IPhone Maker Hon Hai Says EV Business Will Need Years to Ramp Up

(Bloomberg) — Hon Hai Precision Industry Co. said that it will take years to build up its nascent automotive arm as electric vehicle sales slow globally, while its business of making and selling AI servers with Nvidia Corp. chips has been booming and growing fast.

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The world’s biggest iPhone assembler is proceeding cautiously with its EV push as it sees a highly uncertain business environment where “a fast move may be dangerous,” the head of its EV business Jun Seki said in an interview with Bloomberg TV ahead of a two-day event showcasing emerging tech and products. “We want to be very smart investment wise, development wise.”

Seki, a Nissan Motor Co. veteran who was appointed Hon Hai’s EV strategy chief in 2023, will be one of several key executives showcasing the firm’s latest tech on Tuesday, including a couple of new vehicle models and a $3 million Nvidia AI chip server. On EVs, he said it will probably take about another five years for the company to fully utilize its production lines at an Ohio facility it acquired from Lordstown Motors Corp. in 2022. The company’s main EV campus in the US, the Ohio plant will be able to build 350,000 vehicles per year.

Still, Seki reaffirmed Hon Hai’s goal of securing 5% of global EV manufacturing in 2025 and said it’s interested in becoming a player in Japan and Southeast Asia in addition to the US.

“We never give up, 5% is the first step we have to achieve,” said Seki, and the ultimate aim is to garner a share as large as Hon Hai has in smartphone manufacturing, as much as 40% or more.

To date, Hon Hai has only won corporate customers for its EV manufacturing at home in Taiwan. It ventured into the EV assembly business in 2020 as then-new Chairman Young Liu, who took over from founder Terry Gou, was looking for new cash cows. At the time, Apple Inc. was also harboring automotive ambitions, however it canceled its iPhone-on-four-wheels plans earlier this year.

In addition to EVs, The Taipei-based firm, also known as Foxconn, is fast expanding its AI server manufacturing. OpenAI’s launch of ChatGPT in 2022 has triggered a big spending spree among the biggest cloud service providers, from Amazon.com Inc. to Meta Platforms Inc., transforming Hon Hai’s priorities and prospects.

The Taiwanese company assembles Nvidia’s highly prized graphics processors into ready-made modules that AI data center operators can buy in bulk. That’s helped propel its shares up by nearly 90% this year, and it reported better-than-expected sales for the third quarter on Saturday.

Nvidia’s multimillion-dollar NVL72 system, composed of dozens of next-generation Blackwell chips organized to work as a single unit, will be one of the highlight showpieces at the Hon Hai event on Tuesday.

–With assistance from Lauren Faith Lau.