Border Report: Arizona and Baja California Team Up to Grow Semiconductor Industry

A new nonstop flight between Tijuana and Phoenix got an enthusiastic reception in both cities as it launched last month. Promoters predicted the daily service would boost tourism, generate investment, and open new opportunities for collaboration between Arizona and Baja California.

This piqued my curiosity. Tijuana and Phoenix? Over three decades of covering the border, I’d never heard of any special connection between these two cities. After all, there’s a 360-mile driving distance between them. 

I started asking questions – and soon learned that the new route was just one piece of a larger story involving Arizona and Baja California. When business, academic and government leaders from the two states met in Phoenix last month, much of the talk was about the shifting global semiconductor industry.

A big question: Arizona already has deep and longstanding ties to the neighboring state of Sonora. So why would Arizona be interested in Baja California, a state that is already part of what’s known as the Cali-Baja Megaregion – which also includes San Diego and Imperial counties — and is billed as the “the largest integrated economic zone on the U.S.-Mexico border.” 

The answer: Baja California’s strong manufacturing sector. 

Fueling much of this interest in a Arizona-Baja California “macroregion” is the growing global demand for semiconductor chips, and the U.S. government’s effort to revitalize and expand the domestic industry and build reliable supply chains.

“Arizona has become a very, very big hub for semiconductor fabrication. And Baja California is one of the few states in Mexico that does have that specific area of expertise,” said Rodolfo Andrade, Baja California’s undersecretary of economy. 

Andrade was part of a delegation to Phoenix last month led by Baja California Gov. Marina del Pilar Avila and Kurt Honold, the state’s economy secretary. The visit involved meetings with academic, tourism, business and political leaders, including Katie Hobbs, Arizona’s governor, and Phoenix mayor Kate Gallego. 

Arizona and Baja California have long had ties, especially in the agricultural Mexicali Valley region, which abuts southern Arizona. But this new focus on semiconductors is a sign of the changing times, said Justin Dutram, assistant vice-president for Mexico and Latin American Affairs at the University of Arizona.

“I don’t think Arizona can be tied or California can be tied to just the state that sits across the border from them,” Dutram said. “The industries are too dynamic and they’re too dispersed. The markets are bigger now.”

Semiconductors

Semiconductors are crucial components in everything from satellite systems to smartphones to fighter jets. They have been called “the lifeblood of the digital economy,” and long-term supply disruptions could spell disaster for the world economy.

The U.S. government began efforts to ramp up domestic production after worldwide shortages of semiconductors during the Covid pandemic affected a broad range of industries. In August 2022, President Joe Biden signed into law the CHIPS and Science Act, aimed at expanding manufacturing, research and development in the United States – and also growing semiconductor supply chains with friendly countries such as Mexico.

Arizona is home to a number of semiconductor companies, and striving to become a global hub in chip manufacturing.  

According to the Greater Phoenix Economic Council, the city has positioned itself as a global hub since 2021, when the Taiwanese firm TSMC, the world’s largest chip manufacturer, broke ground on a semiconductor hub there. It’s  currently scheduled to start operations in 2025. 

Greater Phoenix is the fourth-largest metropolitan area for semiconductor manufacturing employment, with more than 140,000 semiconductor-related occupations, according to the council.

Chris Camacho, the council’s president and CEO, said it’s not just semiconductors, but other industries that connect his city with Baja California and offer opportunities for collaboration. Manufacturing sectors in both Phoenix and Tijuana have seen growth in aerospace, medical devices and electronics, he said in a written response to questions. 

Baja California 

Baja California has two long-established semiconductor companies. The Irvine-based company Skyworks Solutions, which manufactures chips for Apple’s iPhone, employs some 6,000 people at a facility in Mexicali. The German company Infineon, which supplies chips to the car industry, has a plant in Tijuana with 1,500 employees.

Last year, San Diego’s Qualcomm announced plans to establish an engineering and testing facility in Tijuana.  

“Right now they’re finishing up the improvements on the building, it should be ready by the middle of this year at the latest,” said Andrade, the economy undersecretary.  

He estimates the facility will open with some 300 to 400 employees: “The level of expertise they need regarding human resources is very high. Engineers, masters and PhDs, are going to be working in the Tijuana operation.”

Academic Connections

Just months after the signing of the CHIPS Act, in November 2022, Arizona State University committed to work with industry and universities in Mexico to boost production of semiconductors in North America. When ASU last October launched an online English course aimed at Mexican engineers in the semiconductor industry, class enrollment included 187 students and 26 teachers from the Autonomous University of Baja California.  

During last month’s visit, the University of Arizona signed agreements with two Baja California universities – CETYS Universidad and UABC to strengthen partnerships in education and research. 

The UABC agreement commits the two schools to explore ways to collaborate on “the manufacture of semiconductors, advanced manufacturing, health sciences, and the water-energy-food connection.” 

The CETYS memorandum addresses collaboration on “semiconductor fabrication, advanced manufacturing,” and “by creating opportunities for developing human resources with a binational and pluricultural understanding of the interdependent U.S. – Mexico relationship.”

In Other News

Bridge to Asia: The U.S. fossil fuel industry is preparing to export natural gas to Asia “as soon as next year” through Sempra Energy’s Costa Azul terminal north of the port of Ensenada, the New York Times reports. Several other such facilities are being planned along Mexico’s west coast. Investors have especially been eyeing the Gulf of California where one company has proposed an export terminal ten times the size of Costa Azul, raising concerns from environmentalists about “potential pipeline leaks and increased shipping in the Gulf of California,” a region with endemic and protected species such as the vaquita porpoise.

Business booms, despite violence: How is it that despite Tijuana’s high levels of violence, (much of it related to organized crime), the city’s nearshoring or maquiladora sector continues to boom? Nathaniel Parish, a freelance writer based in Mexico City, poses the question in Forbes Magazine and in the latest episode of his podcast, Modern Mexico. He interviews Laura Calderon, executive director of University of San Diego’s Justice in Mexico program. 

Musicians killed: Three members of the Ensenada musical group, Rivales del Norte, were abducted by masked gunmen on Feb. 23 while playing at a party in the community of Ojos Negros. Their corpses and that of a fourth man attending the celebration were found the following day on a nearby unpaved road. State authorities said their investigation points to the involvement of organized crime. Earlier in the month, a rising 19-year-old corrido singer known as “Chuy Montana” was shot dead after performing in Rosarito Beach; his driver’s body was found the next day. Authorities arrested a suspect, and said the killings did not appear to be drug-related.

Migrant drop-offs resume: Following the closing of a migrant welcome center in San Diego County due to lack of local funding and an unprecedented flow of people, U.S. Customs and Border Protection resumed the practice of dropping off migrants at area transit centers. Journalists discussed the issue on KPBS. 

Southbound lines continue: The long, maddeningly slow car lines from San Ysidro into Tijuana continue, despite protests and promises to address the issue. Last Tuesday afternoon, I spent three hours in the line. A friend reported a similar wait on Thursday afternoon. Baja California’s economy secretary last week accused Tijuana City Hall of holding up a plan to open additional southbound lanes, El Sol newspaper reported. Questioned by reporters about the holdup, Mayor Montserrat Caballero said she would look into it. 

Student fast lane: Tijuana on Thursday inaugurated a “fast-lane” for students who cross from Tijuana to San Diego from 6-9 a.m. on weekdays through a special access lane that is normally used by patients with medical passes. Up to 500 students in kindergarten through 12th grade are eligible for the program. But they will have to pay, reports the San Diego Union-Tribune: a $286 annual enrollment fee, plus $342 for a card is good for 20 crossings per vehicle.

Drownings: The number of migrants drowning in the Pacific Ocean near San Diego while attempting to cross the border has soared since the Trump administration nearly doubled the height of the border wall in the area, according to a University of California study reported in the Journal of the American Medical Association. 

New Mexican Consul General: Alicia Kerber Palma began her tenure as Mexican Consul General in San Diego  on Feb. 26. Her previous diplomatic posts included assignments in Colombia, Honduras, Ireland, Finland and the United States; her most recent position was as consul general in Houston. While serving at the Mexican Consulate in Kansas City, she instituted a special window aimed at providing services to migrant women — a program that was replicated at Mexico’s 53 consulates in the United States and several embassies. Kerber has a doctorate in international law from the Autonomous National University of Mexico.

Reach me at sandradibblenews@gmail.com