Ford and chip manufacturers reach agreement to increase semiconductor supply

Ford signed an agreement with GlobalFoundries, a New York-based semiconductor manufacturer, to improve the supply of electronic chips in the face of shortages in the automotive industry.

The automaker said the non-binding agreement “opened the door” for joint research and development and manufacturing of chips to supply its own assembly line and other equipment for the US auto industry.

The automotive industry is squeezed by the lack of semiconductors, which limits the sales of new cars. When the decline in demand for cars and trucks caused by the pandemic last year reversed faster than they expected, manufacturers were unprepared.They now find themselves competing with consumer electronics manufacturers Supplies Chip.

Now, the automotive industry, which Toyota pioneered the concept of just-in-time manufacturing in the 1970s, is reassessing how to ensure the safety of this critical component, which is used in everything from brakes and power steering to entertainment systems. Ford said the agreement may increase the company’s chip supply within a few months.

GlobalFoundries is owned by Mubadala Investment Company, Abu Dhabi’s sovereign wealth fund, Listed last month. The chip maker’s stock price rose 5.4% to $66.07 on Thursday, while Ford’s stock price rose 0.3% to $19.92.

They added that the joint R&D work of the two companies can develop advanced chips needed for electric vehicle battery systems, semi-autonomous driving, and wireless software updates.

Ford CEO Jim Farley said the agreement is a “key part” of its vertical integration plan, a move that allows the company to better control its supply chain.

GlobalFoundries CEO Tom Caulfield said that working with automakers will enable the company “to bring new features to market faster and ensure a long-term balance of supply and demand.”

Morningstar analyst David Whiston said that it is great to see Ford gaining some domestic supply and changing course based on Farley’s comments in April. Need to rethink How does it guarantee the supply of key components.

But he added that he doubts whether the agreement “can be implemented quickly unless GlobalFoundries already has production capacity dedicated to Ford.”

The terms of the transaction have not been disclosed, but Ford does not hold the ownership of GlobalFoundries.

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