The global shortage of microchips continues to hurt auto makers in the industry, and the level of frustration within headquarters walls is increasing. Almost all manufacturers have had to cut production and / or remove features from certain models, and dealers are crossing their fingers and toes in hopes of having their inventory fattened soon.
From Germany to Japan via the United States, the situation is not rosy. Going into semiconductor manufacturing is one potential solution, but getting started is a daunting and expensive process. Most automakers are not prepared to go in this direction.
Ford, however, appears to have found what they believe is a solution, at least in the long term.
The company announced a partnership with US chipmaker GlobalFoundries, which owns one of the largest independent foundries in the world. The deal is for semiconductor development, and the two companies say it could eventually lead to joint production of chips in the United States. The partnership, which companies refer to as “strategic collaboration”, is still in its infancy and remains non-binding.
In addition, no investment has yet been announced. Still, what’s interesting is that this is one of the first partnerships of its kind to be announced.
Ford CEO Jim Farley is optimistic about the handshake deal. In a statement, he said independence of chip sourcing is vital to maintaining a constant flow of product to customers. He also believes the partnership could have positive effects outside of Ford’s walls. In his view, the deal is not only about chip development for the company’s vehicles, but also includes plans to “explore expanded semiconductor manufacturing opportunities to support the auto industry.”
Could we imagine a rival like General Motors buying chips from Ford when needed? Well maybe. We bet they would rather do that than just deliver vehicles without heated seats or steering wheels in 2022.
The Wall Street Journal, meanwhile, adds that Ford could potentially set up a dedicated chip manufacturing department to avoid shortages in the future. According to the publication, designing and producing its own chips in-house could allow the company to improve certain features of its vehicles, such as autonomous driving capabilities or battery systems for electric models.
The partnership between Ford and GlobalFoundries does not have a timeline. Nor should we expect Ford to fix its situation quickly with this deal. The objective here seems clear; to avoid such situations in the future.
Don’t be surprised to see similar deals made elsewhere in the industry. We’ve seen Hyundai take steps similar to Ford’s before; other automakers may already be looking for dance partners as we speak.