Volkswagen, STMicroelectronics to Produce Semiconductors

German automaker Volkswagen announced an alliance with microchip productor STMicroelectronics to design and distribute a new semiconductor. This program comes in direct response to the global scarcity of microchips that is affecting the automotive industry.

The new chip will be produced by Taiwanese company, Taiwan Semiconductor Manufacturing Company (TSMC). This decision also supports Volkswagen’s investment in technology. Back in May 2022, Volkswagen’s unit Cariad had announced it would source microchips from US semiconductor maker Qualcomm to develop autonomous driving software, which is one of the companies’ strategies in the future.

“We will get system-on-chips (SoCs) designed to enable assisted and automated driving functions up to Level 4 from Qualcomm, an expert in chip design with over 140,000 patents,” said Herbert Driess, Chief Executive, Volkswagen.

Semiconductor shortages have deeply affected the global automotive industry. Automotive production in Mexico has also been delayed by rising inflation and constant supply chain interruptions due to the lack of critical materials such as semiconductors, said Guillermo Rosales, Executive President, Mexican Association of Automobile Distributors (AMDA).

Mexico expects to sell over 1 million vehicles during 2022, said Rosales. During the first half of 2022, the country sold 518,424 units, as reported by MBN. However, supply chain disruptions are still holding automotive plants back. “If we did not have this impact on the production and distribution chain, this year we could have placed 1.08 million,” said Rosales, to El Heraldo.

While production has risen steadily, the numbers are still far from the 3.8 million vehicles assembled during 2019, before the COVID-19 pandemic. It is estimated that this level of production could resume by 2025, according to Statista. The automotive industry is critical to the Mexican economy as “in the growth projections of the global economy, we see all the possibilities for the automotive sector. In the world ranking of FDI inflows, Mexico still has a privileged position as investments have entered the automotive sector and also other industries,” said González, as reported by MBN.

He also explained that Mexico occupies a privileged place in the global automotive industry but the sector needs some mechanisms to keep growing, such as other countries that have embraced environmentally friendly regulations. This would allow production plants to operate with green energy.