As Chip Demand Surges, Infrastructure Builders Lock Down Supply

In 2021, more than 9 million vehicles were not built because automakers could not get enough semiconductors. Assembly lines across North America, Europe, and Asia shut down over components that often cost less than $50. The shortages stretched into 2022 and forced production cuts at major carmakers. The disruption changed how automakers view chip supply. What had been treated as a procurement detail became a production risk. The semiconductor industry is now expanding at record levels. Global revenue is projected to approach $975 billion to $1 trillion in 2026, according to forecasts from the World Semiconductor Trade Statistics organization. Much of that growth is tied to artificial intelligence systems running in data centers. AI training and inference require high-performance processors and advanced memory. At the same time, carmakers and chip suppliers are locking in supply for the different kinds of semiconductors used in vehicles and industrial systems. The expanded manufacturing partnership between GlobalFoundries and Renesas Electronics Corporation is one example of that shift. AI Spending Is Redirecting Chip Industry Investment Industry forecasts show the scale of current demand. WSTS projects the global semiconductor market approaching $1 trillion in 2026, with strong growth in logic and memory tied to AI systems. Deloitte’s 2026 outlook also points to AI infrastructure as a primary growth driver. Equipment makers are seeing the effect. In February 2026, Reuters reported that Applied Materials said demand tied to AI chips was lifting orders for wafer fabrication equipment. Advanced fabrication plants cost tens of billions of dollars and take years to build. They are designed to produce the newest processors used in cloud computing and AI systems. Vehicle and industrial chips are built differently. Microcontrollers, power management chips, and embedded memory use manufacturing processes optimized for reliability and long operating lifetimes. Cars stay on the road for more than a decade. Industrial equipment often runs longer. The semiconductors inside them must tolerate heat, vibration, and continuous use. The semiconductor industry shares equipment suppliers, materials, engineers, and factory capacity across segments. When large volumes of capital and tool orders flow toward AI production, that shapes how future capacity is planned and expanded. Automotive chips cannot shift into the newest AI fabs if supply tightens. They require specialized process technologies and qualified production lines. This dynamic is influencing procurement strategy across the auto sector. Carmakers Move to Lock In Chip Supply Automakers have been adjusting supply models since the shortage. In 2023, General Motors signed a long-term direct supply agreement with GlobalFoundries to secure U.S.-based semiconductor production for its vehicles. The agreement was structured to dedicate capacity at a New York facility to automotive chips. Governments are also backing new automotive-focused capacity. In 2025, the European Commission approved state aid for Infineon to expand semiconductor manufacturing in Dresden, Germany, with production targeted at automotive and industrial customers. Before that, in the United States, CHIPS Act funding has been directed toward domestic expansion of mature-node production used in vehicles and industrial systems. The U.S. Department of Commerce awarded up to $1.5 billion to GlobalFoundries to expand manufacturing in New York and Vermont serving automotive, IoT, aerospace, and defense markets. The expanded agreement between GlobalFoundries and Renesas follows the same direction. The companies announced a multi-billion-dollar partnership to broaden Renesas’ access to GlobalFoundries’ process technologies, including FD-SOI and BCD platforms used in automotive and industrial applications. Manufacturing under the expanded deal will begin in the United States and extend to facilities in Germany and Singapore. Tape-outs are expected to begin in mid-2026. Renesas is also considering porting select process technologies into its in-house fabs in Japan. Modern vehicles depend on dozens of microcontrollers and power devices. These chips manage braking systems, steering, radar, battery management, and vehicle networking. Electric vehicles add further demand for power semiconductors that regulate voltage and charging systems. Domestic capacity is also expanding for wide-bandgap power devices. The Commerce Department has proposed up to $750 million in CHIPS funding to support Wolfspeed’s silicon carbide wafer facility in North Carolina, aimed at scaling production for electric vehicles and energy infrastructure . Silicon carbide manufacturing runs on specialized lines distinct from advanced AI processors and serves high-voltage automotive and grid applications. Read more: Wolfspeed Is Turning to AI to Fix Its Silicon Carbide Problem Spreading production across the United States

As Chip Demand Surges, Infrastructure Builders Lock Down Supply

AI Spending Is Redirecting Chip Industry Investment

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