General Motors Co. and GlobalFoundries announced a strategic, long-term agreement establishing a dedicated capacity corridor exclusively for GM’s chip supply. Through this first-of-its-kind agreement, GF will manufacture for GM’s key chip suppliers at GF’s advanced semiconductor facility in upstate New York bringing a critical process to the U.S.
The deal, which they’re calling an industry first, comes as automakers continue to battle through supply chain problems, including a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic.
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“The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help GM meet this demand, while delivering new technology and features to our customers,” Doug Parks, GM executive vice president of global product development, purchasing and supply chain, said in a statement.
The deal is a win for the Biden administration, which has been pushing for companies to reestablish American production of semiconductor chips, including the CHIPS Act that was signed into law in August.
Parks said GM expects its usage of semiconductors to more than double over the “next several years” as it increases the technological capabilities in its vehicles, specifically all-electric cars and trucks that require more chips than traditional vehicles.
The companies declined to disclose details such as cost and the amount of added capacity. They expect the deal will enable chip production in higher volumes as well as offer “better quality and predictability, maximizing high value content creation for the end customer,” according to the release.
Caulfield said the exclusive production for GM is expected to take two to three years to really ramp up.
Automakers have historically not directly worked with chip suppliers. Instead, allowing their larger auto suppliers to handle such negotiations. However, the shortage of semiconductor chips has companies such as GM reaching further into their supply chains in an attempt to better secure parts for their vehicles.
SOURCE: PR Newswire