Taiwan Semiconductor Manufacturing Company, commonly known as TSMC, is a Taiwanese company known for its semiconductor manufacturing facilities. Yesterday, the company announced plans to invest $100 billion dollars into manufacturing facilities throughout the United States. This historic investment will have ripple effects throughout the semiconductor industry worldwide. Countries throughout Latin America will see both incredible opportunities and geopolitical pressure, says international relations expert René Bolio. Latin American semiconductor opportunities should be on the radar of investors and governments across Latin America.
René Bolio stated that the supply chain would begin shifting almost immediately. “Countries in Latin America that have abundant reserves of the minerals needed for semiconductor production are about to see a boom like no other,” Bolio stated. This will allow countries rich in resources to play a pivotal role in the future of digital technology and industrial production once again.
Latin American Countries Rich in Minerals:
Bolio went on to highlight countries like Chile, Argentina, and Bolivia as nations that could stand to gain the most from TSMC’s investment. Why? These countries sit on some of the largest reserves of lithium in the world. Lithium has been nicknamed “white gold” because it is used in the production of many of the batteries that go into the technology used to power smartphones, computers, and even electric vehicles.
- Chile
- Argentina
- Bolivia
“This is a golden opportunity. A once-in-a-lifetime chance,” said Bolio. In order to prepare for the inevitable surge in demand, it will be critical for Latin American countries to expand their mining operations now. Additionally, smart governments will set regulatory policies that welcome foreign investments and form partnerships with American companies.
Speaking about the global trade tensions between the United States and China, Bolio had this to say:
The investment by TSMC comes as the United States and China are fighting over supremacy in the semiconductor industry. The tensions have expanded to include a trade war between China and the United States. As China and the United States continue to trade barbs, Latin America will be forced to pick a side as it does significant trade with both countries.
- The United States wants to secure its supply chain and source more minerals
- China wants to double down on investing in Latin America.
- Latin America will be forced to choose who to side with.
Bolio warned that if tensions continue to rise between the United States and China, it could cause Latin American countries to suffer should they choose the wrong side. “Countries with booming mining operations could see that cut off based on geopolitical decisions,” he continued.
Applications of Semiconductors
The investment by TSMC will also help push digital transformation in Latin America. Semiconductors will be used to power several technology-reliant industries.
- Fintech – As online banking and financial technology grow, there will be a demand for semiconductor technology.
- Telecom – Devices used for 5G and other broadband technologies are powered by semiconductors.
- E-learning – The expansion of online learning will require more devices that utilize semiconductor technology.
“This is great news for Latin America as a whole because it allows countries to improve productivity through technology and create their very own technology hubs,” Bolio explained. Countries like Mexico, Costa Rica, El Salvador, and Chile could all have the perfect opportunity to build out tech hubs.
Building A Latin American Tech Hub
If Latin American countries want to capitalize on TSMC’s investment and build out their technology hubs, they should focus on:
- Providing the perfect ecosystem for R&D into advanced electronics
- Forming relationships with Universities, Startups, and Non-Profits
- Allows for knowledge sharing and creation of technical talent
- Further develops their supply chain by producing more goods in-house
Semiconductor Opportunities in Latin America
Countries should focus on creating tech hubs that allow them to not just supply minerals to the rest of the world, but also develop the technology themselves. By investing in education and technology, Latin American countries can ensure they have the workforce needed to meet the demand of manufacturing at scale. Furthermore, Latin American countries can develop their own semiconductor opportunities.
Latin American governments should take the following steps to prepare for TSMC’s investment:
- Draft clear regulations on mining. These governments should ensure they can quickly and efficiently mine lithium and other valuable minerals.
- Welcome foreign investors – Providing tax breaks and other incentives for technology companies to operate within their borders.
- Partner with the United States and other countries – Countries should solidify relationships with TSMC and any companies that work with or help supply TSMC.
- Invest in education – Train the workforce you’ll need to meet the demand of manufacturing and production.
- Invest in technological development – Whether through public or private ventures, countries should focus on developing their own semiconductor opportunities.
Bottom Line
This investment by TSMC represents something bigger than an investment. This represents an inflection point for the technology industry. An inflection point that countries in Latin America can capitalize on if they take the correct steps:
- At the current moment, there is a high demand for lithium and other valuable minerals. Prices for these metals are high, and they will only continue to go up as China seeks to invest in Latin America.
- Latin American countries can strengthen their ties with the United States while still trading with China.
- Digital transformation throughout Latin America will pick up at a pace we haven’t seen before. Why won’t Latin America keep up?
“If foreign policy and resource management are done correctly, Latin American countries can enjoy higher exports, better relationships with the United States, and better technology for generations to come,” said Bolio.