Foxconn, a key AI server manufacturing partner of US chip giant Nvidia, has announced plans to spend up to NT$42 billion ($1.4 billion) on purchasing equipment for an AI data center.

The Taipei-based company, also known as Hon Hai Precision Industry, said in a stock exchange filing on Monday that the investment will be made with its own funds from December 2025 to December 2026. Foxconn added that the investment is aimed at expanding its cloud computing service platform and accelerating the development of its “three smart platforms”, namely smart manufacturing, smart electric vehicles and smart cities.

The announcement follows Foxconn’s May announcement to build a 100-megawatt AI data center with Nvidia in Taiwan. Foxconn will use the infrastructure to improve the efficiency of its factories, develop advanced driver assistance systems for its electric vehicles and optimize connected transportation systems in Taiwan.

Foxconn, the world’s largest contract electronics manufacturer by revenue, has successfully diversified its revenues from assembling iPhones for Apple to producing AI servers. In the second quarter, Foxconn saw its revenue from making AI servers and other cloud and networking products surpass that of smart consumer electronics for the first time. Its AI servers business segment contributed 41% of Foxconn’s NT$1.8 trillion revenue in the three months ended June, while its smart consumer electronics division accounted for 35%. The company claims it has more than 40% of the global market for AI servers.

In August, Foxconn said it was selling an EV factory in Ohio to Japanese investment giant SoftBank to produce AI servers. The Taiwanese company will continue to operate the factory, which will produce the equipment needed for Stargate, the $500 billion AI data center venture backed by SoftBank, AI poster child OpenAI, cloud giant Oracle and Abu Dhabi’s state-backed fund MGX.

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