage amoung other uC manufacturers - > their uC were always available in stock or 3-4 weeks. > > Any comments? Did you get the same letter? > > Best regards > Tsvetan > > ---letter--- > > Dear Customer, December 15, 2003 > About 2 months ago I wrote a letter to you that was also posted on > Microchip's > web-site informing you that the semiconductor industry is going > through an up-cycle.
> [snip] I didn't get such a letter. When I tried to order Atmel AVR last November, I was told the lead time to be in the order of 12-16 weeks. Rene -- Ing.Buero R.Tschaggelar - http://www.ibrtses.com & commercial newsgroups - http://www.talkto.net
In article <3090b96933be81a27a49c5fd39b86fd4@news.teranews.com>, Rene 
Tschaggelar <none@none.none> writes
>Tsvetan Usunov wrote: >> I just received this letter from our microchip's distributor. it seems >> they will lost their one advantage amoung other uC manufacturers - >> their uC were always available in stock or 3-4 weeks. >> Any comments? Did you get the same letter? >> Best regards >> Tsvetan >> ---letter--- >> Dear Customer, December 15, 2003 >> About 2 months ago I wrote a letter to you that was also posted on >> Microchip's >> web-site informing you that the semiconductor industry is going >> through an up-cycle. >> [snip] > >I didn't get such a letter. When I tried to order Atmel AVR last >November, I was told the lead time to be in the order of 12-16 weeks. >
I have also experienced this with a range of Atmel micros, so it's not just Microchip. Atmel don't offer you a "pay extra get them earlier" deal like microchip are doing. -- Tim Mitchell
On 21 Jan 2004 22:40:00 -0800, tusunov@my-deja.com (Tsvetan Usunov) wrote:

>I just received this letter from our microchip's distributor. it seems >they will lost their one advantage amoung other uC manufacturers - >their uC were always available in stock or 3-4 weeks. > >Any comments? Did you get the same letter?
<snip> I got this as well. Seems to me that they appreciate that people have got used to their generally very short leadtimes, and they are just asking customers help them maintain this in the face of tight capacity by placing orders in advance wherever possible, to avoid getting into an Atmel situation. I think this is the best thing they can do in the circumstances, and are doing their customers a big favour by keeping them 'in the loop'. If Microchip are forseeing problems, you can bet every other micro maker will be having the same, if not worse problems - at least Microchip are trying to pre-empt problems. Seems Atmel haven't learnt from their disastrous problems of a few years ago - a customer of mine has recently been quoted 16 weeks on an Atmel part..!
The moral is allways keep a stock of your critical single sourced components.
CBarn24050 wrote:
> The moral is allways keep a stock of your critical single sourced components.
Its not just Microchip. Arrow UK have been advising customers to expect delivery issues with many of the major semiconductor manufacturers. Many are described as 'On Formal Allocation' for the next quarter, and there are 10-15% price increases for Flash and SRAM. Martin
In article <ls6v005ovrpra13h30pmqmtna2nrpseafj@4ax.com>, 
mike@whitewing.co.uk says...

> On 21 Jan 2004 22:40:00 -0800, tusunov@my-deja.com (Tsvetan Usunov) wrote: > Seems Atmel haven't learnt from their disastrous problems of a few years ago - a customer of mine > has recently been quoted 16 weeks on an Atmel part..! >
I love Atmel chips, but I will NEVER put a Atmel in a new design just for this reason. I've found the TI MSP430's to be a fine replacement and they are in stock every where... -- Greg Deuerling Fermi National Accelerator Laboratory P.O.Box 500 MS368 Batavia, IL 60510 (630)840-4629 FAX (630)840-5406 Electronic Systems Engineering Group Work: egads_AT_fnal.gov, remove '_AT_'
> If Microchip are forseeing problems, you can bet every other micro maker will be having the same, if > not worse problems - at least Microchip are trying to pre-empt problems. > > Seems Atmel haven't learnt from their disastrous problems of a few years ago - a customer of mine > has recently been quoted 16 weeks on an Atmel part..!
OK, but I don't get the background for this situation. Perhaphs Microchip got more business than they can handle? Best regards Tsvetan --- PCB prototypes for $26 at http://run.to/pcb (http://www.olimex.com/pcb) Development boards for ARM, AVR, PIC, and MSP430 (http://www.olimex.com/dev)
cbarn24050@aol.com (CBarn24050) wrote in message news:<20040122051654.12611.00000628@mb-m29.aol.com>...
> The moral is allways keep a stock of your critical single sourced components.
It's OK for running projects which you can plan ahead, but what to say to customer with new design who wants 10K units tomorrow (what usually customers with new projects do)? Please wait 3 months to get the PICs or pay 20% more? I don't think he will understand this. Best regards Tsvetan --- PCB prototypes for $26 at http://run.to/pcb (http://www.olimex.com/pcb) Development boards for ARM, AVR, PIC, and MSP430 (http://www.olimex.com/dev)
In article <dd52331e.0401220815.5680dcc1@posting.google.com>, Tsvetan 
Usunov <tusunov@my-deja.com> writes
>> If Microchip are forseeing problems, you can bet every other micro >>maker will be having the same, if >> not worse problems - at least Microchip are trying to pre-empt problems. >> >> Seems Atmel haven't learnt from their disastrous problems of a few >>years ago - a customer of mine >> has recently been quoted 16 weeks on an Atmel part..! > >OK, but I don't get the background for this situation. >Perhaphs Microchip got more business than they can handle? >
I think it's normally caused by lack of fabrication capacity when there is a rise in demand for the products. They obviously don't want to have factories standing idle, so try to match their capacity to the demand, but it takes quite a while to bring a factory on-line. -- Tim Mitchell