Foxconn's AI Server Revenue Surpasses Smartphones Amid AI Boom
In a significant turn for the global technology supply chain, Foxconn, the Taiwanese electronics manufacturing giant best known as Apple’s primary iPhone assembler, has reached a pivotal milestone: its revenue derived from servers now eclipses that from smartphones. This strategic shift, driven by the insatiable demand for artificial intelligence (AI) infrastructure, marks a profound reorientation for the company traditionally synonymous with consumer electronics.
The latest figures reveal a dramatic rebalancing of Foxconn’s business portfolio. In the second quarter of 2025, the AI server segment alone accounted for 41% of the company’s total revenue, officially surpassing the 35% contributed by smart consumer electronics, which includes the ubiquitous iPhone. This financial pivot is not merely about volume; it reflects a move towards higher-margin business, with AI servers boasting gross margins 10-15% higher than traditional consumer electronics. Foxconn anticipates an astounding year-on-year growth of over 170% in its AI server revenue for the third quarter, underscoring the accelerating momentum of this transformation.
At the heart of this surge lies Foxconn’s deep and expanding partnership with NVIDIA. The company serves as the sole assembler for NVIDIA’s cutting-edge Blackwell-powered GB200 servers, which command a substantial 40% price premium in the market. Beyond mere assembly, Foxconn is intricately involved in co-developing crucial components such as high-speed connectors, advanced liquid-cooling systems, and robust power supplies essential for these next-generation AI chips. This vertical integration secures exclusive contracts and solidifies long-term relationships with hyperscalers and enterprises building vast AI-driven infrastructure.
Foxconn’s strategic diversification extends well beyond its product focus, encompassing a significant geographic realignment aimed at mitigating geopolitical risks and strengthening supply chain resilience. The company has aggressively expanded its manufacturing footprint outside of China, notably with a $900 million AI server plant in Mexico, capable of producing 20,000 AI servers annually. Further investments include a $2.2 billion allocation for manufacturing projects in India and the United States, which specifically targets smartphone display modules and a $3.7 billion semiconductor joint venture in India, alongside a $735 million venture in the U.S. for data center modules and server assembly. These moves position Foxconn closer to key North American clients and align with global shifts towards localized production.
The broader electronics manufacturing industry is profoundly impacted by the AI boom. The escalating demand for AI acceleration hardware, high-performance memory, and specialized components is straining supply chains, leading to extended lead times and price volatility. However, this also presents immense opportunities for manufacturers capable of adapting. Foxconn’s foresight in pivoting towards AI servers highlights a trend where companies are leveraging AI not just in their products, but also to optimize their own internal manufacturing processes, enhancing efficiency and boosting revenue per employee.
As the world continues its rapid embrace of artificial intelligence, Foxconn’s strategic evolution from a consumer electronics powerhouse to a critical enabler of AI infrastructure positions it firmly at the forefront of this technological revolution. The company’s proactive investments and deep partnerships are setting a new benchmark for how traditional manufacturers can reinvent themselves to capture the immense value generated by the AI era.