Stellantis signs $11b of microchip contracts

STELLANTIS has secured a staggering $US11 billion ($A16.1b) in future microprocessor provisions with a range of contracts from multiple manufacturers it hopes will secure supply until the end of the decade.

Predicting ongoing uncertainty in the availability of the valuable electronic components – as vehicle software functions and new energy vehicle demands increase – Stellantis executive Joachim Kahmann told Automotive News that he expects semiconductor shortages to re-emerge as an ongoing issue for vehicle manufacturers across the globe.

Mr Kahmann said he believed the current respite in microprocessor demand will be short-lived, with a return to severely stretched supplies to “increase dramatically” over the coming years.

“In the last two years, the huge diversity of semiconductors in cars meant we had multiple issues everywhere, and once we solved one topic, a new topic popped up,” he said.

As Stellantis and other manufacturers shift towards more complex vehicles, Mr Kahmann predicts any shortage “may impact not only one or two of our plants, but maybe five, six or seven”.

He said protracted bottlenecks in supply, the likes of which were seen following the COVID-19 pandemic, are likely far from over, with global chip capacity remaining “constrained”.

To help mitigate those risks, Stellantis is signing contracts with microprocessors including Infineon Technologies, NXP Semiconductors and Qualcomm, among others, and is setting up a semiconductor database with order plans that stretch years into the future, Automotive News said.

The Stellantis executive said its new supply agreements cover silicon carbide chips that help to extend the range of EVs, computing chips to operate EVs, and high-performance computing chips that will provide infotainment and autonomous driving assistance functionality.

He said the company is also working with AiMotive and SiliconAuto to develop its own semiconductor, potentially alleviating its reliance on external manufacturers.

But Mr Kahmann warned that the industry is not out of the woods as far as the potential interruption from microprocessor supplies is concerned.

He said growing political tensions with China have the potential to create another severe crimp in the flow of microprocessor supplies, with exports of specific metals used in the production of semiconductors and other components likely to be restricted.

He said China’s restrictions on the export of gallium and germanium should be manageable but said growing tensions with China “is a definite topic”, adding that Stellantis is working to reduce its dependence on both Chinese and Taiwanese semiconductor supplies.

“For now, the chip situation is much improved, with sufficient supply for the second half of the year,” said Mr Kahmann.

“Though it is just a matter of time before the before the next bottleneck comes up.”