General Motors strikes deal to secure chip supply

General Motors has struck a deal with a major computer chip maker to help it secure a steady supply of semiconductors as it ramps up production of electric vehicles and complex components that require increased computing power.

Under the agreement, the chipmaker, GlobalFoundries, agreed to set aside some of its manufacturing capacity exclusively to make chips for GM.

The automaker plans to introduce more than two dozen electric vehicles globally over the next two years. A large number 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, radars and other sensors to enable hands-free driving in certain conditions.

“We see our semiconductor needs more than doubling over the next few years as vehicles become technology platforms,” said Doug Parks, executive vice president of global product development, purchasing and sales. GM’s supply chain, in a statement.

He said the company expects its computer chip needs to double over the next few years. “The supply agreement with GlobalFoundries will help establish a strong and resilient supply of critical technologies in the United States that will help GM meet this demand, while delivering new technologies and features to our customers,” it said. he adds.

Automakers have struggled with a shortage of computer chips for two years and have sometimes had to shut down factories while they wait for new supplies of electronic parts. In 2021, Ford Motor entered into an agreement with GlobalFoundries to collaborate on chip design to improve its supplies.

Analysts, however, say tight supplies will persist because automobiles are using relatively simple chips and semiconductor makers are investing more heavily in expanding production of advanced chips that generate more profits for them. It also takes about three years to build a new chip factory and put it into production.

Automakers will likely struggle to build up sufficient inventories of chips if electric vehicle sales take off, according to a recent report from Bank of America Global Research. “Shortages persist in key areas,” the bank said. “The automotive industry will continue to struggle with shortages.”

Based in Malta, NY, north of Albany, GlobalFoundries operates chip factories that were previously owned by IBM.