You can do this, or similar type controller D-pad hacks without the chip also, as long as the controller uses a Common connection for the D-pad then it will work.
Remove the POTs from the Stick.
Remove the outer carbon trace inside both of them at dead center, around 1~2mm wide, where the top wiper sits when the Stick is not touched. Do not sever the inner carbon trace.
Try to make it as smooth a removal as possible as the Wiper will have to ride back and forth over it.
Check with a DMM to make sure the outside leads are now open and measure no Resistance at all, then reinstall the POTs and make sure there is also no Resistance from the center lead to each of the outside leads while the Stick is resting at center.
Wire up both Wipers (center) leads to Ground, or whatever the controller's common connection for the D-pad is.
Then the 4 remaining leads on the POTs are your U, D, L and R connections.
When the Stick is at center, the Wipers are in the area where the carbon trace was removed, thus no connections are being made, and since it is open now the U/D and L/R connections never make contact with each other either. When you press the Stick Up for example, the Wiper moves off the space where you removed the carbon and onto where it is still there, making the Ground (or whatever) connection to the Up line. Albeit this is done thru some Resistance from the remaining carbon trace, but it will still work as that value is less than the Pull-Up value on the D-pad lines.
