Taipei: Taiwan-based manufacturing giant Hon Hai Precision Industry Co., also known globally as Foxconn, announced its expectation for the company's capital expenditure to grow by more than 30 percent in 2026. This statement was made by Hon Hai CEO Michael Chiang during an investor conference, where he highlighted the company's strategic plans to capitalize on the increasing demand for AI and cloud devices.
According to Focus Taiwan, Chiang explained that the planned increase in capital expenditure is aimed at boosting investment in regional production, introducing automation, and enhancing core manufacturing capacity. The announcement follows Hon Hai's report of its highest-ever first quarter net profit of NT$49.92 billion (US$1.58 billion), marking a 19 percent increase from the previous year and a 10 percent rise from the prior quarter.
Hon Hai has been focusing on AI development to diversify its product portfolio. Its cloud and networking division accounted for 48 percent of first quarter total sales of NT$2.12 trillion. The company anticipates that sales will more than double in 2026, with revenue from AI servers and cloud-based devices expected to grow significantly.
In the first quarter, Hon Hai's operating margin was reported at 3.57 percent. Chiang expressed confidence that the operating margin for 2026 will exceed the 3.2 percent recorded in 2025. He also reaffirmed the company's forecast that AI server rack shipments will more than double this year, with a high double-digit growth expected in the second quarter.
According to Chiang, AI servers comprised more than 50 percent of Hon Hai's server revenue in the first quarter. General server shipments are also projected to grow at a double-digit rate, outperforming the industry average. Hon Hai currently holds approximately a 40 percent share of the global AI server market.
The company plans to begin shipments of co-packaged optics (CPO) switches in the third quarter, with expectations of reaching 10,000 units this year. Hon Hai Spokesman James Wu noted that shipments of multiple AI solutions are anticipated to increase each quarter, with AI servers embedded with application-specific integrated circuits (ASIC) likely to double.
Hon Hai is also advancing its efforts in developing sovereign AI by partnering with sovereign AI infrastructure firm Amin and French-government owned Bull to establish sovereign AI infrastructure in Africa. Chiang emphasized the company's collaboration with major cloud service providers to develop ASIC-powered AI server racks and its investments in AI server components, including liquid cooling and high-speed transmission solutions.
The United States and Mexico will continue to serve as Hon Hai's AI server production hubs, driven by strong demand from North America, Chiang added.