Mexico stands at a pivotal moment in its industrial development, aiming to significantly increase its participation in the global semiconductor supply chain. The country’s strategic location, trade agreements, and highly skilled workforce position it as a potential hub for semiconductor manufacturing and advanced electronics. However, as the Undersecretary of Industry and Commerce of the Ministry of Economy (SE), Vidal Llerenas, emphasized, achieving this goal requires not only leveraging existing strengths but also addressing structural weaknesses that have limited domestic industrial integration.
During the inauguration of Chapter 5 of the Mexico–U.S. Semiconductor Forum, Llerenas presented Plan México, a comprehensive strategy designed to enhance infrastructure, financing, talent development, and strategic sector growth. The plan seeks to integrate Mexico more firmly into the global semiconductor supply chain while simultaneously diversifying industrial development and increasing domestic content in high-value exports.
Diversifying Industrial Development Beyond Traditional Hubs
Historically, Mexico’s advanced manufacturing clusters have been concentrated in cities such as Guadalajara and Tijuana. These regions have become renowned for electronics and information technology manufacturing, but relying heavily on a few hubs creates vulnerabilities and limits broader economic development.
Llerenas highlighted that Mexico must expand these value chains to other regions, ensuring that more parts of the country are connected to complex production ecosystems. “We want regional development to reach more parts of the country, so that more locations are connected to these complex value chains,” he explained. By distributing investment and infrastructure more evenly across the nation, Mexico can build resilience, reduce regional disparities, and strengthen its position in the global semiconductor supply chain.
Addressing Low Domestic Content
One of the country’s most pressing structural challenges is its low domestic content in exports. Despite Mexico being one of the world’s most sophisticated exporting economies, much of its high-value output relies on imported inputs, including chemicals, plastics, and metal components essential for semiconductor manufacturing.
This dependence on foreign inputs limits Mexico’s ability to produce higher-value-added products and fully capitalize on the opportunities presented by the global semiconductor industry. To overcome this, Plan México emphasizes strengthening domestic industries such as chemicals, metalworking, and plastics. By building local capabilities in these sectors, Mexico can increase the domestic content of its exports, reduce vulnerabilities from supply chain disruptions, and enhance its strategic role in North American manufacturing.
A Three-Dimensional Approach: Horizontal, Regional, and Vertical
Plan México is structured along three complementary dimensions: horizontal, regional, and vertical.
The horizontal dimension focuses on improving investment conditions, including the development of a functional financial system, modern infrastructure, and streamlined regulatory processes. This creates a conducive environment for domestic and foreign investors alike.
The regional dimension addresses the uneven concentration of industrial clusters, as discussed earlier, aiming to expand value chains to new regions and ensure nationwide integration into global production networks.
The vertical dimension targets both traditional and emerging sectors. While Mexico has a long history of exporting textiles, footwear, and toys, the future lies in high-value industries such as medical devices, pharmaceuticals, electronics, and semiconductors. By strengthening vertical integration in these sectors, Mexico can produce more sophisticated components domestically, creating a robust ecosystem that supports innovation and higher-value manufacturing.
Enhancing Regional Integration Within North America
Llerenas emphasized that Mexico’s success in the semiconductor industry is closely tied to regional integration under the USMCA framework. The concept of “Made in Mexico” should be understood in a trinational context, reflecting the interdependence of supply chains across Mexico, the United States, and Canada.
However, the Undersecretary warned that this integration is not sustainable without a strong domestic productive base. Dependence on imported inputs reduces the effectiveness of regional supply chains and limits the economic benefits that Mexico can capture. Strengthening domestic production capabilities is essential to ensure that Mexico contributes significantly to the global semiconductor supply chain, rather than merely serving as an assembly hub dependent on foreign components.
Leveraging a Skilled Workforce
One of Mexico’s most significant competitive advantages is its industrial workforce. The country boasts a pool of skilled labor capable of operating complex manufacturing processes, from semiconductor fabrication to electronics assembly.
Llerenas highlighted several initiatives to maintain and enhance this workforce, including dual education programs, micro-credential initiatives, and specialized technical training. These programs aim to ensure that Mexican workers are prepared for the demands of high-tech manufacturing, making the country a more attractive destination for foreign investment in semiconductors and related industries.
“This country is fundamental not only because of its location and trade agreements but also because of our ability to participate in this race… our greatest competitive advantage at this moment is an industrial workforce of enormous capacity,” Llerenas stated. Indeed, a skilled workforce not only improves productivity but also positions Mexico as a reliable partner in the global semiconductor supply chain, capable of delivering high-quality outputs in a competitive timeframe.
Meeting the Challenge of Asia
Mexico’s ambitions in semiconductors are inevitably compared with Asia, the global epicenter of semiconductor production. Countries like Taiwan, South Korea, and China dominate the industry due to advanced manufacturing technologies, robust domestic ecosystems, and significant government support.
To compete, Mexico cannot rely solely on tariffs or its geostrategic location. Instead, it must create conditions for industrial efficiency, technological innovation, and high domestic content. By investing in upstream industries, modernizing production facilities, and cultivating a workforce trained for high-tech manufacturing, Mexico can position itself as a competitive alternative in the global semiconductor supply chain.
Infrastructure and Strategic Investments
Plan México also highlights the critical role of infrastructure in enabling industrial competitiveness. Modernized transportation networks, advanced industrial parks, reliable energy supply, and logistics hubs are essential for reducing production costs and improving efficiency. Investments in these areas not only support domestic manufacturing but also attract multinational corporations seeking to diversify supply chains away from Asia.
Furthermore, strategic investments in chemicals, electronics, and metals industries are expected to enhance domestic content and enable Mexico to participate more fully in the higher-value segments of the semiconductor market. By aligning these investments with workforce development programs and regional expansion strategies, Mexico aims to create a self-reinforcing ecosystem capable of long-term growth.
Outlook for Mexico in the Semiconductor Industry
Mexico faces both a historic opportunity and a significant challenge. With careful planning, targeted investments, and effective workforce development, the country can deepen its integration into the global semiconductor supply chain and secure a more strategic role in North American and global manufacturing networks.
By increasing domestic content, diversifying industrial development, and expanding regional value chains, Mexico can transform from a participant in assembly and low-value production to a producer of high-tech, high-value-added semiconductor components. This shift will not only strengthen Mexico’s industrial base but also ensure that its economy captures a larger share of the economic benefits of global trade in advanced manufacturing.
In conclusion, Mexico’s strategy to strengthen its position in the semiconductor industry is multidimensional, involving infrastructure development, regional diversification, domestic content enhancement, and workforce training. With sustained commitment and strategic investments, Mexico has the potential to emerge as a key player in the global semiconductor supply chain, competing effectively with Asia and contributing significantly to regional and global industrial networks