United States tech giants are reportedly vying for Mexico as the next big location for its manufacturers of artificial intelligence-related hardware, a move to lessen reliance on China and Asia-imported materials in general.
The biggest AI companies in the US have asked their Taiwanese manufacturing partners to boost the quantity of hardware made in Mexico specifically for AI applications.
Analysts and industry experts report that Foxconn, the world's largest contract electronics manufacturer, and other Taiwanese companies are boosting their investments in Mexico in response to the request
They are profiting from the free trade agreement between the United States, Mexico, and Canada, which went into effect in 2020. Manufacturers looking to move operations from China to Mexico have poured billions of dollars into it.
(Photo: JOSEP LAGO/AFP via Getty Images) A woman uses a smartphone during the Mobile World Congress (MWC), the telecom industry's biggest annual gathering, in Barcelona on February 28, 2024. The world's biggest mobile phone fair throws open its doors in Barcelona, with the sector looking to artificial intelligence to try and reverse declining sales
The Wall Street Journal reports that in the last four years, the nation has received $690 million from the largest contract electronics manufacturer in the world. To support a significant expansion of its AI server production, Foxconn recently paid $27 million for a parcel of land in the western state of Jalisco.
The largest IT giants in the United States, including Nvidia, Amazon, Google, and Microsoft, are reportedly leveraging Foxconn's facilities in Mexico to assist in meeting their needs for AI servers as they compete to develop the newest and greatest AI technology.
Big Tech corporations are attempting to ensure that a smaller portion of their supply chains depend on China, a more potent political adversary of the United States.
Mexico as an AI Manufacturing Hub
Mexico has reportedly shown itself to be a profitable investment for these ventures and is already rearranging international commerce. According to U.S. data released last month, imports into the country from Mexico exceeded imports from China for the first time in 20 years. Bureau of Census.
As an industrial hub, Mexico has its own set of hazards, such as high crime rates, inadequate water and energy supplies, and fierce wage competition for laborers proficient in assembling high-tech products.
According to some Taiwanese managers, they depend on private security to prevent local gangs from stealing chips or other expensive equipment from their operations.
They said Mexican laborers are typically less inclined to work long overtime shifts than their Chinese counterparts. Mexican factories must abide by USMCA labor regulations, and workers there are unionized.
China Responds
As the US and its allies continue to tighten restrictions, China, on the other hand, is reportedly preparing its semiconductor industry with a gigantic $27 billion chip fund, the largest of its type to date.
The action seeks to quicken the development of cutting-edge technologies in opposition to US efforts to impede China's efforts to advance semiconductor technology.
This project, which is anticipated to surpass the 200 billion yuan threshold of its previous fund, demonstrates China's will to strengthen its semiconductor capabilities despite outside criticism.
The Big Fund's growth is a calculated move by China's tech ministry to reaffirm its leadership in the world semiconductor market amid growing US tech sanctions aimed at China's chip and AI industries.
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(Photo: Tech Times)
