Yahoo Finance GM Locks Up Chip Supply in Deal With GlobalFoundries
(Bloomberg) -- General Motors Co. signed a deal with GlobalFoundries Inc. to lock up production capacity for semiconductors, helping the automaker manage a chip shortage that has hindered auto production for several years.
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GlobalFoundries, a provider of made-to-order semiconductors, will set aside capacity at its New York plant exclusively for chips destined for GM vehicles. The automaker will tell its chip designer suppliers to use the company’s production to make some of the components it deems essential to its vehicles.
“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” said Doug Parks, GM’s executive vice president of global product development, purchasing and supply chain, said in a statement Thursday.
GM has been reducing the number of unique chips needed to build increasingly complex vehicles. Parks said the GlobalFoundries deal “will help establish a strong, resilient supply of critical technology.”
GlobalFoundries is positioning itself to take advantage of attempts to remake the semiconductor supply chain. Governments in the US and Europe are pushing through support packages aimed at increasing local manufacturing of the devices and lessening a dependence on East Asia.
See also: Chipmaker GlobalFoundries to Start Job Cuts and Freeze Hiring
The chipmaker’s chief executive officer, Tom Caulfield, has said he will put capacity in place when his customers commit to using it when outlining plans to increase his company’s footprint in the US.
Unlike Intel Corp. and Micron Technology Inc., GlobalFoundries is concentrating its efforts on older types of chip manufacturing that it says will stay in high demand for years. Electronic components in vehicles aren’t typically made on the most advanced chipmaking gear but a dearth of investment in that type of production has made capacity tight.
“At GF we are committed to working with our customers in new and innovative ways to best address the challenges of today’s global supply chains,” Caulfield said.
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