General Motors has reached an agreement with a major computer chip maker to 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 terms of the agreement, chipmaker GlobalFoundries agreed to dedicate some of its manufacturing capacity solely to making chips for GM
The automaker plans to launch more than two dozen electric vehicles worldwide over the next two years. Many chips are also used in vehicles with combustion engines.
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 in certain conditions.
“We expect our demand for semiconductors to more than double over the next several years as vehicles become technology platforms,” said Doug Parks, GM’s executive vice president of global product development, purchasing and supply chain, in a statement.
He said the company expects demand for computer chips to double in the next few years. “The supply agreement with GlobalFoundries will help build a strong, resilient supply of critical technology in the United States that will help GM meet this demand while providing our customers with new technologies and capabilities,” he added.
Automakers have been struggling with computer chip shortages for the past two years, and have had to shut down plants at times while waiting for new shipments of electronic parts. In 2021 Ford Motor reached an agreement with GlobalFoundries to collaborate on the design of chips to improve supply.
But analysts say supply shortages will continue as cars use relatively simple chips and semiconductor manufacturers invest more in expanding production of advanced chips that bring them more profit. It also takes around three years to build a new chip factory and put it into production.
According to a recent report from Bank of America Global Research, automakers will likely struggle to build sufficient inventories of chips as electric vehicle sales pick up. “Bottlenecks persist in key areas,” the bank said. “The auto industry will continue to struggle with bottlenecks.”
Based in Malta, NY just north of Albany, GlobalFoundries operates chip factories formerly owned by IBM.
