TAIPAI, Thailand – Tech giant Foxconn has entered into a strategic alliance with TECO Electric & Machinery Co. Ltd., a partnership designed to accelerate development of global artificial intelligence data centers – including in the United States, the companies announced Wednesday.
The partnership combines Foxconn’s expertise in manufacturing components such as cooling systems and servers with TECO’s strengths in electromechanical systems, the companies said, with the goal of “tapping into vast AI data center business opportunities worldwide.”
According to the deal, Foxconn will own a 10% stake in TECO, while TECO will take a 0.519% stake in Foxconn. The no-cash transaction is targeted for completion in the fourth quarter of this year.
The companies said Wednesday that discussions are underway to establish data centers in Taiwan and in the United States.
It’s not clear whether Wednesday’s announcement will impact Foxconn’s plant in Lordstown, Ohio. Foxconn purchased the former GM assembly plant in 2022 from Lordstown Motors Corp. and has plans to use it as a hub for electric vehicle production.
TECO operates a Westinghouse facility in Texas, where it manufactures electric motors, according to a press release.
Other target markets include the Middle East, the companies said.
“Time-to-market is key in the global super-computing race. Modular design is gaining popularity,” Foxconn Chairman Young Liu said in a statement. “As AI data centers grow in size and demand ramps higher, teaming up with TECO means both companies are able to level up and rapidly deliver comprehensive, vertically-integrated solutions to our customers – the Tier-1 CSPs [cloud service providers] and hyperscalers.”
Foxconn has vast experience in manufacturing AI server racks and boasts a large, global customer base, Liu said. Foxconn would actively develop a modular architecture for AI data centers, and the TECO partnership extends the value chain from server components and racks to data center construction.
“Changing global dynamics are creating new opportunities for business and cooperation,” TECO Chairman Morris Li 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. Texas-based TECO-Westinghouse, a longstanding world leader in manufacturing electric motors, has the advantages of American manufacturing and local services. Together with Foxconn’s manufacturing base in the United States, it is in line with the strategic direction of the two companies to expand American manufacturing and reshape the global supply chain.”
The partnership was announced at a press conference Wednesday at the Taiwan Stock Exchange. Both Foxconn – also known as Hon Hai Precision Industry – and TECO had suspended trading ahead of the disclosure.