It would complement or come as an alternative to a possible foreign-funded factory, with the aim to double the EU's market share in semiconductors to 20% by 2030, a target set out by European internal market chief Thierry Breton.
Bosch said the shortage, which it said was affecting integrated circuits, automotive microcontrollers as well as application-specific integrated circuits, was also affected by weather-related production issues at other chipmakers.
Toyota, Nissan, Honda and other Japanese carmakers scrambled on Monday to assess the impact on their production of a fire at a Renesas Electronics chip plant that could aggravate a global semiconductor shortage.
Under the deal, Santa Clara, California-based GlobalFoundries said it will make high-frequency radar chips for Bosch at its Fab 1 facility in Dresden, Germany. Radar chips are widely used in vehicles for driver-assistance features such as emergency braking, lane-keeping and parking assistance.
Rather than source the chips from a third-party company to put inside a radar module, Bosch is working directly with the chip contract manufacturer to have its own design custom-made.