As part of the effort, Microchip (Chandler, Ariz.) has recently expanded into the 32-bit controller, touch-screen chip and specialty ASIC markets. It continues to push into the analog and 8/16-bit MCU sectors as well.

The real question is whether the 8-bit controller king and its rivals will take more elbows on the chin during one of the worst downturns in the history of ICs. Microchip has taken its share of lumps amid the downturn, but the company appears to be in relatively decent shape as compared to Atmel, Cypress, Freescale, Infineon, NEC, NXP, Renesas, TI and others.

Microchip itself was bruised earlier this year, when it ended its hostile efforts to acquire rival Atmel Corp.--a deal that could have expanded its efforts in high-end microcontrollers. Instead of landing a big fish in Atmel, Microchip is now content with making smaller acquisitions to jumpstart its sales and propel its new strategy.

In fact, Microchip has made three small acquisitions in the last several months, including a move to enter the emerging touch-screen chip business. It is also raising eyebrows by quietly accumulating shares in mixed-signal chip vendor Supertex Inc.

The idea behind the moves is to find new growth drivers to propel its core microcontroller and analog lines, said Steve Sanghi, president, chief executive and chairman of Microchip. In other words, the company wants to expand -- or what he described as ''elbow out'' -- into new markets, Sanghi said. ''You will see us continue to execute the 'elbow out' strategy,'' he told EE Times in a recent interview.

Microchip also hopes to land some punches against its rivals, many of which are already staggering due to the downturn and other factors. Many of Microchip's MCU rivals--Atmel, Cypress, Freescale, Infineon, NEC, NXP, Renesas and others--are losing money. Others are teetering and could be forced into bankruptcy, including Infineon, NXP and others. Still others are in limbo, such as Freescale and Renesas.

Simply put, there is a potential crisis in the MCU supply chain, said Doug Freedman, an analyst with Broadpoint.AmTech. ''Poor balance sheets have microcontroller designers paying attention'' to their respective suppliers, Freedman said.

As a result of chaos in the MCU sector, "there is market share for sale '' in the MCU market, he said. ''Microchip will continue to gain share in 16- and 32-bit.''

Microchip could benefit as the company remains in relatively decent financial shape. The company is strong in the 8-bit MCU market, but the problem is that Microchip was late to the party in the 16- and 32-bit sectors.

In 32-bit, for example, it has no business to speak of. If Microchip could have acquired Atmel, the 8-bit MCU king would have expanded its kingdom to the higher-margin 16- and 32-bit worlds. So for now, Microchip must grow organically through its internal product efforts, but is that enough to satisfy Sanghi or Wall Street?