At the end of last year, the government of Joe Biden, President of the United States, invited Mexico to be part of his multi-million-dollar investment project to produce semiconductors. As is well known, the semiconductor crisis is still not completely over and all those companies that manufacture automobiles or electrical and electronic equipment, among others, continue to suffer production delays due to shortages of this product.
Chips and Science Act
The CHIPS Act offers incentives to U.S. semiconductor chip manufacturers, including providing a 25% manufacturing investment credit for investments in semiconductor manufacturing properties placed in service after December 31, 2022, for which construction begins before January 1, 2027.
Biden’s proposal is to align this law with Mexico’s economic policy so that North America can be stronger in the production and supply chain of microchips and be able to compete with China, in turn gaining the advantage that our electrical, electronics and automotive industries will no longer have to depend on Asian production to continue their process. Another of the advantages that come with these investments is the reduction of production costs for companies.
Mexico’s Response
Mexico believes that this is a great opportunity for growth and economic development for the country, in addition to creating thousands of new jobs for Mexicans. We are getting closer and closer to a future where hybrid and electric vehicles will be the norm and semiconductors will be more in demand.
Mexico will offer electric infrastructure, telecommunications, as well as a fiscal stimulus package with accelerated depreciation of assets and reduction of the effective tax rate.
Slim’s investment
Carlos Slim, the seventh richest man in Mexico, has expressed his interest in accelerating investments in the semiconductor sector, reporting that some of his investments in Taiwan could be transferred to Mexican territory.
The Mexican government has had several talks with Taiwan to deepen and accelerate the arrival of investment linked to the development of technology, mainly in the semiconductor area. Some of the companies expected are Foxconn, Hon Hai Precision Industry Co., Ltd., New Taipei, among others.
Specifically, it was confirmed that Mexico is one of the key locations for Foxconn, a key supplier for assembling iPhone models, to make certain investments by 2023. Other U.S. regions such as Ohio, Wisconsin, would compete with Mexico for Foxconn’s investment.
Important investments are expected in the country that will allow the growth and development of our economy, since Mexico has turned this crisis into an opportunity to improve economic ties with the United States and create a new source of employment for Mexicans.
