TECO Electric & Machinery and Hon Hai Technology Group (Foxconn) Announce Strategic Alliance Targeting AI Data Center Capabilities

Electromechanics, ICT, key markets get boost in new shares exchange

TAIPEI, July 30, 2025 /PRNewswire/ -- TECO Electric & Machinery Co Ltd ("TECO") (TWSE:1504) and Hon Hai Technology Group ("Foxconn") held a major press conference today (30th) at the Taiwan Stock Exchange to announce a strategic alliance through a board-approved share exchange. This partnership combines TECO's strengths in electromechanical systems with Foxconn's expertise in ICT to seize the global trend of AI data center development toward standardization and modularization, jointly tapping into vast AI data center (AIDC) business opportunities worldwide. Going forward, the strategic alliance will explore the possibility of expanding cooperation in Foxconn's "3+3+3" areas.

According to terms approved by both boards, respectively, TECO will take a 0.519% stake in Foxconn. In turn, Foxconn will own 10% in TECO. The latter will issue 237,644,068 new shares to Foxconn, and Foxconn will issue 72,481,441 new shares to TECO, implying a share exchange ratio of approx. 1 to 0.305. The no-cash transaction is targeted to complete in the fourth quarter of this year, conditional on regulatory approvals.

Previously cooperating in factory energy saving and emission reduction, and ESCO energy services, TECO and Foxconn have started discussions on establishing data center business in Taiwan and the United States. Since a data center is mainly composed of equipment inside the computer room (servers, cooling systems, UPS, etc.) and power infrastructure outside the computer room, the strategic alliance integrates the combined strengths each bring in their respective fields of AI servers, electromechanics, and information and communications. Global customers will be able to tap comprehensive data center modular products, MEP engineering services, and cost-competitive, one-stop solutions. Target markets cover Taiwan and Asia, as well as the Middle East and the US.

TECO Chairman Morris Li said, "Changing global dynamics are creating new opportunities for business and cooperation. The strategic partnership extends the two companies' cooperation in the fields of low-carbon smart factories and energy services, toward being a one-stop solution for data centers going forward. Texas-based TECO-Westinghouse, a longstanding world leader in manufacturing electric motors, has the advantages of American manufacturing and local services. Together with Foxconn's manufacturing base in the United States, it is in line with the strategic direction of the two companies to expand American manufacturing and reshape the global supply chain."

Foxconn Chairman Young Liu said, "Time-to-market is key in the global super-computing race. Modular design is gaining popularity. As AI data centers grow in size and demand ramps higher, teaming up with TECO means both companies are able to level up and rapidly deliver comprehensive, vertically-integrated solutions to our customers – the Tier-1 CSPs and hyperscalers." Foxconn has deep vertical integration capabilities in manufacturing AI server racks and an unrivaled customer base. Liu said Foxconn will actively develop a modular architecture for AI data centers, and with TECO aim to extend the value chain from server components and racks to data center construction.

As bellwethers in sustainability, both companies will use the strategic alliance as a starting point to enhance a low-carbon smart industry chain that aligns with international trends, and support supply chain resiliency and innovation. Both TECO and Foxconn were named in S&P Global Sustainability Yearbook 2025, a milestone ranking that demonstrates corporate sustainability strength.

About TECO

Founded in 1956 as a motor manufacturer, TECO Electric & Machinery Co., Ltd. ("TECO") has grown into one of the world's top five industrial motor producers. Today, TECO operates across three core business groups—Green Mechatronic Solutions, Intelligence Energy, and Air & Intelligent Life—building a green ecosystem for energy generation, storage, and efficiency.

Beyond motors, TECO has expanded into ESCO energy services, EV powertrain systems, and data center engineering. The company is a market leader in Taiwan's onshore substations for offshore wind (2.5 GW), has delivered over 700 MW of data center projects across Southeast Asia, and holds more than 85% of Taiwan's e-bus powertrain market, with recent expansion into India.

TECO's vision is to become the key driver in realizing global electrification, intelligence, and green energy. It has been included for five consecutive years in both the Dow Jones Best in Class Indices and the S&P Global Sustainability Yearbook, and has received the Taiwan Corporate Sustainability Award for eleven straight years. To learn more, visit https://www.teco.com.tw/en

About Foxconn

Established in 1974 in Taiwan, Hon Hai Technology Group ("Foxconn") is the world's largest electronics manufacturer and leading technological solutions provider, ranking 28th among the Fortune Global 500. In 2024, revenue totaled TWD6.86 trillion (approx. USD208 billion). The Group's market share in electronics manufacturing services (EMS) exceeds 40%. The Group operates over 230 campuses across 24 countries and is one of the world's largest employers with approx. 900,000 employees during peak manufacturing season. The Group has expanded its capabilities into the development of electric vehicles, digital health, and robotics, and three key technologies – next-generation communications technology, artificial intelligence, and semiconductors. Pulling it together with its three intelligent platforms – Smart Manufacturing, Smart EV, Smart City – the "3+3+3" strategy is key to driving the Group's long-term growth. Foxconn is dedicated to championing environmental sustainability in the manufacturing process and serving as a best-practice model for global enterprises. To learn more, visit www.honhai.com

SOURCE TECO Electric & Machinery Co.