H3C Technologies, owned by Tsinghua Unigroup and HPE, recently announced that it will collaborate with Foxconn to establish its first overseas factory in Malaysia.
The Malaysian factory is set to begin production in September 2024, before setting up facilities in the US, Mexico, and Europe over the next 2-3 years. Yingtao Yu, President and CEO of the H3C Group, announced this development during the 2024 Zhejiang-Taiwan Cooperation Week.
H3C's partnership with Foxconn signals goodwill and cooperation with Taiwan-based manufacturers. The plan is to leverage Taiwan's precision manufacturing advantages to enter and expand in overseas markets.
The collaboration project in Malaysia involves H3C providing digital solutions and technical support, utilizing its expertise in AI, IoT, cloud computing, big data, and information security. These technologies will be leveraged to facilitate Malaysia's digital transformation, offering comprehensive solutions and services.
The move aligns with H3C Group's strategy for overseas expansion. H3C deployed its UIS Hyper-converged Infrastructure in major hospitals across Malaysia, supporting the hospitals' data centers with PACS/HIS system virtualization.
This deployment enhances the digital management, retrieval, distribution, and display of medical imaging files, thereby promoting digital transformation and economic development in Malaysia and the Southeast Asian region.
H3C will leverage Foxconn's chip manufacturing facilities in Malaysia. Foxconn has acquired an approximately 5.03% stake in Malaysia-based Dagang Nexchange Bhd (DNex), which holds a 60% stake in SilTerra.
This investment grants indirect control over an 8-inch (200mm) wafer fab in Malaysia. The fab is expected to have a monthly capacity of 40,000 wafers, utilizing 28nm and 40nm process nodes.
Meanwhile, Foxconn Industrial Internet (FII), Foxconn's subsidiary, benefits from the surging demand for compute building, and the AI server business has become FII's new growth engine, with AI-related compute business accounting for 30% of its revenue.
FII has engaged itself in GPU modules, substrates, and AI server design and system integration, securing orders from major clients such as Alibaba, Amazon, and Apple. FII projects that AI contributions will increase its cloud computing share to 40% in 2024, with AI servers' global market share rising to 40%.
Recently, Tsinghua Unigroup announced the acquisition of a 30% stake in H3C for approximately US$2.14 billion, increasing its shareholding from 51% to 81%. Tsinghua Unigroup may continue to acquire the remaining 19% of H3C shares, potentially making H3C a wholly-owned subsidiary.
H3C is China's largest supplier of HPE servers, memory, and technical services. According to IDC data, H3C held the second-largest market share (15.8%) for x86 servers in China for three consecutive years from 2021 to 2023. In addition, H3C ranked first in blade server market share (51.7%) from 2019 to 2023 and held the second-largest market share (20.5%) for GPU servers in China from the first half of 2020 to 2023.
