A year into a shortage of computer chips that severely affected vehicle production, Ford announced a collaboration with chipmaker GlobalFoundries Inc., as Wall Street Journal first reported.
Ford’s press release about the non-binding agreement is light on specifics but mentions plans “to advance semiconductor manufacturing and technology development in the United States.” Without committing to building any factories, the two companies said they would “explore opportunities for expanded semiconductor manufacturing to support the automotive industry.” Speaking at an event at a later date, GM CEO Mark Reuss said his company is working to develop new chips with many semiconductor partners such as Qualcomm, TSMC, and others.
Ford’s VP of embedded software and controls, Chuck Gray, told WSJ that “[we] feel like we can really improve our product performance and technology independence at the same time.” GlobalFoundries split from AMD in 2009, eventually becoming the world’s fourth-largest semiconductor producer, 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 supply of chips was sold out until 2023.
The auto industry’s demand for chips has increased in recent years to accommodate new technologies in vehicles. However, many rely on older, cheaper technology and make smaller orders than companies like Apple or Nvidia. Throw supply chain issues related to pandemics and fires at the main factory, and you have a situation that could last for years.
After announcing the electric F-150 in May, Ford CEO Jim Farley said: The Verge that his plan to address the chip shortage was directly involved, and now we see what that looks like.
There has been a huge push from a number of chipmakers and foundries to do manufacturing in the United States, to obtain various incentives from the government to support these investments. All of that still looks like 10 years from now. How do you deal with today’s chip shortage? Are you just waiting, or are there steps you can take?
Well, there’s definitely something we can do. For single-source content, such as the Renesas Naka facility that experienced a fire, that single-source chip, we can run multiple buffer stocks. Which is not ideal. It’s a bit of a waste, but it’s better than running out of what we have.
Another thing we can do is give foundries more confidence in future production by working directly with them. So on behalf of our supply base, actually go and contract purchases. I think boots in places like Taiwan and China and Asia will become more important to us.
I think there are definitely things we can do to make it better. We started to see some confidence in the second half of the year, but when I spoke to my colleagues at Cisco, and Dell, and other companies, they were running a completely different supply chain than automotive. And it’s time for us to catch up.
He also mentioned that the plan to help build the company’s autonomy meant bringing “real expertise in silicon and chip design.” Having software and chip design knowledge in-house is helpful if you’re like Tesla and decide to rewrite your vehicle’s software to work on available chips. In today’s announcement, Farley said, “This agreement is only the beginning and an important 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 a global chip shortage as it reportedly cut production of Ford’s most popular vehicle in half. Several Ford plants in North America were closed several times this year as a result of the shortage. The effects are also being felt across the industry, with factory closures and the removal of features like heated seats in Chevy trucks, touchscreens in BMWs, and USB ports in some Teslas.