Ford Gears up to Make Its Own Chips

Ford Teams Up With Global Foundries

Ford Motor (F) is getting into the semiconductor market. The automaker is fed up with chip shortages which have hurt its ability to churn out vehicles and capitalize on robust demand. Ford is partnering with the manufacturing company GlobalFoundries (GFS) to produce semiconductors.

Chip shortages have prevented vehicle manufacturers from producing millions of cars and trucks this year, so companies are looking for ways to improve the supply chain in order to prevent shortages in the future. That has resulted in several new deals between carmakers and semiconductor companies, but Ford is going further than many of its peers with its plans for securing chips. Down the road, Ford hopes to create some of the chips it uses in-house.

Ford Looks Ahead

Ford is tapping GlobalFoundries to boost its near-term supply of semiconductors. At the same time, the two companies are also working on higher-end semiconductors that would be used in more advanced vehicles in several years. Ford thinks designing its own semiconductors with GlobalFoundries will put it in a more competitive position in the growing EV and self-driving markets.

Ford is taking an aggressive approach to solving its chip shortage because it has been hit hard by the lack of chips and other supply-chain problems. In the near term, shortages should improve somewhat, but constraints are expected to remain in 2022. Amidst strong consumer demand, vehicle makers have to compete with electronics makers and other sectors for chips.

Vehicle Makers Chase Battery Production

Ford’s entrance into the chip-making market is the latest example of a vehicle company taking supply shortages into its own hands. As companies like Ford, General Motors (GM), and Volkswagen (VWAPY) race to produce EVs, they are running into battery constraints. Instead of being at the mercy of manufacturers, these auto companies are inking long-term supply agreements and bringing production in-house. They are pouring billions of dollars into ensuring they have a stable supply of the products they need.

Vehicle makers have been struggling with supplies of semiconductors and other materials for over a year. Constraints are not expected to go away in 2022, so companies are finding innovative solutions.

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