Phinergy Prepares for Mass Production of Aluminum-Air Backup Generators

2 July, 2026

Strategic manufacturing agreement aims to scale production from hundreds of megawatts to multiple gigawatts annually for the rapidly expanding AI-driven data center market

By Yohai Schwiger

Shares of Phinergy rose about 8% on the Tel Aviv Stock Exchange today (as of 1:00 p.m.) after the company announced the signing of a strategic memorandum of understanding with a U.S.-based global manufacturing and assembly company, paving the way for mass production of its aluminum-air backup power systems for data centers.

While Phinergy did not disclose the identity of its manufacturing partner, it said the company generates billions of dollars in annual revenue and ranks among the world’s leading providers of advanced manufacturing and supply chain services. Under the agreement, Phinergy plans to begin production at a capacity of approximately 300 megawatts per year—equivalent, according to the company, to roughly $300 million in annual sales—before expanding to multiple gigawatts annually.

Phinergy develops aluminum-air generators designed to replace diesel generators as backup power systems for data centers and other critical infrastructure. The technology generates electricity through an electrochemical reaction between aluminum plates and oxygen from the air, eliminating on-site combustion and emissions. According to the company, the systems can provide backup power for several days, with operating time extended simply by replacing the aluminum plates.

Under the agreement, Phinergy will continue manufacturing its proprietary core components, which contain the company’s key intellectual property, while the U.S. partner will be responsible for final system assembly during high-volume production. The model mirrors the manufacturing strategy adopted by many hardware companies, enabling rapid production scaling without the need to build large, capital-intensive manufacturing facilities.

Although the company has not identified its partner, its description suggests it could be one of the world’s major contract manufacturers, such as Jabil, Flex, or Sanmina, all of which specialize in producing complex systems for the data center, energy, and electronics industries.

The announcement aligns with Phinergy’s broader strategic shift toward the rapidly growing data center market, fueled by the accelerating adoption of artificial intelligence. Last year, the company’s aluminum-air technology was selected to participate in a validation project led by the Net Zero Innovation Hub consortium, whose members include Google and Microsoft, to evaluate next-generation backup power solutions for data centers.

Should the validation program lead to commercial deployments, manufacturing capacity is expected to become a decisive competitive advantage. The new memorandum of understanding is intended to address precisely that challenge—not only proving that the technology works, but demonstrating that it can be manufactured at the scale of hundreds of megawatts, and eventually multiple gigawatts per year, as required by the world’s largest data center operators.

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