This chapter examines the institutions, policies and regulations that shape Mexico’s semiconductor ecosystem. Building on desk research and interviews with key governmental and non-governmental stakeholders, the chapter analyses challenges and opportunities relating to Mexico’s institutional framework; education, research and innovation; infrastructure; and the regulatory and business environments.
Promoting the Development of the Semiconductor Ecosystem in Mexico
Abstract
Building on the previous chapter’s analysis of the market structure of Mexico’s semiconductor ecosystem, this chapter focuses on the public policies and regulations that shape the Mexican ecosystem. It starts by reviewing Mexico’s institutional framework, analysing the government agencies and strategies – at both the national and sub-national levels – with responsibility for developing Mexico’s semiconductor industry. The chapter then considers three key policy areas for the semiconductor ecosystem: education, research and innovation; infrastructure; and a brief overview of Mexico’s regulatory and business environments, including investment incentives.
Mexico’s federal government does not currently have a single, unified semiconductor strategy. Several federal agencies and state governments have implemented individual strategies and policies in support of industrial development that could strengthen parts of the country’s semiconductor ecosystem. For example, the Plan for Mexico (referred to hereafter by its Spanish name, Plan México), the government’s flagship programme for economic growth and investment launched in 2025, aims to, amongst other objectives, increase the domestic production of semiconductors and direct greater investment towards strategic technologies including semiconductors.
Additionally, the new Secretariat of Science, Humanities, Technology and Innovation (SECIHTI) announced in February 2025 the Kutsari Project, which focuses primarily on semiconductor design and research and development (R&D). Meanwhile, the National Chamber for the Electronics, Telecommunications and Information Technology Industries (CANIETI), an industry association, published its Master Plan for the Development of the Semiconductor Industry in Mexico in September 2024, but it is unclear the extent to which CANIETI’s Master Plan reflects the opinions and objectives of all relevant government agencies.
This section provides an overview of the relevant agencies and strategies and discusses the scope for enhanced co‑ordination across different governmental and non-governmental stakeholders.
3.1.1. Federal strategies related to semiconductors and industrial policy
Within the federal government, the Secretariat of Economy (Secretaría de Economía, SE) is responsible for defining industrial policy and co‑ordinating policy implementation with other government agencies. This includes developing and co‑ordinating semiconductor-related policies.
In 2022, the SE launched its strategy Towards an Industrial Policy (Rumbo a una Política Industrial), which remains the clearest articulation of an overarching industrial strategy for Mexico. It is built on four main pillars: innovation and the adoption of new scientific and technological trends; development of human talent; support for local firms and small and medium-sized enterprises (SMEs); and sustainable industries and economic development (Secretaría de Economía, 2022[1]).
Towards an Industrial Policy classifies the computer, electronic and electrical equipment industries as one of five strategic sectors and recognises that semiconductors are a critical part of this industry. The strategy commits to specific actions to support the semiconductor ecosystem in Mexico, including promoting semiconductor-related educational pathways and increasing the participation of Mexican semiconductor component manufacturers in global value chains (GVCs). Towards an Industrial Policy also notes that the Northwest region specialises in computer, electronic and electrical equipment industries, while the Northeast and Centre West have the potential to develop specialisations in this industry (Secretaría de Economía, 2022[1]). This is in line with the analysis in Section 2.1.3.
Mexico co‑ordinates its social, economic and industrial development through the National Development Plan (Plan Nacional de Desarrollo, PND) that lasts for six years. Although neither the PND 2019-2024 nor the current PND 2025-2030 make explicit reference to semiconductors, their objectives relating to science, technology and innovation nonetheless provide a framework to support the electronics industry and other advanced manufacturing, including semiconductors (Government of Mexico, 2019[2]; Government of Mexico, 2025[3]).
In 2025, Mexico launched Plan México, a new initiative for economic development that aims to promote collaboration between the federal government and the private sector, drive up private investment, encourage firms to relocate to Mexico, and increase domestic manufacturing to achieve greater import substitution. Plan México emphasises the importance of the semiconductor industry and also sets 13 objectives, one of which is to increase Mexican content in GVCs linked to strategic sectors, namely semiconductors and other electronics (Government of Mexico, 2025[4]).
In the context of these multiple initiatives and policies that affect parts of Mexico’s semiconductor ecosystem, there would be advantages to developing an overarching, dedicated semiconductor strategy, led by the government, to ensure policy coherence and clarity. Moreover, there are precedents for national semiconductor strategies in the region, such as Costa Rica’s Roadmap for Strengthening the Semiconductor Ecosystem (Hoja de Ruta para el Fortalecimiento del Ecosistema de Semiconductores), issued by the Ministry of Foreign Trade (COMEX, 2024[5]).
3.1.2. Co‑ordination across federal agencies
In addition to the strategies for industrial policy and economic development outlined above, Mexico has taken an initial step towards developing a dedicated mechanism for co‑ordinating its semiconductor policy across public sector institutions. In June 2024, nine federal secretariats and other government agencies established a Collaboration Agreement (Convenio de Colaboración) to promote the development of the semiconductor industry (Government of Mexico, 2024[6]).
Parties to the Collaboration Agreement include the following secretariats and agencies: the SE, the Secretariat of Finance and Public Credit, the Secretariat of Environment and Natural Resources, the Secretariat of Energy, the Secretariat of Infrastructure, Communications and Transport, the Secretariat of Public Education, Secretariat of Agricultural, Territorial and Urban Development, the National Council for Humanities, Science and Technology and the National Water Commission.
The purpose of the Collaboration Agreement is to enhance co‑ordination amongst these key governmental stakeholders with the objective of developing the national semiconductor industry. To achieve this objective, the Collaboration Agreement sets out ten actions:
Ensure that the one-stop shop for investment (Ventanilla Única para Inversionistas, VUIMX) is kept up to date.
Promote the exchange of knowledge and specialised semiconductor skills, and enhance research and technological development in the field of semiconductors.
Identify the regions of Mexico with the optimum conditions for the development of the semiconductor industry, for example regions with available industrial land, a suitable regulatory framework and sufficient water resources.
Create synergies across educational institutions, the scientific community and firms related to the semiconductor industry, to support the education and training of human talent.
Enhance the frameworks for environmental regulation and water sustainability to allow for the development of the semiconductor industry, while ensuring that domestic consumption takes precedence over other uses.
Provide a continuous and efficient supply of electricity, gas and other energy sources for the semiconductor industry.
Enhance the infrastructure and telecommunications regulatory framework to support investments in the semiconductor industry.
Streamline administrative procedures and provide guidance in a way that benefits the semiconductor industry.
Promote tax incentives for developing the semiconductor industry.
Propose actions to the SE to include in the forthcoming Work Plan for the Development of the Semiconductor Industry. Once the plan is issued, implement relevant actions and provide updates to the SE.
The Collaboration Agreement makes clear that the SE is responsible for co‑ordinating cross-government actions to support the national semiconductor industry and defining the Work Plan for the Development of the Semiconductor Industry.
3.1.3. Sub-national strategies and initiatives
In addition to federal government initiatives to develop Mexico’s industrial and semiconductor ecosystems, several state governments have put forth their own strategies targeting different parts of the semiconductor ecosystem, such as infrastructure, talent, innovation and integration with end-use markets for semiconductors.
The Jalisco Tech Hub Act, enacted in 2022, focuses on enhancing co‑operation between the government, industry and academia (the so-called triple helix model) to support the development, reskilling, attraction and retention of talent for the innovation and high-technology ecosystems (Gobierno de Jalisco, 2022[7]). The state of Jalisco has allocated a budget of MXN 2.3 billion (Mexican pesos) to be split across four areas:
development, reskilling and hiring of talent (MXN 0.4 billion) (this includes training in semiconductor design)
infrastructure for higher education and upper secondary education (MXN 1.3 billion)
dedicated state land reserve (MXN 0.5 billion)
incentives for firms, for example, to attract investment, promote energy efficiency or create jobs (MXN 0.1 billion).
The Red CI Baja programme, implemented by the state of Baja California, aims to further develop the local innovation ecosystem by focusing on technical infrastructure, skills and innovation (Gobierno de Baja California, 2022[8]). This programme brings together 22 recognised research centres to foster scientific collaboration through shared infrastructure and equipment, joint projects, access to funding for innovative projects, as well as collaboration with industry (e.g. Qualcomm) in key areas such as semiconductors, other electronics, software development, radio frequency, computing and energy management.
The capital Mexico City hosts the Vallejo-i industrial innovation cluster, which includes the Centre for Development and Technological Innovation (CDIT). Endowed with MXN 120 million in public funding, the CDIT is developing a City Data Center for storing and analysing data, a cluster of laboratories to promote Industry 4.0 and a business linkages platform to support technology entrepreneurship (SEDECO, 2021[9]).
Plan Sonora focuses on clean energy and investment attraction in the Northwestern state of Sonora (Gobierno de Sonora, 2023[10]). Its priorities are:
Renewable energy: The Puerto Penasco solar plant, inaugurated in 2023, is the first of four such installations and has the capacity to produce 1 000 megawatts (MW) of clean energy. Sonora’s renewable energy is a valuable resource for semiconductor manufacturers, including for firms operating in the nearby US states of Arizona or California.
GVC integration: Sonora has large lithium deposits which were nationalised in 2023 and could help to attract manufacturers of electric vehicles (EVs). Sonora aims to attract the EV value chain, ranging from the raw materials and semiconductors segments through to the final product.
Talent development: The state of Sonora is creating new degrees and other qualifications related to semiconductors and the use of lithium, in partnership with local and foreign universities including Arizona State University, in the United States.
Infrastructure development: Construction is underway for new technological parks and improved transportation logistics, for example the development of the Port of Guaymas and the modernisation of northern border checkpoints (Gobierno de Sonora, 2023[10]).
Other states have also developed plans which could support a local semiconductor ecosystem. These include, for example, Hidalgo’s strategy for attracting the EV and semiconductor industries, through the planned creation of a free trade zone and tax incentives, the provision of energy and water, and investments in talent, building on the state’s geographic proximity to Mexico City. The state of Oaxaca also intends to leverage its water and renewable energy endowments (notably wind power), complemented by efforts on education and skills, logistics and the plans to create the Interoceanic Corridor of the Isthmus of Tehuantepec (Corredor Interoceánico del Istmo de Tehuantepec, CIIT), to help support industrial development.1 In April 2025, the CIIT railway system successfully transported its first cargo – Korean automobiles intended for the US market – from Mexico’s Pacific coast to its Atlantic coast (Courrier International, 2025[11]).
The wide range of state-level semiconductor projects and initiatives emphasises that Mexico is a federal country, with each of the 31 states and capital city wielding considerable discretion to develop and implement their own strategies. On the one hand, states’ individual efforts to attract semiconductor firms – for example through investment in specialised skills, infrastructure development, innovation and other key areas of the semiconductor ecosystem – can have a positive impact on the development of local economies and communities. On the other hand, increased competition amongst states vying to attract semiconductor investment could produce detrimental economic effects – such as a race to the bottom on fiscal incentives for firms – or increased environmental pressure on scarce natural resources, for instance water.
Therefore, a co‑ordination mechanism would significantly enhance Mexico’s efforts to develop its semiconductor ecosystem and incentivise further semiconductor investment. Although the Collaboration Agreement has begun to co‑ordinate government agencies at the federal level (see Section 3.1.2), this mechanism has not yet been extended to the sub-national level. A co‑ordination mechanism across federal and sub-national agencies and initiatives could assess the comparative advantages of each state and their complementarities, with a view to identifying how Mexico, as a whole, could leverage its rich socio‑economic diversity and natural endowments to attract global semiconductor investment. Such a co‑ordination mechanism would allow for synergies in policy actions across regions and policy areas, ensuring an efficient allocation of public resources. The active engagement of federal secretariats and agencies with responsibility for key policy areas relevant to the semiconductor ecosystem – including, but not limited to, industrial development, tax, education and skills, innovation, infrastructure, amongst others – would be essential. The co‑ordination mechanism should also include representatives from industry, academia, civil society and labour unions, ensuring that different stakeholder perspectives and the underlying trade-offs (for example, ease of doing business versus environmental concerns) can be taken into account.
3.1.4. International collaboration
Collaboration with other economies is an opportunity for Mexico to share its semiconductor expertise and learn from international best practices. Mexico and the United States collaborated to establish a new Working Committee for the Analysis of the Semiconductor Industry in Mexico (Comité de Trabajo para el Análisis de la Industria de Semiconductores, hereafter, the Working Committee). CANIETI founded and co‑ordinated the Working Committee, which benefitted from the support of the US Embassy in Mexico and brought together stakeholders from industry groups (e.g. the American Chamber of Commerce and Business Coordinating Council), the federal government (e.g. CONAHCYT and the SE), state governments (e.g. Baja California, Chihuahua, Jalisco, Nuevo León, Sonora), academia (e.g. the National Institute of Astrophysics, Optics and Electronics, INAOE) and the US-headquartered Semiconductor Industry Association.
According to information provided by the SE for the purpose of this report, the Working Committee had two main priorities: to conduct a comprehensive analysis of the semiconductor industry in Mexico, and to identify the industry’s challenges, opportunities and public policy needs. The Working Committee’s analysis was structured according to four overarching themes: talent development, best practices, identification of bottlenecks and access to critical inputs.
Throughout 2024, the CANIETI-led Working Committee organised three Mexico-US Semiconductor Collaboration Fora in the states of Baja California (Tijuana), Chihuahua (Ciudad Juárez) and Jalisco (Guadalajara). The major output of these meetings was the Master Plan for the Development of the Semiconductor Industry in Mexico 2024-2030 (Plan Maestro para el Desarrollo de la Industria de Semiconductores en México 2024-2030). Drawing on the insights of the public and private sectors in both Mexico and the United States, the master plan sets six goals for the period 2024-2030 (CANIETI, 2024[12]):
Double the exports and employment of Mexico’s semiconductor industry.
Double and diversify semiconductor design activities in Mexico.
Relocate more than USD 10 billion’s worth of semiconductor assembly, testing and packaging operations to Mexico.
Relocate printed circuit board operations, substrates and other key back-end and supply chain inputs for the electronics, telecommunications and automotive industries to Mexico, reducing import dependence by 10%.
Double local sourcing of goods and services for semiconductor original equipment manufacturers, original design manufacturers and contract manufacturers.
Initiate the supply of raw materials from Mexico to improve the resilience of the semiconductor supply chain in North America and the region.
CANIETI’s master plan aligns with parts of Plan México (Section 3.1.1), namely the focus on import substitution and relocating more GVC segments to Mexico. Going forwards, Mexico could continue to leverage the work of CANIETI and its partners to identify areas of focus for the different Mexican states seeking to establish a semiconductor ecosystem. CANIETI’s work could also continue to identify opportunities for Mexico in the context of the semiconductor GVC. Proposed policy actions that could be considered for a future government-led national semiconductor strategy would be extremely valuable.
Mexico’s international semiconductor collaboration extends beyond the United States. The SE, in co‑ordination with the Business Coordinating Council, has promoted business missions to highlight Mexico’s competitive advantages. Important international initiatives include, for example, collaboration, with industry and academia from Chinese Taipei on printed circuit boards (Secretaría de Economía, 2023[13]). Mexico is also a member of the OECD Semiconductor Informal Exchange Network, a unique international forum for the exchange of semiconductor industry data and policy information.
3.1.5. Co‑ordination of research and innovation actors
As explained below in Section 3.2.1, the semiconductor industry relies on a thriving research and innovation ecosystem. This section provides an overview of the main agencies responsible for designing and delivering Mexico’s research, development and innovation (RD&I) policy.
In November 2024, a presidential decree replaced CONAHCYT with the new Secretariat of Science, Humanities, Technology and Innovation (SECIHTI) (Government of Mexico, 2024[14]). The elevation of the science, technology and innovation portfolio from a national council to a secretariat for the first time indicates the increased importance that Mexico places on these policy areas. SECIHTI, which was formally established in January 2025, is the federal institution in charge of leading and co‑ordinating Mexico’s science, technology and innovation ecosystem and supporting and developing human talent in these areas.
SECIHTI assumed the responsibility from CONAHCYT for co‑ordinating the National System of Public Research Centres, composed of more than 25 centres located throughout Mexico and covering research areas such as materials, manufacturing and industrial processes; physics, mathematics and data science; the environment, health and food; public policy and regional development; history and social anthropology. Five of the research centres – INAOE, the Center for Advanced Materials Research (CIMAV), the Center for Engineering and Industrial Development (CIDESI), the Center for Advanced Technologies (CIATEQ) and the Mexican Materials Research Corporation (COMIMSA) – partnered to create iSensMEX, a national platform that aims to bring together research skills, technological development and open innovation in relation to advanced materials, semiconductors and integrated circuits in order to manufacture smart sensors and actuators (INAOE, 2022[15]).
SECIHTI also oversees the new Network for a National Common Space for Education, Science, Humanities, Technology and Innovation (Red de Espacio Común de Educación, Ciencia, Humanidades, Tecnología e Innovación, Red Ecos Nacional), which aims to connect stakeholders from across different sectors to collaborate on shared education and research projects. Although SECIHTI is the lead co‑ordinator for Red Ecos Nacional, it collaborates with other federal secretariats to bring together state and local governments, state-owned and private firms, the public research centres (see above), public and private higher education institutions, and civil society. Together, these organisations work on inter‑institutional and multi-disciplinary projects in fields such as science and society, sustainable development, health sciences and climate change (SECIHTI, 2025[16]).
One of SECIHTI’s major achievements since its establishment at the beginning of 2025 is the launch of the Kutsari Project, which aims to increase Mexico’s participation in the design and, ultimately, fabrication segments of the semiconductor value chain (see Box 3.1 for full details).
In February 2025, Mexico announced the Kutsari Project (Proyecto Kutsari) to further the development of the country’s semiconductor ecosystem. The project makes two major commitments.
First, it commits to a National Center for Semiconductor Design, where scientists from public higher education institutions and research centres are expected to develop new semiconductor designs. The centre will have facilities in three Mexican states – Jalisco, Puebla and Sonora – under the co‑ordination of INAOE and the Center for Research and Advanced Studies of the National Polytechnic Institute (CINVESTAV). The project will also benefit from the support and participation of the National Autonomous University of Mexico (Universidad Nacional Autónoma de México, UNAM) and the National Polytechnic Institute (Instituto Politécnico Nacional, IPN). To supply the workforce for the National Center for Semiconductor Design, the Kutsari Project envisages the creation of an Accelerated Training Programme for Designers. By 2027, the National Center for Semiconductor Design intends to design semiconductors for the automotive sector, household appliances and medical devices.
The second main commitment of the Kutsari Project is the establishment of a semiconductor fabrication plant (fab) in Mexico for front-end manufacturing, a segment of the value chain that does not currently operate in Mexico (see Section 2.1). This commitment is over a longer time horizon, with the Kutsari Project hoping to establish a fab by 2030. Whereas the National Center for Semiconductor Design will be fully state‑owned, the ownership model for the semiconductor fab has not yet been determined.
The official announcement of the Kutsari Project makes clear that it is a part of Plan México and contributes to the plan’s overall objectives (see Section 3.1.1).
Sources: Presidencia de la República (2025[17]), “Presidenta Claudia Sheinbaum anuncia creación del Centro Nacional de Diseño de Semiconductores “Kutsari””, https://www.gob.mx/presidencia/prensa/presidenta-claudia-sheinbaum-anuncia-creacion-del-centro-nacional-de-diseno-de-semiconductores-kutsari; SECIHTI (2025[18]), Plan de Desarrollo Semiconductores, https://secihti.mx/wp-content/uploads/2025/12/6febrero25_Plan_Desarrollo_Semiconductores.a.pdf.
Mexico will need to ensure that SECIHTI works closely with the SE, the federal secretariat with overall responsibility for semiconductor policy (see Section 3.1.2). SECIHTI also has a major stake in the expansion of Mexico’s semiconductor ecosystem, as seen through its leadership with respect to Project Kutsari, so close collaboration between SECIHTI and the SE is essential for the development of holistic semiconductor policy and to reduce the likelihood of policy duplication or contradiction between the two secretariats.
This section focuses on two main areas. First, it analyses the education, research and innovation ecosystems. Second, it considers the infrastructure that can support the development of a semiconductor industry, namely electricity, water and transport. It also briefly discusses other aspects of Mexico’s regulatory environment, such as customs, competition and foreign investment. Each sub-section builds on the analysis of policy information gathered from desk research and from consultations with relevant stakeholders.
3.2.1. Education, research and innovation
This sub-section assesses Mexico’s education system, research environment and innovation landscape. It discusses how policies could affect semiconductor workforce development and co‑operation between different institutions, and analyses strategies and policy instruments that can help develop the necessary skills for the semiconductor industry. These include primary, secondary and tertiary education policies, apprenticeship programmes and vocational education and training (VET), specialised industry-academia programmes targeting semiconductor skills and strategies to attract specialised talent to Mexico.
In Mexico, education expenditure as a percentage of gross domestic product (GDP) declined from 5.1% of GDP in 2015 to 4.1% of GDP in 2022. Moreover, as of 2022, Mexico’s expenditure lagged behind other Latin American countries like Chile (4.9%) and Costa Rica (6.2%), and the OECD average (5.0%) (World Bank, 2025[19]). Across primary to tertiary education, Mexico spends USD 3 239 annually per full-time equivalent student, compared to the OECD average of USD 12 647 (OECD, 2023[20]).
Investing in education and developing a skilled workforce will also support Mexico’s efforts to reduce labour informality, which is strongly linked to low educational attainment. Currently, 55% of employment in Mexico is informal, the second-highest rate in the OECD. Although informality does not fall directly within the scope of this report, supporting workers to transition from the informal to the formal economy can also increase the pipeline of talent that could work in the semiconductor ecosystem. See the recent OECD Economic Survey of Mexico for a more detailed discussion of the causes of labour informality and suggested policy responses (OECD, forthcoming[21]).
Primary and secondary education
The Secretariat of Public Education (Secretaría de Educación Pública, SEP) sets Mexico’s education policy and is ultimately responsible for the National Education System (Sistema Educativo Nacional, SEN). According to Article 31 of the General Education Law, the SEN encompasses the education services and institutions overseen by the federal, state and municipal governments, SEP’s decentralised education agencies and certain authorised or recognised private institutions (Chamber of Deputies, 2024[22]). The SEN creates three broad levels of education: basic, upper secondary (educación media superior) and higher education (see Figure 3.1). This part of the report considers the first two education levels. Basic education includes pre-school, primary and lower secondary education and concludes when the child is approximately 14 years old. Upper secondary education lasts for two or three years and prepares the child to join higher education or the labour market (SEP, 2015[23]; Chamber of Deputies, 2024[22]).
Notes: The left-hand side of the diagram shows SEN’s three main levels: basic, upper secondary and higher education. The right-hand side shows the stages within each of these education levels. The “T” symbol represents the end of a learner’s education.
Educational levels are mapped using the International Standard Classification of Education (ISCED) to facilitate interpretation of Mexican educational levels in English. Under this scheme, educación básica includes preescolar (ISCED 0, early childhood education), primaria (ISCED 1, primary education), and secundaria (ISCED 2, lower secondary education). Educación media superior, comprising bachillerato general, bachillerato tecnológico, and capacitación para el trabajo, is classified as upper secondary education (ISCED 3). Programmes oriented toward post-secondary non-tertiary training are classified as ISCED 4, such as profesional técnico. Educación superior includes técnico superior universitario (ISCED 5, short-cycle tertiary education), licenciatura (ISCED 6, bachelor’s or equivalent level), especialización and maestría (ISCED 7, master’s or equivalent level), and doctorado (ISCED 8, doctoral or equivalent level).
Source: OECD adaptation of SEP (2015[23]), “Conoce el Sistema Educativo Nacional”, https://www.gob.mx/sep/articulos/conoce-el-sistema-educativo-nacional.
Upper secondary education became compulsory in Mexico in 2012 (OECD, 2015[24]). Education in Mexico is mandatory between the ages of 3 and 17 years old, for a total of 14 years. This is above the OECD average of 11 years (OECD, 2024[25]). However, in practice, in 2023, Mexico still had one of the lowest education enrolment rates of 15-19 year-olds among OECD Member countries and partner economies: among that age group, just 42% were enrolled in upper secondary education and 59% were enrolled in any form of education (OECD, 2023[26]). Similarly, Mexico had one of the lowest upper secondary education attainment rates among OECD Member countries, with 40.8% of young adults aged 25 to 34 attaining less than an upper secondary education, more than three times the OECD average of 12.8% (OECD, 2025[27]).
The low enrolment and graduation rates for upper secondary education is a clear challenge to developing a semiconductor workforce with the advanced skills that are taught at higher education institutions. Mexico is taking several actions to address this challenge.
To address some of the financial barriers to starting or completing upper secondary education, Mexico introduced the Benito Juárez Universal Scholarship for Upper Secondary Education in 2018. Although this scholarship is not means-tested, universal scholarships can still benefit students from low-income families or marginalised communities and help reduce inequality (Miller-Adams, 2010[28]). This is especially the case when, as with this scholarship, eligibility is limited to public schools, where disadvantaged students are overrepresented (OECD, 2025[29]). This scholarship, aimed at students in upper secondary education, provides MXN 1 900 per student paid every 2 months during the 10 months of the school year,2 up to a maximum of 40 months as long as the student continues to be enrolled. At the beginning of the school term, students must contact their school to confirm their enrolment, as schools are responsible for reporting. In addition, the National Coordinating Body for Welfare Scholarships (Coordinación Nacional de Becas para el Bienestar, CNBB) must confirm with the National Population Registry (Registro Nacional de Población, RENAPO) that students do not receive another federal scholarship aimed at reducing dropout rates, although students are still eligible for the Benito Juárez scholarships if they receive scholarships for other purposes (Government of Mexico, 2025[30]).
Evidence from universal scholarship programmes suggests that their inequality-reducing effects operate less through the direct financial value of the scholarship and more through indirect channels, including shifts in expectations and changes in institutional practices within school systems. In this sense, such programmes are primarily designed to support participation and persistence in education, rather than to maximise returns through fine-grained targeting. This may be relevant in Mexico, where upper secondary enrolment and completion gaps remain strongly correlated with income and territorial disadvantage (Miller-Adams, 2010[28]).
The CNBB also co‑ordinates two scholarships to support children and young adults at other education levels. The Rita Cetina Universal Scholarship for Basic Education is worth MXN 1 900 per family paid every two months and an additional MXN 700 for every student in lower secondary education. The Higher Education Scholarship, called Young People Writing the Future, is worth MXN 5 800 per student, paid every two months. At the start of 2025, there were 8.3 million recipients of the Rita Cetina Universal Scholarship for Basic Education, 2.5 million recipients of the Benito Juárez Universal Scholarship for Upper Secondary Education and 327 000 recipients of the Higher Education Scholarship (Government of Mexico, 2025[31]).
In addition to the CNBB’s federal support, sub-national institutions also offer financial assistance for children to pursue education. For example, the state of Mexico provides the Strong Families for Education Scholarship (Beca Familias Fuertes por la Educación) and the capital Mexico City provides My Scholarship to Start (Mi Beca para Empezar) to support children from low-income families to access primary and secondary education.
Scholarships from the federal and state governments are one way to enhance student retention and grow the pipeline for Mexico’s semiconductor workforce. Strengthening early warning mechanisms and related interventions to support students at risk of dropping out is also crucial, which is also an important recommendation in the latest OECD Economic Survey (OECD, forthcoming[21]). Timely identification and targeted support have proven effective in improving retention (OECD, 2024[32]). Additionally, enhancing the engagement of parents and families through dedicated school activities fosters student motivation and attendance, which are vital for retention (OECD, 2012[33]; OECD, 2024[34]). Finally, demonstrating the value of staying in education by highlighting its benefits for future employment could also help incentivise students to continue into upper secondary education (OECD, 2023[20]; OECD, 2024[34]).
Furthermore, techniques to increase student engagement in subjects required by the semiconductor industry are also important. Expanding technology-supported pedagogic models can enhance students’ creativity, imagination and problem-solving skills, thus making education – particularly in science, technology, engineering and mathematics (STEM) subjects – more engaging and enjoyable. Additionally, technology-supported education can provide wider ranges of experimentation and learning-by-doing that would be difficult to obtain without technological support. For instance, online laboratories using simulations can enable relatively low-cost flexible access to experimental training (Kärkkäinen and Vincent-Lancrin, 2013[35]). Facilitating the involvement of students from a young age (secondary education or earlier) by providing awareness campaigns, specialised short programmes, work experience and open science days at research centres can also help incentivise students to pursue their studies or spark interest in specific fields, such as STEM subjects.
As well as policies to support students and their learning experience, Mexico should also continue to support the training and professional development of teachers. Teachers in Mexico graduate from teacher training programmes provided by SEP, state governments or private institutions. Curricula for these programmes are overseen and authorised by the General Directorate of Higher Education for Teachers (Dirección General de Educación Superior para el Magisterio, DGESuM), part of SEP.
In 2019, the General Law on the System for the Teaching Profession was enacted and introduced significant changes to the processes for the admission, promotion and recognition of personnel performing teaching or supervisory roles, with the aim of improving their professional development. Since the 2019 General Law, Mexico has moved away from mandatory evaluations for all teachers and towards optional evaluations and continuous professional development that support career advancement.
Mexico, through DGESuM, should train teachers that are equipped to teach subjects relevant to semiconductors (for a list of these subjects, see Section 2.3.2). For example, allowing primary school teachers to specialise in STEM subjects by reducing the number of subjects that each teacher is required to train in and teach can improve teaching effectiveness. Although primary teachers tend to teach multiple subjects, growing literature emphasises the advantages of teachers developing subject-specific expertise even at lower education levels (Jensen et al., 2016[36]). By continuing to provide technical and pedagogical training and consolidating the implementation of new training modules, Mexico can enhance teachers’ professional development and ensure that they can adapt to different students’ needs.
Teacher remuneration is another important factor in their retention, recruitment and professional development and, between 2018 and 2024, the average salary of primary school teachers increased by 47.5%, according to Mexican government estimates (Presidencia de la República, 2024[37]). The Unit of the System for the Teaching Profession (Unidad del Sistema para la Carrera de las Maestras y los Maestros, USICAMM) approves the policies, regulations and programmes concerning the selection processes for teacher admission, promotion and recognition. USICAMM aims for the teacher selection process to operate under the principles of legality, certainty, impartiality, objectivity and transparency.
Beyond STEM subjects, foreign languages, notably English, are also an important skill for the semiconductor workforce, not least because most of the equipment instructions and specific machinery training is available in English. English teaching is, in theory, relatively widespread in Mexico. The National Programme for English in Basic Education (PNIEB, 2009), Integral Reform of Basic Education (RIEB, 2011) and National English Programme (PRONI, 2016) made learning English mandatory for children in pre-school, primary and lower secondary education and incorporated English into the national curriculum (Sayer, 2015[38]; Secretaría de Gobernación, 2011[39]; SEP, 2016[40]). Many universities require English skills, in some cases even formal English qualifications, to graduate. English‑taught courses are also offered at some universities (British Council, 2015[41]).
In practice, however, and despite this emphasis on learning English, Mexico recorded the lowest index scores among five Latin American countries in the most recent Education First (EF) English Proficiency Index assessment (Figure 3.2, Panel A).3 Compared to other Latin American countries like Costa Rica and Uruguay, Mexico’s results emphasise the need for increased efforts in English-language education. There is nevertheless considerable heterogeneity across the country, with states like Michoacán, Morelos and Nuevo León performing relatively strongly (Figure 3.2, Panel B).
Notes: Panel A shows the EF EPI results for five Latin American countries and Panel B the results across 31 Mexican states plus Mexico City. The index categorises scores intro proficiency bars, facilitating recognition of clusters with similar English skill levels and enabling comparisons within and between country/regions. The EF EPI calculates a country/region average of adult English skill level using data from three different versions of the EF Standard English Test (EF SET). The bands align with Common European Framework of Reference for Languages levels: C2 and C1 (scores 600-800) as very high proficiency, B2 (550-599) as high, 500-549 as moderate, B1 (450-499) as low, and 1-449 (A2, A1 and Pre-A1) as very low. The test-taking population is self-selected and not guaranteed to be representative of a country/region as whole (EF EPI, 2025[42]).
Source: OECD calculations based on EF EPI (2025[42]), “EF English Proficiency Index”, https://www.ef.com/wwen/epi/.
Mexico’s National Higher Education Entrance Examination (Examen Nacional de Ingreso a la Educación Superior, EXANI-II) aims to assess the skills and competencies of students applying to pursue studies at a university or higher education institution in the country. EXANI-II includes an English assessment and results are used by educational institutions as one of the selection criteria for applicants. EXANI-II has a specific module for students applying to study engineering and technology-related degrees. Results in Figure 3.3 show that these students’ competencies in English are notably better than in mathematics, physics and written language (Spanish).
Therefore, students applying for engineering and technology-related degrees have relatively strong English-language skills, highlighting the importance of targeted educational strategies and the potential effectiveness of pre-university English education training, while also underscoring the need to improve training in mathematics, physics and written Spanish language.
Note: Satisfactory performance in English is defined as the ability to express personal and third-party information in different tenses, the expression of different degrees of comparison, skills, interests and short-term plans, the understanding of simple texts on different topics and the inference of non-explicit information. The engineering and technology module for EXANI-II is only available until 2021.
Source: OECD calculations based on Results of the National Higher Education Entrance Examination in EXANI-II® Diagnostic: Engineering and Technology Module in Ceneval (n.d.[43]), “Nivel Superior Exani II - Ceneval”, https://ceneval.edu.mx/examenes-ingreso-exani_ii/.
University-level tertiary education
Mexico’s development of human talent for the semiconductor industry is also hampered by the insufficient number of graduates that tertiary institutions produce, both at the university level (analysed in this sub‑section) and the vocational level (analysed in the next sub-section).
First, the total pool of students eligible for tertiary education is relatively limited. The large share of young adults without an upper secondary qualification (see above) creates a critical bottleneck, since upper secondary education is a prerequisite for Mexican students to enter university. Moreover, vocational programmes in Mexico begin at the upper secondary level.
Second, even amongst those students that begin tertiary education, a share of them do not complete it. While the federal higher education dropout rate was 5.7% in 2023/2024, it was higher in states such as Sonora (13.0%) and Quintana Roo (13.4%) (INEGI, 2024[44]).4
Mexico has both public and private tertiary institutions in which undergraduate programmes last between four and five years. Public tertiary institutions receive most of their funding from the federal government and some, such as the National Autonomous University of Mexico (Universidad Nacional Autónoma de México, UNAM), have been granted autonomy. Autonomous universities decide their own curriculum and define their organisational structure. Other, non-autonomous, public tertiary institutions are governed by state or federal governments that appoint the leaders of these institutions. Private tertiary institutions set their own tuition fees and do not receive funding from the Mexican government. Private institutions must be formally recognised by SEP (RecoLatin, 2019[45]).
University accreditation is an important way of ensuring that institutions adhere to quality standards, maintain the trust of students and employers, and develop a workforce with the skills required by firms, including the semiconductor industry. In 2021, Mexico enacted the General Law for Higher Education (Ley General de Educación Superior, LGES), overseen and co‑ordinated by SEP. The LGES intended to streamline the system for accrediting, regulating and evaluating higher education programmes and institutions. It also emphasised the alignment of curricula with quality standards, required institutions to conduct periodic reviews of their curricula and promoted flexibility to adapt curricula to diverse student needs as well as to labour-market demands.
In theory, the LGES established a strong framework for higher education accreditation and evaluation. In practice, however, the accreditation system remains complex and convoluted. Currently, public and private tertiary institutions and programmes are accredited by specialised agencies and entities that are recognised by the education authorities. These include the non-governmental National Association of Universities and Higher Education Institutions of the Mexican Republic (Asociación Nacional de Universidades e Instituciones de Educación Superior de la República Mexicana, ANUIES), the Federation of Mexican Private Higher Education Institutions (Federación de Instituciones Mexicanas Particulares de Educación Superior, FIMPES) and the non-profit Higher Education Accreditation Council (Consejo para la Acreditación de la Educación Superior, COPAES). The Inter-Institutional Committees for the Evaluation of Higher Education (CIEES) evaluate and accredit educational programmes in both public and private institutions (Morales-Hernandez, 2012[46]).
On the government side, the General Directorate of Accreditation, Incorporation and Validation (Dirección General de Acreditación, Incorporación y Revalidación, DGAIR), affiliated with SEP, co‑ordinates accreditation requirements so that they align with the National Credit System and the Mexican Qualifications Framework. This is intended to guarantee compliance with the criteria and standards that are established by the System of Higher Education Evaluation and Accreditation (Sistema de Evaluación y Acreditación de la Educación Superior, SEAES), based on guidelines developed with national and international references.
In this way, the private sector plays a direct role in accreditation through FIMPES and COPAES, whereas public agencies like the DGAIR ensure state oversight and standardisation. In theory, this dual structure allows for greater flexibility and responsiveness to institutional and labour-market needs. In practice, however, it can also lead to fragmentation and uneven quality assurance if co‑ordination is lacking. Moreover, according to consultations with some industry stakeholders, some of Mexico’s tertiary (and secondary) institutions and their curricula struggle to meet industry’s skills needs.
Many universities in Mexico contribute to education in semiconductor-related fields. According to data from the Mexican federal government, the National Technological Institute of Mexico (Tecnológico Nacional de México, TecNM) – a network of 248 institutes in 31 Mexican states and Mexico City – has a 12.9% share of students in higher education in Mexico and annually trains 41% of the engineers in the country. The National Polytechnic Institute (Instituto Politécnico Nacional, IPN) produces approximately 9 000 STEM graduates per year. In addition, 46 universities offer programmes in engineering, manufacturing and construction, business and administration and information technology and services, with an emphasis on bilingual and international education.
To reduce potential bottlenecks for semiconductor talent, TecNM has introduced specific engineering and postgraduate programmes in semiconductors, in collaboration with research centres such as CINVESTAV and INAOE. TecNM has also increased the connections between its higher education curricula and the needs of the semiconductor industry by benefitting from international partnerships (TecNM, 2023[47]). For example, TecNM developed the Strategic Semiconductor Technology Development Project (Box 3.2) and began offering a semiconductor engineering programme in 2023 (TecNM, 2023[48]). TecNM has also worked with Arizona State University to teach a technical English-language course on semiconductors (Gonzalez, 2023[49]).
The Community College Initiative (CCI) is another example of international collaboration. The CCI helps develop specialised semiconductor skills through practical experience and exposure to the industry. It is a non-degree, academic programme, which was piloted in 2024 in collaboration with Mesa Community College in Arizona, United States, and funded by the US Bureau of Educational and Cultural Affairs. Eleven Mexican students participated in the CCI programme and took specialised semiconductor courses at Mesa Community College (U.S. Department of State, 2024[50]).
Additionally, the Technological University of Nayarit has signed an agreement with CINVESTAV for teacher training at the Semiconductors Technology Center, a subsidiary of CINVESTAV. The training covers various research areas, including semiconductor materials, semiconductor devices and nanoelectronics.
The National Technological Institute of Mexico (TecNM) leads the Strategic Semiconductor Technology Development Project with the purpose of promoting high-skilled talent and boosting the development of the semiconductor industry based on the following actions:
National co‑ordination: the project aims to set up a collegiate body of TecNM researchers, teachers and directors, for the development of capacities, infrastructure and technological knowledge in the field of semiconductors at the national level.
Definition of research areas: semiconductor physics; design techniques for digital integrated circuits with complementary metal oxide semiconductor (CMOS) transistors; design techniques for analogue and mixed-mode integrated circuits; layout for CMOS integrated circuits; and emerging technologies (e.g. fin field-effect transistor, quantum computing).
Design and development of educational programmes in semiconductors, namely:
a. Diploma in Semiconductors: 1 721 individuals successfully completed the first edition of the course. The second edition was offered to 2 417 individuals (1 604 TecNM students, 498 external students and 315 teachers for teacher training).
b. Semiconductor Engineering: made available at 17 institutes of technology, part of the TecNM system.
c. Four Specialty Modules for curricula related to semiconductors: i) design of semiconductor materials for electronic devices; ii) manufacture of electronic devices and integrated circuits; iii) design of integrated circuits; and iv) design of embedded systems.
Specialisation in Semiconductors, at postgraduate level, including the master’s and doctoral programmes in semiconductors.
Academic exchange: Collaboration agreements with Arizona State University for exchange, training and visits. TecNM also developed English-language teaching for specific courses for almost 140 000 students, including more than 5 000 enrolled in “English for the semiconductor industry”.
Semiconductor Technology Development Network: collaboration with various institutions and initiatives: the SE, SECIHTI, the Secretariat of Foreign Affairs, Plan Sonora, INAOE, CINVESTAV, Arizona State University, CANIETI, Intel, Siemens, Skyworks and certain US community colleges.
National laboratories: Eight of the 43 approved national laboratories were in TecNM Technological Institutes. These eight laboratories were located in Aguascalientes, Celaya, Durango, Ecatepec, Morelia, Superior Progreso, Veracruz and Valle del Yaqui.
Source: Information provided by Secretaría de Economía during the country consultation.
The pipeline of semiconductor talent can also be expanded by continuing to encourage female participation in higher education. Although Mexico has the highest proportion of female students graduating in engineering and related fields among the benchmark countries (see Figure 2.35), this share is still significantly lower than that of male students. Ongoing efforts to raise awareness, such as the national Modo STEM initiative introduced in 2022, encourage participation of adolescent and young women in STEM-related degrees and careers.5 Other initiatives like STEM Mentors or STEM Professions and the Challenges of the 21st Century can help change expectations about professions. Fostering female role models or establishing awards to enhance the visibility of women in STEM would help to continue expanding the potential pool of talent.
Scholarships for tertiary education are another way to expand the talent pipeline. Scholarship programmes for undergraduate education tend to be administered by the relevant institution (e.g. the university) and in line with the institution’s policy. This means that students may have to apply for a different scholarship at each prospective university. Harmonisation and simplification of scholarship programmes would help incentivise (disadvantaged) students to apply. For private institutions, the federal government cannot intervene in scholarship selection procedures. However, SEP also requires private institutions to disburse a minimum number of scholarships, set at 5% of the total number of students enrolled in recognised curricula programmes (RecoLatin, 2019[45]).
Research centres that focus on semiconductors or related technologies and offer advanced training (e.g. INAOE, CIMAV, CIDESI, CIATEQ and COMIMSA under the iSensMEX platform – see Section 3.1.5 – and others such as CINVESTAV) also play an important role in producing talent. They help inform government institutions about the foundational skills needed for advanced semiconductor studies.
Vocational education
Mexico’s VET system struggles to obtain students, despite being provided in several formats and by many institutions. Among 15-19 year-olds, around 16% were enrolled in vocational upper secondary education in 2021, below the OECD average of 23% (OECD, 2023[20]). The enrolment rate of students aged 20-24 was 0.4% in 2021, one of the lowest among OECD and partner countries. Nevertheless, Mexico ranks highly among OECD economies for female graduation rates from upper secondary vocational programmes (52% of graduates) (OECD, 2024[51]). Additional data would be required to assess whether this is also the case for the specific VET programmes which align with the needs of the semiconductor value chain.
Upper secondary VET prepares students for higher levels of education and for employment by providing sound basic and occupational skills. According to the latest OECD VET data, 35.4% of upper secondary students were enrolled in vocational programmes in Mexico in 2021 (OECD, 2024[51]). This figure falls short of the OECD average (42.4%) but is higher than the other Latin American countries included in the data, namely Chile (33.1%), Costa Rica (30.3%), Colombia (27.9%) and Brazil (11.2%).
The private sector is responsible for 21% of the expenditure on vocational programmes, compared to 17% of expenditure on general upper secondary programmes (OECD, 2023[20]). Although VET in Mexico has historically struggled to co‑ordinate with industry to reflect the needs of the labour market (OECD, 2024[52]), the share of private funding denotes increasing industry engagement.
Public funding for formal upper secondary vocational education in Mexico comes from the federal and state governments, in particular SEP and the Secretariat of Labor and Social Welfare, which is responsible for setting the public sector budget for vocational education. Firms bear the costs for their trainees in states that participate in the dual system, which combines vocational education in an educational institution with training or an apprenticeship in a firm. Therefore, VET programmes at public institutions are provided for free for students from upper secondary education onwards. VET also counts towards the 14 years of compulsory education or training required in Mexico (UNESCO, 2023[53]).
Private vocational training is primarily financed by student tuition fees and is provided by, for instance, the Monterrey Institute of Technology and Higher Education, the Universidad del Valle de México, the Instituto Universitario Puebla and the Universidad Tecnológica de México.
SEP governs formal VET at the federal level, a responsibility shared with regional governments, where each Mexican state has its own education body responsible for administering the state’s training centres (UNESCO, 2023[53]). SEP is also responsible for maintaining the quality of VET teachers and trainers (UNESCO, 2018[54]). Teachers and trainers tend to struggle to stay up to date with technological or pedagogical developments. Challenges with the latter are particularly prevalent among teachers of dual VET programmes, who typically work in industry and so may not receive adequate teacher training (OECD, 2017[55]). Some vocational schools also struggle to procure necessary equipment (see sub-section below). Mexico would benefit from further increasing the funding for formal VET programmes, especially in areas that are relevant to semiconductors, and provide ongoing professional development for its VET teachers, both in terms of formal training and to keep teachers abreast of industry developments.
The formal VET programme is structured around three diplomas: Técnico Profesional, Bachiller Técnico and Técnico Superior. Técnico Profesional and Bachiller Técnico are both three-year programmes offered at the upper secondary education level. Técnico Profesional programmes focus entirely on vocational education, while Bachiller Técnico programmes are a mix of 60% general and 40% vocational education. Both programmes are taught in secondary polytechnics and offer a pathway into tertiary education following a competitive examination at the end of the programme. While Técnico Profesional programmes allow students to advance to a bachelor’s equivalent tertiary vocational training, they primarily prepare students for direct labour-market entry. Bachiller Técnico programmes allow entrance into bachelor’s programmes in either vocational or general tracks. The General Directorate of Industrial Technological Education (DGETI), an agency affiliated with SEP, oversees 265 centres offering Bachiller Técnico and Técnico Profesional programmes (UNESCO, 2023[53]).
The Técnico Superior diploma is a two-to-three-year programme offered at the short-cycle tertiary level (UNESCO, 2023[53]). Técnico Superior programmes provide training equivalent to a bachelor’s degree, emphasising both theoretical and practical skills. They are offered at specialised vocational centres across various fields and are associated with entities under SEP, for example, the Colleges of Scientific and Technological Studies (Colegios de Estudios Científicos y Tecnológicos, CECyTEs) and the National College of Technical Professional Education (Colegio Nacional de Educación Profesional, CONALEP). Although these Técnico Superior programmes are associated with these public institutions, they may involve fees for students, which are generally subsidised by the government and hence more affordable compared to private institutions.
CONALEP contributes to developing the semiconductor talent pipeline by creating new VET programmes, implementing programmes to reduce dropout rates, establishing scholarship programmes, increasing international collaboration on VET and forging partnerships with industry (UNESCO, 2023[53]). For instance, in 2021, CONALEP and the semiconductor firm Skyworks Solutions partnered under Baja California’s state initiative on Dual Training in Upper Secondary Education to blend theoretical learning with practical industry experience for students. In 2025, the fourth cohort of CONALEP students completed this dual training programme with Skyworks Solutions (Canal 66, 2025[56]).
Another example of public-private collaboration for vocational skills occurred in 2022, when Intel Mexico and the SE signed an agreement to share knowledge and best practices and train local talent to enhance Mexico’s competitiveness in semiconductors (Secretaría de Economía, 2022[57]). Additionally, the government-led programme Young People Building the Future (Jóvenes Construyendo el Futuro, JCF) has supported more than three million young people to develop skills through 87 firms since its inception. Currently, participants receive MXN 7 572 per month and medical insurance for the duration of the programme, which lasts for up to 12 months (Secretaría del Trabajo y Previsión Social, 2024[58]). The total investment was MXN 121 billion between 2019 and 2024 and the programme could be expanded to include a dual education approach (Government of Mexico, 2024[59]).
Formal VET in Mexico also includes several technology research centres. The Directorate General of Technological and Polytechnic Universities (Dirección General de Universidades Tecnológicas y Politécnicas, DGUTyP) manages 122 technological universities in 28 states and 66 polytechnic universities in 28 states. TecNM manages 254 technological institutes, 126 federal and 122 decentralised institutes, and 6 regional centres for optimisation and development, an interdisciplinary research centre and a national centre for technological R&D. In addition to training centres, DGETI (see above) runs 168 industrial technology research centres at the secondary education level. DGETI was also working to develop a new technical degree in microelectronics and semiconductors for the 2024/2025 academic year (SEP, 2023[60]).
As outlined in Box 3.2, TecNM established the National Coordination for the Technological Development of Semiconductors (Coordinación Nacional de Desarrollo Tecnológico de Semiconductores) in 2023. This is a collegiate body with the participation of researchers, professors, education authorities and private sector experts. It promotes strategies to improve infrastructure, curriculum development and funding for semiconductors training at a national level. This is an important step that helps co‑ordinate amongst public VET (and scientific) institutions to better align semiconductor skills needs and talent development.
Non-formal VET in Mexico is aimed at training adults and is provided by several governmental and non‑governmental actors. At the federal level, the National Institute for Adult Education (Instituto Nacional para la Educación Adulta, INEA) offers vocational programmes lasting one to four years under SEP’s supervision, alongside other courses such as adult literacy programmes. The Secretariat of Labour and Social Welfare also offers non-formal VET (UNESCO, 2023[53]).
Mexico places greater emphasis on the certification of standards of competency (i.e. verifying specific job‑related skills through practical assessment) than on qualification certificates, which formally recognise the completion of an educational or training programme. VET certifications are based on the National System of Competency Standards and overseen by the National Council for Standardisation and Certification of Labour Competencies (Consejo Nacional de Normalización y Certificación de Competencias Laborales, CONOCER). This system is informed by employers and trade unions, which also provides opportunities to involve industry and meet their skill demands (UNESCO, 2023[53]). CONOCER was founded in 1994 and, since 2016, has sharply increased its certification numbers, both in terms of certifications given to individuals and the creation of new valid standards (OECD, 2017[55]).
CONOCER should also reinforce co‑ordination with the semiconductor industry to develop and update its standards to match the needs of the industry. The approval process for standards requires industry and trade union input and agreement, so CONOCER is equipped to incorporate both the needs of the semiconductor industry and workers into its standards. CONOCER should continue to move towards more certification, while ensuring high levels of standards.
As outlined above, dual programmes are an important part of Mexico’s vocational education. Mexico’s dual vocational training system was developed during the 2013-2018 Education Sector Programme, with the support of the German Federal Institute of Vocational Education and Training. Dual programmes – which are undertaken in collaboration with firms and give students practical experience and ideally a path directly into the workforce – exist at both upper secondary and tertiary levels and last for two to three years (Wiemann, 2017[61]; UNESCO, 2023[53]). As outlined above, firms typically bear the cost of their dual programme students. Consequently, to incentivise more firms to join the programme, the federal government has introduced scholarships (UNESCO, 2018[54]). VET institutions can be located far from firms and, as a result, training takes place as multiweek practical sessions supplemented by e-learning. A national steering committee was established in 2022 to make the system more effective and expand its availability across the country (GIZ, 2023[62]).
Mexico should restructure its dual programme funding to encourage greater participation from firms and hence further foster industry collaboration by making firms aware of the shared responsibilities and benefits of the programme. Mexico should consider offering scholarships for both its dual and non-dual VET programmes to students who demonstrate need and/or aptitude. Expanding scholarship programmes for disadvantaged students can increase their enrolment in VET, but further insights are necessary to evaluate the success of existing scholarships for dual programme VET in Mexico.
Enabling research and innovation
Although cultivating a skilled workforce is crucial, Mexico’s ability to further engage in semiconductor GVCs also hinges on the availability of necessary equipment and infrastructure to effectively train future workers and engage in research and innovation activities. However, acquiring specialised machinery is a major bottleneck for Mexican research centres and universities.
Research centres face several challenges, notably in terms of budget and access to specialised equipment and materials for laboratories. SECIHTI centres and research institutions in Mexico, such as CIMAV and INAOE, conduct research in areas related to semiconductor innovation and have collaborated with semiconductor firms. However, according to stakeholder interviews conducted for this report, several factors hinder these efforts to collaborate, most notably the purchasing of equipment.
Public research laboratories need to comply with public purchasing requirements for equipment, which means that federal funds must be spent within a fiscal year, and not used later. During consultations for this report, stakeholders noted that the process for purchasing equipment is too bureaucratic and lengthy, with rigid research benchmarks making it difficult to spend the allocated funding. Postgraduate institutions have also expressed concerns over the quality and skills of students that would be needed to operate the equipment and perform research in semiconductor-related fields.
Facilitating the budgeting process for research centres, including extending budgeting cycles from single‑year to multi-year and allowing funds to be carried over, could help acquire and maintain specialised machinery and equipment and make other longer-term types of investments.
Mexico could also consider facilitating customs clearances for specialised semiconductor equipment for research and educational purposes. Slow customs clearances is another reason why it can often take considerable time to obtain specialised equipment, at least six months according to some stakeholders interviewed for this report. Moreover, equipping a laboratory to conduct semiconductor research can be extremely expensive and equipment used for non-commercial activities, such as research and education, is subject to value-added and import taxes. Mexico could consider exempting certified research centres focusing on advanced semiconductor research from these import taxes, to support the acquisition of expensive high-tech semiconductor equipment needed for research purposes. Other economies have adopted this type of approach. For example, the United Kingdom offers customs duty relief on scientific instruments and apparatus to organisations involved in non-commercial and non-profit-making education and research, such as universities, research laboratories or approved colleges (UK Government, 2020[63]). The European Union allows scientific instruments and apparatus imported exclusively for non‑commercial purposes to be admitted free of import duties (EU, 2009[64]).
However, it is critical that any such tax exemption on importing semiconductor equipment supports research and education purposes and is not exploited by non-eligible entities, such as firms engaged in commercial activities. There is a risk that firms would seek to benefit from this type of tax exemption by importing the equipment directly, or by loaning or buying the equipment from research centres or educational institutes that are themselves eligible for the import tax exemption.
Mexico must guard against the misuse of this tax exemption, for example, by requiring the importing entity to prove that it is a recognised research or educational institute and sign an end-use declaration or certificate for non-commercial use. Mexico could engage in inspections, audits and monitoring to ensure that the semiconductor equipment is used for its intended purpose, although these would require additional resources to achieve. Mexico could also consider a range of penalties to deter research centres or educational institutes from reselling the tax-exempt equipment to firms. For example, the United Kingdom and European Union require the retrospective payment of import duties if equipment is transferred to ineligible entities. Other penalties could include fines or the removal of a research centre’s ability to benefit from tax exemptions and other incentives in the future.
Other specific measures that could help ensure the availability of necessary equipment for advancing semiconductor research include, for example, encouraging joint projects between research centres and industry, agreements to share facilities and equipment therein, or joint industry-academia mechanisms to procure new equipment. Promoting the sharing of equipment and laboratory facilities amongst research centres and higher education institutions would also facilitate access to research infrastructure.
Recent legislative changes to Mexico’s science, technology and innovation ecosystem have raised concerns amongst stakeholders about research and industry collaboration at SECIHTI research centres. The 2023 General Law on Humanities, Science, Technology and Innovation (Ley General en Materia de Humanidades, Ciencias, Tecnologías e Innovación, LGHCTI) includes some positive provisions that facilitate partnerships between public sector researchers and private sector entities. For example, the LGHCTI encourages the National System of Public Research Centres to promote linkages between the public, social and private sectors and engage in strategic alliances and scientific and technological-based enterprises.
Under the LGHCTI, the collaboration between researchers in public institutions with private sector entities must be approved by SECIHTI and align with SECIHTI strategic goals. This policy helps ensure that the innovation system is focused on national priorities and that public resources and research outputs are aligned with national development goals and contribute to public welfare, rather than solely benefitting private interests.
Nevertheless, Mexico should assess whether in the longer run the LGHCTI could constrain the ability of researchers affiliated with the public sector to engage in individual partnerships with the private sector and limit the range of technologies under research. Reviewing the contractual conditions for researchers’ individual engagements in relevant private sector activity, while mitigating risks of conflicts of interest, could help further enhance industry-research collaboration, and foster semiconductor-related basic research and innovation. Such measures could also help support a more impactful public research sector and overall facilitate knowledge transfer on semiconductors. For context, OECD Member countries have been moving towards more flexible and open public research frameworks that facilitate individual engagement with the private sector to help ensure a more impactful public research sector.6
There are particular concerns surrounding the LGHCTI’s intellectual property (IP) reforms, which state that IP stemming from projects funded by the government will belong to the government by default, unless otherwise agreed (Chamber of Deputies, 2023, p. 20[65]). Stakeholder interviews suggest that the changes to the LGHCTI make private industry hesitant to enter into research agreements with SECIHTI research institutions, due to unclear IP procedures and the allocation of funds by SECIHTI to engage in public-private partnerships. The inadequate support from institutions and the new rules governing IP also disincentivise academic entrepreneurship.
Mexico could consider improving the regulatory framework affecting innovation activity and ensure that the incentives for IP development are adequate to promote innovation in the rapidly evolving semiconductor and related fields. This would include, for example, allowing researchers in public universities and research centres to retain part of the IP rights on their inventions, in line with international best practice. For example, the 1980 Bayh-Dole Act in the United States allows universities and private organisations to retain ownership of patents developed through publicly funded research under certain conditions (for example, reporting inventions to the funding agency, granting the public sector the ability to use the invention). Similar policies have been implemented in other countries.7
The Kutsari Project (see Box 3.1) commits to modifying the Federal Law for the Protection of Intellectual Property (LFPPI) to ensure that the process for Mexican researchers to patent new semiconductor designs is consistent with international standards (Presidencia de la República, 2025[17]). It remains to be seen how these proposed reforms to the LFPPI interact with the enacted reforms in the 2023 LGHTCI, and their impact on Mexico’s IP regime.
Funding for scientific research could also stagnate due to legislative changes in minimum science funding requirements. Before the enactment of the LGHCTI in 2023, Mexican legislation set a target of investing 1% of GDP annually in RD&I, although that target was never met. Article 30 of the LGHCTI makes this target substantially less ambitious, only requiring that annual RD&I investment “cannot be less” than the previous year’s investment. This makes increases in Mexico’s RD&I investment less likely (Nature, 2023[66]).
3.2.2. Enabling infrastructure
Enabling infrastructure is essential for a country’s semiconductor ecosystem to develop and expand. This sub-section focuses primarily on energy, water and transport, three areas where Mexico faces challenges and opportunities. High-speed and reliable Internet connectivity also contributes to the infrastructure required by the semiconductor industry, but is not the focus of this sub-section. Nonetheless, it is worth noting that Mexico has recently made progress in expanding its broadband accessibility, even if in 2024, its fixed broadband subscriptions (22.3 per 100 inhabitants) and mobile broadband subscriptions (104.5 per 100 inhabitants) were still below the OECD average (36.5 per 100 inhabitants for fixed broadband; 139.8 per 100 inhabitants for mobile broadband) (OECD, 2024[67]).
Part of the analyses and recommendations in this sub-section draw on the OECD Principles for Private Sector Participation in Infrastructure, which brings together 24 principles on how government can mobilise private investment in infrastructure projects. Key principles relate to the allocation of risk and responsibilities between the public and private sectors, fiscal discipline, transparency and governance, effective competition, access to capital markets, consultation with end users and the importance of competent, well-resourced regulatory authorities (OECD, 2024[68]).
According to the 2024 economic census, the average expenditure by semiconductor and other electronics firms on electricity, water and other crucial inputs varies according to the region. Figure 3.4 shows that average electricity expenditure is highest for firms in the Northwest of Mexico (22% of their total expenditure). Fuel expenditure is highest in the Northwest and Northeast (2.3% and 1.6% respectively) and water expenditure is highest in the Northwest (4.1%). Overall, combined expenditure on electricity, fuel and water is highest in the Northwest (28% of total expenditures), followed by the Northeast (15%), Centre West (6%), Southeast (4%) and Centre (2%).8
The regional variations in electricity expenditure in Figure 3.4 are likely to partly arise from differences in electricity tariffs and consumption patterns for industrial use. With 12 tariff categories defined by the Federal Electricity Commission (Comisión Federal de Electricidad, CFE) according to the level of demand (high or low), tension type (low, medium and high), season and measurement type (ordinary and hourly) (Government of Mexico, 2018[69]), price fluctuations are very likely to drive part of the disparity (Table A I.1). The intensity of regional electricity usage further amplifies these differences, with final tariffs for basic electricity supply (tarifas finales del suministro básico, TFSB) classified into 17 regional groups, reflecting varying costs (Table A I.2).
Mexico lacks a uniform national methodology for defining water tariffs, as each state follows its own water use legislation. Tariffs are determined and approved by states in collaboration with state water authorities and corresponding municipalities. Water rates also vary between residential, commercial and industrial users, generally in relation to the level of consumption. Industrial rates are higher due to high consumption. The highest rates are recorded in Hidalgo (MXN 891 per cubic metre, m3) and San Luis Potosí (MXN 741 per m3). The lowest are in Tlaxcala (MXN 18 per m3) and Nuevo León (MXN 11 per m3). On average, the monthly industrial rate is MXN 265 per m3 (IMCO, 2023[70]).
Semiconductor and other electronics firms, 2024
Note: The columns show expenditure on electricity, fuel and lubricants and water as a proportion of the total expenses incurred by firms (on average by region). Electricity expenditure includes self-generation imputed at market prices. Fuel expenditure includes fuel and lubricants consumed for machinery, equipment and vehicles. Water includes water supplied by the municipal network or by pipes, whether for human consumption or used in the production process. The number of firms differs across regions as follows: Northwest (169), Northeast (133), Centre West (119), Centre (51) and Southeast (6).
Source: OECD calculations based on the 2024 economic census by INEGI (n.d.[71]), Encuesta Anual de la Industria Manufacturera 2024. Serie 2018, Información 2023, https://www.inegi.org.mx/rnm/index.php/catalog/1061.
Energy
Until recently, the governance and institutions of Mexico’s electricity sector were shaped in large part by the 2013 Electricity Industry Law, which supported the expansion of Mexico’s renewable energy resources and an increase in energy efficiency. However, the 2025 Electricity Sector Law looks set to reverse many of the 2013 reforms and strengthen the position of the state-owned CFE, as discussed further below. Moreover, the adequacy of the Mexican electricity grid continues to vary by region, and electricity distribution networks are costly and inefficient, even where production is sufficient.
Legal framework
Until 2013, the state-owned CFE was responsible for all segments of the electricity system, including generation, transmission and distribution. The potential of Mexico’s substantial renewable energy resources remained untapped, as the CFE struggled to create efficient transmission networks, resulting in steadily rising energy costs (Alpizar-Castro and Rodríguez-Monroy, 2016[72]). As a result, in 2012, Mexico was heavily reliant on fossil fuels, with 94% of total power consumption coming from oil, natural gas or coal (Alpizar-Castro and Rodríguez-Monroy, 2016[72]).9
In 2013, Mexico’s energy sector underwent significant reform, as the Electricity Industry Law legally separated the three segments of the electricity system: generation, transmission and distribution. The law created an open market for energy generation and wholesale, with the CFE becoming just one of the market players alongside private electricity firms (Alpizar-Castro and Rodríguez-Monroy, 2016[72]). The law also assigned three government agencies to oversee the electricity sector:
The Secretariat of Energy (Secretaría de Energía, SENER) designs national energy policy.
The National Center for Energy Control (Centro Nacional de Control de Energía, CENACE), affiliated with SENER, oversees the National Electricity System; monitors and oversees the electricity wholesale market to increase transparency in the market and ensure open access to energy transmission; and enters into contracts with private entities wishing to participate in the wholesale market.
The Energy Regulatory Commission (Comisión Reguladora de Energía, CRE) had a regulatory role and grants power generation and wholesale permits, sets energy tariffs and issues standard contracts for CENACE to enter into with private entities.
While the 2013 Electricity Industry Law sought to liberalise the electricity generation market and increase competition, the 2025 Electricity Sector Law guaranteed that a minimum of 54% of the electricity injected into the national grid each year comes from powerplants controlled by the state-owned CFE (Chamber of Deputies, 2025[73]). Additional electricity regulations issued in October 2025 clarified that the 54% share of total electricity generation reserved for the CFE also includes joint ventures with private firms, which could allow for some meaningful private participation (OECD, forthcoming[21]).
The Electricity Sector Law also abolished the independent CRE regulator and replaced it with the new National Energy Commission (Comisión Nacional de Energía, CNE), which is expected to combine the functions of the CRE and the National Hydrocarbons Commission (Comisión Nacional de Hidrocarburos, CNH) (Chamber of Deputies, 2025[74]). It remains to be seen how the new CNE undertakes its regulatory role and its impact on the electricity sector. Nonetheless, the CNE’s affiliation with SENER – the part of the executive branch responsible for energy policy – has called into question its regulatory autonomy (OECD, forthcoming[21]; Cacheaux, Cavazos & Netwon, 2025[75]).
Article 12 of the Electricity Sector Law also called on SENER to develop a new Electricity Sector Development Plan (Plan de Desarrollo del Sector Eléctrico, PLADESE), which was published in October 2025. PLADESE set out the medium- and long-term objectives for the National Electricity System between 2025 and 2039 and replaced the previous National Electricity System Development Programme (PRODOSEN). PLADESE is based on the principles of energy sovereignty and security; affordability; reliability and continuity of electricity supply; and strong state participation. Indeed, PLADESE emphasised the requirement that the state-owned CFE must account for at least 54% of the electricity injected into the grid and that this figure should rise to 59% by 2030. Other PLADESE objectives include the expansion of installed generation capacity from 94 gigawatts (GW) in 2024 to 170 GW in 2039, greater diversification towards renewable energy, the deployment of battery storage systems, reduction in technical and non‑technical electricity losses and increased investment in electricity infrastructure (SENER, 2025[76]).
Renewable energy
Mexico has several measures to support the transition towards clean energy. In addition to state-level initiatives such as Plan Sonora (see Section 3.1.3), the SENER manages the Energy Transition and Sustainable Energy Utilization Fund (Fondo para la Transición Energética y el Aprovechamiento Sustentable de la Energía, FOTEASE). FOTEASE was created by the 2008 Law for the Utilization of Renewable Energy and Financing the Energy Transition (Ley para el Aprovechamiento de las Energías Renovables y el Financiamiento de la Transición Energética) as a financing instrument to support investments in renewable energy and energy efficiency projects, with the following objectives (FOTEASE, 2022[77]):
Support the development, adoption and diffusion of renewable energy technologies.
Increase renewable energy supply by encouraging the diversification of primary energy sources.
Enhance energy efficiency through energy efficiency standards and programmes to improve energy efficiency.
Support renewable energy projects through financial resources and incentives for projects that align with national goals for clean energy and energy efficiency. This includes funding for the research, development and implementation of energy solutions.
Since the 2013 electricity reforms, Mexico has increased its efforts to expand renewable energy capacity. Electricity generation auctions, held shortly after the 2013 reform, awarded contracts primarily to solar and wind generators and the price of renewable energy fell sharply (Vietor and Sheldahl-Thomason, 2017[78]). However, in 2019, Mexico suspended long-term auctions for renewable energy generation (Graham, Viscidi and Phillips, 2020[79]).
Mexico’s electricity production remains heavily reliant on fossil fuels. Figure 3.5 shows that natural gas accounts for more than 60% of total electricity generation. In contrast, low-carbon sources (primarily hydroelectricity, wind and solar photovoltaics) collectively represent just 17% of the energy mix. The share of renewables is much lower than in other Latin American economies such as Costa Rica and Panama, pointing to the need for accelerated investment in clean energy generation.
Note: The latest observations for Panama and Uruguay are for 2023. PV: photovoltaics.
Source: OECD calculations based on country data listed in IEA (2025[80]), “Countries and regions”, https://www.iea.org/countries.
Currently, Mexico’s renewable energy generation is not consistent with its ambitious decarbonisation goal to reach net-zero greenhouse gas emissions by 2050 (Bloomberg, 2024[81]). The objectives in PLADESE (see above) relating to renewable energy are also ambitious: to expand renewable energy generation from 17% to 48% of total generation by 2039; to increase the share of renewable energy in total installed capacity to 59% by 2039; and to install an additional 8.6 GW of energy storage systems between 2025 and 2039 (SENER, 2025[76]). To reach these goals, private investment in renewables is essential. However, the unpredictable regulatory environment and the role of the state-owned CFE in this market (see above) may deter some private investment.
Mexico should therefore consider incentivising investments in renewable energy, including by welcoming new players in the market and facilitating energy auto-production by firms, notably from renewable sources (e.g. solar, wind). For example, the European Union’s recent Net-Zero Industry Act facilitates investment in green technologies by simplifying permit-granting procedures and setting time limits for issuing permits based on the energy consumption of manufacturing investments (EC, 2023[82]). Streamlining steps in the power generation permit application process and expediting decisions would be important to facilitate entry into the power generation market.
The state-owned CFE could redouble its efforts to transition from fossil fuels towards renewable energy such as solar and wind power. The CFE is a major player in the Mexican energy market and boosting its renewable energy generation would help portray the Mexican power grid as more attractive to potential semiconductor industry investors.
Challenges
The growth in Mexico’s overall energy demand is estimated at 2.5% annually until 2037 (SENER, 2023[83]). Improving energy access is critical to meeting the needs of the energy market, as well as the additional electricity demands of an expanded semiconductor ecosystem. However, stakeholders consulted for this report noted that the most critical energy challenges are access – both in terms of electricity availability (particularly in some regions) and the cost of connecting to distribution networks – and reliability.
These consultations suggest that industrial park managers are responsible for connecting new industrial developments to the Mexican power grid, and that this cost can be considerable. Mexico should assess whether the responsibility for connecting designated industrial areas to the grid should remain with these private consumers. While government co-investment in electricity infrastructure with private entities could help address some of those concerns, it would be important to assess costs, in view of the limited budget available for electricity network expansion (and maintenance). Local authorities could also consider engaging further in such energy infrastructure development efforts.
Electricity distribution and transmission infrastructure face particular challenges. Challenges in the network infrastructure persist due to prolonged underinvestment compounded by not spending the limited resources allocated in the federal budget for physical investment in transmission (OECD, 2024[52]). Distribution networks are reported as inefficient, with considerable energy losses (Castrejon-Campos, 2022[84]).
Stakeholder interviews also suggested a slow approval process and an important backlog in permit applications from the previous energy regulator, the CRE. The process for granting a permit to an energy auto-producer includes several steps and takes at least 1.5 years from the start of the feasibility study to the final issuance of permits. The process requires an environmental impact assessment study that needs to be reviewed by the Secretariat of Environment, an application to the CRE (CRE, n.d.[85]), an interconnection study and agreement involving CENACE, negotiations with the wholesale entity and compliance with any local regulations. The permitting process is an area that the new CNE, which replaced the CRE in 2025 (see above), should consider reforming.
Access to electricity and the development of the energy grid in Mexico also varies by region. On the whole, the northern states tend to have better access to reliable electricity than the southern states, and some rural areas and urban communities do not have service at all (SENER, 2023[83]). However, one important northern state, Baja California, is not yet connected to the national grid, even though the region hosts an important electronics cluster (see Chapter 2) and has considerable potential in terms of renewable energy generation, notably solar. The recent announcement that Baja California will be connected to the national network (Mexico News Daily, 2024[86]) is a step in the right direction. Mexico should step up efforts to integrate Baja California into the national grid and improve its electricity connections with neighbouring countries, moving towards an increasingly efficient and resilient management of renewable energy supply.
Water
The semiconductor industry is heavily reliant on the availability of (ultra-pure) water. However, Mexico’s water supply and infrastructure have considerable scope for improvement. Mexico’s water stress – the freshwater withdrawal by major economic sectors as a proportion of available freshwater resources – is around 45%, significantly higher than the average for the OECD (around 23%) (OECD, forthcoming[21]). In 2020, the National Water Commission (Comisión Nacional del Agua, CONAGUA) estimated that 35 million people lived in conditions of water scarcity (Pacheco-Treviño and Manzano-Camarillo, 2024[87]). Access to water in Mexico risks becoming increasingly challenging. By 2030, it is anticipated that Mexico’s available water supply will only meet 75% of demand (AquaTech, 2023[88]).
Between 1950 and 2013, the available water per capita per year decreased from 18 035 m3 of water to under 4 000 m3, and CONAGUA expects this to fall to 3 250 m3 by 2030 (World Bank, 2020[89]). While this annual average for the country as a whole is still above water scarcity levels (less than 1 000 m3), water availability varies significantly across regions. For example, water availability in some northern and central states is considerably lower than in the southern part of the country and can be less than 1 000 m3 per year.
Northern and central regions are especially vulnerable to future water stress due to their reliance on ground and surface water, the predicted increased number of droughts in Mexico and the high rates of water use by industry in these regions (S&P Global Ratings, 2023[90]). An analysis of water security by state suggests that the situation is critical in Baja California, Guanajuato and Sonora, followed by Aguascalientes, Colima, Mexico City and Sinaloa (Arreguin-Cortes et al., 2020[91]). The limited water supply in Baja California and Sonora could be particularly problematic for the semiconductor industry, given these states’ high concentration of electronics firms (see Section 2.1.3). Without decisive action, Mexico could struggle to provide the large amounts of reliable and pure water that an expanding semiconductor industry would require.
As for water quality, very little water in Mexico is recycled, and only two out of three Mexicans are connected to a public wastewater treatment plant, ranking low amongst OECD Member countries. Nationally, only 30% of water is treated and 1% of wastewater is recycled, but these proportions vary across regions (RVO, 2021[92]). Because wastewater treatment services have not kept pace with Mexico’s water supply and use, water quality in Mexico has deteriorated over time (OECD, 2017[93]). Consultations with industry stakeholders suggest that water from the public network is not deemed of sufficient quality. This often results in industrial park owners developing a private local water supply and network of water sanitation services to provide adequate water to their tenants and to satisfy regulatory requirements.
The private sector can significantly impact water use through investment in water management and treatment initiatives. For example, Skyworks Solutions’ new municipal wastewater treatment plant in Mexicali became operational in October 2024, as a result of Skyworks Solutions’ collaboration with the local authorities in the city of Mexicali (Baja California) (Box 3.3). Building on the model of Skyworks Solutions, Mexico should consider engaging the semiconductor industry to help address local water quality and availability challenges in joint local partnerships for water recycling and treatment.
As part of its efforts to monitor and mitigate its impact on freshwater resources, semiconductor firm Skyworks Solutions strives to minimise water withdrawals by implementing factory-level water reduction measures and water recycling systems in Mexico. The firm announced that it would treat municipal wastewater as part of a new municipal wastewater treatment system at its Mexicali facility in the state of Baja California, which became operational in October 2024. The system was developed in partnership with the local municipality to treat city-generated wastewater and reuse it as a substitute for freshwater.
The result will be a significant reduction in freshwater usage (i.e. water withdrawal) by the Skyworks Solutions facility in Mexicali in future years. The city is located in an “extremely high” water stress zone (according to the World Resources Institute [WRI] Water Risk Atlas tool) and the firm has chosen to focus on water recycling efforts at factories located in vulnerable water stress regions. Specifically, Skyworks Solutions sets a worldwide target to improve the aggregate water recycling rate at its factories located in high and extremely high WRI water stress regions from 46% in 2022 to 55% by 2025. As of late 2023, Skyworks Solutions improved the aggregate water recycling rate at such factories to 52% and is on track to achieve the 2025 target.
This initiative holds particular importance given that Skyworks Solutions is the firm with the highest volume of discharges to the sanitary sewer in the Mexicali municipality (CILA, 2021[94]). By addressing its own environmental footprint, it could substantially reduce the city’s overall wastewater and set a precedent for other major semiconductor firms to follow suit.
Sources: CILA (2021[94]), Formulación del programa de saneamiento de la frontera norte a nivel gran visión, http://www.cila.gob.mx/syca/SUIF/PSFN_IF03_Mexicali_A_Informe.pdf; Skyworks Solutions (2023[95]), Skyworks Sustainability Report, 2023, https://www.skyworksinc.com/-/media/SkyWorks/Documents/Brochures/SustainabilityReport2023.pdf.
The main sources of water demand in Mexico are agriculture, followed by energy generation and industry (RVO, 2021[92]). The main water supply for urban and industrial use is aquifers, but 105 of the 653 aquifers in Mexico are overexploited and so are unable to recharge. Uncontrolled pumping of groundwater has led to aquifer depletion that, in turn, has increased costs of water and worsened water quality. Mexico is heavily reliant on groundwater: about 38% of the total concession for consumption uses comes from groundwater (OECD, 2015[96]). In Mexican cities, over 65% of water is supplied from groundwater. The overreliance on groundwater has worsened flooding and caused urban structural damage, leading to increasing economic costs of water depletion and degradation. In Mexico City, the uneven sinking due to groundwater depletion is estimated to create an annual cost of USD 1.4 billion in damage to infrastructure and water facilities. Given that the water wells for human consumption must be dug increasingly deep, the over-pumping of groundwater also increases the energy cost of water distribution (World Bank, 2020[89]).
Water distribution in Mexico is also inefficient, with up to 46% of water supply nationwide being lost to leaks and pipeline failures (OECD, 2024[52]). Existing water infrastructure can be outdated, contributing to this inefficiency. For example, as of 2020, the Cutzamala Water System lacked access to timely information on basin levels, did not have an automated system for managing infrastructure and had limited ability to operate during maintenance or rapid shifts in water levels. These factors made the system unreliable, costly and energy inefficient (World Bank, 2020[89]).
The regulatory environment for water production, sanitation and distribution in Mexico is fragmented across both national and subnational governments. The National Water Act gives responsibility for water allocation to CONAGUA, which is affiliated with the Secretariat of Environment and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales, SEMARNAT). CONAGUA is composed of 13 hydrological-administrative regions, 20 local offices and 200 auxiliary bodies. There are 32 state water commissions and over 2 000 municipal entities managing water and sanitation services (OECD, forthcoming[21]).
Basins are managed by 26 local River Basin Councils that were created by CONAGUA throughout the 1990s and early 2000s (OECD, 2013[97]). CONAGUA also prepares a National Water Program that limits the total volume of water that can be extracted, and it continually updates the availability of water per basin or aquifer that can be assigned. CONAGUA enforces Mexican water regulations through the Sub‑Directorate General of Water Management and through the local basin organisations (OECD, 2015[96]). Water services are typically provided by a local water utility, and water distribution networks are decentralised, with tariffs set at the municipal level (OECD, 2024[52]).
The de-centralised management of water in Mexico, with responsibilities allocated to states and municipalities, creates several challenges including insufficient data on water resources required to assess water security and support better water management (Arreguin-Cortes et al., 2020[91]; OECD, 2024[52]). These challenges are compounded by CONAGUA’s budget constraints, which have led to a decline of CONAGUA water monitoring sites from 5 000 in 2012 to 1 300 in 2024. Measurement frequency has also declined, sometimes to just one measurement per year, and the number of parameters monitored has also been cut (OECD, forthcoming[21]). Although federal funding for Mexico’s water infrastructure has declined over most of the past decade, the 2023 federal budget doubled CONAGUA’s funding to about USD 4 billion (Sullivant, Chamas and Munday, 2023[98]). The impact of this increased funding on water infrastructure and data is still to be seen.
Within CONAGUA, the National Program Against Drought (Programa Nacional Contra la Sequía, PRONACOSE) was established in 2014 and it has since undertaken mapping exercises that track the scarcity of groundwater and surface water. Among other responsibilities, PRONACOSE develops plans and emergency response measures to minimise the environmental, economic and social issues caused by droughts. To achieve this goal, PRONACOSE develops drought vulnerability maps and drought mitigation plans for regions and cities within Mexico (CONAGUA, 2022[99]). Despite this, the prevalence of drought suggests that Mexico’s water infrastructure lacks climate resilience: in March 2023, nearly half of Mexico’s municipalities were experiencing drought (O’Boyle, Romero and Carillo, 2023[100]).
Mexico has received international assistance to improve its water infrastructure. Through the International Bank for Reconstruction and Development, the World Bank provided CONAGUA a loan of USD 120 million in 2019 to improve the energy efficiency and reliability of the Cutzamala Water System (see above) and better manage groundwater use and recharge in the Valley of Mexico.
Mexico and the United States also collaborate on the US-Mexico Border Water Infrastructure Grant Program that funds projects within 100 kilometres of either side of the United States-Mexico border.10 Projects are implemented via co‑operative grants to the North American Development Bank, and projects in Mexico are jointly funded by CONAGUA and the regional state water utility in Mexico (EPA, 2024[101]).
There are several policy actions that Mexico could take to improve its water infrastructure. Mexico should continue to increase funding to CONAGUA and support water infrastructure projects. These projects could help address existing inefficiencies in water distribution by providing necessary maintenance and replacing outdated water service equipment.
CONAGUA and the government of Mexico could review their allocation procedures and replace policies that result in the overuse of water with incentives for individual users and firms to improve water efficiency, and invest in water reuse, recycling and treatment technology. Currently, the water pricing structure means that households in Mexico have limited incentives to save water. Fixed charges make up a very large proportion of total household water charges in Mexico: at the 50-litre-per-person-per-day (l/p/d) consumption level, fixed charges represent 91.9% of total water charges, well above the Latin American regional average; at the 100 l/p/d consumption level, fixed charges represent 71.5% of total water charges, again above the regional average (López-Ruiz et al., 2024[102]). This introduces an element of moral hazard to Mexican households, as most of their water bill is derived from fixed charges and is not related to their consumption. Deploying more water meters – including smart meters – would strengthen CONAGUA’s ability to track consumption and help introduce volume-based pricing (OECD, forthcoming[21]).
Water quality in Mexico faces some challenges, as only 43% of the population use a safely managed drinking water service and 57% of monitored water bodies in Mexico has good ambient water quality (UN-Water, 2022[103]). Efforts to increase wastewater treatment would improve water quality for both private and industrial use. In the short term, Mexico could pursue partnerships with industrial park owners to ensure that industry accesses adequate water infrastructure. This would reduce the cost to park owners of supplying extremely pure water to the semiconductor industry. Mexico could also continue seeking international partnerships to fund large water infrastructure improvement projects in critical areas as well as industrial areas with the potential to attract the semiconductor industry.
Efforts to encourage firms in all sectors to make use of the best available technology for water conservation and recycling, for example by facilitating the integration of firms in the water network system as both users but also recyclers of clean water, would help ensure longer-term sustainability and attract capital investment. As outlined in Box 3.3, Skyworks Solutions’ construction of a wastewater treatment plant to recycle city wastewater for use in production processes provides one example of a partnership that could help address water challenges. Similar partnerships exist in other economies, such as the collaboration between the Taiwan Semiconductor Manufacturing Company and municipalities in the south of Chinese Taipei near Tainan City to operate an industrial wastewater reclamation plant, with the aim of increasing water supply for semiconductor manufacturing and reducing the pressure on local water sources (CTCI, 2022[104]).
A better management of national water resources would also benefit from more and timely data on water availability, consumption and distribution (notably on leaks and inefficiencies), thus supporting the actions of CONAGUA. More reliable data on water are an important first step towards a robust national water information system based on accurate, up-to-date and consistent data on water resources.
Transportation
International transportation of semiconductor inputs is typically carried out via ship (e.g. for heavy semiconductor manufacturing equipment and other bulky inputs) or airplane (e.g. for wafers and other fragile or time-sensitive inputs). While well-functioning ports and airports are essential to the global semiconductor value chain, transportation from these main logistics hubs to the semiconductor manufacturing facilities is typically by road. Moreover, the geographic location of the current electronics clusters in northern Mexican states highlights the importance of land transportation between Mexico and the semiconductor manufacturing bases in the southern states of the United States.
Road transportation
Mexico has made strides in the quality and safety of its road infrastructure in the past decade but still struggles to ensure secure road transportation of cargo. The semiconductor industry relies on expensive and difficult-to-obtain raw materials and produces highly valuable and fragile outputs. Ensuring safe and, in particular, secure road transportation of cargo is therefore a key dimension to consider for the development of the semiconductor ecosystem in Mexico. Mexico should continue its efforts to decrease road accidents, while swiftly addressing challenges with cargo theft. Public safety is consistently ranked by firms as one of their top concerns for operating in Mexico (OECD, forthcoming[21]).
Since 2010, the number of road deaths in Mexico has consistently decreased. The sole exception was in 2022, when Mexico experienced a brief uptick in road deaths compared to 2020 and 2021, likely caused by the end of the COVID-19 pandemic. In 2022, Mexico passed the General Law on Mobility and Road Safety that aims to address the primary causes of road accidents. In particular, the new law targets the inappropriate speed of vehicles – which caused 16% of all road crashes on federal highways – driving while under the influence of drugs or alcohol, driver fatigue and increasing seatbelt and helmet usage (ITF, 2024[105]).
While the number of road deaths is decreasing, cargo hijacking on roads is increasing. Between 2015 and 2020, cargo theft on Mexican highways increased by 40% and accounted for nearly USD 4 million in daily losses (Hernández Ramírez, 2024[106]). Mexico reported a total of 7 862 violent cargo hijackings in 2023, an increase of 3% from 2022.
Consultations with stakeholders conducted for this report also expressed heightened concerns with cargo theft, notably given the highly valuable and fragile nature of semiconductor products and related materials. Firms reported the need to budget for high costs related to ensuring road transport security for their cargo, both in terms of insurance and security services.
Mexico is making efforts to tackle insecurity and the overall number of federal crimes recorded in December 2023 was 34.2% lower than in December 2018 (Government of Mexico, 2024[107]). Statistics from the National System of Public Security note that the number of reported incidents of organised delinquency in 2023 was 16.8% lower than in the previous year, despite a 3.6% increase in crimes related to arms and explosives (Government of Mexico, 2024[107]).
Roadway operatives in Mexico can significantly increase road safety and security by enhancing the law enforcement presence on highways. Unmonitored highways are often more prone to accidents, speeding and criminal activities, making consistent oversight crucial. The deployment of specific security operations, such as the security programmes code-named Belt, Carousel or Radar are examples of enhanced efforts to tackle road transportation insecurity.
In 2022, public security agents from the National Guard carried out almost 190 000 operations on roads and bridges under federal jurisdiction (INEGI, 2024[108]). The number of security operations in 2022 was 69.9% lower than in 2021. The number of reported cargo truck thefts also declined significantly, from 840 reported thefts in 2021 to 167 reported thefts in 2022. One possible explanation is that the reduction in the number of security operations also led to a reduction in the number of incidents reported by the authorities. See the National Census of Federal Public Security for additional statistics on cargo theft by region (INEGI, 2024[108]).
Almost all of Mexico’s cargo hijacking occurs in southern and central states. In 2023, 93% of all hijackings occurred in Mexico State, Michoacán and Puebla, and the number of hijackings in Puebla in particular increased by 44% in 2023 with respect to the previous year. Northern border states account for a very small share (1%) of reported hijackings (Borderless Coverage, 2023[109]). Cargo theft in Mexico is primarily driven by professional groups as opposed to individuals (Hernández Ramírez, 2024[106]).
Data on cargo theft in Mexico can be fragmented and imprecise, limiting analysis and research. Moreover, a sophisticated understanding of the implications for firms would require combining cargo theft data with information on costs incurred by firms for insurance and security services (including convoys). Stakeholder consultations with firms operating in northern states suggested these costs to be considerable. Efforts to increase the collection of data on cargo theft could help inform swift policy action to address this important concern.
Cargo theft is recorded by the Executive Secretariat of the National System for Public Security (Secretariado Ejecutivo del Sistema Nacional de Seguridad Pública, SESNSP). However, these databases are often aggregated at the state and municipality levels, rather than specific segments of highways or precise geographic co‑ordinates, and are only updated monthly. More granular data would allow for targeted interventions to address road transportation safety.
The National Institute of Transparency, Access to Information and Protection of Personal Data (Instituto Nacional de Transparencia, Acceso a la Información y Protección de Datos Personales, INAI) also collects data on highway theft, but these data are only reported when an officer of Mexico’s National Guard responds to the occurrence. While INAI data include the time of day, highway code and name, and kilometre markers and so are more precise than SESNSP data, the datasets are not publicly available (Hernández Ramírez, 2024[106]).
More broadly, Mexico collects different types of security statistics. The National Survey of Victimization and Perception of Public Security (Encuesta Nacional de Victimización y Percepción sobre Seguridad Pública, ENVIPE) 2023 generates information on crimes and their victims, as well as on public perception regarding security and the performance of the authorities (ENVIPE, 2023[110]). The National Survey of Urban Public Security is another, related survey (ENSU, 2024[111]).
Federal roads are regulated by the General Directorate of Federal Road Transportation (Dirección General de Autotransporte Federal, DGAF) under the supervision of the Deputy Ministry of Transport of the Secretariat of Infrastructure, Communications and Transportation of Mexico (Secretaría de Infraestructura, Comunicaciones y Transportes, SICT). The DGAF only has legal authority over federal roads, operates under the direct responsibility of the SICT and is thus affected by the political cycle (OECD, 2016[112]).
The 2019 National Strategy for Public Safety committed to specific actions to tackle road transportation insecurity, including: enhanced surveillance and patrolling, with specific operations in selected routes most affected by insecurity; collaboration with the private sector for incident information exchange; and use of technology (e.g. GPS, surveillance cameras, screening) along the routes, at checkpoints and in vehicles, to detect suspicious activity (Government of Mexico, 2019[113]). The Safe Road Plan (Plan Carreteras Seguras) was launched in 2019 alongside mobile application PF Carreteras that allows both consulting and reporting incidents in federal roads (SEGURIDAD, 2019[114]).
An analysis of the implementation of the National Strategy for Public Security conducted in 2023 highlighted the establishment of three Centers for Immediate Response that help deploy co‑ordinated operations in response to reported cargo theft incidents (SEGURIDAD, 2023[115]). The analysis also highlighted the restructuring of the Safe Road Plan into the Road Transportation Safety Plan, in collaboration with several Mexican states and the creation of three regional working groups to manage emergencies, amongst other measures.
Mexico should further enhance efforts and take swift action to address road transportation insecurity, including preventing cargo theft and reducing road transportation security costs. Mexico could consider further enhancing the role of the National Guard to help protect semiconductor-related material transports, while continuing to work to address the root causes of the lack of security, including inequality and the informal economy.
Mexico could also revamp its highway security data collection procedures to create a precise, consolidated database on cargo theft and cargo security costs, which could be made public to allow for more research to support policy action. This is consistent with Mexico’s new National Strategy for Public Security 2024‑2030 that focuses on enhancing intelligence gathering and investigative capacity (SEGURIDAD, 2025[116]). These data would allow law enforcement (and researchers) to identify hotspots of cargo hijacking and criminal activity, potentially around certain supply lines or manufacturing hubs, helping decrease organised criminal activities and better protect highway transportation. Furthermore, publicly available data on cargo hijacking would allow semiconductor-related firms to co‑ordinate with the Mexican government to protect their cargo.
Finally, Mexico could clarify the roles and responsibilities of the DGAF and increase its co‑ordination with state and local road regulation agencies. Mexico could also consider an autonomous regulator to prevent possible political influence.
Other transportation
The rail sector in Mexico is regulated by the Regulatory Agency for Rail Transport (ARTF), established in 2016. The ARTF works closely with the SICT. It oversees several regulatory duties including technical regulation, while the SICT plans and develops the public policy of rail services and rail development. The Mexican railway network is a broadly successful mode of transporting freight. After major reforms to the Law on the Regulation of Rail Services, including the privatisation of railways by the granting of concessions by the SICT to private firms to operate rail lines, rail freight transport grew on average 4.1% per year from 1995 to 2017, outpacing other forms of transport (OECD, 2020[117]).
The plan for the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) entails an important rail infrastructure investment. It aims to create a logistics hub connecting the Pacific and Atlantic Oceans through a USD 2.8 billion railway system (cargo and passengers) between the two major ports of Salina Cruz in the state of Oaxaca (Pacific) and Coatzacoalcos in the state of Veracruz (Atlantic) (Mexico News Daily, 2023[118]). The plan is broader than the railway system and involves the creation of ten industrial parks in the corridor between Oaxaca and Veracruz as well as the development of the two main ports (OECD, 2024[52]).11 As outlined in Section 3.1.3, the CIIT transported its first cargo in April 2025.
Rail infrastructure could still be improved in several ways. Although railway use in Mexico is close to the OECD average, the country lags in rail line density (1.37 km per 100 km²). Limited investment has constrained network expansion, making road transport more attractive, and critical infrastructure improvements are needed to strengthen the system’s coverage and reliability (OECD/ITF, 2020[119]). In addition, the ARTF currently fills a dual role of both regulation and rail infrastructure development. The government of Mexico could designate the ARTF as purely a regulatory agency and assign railway promotion to other entities to ensure that the ARTF can regulate efficiently (OECD, 2020[120]).
A number of key seaports are also benefitting from investments to upgrade the capacity to handle cargo. These include notable investments in the ports of Salina Cruz in Oaxaca (Pacific) and Coatzacoalcos in Veracruz (Atlantic), in the context of the Interoceanic Corridor of the Isthmus of Tehuantepec described above. Other investments include upgrading the seaports of Altamira (Tamaulipas), Guaymas (Sonora), Lázaro Cárdenas (Michoacán), Manzanillo (Colima), Mazatlán (Sinaloa), Progreso (Yucatán) and Veracruz (Veracruz).
Efforts to upgrade existing airports, such as the Felipe Ángeles International Airport in Mexico City (Mexico News Daily, 2024[121]), and plans to expand airport terminals, for example in Jalisco (Mexico Business News, 2024[122]), Nuevo León (OMA, 2024[123]) and other regions,12 contribute to better transportation infrastructure that can also facilitate connections with global markets and integration into the semiconductor GVC.
Efforts to continue expanding Internet coverage throughout the country, notably in southern regions, would also help ensure that the necessary infrastructure is in place to accommodate the semiconductor and related industries.
3.2.3. Regulatory and business environments
A recent analysis carried out by the United States-Mexico Foundation for Science (Fundación México-Estados Unidos para la Ciencia, FUMEC) – a non-governmental organisation that aims to promote science and technology collaboration between the two economies – identified that some regulations, particularly at Mexico’s state and municipal levels, impose avoidable costs on semiconductor and other electronics firms. The report recommended that the federal and state governments should harmonise or remove regulations that risk deterring parts of the semiconductor GVC from relocating to Mexico (FUMEC, 2024[124]).
More broadly, the need for improvements to the regulatory environment and ease of doing business was reinforced through consultations with representatives from Mexico’s semiconductor industry, business associations and academic institutions conducted for this report. These stakeholders emphasised the importance of an effective regulatory framework to simplify business interactions with government, facilitate the customs and permitting procedures, support competition and promote investment. This sub-section analyses each of these areas in turn.
One-stop shops for investment and trade
One-stop shops are online tools that can significantly facilitate foreign investment and trade. They act as a single point of guidance and information, offering transparency, legal certainty and an expedited administrative process, thus helping increase an economy’s competitiveness.
The one-stop shop for investors (Ventanilla Única para Inversionistas, VUIMX), developed by the SE, is a free online tool designed to support investors to establish or expand investments in Mexico (Government of Mexico, 2024[125]). It provides step-by-step guidance and up-to-date information on the procedures that investors must follow to comply with federal requirements. VUIMX signposts investors towards key documents and resources relating to eight main areas: business establishment, tax services, trademarks and inventions, foreign trade promotion, migration, social security, real estate acquisition, permits and authorisations. VUIMX also helps to connect users to the equivalent investment procedures in each Mexican state. It has gained international recognition and received the award for Best Digital Information Portal 2023 from United Nations (UN) Trade and Development (UNCTAD, 2023[126]).
Of particular relevance to the semiconductor industry, VUIMX also offers tailored guidance for investment in specific sectors, including construction, mining, agriculture, energy, manufacturing and strategic industries. As explained in Section 3.1.1, various federal government strategies – including Plan México and Towards an Industrial Policy – recognise the strategic importance of semiconductors. Consequently, VUIMX has a dedicated webpage for investment in the semiconductor industry. However, as of late 2025, this webpage remained under construction (Government of Mexico, 2024[127]). Although VUIMX’s recognition of the semiconductor industry as a strategic sector is an encouraging start, the SE should finalise the integration of semiconductor-specific information into VUIMX.
Mexico’s one-stop shop for international trade (Ventanilla Única de Comercio Exterior Mexicana, VUCEM) was announced in 2011 and launched in 2012. VUCEM is managed by the Secretariat of Finance and Public Credit and has several objectives: it aims to: facilitate compliance with non-tariff barriers to trade (NTBs) prior to customs clearance; improve transparency and enhance foreign trade operations; and simplify trade logistics. More specifically, VUCEM allows users to send the information required to comply with the NTB procedures, via a single online platform, to ten government agencies and two regulatory bodies: SAT, SE-DGN, AGRICULTURA, SEMARNAT, SEDENA, SALUD, SENER, PROFEPA, INBA, INAH, AMECAFE and CRT. 13
By adhering to best practices and international standards for electronic data exchange (in line with World Customs Organization, UN Electronic Data Interchange for Administration, Commerce and Transport and International Air Transport Association’s Cargo-XML standards), VUCEM aims to improve its interoperability with government agencies and begin to standardise and automate the processes for international trade. According to VUCEM’s own website, sectors including footwear, textiles and steel have reported improvements in obtaining the necessary trading permits (Government of Mexico, 2024[128]).
In addition, data publicly shared by VUCEM show that the number of electronic value vouchers (comprobante de valor electrónico, COVE, the unique code that proves the value of traded goods) across all sectors increased by about 33% from 2019 to 2023 (Figure 3.6). Over the same period, the activity on VUCEM incoming requests and completed procedures have also increased. These data could suggest that increasing volumes of trade are benefitting from VUCEM’s streamlined NTB and trade procedures, which could also imply administrative benefits for Mexico’s semiconductor industry. Available data as of November 2025 show that digitalisation requests between January and November 2025 already show a marked increase (66%) compared to 2023, signalling further uptake of the platform.
Number of COVEs, digitalisation requests, incoming requests and completed procedures
Note: Data for 2025 refer to the period January-November.
Source: Government of Mexico (n.d.[129]), “Estadísticas VUCEM”, https://www.ventanillaunica.gob.mx/vucem/cifrasvucem.html.
Customs
Stakeholders from business associations and industry, consulted for the purpose of this report, identified slow shipping and the handling of fragile semiconductor materials and sensitive inputs during inspections at the Mexican border as challenges related to the customs procedure. Semiconductors require a complex combination of inputs, most of them imported. Key semiconductor inputs include, for example, specialised equipment, gases, chemical reagents, metals and wafers, many of which are delicate. See Annex E for details on specific products.
To facilitate customs procedures, Mexico introduced in 2012 an Authorised Economic Operator (AEO) programme in collaboration with the private sector (WCO, 2020[130]). To receive the AEO certification, firms must demonstrate that they meet internationally recognised standards in customs control procedures and supply chain security. In Mexico, the AEO certification process is managed by the Tax Administration Service (SAT) and requires three main steps: i) an analysis of the current tax and customs status of the applicant firm; ii) an analysis of the firm’s security profile, including an inspection of facilities with foreign trade operations; and iii) validation and issuance of AEO certification. The AEO certification is valid for two years.
The AEO programme is voluntary and has significant benefits for certified firms, including for example the simplification of administrative procedures, fewer customs inspections, priority in inspection lines and for customs clearance. As of 2020, Mexico had 1 057 AEO-certified operators (WCO, 2020[130]).
While the AEO programme already helps firms engage in foreign trade, Mexico’s customs procedures could be improved further by tailoring some of these procedures to the specific needs of the semiconductor industry. For example, prioritising a fast-track customs programme for a set of clearly defined semiconductor-related inputs could further reduce clearance time and, crucially, reduce the risks of damaging fragile semiconductor materials and sensitive inputs during inspections at the border customs. Moreover, facilitating customs verification at the border and investing in technology to allow for electronic scans instead of physical checks (which might render sensitive materials unusable) would also help Mexican semiconductor firms further integrate into the GVC.
It is also important to develop the capability of customs authorities to operate around the clock, notably in key ports and airports, as a means of reducing time to clear cargo to and from relevant markets in East Asia and Europe. Finally, efforts to facilitate trade with neighbouring countries could also be envisaged, for example, through customs checks at the initial departure or final arrival location instead of at the border, building on the AEO programme. These efforts would, however, need to be reconciled with the security and enforcement provisions in existing trade deals and would require trade partners to mutually recognise these customs checks at the point of departure or arrival (WCO, 2020[130]).
In October 2025, Mexico approved an amendment to its Customs Law with the aim of further modernising its customs procedures, promoting traceability and transparency, increasing tax revenue and reducing opportunities for smuggling. The amendment will significantly increase fines for non-compliance and will also establish a new Customs Council to manage the licences of customs brokers and customs agencies (Baker & McKenzie, 2025[131]). The amendment is due to enter into force in January 2026, so its impact remains to be seen.
Competition
National competition policy in Mexico is rooted in Article 28 of the Mexican constitution, which prohibits monopolies and monopolistic practices, and is implemented by the Federal Law for Economic Competition (Ley Federal de Competencia Económica, LFCE) (Cámara de Diputados, 2025[171]). The LFCE prohibits four broad categories of practices that limit economic competition – absolute practices, relative practices, unlawful mergers and barriers to competition – and defines several specific conducts for each category (Chamber of Deputies, 2021[132]).
Certain strategic sectors are reserved, in whole or in part, for the state to operate, and the functions that the state exercises in these sectors are excluded from the LFCE. These sectors include, but are not limited to, extraction of petroleum and hydrocarbons, nuclear energy, the printing of money and the national electricity system (OECD, 2020[120]).14 In recent years, however, a succession of executive decrees have widened the definition of “strategic sectors” so that an increasingly broad set of activities are classified as strategic – such as state-provided Internet services – and become exempt from LFCE oversight. This expansion of the scope of strategic sectors could reduce the regulatory oversight for competition in important parts of the economy. Therefore, it would be important to return to narrowly focused definitions of strategic sectors, aligned with international practices and applied transparently and predictably (OECD, forthcoming[21]).
Until recently, Mexico’s main competition authority was the Federal Economic Competition Commission (Comisión Federal de Competencia Económica, COFECE), created in 2013 in accordance with the LFCE. A previous peer review of competition law concluded that Mexico was broadly in line with international standard practices, but its good standing relied on preserving COFECE’s autonomy and independence (OECD, 2020[120]). However, following major reforms to the LFCE, COFECE was replaced in July 2025 by the National Antitrust Commission (Comisión Nacional Antimonopolio, CNA).
There are some concerns about the independence of the new CNA (OECD, forthcoming[21]). While COFECE had full constitutional independence, the CNA is a decentralised public agency of the SE. Although the CNA is expected to have administrative autonomy and operational independence, it is closer to the executive branch than COFECE was (Norton Rose Fulbright, 2025[133]). These concerns are similar to those raised about the new energy regulator and its proximity to the Secretariat of Energy (see Section 3.2.2 for more details).
As explained in Section 3.2.2, electricity is a critical part of the enabling infrastructure for semiconductor manufacturing and a large share of Mexico’s national electricity system, particularly at the generation stage, is run by the state-owned Federal Electricity Commission (CFE). Enhancing competition in Mexico’s electricity sector could help secure lower electricity prices and higher-quality provision for Mexico’s semiconductor and other electronics industry. The OECD Guidelines on Corporate Governance of State-Owned Enterprises (2024[134]) support competition and help ensure a level playing field between state-owned enterprises and private enterprises. The operations of state-owned enterprises in Mexico are overseen by different secretariats and government agencies depending on the relevant economic activity and the Secretariat of Finance and Public Credit is responsible for the financial oversight of these enterprises.
As part of the 2025 reforms to Mexico’s competition and regulatory landscapes, the Federal Telecommunications Institute (IFT) was dissolved and replaced by the new Telecommunications Regulatory Commission (CRT). Whereas the IFT was fully independent, the 2026 OECD Economic Survey of Mexico highlights that the CRT is overseen by the Agency for Digital Transformation and Telecommunications (ATDT), part of the executive branch. In this way, the new CRT lacks autonomy which could call into question its ability to foster fair competition. This also makes Mexico an outlier amongst OECD Member countries, as the vast majority have independent telecommunications regulators (OECD, forthcoming[21]). This risks dissuading private investment in connectivity infrastructure, another part of the semiconductor ecosystem, albeit one for which detailed analysis is beyond the scope for this report.
To protect and promote market competition in Mexico, it would be necessary to ensure the full autonomy of the CNA and the sectoral regulators and insulate them from political influence, for example by appointing their board members outside of the political cycle. The CNA and other regulators should also be supported with the resources required to fulfil their mandates properly (OECD, forthcoming[21]). Increased competition can also stimulate innovation, entrepreneurship and the establishment of new firms in Mexico, including in the semiconductor industry. These types of ventures could contribute to mitigating “brain drain” and help to attract and retain talent in Mexico, as outlined in Section 2.3.3.
Foreign investment
Section 2.2.1 shows that greenfield investment from foreign firms into Mexico’s semiconductor and other electronics industry totalled USD 1.7 billion between 2003 and 2024, with significant investments from firms including ASE, Intel, Jabil and NVIDIA. One of the factors which has facilitated this investment is Mexico’s foreign investment environment.
Foreign investment in Mexico is subject to relatively few limits and can occur in any economic activity as long as it is not explicitly restricted by law. The Foreign Investment Law (Ley de Inversión Extranjera) defines four types of restrictions: i) activities that are restricted to the state; ii) activities reserved for Mexicans or Mexican corporations; iii) activities with specific regulations; and iv) activities that can occur only with authorisation from the National Foreign Investment Commission (CNIE). Generally, the activities of semiconductor-related firms would not be subject to any of these four categories of restrictions (Secretaría de Economía, 2016[135]).
Since the enactment of the Foreign Investment Law in 1993 and subsequent reforms to it, limits on foreign ownership of Mexican firms have been mostly waived except for a few key areas. Regarding the first type of investment restriction, some of the activities reserved for the Mexican state include, but are not limited to, the exploration and extraction of oil, planning and control of the national electric system, the issuing of currency and the control of ports (Chamber of Deputies, 2024[136]; Secretaría de Economía, 2016[135]).15 There is a high degree of overlap between these activities reserved for the Mexican state in Article 5 of the Foreign Investment Law and the strategic sectors reserved in whole or in part for the Mexican state in Article 28 of the constitution (see above).
The second type of investment restriction – activities reserved exclusively for Mexican individuals or Mexican firms – only affects three categories of economic activity set out in Article 6 of the Foreign Investment Law: domestic land transportation (for passengers, tourism and freight), development banking entities and some professional and technical services that fall under applicable legal provisions (Chamber of Deputies, 2024[136]; Secretaría de Economía, 2016[135]).
The third type of investment restriction – activities with specific regulations – sets a maximum cap on foreign investment in certain sectors. For example, according to Article 7 of the Foreign Investment Law, foreign investors are limited to 10% of shareholding in co‑operative entities for production, 25% in air transportation activities and 49% in areas including, but not limited to, the manufacture of explosives, firearms and ammunition, the printing and publication of newspapers, or broadcasting (Chamber of Deputies, 2024[136]).
The fourth and final type of restriction requires foreign investors to receive authorisation from the CNIE. Specifically, the CNIE’s authorisation is required when a foreign investor wishes to acquire a share larger than 49% in economic activities listed in Article 8 of the Foreign Investment Law, including certain port services, certain shipping firms, private educational services, construction of railway transportation infrastructure and legal services (Secretaría de Economía, 2016[135]). None of the four types of investment restriction are directly related to the semiconductor industry.
Separate to the restrictions on foreign investment outlined above, foreign individuals or firms that regularly conduct business in Mexico and Mexican firms that receive foreign investment must register with the National Registry of Foreign Investment (Registro Nacional de Inversión Extranjera, RNIE). Registration must occur within 40 business days of the start of business action, the creation of the entity by foreign investment, the creation and recording by public notary of formal documents relating to the firm, or the creation of the relevant trust in favour of foreign investment. Electronic registration with the RNIE is available after the firm completes its necessary registration with Tax Administration Service (SAT) and receives its recognised electronic signature. The registration process with SAT can also be carried out electronically (Secretaría de Economía, 2016[137]).
According to the Mexican Federal Labour Law (Ley Federal del Trabajo), at least 90% of workers hired by an employer in Mexico must be Mexican nationals, with the exception of directors, administrators and general managers (Chamber of Deputies, 2015[138]). There are also exceptions that allow hiring foreign workers in specialised technical or professional roles when the skills are not available in Mexico’s workforce, with the requirement that the employer and the foreign workers train Mexican workers in that speciality (Start-Ops, 2022[139]; Esquivel and Lara, 1999[140]).
Investment incentives
In parallel to Mexico’s foreign investment requirements, the federal and state governments offer businesses a range of investment incentives which can be leveraged to help attract the semiconductor industry. In 2006, the government established the IMMEX programme, through the Decree for the Promotion of the Manufacturing, Maquiladora and Export Services Industry (SNICE, 2006[141]).
Managed by the SE, the IMMEX programme grants businesses simplified administrative requirements and the duty-free import of inputs, raw materials, components, parts, machinery and equipment on the condition that the final product is exported within a certain timeframe. IMMEX firms can also apply for a value-added tax (VAT) certification to gain exemption from paying VAT on these imports.
As of September 2025, 6 530 firms were participating in the IMMEX programme and benefitting from the tax deferrals or exemptions. The overarching aim of the IMMEX programme is to incentivise foreign investment and boost the manufacturing and export-oriented sectors in Mexico. In 2025, Plan México (see Section 3.1) announced the creation of a revamped IMMEX 4.0 with a dedicated set of incentives for the semiconductor industry, although the precise details are still to be confirmed (Government of Mexico, 2025[142]).
In addition to the IMMEX programme, the SE also manages the Sectoral Promotion Programs (Programas de Promoción Sectorial, PROSEC). The PROSEC decree (first published in 2002 and most recently revised in 2024) allows firms operating in 24 strategic sectors, one of which is the electronics industry, to benefit from preferential tariffs on the import of certain inputs and machinery. For the electronics industry, these inputs include semiconductor devices (for example diodes and transistors) and machines used for the manufacture of wafers and integrated circuits (SNICE, 2024[143]).
The PROSEC scheme allows firms involved in the production of semiconductors and related electronic components to benefit from reduced import duties: PROSEC programmes reduce most favoured nation tariffs on qualifying products to between 0% and 5%. Annex J contains a full list of relevant inputs under the PROSEC programmes. The administrative procedures for a firm to benefit from PROSEC can be completed through VUCEM, the online one-stop shop analysed at the start of this sub-section (Secretaría de Economía, 2024[144]).
In addition to the preferential tariffs under the PROSEC decree, Mexico could consider becoming a signatory to the World Trade Organization Information Technology Agreement (ITA 1), which aims to eliminate all import duties on products including semiconductors and semiconductor manufacturing equipment. More than 80 countries currently participate in ITA (WTO, n.d.[145]).
Mexico has also established several special economic zones (SEZs) to promote economic growth and industrial activities, typically in less economically developed areas. SEZs have been created in Campeche, Coatzacoalcos, Hidalgo, Lázaro Cárdenas, Puebla, Puerto Chiapas, Salina Cruz, Tabasco and Yucatán (Medrano, 2018[146]). Investment incentives vary across the SEZs. One example is the establishment in the state of Yucatán of two industrial zones, Mérida I and Progreso I, in June 2024. The zones target 11 sectors, including the electronics sector and, separately, the semiconductors industry. Incentives include: 100% corporate income tax discount for the first three years, followed by a 50% discount for the following three years (which could rise to 90% if employment targets are met); an immediate 100% deduction for new fixed asset investments during six years; 100% VAT exemption (Government of Mexico, 2024[147]; UNCTAD, 2024[148]).
There are also tax incentives in specific regions, such as those included as part of the CIIT. The CIIT is made up of ten Development Hubs for Wellbeing (Polos de Desarrollo para el Bienestar) and adopts a similar model to the Yucatán industrial zones: firms in the semiconductors and electronics industries are eligible for tax benefits such as discounts on corporate income tax and VAT and accelerated depreciation on investments, as long as they meet minimum employment levels (determined by the Secretariat of Finance and Public Credit) (Secretaría de Economía, 2024[144]).)
In this way, Mexico provides investment incentives at the federal, regional, state and municipal levels and targets both the manufacturing sectors in general and the semiconductors industry specifically. To ensure that these programmes of government support are coherent and produce the desired outcomes, a strong co‑ordination mechanism is required, as outlined in Recommendation 1.1.1.
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← 1. The aim of the Interoceanic Corridor of the Isthmus of Tehuantepec is to create a logistics hub connecting the Pacific and Atlantic Oceans through a USD 2.8 billion railway system (cargo and passengers) between the two major ports of Salina Cruz in Oaxaca (Pacific) and Coatzacoalcos in Veracruz (Atlantic) (Mexico News Daily, 2023[118]). It also involves the creation of ten industrial parks in the corridor between Oaxaca and Veracruz (OECD, 2024[52]).
← 2. Scholarship funding is not disbursed in July and August, as these months fall outside the school year.
← 3. The Education First Standard English Test (EF SET) is free and online, so anyone with an Internet connection can participate. Participants are self-selected and so are likely to skew towards individuals who want to learn English or are curious about their English skills. Therefore, the test-taking population is not guaranteed to be representative, and almost all the test takers are young adults finishing their studies or professionals.
← 4. These higher education statistics include bachelor’s degrees in university and technological education and excludes postgraduate studies.
← 5. It was developed by the Secretariats of Public Education and of Economy, the STEM+ Movement, UN Women, Siemens Mexico, Siemens Stiftung International Foundation and the Diversity and Inclusion Commission of the Business Coordinating Council.
← 6. See the European Commission/OECD Science, Technology and Innovation Policy (STIP) Compass database for examples (EC/OECD, 2024[149]).
← 7. See the EC/OECD STIP Compass database for additional examples (EC/OECD, 2024[149]).
← 8. Differences in electricity, fuel and water prices may reflect underlying structural factors and a more thorough analysis of competitiveness and sustainability is beyond the scope of this report.
← 9. The CFE has historically relied heavily on fossil fuels, particularly from the state-owned petroleum agency Petróleos Mexicanos (PEMEX).
← 10. The US-Mexico Border Water Infrastructure Grant Programme has thus far completed 129 projects, giving over 60 000 households access to new or improved safe drinking water and increasing access to wastewater services for over 900 households.
← 11. Mexico has also been investing in the development of the Mayan Train, connecting southern states (the first part connecting Yucatán with Chiapas became operational in December 2023) and suburban trains (in, for example, Monterrey and Mexico State) (OECD, 2024[52]).
← 12. Other regions experiencing investment in transport infrastructure include, for example, Lázaro Cárdenas (Michoacán), Puerto Escondido (Oaxaca), Tepic (Nayarit), and Torreón (Coahuila).
← 13. SAT: Tax Administration Service (an agency of the Secretariat of Finance and Public Credit); SE-DGN: General Standards Bureau (an agency of the Secretariat of Economy); AGRICULTURA: Secretariat of Agriculture; SEMARNAT: Secretariat of Environment and Natural Resources; SEDENA: Secretariat of National Defence; SALUD: Secretariat of Health; SENER: Secretariat of Energy; PROFEPA: Federal Attorney for Environmental Protection; INBA: National Institute of Fine Arts; INAH: National Institute of Anthropology and History; AMECAFE: Mexican Coffee Association; and CRT: Tequila Regulatory Council.
← 14. According to Paragraphs 4 and 7 of Article 28 of the constitution, the full list of strategic sectors include: postal services; telegraph and radiotelegraphy; exploration and extraction of petroleum and other hydrocarbons; basic petrochemicals; radioactive minerals; nuclear energy; planning and control of the national electricity system; public transmission and distribution of electrical power; producing and issuing currency.
← 15. According to Article 5 of Mexico’s Foreign Investment Law, the full list of activities in strategic areas that are reserved exclusively for the state are: exploration and extraction of oil and other hydrocarbons; planning and control of the national electric system, transmission and distribution of electricity; generation of nuclear energy; radioactive minerals; telegraph; radiotelegraphy; postal service; the issuing of bank notes and minting of coins; control, supervision and surveillance of ports, airports and heliports.