Mexico’s Semiconductor Strategy: Seizing Opportunity in a Shifting Global Order

Mexico has a solid base in semiconductor design and assembly, supported by strong manufacturing ties to the United States and a growing network of research institutes. With better education, innovation support, infrastructure and a clear national strategy, it could move up the global chip value chain beyond basic assembly.

As countries scramble to secure semiconductor supply chains, Mexico is stepping into the spotlight. Chips power everything from smartphones and cars to medical devices and data centres. Recent global shortages and rising geopolitical tensions have pushed governments to rethink where and how these critical components are made. For Mexico, this shift presents a rare opportunity.

A new OECD assessment suggests that Mexico is well-positioned to deepen its role in the global semiconductor ecosystem. While it does not yet manufacture advanced chips in large fabrication plants, it already plays a meaningful role in design and back-end processes such as assembly, testing and packaging. With the right strategy, Mexico could move further up the value chain.

A Long History, A New Opportunity

Mexico’s semiconductor story began in the late 1960s, when foreign firms established operations along the northern border under the Maquiladora Export Industry model. Today, four major multinational companies anchor the sector: Intel, which operates a large design centre in Guadalajara, and Infineon Technologies, Skyworks Solutions and Texas Instruments, which focus on assembly and testing.

The country also benefits from a network of research institutions supporting advanced technology development. These include the Centro de Ingeniería y Desarrollo Industrial, Centro de Investigación en Materiales Avanzados, Centro de Investigación y de Estudios Avanzados del Instituto Politécnico Nacional, Instituto Nacional de Astrofísica, Óptica y Electrónica, Centro de Tecnología Avanzada, Corporación Mexicana de Investigación en Materiales and the Tecnológico Nacional de México. Together, they provide research expertise in electronics, materials and industrial innovation.

Mexico’s broader electronics sector has grown steadily, especially after the pandemic, when demand for digital products surged. In fact, Mexico became the largest source of imports to the United States in 2023, highlighting its strong integration into North American supply chains.

Strengths and Structural Limits

Despite this progress, much of Mexico’s semiconductor-related activity still revolves around the assembly of imported components that are later re-exported. This model creates jobs and export revenue but generates limited domestic value added. Mexico imports far more chips than it exports and does not yet show strong specialization in advanced manufacturing or raw materials for semiconductors.

Geography plays a major role in the sector’s development. States along the US border, such as Baja California and Chihuahua, host many electronics facilities thanks to their proximity to American markets. Meanwhile, Jalisco in the Centre West region has built a reputation as Mexico’s “Silicon Valley,” attracting technology firms and design activities. Other regions, especially in the Southeast, remain largely outside the semiconductor ecosystem.

Talent and Innovation: The Real Game Changers

One of Mexico’s biggest advantages is its young population and strong output of engineering graduates. However, challenges remain. Secondary school dropout rates are high, student performance in mathematics and science trails OECD averages and English proficiency is lower than in many competing economies.

The OECD stresses that strengthening education is critical. STEM subjects need to be reinforced from early on in schooling. Universities and vocational training centres must align their programmes more closely with industry needs. Increasing female participation in science and engineering would also expand the talent pool.

Innovation is another area that needs improvement. Mexico’s research and development spending is below OECD averages, and patent activity in semiconductors remains modest. While research centres are active, administrative barriers and limited incentives slow the commercialization of new ideas. Stronger partnerships between industry and academia, along with clearer rules on intellectual property, could help boost innovation.

Infrastructure, Energy and a National Strategy

Semiconductor manufacturing depends heavily on reliable energy and water supplies. Northern Mexico faces water scarcity, making recycling and better management essential. Renewable energy expansion is also key, as global semiconductor firms increasingly demand clean energy for their operations.

Logistics and security are additional concerns. Road insecurity raises transport costs for firms, while complex permitting processes can discourage new investment. Improving customs procedures and streamlining regulations would make Mexico more competitive.

Perhaps most importantly, the OECD highlights the need for a clear national semiconductor strategy. While various federal and state initiatives exist, stronger coordination and long-term planning would send a strong signal to investors. Clear goals, measurable milestones and better integration of digital investment platforms could help Mexico move from an assembly hub to a more advanced semiconductor player.

Mexico may not become a leading chip fabrication powerhouse overnight. But in a world eager to diversify supply chains, it has the location, industrial base and growing research capacity to claim a stronger role. The next step depends on whether policy reforms and investments can match the scale of the opportunity.