Ford Teams Up With Chip Giant GlobalFoundries to Boost US Semiconductor Supply

Ford logo is pictured at the 2019 Frankfurt Motor Show (IAA) in Frankfurt, Germany. Wolfgang Rattay/Reuters

Ford Motor Co. and U.S.-based chip maker GlobalFoundries have announced a strategic deal that will see the two companies join forces on seeking to boost semiconductor manufacturing and technology development within the United States.

The two companies said in a joint release that their “strategic collaboration,” based on a non-binding agreement that does not involve cross-ownership between the firms, would expand chip supply for Ford’s current vehicle lineup and entail joint research and development to address the semiconductor needs of the U.S. automotive industry more broadly.

“These could include semiconductor solutions for ADAS [Advanced Driver-Assistance Systems], battery management systems, and in-vehicle networking for an automated, connected, and electrified future,” the two firms said.

Ford and New York-based GlobalFoundries, which is the world’s third-biggest chip foundry by revenue, will also look for expanded semiconductor manufacturing opportunities within the United States, with the move coming amid a global chip supply crunch and calls by lawmakers on both sides of the aisle to ramp up domestic production capacity.

“It’s critical that we create new ways of working with suppliers to give Ford—and America—greater independence in delivering the technologies and features our customers will most value in the future,” Jim Farley, Ford president and CEO, said in a statement. “This agreement is just the beginning, and a key part of our plan to vertically integrate key technologies and capabilities that will differentiate Ford far into the future.”

Tom Caulfield, CEO of GlobalFoundries, called the agreement with Ford “a key step forward in strengthening our cooperation and partnership with automakers to spur innovation, bring new features to market faster, and ensure long-term, supply-demand balance.”

Just weeks ago, GlobalFoundries raised around $2.6 billion in an initial public offering (IPO), marking one of the biggest stock market floatations of the year in the United States.

The chip shortage has put a major dent in the output of motor vehicles, whose increasingly complex systems have made them more dependent on semiconductors. According to a September forecast from AlixPartners, a U.S. consulting firm, the chip crunch is now expected to cost the global automotive industry $210 billion in revenue in 2021, nearly double its previous projection of $110 billion in May.

Automakers worldwide, including Ford and General Motors, had warned of massive earnings cuts this year due to the chip shortage, though strong consumer demand and higher profits from record vehicle prices have offset some of the losses.

The chip shortage-driven auto production slump was the single biggest factor depressing U.S. economic output in the third quarter, shaving over 2 percentage points off the gross domestic production (GDP) number, which disappointed with its below-expectations print of 2.0 percent.