Terry Gou, the chairman of Taiwan's electronics giant Hon Hai Technology Group ( Foxconn ), stated to CNBC that as there are almost no signs of a slowdown in the demand for AI infrastructure, the company is seeking to expand its market share in artificial intelligence servers and enhance its manufacturing capabilities in the United States.
In an interview with journalist Christine Tan from CNBC, Terry Gou stated that Foxconn's market share in the global AI server market is expected to reach 50% in the coming years, and may rise to around 45% next year.
“I think we can grow to 50%,” said Liu Yangwei, referring to Foxconn’s share of the global AI server market. Currently, that proportion is around 40%.
The official name of Hon Hai is Hon Hai Precision Industry. The company is best known for assembling iPhone for Apple, but in recent years, it has increasingly regarded the AI infrastructure as a key driver of growth.
Liu Yangwei expects that, after excluding edge AI devices, AI infrastructure will account for 60% to 65% of Foxconn's revenue in the next three to five years. Edge AI devices refer to those that run AI and machine learning algorithms directly on local hardware.
Liu Yangwei said that Foxconn's production capacity is already fully booked for at least the next one and a half years, which indicates that the demand for AI infrastructure continues to exist.
He stated that currently, the demand mainly comes from AI model developers and cloud service providers, while governments and enterprises have not yet fully adopted this technology. He added that the demand for AI is still “quite strong.”
American Manufacturing Expansion
Liu Yangwei stated that Foxconn is seeking to expand its manufacturing footprint in the United States, and the company plans to extend upstream of its supply chain in order to better serve the American market.
"What we need to do is move up the supply chain," he said, explaining that a more widespread manufacturing layout will enable Foxconn to respond more quickly to the growing demand.
However, the higher manufacturing costs in the United States mean that companies will initially focus on products with higher profit margins, including AI server racks and data center equipment.
Liu Yangwei said that as the production scale in the United States expands, manufacturing costs may eventually decrease.
During this expansion, Foxconn is seeking to strengthen its position in the infrastructure supply chain of AI, with its business scope extending from servers and racks to entire data centers and computing services.
AI Expenditure Risk
However, even though the demand for AI continues to grow, Liu Yangwei emphasizes that controlling investment remains very important.
"Over-investment can kill a company," he said, and added that as the AI business expands, Foxconn will strictly control its expenditures.
Liu Yangwei stated that depending on the degree of vertical integration, Foxconn's expenditure on AI could exceed its original plan of investing between 3 billion and 5 billion US dollars per year.
When asked how the company would respond if its main customers cut back on AI spending, Liu Yangwei stated that a decline in demand from a single customer could be offset by growth in other areas.
However, if the entire industry experiences a general slowdown, this will pose even greater challenges to Foxconn and the broader AI supply chain.
