On the other side of Sonora’s northern border, the expansion of the United States semiconductor industry is underway. Since 2022, the U.S. government has backed an ambitious project to establish a cluster in the Arizona desert to develop and produce these products that are essential for manufacturing the latest technology. Mexico has observed its northern neighbor’s plans and decided it does not want to be left out of the momentum of the emerging and growing sector. Participating in this business would allow the Latin American country to diversify and transform its industry, alongside its main trading partner. The foundations of this connection have been recently strengthened with a visit by Mexico’s Secretary of Economy, Marcelo Ebrard, to Phoenix, the heart of the strategy.
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Near the major cities of Arizona, the development of some semiconductor manufacturing plants has already begun. After the signing of the Chips Act in 2022, the United States allocated 280 billion dollars to the expansion and technological research necessary to boost the sector in the southern state. Mexico has observed the advances of the U.S. industry and has sought ways to fit into the production chain, leveraging its status as a trading partner and membership in the free trade agreement with the United States and Canada (USMCA). “We know that those large plants will need suppliers, which could allow us to develop joint investment projects in semiconductors,” explains Diego Flores, head of the Electronic and Digital Industry sector at Mexico’s Ministry of Economy.
Flores says the Mexican government is studying candidates to be part of the supply chain in various Mexican states, mainly border ones, and that one of the current administration’s goals is “to think long-term and create a” lasting integration with the U.S. sector. Since the creation of production chains between Mexico and the United States, following the opening to free trade more than 30 years ago, various goods have found a way to be produced in North America. The most successful over time has been the automotive industry, which in some cases includes all three USMCA countries for the manufacturing of its final product. The semiconductor case is a project anchored in medium-term prospects regarding North America’s technological needs.
Mexico is at an “incipient stage in advanced manufacturing” in the semiconductor industry, says economist and public policy consultant Jorge Sánchez Tello, but points to various areas of opportunity such as assembly, testing, design, and validation of these types of products. “Mexico’s ambition is economically viable and strategic, as long as it does not aim to be a chip manufacturer from scratch, but rather the natural link for advanced packaging, testing, and design of the Arizona cluster,” explains the economist. Although Mexico has the critical minerals needed to produce some chips, Sánchez Tello points out that the refining chain necessary to transform the metals is lacking. The Arizona cluster also represents an opportunity for Mexico to transition from basic maquiladora industry to one with higher added value, at a time when the global economy is transforming.
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In the Arizona desert, a good part of the emerging semiconductor industry has been driven by Taiwan Semiconductor Manufacturing Company (TSMC). The Taiwanese firm, a world leader in chip production, has planned investments of up to 265 billion dollars to build 12 plants in the southern United States. Ebrard’s visit to Arizona allowed the Mexican government to assess the role Mexico could play, recognizing that a large part of the industry is dominated by Asian producers. Flores, from the Ministry of Economy, indicates that as a starting point, the border supply and production chains already used by the automotive and electronics industries can be leveraged. “We want to add our value offer to the supply chain,” he adds.
The mission also includes a forward-looking view to stimulate the growth of projects related to semiconductors. Ebrard met during his brief tour with the president of Arizona State University, Michael M. Crow, to seal an alliance with the U.S. university both for research and development of new semiconductor technologies and to certify those elements that can be integrated into Arizona’s industry. The Mexican government also seeks to raise the capacity of the Mexican workforce through the U.S. university’s programs. Sánchez Tello assures there is a significant deficit in training specialists in areas such as microelectronics, nanotechnology, and materials physics, which will be necessary for the semiconductor boom in the years to come.
Although the plan is in an early phase, the Mexican government aims to achieve the consolidation of the first supply chains within the next two years. Plan Mexico, the strategy of Claudia Sheinbaum’s administration for the growth of the Mexican economy, has as one of its goals to increase the value of what is produced in Mexico to place the country among the top 10 economies in the world. That objective will require the transformation of some industries and the planning of projects that take advantage of the geographical proximity to the Arizona cluster and Mexico’s productive capacities in the sector. “Nearshoring in semiconductors is not a cheap labor game, but deliberate public policy: it requires regulatory certainty, guaranteed clean energy, and aggressive investment in specialized human capital,” Sánchez Tello states.
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