Nvidia and Foxconn’s AI factory plans amidst US-China tensions

These facilities represent a new genre of data centres, poised to utilise Nvidia’s advanced chips to fuel a broad spectrum of applications, ranging from autonomous vehicle training to robotics and large language models.

The announcement of this partnership comes against the backdrop of fresh export restrictions by the United States, aimed at curtailing the flow of sophisticated chip technology to China, dealing a significant blow to Nvidia. The company confirmed that two of its high-end artificial intelligence chips, the A800 and H800—specifically designed for the Chinese market—are directly affected by Washington's latest sanctions.

At Foxconn's annual tech exposition in Taipei, which took place on a Wednesday, Nvidia's CEO, Jensen Huang, shared the stage with Foxconn's chairman, Young Liu. Huang, originally from Taiwan, remarked, as reported by Reuters, "A new type of manufacturing has emerged - the production of intelligence," acknowledging that data centres are essentially AI factories. He went on to praise Foxconn for its capability and expansive scale, which are essential in constructing these sophisticated facilities worldwide.

Chairman Liu also conveyed Foxconn's strategic shift, stating that the company is transitioning "from a manufacturing service company to a platform solution company." He highlighted that beyond AI factories, smart cities and smart manufacturing are key areas where AI technology will play a transformative role.

This collaboration rides on the crest of Nvidia’s soaring market value, which escalated to over $1 trillion, propelled by its shares more than tripling in value over the year. This surge ushered Nvidia into the elite "Trillion dollar club," an exclusive league of US publicly traded companies including tech giants Apple, Microsoft, Alphabet, and Amazon.

Meanwhile, Foxconn, the manufacturing titan responsible for over half of the world's production of Apple products, has been actively seeking to diversify its business portfolio. The company aims to replicate its manufacturing success beyond personal computers and smartphones. In an exclusive interview with the BBC in June, Liu pointed to electric vehicles (EVs) as the next growth frontier for Foxconn.

Earlier in January, the two companies had already laid the groundwork for collaboration, announcing a joint venture to craft autonomous vehicle platforms. This initiative would see Foxconn producing electronic control units for vehicles, incorporating Nvidia’s cutting-edge chip technology, marking the beginning of what seems to be a long-term symbiotic relationship in the ever-evolving tech landscape.