Volkswagen to develop new semiconductor with STMicro amid chip crunch

The move illustrates how Volkswagen is striving to gain greater control over the supply of chips

Germany's Volkswagen and Franco-Italian chipmaker STMicroelectronics will co-develop a new semiconductor amid a global microchip crunch that has strained the car industry's supply chain, the companies said on Wednesday.

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The move illustrates how Volkswagen, Europe's biggest carmaker, is striving to gain greater control over the supply of chips, found in ever greater number in new generation and low-carbon emission vehicles.

It is Volkswagen's first direct relationship with second- and third-rank semiconductor suppliers, a move executives have hinted at since the chip shortage hit the auto industry in late 2019.

Volkswagen software unit Cariad said in May it would also source system-on-chips from Qualcomm for autonomous driving up to Level 4 standards, in which the car can handle all aspects of driving in most circumstances with no human intervention.

The new deal would not affect this partnership, a Cariad spokesperson said.

Neither party disclosed the financial implications of the deal, which makes STMicroelectronics one of Volkswagen's top technological partners.