Semiconductor Supply Chain Progress Doesn’t Pause
Almost before he’d moved into his office, newly installed U.S. Secretary of State Marco Rubio was leaving it behind as he made his way to Panama, El Salvador, Costa Rica, Guatemala and the Dominican Republic on his first international trip in the presidential cabinet role. The message? Putting America First includes putting the Americas first.
“Covid exposed the fragility of America’s dependence on far-flung supply chains,” Secretary Rubio wrote. “Relocating our critical supply chains closer to the Western Hemisphere would both boost our neighbors’ economic growth and safeguard Americans’ own economic security.”
Near-shoring and friend-shoring in the Americas already has been underway for some time, including the U.S. State Department’s own $500 million International Technology Security and Innovation (ITSI) Fund (funded by the CHIPS and Science Act of 2022) to expand and diversify segments of the semiconductor supply chains such as critical materials and assembly, testing and packaging. Through ITSI, the State Department has established partnerships with Costa Rica, Panama, Vietnam, Indonesia, the Philippines and Mexico.
In March 2024, Costa Rica announced a national semiconductor strategy focused on a subsector it knows well: back-end assembly, test and packaging. Panama followed suit in May 2024, including the announcement of an Advanced Semiconductor Technology Center.
However, the ITSI portal was put on pause on the inauguration day of U.S. President Donald Trump as part of his Executive Order on Reevaluating and Realigning United States Foreign Aid, which places a temporary pause on foreign assistance pending review.
That doesn’t mean projects are on pause in the sector, however. One of Costa Rica’s multiple projects in the chip sector is a new facility in another strong sector: global business services. Applied Material is establishing a new 100-job global services office in Heredia, which follows the company’s pledge to invest $500 million in semiconductor manufacturing in Mexico, Costa Rica and Panama. Among the attractions for the company’s first operation in Latin America is the country’s Free Trade Zone regime.
“The company joins other U.S. semiconductor firms investing in Costa Rica, such as ServiceNow, which recently set up operations in Heredia’s America Free Zone,” reported Nearshore Americas in November, noting the major presence of firms such as Intel (with a major assembly, test and packaging operation), Teradyne, Qorvo, NI, HPE, and R&D Altanova.
“Costa Rica represents an exciting new chapter for Applied Materials’ supply chain operations,” said Applied Materials Corporate Vice President of Global Supply Chain Paul Chhabra in an October 2024 statement released by Costa Rica’s PROCOMER agency during a visit by Costa Rica President Rodrigo Chaves to Applied Materials’ home territory in Silicon Valley. “The country provides a strong foundation for growth, thanks to a great combination of geographic proximity, economic stability, skilled talent and an investment-friendly environment.”
