Nearshoring vs Offshoring in Electronics Manufacturing: What’s Best for Your Program

Where your electronics manufacturing happens is as critical as how it happens. The choice between nearshoring vs offshoring impacts cost, risk, and speed-to-market. In today’s volatile global economy, supply chain strategy is no longer just about cost — it is about resilience, agility, and long-term sustainability. Global disruptions such as the COVID-19 pandemic, rising tariffs, shipping bottlenecks, and escalating logistics costs have reshaped how OEMs evaluate their electronics manufacturing programs. According to the World Economic Forum’s Global Risks Report, supply chain fragility and geopolitical instability remain among the top global business risks.

For decades, offshoring was the dominant model. But today, many companies are reevaluating and turning to nearshoring and onshoring as ways to strengthen their supply chains. Choosing the right model is one of the most critical decisions supply chain managers and executives face when mapping out production strategy.

At Federal Electronics, we don’t believe OEMs should have to compromise. Our dual-site operations in the U.S. and Mexico are fully mirrored — both facilities deliver the same levels of compliance, quality, scalability, and efficiency. Customers choose production location based on their business drivers, whether that’s regulatory requirements, cost optimization, or proximity to market.

Offshoring refers to shifting production to lower-cost regions—most commonly Asia (China, Vietnam, Malaysia) or Eastern Europe. This strategy surged in popularity during the late 20th century as OEMs pursued aggressive cost savings through reduced labor expenses and large-scale capacity.

• Lower labor costs – Asia remains one of the most cost-competitive regions for electronics assembly and manufacturing.
• Massive infrastructure – Decades of investment have built robust supply bases, with wide availability of raw materials, components, and labor.
• Established global trade networks – Mature logistics hubs and long-standing international partnerships streamline global exports.

• Longer lead times – Shipping across oceans can take weeks, slowing speed-to-market and responsiveness.
• Supply chain vulnerability – Natural disasters, pandemics, and geopolitical instability can severely disrupt offshore supply lines.
• Intellectual property (IP) and quality risks – Varying regulatory enforcement may lead to IP theft, counterfeiting, or inconsistent compliance.

Nearshoring means relocating production closer to end markets—for U.S. companies, this often means nearshoring to Mexico or other Latin American countries. The strategy reduces distance, improves responsiveness, and strengthens regional presence.

• Shorter lead times – Reduced transportation distances mean faster time-to-market.
• Lower logistics costs – Less reliance on ocean freight minimizes shipping expenses and transportation volatility.
• Greater supply chain visibility – Geographic proximity allows OEMs to monitor and manage operations more effectively.
• Cultural and time zone alignment – Shared business hours and language compatibility make collaboration smoother.
• Stronger IP protections – U.S.-Mexico trade agreements often provide greater safeguards than some offshore markets.

• Higher labor costs than Asia – While lower than U.S. costs, nearshore wages are generally higher than traditional offshore markets, although of late the gap has lessened.  The introduction of tariffs on both countries and specific industries has also played a role in reducing the cost differential.
• Capacity gaps in some advanced technologies – Certain highly specialized components may still require sourcing from Asia.