Taiwan’s Foxconn, renowned for its role in assembling millions of iPhones, is shifting its focus from Apple to capitalize on the AI boom, diversifying its revenue streams.
In the second quarter, revenue from AI servers and other cloud and networking products, notably for Nvidia, surpassed that from smart consumer products like iPhones for the first time. This marks a significant shift that has been evolving over the years within Taiwan’s tech industry.
Investors have long considered Foxconn’s dependence on smartphones a risk, as iPhone demand has slowed since their debut nearly two decades ago, impacting the company’s sales momentum, according to analysts.
Addressing these risks, Foxconn Chairman Young Liu has been advocating for new ventures in AI servers, electric vehicles, and semiconductors since 2019.
Although its forays into EVs and chips are yet to significantly impact revenues, Foxconn’s success in AI server production, especially as Nvidia’s leading server manufacturer, is attributed to early strategic investments before AI gained prominence with ChatGPT in late 2022.
Consumer electronics contributed 35% to Foxconn’s total revenue in the second quarter, while cloud and networking business accounted for 41%. In contrast, consumer electronics represented 54% of its revenue in 2021.
Foxconn’s strategic early moves have cultivated valuable relationships with U.S. AI chip firms and other major AI entities, analysts noted.
“The company has excelled in meeting high-quality standards, diversifying assembly sites, and pursuing vertical integration,” said Ming-Chi Kuo, an analyst at TF International Securities.
Foxconn started creating reference designs for Nvidia’s graphics cards around 2002 and began producing general-purpose servers for data centers by 2009. The company’s AI server business with Nvidia is considered a culmination of this history, analysts stated.
Foxconn is now among the largest global suppliers of general-purpose and AI servers, holding a market share close to 40% in each category.
Foxconn’s strategy includes early-stage investments, highlighted by its past commitments for Apple and similar actions for Nvidia. “Foxconn is proactive in long-term partnerships,” Kuo added.
The company’s plan to establish factories in Houston, Texas, as part of Nvidia’s $500 billion U.S. investment, and in Mexico to manufacture AI servers for U.S. clients, underscores this strategic approach, analysts indicated.
Foxconn anticipates its AI server revenue will grow over 170% year-on-year in the third quarter.
Neither Foxconn nor Nvidia commented, and Apple did not respond to requests for comment.
BROADER SHIFT
Foxconn’s transition reflects a wider trend in Taiwan’s tech industry, where firms like Foxconn, Quanta Computer, and Wistron Corp, initially focused on consumer electronics, are now deeply investing in AI servers.
Nvidia partner Wistron saw a 92.7% revenue increase from January to July, while Quanta experienced a 65.6% rise in the same period.
“The significant sales boost for Taiwan ODMs in the first half of 2025 underscores this trend,” said Robert Cheng, head of Asia technology hardware research at BofA Global Research, referring to companies like Foxconn that manufacture products for clients.
This swift transition to AI servers results from Taiwan’s tech supply chain’s decade-long collaboration with U.S. tech giants on data center infrastructure, according to Chris Wei, an industry consultant at Taiwan’s Market Intelligence Consulting Institute.
He estimates Taiwan accounts for approximately 80% of global server shipments and over 90% of AI servers.
Cheng concurs.
“This shift towards AI servers benefits Taiwan’s tech industry,” he noted, highlighting Taiwanese firms’ agility in adapting to client needs.
