Chip production set to begin by Continental, in collaboration with GlobalFoundries
Continental Establishes New Semiconductor Division to Boost Self-Reliance
In a strategic move to bolster its position in the semiconductor industry, German automotive giant Continental has announced the creation of a new business division named Advanced Electronics and Semiconductor Solutions (AESS). This division will be part of the soon-to-be-independent business unit, Aumovio, which is scheduled to spin off from Continental in September this year.
AESS will focus on designing and verifying semiconductors internally, while subcontracting front and backend production and testing to external manufacturers. GlobalFoundries, a leading semiconductor manufacturer, has been selected as the manufacturing partner for AESS. The production facilities for AESS semiconductors will be located in Europe and Asia.
Philipp von Hirschheydt, a member of the Continental Executive Board and CEO of the future Aumovio business unit, stated that the creation of AESS will reduce geopolitical risks and make Continental more self-reliant in the semiconductor field. The move to vertically integrate semiconductor supply will also make Continental's supply chain more resilient through dual sourcing.
The automotive industry's demand for semiconductors to enhance electronic content for software-defined vehicles is increasing. In fact, the global automotive semiconductor market is estimated to be worth €110 billion ($127.6 billion) by 2032. This growing demand, coupled with the post-Covid semiconductor supply crisis, has led to several automotive companies integrating semiconductor production to secure supply against risk.
Notably, both General Motors (GM) and Ford have set up dedicated supply agreements with GlobalFoundries. GM established its agreement in 2023, following Ford's 2021 agreement. Kamal Khouri, the former CEO and President for Automotive at GlobalFoundries, discussed the coordination between GlobalFoundries and GM in an interview in 2023.
AESS's creation is not just a response to the current semiconductor supply crisis, but also a long-term investment in the semiconductor field. Continental believes it is imperative for organizations to invest in semiconductor development to be successful in the long run.
Aumovio, on the other hand, will focus on electronic products for connected and autonomous vehicle applications. By integrating AESS, Aumovio aims to strengthen its position as an automotive component manufacturer and ensure a steady supply of high-quality semiconductors for its products.
This strategic move by Continental is a significant step towards securing its position in the rapidly evolving automotive industry, where semiconductors play a crucial role in the development of software-defined vehicles.
