Costa Rica takes advantage of the ‘chip war’ between the US and China

Intel’s CEO Pat Gelsinger’s agenda for Tuesday, August 9, indicated that he should be in Costa Rica at the head of the formal inauguration of the only assembly and testing plant for semiconductors or chips that the world’s leading company owns in the West. The factory reactivated in 2020, however, was presented in society without the participation of the chief executive, who had a more important call: the signing in Washington of the law that the Joe Biden Administration launched to inject 52,000 million dollars into the development of that industry in the United States.

The coincidence of agendas was not entirely a coincidence. The American company has spent its last years trying to balance the weight of its operations in Asia and the Biden government promotes the local production of semiconductors as a key product for the economy and security of the United States in the context of tensions with China, in a clash of giants that places the small Costa Rican economy, located just three hours by plane from Miami, in a position of gain.

The stars have aligned for Costa Rica. After Intel moved its manufacturing operations to Asia in 2015, which came to weigh 20% in Costa Rican exports, in 2020 the plant was reactivated with an announced investment of $350 million that ended up tripling to $1,000 million, with a growth of 60 % of the payroll (almost 4,000 workers in 2022) and the projection of capacities for what comes, warns Timothy Scott, manager of Government Relations at Intel Costa Rica, in an interview.

What is coming seems equally advantageous for the economy of the country where Intel settled in 1997. “Although (the law signed by Biden) is directly focused on the United States, due to geographical proximity and the capabilities already developed, a shock wave could be generated” , explains Scott, who avoids referring to geopolitical dynamics and at the same time recognizes the value of the proximity of the United States to Costa Rica, where research centers and global services are also based.

The manufacturing tasks with assembly and testing of semiconductors in Costa Rica correspond in the production chain to a stage subsequent to the manufacture of silicon wafers that Intel develops in Ohio and that could increase with new investments announced in recent months in other states. of the Union, before the so-called ‘Chips Law’.

“If the capacity to produce wafers is increased, one would understand that the assembly capacity must also be increased and for that the closest point is Costa Rica,” added the manager, who reserved “for security” the proportion that the country represents in the total production of Intel, owner of at least 12% of the world semiconductor market. The company’s other manufacturing plants are in Malaysia, Vietnam and the southwestern city of Chengdu, but pandemic restrictions and global logistics disruptions have given reason to prioritize short distances.

That is where Costa Rica raises its hand, as President Rodrigo Chaves and the Deputy Undersecretary of State for Economic Growth, Energy and Environment, José Fernández, pointed out at a meeting in September in San José. “We have talked about how Costa Rica could benefit from the Chips legislation,” the US emissary told the press without giving further details or comments on the geopolitical disputes between his government and China.

It is now known that the battle for tiny silicon brains continues. Washington on Friday announced a ban on US companies supplying Chinese customers with certain categories of semiconductors made with US technology, a move that deals a serious blow to China’s industry and its production of weapons and supercomputers. It is the most recent step in the fight of the giants, accelerated on August 2 by the surprise visit of Nancy Pelosi, president of the US House of Representatives, to Taiwan, the world’s leading producer of semiconductors, a trip considered by China as a provocation in your yard.

Costa Rica looks at each movement with caution, but also with optimism, acknowledges the Minister of Science and Technology, Carlos Enrique Alvarado. The same in the Ministry of Foreign Trade, whose figures indicate that in 2021 integrated circuits generated $518 million per product exported, one of every $20 of the value of total exports. Chip data is still reported lower than in the 2005-2015 decade, but shows a rapid recovery at times of favorable winds for its effects, hand in hand with the dynamism of other sectors such as medical devices, which is a pointer in sales Costa Ricans abroad and part of the local technology “ecosystem” of which Intel was the forerunner.

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