Foxconn Chairman predicts continued growth in AI investment as language models evolve

Foxconn's Chairman Young Liu has recently shed light on the rapidly growing field of artificial intelligence (AI), asserting that the current investment boom in AI is far from over. Speaking in an interview with CNBC, Liu emphasised that advancements in large language models (LLMs) indicate that the industry is still in its early stages of development.

Liu noted that each new iteration of AI technology is becoming increasingly sophisticated, which he believes will significantly impact the AI server sector. This sector has been a key driver of Foxconn's growth this year, particularly with the anticipated release of Nvidia's Blackwell server chip, which Liu described as having "much better" demand than initially expected.

The concept of Artificial General Intelligence (AGI) was also a focal point in Liu's discussion. He explained that while discussions around AGI are gaining traction, we are currently at what he terms "level two" of intelligence development, with further advancements needed to reach higher levels. His insights align with those from OpenAI's CEO Sam Altman, who has suggested that AGI could emerge in the near future but may not have as profound an impact on employment as many anticipate.

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Foxconn, known as Hon Hai in Taiwan and China, is not only a major player in AI infrastructure but also a leading contract manufacturer for global technology firms including Apple. Recently, the company reported impressive sales figures, with revenues surpassing 1 trillion Taiwanese dollars (approximately £575 billion) for the September quarter a year-on-year increase of 20.2 per cent. This growth is attributed to heightened demand for AI technologies.

The strong demand for Nvidia's Blackwell chip has prompted Foxconn to expand its manufacturing capabilities. Liu indicated that the company is establishing new factories in Mexico to meet this demand, which he described as "insane." The Blackwell chip, expected to be priced between £30,000 and £40,000 per unit, is sought after by tech giants like OpenAI and Microsoft for their AI data centres.

As Foxconn continues to supply cloud-based AI applications like ChatGPT, it is also focusing on producing devices featuring generative AI capabilities. Liu expressed optimism about "on-device" AI, where data processing occurs directly on mobile devices rather than relying solely on cloud services. He believes that this area represents a significant growth opportunity for Foxconn.

The smartphone market is also witnessing a resurgence, with manufacturers integrating advanced AI features into their latest devices. Preliminary data from IDC indicates a 6.5 per cent year-on-year increase in smartphone shipments during the second quarter of 2024, marking four consecutive quarters of growth after years of decline.

Liu anticipates that generative AI devices will become a major growth area for Foxconn in the coming years. He remarked on the potential for a new phase of continuous growth termed a "supercycle," driven by innovative AI features in smartphones from major players like Apple, Samsung, Google, and Huawei's Honor.

As Foxconn navigates this evolving landscape, it remains well-positioned to capitalise on both current trends and future developments within the AI sector. With Liu’s insights underliningthe ongoing evolution of technology and its implications for various industries, it is clear that the journey towards more advanced AI capabilities is just beginning.