Hon Hai expects capex to grow over 30% in 2026

Taipei, May 14 (CNA) Taiwan-based manufacturing giant Hon Hai Precision Industry Co. said Thursday that it expects the company's capital expenditure to grow more than 30 percent in 2026.

Speaking at an investor conference, Hon Hai CEO Michael Chiang (蔣集恆) said that as the iPhone assembler, better known as Foxconn globally, has greatly benefited from robust demand for AI and cloud devices, an over 30 percent increase in capex is planned for this year.

Chiang said the spending will boost investment in regional production, introduce automation and enhance core manufacturing capacity.

Before the investor conference started, Hon Hai announced it posted its highest-ever first quarter net profit of NT$49.92 billion (US$1.58 billion), up 19 percent from a year earlier and up 10 percent from the previous quarter.

Hon Hai, which is focused on AI development in an effort to diversify its product portfolio, said its cloud and networking division accounted for 48 percent of first quarter total sales of NT$2.12 trillion.

Chiang reiterated an earlier estimate made by the company that sales will more than double in 2026 with revenue generated from AI servers and cloud-based devices expected to grow sharply.

In the first quarter, Hon Hai's operating margin -- the difference between sales/cost of goods sold and operating expenses -- stood at 3.57 percent. Chiang said the operating margin for 2026 is expected to beat the 3.2 percent recorded in 2025, Chiang said.

Chiang also maintained the company's previous estimate that AI server rack shipments will more than double this year, with shipments in the second quarter forecast to grow at a high double-digit pace.

According to Chiang, AI servers made up more than 50 percent of Hon Hai's server revenue in the first quarter. For general servers, shipments could grow at a double digit pace, beating the industry average.

Currently, the company has a roughly 40 percent share of the global AI server market.

In addition, shipments of co-packaged optics (CPO) switches is slated to start in the third quarter and the number could hit 10,000 units this year, Chiang said.

Hon Hai Spokesman James Wu (巫俊毅) said shipments of multiple AI solutions are expected to increase quarter by quarter this year with shipments of AI servers embedded with application-specific integrated circuits (ASIC) likely to double.

Hon Hai has also raised its efforts at developing sovereign AI by teaming up with sovereign AI infrastructure firm Amin and French-government owned Bull to develop sovereign AI infrastructure in Africa, Wu added.

Echoing Wu, Chiang said Hon Hai has worked with major cloud service providers to develop ASIC-powered AI server racks, while the company is also investing 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 as demand from North America remains strong, Chiang said.