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ID: 220680


Date: 2021-11-18

Ford and GM are getting into chip development to help deal with the shortage

A year into the computer chip shortage thats heavily affecting vehicle production, Ford announced a collaboration with chipmaker GlobalFoundries Inc., as The Wall Street Journal first reported. Fords press release about the non-binding agreement is light on specifics but mentions plans to advance semiconductor manufacturing and technology development within the United States. Without committing to building any plants, the two companies say they will explore expanded semiconductor manufacturing opportunities to support the automotive industry. Speaking during an event later in the day, GM CEO Mark Reuss said his company is working to co-develop new chips with many semiconductor partners like Qualcomm, TSMC, and others. Fords VP of vehicle embedded software and controls, Chuck Gray, told the WSJ that [we] feel like we can really boost our product performance and our tech independence at the same time. GlobalFoundries spun off from AMD in 2009, eventually becoming the worlds fourth-largest semiconductor manufacturer, behind TSMC, Samsung, and UMC, according to TrendForce. It manufactures chips for other companies like AMD, Qualcomm, and even Samsung. The company went public last month, and its CEO said at the time that its chip supply is sold out through 2023. The car industrys demand for chips has risen in recent years to accommodate new technology in vehicles. However, many rely on older, cheaper technology and make smaller orders than a company like Apple or Nvidia. Throw in pandemic-related supply chain issues and a fire at a key plant, and you have a situation that could last for years. Related After announcing the electric F-150 in May, Ford CEO Jim Farley told The Verge that its plan to address the chip shortage involved going direct, and now were seeing what that looks like. Theres a big push from a number of chip makers and foundries to do the manufacturing in the United States, to get various incentives from the administration to support that investment. All of that still looks like 10 years out. How do you solve the chip shortage today? Do you just wait it out, or are there steps you can take? Well, theres certainly things we can do. For single-source content, like the Renesas Naka facility that had a fire, those single-sourced chips, we can run some buffer stocks. Which is not ideal. Its kind of a waste, but its better than running out of what we have. The other thing we can do is to give the foundries more confidence in future production by going direct with them. So on behalf of our supply base, actually going and contracting purchases. I think boots on the ground in places like Taiwan and China and Asia are going to be more important for us. I think theres certainly things we can do to make it better. We are starting to see some confidence in the second half of this year, but when I talk to my colleagues at Cisco, and Dell, and other companies, they run the supply chain totally different than automotive. And its about time for us to catch up. He also mentioned that the plans to help build company autonomy mean bringing in real expertise on silicon and chip design. Having software and chip design knowledge in-house is helpful if youre like Tesla and decide to rewrite your vehicle software to work on the chips that are available. In todays announcement, Farley says, This agreement is just the beginning and a key part of our plan to vertically integrate key technologies and capabilities that will differentiate Ford far into the future. In February, the F-150 was hit hard by the global chip shortage as it reportedly cut production of Fords most popular vehicle in half. Several of Fords North American plants shut down at times this year as a result of the shortages. The effects have been felt across the industry similarly, with plant shutdowns and the removal of features like heated seats in Chevy trucks, touchscreens in BMWs, and USB ports in some Teslas. Related