German automaker Volkswagen has begun sourcing chips critical to its strategy directly from 10 chipmakers, including NXP Semiconductors, Infineon Technologies and Renesas Electronics, in order to cope with a global chip shortage, according to the company on Wednesday.
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Volkswagen said that in the past the company relied on its component suppliers to source chips, but since October last year it has been signing supply agreements directly with chipmakers to secure its supply.
Dirk Grose-Lohaid, head of purchasing for Volkswagen’s passenger car brand, said, “The global market is running out of capacity, and we have to act.”
The automotive industry’s demand for chips has skyrocketed with the production of electric vehicles and the need for increasingly complex software, and the construction of chip factories has lagged behind supply due to complexity.
It is noted that last July, Volkswagen and STMicroelectronics, a Franco-Italian joint venture chipmaker, announced a partnership to develop a new type of semiconductor, marking the first time Volkswagen has had a direct relationship with a Tier 2 and Tier 3 semiconductor supplier.
The Berlin government has also been luring the world’s largest foundry chipmakers with billions of euros in subsidies. This year, Intel and TSMC both announced plans to build plants in Germany. Volkswagen does not have a direct supply relationship with TSMC, the world’s largest foundry chipmaker, but meets with TSMC every few weeks to communicate its needs. Volkswagen also plans to reduce the types of chips it needs for its cars to simplify its supply chain, which will also help streamline its software offerings.
