OpenAI teams up with Foxconn to build hardware for AI data centres

The OpenAI-Foxconn deal underscores Hon Hai's longer-term intent to expand its role in the AI ecosystem and reduce its reliance on assembling iPhones for Apple.

OpenAI is partnering with Hon Hai Precision Industry Co. (Foxconn) to design and manufacture hardware for AI data centres, amid a grow need for AI infrastructure globally.

Foxconn has separately announced a venture with Intrinsic to explore AI data centres. (Reuters)

Foxconn will co-design and develop data centre server racks with OpenAI, and work to ensure such racks can be manufactured across the US. Foxconn also plans to produce cabling, power systems and other key equipment for data center facilities in the country. The agreement with OpenAI does not include specific purchase commitments, the companies said.

OpenAI has in past months struck a series of multibillion-dollar deals with cloud-computing providers and chipmakers from Nvidia Corp. to Advanced Micro Devices Inc. (AMD), to dramatically increase its data centre footprint.

At the same time, the world's most valuable private firm has taken steps to gain more control over the AI supply chain, including an agreement in October to buy chips and components from Broadcom Inc. The envisioned spending spree however has stoked concerns of an AI bubble.

OpenAI-Foxconn deal

For Foxconn, the latest pact underscores a longer-term intent to expand its role in the AI ecosystem, in part to reduce a reliance on assembling the iPhones for Apple Inc. A direct tie-up with OpenAI suggests that the Taiwanese firm is keen on helping clients integrate their own designs into AI data centres. Foxconn has separately announced a venture with Intrinsic to explore AI data centres.

OpenAI has spent much of this year working with Oracle Corp. and SoftBank Group Corp. on an ambitious initiative to invest $500 billion in US data centres and AI infrastructure over the next few years—a move announced in the early days after President Donald Trump returned to the White House.

Foxconn, a partner in that ‘Stargate’ project, is already expanding AI server production in the US, a key demand of the administration that also mitigates tariff risks.

It’s unclear though how much value the OpenAI tie-up represents for Foxconn. Altman previously said his company has committed to invest $1.4 trillion on infrastructure for AI—a large sum for any business, let alone an unprofitable startup.