Foxconn Technology (2317.TW), the world’s largest electronics contract manufacturer, is significantly expanding its server production capacity in Mexico in response to skyrocketing demand for Nvidia's next-generation Blackwell GPUs and associated servers. Young Liu, Foxconn’s chairman, described the current demand for the GB200-based NVL72 servers—equipped with 72 B200 GPUs for AI and high-performance computing (HPC) workloads—as "crazy."

The Taiwanese company is constructing one of the world's largest server assembly plants in Chihuahua, Mexico, aiming to produce machines for North American clients without relying on its facilities in China, Taiwan, or Southeast Asia. With over $500 million already invested, this facility is projected to be operational by 2025, with a planned capacity of 20,000 servers per month.

Building this enormous facility is a strategic move for Foxconn, allowing the company to reduce its dependence on Chinese manufacturing while enhancing its presence in North America. This expansion is particularly significant for U.S. government contracts and other clients that prefer systems not produced in China.

The new plant will specialize in assembling motherboards and servers for Nvidia's Blackwell-based systems, which require complex liquid cooling solutions—making the assembly process more intricate than that of traditional servers. Foxconn has previously been the sole manufacturer of Nvidia’s compute GPU modules, including the A100, H100, and H200.

Despite facing delays in the launch of B200-based servers due to necessary redesigns, Liu stated that current demand for AI computing continues to exceed Foxconn's initial projections, indicating sustained growth in the AI sector. Foxconn's existing operations in Mexico, which include facilities in San Jerónimo and Juárez, further strengthen its manufacturing capabilities in the region.

Foxconn’s partnership with Nvidia remains crucial, as the latter anticipates multibillion-dollar revenue from its Blackwell chips in the upcoming quarter. With the new facility, Foxconn aims to capture an even larger share of the burgeoning AI server market, reinforcing its position as a key player in the industry.