THE WASHINGTON POST: Hon Hai Chairman says AI demand is real after meeting Sam Altman

Hon Hai Precision Industry Co., a key Nvidia Corp. production partner, is counting on a steady US expansion and a partnership with OpenAI to help hit its goal of capturing half the AI server market within two years.

Hon Hai wants to raise its share from 40% currently to 50%, while lifting gross margins to about 10% by making more high-value components, Chairman Young Liu told Bloomberg TV on Friday.

He also confirmed he’d met with OpenAI chief Sam Altman earlier on Friday to discuss their existing partnership, though he declined to provide specific details.

The ChatGPT developer is intent on building up a vertically integrated business that spans both hardware and software.

Known also as Foxconn, Hon Hai has together with the US government delivered about $20 billion of new investment into facilities on American soil over the past three to four years, a pace Liu said he hopes to maintain.

The company’s expanded its manufacturing presence in the US for both Nvidia and Apple Inc. over the past year or so.

Read: Apple’s iPhone Maker Confident of Meeting Surge in Duo Demand

Foxconn, which also assembles the iPhone, is a key enabler of a multitrillion-dollar global AI infrastructure buildout by supplying servers to major cloud service providers.

The company now relies on AI hardware for roughly half of its revenue.

Investors, however, are increasingly doubtful about how far future AI services can go to deliver earnings commensurate with the extraordinary spending to set up computing facilities.

Liu is adamant that the hardware side of the business is genuine and unquestionable.

“This is not fake demand. This is not imaginative demand. This is real, so that’s a good problem. As long as we are able to keep up with the demand, we’ll make money,” Liu told Bloomberg TV on Friday.

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