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Global semiconductor shortage drives small producers

(Bloomberg) – The global semiconductor shortage that is disrupting production for automakers, from Toyota Motor Corp. to Volkswagen AG, is turning into a growth opportunity for a global chipmaker. Globalfoundries factories Inc. is working at an unprecedented rate and prioritizes manufacturing auto chips to meet demand, said Mike Hogan, who heads the company’s automotive business unit. The corporation, wholly owned by the Abu Dhabi sovereign wealth fund, expects revenue from the sector to double this year. “We are having record production and what we are spending to increase that production is double what we spend in 2020, ”Hogan said in an interview. The auto industry needs all the help it can get to address a supply shortage that is putting auto plants around the world at risk. Production plummeted during lockdowns that were put in place last year to contain the spread of Covid-19, but demand recovered much faster than expected. That presents a challenge for Globalfoundries and its largest company, Taiwan Semiconductor Manufacturing Co., which need months to produce the chips while still having to satisfy the voracious appetite of smartphone, game console and computer makers. Automakers such as Toyota, VW, Daimler AG, Nissan Motor Co. Honda Motor Co., Ford Motor Co. and Fiat Chrysler Automobiles NV have warned that chip shortages are affecting their production. Consumer electronics companies, including Apple Inc. generally occupy much higher capacity in foundries than automakers, as the annual smartphone market is more than 1 billion devices, compared to fewer than 100 million cars. Globalfoundries, which runs factories in the US. , Germany and Singapore account for 7% of the global foundry market, according to TrendForce data. Taiwan TSMC dominates with a 54% stake. The companies are responsible for manufacturing a significant portion of the world’s semiconductors and serving automotive chip companies, including Infineon Technologies AG. Complex Manufacturing Supplying to the automotive sector in the short term has become “very complicated”, in part because The semiconductor industry’s lengthy manufacturing process means customers could be penalized for wrongly anticipating demand, Hogan said. Globalfoundries is doubling its capital expenditures this year as it expands its offerings to automakers, he said. Hogan said the shortage affecting the auto industry is “relatively manageable” in the long run because overall sector demand remains small compared to other industries. “I think this will cause the automotive market to see how important semiconductor technology is to their interests,” he said. “The automotive industry, like the smartphone industry and the computer industry, will end up spending more time with foundry partners to make sure someone has secured the capacity that is required today, tomorrow, and after tomorrow.” Original Note: Carmakers Crying Out for Chips Fuels Growth for GlobalfoundriesFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source. © 2021 Bloomberg LP

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