Foxconn Pledges $3B Annually to AI Amid China EV Shakeout

Taiwanese electronics giant Foxconn is betting big on artificial intelligence, with plans to invest $2 to $3 billion each year over the next few years. The announcement signals a strategic pivot as the company seeks to expand beyond its traditional consumer electronics business.

Chairman Young Liu highlighted that AI investments will dominate Foxconn’s spending, accounting for more than half of its roughly $5 billion annual capital expenditure. The firm’s cloud and networking operations, including AI server production, have already overtaken consumer electronics as the fastest-growing segment, marking a rapid shift in revenue streams.

China’s EV Market Faces Fierce Competition

At the same time, Foxconn is keeping a close eye on China’s electric vehicle (EV) sector, which Liu describes as intensely competitive. With multiple startups struggling to achieve profitability and limited government support, the market is expected to consolidate soon. Top EV maker BYD recently reported its largest quarterly profit drop in four years and adjusted its 2025 sales target to 4.6 million vehicles.

Liu warned that the early-stage EV industry resembles the personal computer market of the 1990s, where fierce rivalry forced companies to outsource production to stay competitive. Foxconn, which pioneered PC outsourcing with Compaq, sees a similar future in EVs, anticipating a trend of automakers increasingly relying on external manufacturers.

Strategic Talks with Japan

Foxconn is also exploring investment opportunities in Japan, focusing on AI and EV sectors. Liu emphasized that local AI manufacturing is essential for data sovereignty, reflecting growing global attention on controlling sensitive technology infrastructure. While Foxconn has delayed aggressive expansion plans in EVs due to worldwide demand slowdown, the company is positioning itself for growth in alternative areas like quantum computing and robotics.

A Shift in Industrial Focus

The move toward AI signals a broader transformation in Foxconn’s business model, moving from traditional consumer electronics to high-tech infrastructure. This shift is in line with global trends where technological advancements are reshaping the competitive landscape across multiple industries.

Foxconn’s strategy highlights the growing importance of AI in shaping the next generation of industrial investment, while also revealing the fragility of the EV sector in China, which may soon witness a wave of consolidation.