Mexico’s electronic industry is poised for a bright future, particularly in the semiconductor sector, which is experiencing a worldwide boom. Our country has the potential to contribute to this growth and emerge as a global leader in the industry, thanks to its strategic location, favorable free trade agreements, and highly skilled workforce.
This year is crucial; investors must act quickly to reap significant benefits.
But why is this sudden growth happening, and how can investors benefit from it? This post will answer those questions by providing a detailed view of the semiconductor industry’s current state and the players critical to its growth.
Semiconductor Industry in Mexico Overview
The semiconductor industry in Mexico has been steadily growing over the years. The country has been excellently fostering some leading semiconductor companies, such as Intel, Skyworks, Qualcomm, and Samsung. In 2020, the semiconductor industry in Mexico grew by 7.5%, with continued growth expected. According to the German consultant Statista, Mexico is projected to reach a revenue of 30.93 billion dollars in 2023.
However, semiconductors have never been Mexico’s true forte. To put it into perspective, only 0.08% of the economic units in the manufacturing sector are currently dedicated to semiconductor production. The main reason for this shortage is the lack of investment. But things are about to change…
Mexico is currently strengthening its technological infrastructure and increasing the number of engineers graduating from universities. These two actions will help improve conditions and competitiveness to increase investment and prosperity in the country.
How Mexico Could Grow Its Semiconductor Industry
The cause of growth could be summed up in the following word: nearshoring. It is expected that in the next five years, the United States will invest 52 billion dollars in the production of semiconductors in North America.
The previous statement is an oversimplification. It is far more complex than that. To get the whole picture, you first need to know the backstory.
A Brief Backstory Of The Semiconductor Industry in America
Semiconductors are everywhere. You can find them in your everyday electronics, from cell phones to cars. Today’s vehicles can contain more than 3,500 semiconductors. Consequently, its demand is very high. Currently, its production does not meet this demand, and much of it is because production is centralized in one place: Asia, from where they supply 75% of the semiconductors used worldwide.
So, what’s the solution?
The Chip Act and Its Role In Semiconductor Development
To address the supply shortage in North America, one proposed solution is to enhance negotiations between the US, Mexico, and Canada. The Chip Act, which allocates 52.7 billion dollars towards R&D and domestic manufacturing, aims to decrease US reliance on Asian semiconductor companies.
In addition to strengthening domestic capabilities, it is crucial for these three countries to collaborate in order to establish a robust semiconductor industry in North America. Together they plan to coordinate investments in semiconductor manufacturing throughout the continent. This includes identifying opportunities for chip investment and critical mineral resources and promoting education in advanced technologies.
How Will The CHIPS and Science Act Impact Mexico Semiconductor Industry?
The US investment in North America will allow Mexico to specialize in producing the accessible part of the supply chain, like design, packaging, and testing. As a result, the bill is expected to impact the country’s job creation, economic growth, and the construction of new facilities. Also, Mexico’s government has stated that 28 billion dollars will be destined for semiconductor production, 10 billion dollars for new manufacturing of chips, and 11 billion dollars for research and development. This would foster a favorable environment for the United States and Mexico economies.
How to Build A Semiconductor Facility With Success?
Designing and building a semiconductor plant requires a high level of specialization. Semiconductors are precision devices, so it’s only natural that the manufacturing process corresponds to that complexity. It includes hundreds of steps to assemble multiple elements, all requiring controlled conditions. Concepts like clean rooms, collaboration, and coordination are critical to success.
Here are some key considerations to ensure a successful semiconductor facility build:
- Clean Rooms: The environment in which semiconductors are manufactured must be free of dust and/or particles in the environment. Clean rooms are vital to semiconductor manufacturing because they provide a controlled environment that limits airborne particle contamination. These types of facilities require ISO class 7 or 8 clean rooms, which allow 10,000 and 100,000 particles per cubic meter in the environment, respectively.
- Early Involvement. It is recommended that the general contractor gets involved in the project as soon as possible. Detailed planning can be carried out, and the purchase of critical long lead equipment coordinated in a timely manner.
- Coordination. Many people are involved in building a semiconductor clean room, including architects, engineers, air conditioning specialists, construction workers, equipment suppliers, and the end user. To avoid delays, “headaches,” cost overruns, and other problems, it is essential that all parties collaborate in a focused and effective manner and that communication is open and transparent.
The next few years are pivotal for the North American semiconductor industry. Demand is overwhelming and will continue to grow in the coming years. With the increase in the sale of electric cars and technology consumption, semiconductors are at an all-time high in popularity.
However, our country will have to continue working as a team with its North American partners, continue to improve its infrastructure, and increase the number and skills of engineers about to graduate to take advantage of this growth in their favor. Circumstances are lining up for the country to become a global force. The horizon looks promising. It could be said that this moment is the best for investors to act in advance and be at the beginning of the development of this industry, whether it is an expansion or a new production building.
Having a local design & construction partner who guides you every step of the way will be the key to having the smoothest experience developing your facility in Mexico. At Hermosillo, we are experts in the matter, and nothing is more important than our partners’ success. Our team of industry experts will help you make savvy financial decisions for your facility to operate on time and within budget.
Having an experienced partner to guide you every step of the way is the key to having the best experience in the development, design, and construction of your facilities in Mexico. At Hermosillo, we are experts in the field, and nothing is more important to our company than the success of our clients. Our teams of experts in the design and construction departments will help you navigate the path pleasantly and smoothly, making the best decisions for the benefit of the project and resulting in a world-class final building.