Ford Motor Company Tackles the Global Semiconductor Shortage
As the demand increases for car makers to manufacture ever more connected and digitally enabled vehicles, so does the demand for the critical semiconductor chips required to facilitate such innovations.
It is unfortunate that we find ourselves in the midst of a global semiconductor shortage that is causing many makers of product makers reliant on them to revise production forecasts as manufacturing output slows to a crawl.
According to Fleet News, fleet operators and company car drivers are facing waiting times of more than a year for new vehicles, while many others being delivered are missing key features as a result of the semiconductor shortage, with some experts predicting the disruption could last until 2023.
A Global Issue
The causes of the semiconductor shortage are myriad and complex, but can be distilled down to a perfect storm of interlacing factors.
Intel, the world’s largest manufacturer of x86 CPUs for P,Cs and data centers, suffered significant production disruptions of its chips which resulted in delayed release of its newest 7nm chip in 2019/2020. This mounted great pressure onto other global semiconductor manufacturers.
Declining memory chip prices caused many top chipmakers to significantly reduce production during the same period.
Then the COVID-19 pandemic hit and demand for digital devices skyrocketed. Businesses around the world sought computers and networking technology to facilitate their staff working remotely, while people stuck at home under lockdown restrictions went on shopping sprees. While consumers bought everything from digital entertainment products, toys, and fitness products to curb boredom and stay healthy, the already fragile semiconductor market suddenly found itself under intense pressure to meet this unexpected increased demand.
Combine all this with the ongoing tech war between the United States and China -- which intensified under President Donald Trump and is continuing under President Joe Biden. Due to national security concerns, sanctions were levied against several big Chinese companies, including SMIC and Huawei, which further impeded semiconductor production.
Ford Motor Company
As one of the world’s largest manufacturers of cars and other vehicles, Ford Motor Company understands all too well how the global semiconductor shortage is affecting its ability to produce the kinds of connected and digitally transformed products modern customers desire.
However, never one to take a challenge lying down, Ford recently announced a new partnership with global leader in feature-rich semiconductor manufacturing, GlobalFoundries Inc. This partnership is expected to advance and accelerate semiconductor manufacturing and technology development within the United States, with the stated goal of boosting chip supplies for, not just itself, but the entire United States automotive industry.
"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," said Ford Motor Company President and CEO, Jim Farley in a press release announcing the collaboration. "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."
The non-binding agreement both parties signed, which does not include cross-ownership between the two companies, will allow GlobalFoundries to create a new semiconductor supply line for Ford’s expanding range of vehicles, and will empower both brands to collaborate on the research and development of semiconductor solutions for ADAS, battery management systems, and in-vehicle networking for the automated, connected, and electrified transportations of the future.
"GlobalFoundries is committed to building innovative alliances with the world’s leading companies to enable the features in products that are pervasive throughout people’s lives," said GlobalFoundries CEO, Tom Caulfield. "Our agreement with Ford is 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."
This partnership will have the dual benefit of supercharging Ford Motor Company’s digitally transformed manufacturing process and addressing the ongoing semiconductor shortage being felt by the entire industry.
Final Thoughts
The global semiconductor shortage will affect manufacturing for some time to come, and the responsibility falls on the biggest industrial players to try and produce innovative solutions to address the issue.
Demand for connected digital products is not likely to fall anytime soon – or ever – and semiconductors are an essential part of that process. Manufacturing brands would do well to follow Ford Motor Company’s lead and seek strategic partnerships to secure supply of these critical components.
You can hear more about how to find innovative solutions to current shortages at Connected Manufacturing Forum 2022, being held in July at the Rancho Bernardo Inn, San Diego, CA.
Download the agenda today for more information and insights.