FUMEC and USAID reveal 6 key States to integrate into Mexico's semiconductor supply chain

A study conducted by FUMEC and USAID has identified six strategic states in Mexico to integrate into the semiconductor supply chain: Aguascalientes, Baja California, Chihuahua, Jalisco, Querétaro, and Tamaulipas.

This initiative aims to boost the semiconductor sector, which has the potential to reach a value of $1.2 trillion. Mexico is uniquely positioned to capitalize on this opportunity due to its proximity to the United States, high demand for microchips, and the presence of advanced technology companies that support regional semiconductor priorities.

In this context, the Mexico-United States Foundation for Science (FUMEC), with support from the United States Agency for International Development (USAID), seeks to identify specific conditions and recommendations to leverage the sector's opportunities. These recommendations cover six key areas: infrastructure, supply chain, workforce, innovation, entrepreneurship, and sustainability, involving academia, government, and the private sector.

Through the "Roadmap: Opportunities for Semiconductor Nearshoring in Mexico (MNSR)," six states have been identified as already engaged in semiconductor supply chain activities. Aguascalientes, Baja California, Chihuahua, Jalisco, Querétaro, and Tamaulipas are poised to expand their participation in the sector, particularly in raw materials, assembly, testing, packaging, and chip design with an emphasis on mature nodes. Six other states - Durango, Guanajuato, Mexico City, Nuevo León, Puebla, and Sonora - possess the conditions and resources but need to enhance their specific capabilities to attract investment in this sector.

Since 2022, the rise of nearshoring and geopolitical tensions, coupled with the reconfiguration of trade flows and climate and health risks, have highlighted the importance of supply chain resilience and efficiency. Therefore, the roadmap aims to identify market opportunities, conditions, and requirements for companies and regions in Mexico seeking to enter or expand in North America's semiconductor supply chain.

Mexico as a Global Leader

Jene Thomas, USAID Mission Director in Mexico, emphasized that both Mexico and the United States are experiencing a "historic moment in the economic landscape of both nations." "In 2023, Mexico surpassed the historical point where the two are each other's number one trading partners thanks to nearshoring and USMCA. Mexico produces more engineers per capita than any other country and must channel that capacity and educational institutions towards critical sectors for the future, such as semiconductors."

Within the nearshoring process, Mexico has a unique opportunity to amplify its participation in high-complexity, high-value-added sectors like semiconductors. According to Thomas, the country has the capabilities to assume leadership within the Western Hemisphere.

"Mexico's role as a regional and global leader should be as a leader in the sector and a benchmark in semiconductors. Latin America, Asia, and Europe look to Mexico to see how they are taking advantage of nearshoring opportunities. We must recognize this leadership responsibility and assume our role in the world, today is the day."

The United States and Mexico seek to create synergies to meet the demand of the local and U.S. industries, specifically in the automotive and electronics sectors. They also aim to reform faculties, courses, and training to equip engineers with new skills in future sectors such as semiconductors.

Roadmap: Opportunities for Semiconductor Nearshoring in Mexico

This document identifies existing efforts at the national and state levels and proposes a series of recommendations and opportunities at different stages of the supply chain to increase Mexico's participation as a North American semiconductor supplier.

Eugenio Marín, CEO of FUMEC, indicated that this document aims to expand Mexico's participation in the semiconductor chain and articulate its position in North America's value chain as a block of global competitiveness.

"Moving from general diagnoses to specific actions and opportunities that can be implemented in the short and medium term to help positioning in the North American bloc. Focusing on the region is to mitigate the risks of disruption in supply chains, not only in epidemiological issues but also natural disasters and other challenges. We must provide security in critical sectors, foster cooperation, and thereby increase the resilience of the semiconductor value chain in the region."

How to add value for Mexico?

Marín specified that there is a significant opportunity in assembly, testing, prototyping, and ATP services (12% of the chip's added value), as well as chip manufacturing which requires investments of 20 billion dollars (56% of the chip's added value) and, finally, specific design and services (32% of the chip's added value).

"North America needs and can create a semiconductor supply chain in collaborative harmony; more secure, resilient, and diversified. One that guarantees the availability of materials, technological facilities, and qualified talent," said Eugenio Marín. "The objective of the document is to attract and retain investments that turn Mexican companies into reliable long-term partners."