State to Promote Semiconductors in Mexico

The U.S. Department of State will partner with the Government of Mexico to explore opportunities to grow and diversify the global semiconductor ecosystem under the International Technology Security and Innovation (ITSI) Fund, created by the CHIPS Act of 2022.  

The initial phase includes a comprehensive assessment of Mexico’s existing semiconductor ecosystem and regulatory framework, as well as workforce and infrastructure needs.  Key stakeholders in the Mexican ecosystem, such as state governments, educational institutions, research centers and companies will participate in this analysis in conjunction with Mexico’s Secretariat of Economy.  

According to the State Department, this collaboration between the United States and Mexico "underscores the significant potential to expand Mexico’s semiconductor industry to the benefit of both nations and will build on existing cooperation under the bilateral High-Level Economic Dialogue and trilateral North American Leaders Summit process. "

This partnership will also support the work already underway to bolster regional competitiveness in semiconductors, including workforce development, in the Americas Partnership for Economic Prosperity.

The Creating Helpful Incentives to Produce Semiconductors and Science (CHIPS) Act of 2022 created the ITSI Fund, which provides the U.S. Department of State with $500 million ($100 million per year over five years, starting in Fiscal Year 2023) to "promote the development and adoption of secure and trustworthy telecommunications networks and ensure semiconductor supply chain security and diversification through new programs and initiatives with our allies and partners."

Arizona State University will be working with higher education institutions in Mexico, along with industry partners, to boost the production of semiconductors in North America, which has been identified as a crucial national security issue.  A recent agreement between ASU and the Government of Mexico is intended to pave the way for an alliance of universities in the U.S. and Mexico, plus microelectronics manufacturers, to focus on training workers and building production capacity in the northwest border states.

ITSI Program Background

The secretary of state has broad authority to allocate ITSI funds within the Department of State and to other implementing agencies, including the U.S. Agency for International Development (USAID), the Export-Import Bank of the United States (EXIM), and the U.S. International Development Finance Corporation (DFC).

Decisionmaking and leadership on ITSI funding is divided among three of its offices:

1. The Bureau of Cyberspace and Digital Policy (CDP), responsible for supporting secure ICT networks under the CHIPS Act
2. The Bureau of Economic and Business Affairs (EB), responsible for the act’s semiconductor “promote” component
3. The Bureau of International Security and Nonproliferation (ISN), responsible for the act’s semiconductor “protect” component

The department issued a fact sheet on March 14, 2023, detailing its roadmap for the ITSI Fund.

Washington-based  Center for Strategic and International Studies (CSIS) prepared a review of the ITSI Fund in May 2023, noting the most impactful focus would be on telecoms infrastructure, with proposals meeting global investment standards and mobilizing private sector capital.

"To maximize the fund and meet expectations, its implementers at the Department of State should focus on three key vectors: building an interagency ecosystem, working with partners and allies, and mobilizing private sector capital.

"This way, the ITSI Fund does not have to accomplish everything on its own; instead, it can draw upon the financial and personnel resources already being used to address similar issues in the U.S. government and among allies, mitigate the possibility of overlapping on programming already underway, and provide private sector funding toward priority areas by encouraging and de-risking engagement in ICT markets and sectors," the CSIS report asserts.