General Motors has reached an agreement with a large computer chip maker to help ensure it has a steady supply of semiconductors as it ramps up production of electric vehicles and complex components that require increases in computing power.
Under the agreement, the chip maker, GlobalFoundries, agreed to set aside a portion of its manufacturing capacity exclusively to make chips for G.M.
The automaker plans to introduce more than two dozen electric vehicles around the world over the next two years. Large numbers of chips are used in internal-combustion vehicles as well.
General Motors is increasing the number of vehicles equipped with advanced driver assistance systems that use cameras, radar and other sensors to allow hands-free driving under certain conditions.
Doug Parks, G.M.’s executive vice president of global product development, purchasing and supply chain, said in a statement that the company expected its need for computer chips to double over the next several years.
“The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the U.S. that will help G.M. meet this demand, while delivering new technology and features to our customers,” he added.
The companies did not disclose the financial terms of their agreement.
G.M. has been working to reduce the varieties of chips it uses, and to cut the number of chips needed in each vehicle. The automaker hopes to develop single chips that can handle computation that is done by multiple chips today. Its long-term goal is to use only three classes of chips.
Several chip makers are building plants and expanding production in the United States with the help of funding from the CHIPS and Science Act, which President Biden signed into law last year.
Intel has announced plans to invest $20 billion to build two plants in Ohio, and Micron Technology says it will spend up to $100 billion on semiconductor manufacturing near Syracuse, N.Y. Taiwan Semiconductor Manufacturing Company is expanding its operations in Phoenix, at a cost of some $40 billion.
Based in Malta, N.Y., north of Albany, GlobalFoundries operates chip factories formerly owned by IBM, and is hoping to secure funding to support its expansion plans. In November, its chief executive, Thomas Caulfield, said GlobalFoundries wanted to increase output at a plant near Malta and another in Burlington, Vt., and to build a new production area at an existing plant in Malta.
He said the company aimed to submit its proposal to Washington early this year.
Automakers have been struggling with a computer chip shortage for the last two years and at times have had to idle plants while waiting for new supplies. In 2021, Ford Motor reached an agreement with GlobalFoundries to collaborate on designing chips to help improve its supplies.
Analysts, however, say tight supplies will linger because automobiles use relatively simple chips and semiconductor manufacturers are investing more heavily in expanding production of advanced chips that generate more profit for them. It also takes about three years to build a new chip factory and bring it into production.
Automakers are likely to struggle to build sufficient inventories of chips if E.V. sales take off, according to a recent report by Bank of America Global Research. “Shortages persist in key areas,” the bank said.