The CHIPS Act: A Win for the U.S. and Mexico in Strengthening the Semiconductor Supply Chain

Guest feature for Molera Alvarez by César Remis, Head of the Office for the Implementation of the United States-Mexico-Canada Agreement (USMCA) for Mexico’s Ministry of Economy

Over the past two years, the semiconductor industry has faced unprecedented challenges amid supply chain disruptions as a result of the Covid-19 pandemic and uncertainty from geopolitical tensions around the world. Simultaneously, this has impacted other critical industries from automotive to electronics, forcing industries and governments to re-evaluate the configuration of supply chains and to emphasize diversification and resilience when formulating investment plans and defining industrial policy.

The recently-enacted CHIPS Act (signed by President Biden on August 9th) aims to reduce dependence on Asia–particularly China–by attracting semiconductor production to the U.S. The new law provides more than $52 billion dollars in incentives to boost semiconductor fabrication and research in the U.S., which, in turn, will open several investment opportunities in North America to support the industry’s ecosystem in the region.

As the U.S.’s trusted ally and second largest trading partner, Mexico will play a key role in the U.S. strategy to further develop the semiconductor industry while remaining competitive with Asia and other regions.

Mexico and the U.S. are taking decisive actions towards the resiliency of our regional supply chains. One of the most significant is the Mexico-U.S. High Level Economic Dialogue, which was relaunched last year by President Biden and President Lopez Obrador with a particular focus on supply chains. Together, our governments are working on promoting investments in the semiconductor and ITC industries by taking measures to avoid future supply chain disruptions. This includes working on infrastructure and trade facilitation, digital economy, and workforce development initiatives.

Mexico is also taking advantage of every opportunity to work with our U.S. counterparts on a North American supply chain resiliency strategy. To that end, we are utilizing the framework laid out by the USMCA Competitiveness Committee and participating in working groups and meetings with the private sector, U.S. Congress, federal and state governments, think tanks, and other stakeholders.

Additionally, we have identified nearshoring and onshoring opportunities in Mexico for the semiconductor supply chain, where our country can competitively participate in, and complement, U.S. production. Of great interest are the opportunities to develop the semiconductor manufacturing ecosystem between Mexico and the southern U.S. states, particularly in Arizona and Texas (states with investment plans to build “fabs,” or semiconductor fabrication plants). By leveraging existing capabilities and experience in electronics and ICT manufacturing, Mexico is ready to participate in the assembly, testing and advanced packaging (ATP), and other segments of the semiconductor supply chain, such as design, materials, and equipment.

One of the key components of Mexico’s semiconductor strategy is workforce development. On this front, we are working along with companies and Mexico’s National College of Professional Technical Education (CONALEP), on several projects to develop labor competencies and build skills so that graduates respond to business’ needs and efficiently address the labor shortage in the industry.

Recently, the Mexican Ministry of Economy held the Forum “Strengthening Semiconductor and ICT Supply Chains between Mexico and the United States“, in which we provided U.S. investors and companies an overview of the semiconductor ecosystem in our country and the advantages of investing in Mexico to strengthen the semiconductor industry in North America. The Forum included the participation of an important U.S. business delegation to Mexico led by the Semiconductor Industry Association, which brought together leading companies from the sector exploring opportunities in Mexico.

Led by Mexico’s Ministry of the Economy, our country has been working strategically at the Federal, State and Municipal levels to further develop its semiconductor manufacturing ecosystem, from regulatory matters to trade facilitation and investment incentives. The idea is to build the right business environment so that we can seize the tremendous opportunity arising from the increasing global and regional manufacturing capacities.

Mexico is convinced that building resilient supply chains requires a comprehensive strategy and must be done through a regional perspective that considers both current and future capacities. This is why we welcome the Biden Administration’s willingness to work with allies like Mexico to mutually strengthen our supply chains and develop this vitally important sector.

Published On: August 24th, 2022Categories: International News

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The CHIPS Act: A Win for the U.S. and Mexico in Strengthening the Semiconductor Supply Chain

Guest feature for Molera Alvarez by César Remis, Head of the Office for the Implementation of the United States-Mexico-Canada Agreement (USMCA) for Mexico’s Ministry of Economy

Over the past two years, the semiconductor industry has faced unprecedented challenges amid supply chain disruptions as a result of the Covid-19 pandemic and uncertainty from geopolitical tensions around the world. Simultaneously, this has impacted other critical industries from automotive to electronics, forcing industries and governments to re-evaluate the configuration of supply chains and to emphasize diversification and resilience when formulating investment plans and defining industrial policy.

The recently-enacted CHIPS Act (signed by President Biden on August 9th) aims to reduce dependence on Asia–particularly China–by attracting semiconductor production to the U.S. The new law provides more than $52 billion dollars in incentives to boost semiconductor fabrication and research in the U.S., which, in turn, will open several investment opportunities in North America to support the industry’s ecosystem in the region.

As the U.S.’s trusted ally and second largest trading partner, Mexico will play a key role in the U.S. strategy to further develop the semiconductor industry while remaining competitive with Asia and other regions.

Mexico and the U.S. are taking decisive actions towards the resiliency of our regional supply chains. One of the most significant is the Mexico-U.S. High Level Economic Dialogue, which was relaunched last year by President Biden and President Lopez Obrador with a particular focus on supply chains. Together, our governments are working on promoting investments in the semiconductor and ITC industries by taking measures to avoid future supply chain disruptions. This includes working on infrastructure and trade facilitation, digital economy, and workforce development initiatives.

Mexico is also taking advantage of every opportunity to work with our U.S. counterparts on a North American supply chain resiliency strategy. To that end, we are utilizing the framework laid out by the USMCA Competitiveness Committee and participating in working groups and meetings with the private sector, U.S. Congress, federal and state governments, think tanks, and other stakeholders.

Additionally, we have identified nearshoring and onshoring opportunities in Mexico for the semiconductor supply chain, where our country can competitively participate in, and complement, U.S. production. Of great interest are the opportunities to develop the semiconductor manufacturing ecosystem between Mexico and the southern U.S. states, particularly in Arizona and Texas (states with investment plans to build “fabs,” or semiconductor fabrication plants). By leveraging existing capabilities and experience in electronics and ICT manufacturing, Mexico is ready to participate in the assembly, testing and advanced packaging (ATP), and other segments of the semiconductor supply chain, such as design, materials, and equipment.

One of the key components of Mexico’s semiconductor strategy is workforce development. On this front, we are working along with companies and Mexico’s National College of Professional Technical Education (CONALEP), on several projects to develop labor competencies and build skills so that graduates respond to business’ needs and efficiently address the labor shortage in the industry.

Recently, the Mexican Ministry of Economy held the Forum “Strengthening Semiconductor and ICT Supply Chains between Mexico and the United States“, in which we provided U.S. investors and companies an overview of the semiconductor ecosystem in our country and the advantages of investing in Mexico to strengthen the semiconductor industry in North America. The Forum included the participation of an important U.S. business delegation to Mexico led by the Semiconductor Industry Association, which brought together leading companies from the sector exploring opportunities in Mexico.

Led by Mexico’s Ministry of the Economy, our country has been working strategically at the Federal, State and Municipal levels to further develop its semiconductor manufacturing ecosystem, from regulatory matters to trade facilitation and investment incentives. The idea is to build the right business environment so that we can seize the tremendous opportunity arising from the increasing global and regional manufacturing capacities.

Mexico is convinced that building resilient supply chains requires a comprehensive strategy and must be done through a regional perspective that considers both current and future capacities. This is why we welcome the Biden Administration’s willingness to work with allies like Mexico to mutually strengthen our supply chains and develop this vitally important sector.

Published On: August 24th, 2022Categories: International News

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