Executive Summary

Last week’s U.S.-Mexico High-Level Economic Dialogue (HLED) in Mexico City between senior government officials of Mexico and the United States focused directly on the bilateral implications of two major pieces of legislation recently signed into law by President Biden: The CHIPS and Science Act (CHIPS) and the Inflation Reduction Act (IRA). Together, these laws seek to develop resilient North American supply chains for semiconductors, batteries, strategic minerals, and electric vehicles and in the process may provide significant opportunities for investment and production in Mexico.

The CHIPS Act aims to promote American leadership in semiconductor manufacturing by providing federal incentives to encourage advanced research and development and to develop the domestic chip manufacturing supply chain. Essential to long term U.S. security and economic competitiveness, this supply chain can extend into allied countries such as Mexico where advanced industrial production is already taking place. The CHIPS Act also includes funds to help partner countries establish communications technologies and supply chain activities needed to integrate into a U.S.-centric semiconductor production chain. The Inflation Reduction Act’s clean energy provisions include subsidies to produce North American electric vehicles from which Mexico’s auto sector is well-positioned to benefit.

The senior leaders co-chairing the U.S. delegation to the HLED made clear the U.S.’s desire to involve Mexico as a key partner in the realignment of the semiconductor and high-tech global value chain. They stressed both the unique opportunity and the urgency with which Mexico, as a key partner in North America, must move to seize what Mexican Foreign Secretary Marcelo Ebrard himself publicly recognized as a “once in a lifetime opportunity.” U.S. Secretary of Commerce Gina Raimondo challenged Mexico to identify specific incentives the country might offer to complement those offered through both the CHIPS and IRA legislation. 

In our assessment, having participated in the inauguration of the HLED in 2013 and watching its evolution since, the meeting in Mexico City last week may be the first time that the HLED delivered on the promise of its original vision: advancement of a strategic partnership for the United States and Mexico to enhance their collective competitiveness within the larger North American enterprise. But having identified the opportunity, the proverbial devil is now in the details and in the ability of the partners, especially Mexico, to seize the moment. This Client Alert examines the opportunity and some of the challenges that await.

Full Report: All CHIPS on the Table

Open in New Page                         Download File