Hon Hai's 2026 capex to focus on AI expansion

Taipei, Aug. 12 (CNA) Taiwan-based Hon Hai Precision Industry Co. said Wednesday that its capital expenditure for 2026 will focus on AI production expansion, while the company will allocate funds to strengthen global R&D and production, especially in the United States.

Speaking at an investor conference, Hon Hai's rotating CEO Michael Chiang (蔣集恆) reiterated the company's capex growth target of over 30 percent for 2026, saying it will continue to expand production capacity of critical AI devices such as AI servers, AI racks and liquid cooling equipment.

In 2025, Hon Hai's capex stood at NT$173.8 billion (US$5.39 billion), up NT$37.4 billion from a year earlier, Hon Hai's chief financial officer David Huang (黃德才) said.

The capex for the first half of this year stood at NT$80.9 billion, up NT$3.7 billion from a year earlier, Huang said, adding Hon Hai is capable of creating large cash and securing sufficient external financing to meet fund demand.

Chiang said the next-generation AI racks will enter mass production in the third quarter with shipments slated to begin in the fourth quarter. The new AI racks are expected to become the core AI product of Hon Hai, also known as Foxconn globally, in 2027, he added.

Chiang further said that the capex will also be used to strengthen its global manufacturing and automation in locations such as Taiwan, the U.S., Mexico and Vietnam.

He singled out the U.S. market, saying Hon Hai will continue to expand its R&D and production capability in its production campuses located in Texas, Wisconsin, Ohio and California to meet requirements from American clients.

Chiang said the increase in capex is paving the way to a significant increase in sales, profits and cash flows in the future for Hon Hai.

The rotating CEO said shipments of AI racks are expected to grow at a double-digit pace in the third quarter. For the whole of 2026, AI rack shipments are expected to more than double from 2025.

Currently, Hon Hai has an over 40 percent share of the global AI server market. Chiang said the company aims to boost the share to 50 percent.

He said Hon Hai's cloud and networking division is expected to enjoy strong growth due to AI applications, and its smart consumer electronics division is also likely to grow sharply as it has entered a traditional peak season.

In the semiconductor field, Chiang said the utilization rate of its eight-inch fab in Japan has topped 90 percent with a focus on key semiconductor technologies such as silicon carbide (SiC), automotive microcontrollers (MCUs), and AI power chips.

In the electric vehicle business, Chiang said EVs based on Hon Hai's Model B will be delivered to New Zealand and Austria at the end of this year, and delivery of the Cavira SUV series in the Taiwan market will start in July, Chiang said.