US Calls on Mexico to Draw Up Incentives to Lure Semiconductor Manufacturers

Washington has asked its southern neighbor to find incentives to bring chipmakers to North America, as both nations try to lure companies that are crucial to the world’s electronics

A production associate adjusts his hat while working between 2018 Honda Accord vehicles during production at the Honda of America Manufacturing Inc. Marysville Auto Plant in Marysville, Ohio, U.S.Photographer: Ty Wright/Bloomberg
By Maya Averbuch
September 14, 2022 | 07:05 PM
Reading time: 2 min.

Bloomberg — The US government has called on Mexico to explore ways of offering incentives to bring manufacturers of microchips to North America as the two countries strive to entice companies that are crucial to the world’s electronics.

US Commerce Secretary Gina Raimondo asked Mexican Finance Minister Rogelio Ramirez de la O. for a list of proposals to lure semiconductor companies to his nation, a top official from the Mexican government said following the US-Mexico High-Level Economic Dialogue between both nations in Mexico City this week.

“They asked that they see the possibility to complement some help, incentives, etcetera, for semiconductors, in order to close the circle,” Economy Minister Tatiana Clouthier told Bloomberg News in an interview on Tuesday. “Time is a priority.”

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The CHIPS Act, which includes $52.7 billion to boost domestic semiconductor production and research, triggered interest in Mexico to try to get some of those businesses to relocate to the country. The US and Mexico said in a joint statement on Monday that they will “work together to pursue a pilot project to determine the feasibility of near-shoring semiconductor manufacturing inputs.”

Researchers for the Inter-American Development Bank wrote in a blog post published Tuesday that Mexico already has several companies -- including Intel Corp., Skyworks Solutions Inc., Texas Instruments Inc., and Infineon Technologies AG -- working on semiconductor design and backend, including assembly and testing, which “presents significant opportunities.” Much of the industry is currently dominated by companies in Asia, the report said.

Mexico is also keeping an eye on the companies setting up shop on the other side of the border, said Clouthier. Intel agreed with Brookfield Asset Management Inc. to invest as much as $30 billion in chip factories in Arizona and Taiwan Semiconductor Manufacturing Co. has been working on a $12 billion plant in the state.

“How can we make it so that the supply chain stays here, and the product is not finished in another place,” Clouthier said. “That it is not sent to other parts of the world.”

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When asked about battery makers, Clouthier said a company was deciding on an investment between the states of Sonora and Chihuahua, on the US border, a boon to the electric vehicle industry.

Clouthier declined to name the company.

Even as the US has sought to attract companies operating in Asia, Chinese companies have been looking for opportunities to take advantage of the near-shoring push to establish themselves in the North American market. Chinese battery giant Contemporary Amperex Technology Co. Ltd. has been considering an investment of as much as $5 billion in a location in Mexico, Bloomberg reported earlier this year.

The US Commerce Department declined to immediately comment on Clouthier’s remarks. Mexico’s Finance Ministry didn’t respond to a request for comment.

Read more at Bloomberg.com