Tesla plans to move towards advance payments to chip suppliers as part of its strategy to overcome the global semiconductor crisis and secure its supply of essential materials for car manufacturing. Sources revealed that the company is also considering purchasing a semiconductor plant as part of its efforts in this direction, according to the Financial Times.
Sources working in the fields of semiconductors, chips, and consulting stated that the American electric vehicle manufacturer is discussing offers from semiconductor manufacturers in Taiwan, South Korea, and the United States. The sources confirmed that purchasing a plant was part of Tesla's initial plan; however, the difficulty of that step became clear once the company realized its cars required the latest generation of chips, which are only available in Taiwan and South Korea, along with the high cost of such an acquisition.
This comes as the chip shortage crisis has led many automotive manufacturers to operate at minimum production levels or to halt entirely, with Fitch Ratings forecasting a 5% decline in car sales this year. Before the semiconductor crisis, Tesla adopted a business model focused on manufacturing specialized parts for its electric vehicles, having announced last year its plans to produce its own vehicle battery.
The company also has a full team of engineers within its factories working on designing the chips for its electric cars, while those designs are fabricated at external semiconductor foundries. Ambrose Conroy, founder and CEO of Seraph Consulting, a supply chain consultancy for Tesla, stated, "The company will initially purchase a stake in production capacity, but it ultimately aims to buy its own foundry."
