Home » Economy » US Ford GM declares ‘semiconductor self-sufficiency’… Samsung Electronics Impact?

US Ford GM declares ‘semiconductor self-sufficiency’… Samsung Electronics Impact?

Ford and General Motors (GM), the two largest automakers in the US, are jumping into the development and production of semiconductors for vehicles. As production continues to be disrupted due to a shortage of semiconductors for vehicles, automakers have decided to build a stable supply and demand environment by making their own semiconductors. It also revealed its will to realize ‘technology independence’ by applying its own semiconductors to automobiles that have introduced advanced technologies such as autonomous driving.

According to the Wall Street Journal (WSJ) on the 18th (local time), Ford announced that it had signed a strategic alliance with GlobalFoundry, an American semiconductor company, to develop semiconductors for vehicles. Ford said the two companies could jointly produce semiconductors in the United States in the future. The two companies also agreed to develop semiconductors specialized for Ford cars and increase the supply of semiconductors to the automobile industry as a whole.

GM also announced on the same day that it is building a cooperative relationship with major semiconductor companies such as Qualcomm and NXP and has agreed to jointly develop and manufacture semiconductors.

The reason Ford and GM are directly engaged in semiconductor development is that as the semiconductor crisis prolongs, a sense of crisis has established that they must strengthen their own procurement capabilities. The automobile industry has been experiencing production disruptions for over a year due to the global supply of semiconductors for vehicles. GM and Ford, which were hit directly by the semiconductor supply shortage, plunged 40% and 23% in the third quarter compared to the same period last year, respectively. The auto industry expects that the semiconductor shortage will continue from the first half of next year to the next year. Ford explained that this semiconductor development cooperation could prevent a shortage that could recur in the future. GlobalFoundry CEO Tom Caulfield also emphasized that the deal with Ford “will ensure a long-term balance of supply and demand.”

The WSJ commented on the entry of the two major US automakers into the semiconductor industry, “Completed car makers have been procuring key parts through external suppliers for decades, but recently they are overturning this policy.” It is interpreted that the trend of automakers entering the electric vehicle battery and vehicle semiconductor industry one after another is as if returning to the past when automakers directly operated steel mills and owned large parts companies.

At the same time, Ford and GM also expressed their intention to achieve ‘technological independence’ with self-developed semiconductors. “We’re working to reinvent our supply chain,” said Chuck Gray, Ford’s vice president, “to simultaneously increase our production capacity and technological independence.”

Automotive semiconductors are used to control various functions in automobiles, from engine calibration to airbags. In order to apply new technologies such as autonomous driving, multimedia environment, and fault detection remote software, more high-performance semiconductors are required and the price is high. Strategy Analytics, a market research firm, analyzed that the average cost of semiconductors for vehicles at the level 2 level of autonomous driving technology (activation of assistive systems in certain situations) is $160-180 on average. However, he said that when it goes up to level 5 of autonomous driving technology (completely autonomous driving, unmanned driving possible), the cost of semiconductors jumps sevenfold to $1,150 to $1,250.

GM President Mark Royce explained in a conference call, “We are promoting cooperation with semiconductor companies as one of the ways to simplify the complex production structure and increase profits.” “Demand for automotive semiconductors will more than double in the next few years,” said Royce, explaining that GM’s vehicles are advancing technologically. Jose Muñoz, Hyundai Motor’s global chief operating officer (COO) also said last month, “In order to reduce dependence on semiconductor manufacturers, Hyundai also wants to be able to develop its own chips within the group.”

Global automakers are making aggressive investments to preoccupy not only semiconductors but also batteries for electric vehicles. Major automakers such as Ford, Volkswagen and GM are already building factories around the world in cooperation with battery makers. Semiconductor companies are also expanding their investments in the automotive semiconductor business.

Infineon, which has the largest market share in automotive semiconductors, is developing semiconductor technology that shortens the charging time of electric vehicles in partnership with Volkswagen and Hyundai Motors.

Intel announced that it plans to focus on producing automotive semiconductors at its semiconductor plant in Ireland, and Qualcomm announced that it would expand its automobile business from $1 billion a year to $10 billion in 10 years. Qualcomm has signed a semiconductor supply contract for next-generation autonomous vehicles with BMW of Germany.

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