Electronics

Global Industry¹

In 2011, the global electronic manufacturing production reached 3,525,277 million USD and is expected to grow at an average annual rate of 7.0% over the 2011- 2020 period.

Products Considered Part of the Sector

Flat-screen television sets, cellular phones, computers, data processing machines, control units or adaptors, telephone components, semi-conductors, transmission and receptor equipment, automatic machines for data processing, microwave receivers, or signals via satellite, modular circuits and video game consoles

Most Important Regions for the Industry

In 2011, the region with the largest share of the electronic market was Asia-Pacific with 64.2%, followed by North America 16% and the European Union with 12.8%.¹

Major Companies The largest companies in the sector are: LG, Sony and Samsung Electronics.

The largest electronic manufacturing enterprises [EMS –electronic manufacturing services] are: Foxconn, Flextronics, Jabil, Celestica and Sanmina.

Mexico

Production

Our country has a solid installed capacity for manufacture of electronic products, which was valued at 62,775 million USD2 in 2011.

According to Global Insight’s estimates, the electronics production in Mexico will increase by an annual average rate of 2.5% over the 2011-2020 period.

Mexico provides great opportunities for manufacturing. Our country has 777 economic units* specializing in the electronic industry and located mainly in Baja California, Tamaulipas, Chihuahua.³

This sector employed a total of 312,913 people in 2009.³

Consumption

The consumption of electronics in Mexico in 2011 was reported at 84,348 million USD. This value is expected to grow at an average annual rate of 3.3% over the 2011-2020 period.¹

International Trade4

In 2011, the sector’s exports totaled 71,146 million USD, representing 24% of non-oil exports of the country.

The United States was the main destination for Mexican exports with a market share of 85%, followed by Canada, Holland and Colombia.

Exports 2011 (million USD)

The major electronic products exported by Mexico were:

Mexico also reported imports in the electronics sector totaling 78,017 million USD in the same year.

Foreign Direct Investment (FDI)⁵

Between 2000 and 2011, the accumulated foreign investment amounted to 10,494 million USD.

In 2011 the country’s FDI reached a total of 616.7 million USD.

The main investor countries were USA, Netherlands and Switzerland.

Success Stories⁶

In May 2011, Samsung announced an expansion of its plant in Tijuana representing an investment of 70 million USD and generating 1,000 jobs.

This plant will focus primarily on the production of flat-screen television sets with the latest technology such as the Smart TV.

In February 2011, company Jabil announced the opening of its third plant in Jalisco dedicated to manufacture circuit components.

The company expects to invest 7 million USD in this project and create 250 new jobs.

Competitiveness

According to estimations from AlixPartners in 2012, Mexico is the most competitive country worldwide in terms of manufacturing costs, with approximately 21% less than USA, 11% less than China and 3% less than India.⁷

In 2011, according to KPMG, Mexico offered 19.4% savings in metal components costs and 19.5% savings in plastic components manufacturing compared to the United States.⁸

According to the World Bank, Mexico is ranked 53 in the world for doing business, over the BRICs and leading the TIMBIs.⁹

Only 9 days and 6 procedures are required to start a new business, which makes this process much easier than in the BRICs.⁹

In the past decade, the average annual growth rate of engineering graduates in Mexico was 7% which places it above the population growth rate.10 In 2010, the number of engineering graduates in the country totaled approximately 114,000.¹¹

A Message to the Investor

In 2011, Mexico occupied first place in the world for the value of its exports of flat-screen television sets.4 Prominent foreign companies have been successfully established in our country.

Eight out of ten of the most important transnational companies of manufacturing services for the electronic industry operate in Mexico, including Flextronics, Jabil Circuit, Lenovo, Samsung, Celéstica and Sanmina SCI.¹²

As a result of free trade agreements (FTAs) with more than 40 countries, Mexico has access to a potential market of more than one thousand million consumers, and 63% of the world GDP, positioning it as an important export platform.

Mexico plays an strategic role due to its geographic location, it has access to the Atlantic and Pacific oceans and it is an intermediary in the North America and South America markets where consumption is growing.

México is a safe place for foreign investment. Our country has signed 28 IPPAs (Investment Promotion and Protection Agreements) and DTTs (Double Taxation Treaties) with more than 40 countries.¹³

Shelter Services: these allow businesses to start operations more easily, as they issue the necessary permits for them to begin operations without having to worry about customs, legality and administrative topics.

Support Programs⁵

Refund of Taxes on Imports and Exports (Drawback)

In a case where the producer has imported materials which are incorporated into merchandise for export, the program offers the possibility of a refund of the general import tax on these materials.

Sectorial Promotion Programs (PROSEC)

In a case where the producer has imported materials which are incorporated into merchandise for export, the program allows the import of such materials at a preferential ad-valorem rate.

Manufacturing Industry, Bonded Assembly and Export Services (IMMEX)

It simplifies the procedures and requirements of the bonded assembly regime for those companies which already have a structured business plan. It allows for the temporary importation of goods or services used in the industrial process; it is geared towards the development, transformation or repair of imported foreign merchandise.

Chambers & Associations

The National Council for the Bonded Assembly and Export Manufacturing Industry (CNIMME)

An organization which represents more than 1,200 established businesses, employing 80% of the work force in the bonded assembly industry.

The National Chamber for Electronics, Telecommunications and Information Technologies (CANIETI)

A public interest institution involved in the competitive development of the telecommunications and technologies electronic industry.

Mexico’s Electronics Supply Chain Organization (CADELEC)

An agency that intends to facilitate the development and integration of local, national, and international companies into the electronic industry’s supplier chain and strategic sectors of the regional and domestic economy.

Sources:

1. Source: Global Insight

2. Source: INEGI and Global Insight

3. Source: INEGI Economic Census 2009

4. Source: Global Trade Atlas

5. Source: Ministry of Economy

*includes companies, plants, commercial and sales offices.

6. Source: Maquila Portal

7. Source: Alix Partners 2011

8. Source: KPMG 2012

9. Source: Doing Business, WB 2012

10.1.4% annual average for the period 2000-2010,I NEGI

11. Source: CONACYT

12. Source: Manufacturing Market Insider

13. Source: Ministry of Economy/Ministry of Finance and Public

Credit (SHCP)

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