Yes I haven't worked at a hardware company, nothing to be ashamed of!
no it's not insane - it's completely mundane policy. that's my point - that you're calling something out as insane with exactly zero experience (which is the actually insane thing...).
in big hardware companies, things start getting siloed, but that probably has more to do with big companies (seemingly invariably) operating as a union of fiefdoms (dunbar-number-ification?)