From Bananas to Microchips – Can it Become Latin America’s Silicon Valley? – The Costa Rican Times

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A President’s Provocative Question

“Who wants to carry bunches of bananas rather than go to work in a microprocessor factory producing the world’s most in-demand technology?” That was the pointed question posed by Costa Rican President Rodrigo Chaves to young Costa Ricans last March. The setting was a region dominated by banana production, but the occasion was a visit from U.S. Secretary of Commerce Gina Raimondo. The message was clear: Costa Rica is ready to shift gears from its agricultural roots to a high-tech future.

The Shared Vision: Costa Rica and the U.S. Eyeing the Microchip Market

The United States and Costa Rica find themselves aligned in a common goal: to grow the microchip manufacturing industry within Costa Rica. For Costa Rica, this means attracting greater Foreign Direct Investment (FDI), enhancing the skill sets of its workforce, and injecting much-needed capital into the economy. For the U.S., the aim is to reduce its heavy reliance on South Asia for microchip production, a dependency that has exposed vulnerabilities in the global supply chain.

In their March meeting, Raimondo and Chaves discussed a shared commitment to bolstering semiconductor supply chain capacity in the Western Hemisphere. Raimondo applauded Costa Rica’s efforts to position itself as a key player in semiconductor assembly, testing, and packaging—critical steps in transforming raw silicon into the sophisticated microchips that power modern technology.

The Semiconductor Ecosystem: Building a High-Tech Future

The discussions between Chaves and Raimondo also touched on the broader Partnership of the Americas initiative. This partnership is focused on developing a skilled workforce across the region in critical digital technology sectors, including cybersecurity, semiconductors, and artificial intelligence. The idea is to create a robust digital infrastructure that can support the demands of the 21st century while fostering economic prosperity.

For Costa Rica, this represents a significant opportunity. The country is positioning itself not just as a manufacturer, but as a hub of technological innovation in Latin America. The groundwork is being laid for a future where young Costa Ricans won’t just be workers in a factory, but innovators at the cutting edge of global technology.

A Look Back: Intel’s Departure and Return

Costa Rica’s relationship with the semiconductor industry has been a rollercoaster ride. In 2014, Intel, a global giant in chip manufacturing, announced it was relocating its production facilities from Costa Rica to China, Malaysia, and Vietnam. This move was seen as a significant setback for Costa Rica, a country that had prided itself on being a stable democracy with a strong economy.

However, a decade, a pandemic, and several trade wars later, the tides have turned. In August 2022, Intel opened its only semiconductor chip assembly and test operations facility in the Western Hemisphere in Costa Rica. This marked a significant vote of confidence in Costa Rica’s ability to support high-tech industries, and Intel has since committed to investing $1.2 billion in the country over the next two years.

The Rise of Costa Rica in Global Investment Rankings

Costa Rica’s efforts to attract foreign investment are paying off. In 2022, the country ranked first in Investment Monitor’s Inward FDI Performance Index. This index measures a country’s ability to attract inward investment relative to its gross domestic product (GDP), and Costa Rica’s top ranking underscores its success in creating a favorable environment for investors.

One of Costa Rica’s standout achievements has been the development of a robust medical device manufacturing sector. This industry has become one of the country’s top exports, showcasing Costa Rica’s ability to excel in complex manufacturing processes that require precision and high standards of quality.

The Chaves Administration’s Strategy: Laying the Groundwork for Tech Growth

Under President Chaves, the Costa Rican government has made concerted efforts to attract FDI through a combination of tax incentives, regulatory reforms, and the promotion of its 99% renewable energy grid. These initiatives are designed to make Costa Rica an attractive destination for high-tech companies looking to establish or expand their operations.

One of the key components of this strategy is the “roadmap for strengthening the semiconductor ecosystem in Costa Rica.” This roadmap outlines the government’s plan to develop talent, modernize incentives, attract investment, and improve the regulatory framework. By focusing on these areas, Costa Rica aims to create a supportive environment for the semiconductor industry to thrive.

The U.S. Connection: Strengthening Supply Chains with Trusted Allies

The United States’ focus on strengthening supply chains with stable allies and bringing production closer to home presents a significant opportunity for Costa Rica. As the U.S. seeks to reduce its dependency on South Asia for microchips, Costa Rica is well-positioned to become a key partner in this effort. The country’s stable political environment, skilled workforce, and commitment to sustainability make it an attractive destination for U.S. companies looking to diversify their supply chains.

The Future: Costa Rica as Latin America’s Silicon Valley?

As Costa Rica continues to attract high-tech investment and develop its semiconductor ecosystem, the question arises: Could Costa Rica become Latin America’s Silicon Valley? The signs are promising. The country has the political will, the economic stability, and the human capital needed to achieve this ambitious goal.

The return of Intel and the ongoing investment in semiconductor manufacturing are just the beginning. If Costa Rica can continue to build on this momentum, it could very well emerge as a leader in the global technology industry. The shift from bananas to microchips is not just a change in industry—it’s a transformation of the entire economy, one that has the potential to elevate Costa Rica to new heights on the world stage.

A New Chapter for Costa Rica

President Rodrigo Chaves’ provocative question to young Costa Ricans was more than just a rhetorical flourish—it was a call to action. As Costa Rica embarks on this journey towards becoming a high-tech powerhouse, the country is writing a new chapter in its history. The move from agriculture to technology represents a fundamental shift in the nation’s economic strategy, one that promises to bring new opportunities and prosperity to its people.

With the backing of the U.S. and the commitment of global tech giants like Intel, Costa Rica is well on its way to becoming a key player in the semiconductor industry. The future is bright for this small but ambitious country, and the world is watching as it takes its place as a leader in Latin America’s technology sector.

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