In 2023, Costa Rica aims to rival Taiwan in semiconductor manufacturing by forming a partnership with the U.S. to enhance chip production. The Costa Rican government released an 80-page semiconductor roadmap and received reaffirmation of U.S. support amid geopolitical concerns regarding Taiwan’s energy policies. Costa Rica predominantly relies on renewable energy sources to attract semiconductor manufacturers seeking competitive and sustainable options.
Costa Rica is strategically positioning itself to compete with Taiwan in semiconductor manufacturing. In 2023, the nation established a partnership with the United States to enhance its microchip production capabilities, responding to Washington’s search for reliable, geopolitically neutral sources. The Costa Rican Ministry of Foreign Trade released a comprehensive 80-page National Semiconductor Roadmap aimed at developing the country’s semiconductor industry, dubbed the “Silicon Jungle.”
Despite previous uncertainties regarding U.S. support, Secretary of State Marco Rubio recently reaffirmed the partnership’s significance during a summit with Costa Rica’s President Rodrigo Chaves Robles. The partnership aims to stabilize supply chains by training local technicians in semiconductor assembly, testing, and packaging while ensuring that future supply chain disruptions are minimized.
Costa Rica has a historic reputation for political and economic stability, largely due to its avoidance of the colonial-era labor systems that affected many neighboring nations. Agriculture was once the primary sector of its economy until the closure of the USAID office in 1996 prompted a search for new economic opportunities.
Costa Rica turned its focus toward attracting foreign investment, notably engaging with California-based Intel, which ultimately established its first assembly and testing facility in the country. This pivotal moment marked a shift toward high-tech industries, a transformation described by former Costa Rican economic diplomat Armando Heilbron as a move from “banana chips to microchips.”
Although Intel had begun to shift manufacturing operations to Asia in 2014, it recently announced a substantial investment of $1.2 billion into its Costa Rican facilities, a reversal attributed to Taiwan’s precarious geopolitical landscape and its energy policies.
The growing concerns about Taiwan’s vulnerability to Chinese political pressure further accentuate Costa Rica’s competitive stance. Taiwan has traditionally leveraged its nuclear energy capabilities to support its semiconductor industry, yet a robust shift away from nuclear energy by its current government could lead to skyrocketing energy costs.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s leading chipmaker, is already facing surging electricity prices in Taiwan, projected to be the highest globally for its operations. Meanwhile, Costa Rica’s electricity remains predominantly sourced from renewables, mainly hydropower and geothermal energy, which lends it a sustainable edge.
Costa Rica’s energy framework could appeal particularly to semiconductor manufacturers, as clean and affordable power is crucial for production. TSMC and others are shifting towards renewable energy sources to optimize production of “green chips,” further indicating a strategic transformation in the industry.
With almost all of its electricity originating from renewable sources, Costa Rica’s energy reliability underscores its capacity to attract semiconductor firms seeking a steadfast power supply amid rising energy costs elsewhere. This dynamic positions Costa Rica as a practical and environmentally friendly option in the global semiconductor landscape.
Overall, Costa Rica’s established political stability, combined with a renewable energy infrastructure, positions it as a competitive player in the semiconductor industry. The renewed partnership with the United States and significant investment from Intel solidify its commitment to ascend in the semiconductor supply chain. As energy concerns mount for traditional leaders like Taiwan, Costa Rica’s clean and stable power presents an appealing alternative for semiconductor production. In essence, Costa Rica embodies a promising opportunity for the semiconductor sector in light of geopolitical uncertainties and energy challenges faced by established manufacturing hubs.
Original Source: www.motherjones.com
