This article is more than 1 year old

US, Mexico to align chip and lithium supply chains to amp EV production

Trump wanted a wall, Biden wants batteries

The US and Mexico are reportedly joining forces on supply chains for electric vehicle production in a mutual aid pact.

During economic talks in Mexico City reported on Tuesday, leaders from both countries discussed aligning the US’s semiconductor industry with Mexico’s lithium production – both resources essential to supporting a large-scale transition to electric vehicles.

Mexico President Andrés Manuel López Obrador in April nationalized the country’s lithium mining industry in a bid to capitalize on growing demand for electric vehicles, which is likely to grow rapidly as restrictions on the production of gas-powered vehicles become more prevalent.

California in August moved to phase out internal combustion engines by 2035 inline with the EU's planned ban. Several other European countries have introduced bans on the sale of non-electric cars in the coming decades.

As part of the agreement, Mexico's president plans to expand its national lithium industry and make the state of Sonora a leader in lithium, electric vehicle, and solar production.

Beyond lithium, Mexico is also home to several semiconductor facilities, and that too has a major input into the deal.

"Major elements of the semiconductor supply chains are already well established in Mexico, with US-based companies like Intel and Skyworks conducting research, development, design and test manufacturing in parts of Mexico," US Secretary Antony Blinken said.

Whether Mexico's investments in US supply chain security entitles it to investments under the $280 billion CHIPs and Science Act remains to be seen.

Last week, the US Commerce Department shared its plans for implementing the $52 billion CHIPs portion of the bill.

According to department documents, the funds are to be split – with $28 billion going toward leading-edge logic and memory manufacturing endeavors, $10 billion directed toward expanding capacity for legacy processes, and $11 billion going toward research and workforce development.

While both Blinken and Commerce Secretary Gina Raimondo have discussed opportunities afforded by the CHIPs bill with the Mexican president, documents released by the Commerce Department last week would seem to rule out this possibility.

"CHIPs funds must be used for facilities built in the United States and cannot support facilities being constructed or operated abroad," a Commerce Department document reads.

However, the Commerce Department has also called for "collaborations across the supply chain to clarify future demand, improve transparency and trust, and mitigate the risk of future chip shortages or oversupply." This includes collaborations between producers and suppliers.

As the US and Mexico take steps to strengthen their trade relationship, the Biden Administration is reportedly poised to unleash another wave of restrictions on China. The trade bans aim to further destabilize China's semiconductor manufacturing capabilities by restricting access to equipment required to produce sub-14nm parts. ®

More about

TIP US OFF

Send us news


Other stories you might like