(By Dan Robinson, 06/09) Mexico is the next country in line to offer incentives to tempt semiconductor manufacturers to set up shop, and may be aiming to take advantage of the US desire to bring manufacturing closer to home.

Both the US and the EU have this year unveiled strategies aimed at encouraging chip companies to on-shore semiconductor production and reduce the reliance of their economies on silicon imported from Asia, especially Taiwan.

Mexico is now hoping to take advantage of the US desire to bring chip manufacturing closer to home. As a neighbor of the American economy, the country is well-placed to take advantage of US investment, and has already seen many companies locate factories there, so adding semiconductor manufacturing to the mix might seem a logical step.

Mexico’s Secretariat of Finance and Public Credit has already held a forum with American financiers to discuss investment in Mexico following the signing off of the US CHIPS Act earlier this month, with the head of the ministry Tatiana Clouthier saying that Mexico could have mechanisms to make investment more attractive for companies that relocate.

Clouthier said earlier this month at a Mexican government forum titled “Strengthening Semiconductor Supply Chains” (translated from Spanish): “For some time back we have been working with the ministry of Treasury… in allowing us to see how to compete worldwide with incentives of different sorts. These, by the way, usually end up by distorting the markets, nevertheless in the short term (they) make pretty much everybody nervous because everybody wonders what’s going to happen if I’m left out.”

She added: “The location of Mexico is privileged: we are close to one of the largest markets and also we have 40 treaties across the world that allow us to reach more than 50 countries. In particular, we have the free trade agreement with Canada and the US and South America.”

“Mexico is already the world’s eight biggest producer of electronics.”

It isn’t just US companies like Intel, which earlier this year broke ground on a fab tantalizingly close to Mexico’s northern border with the US, that are jockeying for a slice of the US CHIPS Act spending. Samsung is expanding its footprint in Texas and TSMC is building on its presence in Arizona. Mexico could try to lure companies such as these to invest south of the border as well.

As well as the EU announcing its European Chips Act earlier this year, which is expected to grow to more than €43 billion (about $44 billion) of spending by 2030, South Korea is also aiming to become a major player in the semiconductor industry, announcing last year a package of investments for its chip industry said to be worth over $450 billion.