GM, Ford introduce new ways to deal with chip crunch
Detroit automakers General Motors Co. and Ford Motor Co. on Thursday revealed new ways they are working to prevent the current semiconductor shortage they've both battled over the last year.
GM President Mark Reuss during the virtual Barclays Global Automotive and Mobility Tech Conference revealed a new strategy to "reduce the number of unique microcontroller units, or MCUs, required by 95%." The automaker is working with a list of semiconductor companies on co-development, sourcing and manufacturing, helping to drive predictability in the supply chain.
Ford on Thursday said it signed a non-binding agreement to collaborate on production and technology advancements with semiconductor supplier GlobalFoundries Inc.
The chip supply issue affecting all automakers has been ongoing since the start of the year and its effects are expected to last into 2022. The shortage will cost $210 billion in lost revenues this year, according to the most recent estimates from global forecaster AlixPartners LLP. The firm expects the industry to lose production of 7.7 million vehicles this year.
While automakers try to figure out how to prevent the current semiconductor supply crunch from happening again in the future since more chips will be needed for advanced vehicles, politicians are also working on ways to increase supply.
Members of the Problem Solvers Caucus, a bipartisan group of moderate members of the U.S. House, on Thursday pushed their colleagues to pass $52 billion in proposed funding for domestic semiconductor chips manufacturing.
They argued the funding is crucial to get the economy back on track and fortify U.S. supply chains. The vast majority of semiconductor chips are produced in Taiwan, and the instability of global supply chains has been put on display by shortages caused by the pandemic.
"Economic security is national security,” said Rep. Elissa Slotkin, D- Holly, a caucus press conference Thursday. “After what we've gone through as a nation on COVID, people have really gotten religion on that idea."
The funding includes $2 billion set aside for “legacy” chips used in auto manufacturing, a provision pushed for by Sen. Gary Peters, D-Bloomfield Township.
It is part of a larger bill aimed at increasing U.S. competitiveness with China, which passed the U.S. Senate earlier this year but has not yet been taken up in the House.
Rep. Haley Stevens, D-Rochester Hills, said that auto manufacturers were quick to answer calls to innovate amid the pandemic.
“We owe this to them,” she said. “The reality is in Michigan we have cars sitting in lots that are literally almost produced except they're missing their chips."
GM's new strategy
As vehicles continue to have advanced technology, GM sees "semiconductor requirements more than doubling over the next several years," Reuss said at the Barclays conference.
For this strategy, GM is working with a list of semiconductor companies, Reuss noted: Qualcomm Technologies Inc., STMicroelectronics, TSMC, Renesas Electronics Corp., onsemi, NXP Semiconductors and Infineon Technologies AG.
“That's quite a list and this will drive our margins higher, as we've discussed in our Investor Day," Reuss said. "But this this is a very unique and very integrated approach ... we've got a pretty broad platform of companies that will help us execute that strategy, so that's a big deal for us.”
Ford said in a release the "strategic collaboration," it has formed with GlobalFoundries, which does not include cross-ownership between the companies, will "advance semiconductor manufacturing and technology development within the United States, aiming to boost chip supplies for Ford and the U.S. automotive industry."
GlobalFoundries, or GF, is based in Malta, New York, and has 14 locations on three continents, according to its website. The company says it is "one of the world’s leading semiconductor manufacturers."
A non-binding agreement between Ford and GF would enable further semiconductor supply for Ford’s current vehicle lineup and joint research and development on chips that apply certain features in a vehicle, like in-vehicle networking, the automaker said.
The two companies would also look at expanding semiconductor manufacturing.
Washington correspondent Riley Beggin contributed.