Ford Announces Partnership to Assure Steady Flow of U.S.-Made Chips
The automaker will team with GlobalFoundries on producing and developing semiconductors, crucial parts that have been in short supply.,
Ford Motor announces a partnership to assure a steady flow of U.S.-made chips.
A Ford Motor factory in Dearborn, Mich., in September. Ford production has been hobbled this year by shortages of semiconductors.Credit…Rebecca Cook/Reuters
By Neal E. Boudette and Don Clark
Nov. 18, 2021, 12:38 p.m. ET
About two months ago, the chief executives of Ford Motor and GlobalFoundries, a semiconductor supplier, spent several hours discussing the chip shortage vexing automakers and disrupting production around the world.
On Thursday, the companies revealed the result of that meeting — a collaboration aimed at increasing chip manufacturing in the United States and improving Ford’s supply of the critical parts.
Ford said in a statement that it and GlobalFoundries had signed a nonbinding agreement to collaborate on developing chips for Ford vehicles, and that the companies would explore ways of expanding U.S. chip production.
“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,” Ford’s chief executive, Jim Farley, said. “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 companies plan to continue discussions about specific ways to increase the output of chips in the United States. They declined to elaborate or say if Ford might invest in a new semiconductor factory with GlobalFoundries. The current memorandum of understanding does not call for a cross-shareholding between the companies.
Thomas Caulfield, GlobalFoundries’ chief executive, said the agreement would foster innovation and “ensure long-term supply-demand balance.”
Ford and other automakers have had to idle vehicle plants intermittently this year because they have been unable to get enough computer chips — the brains needed to control engines, transmissions, brakes, infotainment systems and more.
General Motors is also having discussions with chip companies about ways to secure enough chips to keep its factories running. “We are specifically working on a strategy to make sure that we are not seeing these types of constraints in the medium term and certainly in the long term,” G.M.’s chief executive, Mary T. Barra, said on a conference call last month.
The auto industry’s chip shortage stems from the beginning of the pandemic, when auto plants closed for about two months to prevent the spread of the coronavirus among workers. At the same time, sales of computer and game consoles soared, and their producers increased semiconductor orders. When automakers resumed production, chip suppliers had little capacity available for them.
Ford was particularly hard hit earlier this year because a chip plant owned by one of its key suppliers was shut down by a fire. In the second quarter, it was able to make only about half as many vehicles as it originally expected, although its supply of chips has steadily improved since then.
GlobalFoundries was formed in part through acquisitions of plants formerly owned by the chip maker Advanced Micro Devices and IBM. It had an initial public offering of stock in October and is investing heavily to expand its output.
Mr. Farley visited Mr. Caulfield in September at GlobalFoundries headquarters near Albany, N.Y., to discuss how the companies could cooperate, according to a person familiar with the matter.