EconomyFinancialMade in the US, programmed in Mexico: this will...

Made in the US, programmed in Mexico: this will be the chips of North America

Mexico will join the United States’ plan to develop the semiconductor industry in North America, which seeks to reduce the dependency that key industries, such as automotive and technology, now have on Asia. Although there are not many details yet on how this regional chip production chain will be integrated, the National Auto Parts Industry (INA) announced that Mexico will dedicate itself to the programming of these inputs, through three factories already installed in the country.

Alberto Bustamante, general director of the INA, detailed in an interview that the three companies that have programming factories already installed in Mexico are WalCom in Jalisco, as well as Intel and Skyworks Solutions in Baja California.

Senior executives from these companies “went to sit down with people from the Biden administration so that Mexico could play the role of programming. These companies have been doing it for many years in Mexico, they are prepared and that is why they will do it,” he added.

Joe Biden, president of the United States, signed the Chips and Science Act in August to boost the financing of semiconductors through a pool of resources of 52,000 million dollars that will be used to promote the manufacture of chips in his territory.

According to information released by the Los Angeles Times, on September 9 the US president visited Ohio, where “a huge semiconductor plant” will be built, which will be in charge of the US technology firm Intel.

Mexico is included in the US master plan. On September 12, after the visit to Mexican territory by the Secretary of State, Antony Blinken, both governments reported that Mexico would join said project. “Mexico takes the offers that the United States has made us very generously at their word,” said Mexican Foreign Minister Marcelo Ebrard at a press conference with the US official at the end of the annual High-Level Economic Dialogue meeting.

But Bustamante warns that the semiconductor industry is not something that can be developed overnight. The manufacture of these tiny components requires advanced technology , mainly in some parts of the process that cannot be done manually, but rather require high-precision robotic arms.

“That’s why building a microchip factory takes so long, it’s not so much to build the building, but to have the robots made, it takes two years to make them,” adds Bustamante.

The plan of the United States contemplates that the first part of the process, that of the construction of the chip, be carried out in that country, so that, while in Mexico, the programming and distribution to the entire continent will be carried out.

“Then all those semiconductors that go to Latin America will be distributed from here, while those that go to North America will cross the border again,” specifies Bustamante.

From the perspective of the representative of auto parts manufacturers, the fact that Mexico is inserted in the semiconductor manufacturing chain will open up new possibilities to attract investments in the coming months , aimed at increasing the installed capacity of factories dedicated to programming, or even open new.

A break for shipowners

The lack of these inputs during the covid-19 pandemic was used for the manufacture of electronic devices such as tablets, laptops and cell phones, reducing the supply for other sectors that at that time had to slow down the pace of production, such as the automotive industry .

The international consultancy IHS Markit estimates that throughout 2021 in the world 9,580,911 vehicles ceased to be produced due to the shortage of semiconductors. In this, the North American region stands out for being the most affected with 2,459,964 vehicles , that is, 26% of the total.

But just over two years after Covid-19 collapsed vehicle production, manufacturers’ need for a smooth supply of chips is key to speeding up their electrification plans. There are approximately 1,000+ chips in a non-electric vehicle and twice as many in an electric one.

José Zozaya, president of the Mexican Association of the Automotive Industry, which represents the more than 20 assemblers in the country, stressed that the sector uses more and more technology in its daily processes and Mexico must play “a notable role” in the development of the chip production chain.

“Mexico is not cheap labor, but well prepared and competitive at a global level, that allows us to enter the technological issue,” he says.

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