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 News Around the Republic of Mexico | February 2005 
Investors Bet on Silicon Border in Mexico
 Tim Gaynor - Reuters
 Mexicali, Mexico - On an empty stretch of Mexican desert where nobody but cowboys now roam, developers see a new, $1 billion high-tech industrial park dubbed the "Silicon Border."
California-based developers hope the chip manufacturing and assembly complex, located just south of the U.S. border, will become a new hub of the North American semiconductor industry and take advantage of Mexico's cheaper labor costs.
The 15 square mile patch outside Mexicali is relatively close to the corporate headquarters of U.S. high- tech companies and will compete with China and Taiwan in the $200 billion global semiconductor industry.
"The project aims to capture some of the new capacity in the semiconductor industry," said Ron Jones, the president and chief executive of Silicon Border Development, the California- based developers behind the project.
"More and more of it is going to Asia and we believe it is prudent to have a parallel supply chain in North America," he told Reuters in a telephone interview.
Mexico has had problems attracting high-tech companies due to relatively low education levels, plus energy and labor costs that are often much higher than Asia's. Elsewhere, large-scale semiconductor projects such as Dubai's "Silicon Oasis" have disappointed in the past.
Still, Mexican authorities have pledged 10-year tax breaks to hi-tech companies locating to the site, which is just a two hour drive from San Diego, in an area with abundant water, power and gas supplies, Jones said.
A Stone's Throw From Border
Jones said the science park aims to woo a variety of hi- tech businesses, including semiconductor and flat panel display makers, as well as contract chip manufacturers known as foundry plants.
It wants to create 100,000 jobs for Mexican workers and U.S. commuters slipping over the border each day.
The group is negotiating financing of between $100 million to $125 million to break ground on the first stage of the five- step project as soon as August of this year.
Business leaders in Mexicali, which has 600,000 residents and three universities, have embraced the project, which they say will add value to the traditional export assembly plant or "maquiladora" model.
"They are looking for engineers and designers ... and not just intensive labor ... so it would bring real economic benefit to Mexicali," Federico Prieto, the president of the Mexicali Economic Development Advisory Council told Reuters. Industry analysts are also hopeful.
"There is a danger that we could lose a lot of our design and research activities to be closer to the manufacturers in China and Taiwan," said industry analyst Risto Puhakka of VLSI Research. "In terms of North American competitiveness ... we'd be delighted to have it succeed." |
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