Promoting the Development of the Semiconductor Ecosystem in Panama
📄 Read at OECD ↗Country Review · Jul 2026 · 143 pp
Summary
Panama has no existing semiconductor manufacturing ecosystem. The OECD review, funded by the US Department of State under the CHIPS Act’s ITSI Fund, examines how Panama can leverage its geographic position, logistics platforms, air-maritime connectivity, and international services experience to enter selected semiconductor value-chain segments. The report identifies circuit board construction and assembly/testing/packaging as viable entry points, while flagging critical gaps in workforce development, STEM education, English proficiency, and the absence of WTO Information Technology Agreement 2 membership (which imposes tariffs that make semiconductor investment uncompetitive).
Key Insights
Panama starts from zero. There is no existing microelectronics manufacturing. The semiconductor strategy was launched by former President Cortizo on 30 April 2024, creating a Commission for Innovation in Microelectronics and Semiconductors under the Ministry of Commerce and Industries.
Viable entry points: circuit boards and ATP. The OECD identifies circuit board construction and assembly/testing/packaging as realistic segments — the same entry-level activities recommended for the Dominican Republic. Advanced fabrication is not on the table.
Logistics is the differentiator. The Panama Canal, Tocumen International Airport, and the Colón Free Trade Zone give Panama air-maritime connectivity advantages that few small economies can match. The OECD frames these as enabling specialised logistics for semiconductor supply chains, not manufacturing per se.
Workforce pipeline is the binding constraint. Panama lacks qualified engineers, researchers, and technicians. The government established scholarship programmes with Arizona State University and Purdue University for master’s and doctoral degrees in microelectronics.
WTO ITA-2 accession is critical. Industry has urged Panama to sign the WTO Information Technology Agreement 2 to eliminate tariffs on semiconductor products — without this, Panama cannot compete for investment against tariff-free jurisdictions.
Four-pillar OECD recommendation structure. (i) Policy coordination through the new Commission, avoiding isolated initiatives; (ii) human capital development — STEM, English, international specialists; (iii) research and innovation ecosystem — applied research, technology financing, local suppliers; (iv) infrastructure — electricity, water, digital connectivity, cybersecurity.
What This Means for India
Panama is a useful floor for calibration. When even Panama — with zero semiconductor manufacturing and a 4-million population — is being positioned for ATP entry, India’s semiconductor strategy should be ambitious well beyond OSAT. India’s comparative advantage includes a 1.4-billion population, 95,000 existing semiconductor workers, and operating design centres for every major chip company. The ISM programme should be asking what India can do that Panama cannot, not competing on the same entry-level segments.
The logistics angle is relevant for Indian port states. Panama’s competitive advantage is logistics infrastructure, not manufacturing capability. Indian states with major port infrastructure — Gujarat (Mundra, Kandla), Tamil Nadu (Chennai, Ennore), Maharashtra (JNPT) — could similarly pitch specialised semiconductor logistics services (bonded warehousing, cold-chain for sensitive materials, customs fast-tracking) as a complement to manufacturing.
Source
OECD (2026), Promoting the Development of the Semiconductor Ecosystem in Panama, OECD Publishing, Paris, https://doi.org/10.1787/c5ad8bd3-en.