Federated clustering: An unsupervised cluster-wise training for decentralized data distributions

Federated Learning (FL) enables decentralized machine learning while preserving data privacy, making it ideal for sensitive applications where data cannot be shared. While FL has been widely studied in supervised contexts, its application to unsupervised learning remains underdeveloped. This work introduces FedCRef, a novel unsupervised federated learning method designed to uncover all underlying data distributions across decentralized clients without requiring labels. This task, known as Federated Clustering, presents challenges due to heterogeneous, non-uniform data distributions and the lack of centralized coordination. Unlike previous methods that assume a one-cluster-per-client setup or require prior knowledge of the number of clusters, FedCRef generalizes to multi-cluster-per-client scenarios. Clients iteratively refine their data partitions while discovering all distinct distributions in the system. The process combines local clustering, model exchange and evaluation via reconstruction error analysis, and collaborative refinement within federated groups of similar distributions to enhance clustering accuracy. Extensive evaluations on four public datasets (EMNIST, KMNIST, Fashion-MNIST and KMNIST49) show that FedCRef successfully identifies true global data distributions, achieving an average local accuracy of up to 95 %. The method is also robust to noisy conditions, scalable, and lightweight, making it suitable for resource-constrained edge devices.