Foxconn unit expands AI output with new Taiwan site

Taiwan’s Hon Hai Precision Industry Co. (Foxconn) announced that its subsidiary, Ingrasys Technology, will lease a facility in the Farglory Free Trade Zone in Taoyuan, Taiwan, for NT$657 million (US$22.8 million).

The 60-month lease includes eight floors in a factory on Hangxiang Road, Dayuan District.

Ingrasys is expanding its AI server production lines in the free trade zone, as well as in Luzhu, Taoyuan, and Hukou, Hsinchu.

Earlier this year, it announced a US$142 million investment in land and a factory in Houston, Texas, and also acquired a facility in Sunnyvale, California.

Foxconn is adjusting its high-end AI server production capacity across Taiwan, the US, Mexico, and Vietnam.

The company expects AI server revenue to grow over 50% in 2025, potentially surpassing NT$1 trillion (US$34.7 billion).

🔗 Source: Focus Taiwan

🧠 Food for thought

1️⃣ Hon Hai’s strategic pivot to AI represents a crucial business transformation

Hon Hai’s aggressive expansion of AI server production facilities reflects a deliberate strategic pivot away from its traditional core business model.

The company has historically been heavily dependent on Apple, which accounts for approximately 55% of its revenue, but this reliance has become problematic as smartphone demand matures 1.

This transformation is financially necessary as Hon Hai’s returns on invested capital have declined significantly, falling from 23% in 2016 to just 11% in 2023, indicating diminishing returns from its traditional assembly business 1.

The company’s projection that AI server revenue will exceed NT$1 trillion this year and grow by more than 50% demonstrates the scale and importance of this strategic shift 2.

Hon Hai’s evolution from a small plastic parts manufacturer in 1974 to the world’s largest electronics manufacturing services provider shows the company’s ability to adapt at critical market inflection points 3.

2️⃣ Taiwan emerging as the epicenter of global AI infrastructure manufacturing

Taiwan’s industrial output increased by 5.07% year-on-year, primarily driven by demand for AI and high-performance computing components, with the electronic components sector surging by 16.67% 4.