Strategic Alliance: TECO and Foxconn's Vision for AI Centers

TECO Electric & Machinery and Foxconn Forge Strategic Alliance

TECO Electric & Machinery Co., Ltd. (TWSE:1504) and Hon Hai Technology Group, widely known as Foxconn, have officially announced their strategic alliance aimed at revolutionizing the AI data center landscape. This alliance was unveiled at a pivotal press conference, where both companies expressed their commitment to leveraging their respective strengths in electromechanical systems and ICT to meet the surging global demand for AI data centers.

Strengthening Electromechanics and ICT

The partnership, formed through an approved share exchange agreement, will see TECO acquiring a 0.519% stake in Foxconn, while Foxconn becomes a 10% stakeholder in TECO. This significant exchange involves TECO issuing approximately 238 million new shares to Foxconn, who in return will issue around 72 million new shares to TECO. This no-cash transaction is set to complete pending necessary regulatory approvals, with timelines suggestive of a completion by the year's end.

Expanding Cooperation in Data Center Solutions

This strategic alliance is not a new venture; TECO and Foxconn have partnered in the past focusing on energy efficiency and emission reduction initiatives. The companies are now in discussions to establish comprehensive data center operations. A typical data center encompasses powerful servers, cooling systems, uninterruptible power supplies, and robust power infrastructure. The combined expertise will drive innovation in modular data center products, leveraging both companies' strengths in AI servers and electrical systems.

Market Focus and Future Ambitions

Target markets for this ambitious endeavor include regions beyond their home base, reaching into the broader Asian market, the Middle East, and the United States. TECO's Chairman, Morris Li, emphasized the important shifts in global business dynamics and how this partnership aims to navigate these changes. With a focus on creating sustainable, low-carbon smart factory solutions, both entities are keen to enhance their operational capabilities in line with modern industrial demands.

Leveraging Modular Design and Speed to Market

Foxconn's Chairman, Young Liu, highlighted the critical role of time-to-market in contemporary super-computing dynamics. The growing trend of modular design is crucial for capitalization on increasing demand for AI data centers. Through this collaboration, TECO and Foxconn are positioned to offer fast, integrated solutions tailored to meet the needs of top-tier hyperscalers and Cloud Service Providers (CSPs).

Pioneers in Promoting Sustainability

As leaders in sustainability, both TECO and Foxconn view this alliance as a catalyst for enhancing the low-carbon industry chain that aligns with global sustainability trends. The recognition from the S&P Global Sustainability Yearbook 2025 serves as a testament to their commitment to corporate sustainability practices.

About TECO Electric & Machinery

Founded in 1956, TECO Electric & Machinery has become one of the world's foremost industrial motor manufacturers. Offering solutions across various sectors including Green Mechatronic Solutions and Intelligent Energy, TECO builds a sustainable ecosystem for energy generation and efficiency. The company's recent expansions into energy services and data center engineering projects further solidify its market leadership.

About Hon Hai Technology Group

Established in 1974, Hon Hai Technology Group (Foxconn) is renowned as the largest electronics manufacturer worldwide, with a robust presence across multiple sectors, including electric vehicle manufacturing and advanced communications technology. Foxconn's commitment to sustainable manufacturing practices showcases its role as a leader in environmental responsibility and an innovator in technology development.

Frequently Asked Questions

What is the purpose of the TECO and Foxconn alliance?

The alliance aims to enhance AI data center capabilities by merging TECO's electromechanical strengths with Foxconn's ICT expertise.

How will the share exchange between TECO and Foxconn work?

TECO will receive a 10% stake in Foxconn, while Foxconn will acquire a 0.519% stake in TECO through a share exchange process.

What markets are targeted by this strategic partnership?

The focused markets include Taiwan, Asia, the Middle East, and the United States, with plans for expanded data center solutions.

What is Foxconn's role in the modular design for data centers?

Foxconn's expertise in manufacturing enables the development of modular architectures for AI data centers to meet increasing market demands efficiently.

What initiatives are TECO and Foxconn pursuing in sustainability?

Both companies aim to pioneer low-carbon smart industry solutions that align with global sustainability goals.

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