Amazon's AWS to Invest Over $5 Billion in Mexico to Boost Cloud Computing

Amazon Web Services Mexico to Invest $5 Billion in Data Centers

Amazon Web Services Mexico (AWS) has revealed its intention to invest over $5 billion in establishing a cluster of data centers in Mexico. The move comes as cloud services continue to experience significant demand, with many companies adopting new technologies.

The data center cluster will be constructed in the Mexican state of Queretaro. In an interview with Reuters, Ruben Mugartegui, head of Amazon Web Services Mexico unit, stated that the investment will be spread over a period of 15 years. This project has been in the works for more than five years.

AWS currently serves a range of clients in Mexico, including Cinepolis, BIVA, Aeromexico, and local governments. By leveraging cloud computing, these companies are able to access technology services, such as storage and databases, via the internet, eliminating the need for physical data centers and servers. Mugartegui highlighted that companies using AWS can reduce technology costs by approximately 20% based on a study.

Investment in Mexico amidst Supply Chain Disruptions

This new investment from Amazon comes as part of the trend of nearshoring, where companies are relocating their businesses from Asia closer to the United States. The COVID-19 pandemic has caused significant disruptions in global supply chains, prompting companies to seek alternative locations.

The Mexican government has been actively encouraging investment in the country, offering tax incentives to firms that choose to move their operations to Mexico. While Ruben Mugartegui did not disclose whether Amazon received any fiscal benefits, he stressed the efficient collaboration between the company and the government. Furthermore, companies relocating to Mexico are seen as potential new clients for Amazon.

Other major companies, like Tesla, have also announced plans to invest in Mexico. The carmaker revealed intentions to build a factory in Mexico, with local authorities granting substantial incentives for the project. Tesla's investment in Mexico is estimated to exceed $5 billion.

Conclusion

Amazon Web Services Mexico's investment of over $5 billion in data centers underscores the increasing demand for cloud services in the country. The move aligns with the recent trend of nearshoring, as companies seek to mitigate supply chain disruptions caused by the COVID-19 pandemic.

The Mexican government's initiatives, including tax incentives, have successfully attracted investments from major companies like Amazon and Tesla. With the construction of the data center cluster in Queretaro, AWS aims to cater to the needs of its existing clients and expand its customer base in Mexico.