Hon Hai and Teco to team up, target AI data center capabilities

Taipei, July 30 (CNA) Taiwanese tech companies Hon Hai Precision Industry Co. and Teco Electric & Machinery Co. on Wednesday announced a strategic alliance aiming at strengthening their artificial intelligence (AI) infrastructure capabilities.

In separate news releases, the companies said that the alliance will materialize through a share exchange approved by both boards in order to seize AI data center (AIDC) global business opportunities.

The agreed-upon terms entail Teco issuing 237,644,068 new shares to Hon Hai (also known globally as Foxconn) and the latter issuing 72,481,441 new shares to Teco, implying a share exchange ratio of about 1 to 0.305, and resulting in Teco taking a 0.519 percent stake in Hon Hai while Hon Hai owns 10 percent of Teco.

The transaction is expected to be finalized in the fourth quarter of 2025, conditional on regulatory approval, the companies said.

As a data center is mainly composed of equipment inside the computer room, including servers, cooling systems and uninterruptible power supply systems, as well as power infrastructure outside the computer room, the alliance combines Teco's strength in electromechanics and Hon Hai's expertise in AI servers and information and communications technology, the statements said.

Global customers from Taiwan, Asia, the Middle East and the United States can tap comprehensive data center modular products, mechanical, electrical and plumbing engineering services, and cost-competitive, one-stop solutions, the statements said.

Hon Hai Chairman Young Liu (劉揚偉) was quoted in the statements as emphasizing "time-to-market as key in the global super-computing race."

Hon Hai "will actively develop a modular architecture for AI data centers" using its "deep vertical integration capabilities in manufacturing AI server racks and unrivaled customer base," Liu said.

Meanwhile, TECO Chairman Morris Li (利明献) said that "changing global dynamics are creating new opportunities for business and cooperation."

Li added that "Texas-based TECO-Westinghouse, a longstanding global leader in electric motor manufacturing, benefits from American manufacturing and local service capabilities," and that the partnership aligns with both companies' strategic goals of expanding U.S. manufacturing and reshaping the global supply chain.

The two companies also noted their previous cooperation in factory energy saving, emissions reduction and energy services.

The companies said the strategic alliance will be a starting point to "enhance a low-carbon smart industry chain that aligns with international trends, and supports supply chain resiliency and innovation," pointing out that they were both named in the Standard and Poor Global Sustainability Yearbook 2025.