The U.S. is building a chip packaging supply chain in Latin America

To reduce dependency on Asia and package American chips in the Americas, the U.S. government has launched an initiative to boost chip packaging capabilities in Latin America. Notably, Intel already has an assembly, testing, and packaging facility in San Jose, Costa Rica. Yet, it is unclear whether the blue giant will benefit from the new initiative.

Meanwhile, the statement on the initiative’s website stresses enhancing semiconductor manufacturing and securing supply chains; the initiative aims to prevent any single country or region from monopolizing the crucial chip packaging sector, which is vital to avoid potential manipulation or disruption of these essential services.

One of the things about the U.S. government’s CHIPS & Science Act initiative is that while there will be more semiconductors products in America by the end of the decade, most of them would have to be packaged outside of the U.S., somewhere in Asia, which complicates the whole supply chain.

The U.S. Department of State and the Inter-American Development Bank (IDB) have launched the CHIPS ITSI Western Hemisphere Semiconductor Initiative to enhance semiconductor assembly, testing, and packaging (ATP) capabilities in key partner countries: Mexico, Panama, and Costa Rica. The program will support public-private partnerships and the adoption of OECD (Organisation for Economic Co-operation and Development) recommendations to develop robust semiconductor ecosystems in the said countries.

Under the terms of the program, the ITSI Fund will provide $500 million over five years starting in fiscal year 2023. Each year, $100 million will be allocated to ‘to promote the development and adoption of secure and trustworthy telecommunications networks and ensure semiconductor supply chain security and diversification,’ which indicates that in addition to semiconductor ATP capabilities, the initiative will also address the development of telecommunication networks. It aligns with ongoing IDB efforts to boost regional semiconductor supply chain competitiveness through the Americas Partnership for Economic Prosperity.

“The ultimate goal is to bring new trusted information and communications technology vendors and semiconductor production capacity into the global market, in ways that will directly benefit the United States as well as our allies and partners,” a statement on the initiative’s website reads.