Market Trends of Mexico Wires And Cables Industry
Rapid Infrastructure Development and Continuing Smart City Projects
- Mexico has experienced remarkable growth in infrastructure development, encompassing significant initiatives in electricity transmission and distribution, telecommunications, transportation, and building. These initiatives have increased demand for a wide range of wire and cable products, including power cables, communication cables, and building wires.
- Public infrastructure investments remained robust in 2023 and 2024, as the federal government directed considerable funding toward priority projects to complete them before the end of the López Obrador government’s term in December 2024. Mexico's 2023 budget brings a substantial surge in infrastructure funding, with federal investment set to increase by more than 20% year-on-year. Many of these resources are earmarked for a select few large-scale ongoing infrastructure projects.
- The most significant of these initiatives regarding capital investment is the TrenMaya (Mayan Train) project. Launched in 2019, this endeavor entails the development of an expansive rail network spanning over 1,500 kilometers across the southern states of Chiapas, Tabasco, Campeche, Yucatan, and Quintana Roo.
- In Mexico, the smart cities market is rapidly growing, focusing on integrating technology to improve transportation and energy efficiency. Considering the recent focus of federal investment in railway and airport infrastructure, private investment and state governments have been pivotal in developing highway infrastructure, a trend that is expected to continue in the coming years. In the fall of 2020, the Mexican Business Federation Consejo Coordinador Empresarial (CCE) launched two packages that include 43 road projects for a combined capex of USD 11.8 billion. These projects include extensions of existing concessions and new public-private partnerships.
- Mexican EPC (Engineering, Procurement, and Construction) firms account for around 45% of all construction roles in major projects in the country, with transportation traditionally being a domestically-driven segment. This is well below European levels but slightly above the Latin American mean of 43%. On the other hand, the presence of international firms is strongest in power and utility projects, in which they claim 70% of major construction roles. This is a consequence of the 2013-2014 energy reforms that saw the sector's liberalization and opened up contracting opportunities for construction firms.
- As per Mexico’s Energy Transition Law (Ley de Transición Energética) and General Climate Change Law (Ley General de Cambio Climático), Mexico aims to produce 35% of its electricity from clean energy sources by 2024. This goal includes power regeneration from renewable and non-renewable sources such as nuclear and efficient cogeneration. Mexico’s large and diverse renewable energy resource base could support significant growth in clean generation capacity. Such a trend would lead to major demand for solar cables during the forecast period.
Understand The Key Trends Shaping This Market
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Fiber Optic Cable to Witness Major Growth
- A fiber optic cable is composed of strands of glass fibers covered by an insulated casing. Primarily used as a network cable, these cables are designed for high-performance, long-distance data networking and telecommunications. Fiber optic cables transmit data faster over longer distances and provide higher bandwidth than wired cables. Fiber optic cables support cable television, the internet, and telephones. Thus, the fiber optic cable market in Mexico presents significant opportunities, majorly driven by the increasing demand for high-speed internet, government initiatives, and the growing needs of various sectors.
- The implementation and growth of 5G technology are anticipated to influence the fiber market in Mexico. To accommodate the substantial surge in data traffic, 5G networks necessitate a strong and high-capacity infrastructure. Fiber optic cables are crucial in providing the fast and reliable connectivity that 5G networks require. The adoption of 5G technologies is generating a need for fiber optic cables in Mexico, as they are vital for connecting various network elements such as base stations and data centers.
- In February 2024, AT&T and Ericsson revealed Mexico's inaugural private 5G network. This network is operational at the business and technological development center (CEDETEC) of Tecnológico de Monterrey University, a prominent educational institution in Mexico. Ericsson, a Swedish vendor, supplied the equipment for this project, which also received backing from partnerships with Instituto Tecnológico y de Estudios Superiores de Monterrey and local startup hub Endeavor. The primary aim of this private network is to facilitate a range of new applications, from AI and blockchain technologies to enhanced IoT devices and tailored industrial solutions. These projects are driving the demand for fiber optic cable in the country.
- The rise in data center construction in Mexico, driven by increased data consumption and cloud service adoption, creates a demand for high-capacity fiber optic networks. For instance, increasing the number of data centers may also offer massive opportunities for the company to expand its scope for new applications. According to Cloudscene, as of March 2024, there were 219 data centers in Mexico, the most of any country in Latin America.
- Moreover, in Industry 4.0, the fiber optic cable network enables the upgrade of telecom networks, industrial data communication, and real-time monitoring in traditional industries with high-speed M2M/M2S networks. Thus, manufacturers of optical fiber cable focus on improving production to keep up with the growing demand for fiber-to-the-home (FTTH) broadband and power 5G services in the Mexico market.
