#Taiwan #Taipei #Foxconn #AI Data Centers #TECO

Strategic Alliance Between Foxconn and TECO

On July 30, 2025, Hon Hai Technology Group, commonly known as Foxconn, and TECO Electric & Machinery Co Ltd made a significant announcement regarding a new strategic partnership. This alliance is primarily focused on enhancing capabilities pertaining to artificial intelligence (AI) in data centers. It marks a substantial development in the tech landscapes of both organizations, promising to propel them into critical markets in the ongoing global race for supercomputing.

Details of the Alliance

The partnership combines the unique strengths of Foxconn, a leading global provider of electronic manufacturing services and AI server production, with TECO, a frontrunner in industrial electromechanical engineering and renewable energy innovation. Both companies aim to capitalize on the global trend towards the standardization and modularization of AI data center infrastructure (AIDC). Collaboratively, they plan to explore substantial business opportunities within this sector, allowing global clients to access comprehensive modular products, electromechanical engineering services, and cost-competitive solutions tailored for data centers.

According to the agreements approved by the boards of both companies, TECO will acquire a 0.519% stake in Foxconn (officially known as Hon Hai Precision Industry Co Ltd, traded on the Taiwan Stock Exchange). In exchange, Foxconn will hold a 10% stake in TECO. TECO will issue approximately 237.6 million new shares to Foxconn, while Foxconn will provide around 72.5 million new shares to TECO, reflecting an exchange ratio close to 1 to 0.305. This cashless transaction is expected to close in the fourth quarter of this year, subject to the necessary regulatory approvals.

Comments from Leadership

Young Liu, President of Foxconn, emphasized the importance of rapid market entry in the competitive arena of supercomputing, asserting that modular design is gaining increasing traction. He stated, "As AI data centers expand and demand rises, our collaboration with TECO enables both companies to enhance and quickly provide integrated, comprehensive solutions to our customers, particularly major communication service providers and hyperscalers."

On the other hand, TECO’s President, Morris Li, acknowledged the evolving global dynamics that are generating new business and cooperation opportunities. He stated, "This strategic alliance broadens the cooperation between our two companies in areas such as low-carbon smart factories and energy services, aiming to provide comprehensive solutions for future data centers."

Target Markets and Future Prospects

The strategic focus of this alliance includes targeting markets in Taiwan, Asia, the Middle East, and the United States. TECO-Westinghouse, a Texas-based company renowned for manufacturing electric motors, pairs its U.S. manufacturing base and local services with Foxconn’s American manufacturing capabilities. This alignment is pivotal for both companies as they aim to expand manufacturing in the U.S. and restructure their global supply chains to adapt to current market needs.

As the tech industry continues to evolve rapidly, the collaboration between Foxconn and TECO could set a benchmark in the AI infrastructure sphere. The implications of this partnership could redefine operational efficiencies and innovation within the AI data center sector, driving forward the capabilities of both companies in a significantly competitive international landscape.