Mexico Emerges as a Key Hub in the U.S. AI Supply Chain, Led by Taiwanese Firms

[Financial News]  


Mexico is emerging as a key supplier to the U.S. AI industry.
AI servers assembled in Mexico, led by Taiwanese firms, are being shipped to the United States.
As Mexico's GDP growth has slowed, AI server exports are helping cushion the economy from a deeper downturn.
However, unlike the automobile industry, which sources 39% of its parts locally in Mexico, AI server production is highly automated and must import all key components, including semiconductors. As a result, its contribution to the Mexican economy is limited to just 3% to 7%.

According to the Financial Times (FT) on June 1 local time, Mexico is serving as a back-end base supporting the U.S. AI boom.
So far this year, corporate server shipments to the United States have reached $46.9 billion, ranking second in the world. Taiwan, the global leader, is close behind at $53.5 billion.
On a monthly basis, Mexico even overtook Taiwan in May.

AI server exports have become a new source of strength for Mexico's economy, which has struggled as its role as an auto supply base has weakened since the launch of the Donald Trump administration.
From January through May, exports of servers and related hardware accounted for nearly 20% of Mexico's total exports of $317 billion during the period. That figure more than doubled from a year earlier.
Since 2020, Taiwan has invested more than $1.6 billion in Mexico to build server assembly bases there. As a result, Mexico has jumped from eighth to third place among Taiwan's trade partners. Taiwanese firms are assembling servers not only at home but also in Mexico for sale to the United States.
Jesse Rogers, director for Latin America at Moody's Analytics, said Mexico has become an important country in the new AI-driven economy.

Juarez, a border city in Texas, is the center of AI server production in Mexico.
Once known as a hub for drug trafficking, the city has transformed into a key area for assembling advanced AI servers rather than simple electronics.
Taiwanese firms that once assembled electronics there now build large AI servers.

AI servers are injecting new vitality into Mexico's struggling economy.
Mexico's economy has slowed, with GDP growth falling to 0.6% last year from an average of 1.6% in the five years before the COVID-19 pandemic. The impact has been severe, as Trump administration restrictions and investor concerns over President Claudia Sheinbaum's reforms have added to the pressure.
The server industry is widely seen as a major factor that helped pull Mexico's economy back from the brink of recession.
Carlos Serrano, chief economist at BBVA, said that without AI server exports, Mexico would now be in a recession.
Fernando Alba, deputy economy minister for Chihuahua state, said AI servers have brought about a paradigm shift. He emphasized that "one truckload of servers is worth as much as 1,000 cars."

The problem is that the benefits of this surge in high-value exports are not spreading proportionally across Mexico. The facilities are highly automated, so the job-creation effect is minimal.
Compared with labor-intensive manufacturing such as automobile parts, automated AI server factories do not create many jobs.
Manufacturing employment in Juarez peaked in 2023 and has been on a downward trend since then.
The biggest reason is that most AI server components are imported.
Alba said the local sourcing rate for automobile parts reaches 39%, but AI servers have almost no local production, and the target is only 3% to 7%.
Semiconductors, a core component, are difficult to produce locally in Mexico because of shortages of labor, energy, and water.
Along with Juarez, Guadalajara is also emerging as a server production base.
Thanks to Foxconn's AI server plant in Guadalajara, Jalisco state ranked second in Mexico for export value in the first quarter.

[email protected] Song Kyung-jae Reporter