General Motors is planning to make significant changes to its supply chain in the wake of the semiconductor chip shortage, which has already cut 800,000 vehicles from the automaker’s planned production so far this year.
GM CEO Mary Barra revealed the automaker’s plan to overhaul its supply chain in a live-streamed media event held Friday called Gaining Altitude, in which she appeared alongside Delta CEO Ed Bastian. Barra said the automaker did not previously buy chips directly from chipmakers, but it is now forging stronger relationships with the likes of Intel and NVIDIA to prevent a situation like the one it is currently facing from happening again.
Barra’s comments echo those of GM Chief Financial Officer Paul Jacobson, who said during a conference in June that the company is hoping to forge stronger relationships with chipmakers going forward.
“Whether we work with foundries to give longer-term commitments or we look to partnering with folks, we’re looking at all aspects of the supply chain to really ensure that something of this magnitude as it relates to chips doesn’t happen again,” Jacobson said.
While the COVID-19 pandemic is largely to blame for the chip shortage, demand for silicon wafers will remain high in the coming years as automakers continue to release technologically advanced vehicles with more onboard tech like large display screens and active safety systems.
Despite the setbacks, Barra believes GM can weather the storm and come out the other side with stronger supplier relationships and better access to chips – though it will take a while to fully subside.
“It’s a solvable problem, but it’s going to be here a little longer,” Barra said, as quoted by Bloomberg.
GM has been forced to shut down several plants this year due to chip shortages, some of which have remained offline since February. The automaker has been able to mitigate the effects of the shortage by prioritizing chips for its most popular vehicles, which include full-size trucks like the Chevy Silverado and GMC Sierra and full-size SUVs like the Chevy Tahoe and GMC Yukon.