Ford and chip maker announce non-binding “partnership” to remedy shortage

300 mm silicon wafer

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In an attempt to combat persistent global chip shortage, chip maker GlobalFoundries and Ford Motor Company have announced a “strategic partnership” today, both via Press release and coverage in Wall Street Journal. The “non-binding agreement”, according to the release, “opens the door” for GlobalFoundries to supply more chips to Ford in the short term, while promising collaboration on future chips for cars.

“These could include semiconductor solutions for ADAS, battery management systems and networking in vehicles for an automated, connected and electrified future,” the release said. “GF and Ford will also explore expanded opportunities for semiconductor manufacturing to support the automotive industry.”

It all sounds promising, even though the press release does not actually oblige any of the companies to take any specific actions. When contacted for more details, Ford spokeswoman Jennifer Flake reiterated that this was “an agreement to work together on the areas called out in the release”, but had no further information to share.

Car manufacturers have been hard hit by the chip shortage, which in part stems from business decisions made early in the COVID-19 pandemic. To anticipate reduced demand, automakers cut their chip orders, and chipmakers in turn reduced chip production. But demand for new vehicles (and all kinds of goods) has risen faster than expected, and automakers cutting back on their orders have found themselves at the back of a long queue waiting for more chips.

The results have been far-reaching. ONE Detroit Free Press piece from April 2021 showed a parking lot full of Ford F-150s waiting for chips but otherwise pre-assembled. Chip shortage has slowed or stopped production at many car factories this year, and a shortage of new cars has had far-reaching spillover effects, which has driven up prices on everything from car rental to used cars.

If the agreement between Ford and GlobalFoundries to develop future chips bears fruit, it would be another example of a company choosing to design its own custom-built chips rather than relying on general chips made from e.g. Intel, AMD, Qualcomm, Samsung, Nvidia or MediaTek. Apple is perhaps the highest-profile example, thanks to Apple Silicon chips that have replaced Intel on the latest Macs. But so does Google created its own chip for its latest Pixel flagship phones, and Amazon has been install their own chips in their servers to improve the performance and capabilities of the Alexa voice assistant. Intel, which for decades has only manufactured its own chips at its factories, is even low movements to open up factory capacity for other companies wishing to manufacture their own designs.

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