TAIPEI, July 30 (Reuters) - Taiwan's Foxconn,

the world's largest contract electronics maker, will form a

strategic partnership with industrial motor maker TECO Electric

& Machinery to boost development in the AI data centre

market, they said on Wednesday.

The move underscores Foxconn's efforts to expand beyond its

traditional role as an iPhone assembler as it taps opportunities

in the artificial intelligence infrastructure market, from

supplying AI server racks to data centre businesses.

Under the deal, Foxconn will hold a 10% stake in TECO, which

will hold about 0.519% of Foxconn, they said, adding at a press

conference that the partnership's target market extends beyond

Taiwan and Asia to the U.S. and Middle East.

The companies aim to accelerate global data centre

development by combining Foxconn's expertise in servers, cooling

systems and uninterruptible power supplies with TECO's

experience in data centre power infrastructure, they said.

TECO Electric & Machinery Co is Taiwan's top

industrial motor maker and ranks among the world's top five

suppliers of small low-voltage and medium- to high-voltage

motors. It also produces motors for electric vehicles.

The company has provided mechanical, electrical and plumbing

engineering services for data centre infrastructure for more

than a decade, it said, specialising in power infrastructure

outside the server room.

"This is where Foxconn and TECO can jointly extend the value

chain. Accelerating data centre construction will also help

expand the server rack market," said Foxconn spokesperson James

Wu.

"Taiwan's strength in AI lies in its vertical integration,

design capabilities, and production scale... (the) Foxconn-TECO

partnership would result in faster, more cost-efficient

solutions."

The news comes after Apple ( AAPL ) and Nvidia ( NVDA )

supplier Foxconn halted trading in its shares on Wednesday. TECO

also halted trading in its shares.

TECO entered Malaysia's data centre infrastructure market

this year with the acquisition of an 80% stake in NCL Energy. In

July, the company said it had secured major data centre projects

in the Malaysian states of Selangor and Johor Bahru.

Foxconn, officially called Hon Hai Precision Industry ( HNHPF ), has a

big AI server business and is actively expanding its electric

vehicle business. It has also been seeking partnerships with

automakers and within the automotive supply chain.

The Taiwan technology giant this month reported record

second-quarter revenue on strong demand for AI products but

cautioned about geopolitical and exchange rate headwinds.