Apple and Foxconn’s Houston AI Hub Sparks Massive Energy and Infrastructure Demands

Apple and Foxconn's AI Facility in Houston

Apple is currently testing servers in Houston as it prepares to launch a 250,000-square-foot artificial intelligence facility in partnership with Foxconn. Mass production is expected to start in 2026.

Infrastructure and Energy Demand

Foxconn is set to manufacture AI hardware in Houston for Apple and Nvidia. This expansion requires significant energy support, prompting Houston utility CenterPoint Energy to consider infrastructure upgrades. These upgrades could handle a power demand increase equivalent to tens of thousands of homes.

The investment is substantial, with hundreds of jobs and $420 million expected to be added to the Houston economy. However, specifics about the extent and cost of these power upgrades remain unclear. Foxconn has not confirmed its exact electricity needs for its AI projects, including the Apple server factory and a proposed Nvidia supercomputer factory.

According to CenterPoint, Foxconn's Houston operations could add over 100 megawatts of electricity demand, which is roughly the peak power usage of 25,000 homes. This demand could grow significantly depending on project developments.

CenterPoint Energy’s role: The utility is actively collaborating with Foxconn to ensure the electric grid can support the high-capacity requirements of AI manufacturing. This goes beyond just running data centers — it involves powering the production of the hardware those centers rely on.

Future Energy Needs

Energy is a critical factor in Foxconn’s plans. While Houston’s current infrastructure can support immediate needs, future AI hardware generations will require more power. Nvidia’s chips, for example, consume about 50% more energy with each new generation.

Foxconn’s chief product officer emphasized the need for early planning with local governments and energy providers to avoid power shortages within five to ten years. This foresight is essential for sustainable growth.

Energy Usage Patterns

Foxconn is not building data centers in Houston but will assemble and test servers and supercomputers. While assembly uses moderate energy, testing involves “burn-in” periods lasting up to 48 hours, which can cause sharp spikes in electricity consumption.

In Wisconsin, Foxconn built a dedicated substation for similar operations, but no such plans exist yet for Houston.

Texas Power Demand Projections

Foxconn’s expansion aligns with a broader AI and data center boom in Texas. The Electric Reliability Council of Texas forecasts that peak power demand in the state could rise by up to 70% by 2031 due to these developments.

CenterPoint projects that AI projects, data centers, and medical center expansions could account for 30% to 35% of the Houston region’s electricity demand growth by 2031.

Infrastructure Upgrades and Costs

CenterPoint is evaluating whether Foxconn can be served through the local distribution network or if it requires direct connection to high-voltage transmission lines, typically reserved for large industrial customers. Potential upgrades include enhancing substations, adding power lines, and installing transformers and switches.

The cost allocation for these upgrades is still undecided. Typically, costs are shared among the utility, the customer, and ratepayers. A new state law will soon require regulators to reassess how upgrade costs are divided, aiming to protect residential customers from disproportionate charges.

Foxconn will also need to contract a retail electric provider to purchase its power since CenterPoint only manages delivery infrastructure.

Ultimately, the success of AI manufacturing in Houston depends as much on energy infrastructure—transformers, substations, and power lines—as on the technology inside the servers.