Hon Hai Precision's $84 mln Stake in FII AMC Mexico: A Strategic Move in Nearshoring and Industrial Growth

In an era defined by geopolitical shifts and the relentless demand for artificial intelligence (AI) infrastructure, Hon Hai Precision Industry (Foxconn) has positioned itself at the forefront of industrial transformation. The company's recent $84 million investment in its Mexican subsidiary, FII AMC Mexico, is not merely a financial transaction but a calculated step toward reshaping North American manufacturing ecosystems. By aligning with nearshoring trends and leveraging Mexico's strategic advantages, Hon Hai is creating a blueprint for long-term value generation through industrial infrastructure expansion.

Strategic Rationale: Nearshoring and AI-Driven Demand

Hon Hai's investments in Mexico—spanning $120 million in 2024 and an additional $168 million in August 2025—underscore its commitment to capitalizing on two megatrends: the U.S.-led push for nearshoring and the exponential growth of AI server demand. According to a report by Jakota Index, the $120 million injection in 2024 was specifically earmarked for acquiring 421,600 square meters of land in El Salto, Jalisco, to expand AI server production linesHon Hai Precision Industry Co., Ltd.: says unit Cloud Network buys FII AMC Mexico stake for $45 million^[3]. This move aligns with broader nearshoring efforts, as Mexico's proximity to the U.S., participation in the USMCA trade agreement, and cost-competitive labor force make it an ideal hub for high-tech manufacturingHon Hai Invests $120 Million in Mexican Subsidiary to Boost AI Server Production^[2].

The strategic rationale is further amplified by Hon Hai's partnership with NVIDIA. As a key supplier of AI server components, Hon Hai produces over 50% of AI server chip substrates and holds exclusive orders for NVIDIA's GH200 chip modulesHon Hai Precision Industry Co., Ltd.: says unit Cloud Network buys FII AMC Mexico stake for $45 million^[3]. With global AI infrastructure spending projected to surge, Hon Hai's Mexican operations are poised to meet this demand while reducing supply chain vulnerabilities.

Industrial Infrastructure Expansion: A Catalyst for Regional Growth

The allocation of funds to FII AMC Mexico reflects a dual focus on facility construction and technology upgrades. Data from Focus Taiwan indicates that the $168 million investment in August 2025 is likely directed toward enhancing AI server assembly capabilities, including the establishment of advanced production lines in GuadalajaraFoxconn invests US$168 million more in Mexico, likely for AI servers^[1]. Additionally, Hon Hai's collaboration with the Mexican state of Chihuahua—announced in 2023—includes plans to develop renewable energy projects and train a skilled workforce in ICT and automotive technologiesHon Hai Technology Group (Foxconn) and Mexico’s Chihuahua^[4]. These initiatives not only strengthen Hon Hai's operational resilience but also contribute to Mexico's industrial modernization.

The economic impact is already materializing. By 2025, Hon Hai operates 14 manufacturing plants in Mexico, employing over 35,000 workersHon Hai Invests $120 Million in Mexican Subsidiary to Boost AI Server Production^[2]. The company's $840 million expansion across North America, India, and Europe further signals its intent to localize supply chains and mitigate risks associated with over-reliance on Asian manufacturing hubsHon Hai Technology Group (Foxconn) and Mexico’s Chihuahua^[4].

Government Incentives and Long-Term Value Creation

Mexico's fiscal incentives have played a pivotal role in attracting Hon Hai's investments. The 2025 Nearshoring Decree, which offers accelerated depreciation rates (41–91%) for high-tech investments, has made the country a magnet for foreign direct investment (FDI)Mexico Implements Nearshoring Decree for Investments^[5]. As stated by the International Trade Administration, these incentives are designed to offset rising labor costs and infrastructure gaps, ensuring Mexico remains competitive in the global manufacturing landscapeMexico Implements Nearshoring Decree for Investments^[5].

For Hon Hai, these policies translate into reduced capital expenditures and faster ROI. The company's $45 million stake in FII AMC Mexico in August 2025, followed by a $168 million top-up, demonstrates confidence in the Mexican government's ability to support industrial growthFoxconn invests US$168 million more in Mexico, likely for AI servers^[1]. This trust is reciprocated: Hon Hai's investments are expected to catalyze ancillary industries, from logistics to renewable energy, creating a multiplier effect on regional GDP.

Quantifying the Impact: Jobs, Production, and Regional Synergies

While specific figures on job creation from the $84 million investment remain undisclosed, Hon Hai's broader Mexico strategy has already generated 35,000 direct jobsHon Hai Invests $120 Million in Mexican Subsidiary to Boost AI Server Production^[2]. The expansion of AI server production in El Salto and Guadalajara is likely to add thousands more, particularly in high-skill roles aligned with AI and EV manufacturing. Additionally, Hon Hai's emphasis on sustainable energy—such as solar-powered facilities—positions Mexico as a green manufacturing leader, aligning with global decarbonization goalsHon Hai Technology Group (Foxconn) and Mexico’s Chihuahua^[4].

Production capacity metrics are equally compelling. Hon Hai's Mexican plants are projected to contribute significantly to its $32.82 billion AI server revenue target by 2025Hon Hai Precision Industry Co., Ltd.: says unit Cloud Network buys FII AMC Mexico stake for $45 million^[3]. This output will not only serve NVIDIA but also diversify North America's AI supply chain, reducing dependence on Asian suppliers and enhancing regional self-sufficiency.

Risks and the Path Forward

Despite these positives, challenges persist. Rising labor costs, infrastructure bottlenecks, and potential shifts in U.S. trade policy could temper growth. However, Hon Hai's diversified investment approach—spanning multiple geographies and sectors—mitigates these risks. The company's focus on vertical integration, from substrate manufacturing to AI server assembly, further insulates it from supply chain disruptions.

For investors, the key takeaway is clear: Hon Hai's Mexico investments are not isolated bets but part of a cohesive strategy to dominate the AI era. By anchoring its operations in a nearshoring hotspot and leveraging government incentives, the company is building a foundation for sustained value creation. As AI demand accelerates, Hon Hai's Mexican footprint will likely become a linchpin in North America's industrial renaissance.