The Volkswagen Group has initiated the direct purchase of crucial chips, anticipating a global scarcity, from ten manufacturers including NXP Semiconductors, Infineon Technologies, and Renesas Electronics.
Previously, VW relied on its suppliers to procure chips. The company started forming direct agreements with chip manufacturers in October to ensure a steady supply, overseen by Karsten Schnake, who leads a company-wide component supply taskforce established in 2022.
Recognizing the inadequacy of global market capacity, Dirk Grosse-Loheide, Volkswagen’s purchasing chief for the passenger car brand, stressed the need for proactive measures.
Amidst the surging demand for chips due to electric vehicle production and increasingly complex software requirements, the automotive industry has struggled to keep pace with supply due to the intricacies of establishing chip factories.
VW and STMicroelectronics, a Franco-Italian chipmaker, revealed joint plans in July to co-develop a new semiconductor. This marked VW’s initial direct association with second- and third-tier semiconductor suppliers.
The German government has incentivized major contract chipmakers with substantial subsidies. Both Intel from the U.S. and Taiwan-based companies have announced plans to construct factories in Germany this year.
Although VW hasn’t formed a direct supply relationship with TSMC, the largest contract semiconductor manufacturer globally, the company maintains regular communication to apprise them of its demand status, as shared by Schnake.
Volkswagen also intends to streamline its supply chain by reducing the variety of chips required in their vehicles, a move that will simplify both the supply chain and software offerings, according to Schnake.