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The backstory: Last year, the artificial intelligence (AI) landscape was shaken up when OpenAI's ChatGPT made its debut. This sent shockwaves across the tech world, drawing giants like Google, Microsoft and others into the AI arena. One notable player that joined the frenzy was Nvidia, known for its advanced chips used to power AI. The chipmaker even saw its market value surge past the US$1 trillion mark joining tech giants like Apple, Microsoft, Alphabet and Amazon.
Meanwhile, Foxconn, the Taiwanese giant behind Apple products, aimed to diversify. For instance, its subsidiary, Foxconn Industrial Internet (FII), was reportedly set to become Apple's sole supplier for AI servers, with production in Vietnam. This was part of Apple's plan to reduce its reliance on Chinese manufacturing. FII was already supplying servers to big names like Amazon Web Services, OpenAI and Nvidia.
More recently: In January, Foxconn and Nvidia teamed up to work on self-driving vehicle platforms. Foxconn said it would manufacture electronic control units using Nvidia's chips.
Earlier this week, the Biden administration introduced new export restrictions on high-tech chips and tools. These restrictions are in response to concerns about the possible military uses of advanced technology in China. They'll take effect in 30 days and seem to be affecting Nvidia, restricting its chips designed specifically for the Chinese market.
The development: Nvidia and Foxconn are teaming up to create something they're calling "AI factories." This was announced by Nvidia CEO Jensen Huang and Foxconn Chairman Young Liu at a tech event in Taipei on Wednesday. Huang described these AI factories as places where intelligence is manufactured, and they'll handle various tasks, including training autonomous vehicles, operating robotics platforms and managing large-scale language models.
Huang believes Foxconn, with its expertise, can establish these AI factories worldwide. Liu highlighted Foxconn's shift from being a manufacturing company to a broader platform solution provider. Their focus is on smart cities and smart manufacturing.
"A new type of manufacturing has emerged – the production of intelligence. And the data centers that produce it are AI factories," said Nvidia CEO Jensen Huang.
"This car would, of course, go through life experience and collect more data. The data would go to the AI factory. The AI factory would improve the software and update the entire AI fleet," said Huang. "In the future, every company, every industry, will have AI factories."
"A new type of manufacturing has emerged – the production of intelligence, and the data centers that produce it are AI factories," said Huang.