September 26, 2023
Ford Motor Co. and U.S.-based chip maker GlobalFoundries have signed a strategic partnership to see both companies work together to improve semiconductor technology development and manufacturing in GlobalFoundries in the United States. The two firms said in the form of a┬ájoint announcement┬áthe “strategic collaboration,” based on a non-binding arrangement that does not require ownership of the two firms in a cross-ownership arrangement and will expand the supply of chips for Ford’s existing vehicle lineup. They will also include jointly developed research and development to more broadly meet the requirements of semiconductors and the U.S. automotive industry.“These could include semiconductor solutions for ADAS [Advanced Driver-Assistance Systems], battery management systems, and in-vehicle networking for an automated, connected, and electrified future,” both companies stated.

Ford and the New York-based GlobalFoundries, the third largest chip foundry in terms of sales, are also searching for opportunities to expand manufacturing of semiconductors in the United States, with the move occurring amid a global supply crisis and calls from lawmakers from both sides to boost the production capacity of domestic producers.

“It’s critical that we create new ways of working with suppliers to give Ford–and America–greater independence in delivering the technologies and features our customers will most value in the future,” Jim Farley, Ford’s chief executive officer, stated in an announcement.┬á“This agreement is just the beginning, and a key part of our plan to vertically integrate key technologies and capabilities that will differentiate Ford far into the future.”

Tom Caulfield, CEO of GlobalFoundries, called the deal to sign with Ford “a key step forward in strengthening our cooperation and partnership with automakers to spur innovation, bring new features to market faster, and ensure long-term, supply-demand balance.”

A few weeks ago, GlobalFoundries raised around $2.6 billion through an initial public offering (IPO), one of the most extensive stocks that went public this season in the United States.

The shortage of chips has caused an immense dent in motor vehicle production, and their ever-complicated systems are now more dependent on semiconductors.┬áAccording to a forecast for September by AlixPartners, a U.S. consulting firm, the chip shortage will cost the world’s automotive industry $210 billion in revenue by 2021. That’s more than double the forecast of $110 billion as of May.

Automobile manufacturers worldwide, including Ford and General Motors, had warned of massive cuts to earnings this year because of the shortage of chips. Still, the strong demand from consumers and higher profits from record-high prices of vehicles have helped offset some losses.

The car production slump caused by a shortage of chips was the primary cause of lowering U.S. economic output in the third quarter, slicing two percent off of the domestic gross product (GDP) figure that was disappointing with its lower-than-expected figure of 2.0 percent.

Tom Ozimek has broad experience in journalism and deposit insurance, as well as communications and marketing, as well as adult education.┬áThe most effective advice for writing he’s ever received comes from Roy Peter Clark: ‘Hit your mark’ and leave the top to the end.’

 

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