General Motors has signed a “first-of-its-kind” deal with GlobalFoundries (GF) to close supplies of critical semiconductors, a move to avoid the disruptions caused by the recent global chip shortage.
Under the agreement, GF will manufacture the chips at its semiconductor facility in New York state. The company, which is owned by United Arab Emirates sovereign wealth fund Mubadala Investment, has said it would invest $1 billion to build a second factory near its headquarters in Malta, New York.
Like all automakers, GM relies on computer chips to power a range of functions in its vehicles: everything from automatic seats and infotainment systems to more advanced automated functions. The deal with GF will boost the company, which is still feeling the effects of the chip shortage that plagued the auto industry for years during the pandemic.
Like all automakers, GM relies on computer chips to power a range of functions in its vehicles
In fact, a lack of available semiconductors caused GM to lose its top selling position to Toyota in 2021. The company also had to cut features from some vehicles, such as wireless chargers and HD radios, due to supply issues.
During the shortage, as factories shut down and vehicle deliveries were delayed, Washington lawmakers scrambled to pass legislation that would boost domestic semiconductor production. In August 2022, President Joe Biden signed the CHIPS and Science Act, a $280 billion package that includes $52 billion in funding to boost US manufacturing.
GM also says it is working with GF to “reduce the number of unique chips required to power increasingly complex and tech-laden vehicles,” the company said. “This strategy allows chips to be produced in higher volumes and is expected to offer better quality and predictability, maximizing the creation of high-quality content for the end customer.”
GM is trying to shut down its EV supply chain in the rush to make more batteries and meet rising customer demand. In addition to chips, the company has been trying to strike deals with lithium mining operations to fuel its need for more EV batteries. Recently GM said yes Invest $650 million in Lithium Americasgiving it exclusive access to the first phase of lithium production from Nevada’s Thacker Pass mine.
