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MEXICO
A Site Selection Web Exclusive, March 2022
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Querétaro Data Center Investment Central to Digitizing Mexican Industry

MEXICO
This portion of TeleGeography’s world map of the internet figures to fill in as substantial data center investment comes to Mexico, particularly in the state of Querétaro.
Map courtesy of TeleGeography

By Adam Bruns
M
Anahí Rebatta, Senior Analyst, TeleGeography
Anahí Rebatta, Senior Analyst, TeleGeography

exican exports to the United States surged to $384.7 billion in 2021, after a pandemic-inflicted blip down to $325.2 billion in 2020 following $356.1 billion in 2019. If the first two months of 2022 were any indication (totals exceeded the previous year’s first two months by some $7 billion), 2022 may be a record year.

As the chart illustrates, there is real evidence of more near-shoring investment by companies from all countries (including China) following the supply chain headaches all industries have endured since the pandemic’s onset. One example: San Diego–based Morgan Polymer Seals, a supplier of gaskets to Ford, in April announced a 35,000-sq.-ft. expansion at its primary manufacturing plant in Tijuana to “help meet the rapidly growing demand for quality elastomeric seals efficiently manufactured on-shore in North America.” Founded 25 years ago, the company now has three sites in Mexico delivering over 100 million parts per year to such OEMs as Ford, GM, Stellantis and Volkswagen.

What Site Selection’s proprietary data also shows us is the less ballyhooed digitization of Mexico and its advanced manufacturing portfolio, via new data center investment by some of the world’s largest hyperscale and cloud providers. Multiple projects highlight the strategic location of Querétaro — just north of Mexico City — in particular. Among the companies landing in that region:

  • CloudHQ
  • Scala Data Centers
  • Microsoft: An Azure data center on the campus of Arkansas State University Querétaro in Colón
  • Huawei Cloud, which in October opened another new Mexican cloud region in the State of Mexico in the municipality of Tultitlan
  • Ascenty (Digital Realty and Brookfield, with two facilities, including one at Arkansas State University Querétaro)
  • Amazon Web Services (two Edge facilities serving its CloudFront product)
  • Equinix (two facilities totaling 43,000 sq. ft.)
  • KIO Networks
  • Brazil’s Odata, which is investing $100 million in a 327,000-sq.-ft. site that will offer 32 MW of capacity in Parque Industrial Querétaro.

Until now, says San Diego–based Anahí Rebatta, senior analyst at TeleGeography specializing in Latin America and the Caribbean, Mexican telecom carriers have relied on U.S. data center infrastructure. Now, she says, “all the Mexican carriers are like, ‘Hey, we need our own data centers and IXs [internet exchanges] here. We are now seeing big service providers establishing cloud regions, not in Mexico City but in Querétaro. I was curious, and the main reason was there are no earthquakes in Querétaro.”

Indeed, says Digital Realty of its two Querétaro facilities, “close to Mexico City and in the largest growth market in the country, Digital Realty’s data centers are safe from seismic and flood zones, and provide direct access to the Mexico IX [internet exchange].”

“In Mexico, our two new edge locations in Querétaro will provide viewers as much as a 30% reduction in p90 latency measures,” says AWS of the industry metric that some have called “the new outage.”

“Oracle Cloud Infrastructure has seen stellar growth over the past year,” said Clay Magouyrk (pictured), executive vice president, Oracle Cloud Infrastructure, in October when the company announced that Mexico was among the 14 new cloud regions the company would establish by fall 2022. The company says it intends to have at least 44 cloud regions by the end of 2022, and eventually will have two cloud regions in every country in which it operates.

Writing for Dgtl Infra in March, journalist Mary Zhang cited Querétaro’s Ministry of Economy as reporting 141 IT companies in the state and nine operational data centers — a total that is expected to grow to 25 in the medium term.

Among the factors making the area attractive, she wrote, is abundant power from the Comisión Federal de Electricidad (CFE), Mexico’s state-owned electric utility. Mexico’s Supreme Court in April upheld Mexico’s 2021 electricity law giving priority to CFE over private firms.

Microsoft’s Azure data center region is part of its broader $1.1 billion “Innovate for Mexico” investment plan in Mexico over the next five years. “The plan also includes a robust education and skilling program,” said the company in rolling out the program in 2020, “with different initiatives the first one being the creation of three laboratories and a virtual classroom, in collaboration with public universities to create an education platform for digital skills, to expand employability in future generations.”

Fernando Liu, General Director of HUAWEI CLOUD for Latin America, mentioned that Huawei has traditionally had strengths in the Operator and Business segments, and in Cloud they have taken advantage of those strengths, but at the same time it is putting a lot of efforts to help SMEs and Mexican startups.

In announcing yet another Mexican cloud region in the State of Mexico’s municipality of Tultitlan in October 2021, Huawei said its 20 years of doing business in Mexico had “contributed to the development of more efficient and better used technologies to constitute an advance, not only in terms of connectivity, but also as an engine to boost the digital economy in different sectors and industries. such as agriculture, manufacturing, the aeronautical sector, transportation, health, among many others.”

“Over 20 years, this digitalization process has marked the opening of a more efficient industrialization and Mexico has played a leading role, which has resulted in an investment of more than $500 million in the last six years, in addition to the generation of around 8,000 direct and indirect jobs,” said Fernando Liu, general director of Huawei Cloud for Latin America.

Virginia-based CloudHQ’s hyperscale data center campus in Querétaro will bring 1,000 jobs and as much as $725 million of investment. The company’s business plan calls for continued expansion inside and outside the U.S., said CloudHQ Executive Vice President José Fraga, including the company’s new project in Brazil. As for Querétaro, he said, “We believe that the state has optimal conditions for our installation, with highly qualified talent, an excellent infrastructure and a very proactive government committed to new investments that undoubtedly helps to make the business environment friendly.”

In a press release, Querétaro Governor Francisco Dominguez noted, “One of the competitive advantages of Querétaro, reflected in the 2020 competitiveness index of the Mexican Institute for Competitiveness (IMCO), is precisely the promotion of science and technology. We are the first national place in patents, second place in number of companies and scientific and technological institutions and third place in number of researchers per 100,000 inhabitants.”

Rebatta says operators who previously have located data centers in Brazil, for example, are beginning to invest in Mexico now. “I believe there will be a boom in Mexico and Querétaro,” she says of major data center investments. “Maybe we will see that Mexico will not depend so much on the U.S. for connectivity and be itself.”

Major Corporate Facility Projects in Mexico Since January 2021

# Company Name City Capital Investment (Million USD) Jobs Created
1 General Motors Company Ramos Arizpe 1000.0  
2 Ternium México, S.A. de C.V. Pesqueria 1000.0  
3 Microsoft Corporation   1000.0  
4 DIAGEO PLC La Barca 500.0 1000
5 DEACERO, S.A.P.I. DE C.V. Ramos Arizpe 420.0 450
6 TOYOTA MOTOR CORPORATION Aguascalientes 273.0  
7 LINK   265.0 400
8 BSH HAUSGERÄTE GMBH Monterrey 260.0 1500
9 AT Engine México, S.A.P.I. de C.V. Hermosillo 200.0 400
10 INVENTEC CORPORATION Ciudad Juarez 200.0  
11 Kohler Co. San Luis de la Paz 181.0 886
12 Metalsa, S.A. De C.V. Apaseo el Grande 170.0 1024
13 Martinrea International Inc Santiago de Queretaro 155.0 668
14 Hisun Saltillo 152.0 1500
15 Grupo Modelo, S. de R.L. de C.V. Tierra Blanca 150.0 100
16 Robert Bosch Tool de México, S.A. de C.V. Santiago de Queretaro 146.0 400
17 TORAY INDUSTRIES,INC. Guadalajara 130.0  
18 Bayerische Motoren Werke Aktiengesellschaft San Luis Potosi 125.0  
19 Impro Industries México, S. de R.L. de C.V. San Luis Potosi 120.0  
20 Whirlpool Corporation Ramos Arizpe 113.0 1000

Conway Projects Database

Adam Bruns
Managing Editor of Site Selection magazine

Adam Bruns

Adam Bruns has served as managing editor of Site Selection magazine since February 2002. In the course of reporting hundreds of stories for Site Selection, Adam has visited companies and communities around the globe. A St. Louis native who grew up in the Kansas City suburbs, Adam is a 1986 alumnus of Knox College, and resided in Chicago; Midcoast Maine; Savannah, Georgia; and Lexington, Kentucky, before settling in the Greater Atlanta community of Peachtree Corners, where he lives with his wife and daughter.

   



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