Chips Ahoy: BMW Inks Deal With New Supplier

While we’re sure the vast majority of our readers think of Ponch and Jon when they hear the word ‘chips’, there’s no denying the world’s automakers would probably rather never hear the term again as it relates to car parts. After weathering a severe shortage of the things, BMW thinks it has a solution: Shacking up with a semiconductor manufacturer and a semiconductor foundry.

Seeking to ward of any future production calamities, BMW has signed a so-called ‘direct supply assurance agreement’ with high-tech microchip developer INOVA Semiconductors and GlobalFoundries. They’re apparently a manufacturer of semiconductors with good control over the chain from raw material to finished product. Suits at BMW say this agreement guarantees them a supply of several million microchips per year.

“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. Parsing the marketing double-speak, this means the company hopes to have a heckuva lot more control over its supply of chips in case the world’s stock gets turned on its head again like it did this year. BMW has indicated these particular chips will go in the upcoming iX model.

Across the country, many dealer lots have resembled deserted parking areas, devoid of new metal for their sales staff to sell. More than one friend in the business has told me if they had a dollar for every wiseacre customer who has strolled through the doors and blared “Where’s all your cars?”, they’d be able to pay cash for one themselves. Some of the more switched on managers and dealer principals have managed to snag enough used inventory to keep their stores hopping, accepting early in these proceedings that they’d be in the used car business for the foreseeable future. Those who didn’t, well – they’re in charge of the aforementioned empty lots.

Depending on the equipment options, every car contains umpteen squillion of these semiconductors, little electronic wonders which are essential for modern devices and features. They can serve various functions ranging from performing arithmetic and control tasks in computers, storing data, or even handling multiple tasks at the same time. Not all of them are essential to make a vehicle operable at its most basic level. Readers with long memories may recall GM built and shipped many pickup trucks without start/stop systems, not to mention the in-dial temperature displays vanished from more than a few vehicles as well. They even toyed with yanking heated seats but backpedaled on that decision after public outcry. Now, apparently, any GM rig equipped with heated seats but not the ability to activate them will have its chip fitted by a dealer when available.

While this deal is impressive, some basic math reveals the scope of an OEM’s problem. BMW says this agreement is good for ‘several million’ chips per year and later says each car could have ‘several thousand’ chips each. Assuming the numbers of 18 million chips per year and 2,000 chips per car, that’s still only enough for 9,000 vehicles. BMW Group is on track to shift well over 2 million vehicles this year across its BMW, MINI, and Rolls Royce brands. Hey, at least the share of electronic components in vehicles is likely to only increase further in the future.

[Image: BMW]