Yahoo Finance General Motors (GM) and GlobalFoundries Announce Strategic Deal
US legacy automaker General Motors GM and GlobalFoundries GFS, one of the leading semiconductor manufacturers in the world, have joined forces to battle the global chip shortage that has become a cause of concern for automakers in recent years. Semiconductor chips are the core component of an electric and autonomous vehicle. This agreement will establish an exclusive dedicated capacity corridor for General Motors’ chip requirements.
GM has been using a lot of unique chips to power its intricate-technology vehicles. The new strategy is to reduce the number of chips while improving their quality and predictability to generate value for the end customer. The supply agreement entails GF manufacturing chips at its semiconductor facility in New York, helping to meet the auto giant’s microchip demand. GlobalFoundries will expand its production capabilities to strengthen GM's supply chain.
The federal and local governments’ policies like the bipartisan CHIPS and Science Act are encouraging such agreement to re-establish United States as a global leader in advanced technology. As we know, the landmark climate bill passed last year allows only those vehicles to become eligible for a tax credit if they are manufactured in North America and meet the raw material sourcing requirements. The latest agreement promotes domestic chip production, which is required for green vehicles.
The agreement has the potential to establish Upstate New York as a leading hub for semiconductor manufacturing, which is critical to the supply chain of the automotive industry. The 'Made in New York' chips will boost GM's next-generation vehicle production across the country. Notably, GM plans to roll out 30 fresh EV models by the end of 2025.
Doug Parks, GM Executive Vice-President of Global Product Development, Purchasing and Supply Chain, said “We see our semiconductor requirements more than doubling over the next several years as vehicles become technology platforms.” And "The supply agreement with GlobalFoundries will help establish a strong, resilient supply of critical technology in the United States that will help General Motors meet this demand, while delivering new technology and features to our customers."
Zacks Rank & Key Picks
GM currently carries a Zacks Rank #3 (Hold).
A few top-ranked players in the auto space include Wabash National WNC and BMW AG BAMXF, both sporting a Zacks Rank #1 (Strong Buy).
Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 24%, respectively.
BMW is a multi-brand automobile manufacturer that focuses on the premium segments of the worldwide automobile and motorcycle markets. The Zacks Consensus Estimate for BAMXF’s 2023 sales implies year-over-year growth of 1.88%.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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General Motors Company (GM) : Free Stock Analysis Report
Wabash National Corporation (WNC) : Free Stock Analysis Report
Bayerische Motoren Werke AG (BAMXF) : Free Stock Analysis Report
GlobalFoundries Inc. (GFS) : Free Stock Analysis Report
