A change in leadership would come at a delicate time for the world's largest contract manufacturer, which is trying to reinvent itself to cut its reliance on Apple as smartphone sales plateau and as the iPhone maker diversifies its supplier base.
It would mark another top-level change at a tech firm in Greater China.
Jack Ma, co-founder of China's Alibaba Group, said in September he will step down as chairman in a year to allow for younger management. And Morris Chang, founder and chairman of Taiwan Semiconductor Manufacturing Co (TSMC), another Apple supplier, retired last year.
Terry Gou, speaking on the sidelines of an event in Taipei, said that while he planned to resign as Foxconn chairman, he hoped to remain involved in strategic decisions regarding the company's business.
When asked by Reuters if he would quit as chairman, Gou said he was moving in that direction, although any decision needed to be discussed with the company's board.
"I don't know where you got the information from. But I have to say, basically, I'm working toward that direction - to walk back to the second line, or retire," Gou said.
"I will be involved in the major direction of the company, but not involved in daily operations.
"I'm already 69 years old. I can pass down my 45 years of experience. That's the goal I set up - to let young people learn sooner and take over sooner and to replace my position sooner."
Gou said his plans would be discussed with the board of Foxconn, formally known as Hon Hai Precision Industry Co Ltd, in the coming months and shareholders would be told at the AGM in June.
A source with knowledge of the matter told Reuters that Lu Sung-Ching, the chairman of Foxconn Interconnect Technology Ltd, the electronic and optoelectronic connectors unit of Foxconn, was among the possible candidates to take over from Gou.
"It doesn't mean he will just be gone. He will remove himself to the second line and he would not be involved in the daily operations," the source said.
Shares of Foxconn, which has a market value of $40 billion, rose after the news and closed 3.2 percent higher on Monday.
The news comes as tech companies are seeking to diversify their customer base and move into emerging industries such as artificial intelligence and autonomous driving.
Foxconn, which celebrated 30 years of doing business in China last year, has far-flung businesses that include autonomous car startups and investments in cancer research.
In January, the Nikkei reported that Foxconn had let go around 50,000 contract workers in China since October.
Foxconn acquired control of Japan’s Sharp Corp in 2016 to try to boost the Taiwanese company’s advanced screen technology.
Founded in 1974, the Foxconn group has grown to become the world's biggest contract manufacturer with T$5.2 trillion ($168.52 billion) in annual revenue, assembling goods for Apple, SoftBank Group Corp and other global tech firms. It relies on Apple for more than half of annual revenue, according to analysts.
Gou, who owns 9.4 percent of Foxconn as its top shareholder, is Taiwan's richest person with a net worth of $7.6 billion, according to Forbes.
Last month, Foxconn reported a smaller than expected fall in quarterly profit, despite warning signs from key customers including Apple that demand for tech electronics was softening.
The news comes three months after Reuters reported Foxconn was reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus. Foxconn later reiterated it would still build a factory in Wisconsin after Gou spoke to U.S. President Donald Trump.
(Reporting By Yimou Lee; Writing by Anne Marie Roantree; Editing by Muralikumar Anantharaman)
By Yimou Lee