Canada, US Aim to Boost Regional Semiconductor Industry

As Canada and the US aim to settle the dispute with Mexico over the latter country’s energy policies, the White House announced the three countries will take steps to consolidate the North American semiconductor industry. In addition, the US government reported that in early 2023, Mexico, Canada and the US will organize a semiconductor forum to increase investment in the hi-tech industry.

According to the statement, this strategy would mean coordinating and mapping the semiconductor supply chain to identify the needs and investment opportunities to make chips for the telecommunications, automotive and defense industries.

The semiconductor industry has long been dominated by Asia, specifically by China. Nonetheless, the supply of this technology was severely affected during the COVID-19 pandemic, causing serious delays in global manufacturing. To tackle this issue and reduce North America’s dependence on Taiwan’s and China’s semiconductor centers amid an uncertain US relationship with China, the CHIPS Act was born.

“We need to continue working in this effort of bringing production back to North America. It is not just a matter of trade but of technology, education, competitiveness, innovation, workforce development, regional security and geopolitics,” said Esteban Moctezuma Barragán, Mexico’s Ambassador to the US. He also highlighted the importance of reducing dependency on Asia countries because if the supply chain is broken, the world may experience a global economic crisis.

The US Congress passed CHIPS in July 2022 with a budget of US$52.7 billion. The act aims to strengthen domestic semiconductor manufacturing, design and research, fortify the economy and national security and reinforce the US’ chip supply chains. The country is building plants to make high-tech chips, the most expensive part of the semiconductor business. 

Meanwhile, Mexico is interested in stepping into the design, packaging and testing stages of the productive process. Nevertheless, to do so, the Mexican government must work hard to modify the negative image of the country’s electricity market, which is a result of President López Obrador’s campaign to prioritize fossil-fuel-dependent state energy companies CFE and PEMEX. 

These controversial policies are putting several foreign investment opportunities at stake. In the past months, authorities from different states, including Puebla and Jalisco, have complained about the situation. According to Jalisco’s energy agency, the state has seven private renewable power projects on hold, encompassing a total of US$1.1 billion.

However, Canada’s Prime Minister Justin Trudeau and US President Joe Biden are hoping to solve these controversies during the North American Leaders’ Summit currently taking place in Mexico City.