Donghai announced on August 25 that it will invest US$168 million in its Mexican subsidiary FII AMC MEXICO, which is generally seen as a key layout for further expanding the capacity of artificial intelligence (AI) servers.
The subsidiary is affiliated to Industrial Welfare (FII), which has received US$241 million in funding support from Donghai as early as 2024, and has now become an important base for the group to manufacture AI servers. At the same time, Dung Hai is deepening cooperation with NVIDIA (NVIDIA) and using NVIDIA's Omniverse platform and digital biotechnology to build an AI factory, covering the United States, Mexico and Taiwan.
This increase not only demonstrates Dunghai's strong determination in the global AI server production competition, but also highlights the strategic value of the Mexican factory. Mexico not only surrounds major North American customers, but can effectively shorten supply chains and reduce logistics costs, but also help avoid US-China taxes and ground political risks. At the same time, the local competitive dynamic costs also bring better cost control advantages to the Duck Sea.
FII leads the global AI supply chainRelying on Donghai's profound OEM technology and manufacturing management experience, Industrial Fulian (FII) has established diversified production capacity layout in Taiwan, Mexico, the United States and other places to form a concrete and flexible global supply network. This strategy not only improves the ability to serve major global customers and the market response speed, but also effectively disperse the risks of political, trade policies and supply chain disruptions.
It is worth noting that it is facing fierce competition from many hardware manufacturing giants from around the world. Traditional server manufacturers including Dell, HP, and United have long established mature AI server solutions and global production capabilities; at the same time, suppliers such as Supermicro and Huasheng that focus on high-performance computing are also accelerating investment in the AI hardware domain. These competitors not only have technical accumulation, but also have large and efficient distribution channels, forming resistance to the market share.
Donghai and NVIDIA cooperated to introduce Omniverse platform and Digital Twins technology, successfully improving the intelligence of AI factories. Through virtual simulation and data rebate, the production process is continuously optimized, not only improving efficiency and precision, but also effectively reducing operational costs and energy consumption. For example, Mexican factories have achieved annual power usage reduction by more than 30%.
NVIDIA also cooperates with many OEM and competitive manufacturers such as Taiwan Power and Samsung to make Dung Hai bear pressure in the cooperation model and the distribution of interests; coupled with its high dependence on NVIDIA technology, if its strategy is adjusted or hardware architecture is upgraded in the future, Dung Hai will also face potential risks.
Dunghai has increased investment and has recycling risksAs countries accelerate investment in AI basic construction, global demand for AI hardware has risen rapidly, and the focus of competition is focusing on three major trends: technology leadership, global layout and diversification of participants.
The author believes that in this context, Dunghai has invested heavily in the construction of Mexican subsidiaries and AI servers, although it helps to strengthen production capacity and layout, it will have to bear heavy capital pressure in the short term, and the reporting will be in a medium-term and long-term period. At the same time, fierce market competition and rapid technological environment have also increased investment recovery risks.
If it only depends on the OEM model, Donghai will be limited in terms of price and profit space, so it must deepen cooperation with chip designers, software solution suppliers and cloud service providers to build a complete ecological system and technical wall-to-wave.
Through fund investment, technical cooperation and global decentralized layout, Donghai will actively create an efficient, reliable and innovative AI server supply chain. This will not only respond to current market demand, but also position the advantages of future competition in advance, strengthening its core position in the global AI industry chain.
However, while showing forward-looking vision and strategic strength, Donghai still faces multiple challenges such as strong competitive opponents, including technical breakthroughs, management efficiency, capital use and environmental social responsibility. In the future, whether it can combine manufacturing advantages and ecological systems to form a differentiated competitive wall-shaping will become its key to its continuous AI hardware supply chain.
Foxconn investors US$168 million more in Mexico, likely for AI servers Extended reading: Duck sea plus investment in Mexico of 5.1 billion yuan to expand North American AI server production