Jalisco, Mexico – AI chip manufacturing is expanding to Mexico, with US tech companies investing in the country as a new hub for production. This shift aims to diversify manufacturing beyond China and capitalize on the US-Mexico-Canada free trade agreement.
Foxconn, a major contract electronics manufacturer, has boosted its investments in Mexico, pouring $690 million over four years and acquiring land in Jalisco for $27 million. This expansion focuses on producing AI servers to meet growing demand from US companies.
Leading tech firms like Nvidia, Amazon, Google, and Microsoft are utilizing Foxconn’s Mexican facilities for their AI server requirements. This move aligns with broader strategies to reduce reliance on Chinese supply chains, seen as politically contentious by the US.
Foxconn reports Mexico as a profitable investment, with imports from the country surpassing those from China for the first time in two decades. Yet, Mexico faces the challenge of wage competition for skilled workers in high-tech assembly.
Mexico’s attractiveness as a manufacturing hub extends beyond AI. The country’s automotive industry has also seen significant growth, with car production reaching nearly 4 million units in 2023, a 14 percent year-on-year increase. This trend aligns with the nearshoring strategy, offering advantages such as streamlined deliveries, improved supply chain transparency, and operational effectiveness.
Mexico’s robust growth in AI and automotive manufacturing positions it as a strong contender in the nearshoring movement. Its strategic location, skilled workforce development initiatives, and the influx of major corporations all point towards a future of continued success for the Mexican manufacturing sector.
