Foxconn's $10M Expansion in Mexico: AI and EV Focus

Foxconn Corporation announced a significant investment of $10 million on January 10th to enhance the capital of its subsidiary in Mexico, reinforcing its commitment to expanding production capacities in pursuit of key business sectors – artificial intelligence (AI) servers and components for electric vehicles.

Through its subsidiary, Focus PC Enterprises Limited, Foxconn successfully acquired equity in Cloud Network Technology Kft. Additionally, another subsidiary, Cloud Network Technology Kft., secured shares in Ingrasys Technology Mexico SA de CV, with the overall transaction amounting to $10 million.

Insiders in the supply chain have reported substantial achievements for Foxconn in the AI server industry during 2023. Notably, Foxconn secured exclusive orders for the H100 AI server modules from NVIDIA in North America. The company plans to manufacture these modules in its facilities located in Mexico, the United States, and Taiwan. Foxconn is optimistic about the high production capacity and yield of the H100 modules, laying a robust foundation for securing orders for the H100's successor, the B100 module.

In the realm of AI servers, Foxconn's subsidiary, Hon Hai Technology, boasts production capabilities in Hsinchu, Taiwan, alongside facilities in Mexico and Wisconsin, USA. This strategic global distribution helps mitigate geopolitical risks.

Turning to the automotive product sector, sources within the supply chain confirm that Foxconn's Mexican factory has secured orders for electronic control units (ECUs) for Tesla vehicles. The factory is set to expand shipments of automotive electronic module products, contributing significantly to the broader supply of Tesla products and positioning Foxconn Group as a key player in the automotive component market.

Foxconn's Mexican factory currently stands as the largest-scale manufacturer among Taiwanese facilities in Mexico. Notably, PCE Technology de Juarez SA de CV, a Foxconn subsidiary, is situated on the U.S.-Mexico border and has become the largest consumer electronics product assembly plant in North America since its establishment in 2009.

While the factory's historical revenue centered around servers and network products, the expansion into supplying Tesla and automotive products is expected to be a significant driver of future growth. With BMW and KIA also planning to establish factories in the region, Mexico has emerged as a global hub for electric vehicle manufacturing, aiding Foxconn Group in attracting traditional automotive clients.

Foxconn's Chairman, Liu Yangwei, previously stated that automotive components are a major source of revenue growth. In 2022, Foxconn's revenue from automotive components was approximately NT$20 billion, and it is estimated to grow to between NT$50 billion and NT$100 billion in 2023. The ongoing expansion of the Mexican factory, along with the development of new electronic control and sensor product lines, as well as battery core and battery pack testing and manufacturing, contribute to Foxconn's strategic initiatives in this sector.