Article · AI translation
Thanks to IT Home reader 咩咩洋 for the tip!
IT Home reported on October 31 that, according to U.S. broadcaster CNBC on the 30th local time, Hon Hai plans to further expand its AI server business and increase production in the United States. Chairman Liu Yang-wei said demand in the AI infrastructure market remains strong, and the group hopes to increase its market share further.
In an interview, Liu Yang-wei said the company currently holds about 40% of the global AI server market. He expects that share could rise to about 45% next year and has a chance of reaching 50% in the coming years.
Hon Hai has long been known for assembling Apple iPhones under contract. In recent years, its AI infrastructure business has gradually become an important driver of growth for the group.
Liu Yang-wei expects the AI infrastructure business to contribute 60% to 65% of Foxconn's revenue over the next three to five years, excluding edge AI devices that run artificial intelligence and machine learning algorithms directly on local hardware.
AI infrastructure orders continue to grow, and production capacity is fully booked for at least the next year and a half. Orders currently come mainly from AI model developers and cloud service providers. Government and corporate customers have yet to adopt AI technology fully, but overall market demand remains strong.
Hon Hai is also preparing to further expand production in the U.S. market. Liu Yang-wei said the group plans to move upstream in the supply chain to better meet demand in the United States.
Given the higher cost of manufacturing in the United States, Hon Hai will initially prioritize higher-margin products such as AI server racks and data center equipment. Liu Yang-wei believes manufacturing costs could eventually fall as the scale of U.S. production increases. Through this expansion, the company hopes to further strengthen its position in the AI infrastructure supply chain, extending its business from servers and racks to entire data centers and computing power services.
Liu Yang-wei cautioned, however, that growth in the AI market does not mean companies can expand investment without regard to cost. He stressed the need to keep investment levels under strict control, saying bluntly, “Overinvestment will destroy the company.”
As its AI business develops, the company's annual AI investment is expected to exceed its original plan of US$3 billion to US$5 billion (IT Home note: approximately 20.009 billion to 33.348 billion yuan at current exchange rates), depending on the extent of its vertical integration.
Regarding the potential impact of major customers cutting AI spending, Liu Yang-wei said a decline in demand from one customer could be offset by growth in other business areas. But if demand falls across the industry, Hon Hai and the entire AI supply chain will face a greater challenge.