Pegatron AI server production in Mexico set to start in Q3

Taipei, June 6 (CNA) Pegatron Corp., one of Taiwan's leading contract electronics makers, said on Friday that its commercial production of artificial intelligence servers in Mexico is scheduled to start in the third quarter of this year.

Speaking with reporters on the sidelines of the company's annual general meeting, Cheng Kuang-chih (鄭光志), Pegatron's Co-CEO, said amid the efforts to diversify production, the firm started planning to expand operations in Mexico last year with AI server commercial production in the North American country set to start next quarter.

To cope with the problems of manpower in Mexico, Cheng said Pegatron will employ automation equipment in its AI server production lines in the country.

Cheng said with its expansion efforts in the North American market not limited to Mexico, Pegatron's assessment of extending its production reach to the United States will coming to an end soon, adding a decision will be finalized this month or next month.

The top consideration to pick a location in the U.S. market for expansion will focus on manpower and land costs as well as how to secure electricity at a reasonable price, while an ideal location will bring it closer to competitor's plants, Cheng said.

In March, Pegatron announced a plan to build a production base in the U.S. to provide better services to its American clients.

Commenting on the Trump administration's tariff policies, Teng Kuo-yen (鄧國彥), another Co-CEO at Pegatron, told reporters that the company has been preparing itself for the possible impact of tariff issues since Trump 1.0 by diversifying production locations.

In addition to Mexico, Pegatron's plant in Malaysia is scheduled to start commercial production this quarter, while its plant in India will add new production lines in the second half of this year, Teng said.

Pegatron tends to discuss issues with its clients to seek ideal solutions to uncertainties created by the U.S. tariff policies, Teng added.

In Taiwan, Pegatron announced in May plans to spend NT$5.6 billion (US$187 million) to buy a plant from smartphone brand HTC Corp. for expansion.

The new plant in Taiwan will be partly allocated to AI server-related products, adding Taiwan remains Pegatron's global manufacturing hub, Teng said.

At the annual general meeting, shareholders approved a proposal for Pegatron to issue NT$4.5 in cash dividend per share for its earnings per share of NT$6.34 in 2024.

In 2024, Pegatron posted NT$16.9 billion in net profit, up 7.64 percent from a year earlier, while its consolidation sales totaled about NT$1.13 trillion, down 10.46 percent from 2023.