GM inks long-term supply deal with Global Foundries to manufacture microchips

With a global chip shortage that is exacerbated by conflicts in Ukraine and in East Asia as well as supply chain issues brought by the previous pandemic, car manufacturer GM has finally learned its lesson and is starting to source crucial parts in the United States.

In a recent joint statement by the companies, they announced that the strategic, long-term partnership between General Motors Co. and GlobalFoundries will create a dedicated capacity corridor just for GM’s chip supply.

While in previous years the US automaker has been souring chips from China and Taiwan among many other top sources of semiconductors, it has now set its sights in acquiring parts from GlobalFoundries own semiconductor plant in upstate New York.

This partnership also helps GM achieve its goal of lowering the number of distinctive chips required to power increasingly sophisticated and technologically advanced automobiles. Using this approach, chips may be created in greater quantities and are anticipated to provide improved quality and predictability, maximizing the generation of high-value content for the end user.

In recent years, semiconductors have taken the spotlight in the worldwide chip shortage that has hit the industry over the past couple of years. They are also considered the backbone of the technologies fueling the electrification, autonomous driving, and connectivity of the auto industry, particularly the growing EV industry.

“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing, and Supply Chain.

“The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help GM meet this demand while delivering new technology and features to our customers.”

The company executive, however, did not provide specifics on the length of the agreement or the financial side behind the construction of the semiconductor manufacturing facility.

“At GF we are committed to working with our customers in new and innovative ways best to address the challenges of today’s global supply chains,” said Dr. Thomas Caulfield, president, and CEO of GlobalFoundries (GF).

“GF will expand its production capabilities exclusively for GM’s supply chain, enabling us to strengthen our partnership with the automotive industry and New York State, while further accelerating automotive innovation with U.S.-based manufacturing for a more resilient supply chain.”

The New York region’s economy will also advance thanks to this groundbreaking agreement between GlobalFoundries and General Motors, which will also ensure that Upstae New York maintains its position as one of the nation’s leading centres for semiconductor production, and an important component the auto industry’s supply chain.

“‘Made in New York’ chips will now assist GM around the nation in launching the next generation of automobiles, as I have long predicted that Upstate New York’s semiconductor corridor will be a vital engine fueling America’s technological future,” stated U.S. Senate Majority leader Sen. Charles Schumer. Headds the latest development will be highly beneficial in “accelerating automotive innovation with U.S.-based manufacturing for a more resilient supply chain.”

“Thanks to my CHIPS and Science Act, we are bringing manufacturing back to our country and America’s supply chains are being secured, creating good-paying jobs here in Upstate New York, not overseas. This partnership is yet another example that our nation’s future will be built in Upstate New York, with the Capital Region as a global center for the future of the microchip industry,” Schumer added.

“We’re making New York State not only the semiconductor capital of the country — but of the globe,” said New York Governor Kathy Hochul.

“This agreement will help to further establish New York State as a major hub for semiconductor manufacturing. With our nation-leading Green CHIPS legislation and the new Governor’s Office of Semiconductor Expansion, Management, and Integration, we are helping businesses like GM and GlobalFoundries expand the chips manufacturing ecosystem in our state, creating jobs and opportunities for generations to come.”

GF is responding to the global demand for semiconductors through a series of strategic long-term agreements with existing and new customers and simultaneously expanding global capacity to meet customer demand in partnership with federal and local governments.

Supportive policies like the bipartisan CHIPS and Science Act are encouraging the onshoring of semiconductor production and reestablishing the U.S. as a global leader of this critical technology.