German parts supplier ZF Group signed a multiyear contract with a major producer of semiconductors to secure millions of silicon carbide chips that will be integrated into its upcoming inverter platform for electric vehicles.
ZF will have Swiss chipmaker STMicroelectronics supply "double-digit millions" of the chips starting in 2025, according to a news release. ZF described the contract as "multi-year" but did not disclose further details.
ZF said it is betting on silicon carbide chips because they are more efficient and power dense than typical silicon-based designs, which promises to help EVs boost their range. The German supplier plans to integrate the chips into a new inverter platform that will debut in vehicles produced by an unnamed European automaker starting in 2025.
The contract comes as both automakers and suppliers work to secure long-term supplies of semiconductors in the wake of the global microchip shortage, now in its third year. The shortage has resulted in nearly 16 million vehicles being cut from production plans over the past three years, made new product launches more difficult, reduced new-vehicle sales and put a financial squeeze on suppliers because of vehicle assembly interruptions.
"With this strategically important step, we are strengthening our supply chain to be able to securely supply our customers," said Stephan von Schuckmann, a member of the ZF Board of Management, in the news release.
STMicroelectronics will build the chips for ZF at plants in Italy and Singapore, with packaging and testing taking place in China and Morocco.
This is the second major agreement ZF has signed to procure silicon carbide chips this year.
In February, it signed an agreement with Durham, N.C., chipmaker Wolfspeed to build a $3 billion factory in Germany to make silicon carbide semiconductors starting in 2027.
ZF needs several sources of silicon carbide chips as its EV-related business grows, von Schuckmann said. The company has some $33 billion in orders lined up for its e-mobility business until 2030.
ZF ranks third on Automotive News' list of top 100 global suppliers, with sales of $39.3 billion to automakers in 2021.