Manufacturing in Mexico Primed for Growth of Semiconductor Industry

In a digital device and artificial intelligence world, the demand for chips has grown exponentially, and global companies are looking for cost-effective ways to keep up with the pace.

As of 2025, semiconductor manufacturing has reached an all-time high with predicted sales of US$697 billion and is on track to reach US$2 trillion by the end of 2040.

Manufacturing in Mexico has already been a proven successful route for U.S. and other foreign companies expanding in automotive, aerospace, and electronics manufacturing, and other traditional sectors, and now semiconductor production is following suit.

While largely under the umbrella of larger sectors, the rapid growth of semiconductor demand has caused manufacturers to consider Mexico to expand production, particularly for the more labor-intensive part of the process of assembly, testing, and packaging (ATP).

Moreover, bi-national initiatives between the U.S. and Mexico provide unique strategic advantages when compared with China, including convenient proximity, lower transportation costs, and collaborative government partnerships.

While Mexico is still in the early phases of development for semiconductor manufacturing, there is already infrastructure in place to support this emerging industrial area. It’s beneficial for companies to get a head start on considering this option that has already presented opportunities for global manufacturers for decades.

Mexico’s Semiconductor Industry by the Numbers

$0MUSD in foreign direct investment
0economic units of semiconductor and other electronic component manufacturing
$0BUSD estimated market size in 2025

A Proven Business Model for an Emerging Sector

Electronics manufacturing is a significant driver of the increase in semiconductor production. Everything from personal computers to smartphones to the Internet of Things requires chips.

However, it’s not electronics manufacturing alone increasing chip production; the popularity of electronic and hybrid vehicles has transformed the automotive and aerospace industries, as well as the use of chips in medical device manufacturing for wearable health monitors, imaging machines, and diagnostic equipment, not to mention the rapid rise of generative AI.

For decades, foreign direct investment (FDI) into Mexico has steadily increased the manufacturing industry, and U.S. and other foreign manufacturers benefit from the advantages Mexico provides. This includes reliable supply chains, cost-effective, highly skilled labor, and a close proximity to a U.S. audience.

Additionally, there are established industrial hubs set up throughout Mexico, ready for production. Semiconductor manufacturers can leverage this history of success to offer industrial support in areas most needed, including:

  • Assembly, testing, and packaging (ATP)
  • Supply chain operations
  • Intellectual property (IP) protection
  • Shelter company infrastructure

Assembly, Testing, and Packaging (ATP)

Baja California, Jalisco, Chihuahua, Nuevo Leon, Querétaro, and Aguascalientes have been identified as main semiconductor manufacturing hubs, and incoming semiconductor companies can rely on the existing resources and capabilities these areas provide. Major international corporations, including Skyworks Solutions, Infineon, and Qualcomm, to name a few, have established a strong presence in Mexico to build upon their semiconductor manufacturing goals, with FDI allocated to drive technical processes.

Supply Chain Operations

Due to Mexico’s strong infrastructure and strategic logistical access to materials from around the world, essential for semiconductor production, U.S. and foreign manufacturers can rely on the country’s ability to source the materials needed for their processes, typically imported from Europe and Asia. Additionally, under Mexico’s IMMEX Program, these materials can be imported under a temporary import status, allowing companies to avoid paying Mexico’s VAT on imported goods that qualify for IMMEX benefits.

IP Protection

As technology becomes more sensitive and sophisticated, manufacturers are hesitant about continuing semiconductor production in China due to the problematic history involving IP protection. Mexico and the U.S. are both part of the USMCA, which highlights greater protection for intellectual property, including stronger copyright enforcement, including digital IP, and enforced criminal penalties for infringement.

Shelter Company Infrastructure

A unique advantage available to U.S. and other foreign manufacturers launching production in Mexico is the local expertise and experience of a shelter company. This partnership handles all administrative responsibilities necessary for setup, while saving on costs and streamlining schedules.

Two-Country Strategic Advantage for Semiconductor Growth

Manufacturing in Mexico provides a bi-national solution for the U.S. Since the introduction of the maquiladora program, now IMMEX, in the mid-1960s, both countries have benefited from industry growth.

Lower labor costs and the availability of a highly skilled workforce have been the main incentives for U.S. manufacturers to seek expansion in Mexico. Now, they can apply these same benefits to their advantage to meet the demand of the semiconductor industry.

Technically focused processes can be allocated to Mexico on a larger scale and at a more cost-effective rate compared to the U.S. and complement roles like research and development.
Since this two-country initiative has already been proven effective with traditional manufacturing and can capture the needs of semiconductor growth through:

  • CHIPS ITSI
  • Geographic Proximity
  • Skilled Workforce
  • Collaborative Partnership

CHIPS ITSI

This U.S. initiative promotes ATP capabilities with international partners, starting with Mexico. In a collaborative effort, the goal is to build secure semiconductor supply chains and sustainably strengthen regional capabilities for growth. This is to help diversify supply chains and reinforce the security necessary for this type of information and communication technology.

Geographic Proximity

Mexico provides a logistical advantage, resulting in less costly transportation and better-aligned time zones, particularly for U.S. manufacturers considering moving production from China and/or expanding their global presence. Business leaders maintain greater quality assurance and facility oversight, thanks to the proximity between the two countries.

Skilled Workforce

The manufacturing industry continues to expand globally; however, the availability of qualified workers in the U.S. has been steadily declining. In contrast, Mexico has maintained a strong pool of highly skilled talent, supported by targeted workforce development initiatives. These include collaborative programs between U.S. and Mexican universities, for example, partnerships between Arizona State University and higher education institutions in Mexico, aimed at strengthening technical training and industry readiness.

Collaborative Partnership

The U.S. and Mexico governments continue working together to diversify the global semiconductor ecosystem and reduce reliance on suppliers from Asia. In addition to strategic educational partnerships, integration between the two countries is a focus at events such as the U.S.-Mexico Semiconductor Collaboration Forum.

CASE STUDY

Easing the Transition for Our Electronics Client

After eight years as an IVEMSA shelter client, a leading electronics manufacturer decided to create its own Mexican business entity. IVEMSA’s human resources team, along with the client’s upper management, developed a plan to transfer 550 personnel from IVEMSA’s payroll to the new entity and a communications strategy to keep employees informed of the transition.

Read case study >

"We have no intention of moving away from shelter services. IVEMSA is helping us accomplish our goals."

Brad Nelson, Plant Manager, LMI Aerospace

"From the beginning they found the best candidates for the job - people who are still with me today."

John Chettleburgh, President & CEO, Formglas

"IVEMSA has the most experience with companies in our niche and demonstrated that they could best help us navigate this new business landscape. Just as important, we genuinely like the IVEMSA team and feel comfortable working with them."

Jonathan Minter, President, German Machined Products, Inc.

"They provided an in-depth analysis and made sure that we were aware of all the potential issues while openly sharing their costs. This was in direct contrast to the other companies we talked to who offered us pre-packaged solutions with a 'take it or leave it' attitude."

Bill Jordan, Shop Manager, Allied Tool & Die

"After an objective evaluation, IVEMSA was simply the best value. Not only is IVEMSA well-established and connected, we were also very impressed with the professionalism and transparency with which they do business."

Loren Engel, General Manager, GKN Aerospace Composites

"The IVEMSA group are the experts and what we have is a win-win situation. It just makes more sense to let them handle the import/export side of the business so we can focus on core competencies. IVEMSA isn't just a business partner, they're part of our team."

Jose Fletes, Division President, Panasonic Industrial Devices Mexicana

"We realized that with IVEMSA we would be dealing with not only a highly experienced company, but also with a professional and honest group who reflects our own values and emphasis on integrity."

Rick Martindale, President, Wunderbar

"Everything the IVEMSA team told us to expect was dead on. We simply could not independently do what they do for us in any economic manner."

David Bouley, President, Miraco

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Contact us today and see how we can help you take advantage of all the benefits of manufacturing in Mexico - without the hassle.

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