North America Semiconductor Conference Meets in Washington to Advance Ambitious Plan to Rebalance Supply Chain
Friday, May 19, 2023, 3:10pm
by Rina Pal-Goetzen, Director of Global Policy
SIA and Arizona State University this week hosted the first North America Semiconductor Conference (NASC), a new trilateral endeavor between the governments, academic institutions, and private sectors of Mexico, Canada, and the United States. NASC aims to create a contiguous region of semiconductor development and production in North America and to leverage existing strengths of the three countries to work toward an integrated ecosystem that can better compete globally. SIA CEO John Neuffer moderated NASC’s trilateral semiconductor forum that took place today in Washington.
NASC was launched during a January meeting between Canadian Prime Minister Justin Trudeau, Mexican President Lopez-Obrador, and U.S. President Joe Biden, with the goal of advancing government policies and increasing investment to strengthen regional semiconductor supply chains. The inaugural meeting this week focused on aligning industrial policy on semiconductors, expanding the North American semiconductor footprint, strengthening the semiconductor supply chain, and growing the semiconductor workforce across North America.
NASC is part of a major, multifaceted effort to rebalance and rebuild semiconductor supply chains in the Western Hemisphere. Core to this effort is the $52 billion CHIPS and Science Act, a landmark law enacted last year to incentivize U.S.-based chip production and innovation. Since it was introduced in Congress, CHIPS has already spurred more than $210 billion in new company investment commitments. While CHIPS is a massive step forward, it is not intended to be a ticket to semiconductor self-sufficiency, so it remains critical for the U.S. to work closely with partners and allies to strengthen global semiconductor supply-chain resiliency.
One of the key drivers behind the launch of NASC was the pandemic-induced global semiconductor shortage, which hit many industries hard. The shortage led to a significant shift in government and industry focus towards building more resilient supply chains. By building up the semiconductor industry within North America, the region can improve the resilience of its technology supply chains by having a greater share of the value-chain located within the region.
Each country already brings to the table significant strengths:
- The United States leads in several key segments of the semiconductor value-chain, especially those that are high-value add and research intensive. This includes semiconductor design, electronic design automation software, semiconductor manufacturing equipment, and overall semiconductor R&D. Many of the leading chip-design companies are headquartered in the United States. The U.S. is also strong in analog chip design and manufacturing, with a significant share located in the U.S. While the U.S. does have several competitive leading-edge logic and memory manufacturers, the bulk of such activity today occurs outside of the U.S.
- Canada’s semiconductor industry, while small relative to the chip sector in the United States, includes over 100 domestic and multinational companies conducting semiconductor research and development. Its manufacturing base includes five commercial facilities in areas such as compound semiconductors, microelectromechanical systems (MEMS), and advanced packaging. Many global chip companies are conducting R&D and semiconductor chip design in Vancouver, British Columbia. Homegrown Canadian companies are also making their mark. MOSAID maintains a history of R&D innovation. The strong university presence in the Ontario region is a hub for start-ups in the design space and poised to add significant value in the sector. Canada is also rich in the minerals critical to manufacturing for the semiconductor industry, and efforts are being taken to explore if these can be extracted and finished for use in a sustainable manner.
- Mexico is already a growing hub for semiconductor assembly and test operations. Several multinational companies have major back-end chip operations in Mexico and others are growing their chip engineering and design workforce in the country. In addition, Mexico has a thriving electric automotive sector and seeks to create ecosystems for the supply of chips for this industry. The state of Sonora is a leader in the production of lithium, solar energy, and electric vehicles. Mexico’s geographic proximity, strong manufacturing sector, relatively young workforce, and favorable terms of trade uniquely position it to join this effort to rebalance the supply chain.
The goal of NASC is to coordinate efforts across the region. We believe NASC should focus on four major areas:
- Workforce Development: The shortage of qualified workers in the technology industry is a global issue, and North America is no exception. To address this, university partnerships should be expanded across Mexico, the U.S., and Canada to train enough workers for the industry. This will help address the workforce shortage in the industry both in the short-term and long-term. NASC should be an important forum to have governments work together with industry to identify and launch training and upskilling efforts, especially by leveraging large research universities across the region to partner with smaller community colleges and technical institutes to develop semiconductor workforce related curriculum and a cadre of professional trainers.
- Research & Development: A key motivation behind the development of NASC is the desire to ensure North America remains at the forefront of technological innovation and development. With government support in NASC, the region can ensure it remains a major player in the global technology landscape for years to come. This involves promoting university partnerships across all three countries to keep curriculum up to date and relevant for the jobs in the industry and creating consortiums between research institutions, such as working in collaboration with the National Semiconductor Technology Center (NSTC).
- Coordinating Mutually Beneficial Government Incentives: To make semiconductor manufacturing competitive again in the Western Hemisphere, government incentives will be key. While the CHIPS Act will attract important leading-edge investments to the United States, we cannot and should not attempt to rebuild everything. Mexico could play a much stronger role in the semiconductor assembly, test, and packaging supply chains and Canada could boost its role in chip design and environmentally sustainable rare earths mining and processing. Key to this effort are government incentives to make such capital-intensive investments competitive to other regions that offer generous support. Such growth-oriented incentives could include tax breaks, grants, and funding for research and development. We strongly recommend both Mexico and Canada to seek to develop their own incentives packages and coordinate efforts with the U.S. through NASC.
- Critical Minerals and Environmental Protection: The semiconductor industry is committed to environmentally sustainable manufacturing methods. It is well known that the global electronics industry relies on only a few sources for the processing of rare earths. Canada, Mexico, and the United States should leverage NASC to explore clean and sustainable processing and extraction of critical minerals in a cost competitive manner. NASC can also pool important resources to overcome environmental challenges.
NASC holds great promise as a critical platform to help rebalance the global semiconductor supply chain and bring more manufacturing, assembly, test, packaging, and design to the North America region. SIA looks forward to playing a collaborative role as this important new effort progresses in the months and years ahead.
 Canada provides attractive incentives and services for companies looking to design and manufacture semiconductors in the country: Strategic Innovation Fund (SIF), Accelerated Investment Incentive, Scientific Research and Experimental Development (SR&ED) Tax-Credit Program; and BizPals. https://www.investcanada.ca/blog/why-canada-solution-global-semiconductor-shortage