Foxconn's AI server capacity for the next 18 months is fully booked

Recently, foreign media outlet CNBC published an exclusive interview with Hon Hai Chairman Young Liu. In the interview, Liu said that demand for AI infrastructure has shown no sign of significant slowdown, and that Hon Hai plans to raise its global AI server market share from the current roughly 40% to about 45% next year, and to 50% within the next few years.

Hon Hai, officially named Hon Hai Precision Industry, has long been known for assembling Apple's iPhone, but AI infrastructure is rapidly becoming its core growth engine. Data disclosed by Hon Hai in August this year shows that in the second quarter of this year, the company's cloud and networking products division, which includes AI servers, accounted for 51% of second-quarter revenue, breaking above 50% for the first time. This means that although iPhone assembly remains an important business for Hon Hai, AI hardware has already matched or even surpassed it in financial contribution.

Supporting Liu's confidence is Hon Hai's substantial AI server orders. He said that Hon Hai's production capacity for at least the next year and a half has been fully booked, reflecting continued strong demand for AI infrastructure. Current demand comes mainly from AI model developers and cloud service providers, while government and enterprise customers have not yet fully adopted the technology. Liu stressed that AI demand remains "quite strong," and that government and enterprise customers are still in an early exploratory stage, suggesting there is still considerable room for demand to be unleashed.

It is worth noting that during Hon Hai Tech Day on October 30, Liu revealed that he had met with OpenAI CEO Sam Altman to discuss cooperation between the two sides. In an interview with Bloomberg Television that day, he also stressed: "This is not fake demand, not imagined demand. It is real, so that is a good question. As long as we can keep up with demand, we can make money."

Hon Hai is currently accelerating its manufacturing footprint in the United States. In the CNBC interview, Liu said the company plans to extend upstream along the supply chain to better serve the U.S. market. "What we need to do next is move upstream along the supply chain," he explained, saying that a broader manufacturing footprint will enable Hon Hai to respond more quickly to surging demand.

But U.S. manufacturing costs are higher, so initially priority will be given to producing higher-margin products, including AI server racks and data center equipment. Liu believes that as U.S. production scale expands, manufacturing costs are ultimately expected to decline. Hon Hai currently has six factories in Houston, Texas, producing AI servers for customers such as Nvidia, and believes further expansion is necessary.

However, even with strong demand, Liu still emphasized prudent investment management. He said bluntly: "Overinvesting will kill a company." Hon Hai will strictly control spending as it expands its AI business. Depending on the degree of vertical integration, Hon Hai's annual AI investment may exceed the originally planned US$3 billion to US$5 billion.