Benzinga | Nov 18, 2021 10:55AM EST

Ford Teams With GlobalFoundries On Semiconductor Manufacturing Pact

Ford Motor Company (NYSE:F) and semiconductor manufacturer GlobalFoundries Inc. (NASDAQ:GFS) have entered into a partnership designed to boost chip supplies for Ford and the U.S. automotive industry.

What Happened: The new partnership involves a non-binding agreement that enables GlobalFoundries to expand the semiconductor supply for Ford's current vehicle lineup while joining with the automaker in joint research and development to address the need for an increased chips volume to meet the automotive industry's needs, including semiconductor solutions for ADAS, battery management systems and in-vehicle networking.

Furthermore, the companies will explore what they described as "expanded semiconductor manufacturing opportunities to support the automotive industry."

No financial aspects or timeline for the partnership were announced, and the companies added their collaboration did not involve cross-ownership.

Related Link: Toyota Debuts bZ4X All-Electric Vehicle

Why It Happened: The semiconductor shortage has been blamed for a slowing of automobile manufacturing and sales during the course of the year. Ford President and CEO Jim Farley stated it was "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."

GlobalFoundries CEO Tom Caulfield added that the new pact with Ford was "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."

GlobalFoundries is headquartered in Malta, New York, and was launched in 2009 when Advanced Micro Devices Inc. (NASDAQ:AMD) separated its chip-production operations into a standalone entity. The company is owned by Mubadala Investment Co., an investment office within Abu Dhabi's government, and conducted its initial public offering on Oct. 28.

Price Action: Share of GlobalFoundries are trading higher by 5.4% to $66.10 at press time, while Ford shares are down 0.8% to $19.80.

Photo: Marcus Wong / Wikimedia Commons