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News Article

Mexico, Foxconn’s New iPhone Factory?

By Andrea Villar | Mon, 08/24/2020 - 12:50

While the trade war between the US and China shows no signs of recovery and the COVID-19 pandemic continues to affect the economy, companies continue eyeing new ways to reduce costs to keep as much cash flow as possible. In such a scenario, companies with factories in Asia are considering regionalizing their supply chain in North America, among them Apple partner and iPhone assembler Foxconn, which is reportedly considering opening a new factory in Mexico.

Foxconn has plans to use the factory to make Apple iPhones and is likely to make a final decision on a new factory later this year. However, there had been no sign of Apple’s direct involvement in the plan yet, reports Reuters. Pegatron, a contractor for several phone manufacturers, including Apple, is also considering a facility in Mexico mainly to assemble chips and other electronic components, reports the news outlet.

In this scenario, USMCA creates a great opportunity for prosperity, although it is not a “magic wand that will change everything,” said US Ambassador in Mexico, Christopher Landau in a press conference back in July. The ambassador said that countries such as India and Vietnam are knocking on the doors of Chinese companies and offering opportunities, so as a region it is convenient for Mexico to collaborate and not miss the opportunity. In July, Foxconn reported it planned to invest up to US$1 billion to expand a factory in India where it assembles Apple iPhones.

The Ministry of Economy (SE) has spoken with a number of foreign companies in an effort to lure business from Asia to capitalize on the trade deal and was preparing to speak to Apple about relocating manufacturing, Economy Minister Graciela Márquez told Reuters last month. 

“Terms like reshoring and nearshoring are starting to appear more and more as a response to the lessons we are learning from the moment we are living. This applies not only to processes and products. It applies in the same way to services such as engineering, design and project management. We are living a moment of opportunity and USMCA should help us think beyond geographical borders,” Carlos Robles, Vice President of the Central Region of FEMIA, told Mexico Business News (MBN). 

Every month, 10 companies from China arrive in Mexico, three of them from the automotive sector, interested in establishing themselves in Mexico, said Amapola Grijalva, Leader of the Mexico-China Chamber of Commerce in a report.

“Both, USMCA and the COVID-19 pandemic will take Mexico to nearshoring practices, which is contrary to the offshoring practices seen in previous years. We must not confuse the decrease in demand caused by COVID-19 with the strengthening of the North American region through USMCA. However, both will foster the transfer of operations to closer locations,” said Private International Consultant and Former President of AMIA, Eduardo Solís in an interview with MBN.

The data used in this article was sourced from:  
Reuters
Andrea Villar Andrea Villar Journalist and Industry Analyst