According to Hon Hai Precision Industry, you'll have to wait several years before Foxconn's electric vehicle (EV) business reaches its full potential. This announcement comes as EV sales face a slowdown globally. However, while Foxconn is moving slowly in the automotive industry, it's making significant progress in artificial intelligence (AI) servers, especially with Nvidia chips.
Hon Hai, better known as Foxconn and famous for assembling iPhones, is taking a cautious approach to the EV sector. The company sees many uncertainties in this business, so it's not rushing its developments. Jun Seki, the head of Foxconn's EV division, shared these thoughts in an interview with Bloomberg TV ahead of a two-day event showcasing some of Foxconn's latest technology and products. “We need to be wise in how we invest and develop,” said Seki, emphasising that quick moves in a risky environment might lead to setbacks.
Cautious EV strategy
Seki, who joined Foxconn from Nissan Motor in 2023, is leading the company's strategy in the EV space. He will be one of the main executives to present new developments at the upcoming event. Foxconn will unveil a few new vehicle models alongside a US$3 million Nvidia AI chip server.
In the EV space, Seki mentioned that it will take approximately five years for Foxconn to utilise its Ohio-based production plant fully. This factory, bought from Lordstown Motors in 2022, serves as Foxconn's primary EV manufacturing hub in the US. Once fully operational, the facility can produce 350,000 vehicles each year.
Although the process is slow, Seki confirmed that Foxconn remains committed to its goal of manufacturing 5 per cent of all global EVs by 2025. Beyond the US market, the company is exploring opportunities in Japan and Southeast Asia to expand its presence in these regions.
“We're not giving up. Reaching 5 per cent is just the beginning,” said Seki. Ultimately, Foxconn hopes to secure as large a market share in EVs as it has in smartphone production, where it controls around 40 per cent of global manufacturing.
Strong growth in AI server business
While Foxconn's EV plans are advancing slowly, its AI server business is thriving. Thanks to the rise of AI technologies such as OpenAI's ChatGPT, the company has seen massive demand for its AI servers launched in 2022. Major cloud service providers, including Amazon and Meta Platforms, invest heavily in AI, boosting Foxconn's revenues.
Foxconn assembles Nvidia's highly sought-after graphics processors into ready-made modules that data centres can purchase in bulk. This has significantly boosted Foxconn's market performance, with its shares rising by almost 90 per cent this year. The company also reported better-than-expected sales for the third quarter, reflecting strong growth in its AI server operations.
One of the highlights of the upcoming Foxconn event will be Nvidia's NVL72 system, which features next-generation Blackwell chips. This system, comprised of dozens of chips that work together, is expected to capture significant attention at the event. Nvidia's AI technology has become a key part of Foxconn's business strategy, shifting its priorities and future direction.
Foxconn's EV business may take time to scale up, but its booming AI server business has positioned the company for long-term growth.
