Foxconn’s AI server business overtakes Apple products for first time

Foxconn now claims nearly 40% market share in both general-purpose and AI servers globally.

Taiwan's Foxconn has reached a significant milestone in its diversification strategy, with revenue from AI servers and cloud networking products surpassing its traditional smartphone manufacturing business for the first time in the second quarter (Q2) of 2025.

The world's largest contract manufacturer, best known for assembling Apple's iPhones, reported that its cloud and networking division now accounts for 41% of total revenue, compared to 35% from consumer electronics. This marks a dramatic shift from 2021, when consumer electronics represented 54% of revenue.

Strategic pivot pays off

Foxconn Chairman Young Liu has been steering the company toward new growth areas since 2019, recognizing the risks of heavy dependence on smartphone demand. The strategy has proven prescient as iPhone sales momentum has gradually weakened over the past two decades.

"The company has been in the business for years, meeting higher quality requirements, diversifying assembly and operations across sites, and pursuing vertical integration," Kuo Ming-chi, analyst at TF International Securities told Reuters.

The transformation builds on relationships cultivated long before the current AI boom. Foxconn began producing Nvidia graphics card reference designs in 2002 and started manufacturing servers for cloud providers around 2009. This foundation positioned the company to become Nvidia's largest server manufacturer when AI demand exploded following ChatGPT's launch in late 2022.

Foxconn now claims nearly 40% market share in both general-purpose and AI servers globally. The company expects AI server revenue to surge more than 170% year-on-year in Q3 2025. Future expansion plans include new factories in Houston, Texas, and Mexico to serve US clients, reflecting Foxconn's willingness to invest early in strategic partnerships.

Industry-wide transformation

The shift extends beyond Foxconn across Taiwan's technology sector. Fellow manufacturers Wistron and Quanta Computer have seen revenue jumps of 92.7% and 65.6% respectively in the first seven months of 2025, driven by AI server demand.

"The monthly sales jump for Taiwan ODMs in the first half of 2025 is evidence of this trend," said Robert Cheng, head of Asia technology hardware research at BofA Global Research.

Taiwan's established position in the global supply chain has facilitated this transition. Industry estimates suggest Taiwan accounts for approximately 80% of global server shipments and over 90% of AI servers.

"We think this shift toward AI servers, whatever form it takes, is good for Taiwan's tech industry," Cheng noted, highlighting Taiwanese manufacturers' ability to rapidly adapt to changing customer needs.

The milestone represents not just Foxconn's successful diversification, but the broader evolution of Taiwan's tech manufacturing ecosystem from consumer electronics toward enterprise AI infrastructure.