Ford just signed deal to help solve chip shortage issue

Auto maker Ford has signed an agreement with chipmaker GlobalFoundries to help address auto industry semiconductor supply shortages that are blocking production lines.

The Mustang Maker Said it has signed an agreement with US chipmaking contractor GlobalFoundries to help create more semiconductors for Ford’s vehicle lineup and the broader American auto industry.

Earlier this month, Ford reported new vehicle sales fell 27% in the quarter from a year ago as production slowed due to missing semiconductor components.

SEE: Hang in there: the chip shortage and rising prices are expected to persist for some time

Foundries, or contract semiconductor manufacturers, have left the auto industry short of chips after the pandemic altered expected demand for vehicles. Semiconductor contracts stretch for years, and as countries reopen their doors during the pandemic, demand for new vehicles has exceeded expectations.

On top of that, chipmakers are focusing on higher-value chips for computers and smartphones using newer manufacturing processes, while the auto industry is using cheaper chips created with older production techniques. for components such as microcontroller units and on-board displays.

“It’s critical that we create new ways of working with suppliers to give Ford – and America – greater independence in delivering the technologies and features our customers will most appreciate in the future,” Ford chief executive officer Jim Farley said in a statement.

“This agreement is just a start and a key part of our plan to vertically integrate the key technologies and capabilities that will differentiate Ford in the future.”

The details of the deal are unclear. However, Ford says it could include semiconductors for ADAS, battery management systems, and on-board networks for electric vehicles.

The deal isn’t just about Ford, but could include a collaboration that “would advance semiconductor manufacturing and technology development in the United States, with the goal of increasing chip supply for Ford and the industry. American automobile “.

European lawmakers are also considering opportunities to regain control of semiconductor supply chains, which are dominated by Asia, particularly Taiwan. The EC unveiled its Digital Compass plan in March, which aims to make the EU digitally sovereign by 2030, increasing its share of the global semiconductor supply from 9% today to 20%, or a just under half of its share in the 90s.

The semiconductor shortage is estimated to cost the auto industry $ 210 billion in lost revenue in 2021.

GlobalFoundries was listed on the Nasdaq in October with a valuation of $ 25 billion. Its customers include the American Qualcomm, the Taiwanese MediaTek and the Dutch NXP Semiconductors.

SEE: Europe wants to become again a powerhouse of computer chips. it won’t be easy

Tom Caulfield, CEO of GlobalFoundries told CNBC last month it’s focusing on “legacy nodes” used for low-power things suited to the automotive industry, compared to smartphones.

“This is where most of the shortage is, because there has been underinvestment in this area,” said Caulfield.

However, he said GlobalFoundries’ wafer capacity was depleted until the end of 2023.


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