Relocation of Companies to Mexico Expands Beyond Manufacturing
In the first five months of this year, the United States has imported computing equipment from Mexico, accounting for 25.9% of total purchases of Mexican products.
Relocation of Companies to Mexico continues its silent march, expanding beyond automotive parts manufacturing to sectors such as information technology.
Just in July, the Mexican Association of Information Technology Industry (AMITI) reported that up to 30% of manufacturing investment in Mexico is directed towards information technologies, including semiconductor production.
This data is reinforced by the Harmonized System of Designation and Coding of Goods (HS), which shows that in the first five months of the year, the United States has imported computing equipment from Mexico, representing 25.9% of total purchases of Mexican products.
According to Gabriela Siller, economic analysis director at Banco Base, this could indicate the beginning of a new phase for the Mexican industry that goes far beyond startups or fintechs.
Growing Sectors in Mexico
We have documented the establishment of data centers like Odata, expansions of software industrial companies such as Schneider Electric or Siemens, automation firms like Prosys CP, and digital logistics companies such as Nauta and SimpliRoute.
Additionally, data analysis companies like Arkeero and cybersecurity firms such as Nuvol Cybersecurity, along with semiconductor manufacturers like Intel and Qualcomm, have also set up operations in Mexico.
Impact on Nearshore Operations
The International Monetary Fund (IMF) states that the relocation of technology and telecommunications operations to Mexican territory is generating an additional boost to nearshore operations, strengthening connections and making partnerships more efficient.
“Mexican exports of electronic products and semiconductors have gained a significant portion of the US market left by Chinese imports between 2017 and 2023,” experts from the IMF noted in their working paper titled “Relocation of Global Value Chains: Mexico’s Role.”
According to the Director of Industry, Science and Technology in Mexico for consulting firm Turner & Townsend, André Rizzo, local demand for data processing and artificial intelligence development is substantial.
“It’s a rapidly growing market. The Mexican market can be an offshore option for the US, but it’s not necessary for continued growth,” he emphasized.
Future Prospects
The Mexican Data Centers Association (MEXCD) predicts that the sector will attract direct investments to the country, totaling approximately USD 9.192 billion over the next five years and will contribute 5.2% to Mexico’s GDP by 2029.
The association highlights the development of dynamic markets driven by relocation, as demonstrated by the arrival of tech giants in Querétaro, Nuevo León, Sonora, and Jalisco, according to Rizzo.
Key Questions and Answers
- Q: What is driving the growth of technology and telecommunications operations in Mexico? A: The relocation of these operations from other countries, particularly China, has led to Mexico capturing a significant portion of the US market for electronic products and semiconductors.
- Q: How is this trend affecting Mexico’s economy? A: The technology and telecommunications sector is expected to attract USD 9.192 billion in direct investments over the next five years and contribute 5.2% to Mexico’s GDP by 2029.
- Q: Which industries are expanding in Mexico due to this trend? A: The growth includes data centers, software industrial companies, automation firms, digital logistics companies, data analysis companies, cybersecurity firms, and semiconductor manufacturers.
- Q: How is this trend impacting nearshore operations? A: The relocation of technology and telecommunications operations to Mexico is strengthening connections and making partnerships more efficient, generating an additional boost to nearshore operations.
- Q: What role does local demand play in this trend? A: Local demand for data processing and artificial intelligence development is substantial, driving the growth of this sector.
