General Motors, the largest automaker in the United States, saw a large decline in sales in 2020, largely in part due to the crippling supply chain shortages that came with the COVID-19 pandemic. GM’s yearly sales revenue dropped by 10.75% in 2020, nearly $15 billion dollars. Since then, GM has recorded strong growth in revenue year-over-year, but chip shortages and disruptions are a constant threat. 

GlobalFoundries is a multinational semiconductor chip contract manufacturer based in Malta, New York. As of 2021, GF is the world’s fourth largest chip manufacturer and accounts for over 7% of all semiconductor manufacturing worldwide. 

The Relationship Between Automakers and Semiconductor Fabs

Semiconductors have become a critical part of most features we have come to expect in modern cars, from entertainment screens to brakes and safety sensors.  

In the past, automakers have opted to work through suppliers to procure microchips. And generally, suppliers would give priority to those automakers. However, due to the ongoing semiconductor shortages, companies like GM are beginning to establish their own relationships to secure their future supply of chips. 

This long-term deal between General Motors and Global Foundries will result in the production of semiconductor microchips used in all vehicles and help drive the development of autonomous driving technology for GM by 2023. Simultaneously, the risk of GM’s chip supply being disrupted will drop dramatically.

Doug Parks, General Motors’ executive vice president of Global Product Development, Purchasing and Supply Chain announced: “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.“