Power Semiconductors

Mexico seeks to woo chip manufacturing firms

24 August 2022

Add Mexico to the list of countries looking to strengthen their domestic semiconductor manufacturing capacity as the country is establishing incentives to woo chipmakers to the region to build new fabs and facilities.

Countries in Europe and in North America have been gathering support and funding to provide chipmakers with incentives and tax breaks to build new facilities. The move comes after COVID-19 revealed the aggregation of semiconductor manufacturing was a dangerous proposition and likely was the root cause of the chip shortage that has impacted the supply chain for the past few years.

In the U.S., the CHIPS and Science Act was passed by President Biden and Congress and will provide $52 billion in funding and incentives to build domestic semiconductor manufacturing in the country. It is unclear if the funding will only go to U.S.-based firms or if it will be open to foreign semiconductor makers as well. Something that both Samsung and Taiwan Semiconductor Manufacturing Co. are hoping for.

In Europe, the European Chips Act is being enacted for a similar path and similar funding (about $50 billion). Separately, countries are looking to use their own funding combined with funding from the European Chips Act. This includes Italy and Spain, which are both setting aside their own funding to boost semiconductor manufacturing domestically.

In North America, Mexico would be the third country offering incentives for domestic semiconductor after the U.S. and Canada, which plans to spend about $240 million as part of its four-step plan to expand chip development by 2050.

According to a report from The Register, Mexico is hoping to take advantage of America’s efforts to bring manufacturing closer to home. As its neighbor, it would be in a good position to offer its own investment and has already seen many companies locate factories in the region.

“The location of Mexico is privileged: we are close to one of the largest markets and also we have 40 treaties across the world that allow us to reach more than 50 countries,” said Tatiana Clouthier, head of the Secretariat of Finance and Public Credit for Mexico. “In particular, we have the free trade agreement with Canada and the U.S. and South America."

Clouthier added that Mexico is already the world’s eighth largest producer of electronics.

To contact the author of this article, email PBrown@globalspec.com

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