General Motors and chip maker GlobalFoundries (GlobalFoundries) announced a long-term agreement on Thursday (9th) that the latter will provide the former with U.S.-made chips. Chip shortages that shut down production of millions of cars.
GF said the agreement, which will run for at least three years, is the first of its kind and will establish dedicated capacity for GM’s main chip supplier at its upstate New York manufacturing plant.
GF Chief Executive Tom Caulfield told Reuters he believed backing U.S. manufacturing would make the company more competitive as it seeks some financing. In addition, automakers go directly to OEMs to reserve capacity for their needs, and make appropriate co-investments with OEMs to achieve the best economic benefits.
Field also said that GlobalFoundries is negotiating with almost all major global automakers, and the agreement with GM does not mean that it will not sign agreements with other automakers.
In late 2021, at the height of the wafer shortage, GlobalFoundries and Ford Motor (F-US) jointly announced a non-binding agreement that could involve additional production capacity for Ford, although Ford did not provide any details on the agreement at the time. Details have never been disclosed since.
Ford said last week that fourth-quarter profit was $2 billion lower than expected due to an inability to procure chips and other supply chain issues.
GM, on the other hand, said it was working to simplify the number of unique chips in the car and was securing the capacity of suppliers to produce the chips in anticipation of an increase in the overall number of chips used.
“As the vehicle becomes a technology platform, we estimate that the company’s demand for semiconductors will more than double in the future,” Doug Parks, GM’s global product development chief, said in a statement.
Before the deadline, the intraday stock price of General Motors (GM-US) rose 2.48%, tentatively reported at $42.60 per share; the stock price of GlobalFoundries (GFS-US) rose 4.28%, tentatively reported at $65.41 per share.