Mexico’s potential in semiconductor manufacturing extends far beyond its geographical proximity to the U.S. Over recent years, the country has made impressive strides in enhancing its technological capabilities. Traditionally known as a hub for low-cost, labor-intensive manufacturing, Mexico has gradually transformed its workforce to include more advanced manufacturing skills.  The availability of more highly- skilled professionals opens its doors to other industries.

As worldwide demand for semiconductor chips remains insatiable, Mexico can play an important role.  As the graph below show demand and revenue has grown significantly in the last couple of years:

Semiconductors Revenue in Mexico

Source: https://www.statista.com/outlook/tmo/semiconductors/mexico

In regards to manufacturing, historically, Taiwan has been the largest semiconductor producer in the world. Nevertheless, with the United States taking the initiative with the CHIPS Act, there has been a growing interested in establishing chip manufacturing facilities in North America.

The above- mentioned, leads to Mexico playing an important role in supporting the North American market.

Supporting the North American Market

Even if Mexico doesn’t develop full-scale semiconductor manufacturing, as the country isn’t considered ready for this, it can still play a supportive role in the North American semiconductor supply chain:

• Reduced Reliance on Asian Markets: Rather than attempting to build end-to-end semiconductor manufacturing capabilities, Mexico could focus on less capital-intensive, yet crucial, stages of the semiconductor process like TAP (Testing, Assembly, and Packaging). By contributing with this special process or focusing on a specific area of the supply chain, it can help North America reduce its dependence on Asia for certain semiconductor manufacturing steps.
• Enhanced Supply Chain Stability: Mexico’s location next to the U.S. means quicker shipping times and reduced transportation costs, which can be crucial during periods of high demand or supply chain disruptions.
• Complementary Manufacturing Capabilities: Mexico’s strengths in manufacturing and assembly can complement the high-tech, capital-intensive manufacturing facilities located in the U.S., creating a balanced ecosystem that strengthens the entire North American semiconductor market.

By following this roadmap, Mexico can position itself as an essential part of North America’s semiconductor supply chain, supporting the region’s technology goals and contributing to a more resilient and integrated semiconductor industry.

Nowadays, there are already important players in the semiconductor industry in Mexico,  including R&D centers, assembly and test manufacturing.

Which include among others:

• Intel: Guadalajara.
• Texas Instruments: Aguascalientes.
• Infineon Technologies: Tijuana.
• Skyworks Solutions: Mexicali.
• QSM Semiconductors: Queretaro

Furthermore, the future of semiconductor manufacturing in Mexico looks promising. With its strategic advantages, growing skilled workforce, and supportive government policies, the country is well-positioned to become an important part of the global semiconductor supply chain.

Next Steps for Semiconductor Manufacturing in Mexico

• Build Specialized Facilities: Developing specialized semiconductor fabrication facilities requires substantial investment but can be done in phases. Mexico can start by establishing facilities focusing on specific parts of the semiconductor manufacturing process, such as wafer testing, packaging, or assembly.
• Expand Education and Training Programs: Partnering with universities and technical institutes (both locally and abroad) to create specialized programs in semiconductor engineering and advanced manufacturing will be critical to further develop a skilled workforce. Scholarships, internships, and apprenticeships can attract students to these fields and provide hands-on experience.
• Government Support and Incentives: Offering tax incentives, subsidies, and funding grants can help attract international semiconductor companies to invest in Mexico. Furthermore, policies that support R&D tax credits and provide favorable loan terms for infrastructure projects can further enhance investment projects.
• Availability of adequate infrastructure and utilities: Availability of water and electricity supply are critical for different processes in the semiconductor manufacturing industry.

Investing in Mexico

As the demand for semiconductors continues to grow, Mexico’s role in this industry is likely to expand, offering exciting opportunities for businesses and workers alike.

Whether you’re a company looking to invest or a professional seeking opportunities in the semiconductor field, now is the time to pay attention to Mexico’s burgeoning semiconductor landscape. Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us! 

Mexico has rapidly become a significant hub for electronics manufacturing, driven by a combination of strategic location, cost-effective labor, skilled workforce, and favorable trade agreements. This blog explores the factors behind Mexico’s rise in the global electronics manufacturing landscape, the challenges it faces, and the potential for future growth.

Strategic Location and Proximity to the U.S.

One of Mexico’s most significant advantages is its proximity to the United States, the world’s largest consumer market. This geographical advantage facilitates just-in-time delivery, reduces shipping costs, and enhances the ability to respond quickly to market demands. The shorter supply chains compared to those in Asia offer manufacturers the flexibility to manage production more efficiently, especially in the context of the ongoing global supply chain disruptions.

Cost-Effective and Skilled Labor Force

Mexico offers a competitive labor market with wages significantly lower than those in the U.S. or Europe but higher than in many Asian countries. This cost-effectiveness does not come at the expense of quality. Mexico’s workforce is known for its technical skills, especially in electronics, automotive, and aerospace manufacturing. Numerous technical schools and universities in Mexico offer specialized programs in engineering and electronics, ensuring a steady supply of skilled workers.

Trade Agreements and Regulatory Environment

Mexico’s participation in the United States-Mexico-Canada Agreement (USMCA) and its network of free trade agreements with over 50 countries provide manufacturers with tariff-free access to key markets. This regulatory environment makes Mexico an attractive destination for foreign direct investment (FDI), as companies can produce goods in Mexico and export them globally with fewer trade barriers.

Growing Infrastructure and Technology Ecosystem

Mexico’s infrastructure, particularly in its northern industrial zones, has seen significant improvements. Modern industrial parks, reliable energy supplies, and robust transportation networks are crucial for high-tech manufacturing. Moreover, the Mexican government has been proactive in supporting the development of a technology ecosystem, promoting innovation and investment in electronics manufacturing.

Challenges Facing the Industry

Despite these advantages, Mexico’s electronics manufacturing sector faces several challenges, including political instability due to the change of presdient can create uncertainty for investors. Additionally, in some cases, Mexico faces challenges in intellectual property protection, which can be a concern for companies dealing with high-value, innovative products.

The Main Electronics Manufacturing companies in Mexico and where are they located

Mexico is an important center for electronics manufacturing, with many companies operating in the country. Here are some of the main companies and their locations:

The Most Manufactured Electronic Products in Mexico

The Future of Electronics Manufacturing in Mexico

The future of electronics manufacturing in Mexico looks promising. The ongoing trend of nearshoring, where companies relocate production closer to their home markets, is likely to benefit Mexico. As companies seek to mitigate risks associated with long supply chains, Mexico’s strategic advantages become even more pronounced.

Investments in education and infrastructure, coupled with government support for innovation, will be key to sustaining growth. Additionally, Mexico’s ability to adapt to global trends, such as the increasing demand for green and sustainable manufacturing practices, will determine its long-term success in the electronics manufacturing sector.

Mexico’s rise as a global hub for electronics manufacturing is the result of a strategic blend of location, skilled labor, favorable trade agreements, and growing infrastructure. While challenges remain, the country’s potential for growth is significant. As global companies continue to seek efficient and reliable production bases, Mexico is poised to play an increasingly important role in the electronics manufacturing industry.

Interested in Manufacturing Electronics in Mexico?

If you are a company in the electronics industry interested in manufacturing in Mexico, it is important to have a reliable partner for a hassle-free start of operations.  Mexcentrix can help you by facilitating the process through shelter services and flexible solutions that guarantee long-term success. Contact us! 

Starting a business in Mexico

Incorporating a company from abroad is a complicated task if you do not count with personnel in Mexico with know- how and experience in this process and who can submit all the paperwork required before the public notary and authorities.  As each country count with different processes and regulations for company incorporation, it is important to learn beforehand about the process to know what to expect.

Mexico allows foreigners to incorporate and operate companies in Mexico without limitation in most cases, nevertheless, some activities in Mexico are restricted for foreigners.

Steps for Incorporating a Company in Mexico

The main steps for incorporating a company in Mexico are:

Determining the type of entity.

The 3 most frequently used corporations in Mexico are:

• Sociedad Anónima (“S.A.”).
• Sociedad de Responsabilidad Limitada (“S. de R.L.”)
• Sociedad Anónima Promotora de Inversión (“S.A.P.I.”)

Contacting with an expert is always important to receive advice on which type of entity is best for your company, in some cases even incorporating a company is not needed for establishing operations in Mexico, therefore it is always important to contact the experts, such as Mexcentrix, who counts with legal advisors that can provide advice and consulting on this topic.

Following on determining the type of entity, the company must determine the corporate name of the new entity, which must be authorized by the Ministry of Economy.

Once the name of the new entity is authorized the company shall proceed with the drafting of the bylaws, which must include among others:

• Name of the company and its address.
• Object of the company: You should include the corporate purpose and  the main activities of your business in detail, and every other activity related to the business that the company will carry on.

• Name and data about shareholders/ partners, including number and percentage of ownership. Under the Mexican law all the three abovementioned entities must have at least minimum two shareholders/ partners.
• The partners must appoint the corporations management (either a Board of Managers or a Sole Manager).
• Name of the Statuory Auditor (Comisario)
• Rules on profit distribution
• Powers of attorney granted to individuals: When the new company has foreign shareholders/ partners it is important and recommended to appoint someone in Mexico to appear before the public notary and perform other administrative tasks before the authorities. If the power of attorney is granted to a foreigner, it must be apostilled/ legalized in the country of origin. Afterwards, it must be translated to Spanish by an official translator and notarized in Mexico.
• Characteristics and organization of annual partners/ shareholders meeting.
• A social capital and nationality chapter which must be included when the shareholders/ partners are foreigners.
• Causes and procedure for dissolution or liquidation.

Bylaws signature

• The signature of the by-laws must take place in Mexico, in the State where the company has been incorporated. Incorporating shareholders must appear personally or represented through powers of attorney before the public notary.
• The new company must have a physical address in Mexico for incorporations purposes which can be subsequently changed.
• Additionally, if it’s the case a copy of organizational documents duly notarized and certified by Apostille or legalized, must be provided.

Registration Before Authorities

• Once incorporated, the first step is to register the new company before the Public Registry of Commerce (Registro Público de Comercio).
• Afterwards the company must be registered in the Tax Administration Service (SAT) in order to obtain its tax id (RFC).
• If the company counts with foreign shareholders/partners shall be registered before the National Registry of Foreign Investments (RNIE)
• As most companies hire employees they should register before before the Mexican Institute of Social Security (IMSS) and the Institute of National Housing Fund for Workers (INFONAVIT).

Do you have any doubts regarding the company incorporation process in Mexico? Feel free to contact us, we have helped several of foreign companies to throught the incorporation process in Mexico and to start operations.

Your company has decided to start manufacturing operations in Mexico but do not know where to start from? Site selection is within the first steps after after performing a feasibility  study. Nevertheless, most companies do not know that  choosing the right site involves a thorough examination of multiple factors.  

This blog post will navigate you through a site selection, we will explore the detailed steps necessary for finding the ideal industrial building for your operations. 

Geographical Location

• Proximity to Borders and Ports: Businesses that rely heavily on exports should consider locations near the US border or major ports like Veracruz and Manzanillo to streamline logistics and reduce shipping costs. 

• Proximity to Suppliers: Proximity to key suppliers can reduce lead times and transportation costs of raw materials and components. 

• Free economic zones: Being relatively close to a free economic zone such as a “Recinto Fiscalizado Estrategico” can be an important point to take into account for site selection, if it goes according to the business strategy.  

Infrastructure

• Transportation Networks: Access to highways, railroads, and airports is crucial for efficient supply chain management. The quality of local roads and the availability of public transportation for employees should also be assessed. 
• Utilities: Reliable access to water, electricity, and gas are essential. Evaluate the capacity and dependability of these utilities in the prospective area.  

Labor Market

• Availability of Skilled Workforce: Depending on the type of workers required, Mexcentrix can guide you on which location can suit best your company needs and to guide you to  regions with a high concentration of skilled labor relevant to your industry.  
• Labor Costs: Wage levels can vary significantly across Mexico. Balancing cost with the quality of labor is vital for long-term sustainability.  

Regulatory Environment

• Local Regulations and Incentives: Some states provide an more attractive incentives package for foreign investor than other. This will also depend on the amount of investment and employment generation. 

Cost of Living and Quality of Life

• Employee Attraction and Retention: Areas with a higher quality of life can attract and retain skilled workers more effectively. Consider factors such as housing, education, healthcare, and recreational facilities. 

• Cost of Living: The cost of living can impact wage expectations and overall operational costs. Balancing affordability with quality of life is important for both business and employee satisfaction. 

Security

• Crime Rates: Assess the security situation in potential areas. High crime rates can affect employee safety, supply chain security, and overall business operations. 

Selecting the ideal site for your business in Mexico involves a comprehensive evaluation of various factors. By considering geographical location, infrastructure, labor market, regulatory environment, supply chain proximity, cost of living, security, and cultural aspects, businesses can make informed decisions that align with their strategic goals. A thorough site selection process not only enhances operational efficiency but also contributes to long-term success and sustainability in the vibrant Mexican market. 

Collaborating with a shelter service provider like Mexcentrix can streamline and accelerate the site selection process in Mexico. Our team of industry specialists will analyze your unique market requirements to identify the optimal location for your operations. Contact us!  

Businesses are continuously looking for ways to maximize cost savings without sacrificing quality or efficiency in today’s global market. Creating alliances with shelter companies is one successful approach that companies are using, especially in the manufacturing industry.

Most importantly, this strategy is especially advantageous for businesses wishing to establish operations abroad, who are not familiar with local regulations and wish to start operations as soon as possible.

What is a Shelter Company?

A shelter company offers international businesses a way to set up operations abroad without having to worry about local laws and regulations, including involved risks and complications of handling legal, administrative, and compliance-related matters. With this model, businesses can concentrate on their core business, such as production, quality control, inventory, and the shelter company will take care of the rest.

Key Benefits of Using a Shelter Company:

• Reduced Start-Up Costs: Under Mexcentrix shelter services your company can save up to 40% during the pre-operational phase and up to 20% after startup. This is due to economies of scale, the already established administrative teams, and local expertise and experience that help you maximize cost savings.

• One-stop shop: Most shelter services fully support investing in Mexico. From feasibility studies and cost analysis, site selection, company incorporation (if applicable), and visas for expatriates, to all administrative tasks upon starting operations.

• Streamlined Administrative Processes: Shelter companies manage all local compliance requirements, such as taxes, labor laws, and environmental regulations. This reduces the need for a company to hire specialized administrative staff or consultants, resulting in substantial cost savings.

• Labor Cost Advantages: Shelter companies manage the recruitment process, and provide recommendations on wages, benefits, and compensation packages to ensure lower turnover rates that lead to cost savings, in addition to finding employees at competitive wages.

• Access to Established Supply Chains: By partnering with a shelter company, businesses can tap into existing networks of suppliers and service providers, reducing procurement costs and improving operational efficiency.

• Risk Mitigation: Shelter companies assume many of the operational risks, including legal and financial liabilities. This allows foreign companies to enter new markets with reduced risk exposure.

Real-World Example: Mexico’s Shelter Program

Moreover, Mexico is a prime example of a country where shelter companies have significantly benefited foreign investors. Additionally, he country offers an attractive blend of low labor costs, a skilled workforce, and proximity to major markets like the United States and Canada.

• Labor Costs: Labor costs in Mexico are significantly lower than in the US and Europe. The average manufacturing wage in Mexico is between 50% to 70% lower than in the United States​.

• Operational Efficiency: Shelter companies in Mexico, such as Mexcentrix, have a proven track record of helping businesses achieve operational efficiency. They provide comprehensive support services, including HR management, payroll, customs, and foreign trade compliance, among others.

Steps to Maximize Cost Savings with a Shelter Company

• Select the Right Partner: Choose a shelter company with extensive experience and a robust network of local contacts. In addition to a partner that offers customized solutions tailored to your specific industry needs.
• Leverage Local Expertise: Utilize the shelter company’s knowledge of local regulations, market conditions, and business practices to navigate the complexities of the new market smoothly.
• Focus on your Core Business: Let the shelter company take care of all administrative and compliance tasks, which is what they do best, allowing your team to concentrate on core business activities that drive value and growth.
• Continuous Improvement: Regularly review and assess the partnership with the shelter company to identify areas for improvement and additional cost-saving opportunities.

Therefore, for businesses looking to nearshore will take advantage of maximizing cost savings, partnering with a shelter company can be a game changer. Businesses can achieve operational efficiency by leveraging local expertise, cutting start-up costs, and streamlining administrative processes.

Furthermore, for more insights into how shelter companies can help your business, consider reaching out to Mexcentrix, exploring case studies of companies that have successfully leveraged this model. Contact us!