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General Motors signs deal with GlobalFoundries for exclusive U.S. semiconductor production

Daniel Nenni

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Staff member
KEY POINTS
  • - GM has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips, the companies announced Thursday.
  • - The deal comes as automakers continue to battle through a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic.
  • - The exclusive production of chips for GM will be an expansion of the New York-based company’s operations, according to GlobalFoundries CEO Thomas Caulfield.

General Motors has signed a long-term agreement with GlobalFoundries to establish exclusive production capacity of U.S.-produced semiconductor chips, the companies announced Thursday.

The deal, which they’re calling an industry first, comes as automakers continue to battle through supply chain problems, including a yearslong global shortage of semiconductor chips that has sporadically idled factories during the Covid pandemic.

The chip manufacturer will establish dedicated production capacity exclusively for key auto suppliers of the Detroit automaker at its semiconductor facility in upstate New York, according to the companies.

“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,” Doug Parks, GM executive vice president of global product development, purchasing and supply chain, said in a statement.

The deal is a win for the Biden administration, which has been pushing for companies to reestablish American production of semiconductor chips, including the CHIPS Act that was signed into law in August.

Parks said GM expects its usage of semiconductors to more than double over the “next several years” as it increases the technological capabilities in its vehicles, specifically all-electric cars and trucks that require more chips than traditional vehicles.

The exclusive production of chips for GM will be an expansion of the New York-based company’s operations, according to GlobalFoundries CEO Thomas Caulfield.

The companies declined to disclose details such as cost and production timing. They expect the deal will enable chip production in higher volumes as well as offer “better quality and predictability, maximizing high value content creation for the end customer,” according to the release.

Automakers have historically not directly worked with chip suppliers. Instead, allowing their larger auto suppliers to handle such negotiations. However, the shortage of semiconductor chips has companies such as GM reaching further into their supply chains in an attempt to better secure parts for their vehicles.

Semiconductor chips are extremely important components of new vehicles for areas like infotainment systems and more basic parts such as power steering and brakes. Depending on the vehicle and its options, experts say a vehicle could have hundreds of semiconductors. Higher-priced vehicles with advanced safety and infotainment systems have far more than a base model, including different types of chips.

The origin of the chip shortage dates to early last year when Covid caused rolling shutdowns of vehicle assembly plants. As the facilities closed, the wafer and chip suppliers diverted the parts to other sectors such as consumer electronics, which weren’t expected to be as hurt by stay-at-home orders.
 
As I have mentioned before, if you have large amounts of software that works in concert with hardware you need to control your silicon and make your own chips. Apple started this business model with the iProducts years ago and Tesla brought it to automotive. For combustion engine and EV this may not be a problem but autonomous vehicles will have millions of lines of code running through them and that will require custom silicon.

Here is the PR from GF:


Notice the political content! Go Semiconductors!

“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. I have long said that Upstate New York’s semiconductor corridor will be a major engine powering America’s technological future, and now ‘Made in New York’ chips will help jumpstart the next generation of vehicles for GM across the country,” said U.S. Senate Majority Leader Charles Schumer. “Thanks to my CHIPS and Science Act, we are bringing manufacturing back to our country and America’s supply chains are being secured, creating good-paying jobs here in Upstate New York, not overseas. This partnership is yet another example that our nation’s future will be built in Upstate New York, with the Capital Region as a global center for the future of the microchip industry.”

New York Governor Kathy Hochul said: “We’re making New York State not only the semiconductor capital of the country — but of the globe. This agreement will help to further establish New York State as a major hub for semiconductor manufacturing. With our nation-leading Green CHIPS legislation and the new Governor’s Office of Semiconductor Expansion, Management, and Integration, we are helping businesses like GM and GlobalFoundries expand the chips manufacturing ecosystem in our state, creating jobs and opportunities for generations to come.”
 
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GM and Ford once upon a time had their own internal chip manufacturing capabilities. In fact GM shuttered their fab in Indiana just a few short years ago. What goes around comes around.
 
GM and Ford once upon a time had their own internal chip manufacturing capabilities. In fact GM shuttered their fab in Indiana just a few short years ago. What goes around comes around.
That fab was shuttered almost two decades ago. The digital technology at the time was 1 um and 2 metal layers.
 
GM and Ford once upon a time had their own internal chip manufacturing capabilities. In fact GM shuttered their fab in Indiana just a few short years ago. What goes around comes around.

Once upon a time all electronics based companies had their own fabs. They had no choice because we did not have the semiconductor manufacturing options we have today. Silicon Valley was littered with fabs and they polluted the air and ground water. If you really want to know why semiconductor manufacturing left the US is was the EPA cleaning the place up. Today it is much less of a problem. TSMC has a green initiative as do others:

 
One more question. Mercedes partnered with nVidia and later Qualcomm.
Mercedes also trying to do chips. Are Mercedes just co work with nvidia and Qcom or trying to do self driving chips along in the long run?

Factory shutdowns had nothing to do with any kind of Nvidia, or Qualcom chips
 
Which they do. Look up "Cruise" or "Supercruise" on the Google for more info.

Which is a terrible move economically. Not buying commodity stuff off the market dooms them to 2-4 times the wholesale rate.

This is the same fiasco Amazon got itself with their Gravitron chip. Their volumes pale to what AMD puts at TSMC, and their cost from AMD must be at least half their own for the lowest-end chips.
 
This is the same fiasco Amazon got itself with their Gravitron chip. Their volumes pale to what AMD puts at TSMC, and their cost from AMD must be at least half their own for the lowest-end chips.
The Graviton 3 is essentially a productization of an off the shelf demo chip by ARM, with the missing IO and DDR channels sourced in chiplet to further reduce AWS development costs. The roughly 4cm2 chip probably costs them about $300 with dev costs amortized, tested and packaged, which is likely cheaper than AMD. They were rumored to be purchasing more than half their sockets in G3 form for much of 2022, well over a million pieces, and converted a lot of their in-house services, storage and fabric controllers because that frees up the X64 silicon to sell to 3rd parties for revenue. The SKUs they launched were very simple including a much lower DRAM per core ratio than X64, further evidence of the project focus on cost saving.

The negotiating power this gave them with Intel and AMD to get better pricing probably more than paid for their engineering cost.

A couple of Chinese clouds did roughly the same thing, productized a 64-core configuration which was in the ARM catalog. That is, after all, how ARM is supposed to deliver advantage to licensees.
 
At 1m per year, it's only around 5500 wafers per year assuming 180 dpw
I think 180 dpw is too high, but yeah it is not a huge contract. Your point? Even adding the masks and dev it is definitely cheaper than AMD or Intel would sell for the equivalent sockets even at cloud-scale discounts - and as I pointed out, it wrestles those discounts even further down for all the other sockets.

Well, we will know if the stategy is working when we see - or do not see - a G4. Amazon will not repeat what did not cut costs.
 
Probably not much money unless GM develop their own self drive chips.
The GM self-driving chips better work on 12nm :)

Tesla Hardware 4.0 is going to be TSMC N4/N5, and 3.0 is already on N7

GM and the legacy makers are so behind though that just consolidating a lot of existing functions to something more modern would be a big win for them.. GF probably has some expertise that can help there, not even counting the subsidies..
 
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