TECO Electric & Machinery and Hon Hai Technology Group Announce Strategic Alliance Targeting AI Data Center Capabilities

TECO Electric & Machinery and Hon Hai Technology Group

Announce Strategic Alliance Targeting AI Data Center Capabilities

Electromechanics, ICT, key markets get boost in new shares exchange

[Taipei, Taiwan – July 30, 2025] TECO Electric & Machinery Co Ltd (“TECO”) (TWSE:1504) and Hon Hai Technology Group (“Foxconn”) (TWSE:2317) held a major press conference today (30th) at the Taiwan Stock Exchange to announce a strategic alliance through a board-approved share exchange. This partnership combines TECO’s strengths in electromechanical systems with Foxconn’s expertise in ICT to seize the global trend of AI data center development toward standardization and modularization, jointly tapping into vast AI data center (AIDC) business opportunities worldwide. Going forward, the strategic alliance will explore the possibility of expanding cooperation in Foxconn’s “3+3+3” areas.

According to terms approved by both boards, respectively, TECO will take a 0.519% stake in Foxconn. In turn, Foxconn will own 10% in TECO. The latter will issue 237,644,068 new shares to Foxconn, and Foxconn will issue 72,481,441 new shares to TECO, implying a share exchange ratio of approx. 1 to 0.305. The no-cash transaction is targeted to complete in the fourth quarter of this year, conditional on regulatory approvals.

Previously cooperating in factory energy saving and emission reduction, and ESCO energy services, TECO and Foxconn have started discussions on establishing data center business in Taiwan and the United States. Since a data center is mainly composed of equipment inside the computer room (servers, cooling systems, UPS, etc.) and power infrastructure outside the computer room, the strategic alliance integrates the combined strengths each bring in their respective fields of AI servers, electromechanics, and information and communications. Global customers will be able to tap comprehensive data center modular products, MEP engineering services, and cost-competitive, one-stop solutions. Target markets cover Taiwan and Asia, as well as the Middle East and the US.

TECO Chairman Morris Li said, “Changing global dynamics are creating new opportunities for business and cooperation. 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. Texas-based TECO-Westinghouse, a longstanding world leader in manufacturing electric motors, has the advantages of American manufacturing and local services. Together with Foxconn's manufacturing base in the United States, it is in line with the strategic direction of the two companies to expand American manufacturing and reshape the global supply chain.”

Foxconn Chairman Young Liu said, “Time-to-market is key in the global super-computing race. Modular design is gaining popularity. As AI data centers grow in size and demand ramps higher, teaming up with TECO means both companies are able to level up and rapidly deliver comprehensive, vertically-integrated solutions to our customers – the Tier-1 CSPs and hyperscalers.” Foxconn has deep vertical integration capabilities in manufacturing AI server racks and an unrivaled customer base. Liu said Foxconn will actively develop a modular architecture for AI data centers, and with TECO aim to extend the value chain from server components and racks to data center construction.

As bellwethers in sustainability, both companies will use the strategic alliance as a starting point to enhance a low-carbon smart industry chain that aligns with international trends, and support supply chain resiliency and innovation. Both TECO and Foxconn were named in S&P Global Sustainability Yearbook 2025, a milestone ranking that demonstrates corporate sustainability strength.