BMW is looking to secure its chip supply - inks several deals

The BMW Group is exploring new ways of working with suppliers and, in the case of strategically important components, becoming more closely involved in the supplier network. In order to secure semiconductor supplies for the long run, the German auto group has concluded a direct supply assurance agreement with INOVA Semiconductors and GlobalFoundries. With the agreement the BMW Group is guaranteed the supply of several million microchips per year. These microchips will be used in the ISELED smart LED technology co-developed by the BMW Group, which will be deployed for the first time in the BMW iX and rolled out in further models. “We are deepening our partnership with suppliers at key points in the supplier network and synchronising our capacity planning directly with semiconductor manufacturers and developers. This improves planning reliability and transparency around the volumes needed for everyone involved and secures our needs for the long term,” says Dr Andreas Wendt, member of the Board of Management of BMW AG responsible for Purchasing and Supplier Network in a press release. “This pioneering agreement marks the next logical step in securing our supplies in an even more balanced and proactive manner going forward.” Depending on the equipment options, every car contains several thousand of semiconductors that are essential for all electronic devices. They serve various functions by performing arithmetic and control tasks in computers, storing data or even handling multiple tasks at the same time. The share of electronic components in vehicles is likely to increase further in the future. Bu just to illustrate this, let use an example; lets look at the cost contribution of electronics to a new cars total cost; back in 2000, that number was about 18%, today, electronics account for 40% of a new car's total cost, according to a Deloitte analysis. “This agreement directly with an OEM certainly marks new territory for us as a semiconductor manufacturer,” adds Robert Kraus, CEO of INOVA Semiconductors. “But we firmly believe this innovative approach to partnership throughout the production chain will help us achieve our objectives: In this way, we can secure supplies for our end customers and ensure high planning reliability throughout the long chip production cycles. It’s a real win-win.” “This supply assurance agreement with the BMW Group and INOVA demonstrates how the companies are partnering to develop innovative smart LED technology for the new BMW iX and to develop new technologies for the car of tomorrow,” says Mike Hogan, senior vice president and general manager of Automotive, Industrial and Multi-market at GlobalFoundries.