Beyond the iPhone: Foxconn Enters Super-Computing Race
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On Tuesday, Apple’s largest iPhone manufacturing partner, Foxconn, halted trading on the Taiwan Stock Exchange pending the release of “material” news. Some analysts speculated that Apple customers should brace themselves for negative news related to iPhone production and tariffs, suggesting the possibility of iPhone price increases. However, the word is now out, and it’s not the ominous sign for Apple some expected. Instead, Foxconn is further diversifying its already massive business.
Yesterday, Foxconn announced a strategic alliance with another Taiwanese company, TECO Electric & Machinery Co Ltd (“TECO”). Foxconn’s press release says it’s the world’s largest AI server producer, while TECO is a leader in industrial electro-mechanical engineering and green energy innovation. Together, it appears the alliance will serve customers as a major player in AI data center construction with a focus on standardization and modularization.
Teco will take a 0.519% stake in Foxconn, while Foxconn will own 10% of TECO. It’s a no-cash transaction that should be finalized before the end of the year.
“Time-to-market is key in the global super-computing race. Modular design is gaining popularity,” Foxconn chairman Young Liu said of the partnership. “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 and hyperscalers.”
TECO Chairman Morris Li added that “Changing global dynamics are creating new opportunities for business and cooperation. 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.”
Li also commented that TECO already has the advantages of American manufacturing and mentioned Foxconn’s manufacturing base in the US as well. According to Li, this partnership aligns with the intentions of both companies to expand manufacturing in the US and “reshape the global supply chain.”
Apple stands to benefit from the deal, given its plans to expand its AI server footprint globally and its already deep ties with Foxconn. However, one has to wonder if the pressure on Apple to move iPhone manufacturing out of China was a catalyst for Foxconn to explore these other opportunities. Foxconn and TECO will be the giants in the room and well-positioned to serve the massive AI computing needs of US companies like Google, Meta, and Apple.
