After nearly two years of a global shortage of semiconductor chips that crippled new-car production across the industry, General Motors has locked in exclusive production of a significant portion of the chips it will need for future cars.
GM and GlobalFoundries, a global manufacturer of semiconductor chips, on Thursday announced a long-term agreement where GF will make the key components in chips, including the semiconductor wafer. That wafer will be sent to a semiconductor chip supplier, who will complete the finished chip. That chip goes to a parts supplier, such as brake-maker Bosch, which puts it in an electronic braking system that is then sent to GM for its vehicles.
The chip components will be made in the United States at GF’s advanced semiconductor facility in Malta, New York, which is about 25 miles north of Albany.
“This long-term agreement helps us establish a dedicated supply of semiconductor chips going forward,” GM spokesperson Dan Flores said.
Flores declined to provide specifics on the length of the agreement or the financials.
GF CEO Thomas Caulfield said the company will expand its production exclusively for GM’s supply chain, which enables GF to strengthen its partnership with the auto industry and it will be “accelerating automotive innovation with U.S.-based manufacturing for a more resilient supply chain.”
More:GM to invest $650 million in lithium mining company in US
More:GM salaried workers should expect smaller bonuses: How formula works
Semiconductor chips, used in a variety of car parts, are the foundation of the technologies that power electrification and autonomous driving. GM is rolling out 30 new EVs globally in the next two years. The chips fell into short supply after demand for laptops and small electronics soared during the pandemic.
GM said this agreement with GF reflects the automaker’s strategy to reduce the number of unique chips needed to power increasingly complex and tech-laden vehicles, which GM President Mark Reuss laid out in 2021. At that time, Reuss said GM was working with seven chip suppliers on new designs of chips that would be capable of handling more than the current chips and would be made in North America, The strategy will allow for chips to be produced in higher volumes and offer better quality.
“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.”
Contact Jamie L. LaReau: jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter.