Mexico’s Emerging Silicon Valley
By Rob Spiegel -- 4/12/2005
Silicon Valley has apparently moved south where housing costs are cheap and engineers are cheaper.
According to recent research from Technology Forecasters Inc. in Alameda, Calif., Guadalajara has become a hot spot for manufacturing and engineering services in the electronics industry. Apparently, many American companies would rather outsource a couple hours south rather than halfway across the world.
“They say Guadalajara has become Mexico’s Silicon Valley. That’s because so much engineering has grown in the area,” said Eric Miscoll, senior consultant at Technology Forecasters. “Freescale Semiconductors alone has hundreds of engineers in Guadalajara.”
According to the Secretaria de Economia of Mexico, there are 700 companies with manufacturing in Guadalajara. They include among them IBM, HP, Flextronics, Solectron and Benchmark.
Emphasis on Engineering
The emphasis on engineering is paying off in the Guadalajara area. GE Engines has 600 engineers working there, and first-tier automotive supplier, Delphi, has 2,200 engineers working on projects in the area.
In the past, most engineering in Mexico was related to manufacturing. In the last three years, however, there has been a shift to design engineering.
“In Mexico, it used to be all production process engineering, but now it’s product design capabilities,” said Miscoll. He notes that Mexico has gained a strong reputation for its engineering talent. “They’ve grown up the food chain,” said Miscoll. “Siemens’ video division sent a couple engineers from Mexico to its Detroit facilities, and the engineering team in Detroit, said, ‘Send us more of these guys!’”
Miscoll notes that it took a few years for U.S. manufacturers to get accustomed to the idea that Mexico is a source for design engineers. “The talent was there, but they didn’t have the ability to show off their talent,” said Miscoll, adding that the word got out from the EMS providers that that Mexico was developing a strong engineering base. “It grew when the EMS providers recognized that Mexico was developing good engineering schools and good engineers.”
Guadalajara 'Graduates' to High Tech
Technology Forecasters estimates that Mexico is now graduating the same number of engineers as the United States. Plus, there is a lot of cooperation between industry and the engineering schools in Mexico. The engineers in Mexico come at a significant savings. The labor rate for engineering services in Mexico is $15 to $20 per hour for light jobs, compared with $70 per hour for the equivalent work in the United States.
Guadalajara has become the center of engineering development in Mexico, with 12 global OEMs on hand, 16 EMS providers and 24 design centers. The area is also home to the Mexico Center for Semiconductor Technology, renown for its leading-edge IC technology. On the software side, Mexico is strong in middleware because of the many legacy systems that are already installed there that need to be connected to emerging technology.
According to Miscoll, the rapid developments in the Guadalajara areas of Mexico are giving U.S. engineers pause. “I know an engineer who has been in the electronics industry in the Unites States for 40 years,” said Miscoll. “His son said he wanted to go into engineering in the electronics industry. He told his son not to. That’s how concerned U.S. engineers are about Mexico.”
© 2009, Reed Business Information, a division of Reed Elsevier Inc. All Rights Reserved.