Cyberattack Disrupts Chip Production at Microchip Technology

US chip manufacturer Microchip Technology has reported a cyberattack. The Microchip hit by cybercriminals compromised servers, forcing the company to shut some of its systems and reduce operations.

Microchip Technology supplies chips to the defense industry. Yahoo Finance reported that the chipmaker detected suspicious activity in its information technology systems on August 17.

Server Breach

A regulatory filing made by Microchip Technology shows the company noticed that some of its servers and business operations had been breached two days after suspicious activity was detected.

Microchip Technology said it has taken prompt action to fix the breach. These actions include isolating systems that were affected by the breach and shutting down specific systems. The chip maker has also commenced an investigation into the attack with the help of external cybersecurity experts.

Microchip Slowing Down

The move to shut down specific systems has caused some of Microchip’s operations to run at suboptimal levels. The slowdown in operations has affected the company’s ability to fulfill chip orders.

But the Arizona-based chipmaker won’t be the first to experience order fulfillment delays this year. Earlier this month, Nvidia announced that the launch of its new AI chips could be delayed for three or more months due to design flaws.

Microchip says it’s not sure whether the cyberattack will have a significant impact on its financial results.

“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. As the company’s investigation is ongoing, the full scope, nature, and impact of the incident are not yet known,” The company said in a statement.

Earlier this year, Microchip received funding from the US Chips and Science Act to boost production of semiconductors that are used in weapon systems and cars.

Multiple Chip Maker Attacks

In recent years, chip manufacturers have been targeted with different types of cyberattacks. The recent cyberattack on Microchip comes at a time when countries across the world are competing to dominate the chip market. The competition is driven by the need for national security and a desire to prevent supply-chain challenges experienced during the pandemic.

Two years ago, leading chipmaker Nvidia suffered a cyberattack that appeared to be ransomware. Although the company said the attack never interrupted its commercial activities, the attack reportedly exposed email addresses and passwords belonging to about 71,000 individuals, including employees.

Following the data breach, Nvidia notified law enforcement about the attack, engaged cybersecurity incident response experts, and strengthened its network security. About two months ago, Taiwan-based chip maker GlobalWafers also suffered a cyberattack that brought its operations to a halt.