There is news that the United States government is promoting plans to establish a chip packaging supply chain in Latin America in order to reduce its dependence on Asian chip packaging. The initiative, co-sponsored by the United States Department of State and the Inter-American Development Bank (IDB), is known as the Western Hemisphere Semiconductor Initiative (CHIPS ITSI) and aims to enhance semiconductor assembly, test and packaging (ATP) capabilities in key partner countries such as Mexico, Panama and Costa Rica.
1. Background and purpose of the plan
Reducing dependence on Asia: The United States government believes that many key links in the current semiconductor supply chain depend on Asian countries, which increases supply chain risk. To reduce this risk, the United States decided to establish a chip packaging supply chain in regions such as Latin America.
Enhance the security and diversification of the semiconductor supply chain: By establishing chip packaging capabilities in multiple regions around the world, the United States can ensure the stability and security of the semiconductor supply chain and prevent any single country or region from monopolizing critical links.
2. The content of the plan
Launch of the Western Hemisphere Semiconductor Initiative (CHIPS ITSI): A joint initiative of the United States Department of State and the Inter-American Development Bank (IDB), this initiative aims to enhance semiconductor assembly, test and packaging (ATP) capabilities in key partner countries such as Mexico, Panama, and Costa Rica.
Funding: The ITSI Fund will provide $500 million over five years starting in fiscal 2023 to enhance the semiconductor ATP capacity of these countries. In addition, $100 million per year will be allocated to promote the development and adoption of secure and reliable telecommunications networks to ensure the security and diversification of semiconductor supply chains.
Public-Private Partnerships: The program will support public-private partnerships and develop semiconductor ecosystems in these countries, using the recommendations of the Organisation for Economic Co-operation and Development (OECD).
Figure: United States is building a chip packaging supply chain in Latin America (Source: JCET Group)
3. Implementation
First projects: The first projects will be carried out in Mexico, Panama and Costa Rica, with the possibility of including other countries in the Americas in the future.
Existing foundation: Notably, Intel already has an assembly, test, and packaging facility in San Jose, Costa Rica. However, it is unclear how this company will benefit from the new program.
4. Influence and significance
Impact on the United States: The program will directly benefit the United States and its allies and partners by enhancing the security and diversification of the semiconductor supply chain and reducing reliance on external suppliers.
Impact on Latin America: For countries such as Mexico, Panama, and Costa Rica, the program will boost the semiconductor industry and enhance its position in the global semiconductor supply chain.
Impact on the global semiconductor industry: The plan may trigger the relayout and adjustment of the global semiconductor industry, and promote competition and cooperation among countries in the semiconductor field.
5. Conclusions
The United States is building a chip packaging supply chain in Latin America as an important strategic move to reduce dependence on Asia and enhance the security and diversification of the semiconductor supply chain. The implementation of this plan will have a profound impact on the United States, Latin America and even the global semiconductor industry. As the plan moves forward and is implemented, there is reason to believe that this initiative will achieve positive results.
