Mexico’s Data Center Potential Limited by Challenges

Mexico's nearshoring potential has catalyzed the emergence of a burgeoning data center industry of large and small facilities, and strategically positioned edge data centers, according to industry experts in Information and Communications Technology (ICT). This complementary variety is set to increase investments directed towards Mexico and incentivize the development of more data centers in the country. However, challenges related to power distribution and data processing within data centers persist, posing limitations to its full potential. 

Mexico has emerged as an increasingly attractive destination for data centers, a trend catalyzed by the digital transformation prompted by the COVID-19 pandemic among companies around the world. This market shift persuaded hyperscalers like Google and Amazon to establish operations in Mexico as its primary location as part of their Latin American expansion, according to Amet Novillo, President, Mexican Association of Data Centers (MEXDC). The country's appeal as a key location for data center operations is not solely based on geographic proximity but is underscored by its ongoing efforts to address challenges, notably in power distribution and data processing

"Mexico is very attractive for the data center industry due to its strategic location, being interconnected with the US, and the connection we have with Latin American culture and language,” says Novillo. As a result, “major data center investors continue to arrive in the country."  

Between 2020 and 2025, Mexico is expected to attract data center investments upwards of US$8.5 billion, according to MEXDC. This financial commitment underscores the confidence in Mexico's potential to serve as a pivotal hub for data-centric operations. Specific regions, such as Querétaro, Guanajuato, Nuevo León, and the State of Mexico, are emerging as focal points for this industry evolution. A business-friendly environment in these regions, characterized by supportive regulatory frameworks and collaborative public-private initiatives, contributes to their appeal.

To boost the data center industry, governmental authorities within these states have implemented public policies to attract investment, generate green certificates, and promote energy consumption from alternative sources. These green initiatives demonstrate that “the industry’s focus has shifted from improving energy efficiency to reducing greenhouse gas emissions,” according to Jose Luis Friebel, Managing Director Spain and LATAM, DatacenterDynamics.  This is particularly relevant as sustainability becomes a major consideration for global industry leaders looking to establish operations in other countries. 

Despite these efforts, Mexico faces power distribution and processing challenges to become a data center hub, as “the growing demand for high-speed data calls for larger and more powerful data centers,” Marcos Siqueira, VP of Sales, Products and Operations, Ascenty, told MBN. Furthermore, the advent of artificial intelligence technologies will also require greater energy capacity from data centers, according to Siqueira. As the demand for data-intensive applications continues to surge, overcoming these obstacles will be instrumental in ensuring Mexico's competitiveness as a thriving hub for advanced data center capabilities.

However, energy provider, MTP, is currently working to address the industry’s demand for reduced latency and swift data processing. While the company was originally specialized in telecommunications and critical mission equipment, it has strategically entered the edge data center sector in the past two years, offering Mexican companies with a holistic data infrastructure that addresses a wide range of computing needs. 

As a Mexican-based company, MTP’s edge data centers present a compelling alternative to traditional data centers by addressing the demand for high performance computing within the country. Moreover, this alternative is also more scalable, allowing organizations to deploy additional computing resources in response to changing demands. 

“As companies and governments adopt new technologies, there will be a need for more computing capacity closer to the end-user. [Th]is [need] could lead to the continuation of the expansion of data centers within Mexico in the coming years," said Alejandro Vargas, Business Development Manager, Select.