FILE PHOTO: A woman walks past the logo of Foxconn outside a company's building, in New Taipe City, Taiwan December 22, 2022. REUTERS/Annabelle Chih/ File Photo
TAIPEI (Reuters) -Taiwan's Foxconn, the world's largest contract electronics maker, will form a strategic partnership with industrial motor maker TECO Electric & Machinery to boost development in the AI data centre market, they said on Wednesday.
The move underscores Foxconn’s efforts to expand beyond its traditional role as an iPhone assembler as it taps opportunities in the artificial intelligence infrastructure market, from supplying AI server racks to data centre businesses.
Under the deal, Foxconn will hold a 10% stake in TECO, which will hold about 0.519% of Foxconn, they said, adding at a press conference that the partnership's target market extends beyond Taiwan and Asia to the U.S. and Middle East.
The companies aim to accelerate global data centre development by combining Foxconn’s expertise in servers, cooling systems and uninterruptible power supplies with TECO’s experience in data centre power infrastructure, they said.
TECO Electric & Machinery Co is Taiwan's top industrial motor maker and ranks among the world's top five suppliers of small low-voltage and medium- to high-voltage motors. It also produces motors for electric vehicles.
The company has provided mechanical, electrical and plumbing engineering services for data centre infrastructure for more than a decade, it said, specialising in power infrastructure outside the server room.
"This is where Foxconn and TECO can jointly extend the value chain. Accelerating data centre construction will also help expand the server rack market," said Foxconn spokesperson James Wu.
"Taiwan’s strength in AI lies in its vertical integration, design capabilities, and production scale... (the) Foxconn-TECO partnership would result in faster, more cost-efficient solutions."
The news comes after Apple and Nvidia supplier Foxconn halted trading in its shares on Wednesday. TECO also halted trading in its shares.
TECO entered Malaysia's data centre infrastructure market this year with the acquisition of an 80% stake in NCL Energy. In July, the company said it had secured major data centre projects in the Malaysian states of Selangor and Johor Bahru.
Foxconn, officially called Hon Hai Precision Industry, has a big AI server business and is actively expanding its electric vehicle business. It has also been seeking partnerships with automakers and within the automotive supply chain.
The Taiwan technology giant this month reported record second-quarter revenue on strong demand for AI products but cautioned about geopolitical and exchange rate headwinds.
(Reporting by Lee Wen-Yee; Writing by Brenda Goh; Editing by Anne Marie Roantree, Clarence Fernandez and Jan Harvey)
