Foxconn and Pegatron eye new factories in Mexico due to US-China trade war

Taiwan-based electronics manufacturers Foxconn and Pegatron are among companies eyeing new factories in Mexico, as the U.S.-China trade war and coronavirus pandemic prompt firms to re-examine global supply chains.Phone shop in MexicoMexico is Latin America’s second-largest economy, which is primed for its worst recession since the 1930s Great Depression, Reuters reported.

Foxconn and Pegatron are contractors for several phone manufacturers including Apple.

Foxconn has plans to use the factory to make Apple iPhones.

Foxconn is likely to make a final decision on a new factory later this year, and work will commence after that.

Pegatron is in early discussions with lenders about an additional facility in Mexico mainly to assemble chips and other electronic components.

Foxconn has five factories in Mexico mainly making televisions and servers. Its possible expansion would underscore a broader and gradual shift of global supply chains away from China amid a Sino-U.S. trade war and the coronavirus crisis.

Taipei-headquartered Foxconn said in a statement that while it continued to expand global operations and is an “active investor” in Mexico, it had no current plans to increase those investments.

Reuters in July reported Foxconn planned to invest up to $1 billion to expand a factory in India where it assembles Apple iPhones.

Foxconn Chairman Liu Young-way told an investor conference in Taipei on Aug. 12 that about 30 percent of the company’s products were now made outside China and the ratio could increase.

Foxconn unit Sharp has said it is stepping up television production in Mexico. Sharp last year said it would set up a plant in Vietnam to shift part of its China production.

China’s Luxshare Precision Industry is also considering building a facility in Mexico this year to offset the tariff war between the world’s two largest economies. Luxshare is a leading manufacturer of Apple Airpods.

The Taipei Economic and Cultural Office in Mexico, which represents Taiwan’s government in the country, said it had heard Foxconn was interested in building another factory in Ciudad Juarez, in the northern border state of Chihuahua.

In 2017, U.S. President Donald Trump said Foxconn would build $10 billion plant employing 13,000 people making LCD panels in the state of Wisconsin. In 2019 the company downgraded the size of the planned factory. In April, Foxconn said it would make ventilators at the plant in partnership with Medtronic.