Amazon Web Services Mexico, a subsidiary of Amazon.com Inc., said it will invest more than $5 billion to build a cluster of data centers in Mexico, citing increased demand for cloud services.
Amazon Web Services Mexico (AWS), a subsidiary of Amazon.com Inc. (AMZN.O.), announced on Monday that it will invest more than $5 billion to establish a cluster of data centers in Mexico, citing rising demand for cloud services as businesses adopt new technology.
The cluster will be erected in Mexico’s state of Queretaro. Ruben Mugartegui, the CEO of Amazon Web Services Mexico, said that the investment will be distributed over the next 15 years.
According to Mugartegui, the company has been working on this idea for almost five years.
AWS now serves clients including Mexican theater company Cinepolis, stock market BIVA, airline Aeromexico, and local governments.
Cloud computing enables businesses to access technology services such as storage and databases over the internet, eliminating the need to own and operate physical data centers and servers. According to Mugartegui, using AWS can help companies save roughly 20% on technology costs.
Amazon has invested more than 52 billion pesos ($3.04 billion) in Mexico since its entry there in 2015.
The new investment comes amid a trend known as nearshoring, in which companies relocate their operations from Asia to the United States in response to supply chain disruptions created by the COVID-19 outbreak.
The Mexican government has attempted to entice companies to invest in the nation through efforts such as a decree published last year giving tax benefits to firms willing to move operations to Mexico.
Mugartegui declined to specify whether Amazon received any financial incentives, but he did remark that the corporation has worked closely and efficiently with the government and that companies relocating to Mexico are among the contenders for new clients.
Last year, Tesla stated that it would build a manufacturing plant in Mexico. Local authorities granted $153 million in incentives for Tesla, and the company has stated that its investment will exceed $5 billion.
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