With cars getting more and more sophisticated and demanding more and more computing power, the scarcity of chips for electronic equipment (also called semiconductors) bothered automakers and halted vehicle production worldwide.
THE Ford acted on Thursday 18 to address this challenge and announced a collaboration that could give the company more control over the supply and development of its processors – the brains needed to control engines, transmissions, brakes, infotainment systems and more .
The automaker said it signed an agreement with the US semiconductor supplier GlobalFoundries to collaborate on the development of chips for Ford vehicles, and that the companies will study how to expand chip manufacturing in the U.S.
Chuck Gray, Ford’s vice president for in-vehicle software and controls, said that even with the new partnership, the automaker expects the supply of chips to remain uneven for some time. “We still think there will be problems next year,” he said.
But the executive added that working with GlobalFoundries should allow Ford to start developing some of its own computer chips.
industry in transformation
Until recently, many automotive components could easily be controlled by generic computer chips. But that’s no longer the case as manufacturers add increasingly complex features such as battery monitoring, advanced driver assistance systems and network services.
“Computer power is the new measure of (car) power,” Gray said. “The demand for computing power is now so high, and we need the right chips to do the right things.”
In recent years, American automakers have hired thousands of software developers and programmers. Gray said Ford is now looking to bring in chip designers as well. “In the near future, we will be building this (the ability to develop processors),” he said.
the competitor General Motors (GM), which owns the Chevrolet brand, is also taking steps to better control chip development and availability. GM President Mark Reuss said on Thursday that the company expects the number of semiconductors used in vehicles to double in the coming years. As a result, he says, GM is working with chip makers to develop three types of microprocessors to handle nearly all of their computing needs.
The moves are part of a strategy to reduce the number of chip varieties by 95 percent and should help increase chip supply while significantly cutting costs, Reuss told an automotive technology conference hosted by Barclays, the bank. of investment. “We are going to lead the industry with this,” he said. “And that will generate quality and predictability.”
To secure supplies of new chips made from a higher-efficiency material called silicon carbide, GM reached an agreement last month with wolfspeed, a company formerly called Cree which is building a factory in the state of New York.
Reuss said GM talks to many key suppliers to secure enough chips to keep its factories running. Shortages of processors and stoppages in the production of laminates at car factories have left dealerships with low inventories of new vehicles.
Ford and GM reported that new-vehicle sales fell by about a third in the United States in the three-month period ended in September, hurting their earnings.
future of cars
Mike Hogan, GlobalFoundries’ senior vice president in charge of its automotive business, said discussions with Ford initially focused on securing essential chips for today’s auto production. But talks have expanded into other areas, including allowing Ford to obtain advance information about the chip production processes that could shape the car’s characteristics, such as how far away a car is to be. electric vehicle can go through.
“Historically, there have always been a lot of intermediary companies between us and a company like Ford,” Hogan said. The automaker’s move to get more involved in chip technology modeling “is a great example of the kinds of changes that will be seen,” he said.
The other question is where the future pieces will be made. Most high-end chips are produced by Taiwan Semiconductor Manufacturing Company (TSMC), which is by far the largest make-to-order chip maker. But the interruptions in the supply logistics of the Asia because of the pandemic made politicians worry about dependence on factories in Taiwan, especially in view of the territorial claims of the China over the island.
Therefore, the US Senate overwhelmingly approved a $52 billion subsidy package aimed at spurring the construction of more chip factories in the United States, although that funding was the subject of partisan disputes in the House.
GlobalFoundries was formed in part through acquisitions of factories that previously belonged to the chip maker Advanced Micro Devices (AMD) and the IBM, both from the USA. It made an initial public offering of shares in October and is investing heavily to expand its production.
Although 89% of the company’s ownership is owned by the government of Abu Dhabi, GlobalFoundries manufactures confidential chips for the Pentagon in factories in Vermont and in upstate New York. It has a high-volume factory near Albany, also in New York state, and hopes to double production capacity with the help of the Congressional funding package if it passes, said Hogan, the company’s vice president. Making chips in the United States, he said, is definitely part of the deal with Ford.
High complexity chain
The semiconductor industry is worth $500 billion a year and its supply chain is extremely complex, especially for chips used in cars. Top vendors include companies like NXP Semiconductors and STMicroelectronics at Europe, Renesas Electronics, at the Japan, and onsemi and Microchip Technology, In the USA. These companies have factories to make some chips that they design, but they also outsource some of the manufacturing.
Automakers have always relied on an intermediary group of suppliers – the so-called Tier 1 companies, which buy the chips to produce electronic modules that handle specific functions in cars, such as controlling engines and transmissions.
Handel Jones, who directs the consultancy International Business Strategies specialized in the chip market, says it has advised automakers to follow the example of companies from the Silicon Valley, such as apple, which designs some of its leading chips and advises other companies on both how to design and how to make the processors.
“They will look to suppliers to ensure that production capacity is protected,” Jones said in a recent interview.
THE Infineon Technologies, a chip maker based in Munich, in Germany, and leading supplier to the Auto Industry, has partnerships with the Volkswagen and the Hyundai to develop semiconductors that increase the range and reduce the charging time of electric vehicles. It is also among the chip makers working directly with General Motors.
Ford and GlobalFoundries said they plan to continue discussions on how to increase chip production in the United States. They declined to go into details or say whether Ford could invest in a new semiconductor factory with GlobalFoundries.
Thomas Caulfield, chief executive of GlobalFoundries, said the deal will encourage innovation and “will ensure a balance between supply and demand over the long term.”
The car industry’s shortage of chips originated at the beginning of the pandemic, when car factories closed for about two months to prevent the spread of the coronavirus among workers. At the same time, sales of computers and video games soared, and technology companies increased orders for semiconductors. When automakers resumed production, chip suppliers had little available capacity to service them.
Ford was particularly hit earlier this year because a chip factory for one of its major suppliers had to close after a fire. In the second quarter, the American automaker was only able to make about half of the vehicles it initially expected, although its chip supply has improved since then.