Foxconn & Nvidia Unveil Groundbreaking Partnership for AI Factories in Taiwan

Taiwan's Foxconn intends to construct artificial intelligence (AI) data factories using technology provided by American chip giant Nvidia. This move is part of Foxconn's strategy to establish itself as a prominent player in electric car manufacturing on a global scale. During a joint announcement in Taipei, Foxconn Chairman Young Liu and Nvidia CEO Jensen Huang unveiled their plans. The collaboration will enable Foxconn to optimize the application of AI in its electric vehicles (EVs) by utilizing Nvidia's chips and software.

Huang expressed that we are currently witnessing the onset of a novel computing revolution, wherein computers autonomously generate software that surpasses human capabilities. By utilizing cutting-edge chips, extensive computing systems will acquire the ability to construct software platforms for future electric vehicles (EVs) through the assimilation of daily interactions.

According to Liu, Foxconn is transitioning from a manufacturing service company to a platform solution company. Within just three years, Foxconn has successfully produced a diverse range of luxury sedans, passenger crossovers, SUVs, compact pick-ups, commercial buses, and commercial vans. Although Foxconn is most recognized for assembling Apple's iPhones, it plans to adopt a comparable business model for electric vehicles (EVs). Rather than selling EVs under its own brand, Foxconn aims to manufacture them for clients both in Taiwan and worldwide.

Foxconn introduced three electric vehicle models in 2021, consisting of two passenger cars and a bus. More models were announced last year, including Model N, a cargo van, and Model B, a compact SUV, during Foxconn's tech day. The electric buses have been operational in Kaohsiung, Taiwan since last year, and Luxgen, a Taiwanese automaker, is set to start delivering their first electric car, branded as N7, in January 2024.

Foxconn has ventured into a highly competitive sector. The International Energy Agency reported a noteworthy surge in global EV sales, which reached over 10 million units last year, marking a remarkable 55% increase from 2021. Furthermore, their projections forecast a staggering 14 million electric cars to be sold in 2023.

Beyond iPhones

Foxconn, which is officially known as the Hon Hai Technology Group, has been expanding its business by entering new industries such as EVs, digital health and robotics.

Analysts consider its foray into the electric vehicle (EV) sector as a strategic move for diversification.

Kylie Huang, an analyst based in Taipei at Daiwa, stated that the smartphone market is already highly saturated, with limited potential for expansion. However, Huang believes that if the company successfully enters the EV industry, it could potentially wield significant influence in the coming years.

Foxconn's new EV Model C on display during the annual Tech day in Taipei, Taiwan October 18, 2023. REUTERS/Ann Wang

During the previous tech day, Liu expressed the company's goal of manufacturing 5% of the global electric car market by 2025, with a long-term aim of producing 40% to 45% of electric vehicles worldwide.

However, Foxconn's entry into the industry has encountered some difficulties.

In the previous year, Foxconn acquired a factory in Ohio from Lordstown Motors, which was previously manufacturing small cars for General Motors. This collaboration was terminated in June when the American car company declared bankruptcy and filed a lawsuit against Foxconn.

Major steps

Lordstown Motors leveled allegations of "fraud" against Foxconn, citing the latter's failure to fulfill investment commitments. In response, Foxconn swiftly dismissed the lawsuit as "meritless" and condemned Lordstown Motors for spreading "false comments and launching malicious attacks."

Furthermore, Foxconn demonstrates its determination to pursue its broadened aspirations by appointing two new chief strategy officers for its EV and chips divisions. Chiang Shang-yi, an experienced figure in the Taiwanese semiconductor industry who played a crucial role in establishing TSMC as a prominent global foundry leader, has joined the company. Similarly, Jun Seki, previously holding the position of vice chief operating officer at Nissan Motor, is now at the helm of Foxconn's EV division.

Foxconn announced a new collaboration in May, joining forces with Infineon Technologies, a renowned German firm specializing in automotive semiconductor chips. This partnership aims to establish a cutting-edge research center in Taiwan. According to Bill Russo, the founder of Shanghai-based consulting firm Automobility, Foxconn's consumer electronics expertise provides it with a distinct advantage over traditional automakers, enabling the potential creation of more innovative electric vehicle (EV) products.

Legacy automakers face a major hurdle due to their significant investments in outdated platforms. As a result, they often prefer to work within a limited set of requirements rather than starting fresh. These carryover technologies impose constraints on their approach to vehicle development.

On the other hand, Tesla took a different approach by boldly challenging the status quo. They decided to completely overhaul the fundamental architecture of a car, simplifying it significantly.

"I think thats the advantage that a technology company has … And I think thats the way Foxconn will come at this."

Hanna Ziady contributed to this report.