Foxconn transitions to AI from Apple era

Its revenue from making AI servers and other cloud and networking products, including for major customer Nvidia, surpassed smart consumer products such as iPhones for the first time in the second quarter, marking the culmination of a shift that began years ago and has swept through Taiwan's tech industry.

- WEN-YEE LEE

Foxconn's heavy reliance on the smartphone business has long been viewed by investors as a significant risk, as demand growth for new iPhones has gradually weakened since they were first introduced nearly two decades ago, leaving the top iPhone assembler grappling with slowing sales momentum, analysts said.

Wary of the risk, Foxconn Chairman Young Liu has been championing new businesses such as AI servers, electric vehicles and semiconductors since taking the top job in 2019.

While its expansion into EVs and chips has yet to show a meaningful contribution to its topline, Foxconn's success in AI server manufacturing — the company is Nvidia's biggest server maker — is the result of its early bets before the technology was thrust into the limelight with the advent of Chat-GPT in late 2022.

Consumer electronics accounted for 35% of Foxconn's total revenue in the second quarter, while cloud and networking business represented 41%. In 2021, consumer electronics represented 54% of its revenue.