In Light of Chip Shortages, Ford and GM Enter the Semiconductor Game

 

Ford and GM announced plans to enter the semiconductor business this week, after suffering chip shortages and massive supply chain disruptions due to the pandemic and other industry factors.

Ford will partner with American semiconductor manufacturer GlobalFoundries to alleviate short term supply issues, with a co-developed and U.S. manufactured chip a possibility.

GM, in turn, and not to be outdone in the race to stabilize supplies of key components, said they had engaged with chip manufacturers Qualcomm Inc. and NXP Semiconductors NV to co-develop and manufacture semiconductors.

Both relationships will move portions of the automakers chip supply closer to home in a time where bottlenecks in the global supply chain are as disruptive as the shutdowns that caused them. Ford’s move, in particular, lends itself towards in-house development of higher end chips for their flagship electric vehicles in the future.

“We feel like we can really boost our product performance and our tech independence at the same time,” said Chuck Gray, Ford’s vice president of vehicle embedded software and controls.

With cars growing more technically complex on a rapid basis, manufacturers will need to find a way to stabilize their chip supplies in the future.

“We see semiconductor requirements doubling over the next several years.”

Mark Reuss, President, GM

It’s not just chips. As more electric vehicles merge onto the roads, car manufacturers are entering the battery game as well, with Ford, Volkswagen AG, and other brands teaming with battery companies to build new factories in an effort to gain technical advantages and stabilize future supply.

This shift towards vertical integration will benefit those in the electronics business with superior visibility into their supply chains, and not just what’s in stock at their standard distributors. AI-powered Market Intelligence, like Supplyframe’s SaaS solutions, will give businesses the agility and knowledge to make the best of a tough situation.

After all, there’s always a silver lining. Diversifying the global semiconductor supply chain can only help alleviate future shortages and hasten innovation. Take it from GlobalFoundries automotive executive Mike Hogan:

“This is a great example of how you can take a crisis and turn it into an opportunity.”

To learn more, read our own article with input from Mike Hogan of Global Foundries on the past, present, and future of automotive semiconductor shortages

To learn more about Supplyframe, click here.

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Paul McNamara
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