Electromechanics and ICT Markets Surge with Game-Changing Share Exchange
Taipei, Taiwan – July 30, 2025
A strategic partnership between two major players in the tech industry, Hon Hai Technology Group (commonly known as Foxconn) and TECO Electric & Machinery Co., Ltd. (or TECO), is set to reshape the landscape of AI infrastructure and propel both companies into the global super-computing race. This transformative move, announced on a Wednesday, is seen as a vital step toward enhancing capabilities in electromechanics and information and communication technology (ICT).
Uniting Strengths for AI Growth
Foxconn, recognized as the world’s largest electronics manufacturing service provider and a significant AI server producer, has joined forces with TECO, a leader in industrial electromechanical engineering. The two companies plan to explore collaborative business opportunities in AI Data Center (AIDC) construction, which is trending towards standardization and modularization. This alliance will enable clients across the globe to access comprehensive, cost-effective solutions that combine modular data center products with specialized engineering services.
Details of the Strategic Alliance
Under the terms of the agreement, TECO will obtain a 0.519% stake in Hon Hai Precision Industry Co. Ltd., while Foxconn will secure a 10% stake in TECO. As part of this share exchange, TECO will issue 237,644,068 new shares to Foxconn, and in return, Foxconn will issue 72,481,441 new shares to TECO, resulting in a share exchange ratio of approximately 1 to 0.305. This no-cash transaction is projected to conclude by the end of Q4 2025, pending regulatory approvals.
Foxconn’s Vision for Market Leadership
Foxconn Chairman Young Liu emphasized the significance of timing in the competitive race for super-computing. He stated, “Time-to-market is crucial as demand for modular designs rises while AI data centers become larger and more complex. Partnering with TECO positions us to rapidly deliver vertically-integrated solutions to our customers, effectively enhancing our service to Tier-1 cloud service providers and hyperscalers.”
TECO’s Perspective on Collaboration
TECO Chairman Morris Li echoed Liu’s sentiments, noting that evolving global dynamics are fostering new realms of business opportunities. “This strategic partnership extends our collaboration in low-carbon smart factories and energy services,” Li explained. The goal is to solidify their role as a one-stop solution for data center requirements going forward.
Target Markets and Geographical Focus
The partnership aims to target markets not only in Taiwan and Asia but also in the Middle East and the United States. With Foxconn’s deep vertical integration capabilities in AI server rack production and TECO’s expertise in electromechanical systems, the companies are poised to establish a significant presence across these regions.
Expanding Corporate Capabilities
Liu noted that Foxconn’s advanced manufacturing capabilities will play a crucial role in the development of a modular architecture for AI data centers. By aligning TECO’s contributions in electromechanics, the partnership seeks to broaden the value chain—from server components to the actual construction of data centers.
American Manufacturing and Supply Chain Reshaping
The alliance also looks to incorporate the strengths of TECO-Westinghouse in Texas, a respected name in electric motor manufacturing. By leveraging local U.S. manufacturing partnerships combined with Foxconn’s manufacturing base, both companies aim to reshape their global supply chains while enhancing American manufacturing capabilities.
Previous Collaborations and Future Plans
Previously, the two companies have collaborated on energy-saving measures and emission-reduction initiatives. Recently, discussions have expanded to encompass a potential data center business in both Taiwan and the United States. In this context, data centers consist of the internal computer room equipment—like servers and cooling systems—and the external power infrastructure, demonstrating a synergy of strengths in AI servers and electromechanical systems.
Aligning with Global Sustainability Trends
As flag bearers of sustainability, Foxconn and TECO view this alliance as more than a business agreement; it’s a step towards cultivating a low-carbon smart industry chain aligned with global sustainability trends. Both companies have been recognized in S&P Global’s Sustainability Yearbook 2025, highlighting their commitment to corporate responsibility and sustainability.
TECO: Pioneering the Green Energy Sector
Founded in 1956, TECO has evolved from a motor manufacturer into one of the global leaders in industrial motors, contributing to a range of sectors from green mechatronics to intelligent energy. The company is recognized for its innovations in energy savings through ESCO services and has an impressive track record with over 700 MW of data center projects across Southeast Asia.
Foxconn: The Technological Powerhouse
Established in 1974, Foxconn is renowned for its massive operations in electronics and technological solutions, with a staggering revenue of TWD 6.86 trillion (approximately USD 208 billion) reported in 2024. Foxconn occupies over 40% market share in electronics manufacturing services and is dedicated to sustainability as it expands its operations into emerging technologies such as AI, robotics, and electric vehicles.
A Roadmap to Future Achievements
Both companies are equipped to explore Foxconn’s “3+3+3” strategic framework, focusing on its three intelligent platforms: Smart Manufacturing, Smart EV, and Smart City. This collaborative effort aims to drive long-term growth and establish a more sustainable manufacturing process.
Potential for Innovation and Resiliency
The strategic alliance will also explore areas to enhance supply chain resiliency and boost innovation within the rapidly evolving tech landscape. With the emphasis on low-carbon initiatives and integrated solutions, both companies are charting a course that aligns with international trends and consumer demands for sustainability.
Conclusion: A New Era for Taiwanese Tech Giants
The recent share exchange between Foxconn and TECO marks a significant milestone not only for the two companies but also for the broader tech industry in Taiwan and beyond. By combining their strengths in electromechanics, AI server production, and sustainable practices, they are poised to lead the charge in meeting the increasing demands of the global super-computing sector. This strategic move epitomizes how collaboration can ignite progress and innovation, setting a powerful example for other industries to follow.
