The global server supply chain is facing turbulent times as new tariffs introduced by President Trump are set to reshape the landscape. These reciprocal tariffs, which impose up to a 32% tax on servers exported from Taiwan, are poised to significantly hike assembly costs for servers meant for the US market.
For years, the United States has heavily depended on international production for its servers, with imports reaching a towering value of $61.76 billion in 2024. Leading the charge among suppliers are Taiwan and Mexico, which together supply a substantial portion of servers to the US. Taiwanese electronic manufacturing service (EMS) providers, in particular, derive over 60% of their server-related revenues from the US market.
However, the dynamics are changing. While Taiwan faces increased tariffs, Mexico benefits from its advantageous position under the US-Mexico-Canada Agreement (USMCA), which currently allows it to export servers to the US without facing any tariffs. This new landscape is expected to boost Mexico’s role as a key player in server exports to the US, potentially at the expense of domestic US assembly operations that could suffer from elevated costs.
Among the major Taiwanese EMS companies, Quanta Computer stands out as the only one yet to establish manufacturing capabilities in Mexico, which may put it at a disadvantage compared to its peers who can pivot more readily to take advantage of Mexico’s tariff-free status.
In this rapidly evolving scenario, Mexican facilities may emerge as a newfound sanctuary for Taiwanese manufacturers navigating these economic tides. As tariffs reshuffle the cards, companies across the globe must adapt swiftly, searching for innovative strategies to optimize production and retain their foothold in the competitive US server market.
