Mexico: the next El Dorado for Chinese electronics manufacturers?

Foxconn , Pegatron, and other major Taiwanese manufacturers are considering establishing operations in Mexico to avoid being caught in the crossfire of the trade war between the United States and China. This is confirmed 
by sources directly involved in these new locations. Foxconn already has five facilities in Mexico, all located in Juárez, as is Pegatron.

Beyond this commercial battle, the various impacts of Covid-19 are a second motivation for manufacturers to get closer to their customers. As the sole assembler of iPhones in the world and directly affected, Foxconn has had to slow down production, as well as exports. This consequence will very likely delay the release of the iPhone 12, or 
at least the supply to Apple Stores worldwide.

One person’s misfortune is another’s gain, and the arrival of new industries in Mexico is a boon for the country. Its economy has been so severely impacted by the pandemic that it is expecting its worst recession in 80 years. If Foxconn, Pegatron, and similar companies establish production facilities, several hundred billion pesos will flow into the state coffers, creating thousands of jobs. The Taiwanese giant is expected to finalize its decision before the end of the year, and production would be primarily dedicated to smartphones.

While Foxconn’s partners directly involved in these projects are not clearly identified, the United States is a likely target. Juárez’s location is also significant. Situated on the border with the United States, supplying all 48 contiguous states becomes child’s play compared to maritime freight from China. Mexico has also highlighted other advantages, such as low wages and shared time zones with its neighbor.

From a factory city in Shenzhen, China, employing several hundred thousand people, Foxconn is gradually relocating its production. Currently, 30% of its products are assembled outside of China. While Mexico is obviously an attractive country for various reasons, the giant recently participated in a project to develop infrastructure in India , alongside Samsung.

Other companies are also pushing to leave China, such as Google, which wants to produce its Pixel smartphones in Vietnam . On the manufacturing side, Luxshare Precision Industry, the main manufacturer of AirPods for Apple, is also eyeing Mexico. So, we can expect to see products ” designed by Apple in California  ,” but made in Mexico.