GM Signs Exclusive Deal to Prevent Future Chip Shortages

Feb 12, 2023
GM Chevrolet car dealership

While the global automotive chip shortage that started in 2020 is finally easing up, the years-long battle isn’t over for automakers. As a result, General Motors signed an exclusive and first-of-its-kind supply agreement with GlobalFoundries (GF) and secured a direct supply of chips moving forward.

GlobalFoundries, a microchip and semiconductor manufacturer, will expand its production capacity to create wafers specifically for General Motors and its key suppliers. So, instead of just promising more inventory, it’ll have an entire production line dedicated to the automaker. The expansion will occur at its semiconductor factory in New York, which will also help bring more of the production process to the United States.

This first-of-its-kind agreement will send GF chips directly to GM’s key suppliers, ensuring the company has enough supply for regular vehicles and meet the growing demand for EV chips, autonomous driving, and other advanced driving and safety features.

According to Doug Parks, GM executive VP of development and supply, “the supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help GM meet this demand, while delivering new technology and features to our customers.”

The long-term strategic agreement between GM and GlobalFoundries is a solid move to help prevent supply chain shortages, delivery problems, and other slowdowns like many faced during the pandemic. The two companies said this deal will enable higher production volume and deliver “better quality and predictability, maximizing high-value content creation for the end customer.”

Furthermore, as technology and electric vehicles continue to improve and evolve, GM expects its semiconductor chip needs to more than double. It can’t just return to pre-pandemic levels and needs to expand its supply chain to meet the growing demand rapidly.

While Ford partnered with GlobalFoundries in 2021, the exclusive deal with GM sounds more promising. It’s one of many steps General Motors is taking to meet its goal of producing one million EVs by 2025.

via CNBC

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