General Motors has reached an agreement with a large computer chipmaker to help ensure it has a steady supply of semiconductors as production of electric vehicles and complex components that require increases in computing power increase.
under the agreementchipmaker GlobalFoundries has agreed to reserve a portion of its manufacturing capacity exclusively to make chips for GM
The automaker plans to introduce more than two dozen electric vehicles around the world over the next two years. Large numbers of chips are also used in internal combustion vehicles.
General Motors is increasing the number of vehicles equipped with advanced driver assistance systems that use cameras, radar and other sensors to enable hands-free driving under certain conditions.
Doug Parks, GM’s executive vice president of global product development, purchasing and supply chain, said in a statement that the company expects its need for computer chips to double over the next few years.
“The supply agreement with GlobalFoundries will help establish a strong and resilient supply of critical technology in the US that will help GM meet this demand, while bringing new technologies and features to our customers,” he added.
The companies did not disclose the financial terms of their agreement.
GM has been working to reduce the varieties of chips it uses and reduce the number of chips needed in each vehicle. The automaker hopes to develop unique chips that can handle the computation that multiple chips do today. Their long-term goal is to use only three classes of chips.
Several chipmakers are building plants and expanding production in the United States with the help of funds from the CHIPS and Science Act, which President Biden signed into law last year.
Intel has announced plans to invest $20 billion to build two plants in Ohio, and Micron Technology says it will spend up to $100 billion manufacturing semiconductors near Syracuse, NY Taiwan Semiconductor Manufacturing Company is expanding its operations in Phoenix, at a cost about $40 billion.
Headquartered in Malta, New York, north of Albany, GlobalFoundries operates chip factories formerly owned by IBM and hopes to raise funds to support its expansion plans. In November, its chief executive, Thomas Caulfield, said GlobalFoundries wanted to increase production at one plant near Malta and another in Burlington, Vt., and build a new production area at an existing plant in Malta.
He said the company aimed to submit its proposal to Washington early this year.
Automakers have been struggling with shortages of computer chips for the past two years, sometimes having to idle plants while they wait for new supplies. In 2021, Ford Motor reached an agreement with GlobalFoundries to collaborate on the design of chips that help improve its supplies.
Analysts, however, say supply shortages will persist because cars use relatively simple chips and semiconductor makers are investing more 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 put it into production.
Automakers are likely to struggle to build enough chip inventories if electric vehicle sales take off, according to a recent Bank of America Global Research report. “Shortages persist in key areas,” the bank said.
