Why Electronics Manufacturing is Moving to Mexico

In today’s evolving business environment, North American companies are actively seeking ways to strengthen supply chain resilience, reduce dependence on Asia, and improve operational efficiency. As a result, many manufacturers are turning to Mexico as a strategic location for electronics production. While Mexico has long been a hub for the automotive and aerospace industries, its electronics sector has experienced rapid growth, attracting leading global companies looking to capitalize on its numerous advantages.

Mexico is now a key player in the global electronics industry, making significant contributions to economic growth and technological advancement. Over the last decade, foreign direct investment in the sector has surged, driven by competitive labor costs, a skilled workforce, and strategic trade agreements. Major global electronics manufacturing services (EMS) providers have established operations in Mexico, drawn by its well-developed supply chain, proximity to the U.S. market, and cost-effective production environment.

The country is home to a thriving electronics manufacturing ecosystem, with key production centers in Baja California, Chihuahua, Jalisco, and other regions. Guadalajara, in particular, has earned the nickname “Mexico’s Silicon Valley” due to its concentration of high-tech firms and robust export activity. Companies such as Intel, IBM, and Jabil have established operations here, leveraging the region’s talent pool and manufacturing infrastructure to drive innovation and efficiency.

As Mexico continues to expand its role in the global electronics industry, it offers manufacturers an attractive alternative for optimizing production, ensuring supply chain stability, and gaining a competitive edge in international markets.

Importance of the Electronics Industry in Mexico

Electronics is one of the fastest-growing industries in Mexico in terms of employment generation and is currently the second-largest supplier of electronic products to the U.S. market. There are over 730 plants in the country manufacturing audio and video, telecommunications, computer equipment, and related parts.

Major global electronics companies have established operations in Mexico. Nine of the top ten transnational electronics manufacturing services (EMS) have operations here, including Foxconn, Flex, Sanmina, and Benchmark, among others. These companies are capitalizing on competitive labor rates in Mexico and the industry’s lowest operating costs in the Americas.

Electronics Manufacturing Companies in Mexico

Mexico has established itself as a key hub for electronics manufacturing, attracting global companies looking to optimize production and strengthen their supply chains. The country’s strategic location, skilled workforce, and competitive costs have made it a preferred destination for major electronics manufacturers. Below are some of the leading companies operating in Mexico:

• Panasonic – With a strong presence in Mexico, Panasonic operates manufacturing plants in Tijuana, Baja California, and Ixtapaluca, State of Mexico, producing a range of electronic appliances and automotive components.
• Plantronics – Specializing in audio and communication technology, Plantronics has a significant manufacturing facility in Tijuana, supporting its global supply chain.
• Sharp – The Japanese electronics giant has manufacturing operations in Mexicali, Baja California, where it produces display panels and other consumer electronics.
• IBM – With operations in Guadalajara, IBM has been a key player in Mexico’s tech industry, focusing on hardware and software solutions, as well as AI-driven technologies.
• Intel – The semiconductor leader operates in Guadalajara, where it focuses on research, design, and engineering, supporting its global chip manufacturing efforts.
• Toshiba – The company’s presence in Guadalajara allows it to produce a range of electronic components, including storage solutions and consumer electronics.
• Sanmina – One of the country’s largest contract manufacturers, Sanmina has multiple facilities in Mexico, including in Guadalajara, providing electronic manufacturing services for various industries.
• JABIL – With manufacturing sites in Guadalajara and Chihuahua, JABIL specializes in advanced electronics manufacturing and supply chain solutions.
• Molex – A major provider of electronic connectors and interconnect solutions, Molex has operations in Guadalajara, playing a crucial role in the global supply chain.

These companies benefit from Mexico’s well-developed industrial infrastructure and extensive supplier network, allowing them to maintain efficiency and meet global demand while optimizing production costs.

Top-Selling Electronic Products in Mexico

In Mexico’s electronics industry, innovation and growth are driving its rapid expansion. The country has established itself as a leading region for electronics manufacturing, particularly within the NAICS 334 sector, which covers a wide range of consumer and industrial electronic products.

This sector encompasses the production of essential components and finished goods that drive global markets, underscoring Mexico’s position as a strategic manufacturing hub.

• Computer and Peripheral Equipment (NAICS 3341): This category involves the production of desktop computers, laptops, printers, and other peripheral devices that serve as the backbone of personal computing and office automation.
• Communications Equipment (NAICS 3342): Products in this category include wired and wireless communication devices, such as smartphones, routers, and base stations, which are essential for modern connectivity.
• Audio and Video Equipment (NAICS 3343): This encompasses the manufacturing of entertainment and information devices, including televisions, speakers, and professional audio equipment, catering to both consumer preferences and professional settings.

Benefits of Electronics in Manufacturing Mexico

Mexico offers numerous advantages for companies operating in the electronics and microchip industries, including its strategic location, established regional markets, robust supply chain, and access to skilled and affordable labor. Firstly, Mexico’s proximity to the US border means manufacturers are close to US markets; this advantage is significant in the high-tech and electronics sector, where time-to-market is of utmost importance. Secondly, Mexico has consistently been open to trade, facilitating easy access to regional markets and promoting integration through its excellent trade relations and numerous trade agreements with over 50 countries.

In addition, Mexico has a mature base of OEMs, suppliers, facilities, and an efficient, integrated supply chain in the electronics industry, enabling the country to export high-value-added products, such as those required by the microchip and PCB industries. Nine of the top ten international electronics manufacturing services (EMS) are established in Mexico, including Samsung, LG, Toshiba, Foxconn, Flextronics, and Intel. One of the country’s largest clusters of electronics manufacturers and suppliers is located in Baja California, and Guadalajara is known as Mexico’s Silicon Valley due to the large number of high-tech companies and electronics manufacturers that have established there.

Challenges in Electronics Manufacturing in Mexico

While Mexico's electronics manufacturing industry offers significant advantages, companies operating in this sector must navigate several challenges to remain competitive and efficient.

• Rapid Technological Evolution – The electronics industry is characterized by constant innovation and short product life cycles. Manufacturers in Mexico must continually invest in research and development to stay ahead of technological advancements and meet global standards.
• Shifting Consumer Preferences – Market trends in electronics change rapidly, requiring manufacturers to adapt to fluctuating consumer demands. Companies must remain agile, ensuring they can pivot production quickly to accommodate new product designs and emerging technologies.
• Supply Chain Resilience – Maintaining a reliable and efficient supply chain is critical for electronics manufacturing. Businesses must establish strong partnerships with suppliers capable of delivering high-quality components while minimizing disruptions caused by global logistics challenges.
• Skilled Workforce Development – As manufacturing processes become more advanced, companies must ensure access to highly trained workers skilled in automation, robotics, and precision electronics assembly. Collaborations between industry and educational institutions are essential to meet this growing demand.
• Regulatory Compliance – Adhering to both national and international regulations, including environmental and safety standards, is a key factor for manufacturers. Companies must ensure compliance with trade agreements and industry-specific certifications to remain competitive in global markets.

By addressing these challenges proactively, electronics manufacturers in Mexico can strengthen their competitive edge and continue to attract investment in this rapidly evolving industry.

The USMCA and Microchip Production Chains

Mexico's position as a competitive player in the global technology industry is reinforced by the joint efforts between the United States, Canada, and Mexico through the United States-Mexico-Canada Agreement (USMCA). The countries are leveraging this trilateral trade agreement to develop long-term plans for microchip production chains in North America, with a focus on enhancing regional self-sufficiency to help prevent and prepare for future crises.

Officials from state governments in Mexico have also held meetings with stakeholders in the United States to discuss areas of opportunity for both countries, highlighting the many reasons why Mexico is the ideal ally in creating these long-term solutions. By working together, nations will facilitate increased agility and communication among all links in the supply chain, allowing them to adapt more quickly to changing markets and unforeseen global events in the future.

The USMCA fosters a favorable environment for the growth of the electronics and microchip sectors in Mexico, paving the way for increased investment and collaboration. This increased cooperation will reduce dependency on foreign suppliers and enhance the ability of North American companies to meet the rising demand for microchips.

With its strong manufacturing infrastructure, skilled workforce, and strategic location, Mexico continues to position itself as a key player in the global electronics industry. Ongoing investments in high-tech manufacturing, supply chain development, and workforce training further enhance the country’s competitiveness. Through trade agreements like the USMCA and partnerships with leading global companies, Mexico is strengthening its position as a premier destination for electronics production.

As nearshoring trends accelerate and companies seek more efficient and cost-effective solutions, Mexico offers a strategic advantage for businesses looking to optimize their operations and strengthen supply chain resilience. Now is the time to explore the opportunities that Mexico presents in the electronics manufacturing sector. Contact American Industries to learn how we can support your expansion and help you navigate the process seamlessly.