Nvidia outsources production of over half of its AI hardware to one company

The Chinese company Foxconn is now responsible for producing over half of Nvidia AI hardware, Techradar (via Economic Daily reports).

When it comes to producing tech gadgets in China, Foxconn is the first name that comes to mind. The company has close ties with global tech leaders like Apple and produces their devices in China. Much of Foxconn’s reputation is due to producing iPhones. However, Nvidia is also outsourcing its AI hardware production to Foxconn.

According to Liu Yangwei, the chairman of Foxconn, the company now produces over 70% of AI servers sold globally. That said, Nvidia’s compute GPU modules, such as the A100, A800, H100, and H800, are also manufactured by Foxconn.

Foxconn agrees to produce AI hardware for Nvidia

The company is also expanding its production to servers and server cabinets, which doesn’t include Nvidia orders only. Servers that use proprietary AI processors by Amazon Web Services and Google are made by Foxconn. Demand for AI servers is skyrocketing, and Foxconn is pegging itself as the most reliable producer of servers of this kind. Inventec, Quanta, and Supermicro are other AI server producers.

Yangwei added that cloud service providers (CSPs) are the biggest customers for AI servers. AI-based applications have exploded in popularity, and cloud service providers (CSPs) strive to offer a platform capable of running these apps. Likewise, Nvidia CEO Jensen Huang has recently said AI-powered chips can reinvent computers, and AI platforms are the future of computing.

Foxconn’s CEO also stated that the company has close ties with American CSPs like Google, Amazon, and Microsoft. It’s also capable of manufacturing parts in its firm in Wisconsin to prevent unprecedented conflicts with the US government.

The AI server market is expected to reach $150 billion by 2027. The market’s value in 2023 is also estimated at $30 billion. Foxconn’s dominance will allow it to acquire a major share of this segment. According to IDC data, the entire server market was valued at $123 billion in 2022. This number can grow to $186 billion by 2027.