Faced With Supply Shortages, Ford Enters The Chip Business

Ford Motor Co. is in talks with a computer chip maker to increase its supplies of semiconductors and prevent a repeat of its factory closures this year caused by shortages of these components. Few details of the non-binding agreement with GlobalFoundaries Inc. were released, but the deal is intended to boost supply with automotive-grade chipset development. And it could lead to joint manufacturing to support the auto industry, the companies said in a statement Thursday. Ford has been particularly hard hit by the global chip shortage that has hit nearly every automaker.

Like other companies, Ford has had to temporarily close its plants and has even built vehicles without some computers for later installation. The company’s sales in the United States fell 27% between July and September, and it lost 2.4 percentage points of market share, largely because it was unable to produce enough vehicles to meet consumer demand. “This agreement is just the beginning and a critical part of our plan to vertically integrate key technologies and capabilities,” said CEO Jim Farley, who is pushing Ford to further develop its supply chain to ensure parts keep flowing.

Spokeswoman Jennifer Flake said the companies are in the “memorandum of understanding” phase of their relationship but want to work together to design chips and possibly leverage their manufacturing expertise. The chip shortage dates back to early 2020 when automakers around the world were forced to close their factories to slow the spread of the coronavirus. Factories were back online ahead of schedule with security measures, but by then many chipmakers had moved production to consumer electronics, which was in high demand.