Foxconn is to take a 10 percent stake in Teco Electric & Machinery, Taiwan’s biggest manufacturer of industrial motors, as the two companies team up to try to gain a bigger share of the rapidly expanding data centre construction market, the two companies said.
The two Taiwanese firms announced the deal after suspending trading of their shares on Wednesday.
Foxconn, formally known as Hon Hai Precision Industry, is best known as the principal assembler of Apple’s iPhones and is the world’s largest contract electronics manufacturer.
Diversification
It has been making efforts to diversify in recent years into areas including electric vehicles and energy storage.
Some of its most rapidly growing businesses relate to data centres, including manufacturing server racks that power AI workloads.
Foxconn’s AI server revenue is expected to have doubled in the second quarter of this year, forecast Foxconn, which is a major supplier to AI chipmaker Nvidia.
The deal, which will also see Teco take a roughly 0.519 percent stake in Foxconn, aims to combine Foxconn’s expertise in servers, cooling systems and uninterruptible power supplies with Teco’s experience in building power infrastructure for data centres, the companies said.
“The strategic partnership extends the two companies’ cooperation in the fields of low-carbon smart factories and energy services, toward being a one-stop solution for data centers going forward,” said Teco chairman Morris Li.
Tech giants including Amazon, Google, Microsoft and Meta have committed to spending billions on AI infrastructure this year alone, including chips as well as the type of physical data centre infrastructure Foxconn and Teco are targeting.
Industry-watchers expect similar levels of expenditure to continue for some time as companies race to build out the compute- and power-hungry facilities.
Geographic expansion
Foxconn and Teco compete against companies including ABB, Siemens and Mitsubishi Electric.
The companies said they are targeting Taiwan and other parts of Asia, as well as the Middle East and the US.
They said they aim to “expand American manufacturing and reshape the global supply chain”.