US Pushes to Limit Chinese Components in AI Servers, Chips Made in Mexico

The US is moving to restrict the use of Chinese-made components in artificial intelligence servers and semiconductors produced in Mexico. The approach would mirror auto trade rules that grant duty-free treatment only when a certain share of parts is sourced in North America. The aim is to block Chinese components from being assembled in Mexico and shipped to the US through a backdoor export route.

The US is seeking limits on the share of components from China and other regions outside North America in AI equipment made in Mexico, The Wall Street Journal reported on September 17. The proposal is part of negotiations to revise the US-Mexico-Canada Agreement, or USMCA.

The plan would extend rules-of-origin requirements now applied to automobiles to AI equipment. Under the current USMCA, vehicles qualify for duty-free treatment only if at least 75% of parts by value are sourced in North America. The required North American content for AI servers and similar products, as well as the timing of implementation, has yet to be decided.

The move is intended to prevent Chinese products from reaching the US through Mexico. Mexico has recently emerged as a key production base for the US AI industry. Exports of computer servers for AI data centers from Mexico totaled $83 billion in the first half of this year, up more than 170% from a year earlier, according to S&P Global. Of that amount, 94% went to the US.

The shift follows steep US tariffs on Chinese goods, which prompted electronics manufacturers including Taiwan's Foxconn to use production bases in Mexico to supply parts to the US. If the new rules of origin are adopted, those companies would have to increase the share of North American parts to retain duty-free treatment.

Lee Hye-in, Hankyung.com reporter hey@hankyung.com