Costa Rica poised for expansion in semiconductor industry

Costa Rica's foreign direct investment promoter Cinde expects several local expansions and new projects to go ahead in the semiconductor segment as part of the US strategy to reformulate its ICT value chain.

“What we're going to see is greater interest from companies that are already established, while the strategies to promote and attract new companies and projects will be strengthened,” Vanessa Gibson, director of investment climate at Cinde, told BNamericas.

Gibson said that “between two and four projects” related to the semiconductor industry could be announced this year. These initiatives will involve expansions of installed infrastructure or diversification.

“In the last year, companies that are already established are reviewing their strategy in the country and exploring what more can be done in Costa Rica,” she added.

Currently there are only two companies manufacturing semiconductors in Costa Rica: Intel and Qorvo.

Intel opened its plant in 2022 and this year announced that it will increase staff in the country for financial services. “Costa Rica plays a very important role, not only for semiconductors, but with outsourcing, as we provide services to other countries on the continent and even the world through the country,” Intel regional director Gisselle Lanza told BNamericas last year.

Cinde estimates that there are another 15 or 20 companies that are directly related to the semiconductor ecosystem and another 20 indirectly.

“There's an opportunity to attract new companies from this sector and others that are part of this value chain,” said Gibson.

The specialist expects growth in investments in the design or testing area. “These are companies that are likely to have greater demand from their customers in the United States due to this trend” of reorienting the value chain, she explained.

Cinde said that companies in the areas of testing and assembly could eventually set up shop in the country.

Work is currently being done to identify the niches of opportunity in which Costa Rica can compete to attract investments. “The first approaches are already being made to explore and have a better basis for that strategy,” she added.

US Secretary of Commerce Gina Raimondo is expected to visit Costa Rica this month to advance bilateral trade agreements, specifically in the semiconductor value chain.

Costa Rica held meetings last November with the US Semiconductor Industry Association (SIA) and associated companies.

In February, the US Department of State's Bureau of Economic and Business Affairs awarded a total of US$13.8mn to Arizona State University under the International Technology Security and Innovation Fund (ITSI) under the CHIPS Act.

This financing will begin a program aimed at expanding semiconductor chip assembly, testing and packaging (ATP or downstream) operations in several partner countries in the Americas, including Costa Rica, and the Indo-Pacific region.

The US is a strategic partner of Costa Rica, accounting for close to 60% of foreign direct investment as of the third quarter of 2023, according to the latest data released by Costa Rica's foreign trade ministry.

The cumulative total of foreign direct investment in the country was US$2.69bn in the first nine months of 2023.