Foxconn, the world's largest contract electronics manufacturer, is experiencing a significant shift in its revenue streams, with AI server revenue poised to overtake smartphone revenue within two years. This transition is driven by the increasing demand for AI servers, fuelled by the rapid development of AI applications. In the second quarter of 2025, Foxconn's operating profit rose by 27%, propelled by its burgeoning AI server business. The company's cloud and networking business, which includes AI servers, contributed 41% of total revenue, surpassing smart consumer electronics for the first time.
Foxconn is strategically aligning itself with key players in the AI industry, particularly Nvidia, manufacturing server racks tailored for AI workloads. The company anticipates a substantial year-on-year revenue growth in the third quarter, with AI server sales projected to surge by over 170%. Foxconn's ambition is to capture 40% of the global AI server market by 2025, with projected AI segment revenue reaching $34.7 billion. This strategic pivot reflects the higher profitability and recurring revenue potential offered by AI servers compared to traditional consumer electronics.
To support its AI-driven expansion, Foxconn is diversifying its manufacturing locations, including a $900 million AI server plant in Mexico. The company's focus on AI infrastructure is expected to drive long-term growth, with AI server revenue projected to exceed NT$1 trillion in 2025, accounting for over 50% of total server sales. This transformation marks a new era for Foxconn, solidifying its position as a key player in the AI industrial revolution.
