Ford Motor Co. has partnered with chip maker GlobalFoundries to address the auto industry's semiconductor supply shortfalls.
The Detroit-based automaker entered an agreement with the U.S. manufacturer of semiconductor chips to access more semiconductor chips for Ford's vehicle lineup and the entire U.S. auto industry.
“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 value in the future,” said Jim Farley, Ford president and CEO, in a statement about the contract.
He added, “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.”
Ford hasn’t specified the details of the agreement, but indicates it may include semiconductors for ADAS, battery management systems, and in-vehicle networking for electric vehicles.
The agreement spans beyond Ford. The agreement will boost chip supplies for both Ford and the U.S. automotive industry and will advance semiconductor manufacturing and technology development within the United States.
Ford production slowed over the semiconductor shortage, with the automaker reporting latest sales dropped 27% in the third quarter compared to 2020 because of missing components.
The chip crisis arose during the pandemic. When demand fell during shutdowns, automakers responded by lowering their orders for semiconductor chips. When manufacturing resumed, automakers scrambled to access chips that companies had diverted to the electronics industry.
Chip makers place a higher value on the more expensive chips for computers and smartphones that use new manufacturing processeses. The auto industry, in contrast, relies on cheaper chips manufactured with older production techniques.
GlobalFoundries CEO Tom Caulfield told CNBC in October that it focuses on “legacy nodes” used for lower-powered things suitable to the auto industry, versus smartphones.
“That's where the bigger part of the shortage is, because there's been underinvestment in that," he said.
European lawmakers also seek opportunities that will help them regain control of semiconductor supply chains that are dominated by Asia, in particular Taiwan. The EC unveiled its Digital Compass plan in March, which aims to raise its share of the world’s semiconductor supply from 9% today to 20%—or slightly less than half its share in the 1990s.
It is estimated that the semiconductor shortage has cost the auto industry as estimated $210 billion in lost revenue in 2021.