These AI ‘factories’ are large data centers where Foxconn will train autonomous vehicles, robotics platforms and large language models.

Nvidia (NASDAQ: NVDA) and Foxconn (TPE: 2354) are joining forces to establish “artificial intelligence factories,” signifying a diversification move for the Taiwanese electronics manufacturer. This development comes in the wake of the US tightening regulations on AI chip sales to China, impacting Nvidia and other high-performance semiconductor suppliers in the nation.

During Foxconn’s annual tech day, Nvidia’s co-founder and chief, Jensen Huang, announced that they would create “AI factories” or substantial data centers in collaboration with Foxconn. These facilities will be dedicated to training autonomous vehicles, robotics platforms, and large language models.

Huang and Foxconn’s chair, Young Liu, presented this partnership as the dawn of a new computing revolution. (FT)

Foxconn will utilize Nvidia’s latest chips and enterprise software to construct a novel category of data centers for a broad spectrum of applications. However, specific differentiating features from existing Nvidia-powered data centers were not clarified in the announcement. Foxconn is transitioning from a manufacturing service company into a platform solution firm, as Liu disclosed. The company also introduced an electric cargo van and reported readiness to launch a low-earth orbit satellite.

Recognized for producing iPhones, Foxconn aims to pivot from manufacturing electronics to constructing computing infrastructure vital for autonomous technology, including vehicles. This shift is prompted by intensified competition in the company’s core business of contract manufacturing, particularly from Chinese rival Luxshare Precision Industry.

At the same time, the tie-up between Nvidia and Foxconn is crucial for Nvidia, the world’s primary supplier of AI chipsets. The US government has expanded export controls on Nvidia’s GPUs to China, impeding the nation’s AI development due to potential military applications. This situation led to a drop in Nvidia’s stock value and generated concerns about product development.

Nvidia and Foxconn’s collaboration therefore represents a strategic move towards fostering AI development, particularly in the context of autonomous technology. This partnership comes amidst shifting geopolitical dynamics that have implications for Nvidia’s market presence and global technology export controls.

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