Staff report

Foxconn continued its diversification playbook with Wednesday’s announcement it had entered into a partnership targeting AI data center development.

Hon Hai Technology Group, known as Foxconn, and TECO Electric & Machinery Co. Ltd. outlined their alliance at the Taiwan Stock Exchange. Both companies halted trading of their shares prior to the announcement.

Foxconn operates Foxconn Ohio in the former Lordstown GM plant.

“This partnership combines TECO’s strengths in electromechanical systems with Foxconn’s expertise in (information and communications technology) to seize the global trend of AI data center development toward standardization and modularization, jointly tapping into vast AI data center business opportunities worldwide,” the companies said in a joint news release.

Under the no-cash transaction approved by both boards, TECO will own a 0.519% stake (72,481,441 new shares) in Foxconn. In return, Foxconn will possess 10% (237,644,068 new shares) of TECO.

Pending regulatory approval, the deal is expected to be completed in the fourth quarter of this year.

Noting their prior collaborations, the companies said they have begun talks on the creation of data center businesses in Taiwan and the United States. They touted their combined strengths in AI servers, electromechanics, and information and communications to allow global customers “to tap comprehensive data center modular products, MEP engineering services and cost-competitive, one-stop solutions.”

Foxconn Chairman Young Liu said, “Foxconn will actively develop a modular architecture for AI data centers, and with TECO aim to extend the value chain from server components and racks to data center construction.

“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.”

Opportunities for business and cooperation are being created thanks to changing global dynamics, said Morris Li, TECO chairman.

“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,” he said.