Recently, Microchip issued an open letter to their customers on the bipolar changes in recent customer orders and provided solutions.
In the letter, Microchip stated that as the municipality ordered its citizens to “shelter in place”, this resulted in a significant reduction in the labor force at many of its factories, and some factories faced the risk of closure. In addition, hundreds of employees were quarantined due to various first-hand or second-hand contacts with people who tested positive. In this environment, Microchip is focused on reduction of risk and the creation of a level of stability of demand as well as supply.
The letter mentioned that Microchip has recently seen a bipolar demand scenario with many companies want to increase the quantity of products ordered, while at the same time, some companies are considering reducing the order quantity of products that have been placed.
Microchip stated that in order to better reflect the real situation of short-term demand and stabilize the changes caused by the complexity of the supply chain, customers are required to check the outstanding orders for standard products placed with Microchip for the next 3 months, and make any negative or positive adjustments to those orders for standard products that are outside the 30 day cancellation window. Microchip requires that this operation be completed by April 15.
In addition, on April 16, Microchip will change the “no cancellation - no reschedule” window for standard products from 30 days to 45 days, thereby making global demand more stable.
Microchip said it expects this window shift will only last a few months and will notify their customers immediately when changes occur.