Hon Hai to direct 2026 capital expenditure toward global AI expansion
Taipei, August 13
Taiwan-based Hon Hai Precision Industry Co. announced that its capital expenditure for 2026 will focus on expanding artificial intelligence production, while allocating funds to strengthen global research and development as well as manufacturing operations, particularly in the United States, according to a news report by Focus Taiwan.
Speaking at an investor conference, Hon Hai's rotating chief executive officer Michael Chiang reiterated the company's capital expenditure growth target of over 30 per cent for 2026, saying it will continue to expand production capacity of critical AI devices such as AI servers, AI racks and liquid cooling equipment.
In 2025, the company's capital expenditure stood at NT$173.8 billion (USD 5.39 billion), reflecting a NT$37.4 billion (USD 1.28 billion) increase from the previous year, according to Hon Hai chief financial officer David Huang.
Capex for the first half of this year reached NT$80.9 billion (USD 2.77 billion), representing a NT$3.7 billion (USD 126.8 million) increase year-on-year, Huang said, adding Hon Hai is capable of creating large cash and securing sufficient external financing to meet fund demand.
Chiang noted that next-generation AI racks will enter mass production in the third quarter, with shipments slated to begin in the fourth quarter. These new AI racks are expected to become the core AI product for the company, globally known as Foxconn, by 2027.
Chiang further said that the capex will also be used to strengthen its global manufacturing and automation in locations such as Taiwan, the US, Mexico and Vietnam.
He singled out the U.S. market, saying Hon Hai will continue to expand its R&D and production capability in its production campuses located in Texas, Wisconsin, Ohio and California to meet requirements from American clients.
The rotating chief executive officer explained that the increase in capex was paving the way to a significant increase in sales, profits, and cash flows in the future for the firm. Shipments of AI racks are projected to grow at a double-digit pace in the third quarter, while full-year shipments for 2026 are expected to more than double compared to 2025.
Hon Hai currently holds an over 40 per cent share of the global AI server market, with plans to raise that figure to 50 per cent. The firm expects its cloud and networking division to enjoy strong growth due to AI applications, while its smart consumer electronics division is also likely to grow sharply as it enters a traditional peak season.
As per the news report, in the semiconductor sector, the utilization rate of Hon Hai's eight-inch fabrication facility in Japan topped 90 per cent, focusing on key technologies such as silicon carbide, automotive microcontrollers, and AI power chips.
Meanwhile, in its electric vehicle business, deliveries of vehicles based on the Model B platform to New Zealand and Austria are scheduled for the end of this year, following the start of deliveries for the Cavira SUV series in Taiwan in July.
— ANI
Reader Comments
Good to see Foxconn (Hon Hai) doubling down on AI. But the US getting all that R&D focus while Asia gets the crumbs? We've seen this pattern before. India should be pushing harder to attract this kind of investment, especially with our growing semiconductor ambitions.
This is massive for the global AI supply chain. A 30% capex increase means they see enormous demand ahead. India should position itself as a manufacturing alternative to Vietnam for AI hardware, not just a software services hub.
The Model B EV deliveries to New Zealand and Austria are interesting, but what about India? With our EV push and local manufacturing incentives, shouldn't Foxconn be looking at India for EV production too? We keep missing these opportunities while China and Vietnam benefit.
Impressive numbers - NT$173.8 billion in capex last year. But I wonder if this AI bubble could burst. All these companies investing billions into AI servers and racks, but where's the actual revenue coming from? Let's hope it's not another dot-com style overinvestment.
As someone working in IT, I see the AI demand firsthand. Foxconn's move to expand in the US while keeping Taiwan at the core makes strategic sense. But I'd love to see some of this investment flow to India - we have the engineering talent to support this scale of manufacturing.
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