Mexico is known for being a manufacturing powerhouse and the center of the reshoring trend now in full swing across the globe. And among the biggest opportunities for growth is electronics manufacturing in Mexico. In fact, the trajectory of this industry is downright impressive.
The Latin American country is uniquely suited to highly skilled assembly and technical manufacturing, and with proximity to the US consumer market, factories there are highly profitable ventures. Indeed, Mexico has already been well established as a manufacturing hub for electronics, but it is the story of Mexico’s growth and resilience in this market that is the source of the greatest optimism.
A vital sector for the country, electronics manufacturing is a vital sector for the Mexican economy. It dates back to the 1960s and has a long and successful track record of a growing and highly profitable manufacturing industry.
Beginning in Juarez with a focus on consumer electronics, this sector in Mexico now encompasses many areas, from consumers electronics to automotive electronics, medical equipment, computing, and more. Early in its history, the industry focused on mass production and low-skill assembly. This, however, has morphed over the years into a high-mix approach, with an emphasis on higher value-added products made in smaller batches.
Over the past few years, the world has endured an ongoing shortage in semiconductors. While Taiwan and Asia have manufactured the lion’s share of chips for many years, US and European demand has outpaced supply. And US investment in manufacturing domestically has lagged woefully behind.
However, Mexico has emerged as a promising alternative for semiconductor manufacturing. Because of the country’s aggressive investment in manufacturing electronics and their well-established dominance in automotive manufacturing, Mexico is poised to make great strides in supplying the global semiconductor market – and especially the North American market.
Mexico offers North America the opportunity to build a better supply chain for this specialized sector of electronics. Chips go into everything from Teslas to smartphones to numerous everyday products. The Inflation Reduction Act and CHIPS Act in the US are already focusing on North American investment to build the infrastructure needed to manufacture semiconductors on the continent.
While Mexico may not be fully set up to handle the complete process of chip fabrication, it is highly suited for adjacent operations like testing and packaging and even assembling more basic chips. Mexico has invested heavily in increasing its technological capacity and training a highly skilled labor force. It excels at creating supplier and vendor networks in industry hubs. And EV manufacturing is already investing in Mexico, setting the stage for a rapid formation of semiconductor hubs in the country.
Electronics manufacturing in Mexico centers primarily around industry hubs in the northern and central parts of the country. The industry is especially growing in the north of Mexico, with several states hosting more than 100 companies each, including:
Baja California is the unchallenged leader of Mexico’s electronics manufacturing, with at least 200 companies in this one state alone. But Mexico state in the central part of the country is also home to well over 100 companies and a vibrant supply chain. Leading global manufacturers of electronics components, products, and associated parts have factories there, including among others:
The most heavily invested companies in Mexico’s electronics industry are OEMs for computers, smartphones, and flatscreen TVs. In fact, Mexico manufactures and exports more televisions than any other country in the world.
Mexico’s maquiladora manufacturing system offers electronics companies numerous advantages, such as:
Because of Mexico’s unique value proposition for electronics manufacturing, the country has demonstrated profound resilience. In spite of a slow second quarter in 2023, electronics manufacturing in Mexico bounced back strongly in the fall of last year.
Contract manufacturing offers even smaller companies the option to manufacture electronics in Mexico, leveraging low-cost, high-skill labor and Mexico’s other advantages. But other modes of entry have also proven profitable for US companies. Shelter manufacturing has also given small-medium-size companies a leg up in accessing Mexico’s electronics industry.
As global demand for technology and electronics accelerates, decades of industry experience have positioned Mexico to ride the wave. New investments are being announced every month. And with China and other Asian countries on the decline, and shorter supply chains increasing in popularity, Mexico’s prospects for future growth in electronics are quite promising.
