Foxconn and Nvidia team up to build 'AI factories'

By Sarah Wu and Ben Blanchard

TAIPEI (Reuters) - Taiwan's Foxconn, the world's largest contract electronics maker, will build a new kind of data centre using Nvidia chips and software for a range of applications including self-driving cars, the companies said on Wednesday.

Sharing a stage at Foxconn's annual tech showcase in Taipei, Foxconn Chairman Liu Young-way and Nvidia CEO Jensen Huang said their companies would build these "AI factories" together.

"A new type of manufacturing has emerged - the production of intelligence. And the data centres that produce it are AI factories," Huang said, adding that Foxconn had the expertise and scale to build them globally.

Showing a hand-drawn sketch, Huang - sporting his signature black leather jacket - explained how "AI factories" could continuously receive and process data from autonomous electric vehicles to make them smarter.

"This car would of course go through life experience and collect more data. The data would go to the AI factory. The AI factory would improve the software and update the entire AI fleet," said the Taiwan-born Huang. "In the future, every company, every industry, will have AI factories."

Nvidia, the world's most valuable chip company, said in a statement that the AI factories would use its chips and software, including its cutting-edge GH200 superchip that it is barred from selling in China.

The announcement comes after Nvidia on Tuesday said new U.S. export restrictions would also block sales of two less powerful high-end AI chips it created for the Chinese market along with one of its top-of-the-line gaming chips.

Nvidia's shares have tripled in 2023, giving the company a market value of more than $1 trillion, driven by excitement over the central role of the company's chips in AI applications.

Foxconn, the largest supplier of Apple's iPhones, wants to replicate its level of success in assembling personal computers and smartphones as it expands into making electric vehicles for other companies.

In January, Foxconn and Nvidia announced a partnership to develop autonomous vehicle platforms, in which Foxconn would manufacture electronic control units (ECUs) for cars based on Nvidia's DRIVE Orin chip to sell to the global market.

Liu, standing next to Huang, said Foxconn is "trying to convert itself from a manufacturing service company to a platform solution company," citing smart cities and smart manufacturing as other applications for AI factories.

Foxconn on Wednesday unveiled a new electric cargo van called Model N, the sixth prototype in its EV push that has set ambitious goals but has so far only seen limited orders.

Jun Seki, head of Foxconn's EV business, said the company was talking to 14 potential customers, without naming them, and sees India and Japan as promising countries for EV development.

Initially targeting 5% of the global EV market and the equivalent of $33 billion in revenue from manufacturing EVs and components by 2025, Foxconn's aggressive longer-term ambition is to make nearly half the world's EVs.

Foxconn's Tech Day takes place on the birthday of its billionaire founder, Terry Gou, who stepped down as the company's chief in 2019.

He is now running as an independent candidate for Taiwan's president at elections in January and did not appear at the event, unlike last year when he drove on stage in a prototype EV.

Foxconn's shares closed down 0.9% on Wednesday, compared with a 1.2% fall on the broader market.

(Reporting by Sarah Wu and Ben Blanchard; Editing by Christian Schmollinger and Jamie Freed)