Pegatron Corp., a key player in global electronics manufacturing and a major supplier for tech giants like Apple, announced that it will commence commercial production of artificial intelligence (AI) servers in Mexico by the third quarter of 2025. This move is part of the company’s strategic global diversification plan, designed to mitigate risks from geopolitical tensions, supply chain disruptions, and growing demand for AI infrastructure.
Strategic Shift to Mexico: Bridging Production Closer to U.S. Markets
Pegatron’s Co-CEO, Cheng Kuang-chih, confirmed during the company’s Annual General Meeting that its Mexico facility—under construction since 2024—will focus on AI server production, an area seeing exponential growth driven by enterprise demand and generative AI innovations.
To tackle labor shortages in Mexico, Pegatron is turning to automation technology, integrating robotic systems to streamline AI server production. This approach mirrors the broader trend among electronics manufacturers shifting to smart factories to overcome human resource constraints and reduce long-term costs.
U.S. Expansion Plan Under Final Review
Cheng further revealed that Pegatron is finalizing its assessment of launching operations in the United States. The final decision is expected by July 2025. Key considerations include:
- Land and labor costs
- Proximity to clients and competitors
- Reliable access to electricity at a competitive rate
By establishing U.S.-based manufacturing, Pegatron aims to align with the growing trend of “nearshoring”—a practice fueled by both political pressure and logistical advantages.
Diversification Continues: Malaysia, India, and Taiwan Remain Pillars
Besides Mexico and the U.S., Pegatron is aggressively expanding in Asia:
- Malaysia: A new plant is set to begin commercial production this quarter, supporting both consumer electronics and AI infrastructure.
- India: Additional production lines will be introduced in late 2025, focusing on regional supply chain localization.
- Taiwan: Despite overseas investments, Taiwan remains Pegatron’s global manufacturing hub. The company is investing NT$5.6 billion (~US$187 million) to acquire and expand an HTC plant in Taoyuan for AI server production.
Mitigating Tariff Risks with Global Footprint
Addressing potential future U.S. tariffs, especially if Donald Trump returns to the White House in 2025, Co-CEO Teng Kuo-yen said Pegatron has long been preparing for such contingencies. “We started this preparation during Trump 1.0,” he stated, emphasizing the importance of client consultation and flexibility in manufacturing geography.
Financial Performance and Dividends
Despite a drop in consolidated sales in 2024, Pegatron posted strong profits:
- Revenue: NT$1.13 trillion (↓10.46% YoY)
- Net Profit: NT$16.9 billion (↑7.64% YoY)
- Earnings Per Share (EPS): NT$6.34
- Approved Dividend: NT$4.5 per share
The revenue dip is attributed to reduced demand in consumer electronics, but growth areas like AI servers and enterprise hardware are expected to fill the gap in 2025 and beyond.
✅ FAQs
Why is Pegatron investing in Mexico for AI server production?
Pegatron is moving AI server production to Mexico to be closer to U.S. clients, reduce tariff risks, and diversify its manufacturing base amid global uncertainties.
When will the AI server production begin in Mexico?
Commercial production is set to begin in Q3 2025.
What are the benefits of Pegatron expanding to the U.S.?
It reduces dependency on Asia, shortens delivery timelines, and hedges against political/economic risks such as tariffs and trade restrictions.
What products will be made in the new Taiwan plant?
The acquired HTC facility in Taiwan will focus partially on AI server manufacturing.
What role does automation play in Pegatron’s future?
Automation is critical, especially in locations like Mexico, where skilled labor is limited. It also enhances production scalability and precision for AI hardware.
