Semiconductor manufacturing in Costa Rica can benefit the US
Table of Contents
Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.
US policies to return semiconductor production to ‘friendly countries.’
Not long ago, the United States led the world in producing semiconductors necessary to manufacture chips. However, over the years, competitiveness in Asia, where costs are up to 50% less than in the US or Europe, provoked this critical industry to settle in other hands. The US went from providing 40% of semiconductors worldwide to 12% in just a few decades.
The logistical crisis suffered by the pandemic, together with the constant political and commercial disagreements with China, as well as the strong tension between the great Asian dragon and Taiwan, made the US government propose a strategy of bringing semiconductor manufacturing closer to home.
The role of semiconductor manufacturing in Costa Rica
Given this approach, semiconductor manufacturing in Costa Rica comes into play, driven by nearshoring (due to its proximity to the US ) and friendshoring (due to its affinity with the US).
“Currently, our relationship is stronger than ever, and global trade trends, such as nearshoring and friendshoring, have further strengthened the profile of our country as a strategic trade partner and as a recipient of investment from the United States,” explains Manuel Tovar, Costa Rican Minister of Foreign Trade (Comex).
Furthermore, Costa Rica has been a pioneer in the semiconductor industry in Latin America, “where we have managed to generate more than a quarter of a century of experience in its manufacturing and have succeeded in consolidating a national ecosystem with more than a dozen companies that participate in different segments of the value chain in areas such as design, assembly, and testing.”
This semiconductor manufacturing in Costa Rica has been crucial due to its historical impact on the country “since it has diversified our export offerings, has strengthened our human resource pool, and has promoted the Costa Rican advanced manufacturing industry.”
All this has been recognized by the United States by designating Costa Rica as its first strategic partner worldwide within the Chips and Science Act (CHIPS Act) framework in July of last year. Costa Rica is also a beneficiary of the ITSI Funds, the International Fund for Innovation and Technological Security.
Tovar also points to Costa Rica’s free trade agreements “that give us access to a third of the world’s population” and the privileged geographical location, which “positions us as an ally for this industry on a global level.”
In March, the Costa Rican Ministry of Foreign Trade launched the roadmap for semiconductor manufacturing in Costa Rica, with public policy initiatives on human resources, incentives, investment attraction, and regulatory improvement that benefits the entire semiconductor ecosystem in the country “and that positions Costa Rica as an ideal investment destination for the industry.”
The US Secretary of State for Commerce, Gina Raimondo, was present at the launch of the roadmap mentioned above, which added to the visit in January of the Undersecretary of Economic and Business Affairs, Ramin Toloui, during the Symposium on the Semiconductor Workforce of the Association of the Americas for Economic Prosperity. These visits from high-ranking officials clearly show the American interest in developing semiconductor manufacturing in Costa Rica.
Advanced Companies
“The strategy involves seeking the growth of companies already established. This is the first level of the opportunity that is presented to us,” explains Vanesa Gibson, director of Investment Climate of the Costa Rican Coalition of Development Initiatives (CINDE. In that sense, “much of what is going to be emphasized in country strategy is the development of the talent that these companies require to advance their growth initiatives.”
The country is already positioned, “and this strategy repositions us in the Top of Mind of companies that, from the US and Europe, are looking at Costa Rica,” she says. Furthermore, with the rebalancing of value chains, “there are opportunities to bring in new companies.”
Timothy Scott, Government Affairs Manager at Intel Costa Rica, explains: “The world needs a more geographically balanced, resilient, and secure semiconductor supply chain. “Intel is working to balance the global semiconductor value chain with 50% in the Americas and Europe and another 50% in Asia.”
In this scenario, Intel’s operations in Costa Rica are of great relevance because the country represents a significant percentage of the multinational’s server processors as part of the Assembly and Test operations, which join two other production centers installed in Costa Rica: the Global Services Center and the Research and Development Center.
“There are many opportunities for semiconductor manufacturing in Costa Rica, and we hope that through the incentives that the United States government has launched, Costa Rica can benefit from being the only country in the region with proven experience in semiconductor manufacturing. Intel has had a presence in the country for 27 years.
Intel Costa Rica has nearly 3,400 employees and 4,700 contractors. Its facilities occupy 26,000 square meters of production plant and 17,000 square meters of laboratories for multiple software, hardware, and platform engineering operations. This is in addition to the company’s most specialized corporate services center. Employment qualifications are high. Around 1,700 engineering professionals are employed by Intel in Costa Rica.
Between 2020 and 2023, Intel injected almost US$1 billion into its operation for semiconductor manufacturing in Costa Rica, while in 2023, it announced an investment of US$1.2 billion for the next two years.
Rydev and Advantest started 16 years ago and are two companies established in Costa Rica. The first is of Costa Rican capital, and the second, of American origin, was bought by a Japanese company. Both have sophisticated operations that generate quality employment, which is one of the attractive characteristics of the sector. Advantest manufactures “very complex” circuit boards, says Óscar Barquero, Senior Project Engineering Manager of the company. The company’s clients are Intel, Nvidia, Qualcomm, and Western Digital.
“Our part is heavy on engineering and a very scientific process.” Barquero believes that we have included Costa Rica in the ITSI Funds, which is positive since it can attract investment to the country. Because of this, his own company could bet on growing the Costa Rican operation.
Rydev works on integrated circuits and front-end design. Their clients are mostly American companies.
Its vice president and COO, Ronny García, believes that with these movements, “companies from outside will see Costa Rica as a chip partner. This means it is a reliable partner beyond the funds that can be given. From the point of view of the US State Department, I think that semiconductor manufacturing in Costa Rica is a very positive thing.” García points out that this can cause more companies in the sector to migrate to the country, generating more links in the industry supply chain.
This is how Costa Rica is achieving it
Costa Rica will seek to facilitate the arrival of more investments in semiconductors. To do this, the country must work in three areas: logistical, technological, and educational infrastructure.
Hubert Vargas, Vice Minister of Telecommunications, asserts that Costa Rica must improve telecommunications infrastructure to maximize the attraction of FDI: “The MICITT has two main priorities. These are the development of infrastructure for wireless connectivity and the development of wired infrastructure.” To achieve this, Executive Decree 44335 has been issued to encourage and promote telecommunications infrastructure construction.
Concerning logistics infrastructure, “Costa Rica has made positive progress on the path towards the modernization of its roads, ports, airports and border posts,” says Tovar, Minister of Comex, who also points to “opportunities for improvement” and says that the Ministry of Public Works and Transportation (MOPT) “is working to improve logistics infrastructure,” with projects for the expansion of the Limón International Airport (Atlantic) and the modernization of the Port of Caldera (Pacific).
Costa Rica: Center of Excellence
“Costa Rica is prepared to become a nerve center of the digital ecosystem. Taking advantage of this potential, the country’s government, in collaboration with the private sector, is creating the Center of Excellence that would serve as technical training for the American countries receiving ITSI Funds,” comments the Vice Minister of Telecommunications, Hubert Vargas.
The main objective of this project is to establish a dynamic and comprehensive center in Costa Rica to improve the qualification of the workforce in critical digital technology sectors, such as cybersecurity, 5G/6G, semiconductors, artificial intelligence (AI), cloud, augmented reality (AR) and virtual reality (VR). The Center will first serve as a training and development space for Costa Rica.
In addition, it seeks to foster innovation, stimulate economic growth, and promote regional collaboration. “Our efforts are focused not only on promoting the creation of R&D industrial centers and laboratories for the advanced manufacturing industry, including semiconductor manufacturing in Costa Rica. The Center will also develop and specialize in a curriculum for the semiconductor industry and industries linked to its value chain. This will be done hand in hand with the national academic sector, the private sector, and cooperative parties such as the US and the EU,” says Tovar.
In conclusion, Costa Rica’s emergence as a strategic partner in semiconductor manufacturing marks a pivotal moment in regional and global industry dynamics. Costa Rica is poised to be crucial in reshaping the semiconductor supply chain with its established expertise, supportive infrastructure, and initiative-taking government initiatives. As evidenced by significant investments from industry giants like Intel and the inclusion in initiatives such as the CHIPS Act, Costa Rica attracts attention and fosters confidence as a dependable partner in the semiconductor ecosystem. With ongoing efforts to bolster logistical, technological, and educational infrastructure, coupled with the establishment of the Center of Excellence, Costa Rica is well-positioned to meet the industry’s demands and drive innovation and economic growth in the region.
Contact Us
Please use this form to contact us and we will respond as soon as possible: