US-China “Tech Terrorism”: A Opportunity for Market Expansion

In the wake of the trade war between the US and China, the first has been asked to revise its export policies to limit semiconductor chip manufacturing technology sales to the latter. The Asian giant has referred to this as “technological terrorism” since it would stop the sale of technology essential to manufacture a large part of the world’s chips. Mexico could benefit as companies such as Intel have already invested in decentralizing semiconductor and chip manufacturing by opening operations in the Latin American country.

Nowadays, 80 percent of Intel’s semiconductor or chip manufacturing is done in Asia, but this new initiative could limit the sale of crucial chip manufacturing technology to China. The initiative could hurt China’s plan to become the world’s leading chip producer but also opens the door for the market to expand. “This is another example of the US practice of coercive diplomacy by abusing state power and exercising technological hegemony. This should remind all countries of the risks of technological dependence on the US,” said Zhao Lijan, Spokesman Chinese Foreign Ministry.

Despite pressures, US President Joe Biden’s administration continues to push Congress to pass legislation that would channel US$52 billion into US chip manufacturing, according to Bloomberg. Such measures would allow the country to stay ahead of China. Bloomberg also reports that the US plans to pressure companies such as ASML Holding NV in the Netherlands, the leading manufacturer of crucial components in the semiconductor manufacturing process, to stop selling to China.

While the US plans to manufacture semiconductors and chips in-house, Mexico has become a relevant part of the equation. The COVID-19 pandemic led to a shortage in the production and delivery of semiconductor chips, making the industry aware of the need to diversify these productive locations, as previously reported by MBN. According to a KPMG study, Nuevo Leon is the favorite destination for investors looking to expand their operating presence in Mexico, with a 46 percent preference.

“Swiss companies are also interested in coming to the country, and even US manufacturing companies want to move their plants to the Mexican border, despite President Joe Biden’s policy of trying to make US manufacturing strong again,” Mario Hernandez, lead partner of the IMMEX KPMG segment in Mexico, told El Financiero. However, Mexico has been facing issues with foreign investment due to a lack of certainty on matters such as the energy reform.