Several tech manufacturing companies, including Foxconn and Pegatron, are considering shifting some of their production from China to Mexico. The corona virus and the trade war between China and the United States would make production in Mexico attractive.
Reuters writes based on anonymous sources that Foxconn, Pegatron and the Chinese Luxshare are considering shifting their production to Mexico. To this end, talks were to be held with the Mexican government and with factory owners in the region. Foxconn would like to produce iPhones in the Mexican factory. Later this year, the Taiwanese company would make a decision on this. Foxconn currently has five factories in Mexico, mainly producing televisions and servers.
At an investor conference, Foxconn president Liu Young-way said the world is now divided into two groups due to tensions between the United States and China. As a result, according to the CEO, the ‘world factory’ no longer exists and Foxconn is working on two production chains for the two groups. Currently, thirty percent of Foxconn’s production is realized outside of China. The CEO said during the conference that that share could grow in the future.
Foxconn division Sharp has previously said it wants to produce more televisions in Mexico. According to the Taipei Economic and Cultural Representative Office, Taiwan’s representation in Mexico, Foxconn has expressed interest in building a factory in Ciudad Juárez. This is the largest city in the state of Chihuahua and is located opposite the American city of El Paso, on the border between the two countries. Pegatron also wants to shift a production line from China to Mexico, according to the office.
Less information is known about the production plans of Pegatron and Luxshare. Pegatron is said to be in early talks with lenders to open an additional factory in Mexico. Here the company would like to produce chips and other components. It is not clear what Luxshare wants to produce. This company is the market leader in the production of Apple AirPods, according to media reports.
Production in Mexico would be attractive mainly because of the US market. According to Reuters, the US government is investigating whether companies with financial incentives can be stimulated to shift production from Asia to the United States, Latin America or the Caribbean Islands. Mexico is said to be attractive for companies due to low wages and its geographic location. The corona virus has also brought many supply chains to a standstill, so that manufacturers would prefer to produce closer to sales markets. At the same time, the increasing number of coronavirus patients in Mexico is mentioned as a major concern.