TAIPEI, Taiwan (AP) OpenAI and Foxconn, the Taiwanese electronics behemoth, have formed a strategic partnership aimed at designing and manufacturing critical equipment for artificial intelligence (AI) data centers in the United States. This collaboration is part of a broader initiative to strengthen the infrastructure supporting AI development within the country.
Under the newly established agreement, Foxconn, which has a significant history in manufacturing AI servers for Nvidia and assembling various Apple products, including the iPhone, will play a crucial role in co-designing and developing AI data center racks in collaboration with OpenAI. The two companies announced this partnership in separate statements released on Thursday and Friday.
The scope of products that Foxconn plans to manufacture in its U.S. facilities encompasses essential elements like cabling, networking, and power systems specifically tailored for AI data centers. OpenAI will be granted "early access" to assess and potentially make purchases of these innovations, allowing them to evaluate the hardware critical to their AI operations as it becomes available.
Foxconn boasts manufacturing capabilities across the United States, including facilities located in Ohio and Texas. Notably, the current agreement does not entail any immediate financial obligations or purchase commitments, according to the statements from both companies.
The Taiwanese manufacturer has been diversifying its business interests, moving beyond traditional electronics manufacturing to include ventures in electric vehicles and the acquisition of other companies to expand its product range. This pivot reflects Foxconn's strategy to adapt to evolving market dynamics.
OpenAI CEO Sam Altman remarked that this partnership represents a significant step toward ensuring that foundational technologies for the AI era are developed domestically. He stated, "We believe this work will strengthen U.S. leadership and help ensure the benefits of AI are widely shared." OpenAI has committed a staggering $1.4 trillion towards building AI infrastructure and has recently entered multi-billion-dollar partnerships with major tech firms like Nvidia and AMD to bolster its computing capabilities essential for supporting its extensive AI models and services.
Additionally, OpenAI is collaborating with U.S. chipmaker Broadcom to design and manufacture its own AI chips, emphasizing the organization's dedication to innovation in the AI space. However, this aggressive investment strategy has raised concerns among investors regarding OpenAI's ability to recover these expenditures and maintain profitability. Altman noted that the startup, which was founded in 2015 and is known for creating ChatGPT, is projected to exceed $20 billion in annual revenue this year, with expectations of growth reaching into the "hundreds of billions" by 2030.
Foxconn's stock, listed in Taiwan, has seen a remarkable increase of 25% year-to-date, reflecting the surge in stock prices among technology companies that are capitalizing on the recent AI surge. In terms of financial performance, Foxconn reported a net profit of over 57.6 billion New Taiwan dollars (approximately $1.8 billion) for the July-September quarter, marking a 17% increase compared to the previous year. Notably, revenue generated from its cloud and networking services, which includes AI servers, was a primary contributor to this positive outcome.
During a recent earnings call, Foxconn's executive Liu emphasized the growing significance of the AI industry and expressed a strong optimism regarding AI developments in the forthcoming year. He anticipated that the company's collaborative efforts with major clients and partners would deepen, further underscoring Foxconn's commitment to the AI sector's evolution.
