GlobalFoundries signs deal with GM to provide chips for vehicles
GlobalFoundries announced it has signed a long-term agreement with General Motors Co. to make computer chips for the automaker’s vehicles at its Fab 8 factory in Malta.
The deal not only helps secure a steady and important revenue stream for GlobalFoundries but also makes it more likely that the company will eventually move forward with its plans to expand its manufacturing capacity at Fab 8 and potentially build a second factory in Malta.
The financial terms of the deal were not revealed.
The deal is also the latest example of the power of the CHIPS and Science Act, a $52 billion semiconductor manufacturing subsidy program designed to expand chipmaking in the United States and bring back chip production that has been taking place in Asia.
Under the agreement, GlobalFoundries will start making chips for GM suppliers at Fab 8. It is unclear where chips for GM’s vehicles are made, although the announcement indicates that it currently happens outside the U.S.
“We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms,” said Doug Parks, GM’s 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.”
Although the CHIPS Act provides billions of dollars in federal subsidies to entice companies like GlobalFoundries to expand their manufacturing operations (a new chip factory can cost between $5 billion and $10 billion), GlobalFoundries CEO Tom Caulfield has said in the past that it also needs to land new customer supply orders that can justify the additional capacity.
GM says that GlobalFoundries will be able to reduce the number of unique chips used in its cars, allowing it more control over quality and volume.
“At GF we are committed to working with our customers in new and innovative ways to best address the challenges of today’s global supply chains,” Caulfield said. “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.”
GlobalFoundries announced in 2021 that it had negotiated a nonbinding agreement with Ford to “address” chip manufacturing issues and research. The GM deal appears to be much more substantial and definitive.
“This first-of-its-kind agreement between GlobalFoundries and General Motors is going to drive the Capital Region economy forward and ensure upstate New York remains in the driver’s seat as one of the nation’s leading hubs for semiconductor manufacturing that is so critical to the supply chain of the auto industry,” Senate Majority Leader Charles Schumer said in a statement. Schumer was the architect of the CHIPS and Science Act.
