Ford and GlobalFoundries partnership aims to cut into chip shortage

On Thursday, Nov 18, Ford Motor Company and GlobalFoundries announced an initiative to boost the supply of much-needed semiconductor microchips for US manufacturing. The two companies will collaborate “to advance semiconductor manufacturing and technology development” at home in the U.S. with the goal of boosting quantities in the supply chain and taking back control.

According to the joint press release, the agreement is non-binding. However, a partnership between America’s oldest carmaker and a leading semiconductor manufacturer could give Ford the edge in production as the industry becomes increasingly reliant on technology.

With GlobalFoundries’ ability to innovate and manufacture arguably the most in-demand components in the supply chain, not just for automotive but for personal computers, smartphones, and such, Ford will have access to chips for producing “solutions for ADAS, battery management systems, and in-vehicle networking for an automated, connected, and electrified future”.

Ford president and CEO Jim Farley said of the collaboration, “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. 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.”

The partnership does not involve any stake in ownership across the two companies.

The type of domestic collaboration the industry needs

With the Ford-GF partnership, there is likely very little relief coming in the next several months. Previous ventures by other manufacturers including Intel have said it takes 12 to 18 months to retool a production line to produce the necessary chips for automakers. However, the long-term effect of collaboration such as this will reduce American manufacturing dependence on overseas factories.

For example, a tense trade conflict with China has the potential to disrupt the supply of chips out of the world’s top-producing nation, Taiwan. The country is home to as many as 65% of the world’s semiconductor chip foundries. Should China want to put pressure on the US, shutting the door to production or shipping could effectively shut down the industry on American soil, sending carmakers scrambling for other solutions. With multiple manufacturing locations worldwide including a handful in the US, an alliance with Ford will help to mitigate any issues that can develop.

GlobalFoundries CEO Tom Caulfield said, “GF is committed to building innovative alliances with the world’s leading companies to enable the features in products that are pervasive throughout people’s lives. Our agreement with Ford is 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.”

There’s no word on how quickly the partnership will begin to affect the shortage for Ford’s production lines. The press release also mentions that the partnership will “explore expanded semiconductor manufacturing opportunities to support the automotive industry” as a whole, but it’s a safe assumption that Ford production will take priority as supply becomes available.

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