Could Mexico Be the Answer to Chip Shortages?
- Mexico has a strong history of semiconductor production, in 2018 producing 11.6% of the world’s semiconductor supply, to an export value of $721 million. However, Mexico’s largest exports make a strong case for strengthening semiconductor device manufacturing in this Latin American leader.
- Mexico is 4th largest exporter of automobiles and the 8th largest producer of electronics worldwide. It has been the single largest export destination for U.S. semiconductors that could have potentially been produced more cost-effectively in Mexico due as much to closer colocation of automotive components as to lower labor costs.
- Mexico has a strong network of automotive industry suppliers, built up over a century of supporting automotive manufacturing. Automotive clusters have grown up throughout the country to simplify supply chain logistics and enhance economies of scale. Additional semiconductor capacity could help to strengthen the resiliency of this manufacturing network.
According to Tetakawi, more semiconductor chip manufacturing should take place in Mexico, closer to the robust auto industry there.