Mexico May Recover From Chip Shortage Faster Than the US, Here's Why There's Some Hope

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Mexico and its uncannily large and under-appreciated auto industry were one of the places most harshly affected by the global health crisis and the resulting microchip shortages. But news from the Latin-American economic superpower shows signs of a turnaround that's as even more unanticipated than it would have been north of the border.
The latest report from the Mexican Automotive Industry Association (AMIA) details how levels of optimism are on the rise in the heart of Mexican industrial manufacturing hubs. Perhaps, even more hope than there is for American microchip manufacturing.

"We expect the shortage of semiconductors to stabilize throughout the year, and towards the second semester, they may return to levels that we had prior to the pandemic," AMIA head Fausto Cuevas said in a press conference.

Potentially premature optimism aside, it's going to be an uphill battle for every industrialized nation to recover from the gut-punch that is the global microchip shortage. This is the case regardless of whether microchip production worldwide kicks up or not. This time, perhaps the Mexican industry is one of the few that may rise from the ashes first.

Data seems to indicate that the Mexican automotive export numbers were sloped in a downward trend in January 2022 and 2% overall in 2021 compared to 2020. Even so, there are those within the industry who see reasons to suspect a turnaround.

"It seems to me that every time there's enough supply (of semiconductors), carmakers recover their previous capacity levels as soon as possible," Cuevas explained. This notion contradicts the claims of a turnaround between late 2023 and early 2024.

Whether the more hopeful or more conservative estimate turns out to be the truth remains to be seen. In the meantime, the Mexican auto industry sits idle, like a wounded animal.

Manufacturers like Volkswagen, Audi, General Motors, Mitsubishi, and others besides, rely heavily on the might of the Mexican economy to keep up with demand in order to prevent a crisis the likes of which we're seeing unfold before our eyes.
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