Nvidia and Foxconn Partner to Develop AI Factories Amid Chip Export Restrictions

Nvidia, the world’s most valuable chip company, has joined forces with Foxconn, the manufacturer of Apple’s iPhones, to establish “AI factories.” These AI factories are a novel form of data centre powered by Nvidia chips, designed for a wide range of applications, including training autonomous vehicles, robotics platforms, and large language models.

The partnership announcement comes in the wake of the United States unveiling plans to impose further export restrictions on advanced chips to China. These export restrictions will affect Nvidia’s sales of two high-end artificial intelligence chips, the A800 and H800, developed for the Chinese market.

Nvidia’s CEO, Jensen Huang, and Foxconn’s chairman, Young Liu, shared their collaboration at Foxconn’s annual tech showcase in Taipei. Huang described these AI factories as the production centres for intelligence, where data centres are responsible for generating it. He emphasised that Foxconn’s expertise and global-scale capabilities make it a fitting partner to build these AI factories.

Nvidia’s chip technology has significantly driven its market value, with the company’s stock price increasing more than threefold in the current year. This surge in value has elevated Nvidia to a market cap of over $1 trillion, making it the fifth publicly traded US company to join the trillion-dollar club, alongside Apple, Microsoft, Alphabet, and Amazon.

Foxconn, known for producing more than half of the world’s Apple products, has been actively diversifying its business. The company is seeking to replicate its success in assembling personal computers and smartphones and has identified electric vehicles (EVs) as a key driver of future growth.

In a previous interview, Young Liu highlighted that EVs would play a central role in Foxconn’s expansion plans. Foxconn and Nvidia had previously announced a partnership to develop autonomous vehicle platforms, with Foxconn manufacturing electronic control units based on Nvidia’s chips for cars. This collaboration aims to capitalise on the rapid growth of the electric vehicle industry.

As the demand for AI applications continues to grow, Nvidia and Foxconn’s partnership to create AI factories reflects their commitment to staying at the forefront of AI technology, despite ongoing challenges in the semiconductor industry.