OpenAI is partnering with Hon Hai Precision Industry Co. (Foxconn) to design and manufacture hardware for AI data centers as the need for AI infrastructure increases globally.
Foxconn will co-design and develop data center server racks with OpenAI and work to ensure that such racks can be manufactured across the United States. Foxconn also plans to produce cables, power systems and other key equipment for data center facilities in the country. The agreement with OpenAI does not include any specific purchase commitments, the companies said.
In the past few months, OpenAI has signed a series of multibillion-dollar deals with cloud computing providers and chipmakers ranging from Nvidia Corp. to Advanced Micro Devices Inc. (AMD) to dramatically expand its data center footprint.
At the same time, the world’s most valuable private company is taking steps to tighten control of its AI supply chain, including an agreement in October to buy chips and components from Broadcom. But the anticipated surge in spending is fueling fears of an AI bubble.
OpenAI and Foxconn trading
For Foxconn, the latest agreement underscores its long-term intentions to expand its role in the AI ecosystem, including reducing its dependence on assembling iPhones for Apple Inc. The direct partnership with OpenAI suggests that the Taiwanese company is keen to help clients integrate their own designs into AI data centers. Foxconn has separately announced a venture to explore Intrinsic and AI data centers.
“This partnership is a step toward ensuring the core technologies of the AI era are built here,” OpenAI CEO Sam Altman said in a statement. “This effort will strengthen U.S. leadership and ensure the benefits of AI are widely shared.”
Deal making with AI
OpenAI has spent much of this year working with Oracle Corp. and SoftBank Group Corp. on an ambitious effort to invest $500 billion in U.S. data center and AI infrastructure over the next few years. The move was announced shortly after President Donald Trump returned to the White House.
Its Stargate project partner Foxconn is already ramping up production of AI servers in the United States, a key demand of the administration that also reduces tariff risk.
Also read | OpenAI announces talks with Reliance to bring Stargate to India
However, it’s unclear how much the partnership with OpenAI will be worth to Foxconn. Altman previously said the company is committed to investing $1.4 trillion in AI infrastructure, which is a huge amount for any business, much less an unprofitable startup.
