Foxconn (TWSE:2317) just made a bold move into a sector where the stakes are rising fast: artificial intelligence–powered data centers. The Taiwan-based manufacturing giant announced it will take a 10 percent stake in TECO Electric & Machinery (TWSE:1504) in a share swap deal. But this isn’t just another alliance among electronics players. The two companies are essentially combining their seasoned experience to become a go-to resource for anyone eager to build, launch, and scale AI data centers around the world.
To understand why this partnership matters, consider what’s fueling the tech world these days. Data centers, especially those built for AI, are undergoing a massive investment surge. According to forecasts, companies could spend as much as $1 trillion globally on data centers in the next few years as AI demands grow. By teaming up, Foxconn and TECO are aiming to tap into this tidal wave of spending, and the timing could hardly be better.
Foxconn’s expertise goes well beyond its well-known role assembling iPhones and a slew of other consumer electronics. In recent years, the company has become a powerhouse in designing and manufacturing AI servers and the racks that house them. They’re working closely with top players like Nvidia to roll out server systems specialized for AI workloads. For Foxconn, the AI server market isn’t just a side venture. Over the past year, it’s become a key focus area, with revenue from these servers projected to double in the second quarter of this year alone.
TECO, for its part, made its name in electromechanical engineering but has branched out into areas like electric vehicles, energy storage, and crucially, building data centers. Its U.S. offshoot, TECO-Westinghouse, has established a solid reputation for electric motors and other industrial components, with manufacturing muscle spread across Asia and North America.
So what does the deal actually look like? Both firms are executing a share swap, Foxconn will own 10 percent of TECO while TECO gets a slice of Foxconn at about 0.52 percent. No cash is changing hands here; the companies simply exchange millions of new shares. This “paper deal” makes both parties invested, in each other’s future. The share exchange is expected to wrap up later this year, pending regulatory green lights.
The practical result is a new one-stop shop for AI data centers. Need modular computer rooms, power infrastructure, smart cooling systems, or heavy-duty servers custom-built for AI? Now there’s a team in place with the tools, know-how, and global manufacturing bandwidth to deliver, whether you’re operating in Texas, Taiwan, or the heart of the Middle East. This approach isn’t just about convenience, it’s about keeping up with hyperscale customers and big cloud providers who want rapid deployment and minimal hiccups in their AI infrastructure builds.
Foxconn’s Chairman, Young Liu, put it succinctly: the global race for supercomputing leadership is all about speed-to-market. Modular designs for data centers, he argues, are picking up steam. “Teaming up with TECO means both companies can ramp up and quickly provide comprehensive, vertically-integrated solutions to top-tier cloud service providers and hyperscalers,” Liu said. Meanwhile, TECO’s Chairman, Morris Li, highlighted the potential benefits to American manufacturing and the opportunity for both firms to reshape the global supply chain.
These moves come at a time when demand for AI resources is soaring and the market is hungry for end-to-end partners capable of handling everything from engineering to hardware to facility management. If Foxconn and TECO can deliver on their promise of comprehensive, integrated solutions at scale, they’re poised to capture a significant chunk of the AI data center gold rush.
