Mexico has quietly become a cornerstone of the artificial intelligence boom, supplying 40 percent of U.S. imports this year of the computer servers widely used in data centres powering AI systems.

Taiwanese manufacturers are rapidly expanding factory operations in Mexico to assemble servers, which have now become the country's top export to the United States—overtaking automobiles that dominated Mexican trade for decades. Mexican factories offer geographic proximity and tariff-free access under the U.S.-Mexico-Canada Agreement (USMCA) to U.S. tech giants that are spending hundreds of billions of dollars on data centre infrastructure. The expansion also reflects a broader nearshoring trend in which companies have moved production closer to U.S. end markets following pandemic-era supply chain disruptions and escalating U.S.-China trade tensions.

For Taiwanese server makers—whose home base sits near one of the world's most sensitive geopolitical flashpoints across the Taiwan Strait—building capacity in Mexico offers a hedge against concentration risk while staying within North American trade lanes. Major contract manufacturers with roots in Taiwan have increasingly established final-assembly operations in Mexican border states such as Chihuahua and Baja California, leveraging an industrial base built over decades under the country's export-focused maquiladora program.

Mexico ranks as the second-largest provider of enterprise servers to the U.S. so far this year, with sales reaching $46.9 billion. That places it behind Taiwan, which sold $53.5 billion, though Mexico surpassed Taiwan to become the largest supplier on a monthly basis in May.

The surge in server exports is helping bolster Mexico's sluggish economy, pushing the country's overall exports to record levels. Servers and related hardware accounted for nearly one-fifth of the $317 billion in goods Mexico exported between January and May—more than double the figure from the same period a year earlier.

Taiwan, in turn, has risen to become Mexico's third-largest trading partner, up from eighth place in 2022. Taiwanese companies have invested more than $1.6 billion in Mexican factories since 2020 to capitalize on the country's proximity to the U.S. market and its tariff advantages.

"Mexico is of tremendous importance to the way this new AI-powered economy is working," said Jesse Rogers, head of Latin America economics at Moody's Analytics. "It is really a new frontier of collaboration and even dependency on the Mexican economy when it comes to AI servers."

The question for policymakers and industry watchers is whether Mexico can sustain this momentum. The U.S. data centre build-out shows no sign of slowing, with hyperscale operators continuing to commit record capital, but Mexico faces persistent challenges including power grid capacity, water availability for cooling-intensive facilities, and competition from U.S. domestic manufacturing incentives under the CHIPS and Science Act.

More reporting is available from Christine Murray and Alan Smith at the Financial Times.