Ford Redesigning Parts To Use More Accessible Chips, Weighing Direct Deals With Chip Foundries

[Wolf Man]

By Ben Klayman

DETROIT (Reuters) -Ford Motor Co, in response to the global semiconductor shortage, is redesigning automotive components to use more accessible chips, the No. 2 U.S. automaker's chief executive said on Thursday.

Jim Farley, speaking at Ford's online annual shareholder meeting, also said the company is weighing other strategies for the future, including building a buffer supply of chips and signing supply deals directly with the foundries that make the wafers used in semiconductors.

Automakers typically get their chips through their largest suppliers, not dealing directly with chip makers and the foundries that make the wafers used to assemble the semiconductors.


The chip shortage has caused automakers globally to curtail production. Last month, Ford said the issue would cost it $2.5 billion this year and halve its vehicle production in the second quarter, when the shortage will be at its worst. The shortage has forced Ford at times to idle production of its highly profitable F-150 pickup trucks.

Farley said on Thursday that about 60% of the chips used in Ford's vehicles are 55-nanometer or larger, what he called "mature nodes". He said supply of those chips was constrained.

Longer-term changes about how Ford approaches chips are being considered, he said.

"Not only are we redesigning a lot of our components to work with chips that are more accessible ... but we think we need to look at buffer stocks, actual direct contracts with some of the foundries," Farley said. "We think that's going to be a really critical approach to our supply chain as we get more electronic components."

Ford Executive Chairman Bill Ford also said on Thursday the automaker will look to reinstate the company's dividend "as soon as possible."

Ford's dividend was suspended in March 2020 after the COVID-19 coronavirus pandemic hit in a move to conserve cash. That saved the company $2.4 billion at an annual rate.

Ford shares were up 3% in morning trading.

(Reporting by Ben Klayman in Detroit;Editing by Elaine Hardcastle)

Sponsored

 

[spectre446]

I hope we don't end up with some half assed design to be used with second tier chips. I'm definitely buying an extended warranty on my truck. I wouldn't be surprised if chip makers are lowering their standards to pump out more chips or increasing tolerances.

 

[Wolf Man]

Comments like: "The company is weighing other strategies for the future, including building a buffer supply of chips", makes me think Oh Really Dumbasses? You couldn't have thought of this before the crisis? I knew it was only a matter of time before The Just In Time supply mentality bites manufacturers in the ass. So instead of possibly losing some I dunno let's say a couple of million on having too many parts not being used, including the computer chips that eventually get sold off to someone else for less money or even dumping them, you'd rather spend several million now to play catch up and alienate your customers and even lose some in the meantime? Yeah that makes a lot of sense! What the heck kind of business degrees did you guys get anyway? Bottom line though is any loss now will just lead to higher prices for the consumer and higher profits for the companies later.

 

[Pedaldude]

I can almost guarantee that some third rate manufacturers that normally stick with building knock-off products sold on Wish will be trying to step up and supply the automotive industry.

It's also too bad that Ford has all but abandoned the base model truck because they know they can make more money selling porked up luxury vehicles. While EPA regulations guarantee the need for fuel injection, a manual transmission and transfer case would at least eliminate a couple modules. Then there's the required SRS module for the airbags, the required reverse camera and I don't think the lawyers would let vehicles leave the factory without antilock brakes or traction control. Bottom line is though, I think they wouldn't be hurting as much if they weren't pushing multimedia productivity screens for every model and treating the base models like a redheaded stepchild.

I considered an XL with wind up windows and no cruise control or sync but it made zero sense because there were no rebates and there are rarely any incentives. So it would have cost only slightly less and I wouldn't have even gotten power adjustable mirrors. The way Ford has everything rigged, the Lariat seems like the best value.

 

[Uncle_Booty]

This was a ploy playing to the shareholders and the market. And it worked - 3% jump.

Sponsored