Stellantis announced that it has signed contracts with several semiconductor manufacturers to secure supply for vital chips in their electric vehicles.

Demand for portable electronics surged during 2020 as many companies and businesses migrated to remote work. In conjunction with a demand surge, the semiconductor industry saw supply chain issues lead to a large deficit between available chips and overall demand.

The resultant chip shortage had a knock-on effect on automakers, highlighting supply chain risks. Automotive OEMs such as Stellantis are now more actively looking to protect their supply chains and mitigate risks by establishing long-term contract agreements with various chipmakers, thereby securing a stable supply of semiconductor chipsets.

Microchips, sometimes dubbed the “new oil”, are increasingly seen as of vital importance for geopolitical, economic, and military security.  Semiconductor demand is expected to continue to grow thanks to their use in every complex electronic application. Meanwhile, supply risk concerns are becoming more apparent with China recently placing a ban on exporting certain gallium and germanium products (used in semiconductor manufacturing), the Netherlands announcing a new rule restricting exports of semiconductor equipment, and the USA imposing export restrictions of chipmaking technologies since the end of 2022.

Stellantis expects semiconductor shortages to re-emerge given the growing demand for electric vehicles at a time of increased geopolitical risk. To mitigate those risks, Stellantis is inking deals with Infineon Technologies, NXP Semiconductors and Qualcomm, among others, and is setting up a semiconductor database with order plans that stretch years into the future. Stellantis expects to spend US$11.2Bn through 2030 to secure various kinds of semiconductors. Meanwhile, the company is also working with AiMotive and SiliconAuto to develop its own semiconductors.