The Supply Chain Matters blog highlights strategic supply announcements from two U.S. auto makers for supply of semiconductor devices.

U.S. automakers, Ford Motor Company and General Motors, are wasting little time in efforts to address semiconductor micro controller and sensor shortages that have impacted overall output and revenue growth in 2021


Ford Motor Company

Ford entered into a termed early-stage strategic supply agreement with Global Foundries to develop future microprocessors in a pact that reportedly will lead to joint production in the United States. “strategic collaboration” will address both short and longer-term microprocessor supply network needs.

New York based Global Foundries was formed in 2009 when Advanced Micro Devices spun-off its semiconductor chip manufacturing business in 2009. According to reporting by The Wall Street Journal, this collaboration should improve Ford’s technical capabilities while providing for dedicated future semiconductor production domestically.

Specific terms relative to Ford’s sourcing investment were not disclosed.

According to business media reports, Ford aims to eventually move semiconductor microprocessor designs in-house. This is a model that prevails among large high tech and consumer electronics providers.

Ford recently announced the appointment of Doug Field, a former Apple and Tesla execution to the role of Advanced Technology and Embedded Systems Officer. Regarding appointment, Ford CEO Jim Farley had indicated to reporters: “This is a monumental moment in time—a moment in time that I think we have now to really remake a 118-year-old company.”

Such efforts appear to be now underway.


General Motors

North America President Mark Reuss told an investor conference last week that U.S. automaker General Motors is working with seven semiconductor chip suppliers on three new families of microcontrollers that will reduce the number of unique chips by as much as 95 percent on future vehicles. Reuss indicted that the new microcontrollers will consolidate many of the functions now handled by individual chips, will reduce cost and complexity, as well as help in predictability.

The supplier partners include Infineon, NXP Semiconductor, ON Semiconductor, Renesas, STM Electronics, TSMC, and Qualcomm.


Additional Perspectives

Supply Chain Matters continues to highlight the strategic coming together of high-tech and automotive supply networks as global automakers continue in transforming their business models to focus on hybrid or electronic powered vehicle line-ups with eventual autonomous driving capabilities.

Strategic supply network moves for battery sourcing and now semiconductor sourcing are indeed an emulation of strategies undertaken by high tech manufacturing companies.

In a blog commentary published in August, this Editor opined our belief that global automakers will come to grips as to whether each manufacturer needs to foster a more direct relationship with key strategic semiconductor suppliers or continue reliance on designated Tier One suppliers for that relationship. This has always been a challenge for high-tech producers and during times of strategic supply shortfalls. High tech OEM’s have tended to take control the direct relationships with key semiconductor suppliers over that of contract manufacturers.

The notions that are evolving indeed emulate the strategic sourcing strategies high tech product producers exercise to assure direct control of key components, often in cases where Tier One and lower tier suppliers are actually performing the manufacturing of key components or sub-systems. This assures more control and shared component design of overall products, along with assuring strategic supplies.


Bob Ferrari

© Copyright 2021, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.