Pivotal tech moment: iPhones are no longer Foxconn's most important business

In a significant shift signaling the dawn of the AI era, Foxconn has transitioned from being primarily known as Apple's manufacturing partner for iPhones to becoming a leading player in AI infrastructure. This change marks a pivotal moment for investors and industry analysts alike. For the first time, Foxconn's Cloud & Networking Products division has surpassed its Smart Consumer Electronics sector, which includes iPhone assembly operations. According to Barclays research, Cloud & Networking revenue surged by 47% year-over-year in the second quarter of 2025, reaching NT$731.8 billion, compared to NT$634.5 billion from Smart Consumer Electronics. A remarkable aspect of this growth is that over half of the cloud revenue is now derived from AI servers, which experienced a staggering growth rate of more than 60% in just the second quarter. Looking ahead, Foxconn anticipates a 170% year-over-year increase in AI server revenue for the upcoming third quarter, driven by the escalating demand from major cloud service providers. Analysts at Barclays noted, "Foxconn has evolved from its traditional role in smartphone manufacturing to becoming a vital contributor not only in AI servers but also in emerging fields such as electric vehicles and humanoid robotics." This transformation indicates a tectonic shift in Foxconn's business dynamics, as Apple, once its most significant customer, is no longer the key driver of growth. Instead, Foxconn is establishing itself as a dominant force in AI infrastructure, significantly increasing its market share in AI servers and collaborating with industry giants like Nvidia to develop next-generation server architectures and integrate humanoid robotics. In response to geopolitical challenges and tariff risks, Foxconn is expanding its production capabilities for AI servers in the United States, with operations in states like Texas, Wisconsin, and planned expansions in California and Ohio. While Mexico remains a crucial production hub, this strategic move reflects Foxconn's commitment to serving North American clients, particularly large cloud providers. Beyond AI servers, Foxconn is also diversifying into sectors such as electric vehicles, semiconductors, and healthcare robotics. However, it's the server division that has captured the spotlight, now accounting for 41% of the company’s total revenue and projected to grow over 70% for the full fiscal year, as indicated by Barclays research. In contrast, Foxconn foresees stagnant growth in its consumer electronics business, primarily focused on iPhones.