Amazon’s AWS to invest over $5bn to boost cloud computing in Mexico

MEXICO CITY (Reuters): Amazon Web Services Mexico (AWS), a unit of Amazon.com Inc (AMZN.O) announced on Monday it will invest over $5 billion to open a cluster of data centers in Mexico, amid growing demand for cloud services as more firms adopt new technologies.

The cluster will be built in the Mexican state of Queretaro, Ruben Mugartegui, head of Amazon Web Services Mexico unit, told Reuters in an interview, adding the investment will be spread through the next 15 years.

The company has been working on this project for more than five years, Mugartegui said.

AWS currently serves clients such as Mexican theater operator Cinepolis, stock exchange BIVA, airline Aeromexico, and local governments.

Cloud computing helps companies access technology services such as storage and databases through the internet, ending the need to own and maintain physical data centers and servers. Companies can cut technology costs by around 20% when they use AWS, Mugartegui said, citing a study.

Amazon has invested over 52 billion pesos ($3.04 billion) in Mexico since its arrival to the country in 2015.

The new investment comes in the midst of so-called nearshoring, the trend of companies relocating businesses from Asia closer to the United States following disruptions in supply chains caused by the COVID-19 pandemic.

The Mexican government has aimed to lure companies to invest in the country with initiatives such as a decree issued last year granting tax incentives for firms wanting to move operations to Mexico.

Mugartegui declined to say if Amazon received any fiscal benefits, but noted the company has worked closely and efficiently with the government and that firms relocating to Mexico are among the candidates to become new clients.

Carmaker Tesla announced last year it will build a factory in Mexico. Local authorities approved $153 million in incentives for Tesla and have said its investment will stand at over $5 billion.