Mexico Could Strengthen Semiconductor Manufacturing: CANIETIBy Antonio Gozain | Wed, 09/29/2021 - 09:28
Global semiconductor shortages are leading different countries to evaluate the benefits of manufacturing more chips locally. Mexico could strengthen the entire semiconductor supply chain, from design to programming, according to the Mexican Chamber of Electronics, Telecommunications and Information Technologies (CANIETI).
Mexico’s tech industry has been in contact with the Ministry of Economy ever since the semiconductors shortages began, exploring the possibility of producing chips both for domestic use and exports, which would help to reactivate the auto industry, said to El Economista Santiago Cardona, IT Vice President of CANIETI and CEO of Intel Mexico.
“This conversations between CANIETI and the Ministry of Economy had already occurred, also with the Business Coordinating Council. There has been strong communication between all parties to explore what type of processes can be implemented so that the most important strategic sector in the country has the necessary supply to operate,” said Cardona.
Earlier in September, Mexican and US governments reactivated the high-level economic dialogue, started by former presidents Enrique Peña Nieto and Barack Obama but later paused by Donald Trump. Both countries jointly organized a plan in which they seek to tackle the aftermaths of the pandemic. While the dialogue included strengthening supply chains as one of its pillars, semiconductors were not directly addressed. However, Tatiana Clouthier, Mexico’s Minister of Economy, said that Mexico could co-produce chips with the US, reported El Economista.
Coproducing semiconductors with the US is not the only option, according to Cardona. The entire supply chain is already established in Mexico, he added, from the design and programming centers in Guadalajara to manufacturers in Mexico’s northern industrial corridor. "The great opportunity for Mexico as a country and as an economy is to recognize how to become more participative in this, considering the idea to rebalance the supply chain in North America with the CHIPS for America Act,” said Cardona.
CHIPS for America Act
The CHIPS for America Act is part of the National Defense Authorization Act for Fiscal Year 2021 of the US Department of Defense. The bill established investments and incentives to support US semiconductor manufacturing, research and development, aiming to warranty supply chain security. “Specifically, the bill provides an income tax credit for semiconductor equipment or manufacturing facility investment through 2026.” This regulation has promoted the investment of US$75 billion in the US, including US$20 billion invested by Intel on two plants in Arizona.
Uncertainty has become normal in the automotive industry. “Semiconductor shortages have forced us to adjust our sales levels across the world, including Mexico. These are challenging times, no one knows when the supply chain will return to normal. It has become a bottleneck,” said Edgar Estrada, General Director of Volkswagen Brand Mexico during Mexico Automotive Summit 2021 ECHO.
Chips manufactured in Mexico are those that involve massive production and less advanced technology that are often used in electric appliances, while the country designs and validates some of the most advanced semiconductors on the planet, said Cardona. While solutions will not come in the short term, future thinking and immediate action are required.
“All countries and their governments are clear that this is going to take time. This is one of the most complex engineering processes of humanity and it is not something simple that will be solved in the short term, but the important thing is to take decisive action now,” said Cardona.