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Electronics manufacturing group Foxconn is to build the world’s largest factory making Nvidia’s most advanced artificial intelligence servers in Mexico, in a stark illustration of how global technology supply chains are decoupling from China.
The plant in the central Mexican city of Guadalajara will assemble GB200 Blackwell AI servers, Foxconn’s chair Young Liu told customers and partners at Foxconn’s annual technology showcase event in Taipei.
There was still “crazy” demand for the Blackwell platform, Liu said at the event which was also attended by Nvidia’s vice-president Deepu Talla, who gave few details of the 450m-long plant.
Western governments and companies have sought for several years to bring manufacturing of sensitive technology products and critical supplies closer to their own territory, to reduce their dependency on China in the light of growing geopolitical tensions and supply chain disruptions.
Washington’s effort to rebuild semiconductor manufacturing at home, with the help of multibillion-dollar subsidies, has triggered the largest investments by companies such as Taiwan Semiconductor Manufacturing Co, the world’s largest chipmaker, and its rivals Intel and Samsung.
Foxconn itself continues to operate several massive factory complexes in China, including the world’s largest iPhone plant.
The Taiwanese group is the world’s largest contract electronics manufacturer, offering design, component manufacturing and assembly services spanning products from smartphones to industrial robots and electric vehicles.
While Liu has said China’s weight in the group’s global manufacturing footprint will sink to just over 70 per cent, that transition has been slow as it long struggled to scale up low-end, labour-intensive assembly operations of smartphones in south-east Asia and elsewhere.
Only over the past year has Foxconn accelerated its pace of investment in India, mainly for iPhone production.
The shift in the production of servers and associated components has moved at a much faster pace because they are part of critical infrastructure in data centres for big cloud companies, such as Google and Amazon, and for governments.
Driven by demands from big cloud services providers and a trade war unleashed by then US president Donald Trump, Foxconn and other big electronics contract manufacturers began moving server production out of China several years ago.
Liu predicted that the rise of “sovereign AI” — the need for nations to develop their own artificial intelligence to align with their national security interests — would also lead to increasingly localised production of the servers needed.
In addition to sovereign AI, “I would propose a ‘sovereignty server’ concept,” he said. “Future server production will happen in the countries that require it. That is the direction we are seeing now.”