Volkswagen signs supply agreements directly with chip manufacturers to deal with global chip shortages

CTOnews.com, August 24 (Xinhua)-- German carmaker Volkswagen said on Wednesday that in order to deal with the global chip shortage, the company has begun purchasing chips critical to its strategy directly from 10 chip manufacturers, including NXP Semiconductor, Infineon Technology and Renesas Electronics.

Tuyuan Pexels Volkswagen said it used to rely on its component suppliers to purchase chips, but since October last year it has signed supply agreements directly with chip makers to ensure its supply security.

Dirk Grosser-Loeder, head of procurement for the Volkswagen passenger car brand, said: "the global market is insufficient and we have to take action."

With the production of electric vehicles and the demand for increasingly complex software, the demand for chips in the automotive industry is increasing rapidly, while the construction of chip factories lags behind the supply because of complexity.

CTOnews.com noted that in July last year, Volkswagen and Franco-Italian chipmaker St announced a partnership to develop a new type of semiconductor, the first time Volkswagen had established a direct relationship with secondary and tertiary semiconductor suppliers.

The Berlin government has also been using billions of euros in subsidies to attract the world's largest contract chipmaker. This year, both Intel and TSMC announced plans to build factories in Germany. Volkswagen does not have a direct supply relationship with TSMC, the world's largest contract chipmaker, but meets with TSMC every few weeks to communicate its demand. Volkswagen also plans to reduce the number of chips needed for its cars to simplify its supply chain, which will also help simplify its software products.