Foxconn's parent company, Hon Hai Precision, has indicated that due to a slowdown in global electric vehicle (EV) sales, it will take several years for the company to strengthen its emerging automotive division. Meanwhile, the business of producing and selling artificial intelligence (AI) servers powered by Nvidia (NVDA.US) chips has been thriving and growing rapidly.
In an interview ahead of a two-day showcase of emerging technologies and products, Jun Seki, the head of the company's EV business, stated that Hon Hai is cautiously advancing its electric vehicle operations due to a highly uncertain business environment. "Quick action could be dangerous. We want to be very prudent in terms of investment and development," he said.
It is understood that Seki, who previously worked at Nissan Motor, was appointed as the head of Hon Hai Precision's electric vehicle strategy in 2023. On Tuesday, he will present Hon Hai's latest technologies alongside several key executives, including several new models and Nvidia AI chip servers valued at $3 million. Regarding electric vehicles, he mentioned that the company might need approximately five more years to fully utilize the production line at the Ohio factory acquired from Lordstown Motors Corp. in 2022. The company's main electric vehicle campus in Ohio will be capable of producing 350,000 vehicles annually.
Nevertheless, Seki reiterated Hon Hai's goal of capturing 5% of the global EV manufacturing market by 2025 and expressed interest in gaining a foothold in the Japanese and Southeast Asian markets, in addition to the United States.
"We never give up; 5% is the first step we must achieve," Seki said. The ultimate goal is to secure a share as large as Hon Hai's in the smartphone manufacturing industry, potentially reaching up to 40% or more.
So far, Hon Hai's electric vehicle production in Taiwan has only won corporate customers. The company entered the electric vehicle assembly business in 2020 when the newly appointed chairman, Liu Yangwei, who succeeded founder Terry Gou, was looking for new cash cows. At that time, Apple (AAPL.US) also had ambitions to make significant strides in the automotive sector, but it abandoned its iPhone-on-four-wheels plan earlier this year.
Beyond electric vehicles, the company is rapidly expanding its AI server manufacturing. The launch of ChatGPT by OpenAI in 2022 triggered massive spending by major cloud service providers from Amazon (AMZN.US) to Meta (META.US), changing Hon Hai's priorities and prospects.
The company assembles Nvidia's highly regarded graphics processors into ready-made modules that AI data center operators can purchase in bulk. This has helped drive its stock price up nearly 90% this year and contributed to better-than-expected sales in the third quarter, as announced last Saturday.
Nvidia's multi-million-dollar NVL72 system, composed of dozens of next-generation Blackwell chips organized into a single unit, will be one of the highlights at Hon Hai's press conference on Tuesday.