Summary
From the article:
Mexico has quietly become a cornerstone of the AI boom, providing 40 per cent of US imports this year of the computer servers that are widely used in the data centres powering artificial intelligence.
Taiwanese manufacturers are rapidly expanding factories in Mexico to assemble servers, which are now the country’s top US export, overtaking autos that dominated its trade for decades.
Mexico is the second-largest provider of enterprise servers to the US so far this year, with sales reaching $46.9bn, behind Taiwan, which sold $53.5bn, though Mexico became the largest on a monthly basis in May.
The phenomenon is helping prop up Mexico’s limp economy, pushing the country’s exports to record levels. Servers and related hardware made up almost one-fifth of the $317bn of goods Mexico exported between January and May, more than double the same period a year earlier.
Taiwan, in turn, is now Mexico’s third-largest trading partner, up from eighth place in 2022. Taiwanese companies have spent more than $1.6bn since 2020 on Mexican factories that offer geographic proximity and tariff-free access to US tech giants spending hundreds of billions on data centres.
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AI servers offer a “paradigm shift” because the high value of each server rack means you can export higher dollar amounts per load, said Fernando Alba, deputy economy minister in Chihuahua state, where Ciudad Juárez is located. “One truck [of servers] is the equivalent of one thousand cars.”
The surge in high-value exports is yet to translate into proportional local benefits, though. Each dollar of investment in the highly automated plants creates far fewer jobs than more manual sectors such as car parts. Manufacturing employment peaked in 2023 in Ciudad Juárez.