Ford And GM Have A Plan To Conquer Chip Shortage

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Ford is partnering with one chip manufacturer, while GM is teaming up with a few.

Ford and General Motors have announced new strategies to battle the ongoing semiconductor chip shortage currently crippling the automotive industry.

Ford signed a non-binding agreement with GlobalFoundries, a leader in the semiconductor manufacturing sector. GlobalFoundries made the news earlier this year after announcing that it would double its output by spending $6 billion on expansion.

The global shortage is having a massive impact on car production. Several manufacturers have had to shut down plants or remove shifts. These problems filter down to customers, who pay inflated prices for new cars. A Chevy Corvette costs Porsche 911 Turbo money these days due to mark-ups caused by high demand and low supply, and if you want a Z06, you'll have to wait until 2025.

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The agreement between the two companies will see them working together to address the growing demand for chips aimed explicitly at the automotive industry. Examples include chips for ADAS, battery management, in-vehicle connectivity, EVs, and autonomous features.

"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. "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."

"GF is committed to building innovative alliances with the world's leading companies to enable the features in products that are pervasive throughout people's lives," said Tom Caulfield, GF CEO. "Our agreement with Ford is a key step forward in strengthening our cooperation and partnership with automakers to spur innovation, bring new features to market faster, and ensure long-term, supply-demand balance."

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According to The Detroit News, General Motors also has a new strategy. Not just for the ongoing crisis but also semiconductor demand in the future. GM's President, Mark Reuss, commented that he can see "semiconductor requirements more than doubling over the next several years."

GM will be working with various suppliers, including Qualcomm Technologies Inc, STMicroelectronics, TSMC, Renesas Electronics Corp, onsemi, NXP Semiconductors, and Infineon Technologies AG. "That's quite a list, and this will drive our margins higher," said Ruess. "But this is a very unique and very integrated approach. We've got a pretty broad platform of companies that will help us execute that strategy, so that's a big deal for us."

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The shortage is currently hitting GM where it hurts the most. Production of the Chevrolet Traverse and Cadillac Escalade was interrupted for two weeks earlier this year, both key models for the company.

The government could also be helping out soon by providing funding for domestic semiconductor companies. The Problem Solvers Caucus is proposing a $52 billion fund to get manufacturing back on track. It is a crucial part of the supply chain, and therefore an essential part of the economy.

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Source Credits: The Detroit News

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