General Motors Co (GM) President Mark Reuss said on Thursday that the company will co-develop semiconductors with several producers to make chips that can handle more electronic features in its vehicles, a revamp of strategy that comes as a shortage of chips disrupts the global auto industry.
GM currently uses a wide assortment of semiconductors in its cars. It now plans to reduce the types of chips it uses to just three families of semiconductors over the next several years. That would reduce the variety of chips GM orders by 95 percent, making it easier for producers to fulfill the company’s needs and boosting margins, Reuss said at the Barclays Auto Conference.
Reuss said that GM needs to cut down on semiconductor complexity because the rapid increase in high-tech functions in its new models, along with the company’s rapid push toward electric vehicles, means the automaker needs a greater amount of chips.
“We see the semiconductor requirements more than doubling over the next several years as the vehicles we produce become more of a technology platform,” Reuss said.
GM will be working to develop the chips with Qualcomm Inc, STMicroelectronics NV, Taiwan Semiconductor Manufacturing Co (台積電), Renesas Electronics Corp, ON Semiconductor Corp, NXP Semiconductors NV and Infineon Technologies AG, Reuss said.
The Detroit automaker last month reported its third-quarter sales fell 33 percent and profits were almost half what they were a year ago because of lost production due to a lack of chips. GM CEO Mary Barra said last month that she expects the semiconductor shortage to last into the second half of next year.
Separately, Ford Motor Co, responding to a global semiconductor shortage that has crimped profits and production, plans to explore buying chips directly from GlobalFoundries Inc.
The automaker said on Thursday that it is forming a “strategic collaboration” with GlobalFoundries, which went public in a US$2.6 billion listing last month and recently moved its headquarters from California to Malta, New York, where it is expanding a foundry to add capacity.
“If everything progresses as we hope, Ford and GlobalFoundries will team up to grow the supply for Ford’s current vehicle lineup, and also do R&D work together,” said Chuck Gray, vice president of embedded software and controls for the Dearborn, Michigan-based automaker. “It’s an important step in our plans to vertically integrate key technologies.”
The chip shortage has dented profits at automakers including Ford, and cost the global auto industry US$210 billion in lost production, according to the consulting firm Alix Partners. The crisis has also forced auto executives to rethink their supply-chain strategies and consider in-house chip design as computing and software become central to modern vehicles.
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