iPhone maker Foxconn joins $1 trillion AI data center market with new alliance
The Taiwanese firm, formally known as Hon Hai, is looking to replicate the success it has had in consumer electronics in the world of AI. It's a play that could unlock Foxconn's access to a potential $1 trillion of spending by companies on data centers in the coming years, according to Counterpoint Research, and will also pit the Taiwanese giant against companies like ABB, Siemens and Mitsubishi Electric.
Foxconn will take a 10% stake in TECO as the result of a share exchange. TECO started life as a engine maker for cars but has since extended into areas such as electric vehicles, energy storage and data center construction. Foxconn meanwhile, which assembles Apple's iPhone and is a key partner for Nvidia, manufactures server racks designed for AI workloads.
The two companies are now teaming up to bring their expertise together to effectively create a one-stop-shop for anyone looking to set up an AI data center.
"The strategic partnership extends the two companies' cooperation in the fields of low-carbon smart factories and energy services, toward being a one-stop solution for data centers going forward," TECO Chairman Morris Li said.
The assembly of AI servers has become a key focus as Foxconn looks to diversify its revenue beyond the manufacturing of consumer electronics. AI server revenue is expected to have doubled in the second quarter of the year, Foxconn previously forecast. The company has also shown its willingness to expand into new areas including the assembly of electric vehicles and even manufacturing of semiconductors.
"With the AI infrastructure boom, Hon Hai with [a] strategic alliance with TECO aims to extend and tightly integrate the server components and racks value chain from co-design, manufacturing to engineering and infrastructure construction services," Neil Shah, partner at Counterpoint Research, told CNBC.
"Hon Hai aims to become a one-stop shop for all the datacenter needs."
Tech giants from Microsoft to Google have already laid out plans to spend billions of dollars this year alone on data centers, which includes chips and servers — a market that Foxconn is targeting.
Foxconn and TECO said they are targeting business in Taiwan and other parts of Asia, as well as the Middle East and the U.S. The two companies pointed to their footprint in the U.S. and said they plan to "expand American manufacturing and reshape the global supply chain."
"The full data center solutions will give strong impetus to Foxconn's business as it takes to take a bigger slice of the overall data center CAPEX (capital expenditure) which includes servers to physical infrastructure," Counterpoint Research's Shah said.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NBC News
32 minutes ago
- NBC News
This cookware maker is bracing for steel tariffs behind a wall of pots and pans
Checkbook Chronicles Steel and aluminum tariffs are going to cost Heritage Steel hundreds of thousands of dollars a year. But Danny Henn, who runs the family-owned stainless steel cookware company, says it may have a competitive edge. Aug. 3, 2025, 2:06 PM EDT By Emily Lorsch Heritage Steel, a small, family-owned cookware manufacturer in Clarksville, Tennessee, is expecting to pay hundreds of thousands of dollars in tariffs this year. The company recently received a tariff bill of $75,000 on an order of handles, and the company's vice president of operations, Danny Henn, is anticipating another bill of closer to $200,000 for goods that will likely reach the U.S. this month. 'We're a pretty small business,' Henn said. 'Having that as an additional sort of surprise expense is not insignificant.' But even with that new cost factored in, Heritage Steel believes steel and aluminum tariffs could be good for the business. 'Just from the base economics of it, yes, we have to pay more, but others have to pay a whole lot more,' Henn added. Heritage Steel employs about 40 workers and has more than doubled its revenue since 2018. The company is up 60% in cookware sales since last year. While company leaders now have to rethink pricing and make adjustments in response to President Donald Trump's trade war, Henn said they're feeling optimistic. Business highlights Danny Henn's grandfather Donald Henn was a door-to-door cookware salesman after graduating from college. In 1983, he purchased a factory in Clarksville, Tennessee, and from there was born New Era, which later became Heritage Steel. 'My grandma and grandpa and my parents were always big people about cooking at home. The cookware was always there,' said Henn. From frying pans and skillets to stock pots, saucepans and knives, Heritage Steel sells about 50 different cookware products on its website and Amazon. The company also sells wholesale to independent gourmet retailers. 'We are happy and proud to be an American producer of goods.' Heritage Steel needs three main types of inputs to make its cookware, and about 75% of the company's materials are imported. The most important part and the largest cost is the five-ply cladded body, which includes a combination of stainless steel and aluminum. 'It's very specialized processing that it has to go through to get into this form,' Henn said. 'And so, because it is very specialized, there's not a whole lot of people that do it.' Tariff impacts Heritage Steel imports its cladded steel from South Korea, which will be facing a 15% tariff that Trump announced on Wednesday after the country made 'an offer to buy down' the 25% duty level he had previously set. The company imports its handles, made from pure stainless steel using a process called lost-wax casting, from China. Meanwhile, the company purchases the material for its stainless steel lids in the U.S. Those parts don't have to be cladded and are a more simple single layer of stainless steel that's more widely available. Heritage Steel had previously sourced cladded steel from U.S. vendors, but those providers have since exited the business, according to Henn. 'There's just not enough of a U.S. market for cookware manufacturing of this type … right now. There isn't a viable vendor for us to find.' Since the company only makes a handful of raw-material purchases each year, it typically has a large order coming in all at once, which set up the company nicely when the first 25% tariffs on steel went into effect earlier this year. 'We had a good amount of it,' Henn said, referring to the raw materials, 'so that gave us more time of being able to know we're going to be able to manufacture and sell a bunch of stuff without the tariff cost on it.' Henn said that wasn't a tariff strategy, but instead a benefit of his company's workflow. However, they knew that leeway wasn't going to last forever. Eventually it became time for Heritage Steel to order more materials. That first tariff bill was about $75,000, and Henn is expecting the next to be more than twice as much. Who pays? For Heritage Steel, there was never a doubt it would have to raise prices because of the tariff expenses. The question was how high would they have to go? 'We're happy and proud to be a provider of really high-quality cookware, but one that's more affordably priced than some of the others on the market,' Henn said. 'We want to continue to offer the best price we can, given our constraints.' As of Friday, the company had raised prices by about 15% on all of its products. Heritage Steel explained the increase in an announcement on its website, calling the adjustment 'fairly modest' considering the price of the company's input materials spiked at least 50%. 'Obviously, we can't bear the full impact of these cost increases,' Henn said, 'but we also don't want our customers to bear the full cost.' He expects these changes to negatively impact the company's profit margins, but as of now the extent is unclear. Henn believes the company has more flexibility than a lot of its competitors because Heritage Steel is only importing raw materials, not the full product, and manufactures in the U.S. That's why he expects the overall market disruption could be good for the company. 'They might have to do something closer to a 50% price increase,' he said of his competitors, 'because their entire cost of goods is going up by 50%.' For Heritage Steel, on the other hand, only the price of parts is up 50%, not the full product. Henn said it's all about finding the sweet spot: a fair amount to charge customers to compensate for the new costs while still being a price leader in the market. 'We're just doing our best to do good by our customer, not raise prices too much, do well by our employees, keep paying them well and try to stay competitive within the market.' Even though Henn is optimistic about this potential competitive edge, that doesn't mean he believes the Trump administration's tariffs are the right approach. What makes more sense to him, he said, is a change over a longer period of time. 'If there is something that would have a similar effect of giving incentives to bring more more industry back to the U.S., I think that would likely be a positive,' he said, adding that he believes the intent of the tariffs policy is good. 'The implementation is a little bit rocky,' he said. Henn declined to comment on his political views and whom he voted for in the presidential election. As for other options that could bring down Heritage Steel's tariff bill, that's something being discussed as well. While stainless clad cookware is the company's bread and butter, Henn and his co-owners are exploring a range of possibilities. 'If we had our full wish,' Henn said, 'we would be able to have a fully U.S.-based supply chain for our entire manufacturing process.' Emily Lorsch Emily Lorsch is a producer at NBC News covering business and the economy.
Yahoo
an hour ago
- Yahoo
Palantir gets $10B Army contract to improve readiness with AI
Aug. 1 (UPI) -- Denver-based software firm Palantir Technologies secured a 10-year contract worth up to $10 billion to improve the U.S. Army's military readiness and efficiency with artificial intelligence. Palantir specializes in developing software that enables the use of AI to make real-time decisions, such as those that the U.S. Army could face in the future. The contract supports the Army's sustained capability growth and enhances its ability to meet operational warfighting needs with proven [and] commercially available AI technologies, it said in an online announcement on Thursday. "This enterprise agreement represents a pivotal step in the Army's commitment to modernizing our capabilities while being fiscally responsible," Army Chief Information Officer Leo Garciga said. The enterprise agreement with Palantir will help the Army to save money while improving its operational efficiency and military readiness through a "comprehensive framework for the Army's future software and data needs," according to the announcement. "By streamlining our procurement processes and leveraging enterprise-level discounts, we are not only enhancing our operational effectiveness but also maximizing our buying power," Garciga added. The Army will consolidate 15 prime contracts and 60 related contracts into one enterprise agreement with Palantir, which accelerates the delivery of proven commercial software to the Army's military units. "This streamlined approach reduces procurement timelines, ensuring soldiers have rapid access to cutting-edge data integration, analytics and AI tools," according to the Army. The contract also saves money by eliminating contract and pass-through fees, while reducing procurement timelines. The contract enables the Army and other Defense Department to pay up to $10 billion over 10 years to obtain Palantir products, but it does not require the military to spend the full $10 billion. Palantir earlier this year provided the Army with two AI-powered systems as part of a $178 million contract, according to a CNBC news report. The Defense Department in May also increased to $795 million an existing contract with Maven Smart Systems to improve the military's AI capabilities. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Google AI summary feature deals blow to link clicks and website traffic
Google's algorithm changes last year led to a plummet in search engine traffic for news websites and publishers, and even resulted in the bankruptcy of some independent publishers, including Turkey's Gazete Duvar. The technology giant is now dealing another blow to online publishers through its artificial intelligence summaries. Google's Artificial Intelligence Overview feature is a service offered by the internet giant to compete with artificial intelligence tools such as ChatGPT. The feature offers short summaries generated by Gemini that appear at the top of search results. Below the summary, there are details such as links to the source and a "Show more" option. In other words, when a user types a query into the Google search engine, they can get the answer in a summary without clicking on the links below. But this presents a serious risk, especially for websites that rely on Google Ads revenue and traditional search engine optimisation (SEO) efforts. Traffic of popular websites dropped The introduction of the AI Overview has particularly affected traffic to sites that feature content such as holiday guides, health tips and product reviews. According to Similarweb, search traffic to websites decreased by 55% between April 2022 and April 2025. A report published by the Wall Street Journal indicates that traffic to many well-known news sites around the world is declining. Traffic from organic search to HuffPost's desktop and mobile sites has more than halved in the last three years, while the Washington Post has seen a nearly identical decline. Business Insider CEO Barbara Peng laid off about 21% of her staff in May, citing "extreme traffic declines beyond our control" as the reason for the layoffs. The share of traffic from organic search to the New York Times' desktop and mobile sites also fell to 36.5% in April 2025. Nicholas Thompson, CEO of The Atlantic, predicts that traffic from Google will drop towards zero and says the company needs to improve its business model. "Google is changing from a search engine to an answer engine," Thompson said in an interview with the Wall Street Journal. In an interview with the WSJ, Thompson and other industry leaders said they are trying to develop new strategies and are most concerned with building reader relationships. Users don't click on links Google executives argue that the company is committed to sending traffic to the web and that people who click on links after seeing the AI Overview tend to spend more time on these sites. However, survey studies show a different picture. According to a new study by the Pew Research Centre, only % of the 900 Google users in the US click on the source page specified as a result of a search that includes the Artificial Intelligence Overview summary. The rest are content with the short information provided by Google. Moreover, according to the study, the most frequently cited sources in both AI summaries and traditional search results are Wikipedia, YouTube (also a Google subsidiary) and Reddit. 15% of the sources in AI summaries come from these three sites. Referrals to government sites (e.g. with the 'gov' extension) are more common in AI summaries than in traditional search results. On the other hand, both AI summaries and traditional search results are equally likely to refer to news sites, at 5%. Worse still, 404 Media, a website known for specialised technology news, noticed that a story about AI-assisted music production was not showing up in Google searches. This was because Artificial Intelligence Overview summarised the content of the story, but did not link to the actual story. The site summarises the situation with the following statement: "The AI Overview ensures that information is presented in such a way that the source itself is never clicked on." SEO loses its impact The effects of the AI Overview on SEO (search engine optimisation) are also remarkable. According to the Register, the latest data showed that the click-through rate of the top-ranked site in searches with an AI summary fell by an average of 34.5%. Being on the first page is no longer as meaningful as it used to be. AI often provides false information Moreover, there is another risk: the reliability of artificial intelligence. 404 Media published a news article showing that one of the responses given by the feature in question was actually generated from another AI summary, which in turn was based on an AI source. The margin of error increases as the information moves away from the main source. This situation is described by experts as "the vicious circle of information that leads to the collapse of artificial intelligence models themselves". When there are not enough sources of quality information, users are left with inaccurate and superficial content produced by artificial intelligence. The advertising industry continues to work for Google The revenues of websites and Google are based on the following advertising cycle: Websites allow people who use search engines such as Google free access to their content. Google redirects users to websites where they see adverts as well as content. Most websites make money from these adverts. According to the BBC, an estimated 68% of internet activity starts on search engines, and around 90% of searches take place on Google. This means that websites rely heavily on Google to make money. It is stated that the Artificial Intelligence Overview mode could therefore destroy the business model that has existed for 23 years. However, Google experience no loss in this change, at least for now. Alphabet, the Google's parent company, increased its revenues to a record level in the last quarter of 2024. According to data released by the company, Google's total revenue increased by 14% compared to last year, reaching $96.4 billion. According to the Register, the bulk of the revenue still comes from advertising: exactly $54.2 billion. That's because Google now places adverts directly in or around AI Overview summaries. According to a study by SparkToro, by 2024, only 360 out of every 1,000 Google searches in the US led to sites that are not owned or advertised by Google. These rates are predicted to worsen with the rise of artificial intelligence summaries. 'Desperation not demand' While Google still dominates the market, rival AI-powered search engines such as Perplexity are slowly entering the competition. According to Bank of America executive Muhammad Rasulnejat, Google's spending of $14 billion on infrastructure investment in the last quarter alone points to "desperation in the face of competition", not growing demand. In addition to all this, the fact that the US Department of Justice still accuses Google of monopolisation creates a separate pressure. The Ministry is even demanding that Google divest its Chrome browser. The company's recent advertising and artificial intelligence moves may further inflame these debates.
