Major US Chipmaker Will Double Chip Production This Year

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But it won't immediately alleviate the ongoing shortage.

Hyundai said well over a month ago that the ongoing semiconductor chip shortage is unlikely to get worse than it is right now. But although the Korean automaker seems more positive than most about the issue, Mercedes said days ago that the shortage is likely to continue into 2023.

Although automakers have come up with ways to continue selling some models without certain features, that's hardly a long-term solution. One better way to address the chip shortage is to, well, produce more chips. That's precisely what US contract chipmaker GlobalFoundries intends to do.

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According to a report by Nikkei Asia, GlobalFoundries is on track to double its automotive chip output in 2021. An additional $6 billion will be spent on expanding its overall production capacity in response to the ongoing shortage.

"We will shop more than double the [chip] wafers into automotive than we did in 2020, and we expect to expand that capacity in 2022 and beyond," said Mike Hogan from GlobalFoundries. However, the company emphasized that despite these plans, the uptick in production will only start to see real results from 2023. That aligns with the assessment from Mercedes that the shortage is far from behind us.

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"It takes quite a while for new investments to turn into capacity, and the overall lead time for silicon [chips] to make it into the auto manufacturers is also quite long," explained Hogan.

Taiwan Semiconductor Manufacturing Co. is another player in the chip production space and earlier this year, it said it was producing 60% more chips for the automotive industry this year.

Earlier this month, General Motors said it would be forced to shut production temporarily at some of its factories, affecting models like the Chevrolet Equinox and Buick Enclave in the process. Toyota and Volkswagen are two other major automakers that have had to halt production due to the shortage. Hopefully, GlobalFoundries won't be the last supplier to ramp up chip production imminently, but even so, 2022 looks like it won't be spared from the crisis.

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Source Credits: Nikkei Asia

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