At a time when Costa Rica’s trade deficit has grown to its largest size in more than a decade, the country’s smallest export continues to be its biggest moneymaker. That product is the Intel Pentium processor, or the microchip, which continues to be the flagship export for Costa Rica, even in a year of overall economic decline.
In the third quarter of the year, July through September, sales at Intel Costa Rica reached more than $595 million, an 18 percent increase over the same period in 2008. It was the second consecutive quarter that sales increased at Intel, which has 3,000 employees at its plant in Heredia, northwest of San José.
Through the first nine months of 2009, Intel had exported 75 million microprocessors and chipsets, accounting for $1.64 billion in sales, and Intel expects to exceed $2 billion in sales for the third consecutive year.
But the rest of the Costa Rican export market has not been so fortunate.
As a result of the worldwide economic crisis, the export market in Costa Rica has suffered from lessened demand abroad.
In 2008, the trade deficit, which compares the cost of imports to sales generated by exports, was $5.8 billion, as Costa Rica imported over $15.3 billion worth of goods and services and exported around $9.5 billion, $2 billion of which were Intel products.
According to the Foreign Trade Pro– motion Office (PROCOMER), a narrowing of the trade deficit in 2009 is unlikely, as export sales have fallen $886 million, a 12 percent decrease in the first nine months of the year compared to the same time frame during 2008.
As figures for the third quarter were released, Foreign Trade Minister Marco Vinicio Ruiz explained that the “dampening in the export market is in response to the fact that the country has received less foreign direct investment, particularly in the demand for exported products and markets.” Ruiz cited the worldwide economic crisis as the reason for diminished foreign investment.
Yet, even as the rest of the export market sputters, sales of the mighty microchip carry on.
According to Intel, the average annual sales of over $2 billion account for around 20 percent of the total sales earned in the export market. The large profit margin also accounts for between 3 to 4 percent of the nation’s gross domestic product (GDP).
To put that in perspective, according to export statistics released by PROCOMER, throughout the first nine months of the year Intel’s sales have brought in more revenue than all agricultural exports, including more than three times the revenue generated by banana exports and seven times the exports of coffee, Costa Rica’s leading agricutltural export products.
“Intel is the gem of the Costa Rican high-tech export market,” said Andrea Centeno, communications manager at the Costa Rican Investment Board (CINDE). “Sales at Intel drive the export market and make Costa Rica one of the top technology and computer software exporters in the world.”
According to a study in October, CINDE claimed that Costa Rica was, percentagewise, the fourth largest exporter of high-tech and computer software products in the world. Using information from a World Bank study of development indicators, CINDE found that, of all the products and services exported by Costa Rica, 46 percent are high-tech products.
Making the Microchip at Intel
Since its arrival in 1997, Intel has changed the face of exports in Costa Rica. Previously known for agricultural exports – such as bananas, coffee and pineapples – the export of Intel microchips and chipsets has altered the way foreign investors perceive the country.
Much of the reason for Intel’s success is rooted in the meticulous construction process of the microchip and chipset, components that undertake separate but vital functions of a computer.
“The chip, or processor, is the brain of the computer and the chipset is the nervous system,” said Raquel Golcher, manager of external communications at Intel Costa Rica. “The chipset is responsible for controlling the flow of information through the computer’s diverse components.”
Golcher said that construction of the chips and chipsets requires 250 separate steps. The chip-making process begins in plants in the United States, Ireland and Israel, where a silicon core is created. They are then shipped to plants in Costa Rica, Malaysia, China and Vietnam, where they are assembled and tested in extreme conditions to assure the processors are adequate.
Upon completion, the chips are exported to countries worldwide.
In 2010, Intel plans to release a new microchip, known as the 32-nanometer chip, with this being the distance between each of the transistors on the processors. Golcher said the new chips will carry a larger number of transistors, and this will allow for more efficient processing, better performance and less energy consumption.
With continued advances to a product already experiencing surging demand, Intel Costa Rica appears positioned to remain the country’s leading exporter for the foreseeable future.