Highlighting the shifting relationships in the semiconductor industry, General Motors has signed a long term supply deal directly with foundry GlobalFoundries rather than the chip designers.
GM had been threatening to do such a deal since the start of the Covid-19 pandemic when it cancelled chip supply contracts and struggled to reinstate the supply.
- GM looks to buy chips directly as shortages bite
- Chip bottleneck threatens to curb car industry in the long term
The deal with GF will see dedicated capacity 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 wafer fab in upstate New York bringing a critical process to the US.
The agreement supports GM’s strategy to reduce the number of unique chips needed for vehicles such as the electric Hummer so that chips can be produced in higher volumes. GM says this is also expected to offer better quality and predictability, which may well be a criticism of other foundry suppliers.
“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain.
“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.”
“GF will expand its production capabilities exclusively for GM’s supply chain, enabling us to strengthen our partnership with the automotive industry and New York State, while further accelerating automotive innovation with U.S.-based manufacturing for a more resilient supply chain,” said Dr. Thomas Caulfield, president and CEO of GF.
GF is responding to the global demand for semiconductors through a series of strategic long-term agreements with existing and new customers and simultaneously expanding global capacity to meet customer demand. This is taking advantage of the CHIPS and Science Act to provide financial support for semiconductor manufacturing in the US.