Foxconn and TECO team up to build modular AI data centers

Foxconn and TECO Electric & Machinery have announced a strategic share-swap alliance to jointly develop modular AI data center infrastructure, combining Foxconn’s AI server manufacturing expertise with TECO’s electromechanical systems and green energy capabilities. The partnership positions both Taiwanese companies to compete more effectively in the rapidly growing global AI data center market, targeting key regions including Taiwan, Asia, the Middle East, and the United States.

The big picture: This alliance represents a significant consolidation in the AI infrastructure supply chain, as hyperscalers and cloud service providers increasingly demand comprehensive, turnkey data center solutions rather than piecemeal components.

Key details: The non-cash transaction involves TECO acquiring a 0.519% stake in Hon Hai Precision Industry, while Foxconn takes a 10% stake in TECO.
• TECO will issue 237,644,068 new shares to Foxconn, and Foxconn will issue 72,481,441 new shares to TECO, resulting in an exchange ratio of 1:0.305.
• The deal is expected to close in the fourth quarter of 2025, pending regulatory approval.
• The partnership builds on previous cooperation between the companies in factory energy saving, emission reduction, and Energy Service Company services.

Strategic advantages: The alliance leverages complementary strengths from both companies to create integrated solutions for the AI data center market.
• Foxconn brings its position as a global electronics manufacturing service provider and AI server producer, along with its extensive customer relationships with Tier-1 cloud service providers and hyperscalers.
• TECO contributes expertise in industrial electromechanical systems, green energy solutions, and American manufacturing capabilities through its Texas-based TECO-Westinghouse unit.
• The combination addresses the full spectrum of data center requirements, from AI servers inside computer rooms to power infrastructure outside.

What they’re saying: Company leaders emphasized the importance of speed-to-market in the competitive AI infrastructure landscape.
• “Time-to-market is key in the global super-computing race. Modular design is gaining popularity,” said Foxconn Chairman Young Liu. “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 noted 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.”

Market opportunity: The partnership targets the growing demand for standardized and modular AI data center solutions, with customers worldwide set to benefit from complete suites of modular data center products, engineering services, and competitive turnkey solutions.