Foxconn Pivots from iPhone Manufacturing to AI Infrastructure

Foxconn, long recognized as the world’s leading contract manufacturer, has reached a turning point in its business trajectory during the second quarter of 2025. For the first time in its history, income from artificial intelligence servers and cloud equipment has surpassed revenue from consumer electronics, including its iconic iPhone manufacturing operations. This transition reflects a deliberate strategy championed by Chairman Young Liu, who has consistently advocated for reducing dependency on single-product cycles and embracing industries with higher growth potential. The development signifies not just a financial reshaping but also a symbolic departure from Foxconn’s traditional reliance on Apple, the customer that once defined its success.

The Numbers Behind the Transformation

The revenue mix for the latest quarter reveals the depth of this shift. Cloud and networking equipment, including AI servers, contributed 41% of Foxconn’s overall income, while consumer electronics, historically the company’s cornerstone, fell to 35%. The numbers illustrate a wider industry reorientation, as global technology companies prioritize investments in data centre infrastructure and AI capabilities. The extraordinary surge in AI server demand, fueled by the rise of generative AI and advanced machine learning models, has positioned Foxconn not merely as a participant but as a central figure in this rapidly expanding ecosystem.

A Legacy of Early Investments in Emerging Technology

Foxconn’s present success in AI and cloud infrastructure did not materialize overnight. Its journey into server technology dates back to the early 2000s, when it began producing reference designs for Nvidia’s graphics cards. By 2009, the company was already manufacturing general-purpose servers for global cloud providers, a move that quietly laid the groundwork for its current leadership position. Today, Foxconn is estimated to control close to 40% of the global market in both AI-optimized and general-purpose servers. Analysts often cite this outcome as a testament to the company’s philosophy of forward-looking investment, a pattern first evident in its deep collaboration with Apple and now in its strategic alignment with Nvidia.

Expansion to Match Global Demand

Supporting this accelerated growth, Foxconn has extended its manufacturing footprint in critical markets. The company has announced new facilities in Houston, Texas, and Mexico dedicated to AI server production, strategically designed to cater to U.S. clients. These expansions dovetail with Nvidia’s own $500 billion global investment initiative, underscoring the synergy between the two companies. With these efforts in place, Foxconn forecasts its AI server revenue will grow more than 170% in the third quarter compared with the same period in 2024, highlighting both confidence and strong demand momentum.

Financial Performance Reinforcing Strategic Vision

The shift in Foxconn’s business model is also evident in its financial results. In the second quarter, the company posted a 27% year-over-year increase in profits, significantly surpassing analyst expectations. This growth has been propelled by the swelling demand from data centre operators and cloud providers eager to expand AI infrastructure. At the same time, Foxconn has streamlined its portfolio by divesting non-core, traditional manufacturing assets, freeing resources for reinvestment into its AI and cloud businesses. The company’s financial resilience, combined with its strategic redirection, demonstrates a rare alignment of vision, execution, and market opportunity.