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Ford Motor Ties Up With Global Foundries for Car Chips

Ford will address the semiconductor shortage by making its own chips with Global Foundries.

Automaker Ford  (F) - Get Ford Motor Company Report on Thursday said it partnered with chipmaker Global Foundries to address the global semiconductor chip shortage, which has led to production delays for its vehicles.

“It’s 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,” Ford President and Chief Executive Jim Farley said in a statement.

“This agreement is just the beginning, and a key part of our plan to vertically integrate key technologies and capabilities that will differentiate Ford far into the future," Farley added.

Shares of the Dearborn, Mich., company on Thursday traded 0.6% higher at $19.8.

"Our agreement with Ford is 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," said Global Foundries Chief Executive Tom Caulfield.

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Financial terms of the deal were not disclosed.

"The joint-development work is aimed at producing higher-end chips that would go into vehicles several years out," The Wall Street Journal reported.

Global supply chain shortages have affected everything from cars to home appliances for nearly two years, due to the coronavirus pandemic.

According to an early-November report from the South China Post, the worldwide semiconductor supply shortage “is among the most urgent issues the US government is focused on,” said Matt Murray, a senior official in the Bureau of Economic and Business Affairs at the State Department.

Traditionally, the raw materials for the semiconductor business have often come from Japan and Mexico, with the chips made in Taiwan, China and some in the U.S.