Graphics chip maker Nvidia Corp. is partnering with electronics-component maker Foxconn Technology Group on electric vehicles, as both tech companies continue to push into the booming market.

The two companies on Tuesday announced the partnership, where Foxconn, a contract manufacturer best known for its work on Apple Inc. products, would produce electronic control units based on Nvidia’s Drive Orin system-on-a-chip, the central computer for intelligent vehicles.

Foxconn, formally known as Hon Hai Precision Industry Co., said that its manufactured electric vehicles will use Nvidia’s electronic control units and sensors that enable highly automated driving.

The partnership will allow both companies to help the industry meet growing market demand for electric vehicles while increasing their presence in the market. The U.S. auto industry is in the midst of one of its biggest factory-building booms in years, fueled largely by the shift to electric vehicles, among other trends. The global auto industry plans to spend a collective $526 billion on electric vehicles through 2026, according to consulting firm AlixPartners.

With the agreement, Taipei-based Foxconn aims to speed up its ability to make electric vehicles and cut costs, while Santa Clara, Calif.-based Nvidia looks to boost manufacturing of its components. Six months ago, Foxconn started building its first electric-car battery plant in Taiwan.

Foxconn has made other recent moves into the electric-vehicle space. In November, Foxconn entered into a joint venture with Saudi Arabia’s sovereign-wealth fund to manufacture electric vehicles to help the Middle East country diversify its economy away from oil.

Foxconn also in November said it would invest $170 million in Lordstown Motors Corp. , an EV startup that is building its first all-electric pickup truck at a former General Motors Co. plant in Ohio. Foxconn and Lordstown Motors are planning to jointly develop their first electric vehicle together.

Nvidia, meanwhile, has long supplied hardware to run infotainment systems in cars. It is now increasingly betting on software and chips that underpin sophisticated driver-assistance systems.

Mercedes-Benz Group AG

recently tapped Nvidia’s platform for its EV production.

Write to Sabela Ojea at sabela.ojea@wsj.com