The American multinational automobile manufacturers, Ford and General Motors (GM) are leveraging partnerships with semiconductor manufacturers to overcome the chip shortage that’s heavily affecting vehicle production.
Ford has entered into a non-binding agreement with GlobalFoundries, a New York-based chipmaker, that it said would help to advance the joint research and development (R&D) and manufacturing of chips to supply its own assembly lines and others in the US automotive industry.
Without committing to building any plants, the two companies have stated that they would explore expanded semiconductor manufacturing opportunities to support the automotive sector.
The President of GM, Mr. Mark Reuss stated that as the industry becomes more electronically complex, demand for semiconductors will be more than doubling over the next several years. As a result, the automobile manufacturer is pursuing partnerships with Taiwan Semiconductor Manufacturing Company (TSMC), Qualcomm and others.
The automobile sector has been under pressure due to the shortage of semiconductors, limiting sales of new vehicles. Producers were unprepared when the decline in demand for cars and trucks caused by the COVID-19 pandemic last year reversed faster than they expected.
The industry’s demand for chips has risen in recent years to accommodate new technology in vehicles. However, many rely on older and cheaper technology and make smaller orders than a company like Apple or Nvidia.
Ford stated that the agreement with GlobalFoundries could boost the company’s supply of chips within months. GlobalFoundries, which is owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Company, went public last month. The companies’ joint R&D effort could expand the advanced chips needed for use in electric vehicle battery systems, semi-autonomous driving and over-the-air software updates.
