Foxconn, the world’s largest contract electronics maker, has announced that artificial intelligence (AI) applications will drive demand for its server business in 2021. Foxconn Chairman Liu Young-way has stated that the company remains cautious about the year ahead due to geopolitical tensions, monetary policy tightening, and inflation uncertainty. However, the surge in interest in AI has positioned servers as a bright spot for the company. Liu predicts that the market for AI servers will rise much faster than initially expected, and the company may experience a three-digit increase in the second half of 2021. Foxconn has a 40 percent global market share for servers and aims to increase this further.
Foxconn’s Financial Performance in Q1 2021
Foxconn recently revealed a 56 percent plunge in net profit for Q1 2021, which was below market forecasts, marking the company’s most significant quarterly fall in three years. The company’s cloud and network products segment, including servers, accounted for 22 percent of revenue in Q1, with smart consumer electronics, including smartphones, accounting for 56 percent. Liu has stated that 2023 overall will be a flat year for the company due to global economic woes.
Foxconn’s Expansion into the Electric Vehicle Market
Foxconn, also known as Hon Hai Precision Industry, has acquired the former General Motors plant in Lordstown, Ohio, and hired a former Nissan executive, Jun Seki, to lead its expansion efforts in electric vehicles (EVs). The company, which assembles around 70 percent of iPhones, aims to replicate its success with Apple’s iPhone in the EV market. Foxconn is considering expanding its EV battery supply chain beyond Taiwan and into the United States, Indonesia, and India. Liu has stated that China, including its massive iPhone plant in China’s Zhengzhou, remains vital for Foxconn, and the company will continue to develop there.
Foxconn sees AI applications driving demand for its server business in the year ahead. Despite global economic challenges, the company aims to further increase its already significant market share for servers. Foxconn’s diversification into the EV market is also underway, with the acquisition of the former General Motors plant and the hiring of a former Nissan executive to lead expansion efforts. While the company has faced financial challenges in Q1 2021, it remains optimistic about its future prospects.
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