Hon Hai invests US$142 million in Texas, likely for AI server capacity

Taipei, March 25 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. has invested US$142 million in Texas, which industrial sources close to the deal said was aimed at expanding its artificial intelligence server capacity.

In a statement filed Monday with the Taiwan Stock Exchange (TWSE), where Hon Hai shares are traded, the company said it had acquired an 86.34 acre lot in Houston and a 1 million square feet building through its cloud solution subsidiary Ingrasys Technology Inc.

While Hon Hai, better known as Foxconn globally, did not specify the purpose of the investment, saying only that it was for operational needs, the sources said it would be used to expand AI server production to initially cater to clients in North America, except Apple Inc.

In late February, Apple announced it would partner with Hon Hai to build an AI server assembly plant in Houston by 2026, with products rolled out by the 250,000 square feet facility to be used to support Apple's data centers.

Before Monday's announcement, Ingrasys Technology previously acquired a building and piece of land in Sunnyvale of California for US$128 million, with industrial sources saying the investment was also made to boost AI server capacity.

According to Hon Hai, it is currently expanding AI server capacity in several areas, including Taiwan, the United States, Mexico and Vietnam, to give the company flexibility in adjusting high-end AI server production based on market conditions.

At an investor conference held on March 14, Hon Hai said it expected AI server sales of more than NT$1 trillion (US$30.30 billion) in 2025 amid the current boom in demand for AI.

Hon Hai, the world's largest contract electronics maker, said the AI servers it assembles are expected to account for 50 percent of its total server revenue and seize a more than 40 percent share of the global AI server market this year.

Last year, Hon Hai posted a new high of NT$6.86 trillion in consolidated sales, up 11 percent from the previous year.

Hon Hai started investing in the U.S. in 1985 before it went to China in 1988.

Hon Hai has since invested in 24 countries around the world and operates 233 facilities.

According to Hon Hai Chairman Young Liu (劉揚偉), the company spent more than NT$340 billion in capital expenditure to expand production worldwide from 2022 to 2024 and that its global expansion is expected to make it resilient amid U.S. tariff threats.