TAIPEI -- Top U.S. contract chipmaker GlobalFoundries said it is on track to at least double its automotive chip output this year in response to an unprecedented global supply crunch and will spend a further $6 billion to expand overall production capacity.
The company warned, however, that its expansion plans will only start to bear fruit from 2023 and that the car industry will continue to face chip shortages "well into next year."
"We've been making great strides in creating more automotive capacity in 2021, and we will ship more than double the [chip] wafers into automotive than we did in 2020, and we expect to expand that capacity in 2022 and beyond," Mike Hogan, a senior vice president in charge of the automotive business at GlobalFoundries, said on Wednesday.
The company is investing "more than $6 billion" globally to increase capacity, he added, with $4 billion earmarked for expanding its site in Singapore and $1 billion each for expansions in the U.S. and Germany. "All of these wafers can be used for automotive applications," he said.
The executive warned, however, that the chip supply crunch will "extend well into next year as it takes quite a while for new investments to turn into capacity, and the overall lead time for silicon [chips] to make it into the auto manufacturers is also quite long."
GlobalFoundries expects its major investment plan in Singapore, for example, will not start churning out chips until sometime in 2023.
The latest remarks by GlobalFoundries -- a key chip production partner for automotive suppliers including Bosch, Volkswagen, NXP and Infineon -- come as the supply crunch hits some of the world's biggest automakers. Toyota and Volkswagen are among those that have been forced to cut production due to supply constraints as well as fresh waves of COVID-19 infections in Southeast Asia that have further disrupted the supply chain.
The overall car industry is also expected to see a continuing surge in chip demand to power in-car features such as infotainment and navigation systems, cameras and self-driving technology.
GlobalFoundries -- which is owned by Abu Dhabi's sovereign wealth fund Mubadala Investment Co. -- has rushed to heed the call of U.S. and European governments seeking to bring semiconductor production onshore due to national security concerns. The contract chipmaker based in Malta, New York, is also a key manufacturer of radio-frequency chips for Qualcomm and Qorvo, as well as a major supplier for Advanced Micro Devices.
GlobalFoundries CEO Tom Caulfield recently said the chip industry as a whole needs to double production output in the next decade to address lingering shortages and growing government concerns over supply chain security.
Its biggest rival Taiwan Semiconductor Manufacturing Co. said earlier this year that it has been making at least 60% more chips for automotive applications this year. TSMC is also launching its biggest ever expansion plan at a cost of $100 billion over the next three years to help alleviate the chip shortage and capture new chip demand.