Mexico’s potential in semiconductor manufacturing extends far beyond its geographical proximity to the U.S. Over recent years, the country has made impressive strides in enhancing its technological capabilities. Traditionally known as a hub for low-cost, labor-intensive manufacturing, Mexico has gradually transformed its workforce to include more advanced manufacturing skills. The availability of more highly- skilled professionals opens its doors to other industries.
As worldwide demand for semiconductor chips remains insatiable, Mexico can play an important role. As the graph below show demand and revenue has grown significantly in the last couple of years:
Semiconductors Revenue in Mexico
Source: https://www.statista.com/outlook/tmo/semiconductors/mexico
In regards to manufacturing, historically, Taiwan has been the largest semiconductor producer in the world. Nevertheless, with the United States taking the initiative with the CHIPS Act, there has been a growing interested in establishing chip manufacturing facilities in North America.
The above- mentioned, leads to Mexico playing an important role in supporting the North American market.
Supporting the North American Market
Even if Mexico doesn’t develop full-scale semiconductor manufacturing, as the country isn’t considered ready for this, it can still play a supportive role in the North American semiconductor supply chain:
- Reduced Reliance on Asian Markets: Rather than attempting to build end-to-end semiconductor manufacturing capabilities, Mexico could focus on less capital-intensive, yet crucial, stages of the semiconductor process like TAP (Testing, Assembly, and Packaging). By contributing with this special process or focusing on a specific area of the supply chain, it can help North America reduce its dependence on Asia for certain semiconductor manufacturing steps.
- Enhanced Supply Chain Stability: Mexico’s location next to the U.S. means quicker shipping times and reduced transportation costs, which can be crucial during periods of high demand or supply chain disruptions.
- Complementary Manufacturing Capabilities: Mexico’s strengths in manufacturing and assembly can complement the high-tech, capital-intensive manufacturing facilities located in the U.S., creating a balanced ecosystem that strengthens the entire North American semiconductor market.
By following this roadmap, Mexico can position itself as an essential part of North America’s semiconductor supply chain, supporting the region’s technology goals and contributing to a more resilient and integrated semiconductor industry.
Nowadays, there are already important players in the semiconductor industry in Mexico, including R&D centers, assembly and test manufacturing.
Which include among others:
- Intel: Guadalajara.
- Texas Instruments: Aguascalientes.
- Infineon Technologies: Tijuana.
- Skyworks Solutions: Mexicali.
- QSM Semiconductors: Queretaro
Furthermore, the future of semiconductor manufacturing in Mexico looks promising. With its strategic advantages, growing skilled workforce, and supportive government policies, the country is well-positioned to become an important part of the global semiconductor supply chain.
Next Steps for Semiconductor Manufacturing in Mexico
- Build Specialized Facilities: Developing specialized semiconductor fabrication facilities requires substantial investment but can be done in phases. Mexico can start by establishing facilities focusing on specific parts of the semiconductor manufacturing process, such as wafer testing, packaging, or assembly.
- Expand Education and Training Programs: Partnering with universities and technical institutes (both locally and abroad) to create specialized programs in semiconductor engineering and advanced manufacturing will be critical to further develop a skilled workforce. Scholarships, internships, and apprenticeships can attract students to these fields and provide hands-on experience.
- Government Support and Incentives: Offering tax incentives, subsidies, and funding grants can help attract international semiconductor companies to invest in Mexico. Furthermore, policies that support R&D tax credits and provide favorable loan terms for infrastructure projects can further enhance investment projects.
- Availability of adequate infrastructure and utilities: Availability of water and electricity supply are critical for different processes in the semiconductor manufacturing industry.
Investing in Mexico
As the demand for semiconductors continues to grow, Mexico’s role in this industry is likely to expand, offering exciting opportunities for businesses and workers alike.
Whether you’re a company looking to invest or a professional seeking opportunities in the semiconductor field, now is the time to pay attention to Mexico’s burgeoning semiconductor landscape. Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us!