Mexico’s Ambition in the Semiconductor Industry
The geopolitical landscape is shifting, prompting Mexico to rethink its technological strategy. With the return of Donald Trump to the White House, there’s a renewed urgency among countries to enhance their technological sovereignty. This awakening inspired ‘Plan Mexico’, a strategic initiative aimed at reducing dependency on foreign technology. At the heart of this strategy is a drive to position Mexico within the global semiconductor industry. The OECD recently highlighted Mexico’s potential in this space, but, as with any ambitious plan, challenges loom.
The Aims of ‘Plan Mexico’
Mexico’s ambitions extend beyond the semiconductor industry; the country aims to become the tenth-largest economy globally. To achieve this, it has outlined several objectives. These include fighting poverty and inequality, promoting local tourism, and enhancing vaccine production. Key targets set forth in this initiative also include generating 1.5 million jobs and strengthening the country’s technological backbone.
Among various projects, two stand out: the Olinia project focusing on electric cars for urban mobility and the Kutsari project specifically targeting semiconductor development. While Mexico has established itself as a manufacturing hub, transitioning from merely assembling chips to controlling the entire semiconductor value chain poses a significant challenge.
Current Developments
In recent months, institutions in Mexico have been working quietly yet effectively. Puebla, Sonora, and Jalisco have emerged as the primary hubs for this initiative. These states are not only consolidating established infrastructure but also constructing new facilities and attracting skilled talent. For instance, Sonora’s location along the Mexico-US Trade Corridor is strategic, while Jalisco is home to the Intel Design Center, providing valuable expertise in integrated circuits. Puebla is set to host one of the new semiconductor production plants.
Mexico’s Strengths
The ambitious goal is to start producing chips by 2028, targeting commercialization by 2029. The OECD notes that Mexico’s experience in chip assembly and testing provides a strong foundation for scaling up production. Furthermore, the country’s geographical proximity to major markets, a large and skilled labor force, and existing industrial networks further enhance its position.
Interestingly, 17% of Mexican graduates are in engineering, exceeding the OECD average by three percentage points. This robust talent pool will be critical in achieving the semiconductor industry’s potential.
Challenges Ahead
Despite the optimistic projections, Mexico’s journey into the semiconductor landscape is not without its hurdles. There’s a distinct difference between having potential and realizing that potential through concrete execution. Critics raise concerns regarding the country’s capacity to meet necessary energy, safety, and logistical requirements as it develops this industry.
The education sector poses additional challenges. While a good percentage of graduates hold engineering degrees, only 16% of young people aged 15 to 19 are enrolled in related technical programs. This is notably lower than the OECD average of 23%, emphasizing a need for educational reform.
Water scarcity also raises red flags, as the semiconductor production process is water-intensive. Although Mexico is rich in lithium—a critical component for battery production—the journey from possessing this resource to refining it remains a significant challenge.
In conclusion, while Mexico is making strides towards establishing itself in the semiconductor industry, achieving these ambitious goals will require more than good intentions. It necessitates a coordinated effort across multiple sectors, timely execution of projects, and a commitment to addressing existing educational and resource-related challenges.
Images | Mister RFflag of Mexico, Data Center (edited)