Ford Partners With GlobalFoundries To Increase Chip Supply

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Newly manufactured Ford Motor Co. 2021 F-150 pickup trucks await missing parts in Dearborn, Michigan, March 29, 2021.

Rebecca Cook | Reuters

Ford Motor plans to increase its short- and long-term supply of semiconductor chips through a new partnership with GlobalFoundries.

The Detroit-based automaker and New York-based chip supplier announced on Thursday that it has signed a non-binding agreement for a strategic partnership to increase Ford’s supply of chips through GlobalFoundries.

Officials said the merger could eventually result in new chip designs specifically for Ford and increased domestic production and supply of chips for the entire auto industry.

“We are working to reinvent our supply chain,” Chuck Gray, vice president of embedded software and vehicle controls at Ford, told CNBC in a telephone interview. “It will really help increase our independence.”

The companies declined to discuss financial details of the deal or how much GlobalFoundries will increase supplies to Ford in the near term. This collaboration does not imply cross ownership between the two companies. Gray described the talks as being in their “early stages.”

Mike Hogan, senior vice president and general manager of automotive at GlobalFoundries, said the deal is part of a multi-pronged approach for the company to improve the supply of chips to the automotive industry.

“There will be some capacity expansion in the short term… but it’s about building a different future,” Hogan said in the joint interview. “The automotive industry is at the heart of our strategy.

The partnership comes as automakers like Ford continue to grapple with a global semiconductor chip shortage that has sporadically caused plant closures over the past year. It is also following the Biden administration urging companies to create land-based manufacturing supply chains, including semiconductor chips.

“This agreement is just a start and a key part of our plan to vertically integrate key technologies and capabilities that will differentiate Ford in the future,” Ford CEO Jim Farley said in a statement.

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