Taipei: Taiwan-based Hon Hai Precision Industry Co. announced Wednesday that its capital expenditure for 2026 will be directed towards expanding AI production capabilities, emphasizing its commitment to bolstering global research and development (RandD) and production, particularly in the United States.
According to Focus Taiwan, Hon Hai's rotating CEO Michael Chiang addressed an investor conference, reaffirming the company's capital expenditure growth target of over 30 percent for 2026. He elaborated on the company's plans to enhance production capacity for critical AI devices, including AI servers, AI racks, and liquid cooling equipment. In 2025, the company's capital expenditure reached NT$173.8 billion (US$5.39 billion), marking an increase of NT$37.4 billion from the previous year, as stated by Hon Hai's chief financial officer, David Huang.
Huang further detailed that the capital expenditure for the first half of this year amounted to NT$80.9 billion, reflecting a rise of NT$3.7 billion from the prior year. He assured that Hon Hai possesses the capability to generate substantial cash and secure sufficient external financing to meet its funding requirements.
Chiang highlighted that the next-generation AI racks will commence mass production in the third quarter, with shipments scheduled to begin in the fourth quarter. These new AI racks are anticipated to become the core AI product of Hon Hai, also known globally as Foxconn, by 2027. The capital expenditure will also support strengthening global manufacturing and automation efforts in locations such as Taiwan, the U.S., Mexico, and Vietnam.
Focusing on the U.S. market, Chiang underscored plans to expand RandD and production capabilities at production campuses in Texas, Wisconsin, Ohio, and California to cater to American client needs. The increase in capital expenditure is expected to significantly boost sales, profits, and cash flows for Hon Hai in the future.
Chiang projected that shipments of AI racks will grow at a double-digit pace in the third quarter, with a more than doubling of AI rack shipments anticipated for 2026 compared to 2025. Hon Hai currently holds over a 40 percent share of the global AI server market and aims to elevate this share to 50 percent.
Moreover, Chiang noted strong growth prospects for Hon Hai's cloud and networking division due to AI applications, while the smart consumer electronics division is poised for a sharp uptick as it enters a traditional peak season. In the semiconductor sector, the utilization rate of Hon Hai's eight-inch fab in Japan has surpassed 90 percent, focusing on key semiconductor technologies such as silicon carbide (SiC), automotive microcontrollers (MCUs), and AI power chips.
In the electric vehicle business, Chiang announced that EVs based on Hon Hai's Model B will be delivered to New Zealand and Austria by the end of this year, with the Cavira SUV series set for delivery in the Taiwan market starting in July.