Apple Supplier Foxconn Bets Billions on OpenAI Hardware Partnership

TLDR

• Foxconn and OpenAI announced a partnership to design and manufacture AI data center hardware in the United States
• Foxconn plans to invest $1 billion to $5 billion in expanding its US manufacturing operations
• The partnership will focus on co-designing server racks, cabling, power systems, and cooling equipment for AI data centers
• Foxconn expects to assemble up to 2,000 racks per week in the US by 2026
• The collaboration does not include purchase agreements but OpenAI will have early access to assess new systems

Foxconn announced a partnership with OpenAI on Friday to develop and manufacture AI data center equipment in the United States. The collaboration marks a major expansion for the Taiwanese electronics manufacturer known for assembling Apple iPhones.

The companies will work together on designing server racks specifically for AI data centers. Foxconn Chairman Young Liu said the partnership aims to address problems that occur during the first few months of AI data center operations.

Foxconn plans to invest between $1 billion and $5 billion in growing its US manufacturing presence. The investment will support production of servers, cabling, power systems, and cooling equipment needed for AI facilities.

Liu explained that OpenAI’s experience as the largest user of AI computing power revealed the need for new data center designs. Problems can arise with IT equipment, power systems, or cooling infrastructure. The two companies share an understanding that current approaches need improvement.

The partnership does not include any purchase commitments or financial obligations at this stage. OpenAI will receive early access to evaluate new systems and has an option to buy them.

Production Targets and Manufacturing Plans

Foxconn expects to assemble up to 2,000 server racks per week in the United States by 2026. The company will focus its server production expansion primarily on American facilities.

The partnership aims to make server racks manufacturable across the US. Foxconn will also source components from domestic suppliers and increase local testing and assembly operations.

OpenAI CEO Sam Altman called the infrastructure behind advanced AI a generational opportunity to reindustrialize America. He said the partnership represents a step toward ensuring core AI technologies are built domestically.

Liu revealed he has hosted Altman at Foxconn’s Taiwan offices for discussions. The two executives talked about problems OpenAI faces and issues with current AI data centers.

Broader AI Infrastructure Involvement

Foxconn already participates in OpenAI’s Stargate project alongside Oracle and SoftBank. The company operates a server production site owned by SoftBank Group as part of that initiative.

OpenAI worked with Oracle and SoftBank this year on plans to invest $500 billion in US data centers and AI infrastructure over several years. The initiative was announced after President Donald Trump returned to the White House.

Foxconn has been expanding AI server production in the US to meet administration demands and reduce tariff risks. The company wants to grow its position in the AI hardware market and reduce dependence on iPhone assembly for Apple.

Foxconn separately announced a joint venture with Intrinsic on Friday to develop intelligent factory solutions. The collaboration will focus on electronics assembly for server trays, GPUs, and data center equipment. Liu said humanoid robots could eventually handle 10% to 20% of factory work that still requires human skills.

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