GM locks in exclusive U.S. semiconductor chip production with GlobalFoundries

Automakers have struggled in recent years to secure the semiconductor chips needed in today’s modern and increasingly tech-laden vehicles. The shortage has chipped away at profits, periodically idled factories and left automakers with unfinished vehicles that consumers are ready to buy.

Now, GM has struck a deal with GlobalFoundries to alleviate that problem. The two companies announced Thursday a long-term agreement to dedicate an unknown amount of U.S. production capacity for GM’s chip supply. Neither company disclosing details of the agreement, including financials.

GlobalFoundries president and CEO Thomas Caulfield did say that the company will expand production capabilities at its New York factory exclusively for GM’s supply chain.

GM, like most other automakers, use suppliers to buy the chips it needs for the millions of vehicles it produces each year. This agreement secures some of GF’s manufacturing capacity that will be used by GM’s chip suppliers.

Image Credits: GlobalFoundries

The companies said in a joint release that this strategy will allow for chips to be produced in higher volumes and are expected to offer better quality and predictability.

“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain said in a statement. “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.”