Foxconn is accelerating its transformation from a traditional contract electronics manufacturer into a higher-value technology and infrastructure player, committing between $2 billion and $3 billion annually to artificial intelligence. Against the backdrop of a slowing global EV market, heightened competition in China, and a reshaping of the global supply chain, the company is signaling that AI—not consumer devices—will anchor its next phase of growth.

A Strategic Pivot Toward AI Infrastructure

Chairman Young Liu’s comments underscore the most dramatic shift in Foxconn’s investment priorities in decades. The company plans to funnel more than half of its annual capital expenditures into AI over the next three to five years, steering resources toward advanced servers, cloud infrastructure, and high-performance computing. This move comes as Foxconn’s cloud and networking division, which includes AI server production, has surpassed consumer electronics for two consecutive quarters—a clear indicator of changing revenue dynamics.

The redirection of investment also reflects broader market trends. With global demand for smartphones slowing and capital-intensive AI expansion accelerating, Foxconn is positioning itself at the center of one of the most powerful technology cycles in years, where data centers, model training, and high-end chips are driving unprecedented levels of corporate spending. For suppliers like Foxconn, the shift marks an opportunity to anchor future earnings in higher-margin categories that offer long-term resilience.

China’s EV Market Approaches a Breaking Point

Parallel to its AI strategy, Foxconn is confronting a rapidly evolving landscape in China’s electric-vehicle sector. Liu warned that consolidation is inevitable, citing intensifying price competition, slowing demand, and waning government support for smaller manufacturers. Many EV startups, he said, are “not making money,” and the industry’s cost structure has become unsustainable without a shakeout.

Recent indicators support this assessment. BYD, the country’s leading EV maker, recently reported its sharpest quarterly profit decline in more than four years and cut its 2025 sales target. Domestic competition has intensified, squeezing margins across the board and forcing even established players to rethink production volumes, pricing strategies, and model line-ups.

Liu compared the EV industry’s trajectory to the early era of personal computing, when fierce competition forced many manufacturers to abandon in-house production and embrace outsourced assembly—an evolution that ultimately propelled Foxconn into a global manufacturing powerhouse. A similar shift, he suggested, may soon unfold in EVs as automakers look for cost advantages and operating efficiencies.

Exploring New Frontiers in Japan and Beyond

Foxconn is also in discussions with the Japanese government regarding potential AI and EV investments, signaling its intention to diversify its strategic footprint. Liu emphasized that localized AI infrastructure will be critical for maintaining data sovereignty—an issue gaining importance across Asia as governments reassess technological dependencies and supply-chain vulnerabilities.

Although Foxconn postponed its earlier target of capturing 5% of the global EV market by 2025, it has not abandoned its automotive ambitions. Instead, the company is pacing its investments, evaluating opportunities in EV components, autonomous driving systems, robotics, and even quantum computing. This selective approach reflects a market environment where timing and capital allocation are critical to avoiding overextension.

What Comes Next

Foxconn’s accelerated push into AI and its measured posture toward EVs highlight a company recalibrating its long-term strategy around sectors with clearer visibility and higher growth trajectories. As AI server demand continues to surge and China’s EV market approaches consolidation, Foxconn is positioning itself to benefit from both technological and structural shifts. The company’s ability to balance aggressive investment with disciplined market timing will determine how effectively it navigates this pivotal transition.