Market saturation and profit reduction make Apple’s partners in Asia simultaneously shift to Big Data and AI (Part 2)

In the context of an unpromising market for PC and smartphone, some big vendors such as Foxconn, Pegatron, and Quanta are turning to new technologies such as AI, IoT, 5G, and cars.

Earlier this year, Mr. Terry Gou, the President of Foxconn, said that AI solutions would play a key role in the company’s future. In June 2018, Foxconn decided to separate Foxconn Industrial Internet to be a new company and listed it on the Shanghai Stock Exchange. As a result, this company earned $3.98 billion to boost the AI ​​industry. “The next three years will be very important to Foxconn as we move into an Internet company focused on big data and AI”, Gou shared with his shareholders.

Gou is also keen to expand Foxconn’s coverage in the United States. The $10 billion-valued LCD panel complex in Wisconsin will pave the way for Foxconn to access research and development resources. Foxconn has also set up a $100 million research collaboration project with the University of Wisconsin-Madison and established a new AI company in Silicon Valley in July 2018.

Quanta, the world’s biggest notebook maker, is also shifting to some areas where Foxconn is concerned. “The era of laptops has passed”, President Barry Lam said to the reporters after the company’s annual meeting in June. Quanta has been involved in cloud computing for about 10 years and is one of the first Taiwanese electronic components and service providers to enter this field. This company is the world’s largest contract data center builder, and Facebook, Amazon, and Google are their customers. Additionally, it began building AI data centers three years ago.

Similar to the above two companies, Pegatron is also turning to develop IoT devices and intelligent speakers that integrate virtual assistants, automatic devices, and electric vehicles.

In spite of these changes, the companies are likely to face several difficult fiscal years. At present, AI applications are still in the early stages of development while the market for IoT devices, automation devices, and self-driving vehicles has just budged. Moreover, most of these devices and applications depend on the development of 5G networks, which will be available by 2020. According to many analysts, a majority of next-generation technology products will have a much smaller market than PCs and smartphones.

“In the era of AI ​​or IoT, it is quite hard to see any products, especially electronics-related ones that can sell millions of devices each year like PCs or smartphones”, said Vincent Chen, the Head of Regional Research Group cum a hardware expert at Yuanta Investment Consulting. Taiwan component suppliers can make a fortune in the new technology era, but it is difficult for companies such as Foxconn to achieve such phenomenal growth as they did in the past, Chen added. He also believed that escalating trade tensions between the US and China are also a challenge for suppliers. While looking for solutions that no longer depend on PCs and smartphones, these companies also need to avoid potential damages from commercial wars.

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