Microchip Technology suffers cyberattack — operations impacted while extent of attack is investigated

Arizona-based semiconductor manufacturer Microchip Technology detected a cyberattack against its systems on August 17. The company said in a regulatory filing with the SEC that “an unauthorized party disrupted the Company’s use of certain servers and some business operations.” Microchip had to isolate and shut down some affected systems while investigating the cause of the issue, it said.

This inevitably means disruption to operations, with manufacturing output falling below normal levels. Microchip has yet to determine the overall scope, nature, and impact of the attack, so the company has yet to ascertain how the event will affect the company’s bottom line.

"As a result of the incident, certain of the Company’s manufacturing facilities are operating at less than normal levels, and the Company’s ability to fulfill orders is currently impacted. The Company is working diligently to bring the affected portions of its IT systems back online, restore normal business operations and mitigate the impact of the incident," the filing reads.

Microchip Technology did not announce what type of attack hit their systems. There are a few hints that a ransomware attack was the cause, but the company hasn’t given any indication if that is the case. Furthermore, no ransomware group has claimed responsibility for it.

Aside from its wide-ranging client base, the company is also one of the recipients of the American CHIPS Act payouts; the White House considers it crucial for U.S. national security. But as the global semiconductor race is heating up between two powers — China and the U.S. — resulting in a new chip war that will likely last well into the 21st century, state-sponsored cyberattacks are becoming more and more common. Criminal enterprises are also taking advantage of the increased digitization, targeting massive corporations with ransomware and then asking for millions of dollars just to decrypt their files.

Microchip Technology is a major player in the semiconductors industry. It has more than 120,000 customers spread across diverse industries. These include clients in aerospace, automotive, communications, defense, maker and industrial markets.

Whatever the cause and impact of the cyberattack on the company is, a reduction in semiconductor output is never a welcome news in the industry. For example, power outages in Taiwan have historically caused global chip prices to rise. Events like this show how fragile the global semiconductor supply chain is, and it will likely take several more years before it becomes more robust against disruptions.