On Thursday, General Motors Co and the world's leading semiconductor manufacturer GlobalFoundries Inc announced a long-term deal for semiconductor chip production. This will help prevent their shortage which contributed to a halt in car manufacturers’ operations during the Covid pandemic.
GlobalFoundries mentioned that agreement was signed for at least three years and is considered the first of its kind. According to the deal, the company is supposed to manufacture for GM's key semiconductor chip suppliers at their manufacturing facility in upstate New York.
This big announcement came two days after President Joe Biden in his State of the Union address praised the adoption of the CHIPS and Science Act which provides $52 billion to catalyze American semiconductor research. Its primary goal is to bring chip manufacturing back to the United States. It also unveils a new approach for automakers to secure semiconductors.
Supporting manufacturing in the United States makes the company competitive when seeking a portion of that funding, said Tom Caulfield, the Chief Executive Officer at GlobalFoundries.
The automaker is currently working to optimize the number of unique chips in its cars. At the same time, the company provides its suppliers with a chance to manufacture chips as their total number is expected to increase.
“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms," said Doug Parks, Executive Vice President at GM, Global Product Development, Purchasing, and Supply Chain.
Last week, GM’s competitor Ford Motor Co said that its inability to purchase chips along with other issues related to the supply chain led to a $2 billion net profit loss in the fourth quarter as compared to the company’s forecasts.
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