General Motors Reaches Deal to Ensure Its Chip Supply
General Motors has reached an agreement with a large computer chip maker to help ensure it has a steady supply of semiconductors as it ramps up production of electric vehicles and complex components that require increases in computing power.
Under the agreement, the chip maker, GlobalFoundries, agreed to set aside a portion of its manufacturing capacity exclusively to make chips for G.M.
The automaker plans to introduce more than two dozen electric vehicles around the world over the next two years. Large numbers of chips are used in internal-combustion vehicles as well.
General Motors is increasing the number of vehicles equipped with advanced driver assistance systems that use cameras, radar and other sensors to allow hands-free driving under certain conditions.
“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” Doug Parks, G.M.’s executive vice president of global product development, purchasing and supply chain, said in a statement.
He said the company expected its need for computer chips to double over the next several years. “The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help G.M. meet this demand, while delivering new technology and features to our customers,” he added.
Automakers have been struggling with a computer chip shortage for the last two years and at times have had to idle plants while waiting for new supplies of electronic parts. In 2021, Ford Motor reached an agreement with GlobalFoundries to collaborate on designing chips to help improve its supplies.
Analysts, however, say tight supplies will linger because automobiles use relatively simple chips and semiconductor manufacturers are investing more heavily in expanding production of advanced chips that generate more profit for them. It also takes about three years to build a new chip factory and bring it into production.
Automakers are likely to struggle to build sufficient inventories of chips if E.V. sales take off, according to a recent report by Bank of America Global Research. “Shortages persist in key areas,” the bank said. “The auto industry will continue to battle shortages.”
Based in Malta, N.Y., north of Albany, GlobalFoundries operates chip factories formerly owned by IBM.