Following the disruptions to the supply chain of semiconductors from Asia due to the COVID-19 pandemic, the U.S. government, which relies heavily on these materials for the production of electronic components (such as chips, which are essential in communications, computing, healthcare, military systems, transportation, clean energy, and countless other applications), has been on the search for new viable alternatives to ensure a steady flow, even if this implies prioritizing supply from other parts of the world, and not essentially from China. On 2022, President Joe Biden signed the Creating Helpful Incentives to Produce Semiconductors and Science Act or the “CHIPS Act”, designed to allocate around $ USD 52 billion to foster and incentivize semiconductors manufacturing in North America. In this context, on March 2024, the U.S. Department of State announced a partnership with Mexico to explore opportunities to grow and diversify the global semiconductor industry, consequently, making Mexico an ideal location to begin their production.
The need for more reliable semiconductors supply chains could not have arrived at a better time for Mexico, which is also experiencing a new and unique phenomenon: nearshoring. Several global companies have already relocated their production centers to Mexico to not only be closer to their main market, the U.S., but also to enjoy the numerous advantages which Mexico offers. Inside of Mexico, economic and tax benefits to capitalize this new investment opportunity, are already palpable; just last October (2023), the Mexican tax authorities enacted specific tax benefits for companies dedicated to the production of electronic components and semiconductors, among others. Manufacturing of essential consumer products, such as: vehicles to medical equipment relies on the semiconductor supply chain.
It is clear: semiconductors manufacturing in Mexico will grow, and such growth will carry additional opportunities for foreign capitals. The manufacturing, real estate and construction industries will be among the first benefited from this new trend, with more electronics companies willing to assemble their products in what would be newer, high-tech facilities which may already exist or, in the best scenario, will need to be planned and built, carrying a whole new set of opportunities in urban development and housing.
For additional information on this matter, do not hesitate to contact our corporate and real estate practice groups. We will be glad to assist you in the process to successfully enter the Mexican market.
Luis González
Partner
Juan Carlos Izaza
Associate