Ford on Thursday morning outlined a strategic agreement with U.S.-based semiconductor manufacturer GlobalFoundries Inc. to develop chips, a pact that could eventually lead to joint U.S. production (F).

GM later said it was forging ties with some of the biggest names in semiconductors—including Qualcomm Inc. and NXP Semiconductors NV—and has agreements in place to co-develop and manufacture computer chips.

“We feel like we can really boost our product performance and our tech independence at the same time,” said Chuck Gray, Ford’s vice president of vehicle embedded software and controls.

Part of the agreement with GlobalFoundries is intended to enhance near-term chip supplies for Ford, which has been hit especially hard by the supply crunch relative to many other automakers. The joint-development work is aimed at producing higher-end chips that would go into vehicles several years out, Mr. Gray said.

Building a serious chip-design operation will be far from a simple undertaking for Ford. Designing sophisticated semiconductors with their minute transistors is a difficult discipline that typically takes companies years to master.

Even before the pandemic jacked up demand for chips, semiconductor companies were complaining of an acute shortage of qualified engineers. Ford will be competing for talent not just against chip companies like Intel and Nvidia Corp., but also deep-pocketed tech companies like Amazon.com Inc. and Apple Inc. that are increasingly designing chips in house.

Photo by Tim Mossholder on Unsplash

Bottleneck Issues

One key problem for automakers is they need older chips. 

The existing manufacturers do not want to ramp up production or make capital investments for chips that will soon be unneeded and useless.

The automakers are reluctant to use newer chips over testing concerns. 

What manufacturer wants a recall of all their vehicles due to some unforeseen chip issue? 

Time Time Time

With at tip of the hat to Simon and Garfunkel, I wonder: By the time manufacturers ramp up old chips, will they even be needed?

GM's Goal - Eliminate Chips 

GM also wants to reduce the number of unique microprocessors needed to power increasingly complex and tech-laden vehicles by 95%. To do this, it plans to develop with partners three core families that use similar architectures, Mr. Reuss said. These chips can then be produced in higher volumes and offer better quality and predictability, he said.

GM's long-term goal is to get rid of 95% of the chip designs and get rid of older chips entirely while having no chip design experience (GM). 

GM's short-term goal is to ramp up the production of chips that will soon be obsolete. 

Time will tell how this strategy will work out.