Foxconn, long known as Apple’s iPhone manufacturing powerhouse, is undergoing a historic transformation. For the first time, its revenue from AI servers and cloud networking products has surpassed that of consumer electronics.
In the second quarter, cloud and networking made up 41% of Foxconn’s revenue, overtaking consumer electronics at 35%. Just four years ago, iPhones and other smart devices accounted for more than half of the company’s business.
This pivot reflects a broader trend in Taiwan’s tech sector, as companies like Quanta Computer and Wistron also shift from notebooks and phones to supplying AI server infrastructure. Today, Taiwan accounts for about 80% of global server shipments and more than 90% of AI servers, underlining its role as the backbone of the AI era.
Foxconn’s chairman, Young Liu, has been pushing diversification since 2019, expanding into AI, EVs, and semiconductors. Its AI server success stems from early investments: Foxconn began building Nvidia reference designs in 2002 and general-purpose servers for cloud providers in 2009. Now, with Nvidia as its largest AI server customer, Foxconn commands nearly 40% of the global AI server market.
The company is doubling down, planning factories in Houston and Mexico as part of Nvidia’s $500 billion U.S. expansion strategy. AI server revenue is expected to soar 170% year-on-year in Q3.
Analyst Insights
- “The company has been in the business for years, meeting higher quality requirements, diversifying assembly and operations across sites, and pursuing vertical integration,” noted Ming-Chi Kuo of TF International Securities.
- BofA’s Robert Cheng highlighted the rapid transition of Taiwan’s ODMs, calling it a healthy shift for the region’s tech industry.
From iPhones to AI Infrastructure
Foxconn’s reinvention marks the end of the “iPhone era” in Taiwan manufacturing and the dawn of something far bigger. While Apple’s iPhones made Foxconn a household name, AI servers promise to make it indispensable.
This isn’t just diversification, it’s a survival strategy. Smartphones are a maturing market, with slowing growth and shrinking margins. AI, on the other hand, is exploding. Every government, every cloud giant, and every AI startup needs servers, and Foxconn has quietly positioned itself as their most reliable builder.
The irony is striking: while Apple once dictated Foxconn’s fortunes, now Nvidia and the AI ecosystem are shaping its future. The company has effectively swapped dependence on one giant for reliance on another. Still, this time, the market is broader, faster-growing, and central to the next wave of technological change.
