Taipei – Taiwan's Foxconn, which rose to become a global high-tech manufacturing juggernaut by assembling millions of iPhones, can be said that its main business is no longer Apple, as it uses AI-boom to diversify its revenues.
Revenue from manufacturing AI servers and other cloud and networking products surpassed smart consumer products such as the iPhone for the first time in the second quarter involving major customer NVIDIA, marking the pinnacle of a shift that began several years ago and swept the Taiwanese tech industry.
Foxconn's dependence on the smartphone business has long been viewed as a significant risk by investors. Growth in demand for new iPhones has gradually faded since it was first introduced nearly 20 years ago, with top iPhone assemblers working to slow down sales momentum.
Keeping the risks in mind, Foxconn Chairman Young Liu has been advocating for new businesses such as AI servers, electric vehicles and semiconductors since taking the top job in 2019.
The expansion to EVs and chips has yet to make any meaningful contribution to the top line, but Foxconn's success in AI server manufacturing – the company is Nvidia's biggest server manufacturer – is the result of early bets before technology was brought into the spotlight with the advent of ChatGPT in late 20222.
Consumer Electronics accounted for 35% of Foxconn's total revenue in the second quarter, with cloud and networking business accounting for 41%. In 2021, consumer electronics accounted for 54% of revenue.
The company's careful bets a few years ago helped to build a great relationship now with American AI chip companies and other major AI players, analysts said.
“We are pleased to announce that we are committed to providing a range of services to our customers,” said Ming-Chi Kuo, analyst at TF International Securities.
Foxconn began creating reference designs for Nvidia graphics cards around 2002, and around 2009, it began creating general-purpose servers for cloud service provider data centers. We consider the AI server business with Nvidia to be the culmination of its history.
According to Foxconn, it is currently one of the world's largest suppliers of both general purpose and AI servers, each with a market share of nearly 40%.
The company has also shown an appetite to commit to investing in projects early on than other companies, Kuo said, citing past investments in Apple and similar moves by Nvidia. “In the long-term partnership, Foxconn is more than willing to embrace the initiative,” he said.
The strategy is highlighted by FOXCONN's plans to build a factory in Houston, Texas, which is part of NVIDIA's $500 billion US investment plan, and Mexico, which produces AI servers for U.S. clients.
Foxconn expects AI server revenue to rise by more than 170% in three quarters compared to the previous year.
Foxconn and Nvidia declined to comment. Apple did not respond to requests for comment.
Wide shift
The shift at Foxconn reflects a broader trend in the Taiwanese technology sector, which once focused on consumer electronics such as FOXCONN with IPONE, Notma Computer and Wistron Corp. We are currently investing heavily in AI servers.
Wistron's revenues increased 92.7% from January to July, a partner of Nvidia, while Quanta rose 65.6% over the same period.
“Taiwan ODMS monthly sales for the first half of 2025 are evidence of this trend,” said Robert Cheng, head of Asian Technology Hardware Research at Bofa Global Research.
According to Chris Wei, an industry consultant at Taiwan's Market Intelligence & Consulting Institute, the rapid migration to AI servers has been the result of working closely with US tech giants on data center infrastructure for the past decade.
He estimates that Taiwan accounts for about 80% of global server shipments and over 90% of AI servers.
Chen agrees.
“We think this shift to AI servers, no matter what form it is, is a good thing for Taiwan's high-tech industry,” he said.
(Reporting by Wen-Yee Lee, Editing by Miyoung Kim and Shri Navaratnam)
