General Motors is getting into the chip business.
After months of chip shortages have crippled the world's largest automakers' production, costing the industry hundreds of billions of dollars in lost revenue, GM said that it is partnering with seven chip makers to design the silicon necessary to reduce the number needed and improve their quality.
GM has plans for three types of microcontrollers, an older type of chip used in cars for things such as braking and power windows. One of the families of microcontrollers planned could account for more than 10 million units a year, GM President Mark Reuss said on an investor call Thursday.
"We see the semiconductor requirements more than doubling over the next several years as the vehicles that we produce become more of a technology platform," Reuss said on the investor call Thursday. "What we're looking at doing and what we're going to do is a new strategy that will actually reduce the number of unique microcontroller units, or MCUs, required by 95% to the industry-leading levels."
Microcontrollers have proven one of the most problematic chips for the automakers to obtain during the recent shortages, in part because manufacturers produce the vital chips with aging machines. Chip companies typically expand capacity after the market demonstrates it can support the capital spending needed to build new plants, and are even more reluctant to expand capacity in older fabrication sites.
The chip crunch has been further exacerbated for automakers because features such as assisted driving and multimedia systems also need more powerful chips. Electric vehicles and hybrids typically contain a higher quantity of chips to run the more advanced systems.The greater number of semiconductors required and the supply shocks have prompted other automakers to more tightly vertically integrate. On Thursday, GM rival Ford unveiled a partnership with contract semiconductor manufacturing company GlobalFoundries.