Power management chip getting overheated need solution

The chip you have marked is one of four identical chips which your system has these are the Flash (NAND) chips which is your data storage (often referred to as a SSD). In an M Series system Apple splits the parts that make up a typical SSD which has a controller and the Flash chips. The controllers is baked in the M1 chip so here we only have the Raw Flash chips.

So let's dig into the cause of the heating a bit.

SSD's and other Flash based storage have an inherent weakness which is a limited amount of write cycles.

Let's look at a model so you can see this... you have a piece of paper which has four squares drawn and you fill in each square with a letter in alphabetical order A, B, C & D ... Now we need to get rid of some of this data as we need to plug in newer data! Erase the letters B & D now putting E & F in their place and we repeat that a few more times letting A & C alone. The paper is getting worn where we are constantly rewriting! If we tried to get to the last letters of the alphabet I doubt the boxes would be readable clearly! Here is where things get interesting! Before the paper is too badly worn the controller does what we call wear leveling! So now the not modified boxes are now modified but we just can't erase the data we need to move it so this time we make the B box A and then erase the original A box and likewise we do the same with the C box writing it in the D box and erasing the original C! Now the empty boxes can then be filled in continuing our Alphabet run! At some point this happens again on other more static cells.

So a very full storage will need to do this dance as there is not enough empty boxes as you just updated a sizable and more static bit of code the system needed to move things about as well. So it's not uncommon for the Flash chips getting warm.

Now the killer! As the system is used some of the storage cells wear out as we encountered in our model the paper gets worn and dirty so the box is less readable. Your usage over time could have worn quite a few cells! This is one of the hazards of a lean system with not enough storage given the usage the root cause of the heat!

You may need to unload your system of most of your created data to an external drive so the system can have more space to do what it needs with its wear leveling as the more free space it has it can move things once Vs multiple times which is what I think you are seeing is the avalanche effect of a lean system trying to wear level!

So quickly copy off and then delete as much as you can of your music and vids you've download and anything else you can like old work to a second drive. Hopefully you are backing up as well. On a 1TB system I try to get better than 256GB free before I upgrade see if you can get to that here. And don't let the system run with less than 128GB of free space.