Foxconn CEO: AI Surge Takes Time, Server Industry on the Rise

Young Liu, CEO and Chairman of Foxconn, stated in an interview with CNBC that despite the continuous evolution of large language models like OpenAI, the surge in corporate investment in AI infrastructure still has room for growth. Liu highlighted that the technology sector is moving towards Artificial General Intelligence (AGI), but this progression will take time.

In a Tuesday interview with CNBC, Liu explained, "We are aware of AGI and will discuss various levels of intelligence. If intelligence is categorized into four levels, we are currently at level two, with levels three and four yet to be achieved." He emphasized that although AI is advancing, reaching a level of intelligence comparable to or surpassing humans will require more time.

OpenAI is one of the leading companies driving the advancement of AGI. CEO Sam Altman has mentioned that AGI will be developed in the "near future," although he believes it will not significantly alter current work practices. This summer, OpenAI released an upgraded version of the GPT-4o model and announced last week that it had secured $6.6 billion in funding, bringing its valuation to $157 billion. The company is currently developing the next-generation language model, GPT-5, but has not disclosed a specific release date.

Regarding the development of increasingly intelligent AI, Liu views this as a positive development for the AI server industry. He noted that as AGI capabilities improve, AI hardware will become another sector that requires close attention.

In fact, Foxconn has reported strong sales performance due to the robust demand for AI servers. In the September quarter, the company's revenue reached NT$1.85 trillion (approximately $57.5 billion), marking a 20.2% year-over-year increase. This achievement surpassed the company's initial expectations for significant growth.

Foxconn provides manufacturing services to several major global tech giants, including Amazon, Google, Microsoft, and Nvidia. Liu revealed that the company plans to ship Nvidia's next-generation Blackwell GPU servers in the fourth quarter of 2024. Blackwell, also known as GB200, is an advanced AI superchip. Regarding orders for Blackwell servers, Liu stated that demand has "far exceeded our expectations" and mentioned that Foxconn is building a new factory in Mexico to meet the substantial demand for the product.

This statement aligns with Nvidia CEO Jensen Huang's previous comments on the demand for Blackwell products. Last week, Huang told CNBC that the demand for Blackwell is "crazy." It is reported that Blackwell is expected to be priced between $30,000 and $40,000 per unit, with companies like OpenAI, Microsoft, and Meta showing significant interest. These companies are constructing AI data centers to power products such as ChatGPT and Copilot.

In addition to providing IT infrastructure for cloud-based applications like ChatGPT, Foxconn is also powering the new iPhone 16. The smartphone features the latest generative AI capabilities, which Apple hopes will inject new vitality into the smartphone industry. Liu stated that "local" AI processing on devices represents the company's next significant growth opportunity.

He further remarked, "I believe that devices related to generative AI will become the next growth path. Currently, we are seeing this in the cloud. You can observe that generative AI cloud devices are thriving. However, in the next phase, we will see generative AI devices. We believe this will be the next major growth avenue... We have high expectations for these devices."

It is noteworthy that although Apple has not yet released an AI system named "Apple Intelligence" on the iPhone, the company is expected to launch a beta version of Apple Intelligence to the public in its software update this fall. Smartphone manufacturers aim to usher in a new era of sustained growth, referred to as a "supercycle," by integrating AI features into their new models. Beyond Apple, Samsung, Google, and Huawei's subsidiary Honor are also heavily investing in AI for their new smartphone releases.

According to preliminary data from IDC, smartphone sales are showing strong momentum this year. In the second quarter of 2024, smartphone shipments increased by 6.5% year-over-year, reaching 285.4 million units, marking the fourth consecutive quarter of growth. This trend indicates that AI is becoming a new driving force behind the advancement of the smartphone industry.