The global microchip shortage continues to hurt automakers across the industry, and the level of frustration within HQ walls is mounting. Nearly all manufacturers have had to cut back on production and/or remove features from certain models, and dealers are crossing their fingers and toes in hopes of having their inventories fattened soon.
From Germany to Japan to the United States, the situation is not rosy. Getting into semiconductor manufacturing is a potential solution but it is a daunting and expensive process to get off the ground. Most automakers aren't ready to move in that direction.
Ford, however, appears to have found what they believe is a solution, at least for the long-term.
The company has announced a partnership with U.S. chipmaker GlobalFoundries, which owns one of the largest independent foundries in the world. The agreement is for the development of semiconductors, and according to the two companies, it could eventually lead to joint chip production in the United States. The partnership, which the companies call a “strategic collaboration”, is by the looks of it in its early stages, and it remains non-binding.
What’s more, there’s yet to be announcement of any investment. Still, what is interesting is that this is one of the first partnerships of its kind to be announced.
Jim Farley, Ford's CEO, is optimistic about the handshake deal. In a statement, he said that chip supply independence is vital to maintaining a steady stream of products to customers. He also believes the partnership could have positive effects outside of Ford walls. In his view, the agreement is not only about developing chips for the company's vehicles, but also includes plans to “explore expanded semiconductor manufacturing opportunities to support the automotive industry”.
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Could we imagine a rival like General Motors buying chips from Ford, should the need arise? Well maybe. We’d wager they would prefer to do that rather than settle for delivering vehicles without heated seats or steering wheels in 2022.
The Wall Street Journal, meanwhile, adds that Ford could potentially set up a dedicated chip-making department to avoid shortages in the future. According to the publication, designing and producing its own chips in-house could allow the company to improve certain features of its vehicles such as autonomous driving capabilities or battery systems for electric models.
The partnership between Ford and GlobalFoundries does not come with a timeline. Nor should we expect Ford to resolve its situation quickly with this agreement. The objective here seems clear; to avoid such situations in the future.
Don’t be surprised to see similar deals made elsewhere within the industry. We've already seen Hyundai take similar steps to Ford's; other automakers may already be hunting for dance partners as we speak.