Foxconn to spend up to $3bn a year on AI as China’s EV shakeout looms

Foxconn will spend $2 to $3 billion every year on artificial intelligence as it shifts its business away from consumer gadgets. The company’s chairman said the move comes at a time when China’s electric-vehicle sector is under huge pressure, with a major shakeout coming soon. Here are the five things to know.

1. Foxconn is making a massive AI bet

Foxconn will invest $2–$3 billion every year in AI for the next three to five years. Chairman Young Liu said AI will take up “the majority” of the company’s spending. AI projects will now account for over half of Foxconn’s annual $5 billion capital budget, showing how fast the company is reinventing itself.
“Our biggest push now is AI,” Liu said in Tokyo. “It is where most of our investment will go.”

2. AI revenue is growing faster than gadgets

Foxconn’s cloud and networking arm, which includes AI servers, has now outperformed consumer electronics for two straight quarters. This shift marks a major break from its long-time reliance on smartphones and PCs.

Liu said the company must “follow the direction of global demand,” and right now “AI leads that demand.”

3. China’s EV market Is headed for a shakeout

Liu warned that China’s EV makers are in “very fierce competition.” Many are not profitable, and the government cannot support every startup. “They’re not making money,” he said. “A period of consolidation will make the market more stable.”

Signs of strain are clear. BYD, China’s top EV maker, just reported its biggest quarterly profit drop in over four years and cut its 2025 sales target to 4.6 million vehicles.

4. Foxconn is slowing its EV push but not giving up

Foxconn delayed its goal of taking 5% of the global EV market by 2025. Demand is slowing around the world, and the company says it will wait for conditions to improve.

Still, Foxconn is exploring new areas like quantum computing and robotics, keeping its options open.
“We will expand when the market is ready,” Liu said.

5. Japan talks could lead to new EV and AI deals

Foxconn is in discussions with Japan’s government about possible investments in both EVs and AI.
Liu said Japan values local production of AI systems for security reasons. “Data sovereignty matters,” he said.

He believes the EV industry may follow the early PC boom, where in-house production collapsed and companies began outsourcing. “Once one carmaker outsources successfully, others will follow,” Liu said.

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