TAIPEI (Taiwan News) — Electronics maker Foxconn will invest up to NT$94 billion (US$3 billion) in AI as its chair warns that China’s overcrowded EV sector is nearing a major shakeout, Reuters reported Friday.
Over the next three to five years, AI will account for more than half of Foxconn’s roughly NT$156.66 billion in yearly capital expenditure. The company’s cloud and networking division, which includes AI servers, has outpaced its consumer electronics business for two straight quarters.
Foxconn Chair Young Liu (劉揚偉) said the rapid shift in revenue mix shows how fast global demand for AI hardware is growing. He added that Foxconn intends to consolidate its leadership in AI server manufacturing as competition heats up.
He also warned that China’s crowded EV industry faces “very fierce competition” and is headed toward consolidation. He said many unprofitable startups will struggle as government support weakens and market pressures intensify.
“They’re not making money,” Liu said, arguing that Beijing cannot sustain subsidies for every EV maker in the world’s largest auto market. He predicted the industry would become “much more stable” once weaker players exit.
Signs of stress are already visible in China’s EV sector. Automaker BYD recently reported its steepest quarterly profit drop in more than four years and cut its 2025 sales target amid rising domestic competition.
Foxconn postponed its goal of capturing 5% of the global EV market this year, reflecting slowing worldwide demand. Liu said the company remains committed to EVs but will wait for better market conditions before making major new investments.
He confirmed Foxconn is in talks with the Japanese government about potential investments in both AI and EVs. He said domestic manufacturing of AI systems is crucial for data sovereignty and could shape future collaborations.
Liu compared the EV industry to the early personal computer market, when intense rivalry made in-house production unsustainable. Foxconn helped pioneer the outsourcing model with Compaq in the 1990s, reshaping global electronics supply chains.
The same pattern is emerging in EV manufacturing, Liu said. He expects carmakers to accelerate outsourcing once a single successful example proves the model’s viability, echoing the PC industry’s transformation three decades ago.
