Foxconn chairman says its AI server share could be 50%

Young Liu is chairman of Hon Hai Technology Group, known as Foxconn. He told CNBC that its share of the global AI server market is about 40% at this time. He says it could be 50% in about two years. Foxconn is best known as a primary assembler of Apple iPhones. He says AI demand is strong.

What is new

Liu says Foxconn will make more in the US and move up the supply chain. US costs are higher, and it will first make equipment with stronger margins. These include AI server racks and data-center equipment. He says AI infrastructure will be 60% to 65% of revenue in three to five years.

The numbers

• Foxconn plans to spend $3 billion to $5 billion a year on AI.
• Liu says it could spend more if it makes more.
• These are his statements and forecasts, not results.

What is not known

Orders at this time come largely from AI model developers and cloud providers. Governments and companies are not fully in the market at this time. Liu says an industry-wide slowdown can be a much larger challenge.

Insight: A full order book depends on a small number of large buyers

Liu says orders come largely from model developers and cloud providers. Delangue, chief of Hugging Face, says most companies can operate their own models in 24 months, but he gave no data. This seems like a bet: the plan of Foxconn needs governments and companies to start to buy too.