Continental to make its own chips with GlobalFoundries

Continental has set up a new business division with GlobalFoundries to manufacture semiconductors for its automotive components.

The tier one supplier said the automotive industry’s demand for semiconductors to enhance electronic content for software-defined vehicles is increasing and “it is imperative for organisations to invest in semiconductor development to be successful in the long run”. Continental said that the global automotive semiconductor market is estimated to be worth €110 billion ($127.6 billion) by 2032. 

Continental has established a new business unit called Advanced Electronics and Semiconductor Solutions (AESS) and has selected GlobalFoundries, a leading semiconductor manufacturer, as its manufacturing partner. AESS will design and verify semiconductors internally and GlobalFoundries will dedicate a production line to exclusively produce the semiconductors for Continental. The company said the move to vertically integrate semiconductor supply will make its supply chain more resilient through dual sourcing, improve product quality and reduce time to market, as well as generating savings and efficiencies, thereby improving cashflow. 

AESS will form part of Continental’s Automotive division, which it is spinning off into an independent business unit called Aumovio in September this year. Aumovio will focus on electronic products for connected and autonomous vehicle applications, including sensors, smart displays, braking and comfort systems, architecture platforms and assistance systems. 

Continental said the AESS division will help strengthen Aumovio’s position as an automotive component manufacturer. “The creation of this fabless semiconductor organisation will strengthen Continental’s position not only by reducing geopolitical risks but also by the way of becoming more self-reliant in this field,” said Philipp von Hirschheydt, member of the Continental Executive Board and CEO of the future Aumovio business unit. By fabless, Hirschheydt is referring to the fact that the automotive division will subcontract front and backend production and testing. 

 AESS semiconductor production will be located in Europe and Asia. 

 This is not the first move by an automotive company to integrate semiconductor production and secure supply against risk. GlobalFoundries already has direct supply agreements with GM and Ford, which developed out of the post-Covid semiconductor supply crisis. Ford set up a dedicated supply agreement with GlobalFoundries in 2021 and GM followed suit in 2023.