Foxconn Chairman Young Liu also said he expected China’s crowded electric vehicle market to be shaken out “soon” and that the company was in talks with the Japanese government about possible investments in artificial intelligence and electric vehicles.
“Right now, the bulk of the investment will be in AI,” Liu told Reuters during a visit to Tokyo earlier this month. Liu’s comments were embargoed until Friday, coinciding with Apple’s supplier’s annual Honghi Tech Day.
Investments in AI infrastructure and technology development over the next three to five years will account for more than half of Foxconn’s approximately $5 billion in annual capital expenditures, Liu said.
The Taiwanese company’s cloud and networking business, which includes AI servers, outperformed consumer electronics for the second consecutive quarter, underscoring how rapidly its revenue mix is changing.
Liu, who has led Foxconn since 2019, said China’s EV sector faces “very intense competition” and expects consolidation as unprofitable startups disappear and government support weakens. “They’re not making money,” he said, adding that government support was too limited to support all EV makers in the world’s largest car market. He said that after a period of integration, the situation in China’s auto industry will be “much more stable.” The pressure on Chinese EV makers is already clear. Leading EV maker BYD last month reported its biggest quarterly profit decline in more than four years.
Facing increasing competition from domestic rivals, BYD has lowered its sales target for 2025 to 4.6 million units.
Talking with Japan about AI and EV investment
Last November, Foxconn postponed its ambitious goal of capturing 5% of the global EV market by 2025 as the sector faces slowing global demand.
But rather than lose faith in EVs, the company is holding off on increasing investment until market conditions improve, and has plans to expand in other areas such as EVs, quantum computing, and robotics.
Foxconn is in talks with the Japanese government about possible investments in EVs and AI, Liu said, without providing details. He added that local manufacturing of AI systems is important for data sovereignty.
Liu said the EV sector could end up like the early personal computer industry, where intense competition made in-house production unsustainable and prompted a shift to outsourcing.
Foxconn pioneered this model in the 1990s with Compaq Computer, the world’s largest PC supplier. Liu said a similar movement is occurring with EVs, where automakers are likely to outsource more quickly as competition increases.
“If one company starts outsourcing with success, other companies will follow suit,” he said. “That’s exactly what we saw in the PC market.”
