The global largest contract electronics producer and Apple’s longtime iPhone manufacturing supply chain partner, Foxconn, has witnessed diversification of business at the company to an all-time high. AI server sales at the company have finally outpaced consumer electronics for the first time ever.
In its second quarter of 2025, its product revenues from cloud and networking — its AI servers, mainly — represented 41% of Foxconn’s overall revenue. Consumer electronics, including Apple, were only 35%. It’s a sign of where the company is in the world’s tech supply chain.
Speeding Into the AI Infrastructure Era
This is not a one-off-quarter idiosyncrasy — it’s a sign of a broader strategic rotation. Foxconn is getting more interested in AI hardware, with stratospheric demand from the heavy hitters like Amazon, Microsoft, and Google.
Since the leading manufacturer of servers for Nvidia, Foxconn will be making high-performance PCs that form the core of future-proofed next-gen data centers. Hyperscalers — gigantic cloud computing giants — are spending big to develop their artificial intelligence technologies, and Foxconn is smack in the middle.
Good Second Quarter Show
The third-quarter numbers indicate the fruit of the makeover. Net income increased 27% to NT$44.4 billion (US$1.48 billion) on a year-ago basis, topping market expectations.
The short-term outlook is equally positive. Third-quarter revenues of AI servers will increase more than 170% year over year. Server rack shipments will increase threefold sequentially from the second quarter, an indication of the collective power of this business.
Why Escaping Smartphones Is Important
Foxconn’s entry into AI hardware is a testament to one basic industry fact: worldwide demand for high-order data computation keeps increasing by leaps and bounds. With AI algorithms becoming increasingly complex and data-hungry, demand for specifically designed servers has gone through the roof.
Leveraging decades of high-volume manufacturing expertise, Foxconn is emerging as an off-the-shelf provider to high-end data center construction firms. Diversification outside phone manufacturing theoretically also insulates its profitability from the vagaries of consumer electronics markets.
Company executives see headwinds in currency and trade tariffs, but think the stability of investment in AI.
FOXCONN: Q2 AI SERVER REVENUE SURPASSES APPLE PRODUCT SALES FOR FIRST TIME, MARKING KEY DIVERSIFICATION MILESTONE#FOXCONN $AAPL #AIhttps://t.co/r3Ylz9419x pic.twitter.com/MHsLpsGKtu
— CN Wire (@Sino_Market) August 15, 2025
Ramping Up Capacity Across Strategic Locations
To serve record demand, Foxconn is increasing its 2025 capital expenditure by over 20%. US server manufacturing capacity investments are massive and all-out in Texas, Wisconsin, and elsewhere.
Not only do these construction projects increase capacity — they indicate Foxconn’s willingness to be at the forefront of the global digital infrastructure buildout, for both U.S. and international customers.
Foxconn is shifting from Apple’s main hardware maker to a leader in high-speed computer manufacturing ( Image Source: The Information )
Rebranding the Company’s Image
Foxconn’s transformation has been incremental but certain. It was Apple’s de facto hardware factory for years. It’s now transforming into a manufacturing giant that can produce advanced, high-speed computer systems by the millions.
Advantages of the transformation are obvious:
- Diversified revenues: Less dependence on capricious smartphone sales.
- Improved margins: Custom-built AI servers are more profitable than consumer electronics.
- Long-term agreements: Revenues are guaranteed with multi-year lead times to take data center projects live.
- To investors, it is that visibility and potential upside that Foxconn’s entry into AI makes so desirable.
Part of Broader Industry Trend
Foxconn’s success is part of a wider industry trend. The focus of the industry’s growth has moved from consumer hardware to the underlying infrastructure that will power artificial intelligence, cloud computing, and virtual digital experiences.
The hyperscalers are investing billions of dollars in new data center builds, and that is driving steady demand for new servers, especially those loaded with Nvidia’s latest AI processors. The current manufacturing scale, logistics opportunity, and supply chain infrastructure of Foxconn provide it the ability to provide these timely and in scale.
Also Read: OpenAI’s O3 Delivers a Flawless 4-0 in Chess Showdown
Future Outlook
Analysts predict that the AI server business of Foxconn will maintain its rapid growth trajectory in the second half of 2025 and later. Foxconn’s challenge will be to sustain the uninterrupted rhythm with supply chain turmoil, geopolitical globally, and the rate at which the technology itself is evolving.
Something for certain is that Foxconn is no longer just a consumer electronics producer. Today, it is an unmatched producer of the infrastructure powering world computing tomorrow.
The company’s path — the evolution from phones to servers that drove the AI craze — is as much a business as it is a strategy. Its quarter-to-quarter success story now is more; it is a prediction of what manufacturing will bring in the days to come.
Foxconn’s transformation is a reminder to business leaders today that they can also transform themselves, capture new opportunities, and prosper in a world of rapid-technology change. Foxconn has made an evident determination within the herd to shape the spinal cord of the future economy driven by AI.
