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Hon Hai’s Terry Gou plots move beyond iPhone assembly to AI and big data

Bloomberg

Terry Gou, chairman of Hon Hai Precision Industry Co., which took over ailing Sharp Corp., plans to increase its focus on artificial intelligence and big data over the next few years as he seeks to transform the contract manufacturer into a more influential force in the global technology industry.

Gou, at an annual gathering in Taipei for employees and family members Sunday, said the company, best known for assembling Apple Inc.’s iPhones, has a great deal of work to do through 2020 to adapt to the sector’s new realities. He will expand investments in AI, automation and the “internet of things” to position his companies even more centrally in the tech supply chain.

The comments came a day after a Hon Hai unit, Foxconn Industrial Internet Co., said it expects to spend 27.3 billion yuan ($4.3 billion) on next-generation projects and hold an initial public offering in China.

Those efforts will include cloud computing, internet of things solutions, AI manufacturing and fifth-generation wireless technologies, the firm said in an application prospectus on the China Securities Regulatory Commission website.

Hon Hai is moving into sectors beyond pure electronics assembly as growth in the global smartphone industry sputters.

“There will be a big amount of work to do in the next three years because as the world runs faster thanks to the internet economy, the old successful rules can be overturned,” Gou said before an audience of more than 10,000 at a Taiwan exhibition center often used for concerts and other entertainment. “If we don’t keep moving forward, we will be eliminated.”

Gou and his Taiwanese company must strike a delicate balance between China and the United States. Most of Hon Hai’s facilities are in mainland China where the company depends on solid relationships with government officials. Foxconn Industrial Internet is the first Hon Hai unit to list on a domestic exchange.

At the same time, Gou has met with U.S. President Donald Trump and agreed to build a $10 billion display factory in Wisconsin. In July, the state’s governor and Gou signed a memorandum of understanding that calls for up to $3 billion in government assistance and the sale of at least 400 hectares of land.

Hon Hai’s annual gathering is a chance for Gou to speak about his priorities to employees and the media. This year, he put an emphasis on how their company will manage technology trends touching virtually all corners of the industry.

“In the last year, we made preparations for the next transformation of the company,” he said. “In the next three years, from 2018 to 2020, we will solidify our plans as the company moves toward the industrial internet, big data, artificial intelligence and platform economy.”

Hon Hai and its affiliates took control of cash-strapped display maker Sharp Corp. in 2016 and pledged to revive the 100-year-old brand. The company has reported five straight quarters of net income.