Experts forecast that the global consumer electronics manufacturing industry will grow at a CAGR of more than 7% between 2020 and 2026, and there's every indication that much of that industry growth will come out of Mexico. Mexico may be well known for its automotive manufacturing, but the manufacture of consumer electronics is a close second in terms of Mexico's industrial exports. Nine of the top ten transnational electronics manufacturing services (EMS) are established in Mexico, making Mexico a production hub for electronics companies.
Electronics Manufacturing in Mexico
Mexico produces a wide range of consumer electronics, including computers, smartphones, tablets, televisions, major household appliances, electronic devices, and the smaller components necessary for their operation, such as circuit boards, semiconductors, and microchips. The vast majority of these electronics are shipped to the United States, Mexico's largest importer of consumer electronics.
In 2018, Mexico exported $29.7 billion worth of computers, its third-largest export, more than $16 billion in telephones, and $10 billion in video displays. When added up, this makes Mexico the 8th largest producer of electronics worldwide and is a key player in the electronics industry.
Now, with demand for consumer electronics sky high, and new trade deals incentivizing production in North America, many consumer electronics manufacturing companies are wondering if production in Mexico could be right for them.
Consumer electronics demand is high
Mexico has become an attractive business location for consumer electronics manufacturing in part due to its synergy with other manufacturing activities focused here. While it Mexico has a robust industry of consumer electronics, much of this expertise has arisen out of a long history in manufacturing complex components for the aerospace, automotive, and medical device industries.
In many cases, there's valuable overlap between these Mexican industries. As automobiles evolve, they're driving demand for new products and new players in the supply chain. Kristin Dziczek, vice president of industry, labor, and economics for the Center for Automotive Research, points out that the semiconductors at the heart of computers and smartphones are becoming increasingly critical components of new car's touchscreens, infotainment modules, window controls, and even engines. This industrial overlap means the skillsets and materials being used in the automotive industry are also building up skillsets and supply chains in support of the electronics manufacturing industry.
High demand for computer electronics is also pushing computer and semiconductor production sky high. The dramatic uptick in remote business work and home or virtual schooling in 2020 has strained the existing computer production supply chain, pointing to a significant need for increased manufacturing of semiconductors and other electronic components.
Why Mexico for electronics production?
There are several reasons that Mexico may become the ideal location for the production of these critical electronic products.
For starters, the 2020 ratification of the USMCA has cemented many incentives for manufacturing innovative electronics in Mexico. John Neuffer, president and CEO of the Semiconductor Industry Association (SIA), notes that the ratification of the USMCA agreement may help to strengthen the digital economy and the global semiconductor supply chain by ensuring that more electronics goods are made in North America. He cites new rules that prevent parties from restricting trade of commercial encryption products, more robust protections for trade secrets and other types of intellectual property, and commitments to protect the free and open flow of data across borders, as encouragement for greater design and manufacturing of tech products in Mexico.
In addition, disruptions to traditional global supply chains have encouraged more consumer electronics manufacturers to consider opening operations in Mexico in the future. Many of these products have been made in China in the past, but many companies have found themselves looking for an alternative low-cost manufacturing country like Mexico.
For example, a number of Taiwanese consumer electronics manufacturers have reportedly considered moving manufacturing to Mexico in order to avoid being impacted by U.S. tariffs on Chinese goods. The Taiwan-based Apple iPhones assemblers Foxconn Technology and Pegatron, as well as computer manufacturer Inventec and Japanese electronics manufacturer Panasonic are among the consumer electronics manufacturers eyeing expansions into Mexico.
For many manufacturing companies, moving consumer electronics production to Mexico also reduces the time goods spend in transit to consumers in the United States. Mexico's regionalized approach to manufacturing is becoming increasingly popular as global companies balance cost-saving measures with resiliency in the event of supply chain upheaval.
What companies are manufacturing in Mexico?
Electronics manufacturers in Mexico have a strong presence in the country and make up a large portion of the industry. Samsung, LG, Toshiba, Foxconn, Flextronics, and Intel are some of the international companies in Mexico. These manufacturers choose Mexico for its competitive advantage with low labor costs and quality electronic manufacturing.
Mexico's consumer electronics manufacturing clusters
One of the chief benefits of manufacturing in Mexico is the already established manufacturing expertise and company infrastructure. After all, manufacturing services make up approximately 17% of the country's GDP. As a result, the country is home to a strong manufacturing workforce and technical training to meet Mexican manufacturing needs.
This workforce and supporting infrastructure varies across Mexico, with economic clusters sharing synergy in states or cities.
Manufacturing in Baja California
Baja California is home to more than 200 electronic companies. Tijuana, Mexico is a top producer of televisions for brands including Panasonic and Vizio, among a wide range of electronics components.
Mexico's Bajio region, stretching across Aguascalientes, Jalisco, Guanajuato, and Querétaro is also home to many global electronics manufacturers. Manufacturers including Samsung, Industronic and MD Elektronik have made this among the fastest-growing manufacturing regions in Mexico. Between 2013 and 2018, the electronics industry in Baja California grew 47.2%.
Electronic manufacturing in Guadalajara
The city of Guadalajara in Jalisco has become known as a hotspot for software and electronics manufacturing, earning it the nickname the "Mexican Silicon Valley." It boasts a population of over 5 million inhabitants, increasing at a steady rate of 1.5% annually, making it the third most populated city in Mexico. Manufacturers in Guadalajara include companies like Haier Electronics, the world's leader in appliance manufacturing; sensor manufacturer Flex; APS, a manufacturer of ATM and payment systems; and circuit board designers and producers Sanmina, IKOR, and Grupo Gollet, among others.
There is also a strong concentration of electronics manufacturing companies throughout the State of Coahuila and Sonora, specifically in Guaymas and Hermosillo.
Ready to set up a Mexican electronic an electronics manufacturing factory?
With consumer electronics demand high, there's no better time to build upon this fast-growing industry. And, with the possibility of launching a cost-effective operation in Mexico within as little as 90 days, there may be no better place to make your next move.
If you're ready to learn more about building your consumer electronics manufacturing presence in Mexico, contact Tetakawi today. As a professional Shelter Services provider, can help you establish your Mexico manufacturing facilities with everything from accounting services and legal compliance to finding skilled labor and high-quality suppliers.
Thinking about manufacturing in Mexico? Download this ebook and start moving your due diligence forward.
Thinking about manufacturing in Mexico? Download this ebook and start moving your due diligence forward.
