AI now prioritizes Foxconn as a server-centric operation over its role as an iPhone manufacturer.
In a recent development, Foxconn, the Taiwanese multinational electronics contract manufacturer, is making significant strides in the artificial intelligence (AI) server market. According to Terry Gou, the company's CEO, the real challenge for companies, including Foxconn, lies not in the tariffs themselves, but in the volatility of trade policies.
Foxconn's AI server business is experiencing a robust long-term growth trend. The company reported a staggering 170% year-on-year increase in AI server revenue in Q3 2025, accounting for 50% of its total server revenue. This growth has been accompanied by higher margins compared to traditional consumer electronics. Foxconn expects its annual AI server-related revenue to exceed NT$1 trillion (approx. $32 billion) in 2025, reflecting sustained, strong demand driven by global hyperscalers and cloud service providers.
Strategically, Foxconn is expanding production capacity and geographic diversification. The company is building new factories in Houston, Texas, Mexico, India, and the U.S. to strengthen supply chain resilience and deepen partnerships with key AI technology clients like NVIDIA. Foxconn also pursues vertical integration and co-development of next-generation AI server products, including GPU and ASIC solutions, allowing it to capture new customers and orders at every product iteration.
The company has pivoted from its traditional smartphone manufacturing business, with AI and cloud networking revenue now overtaking it. Foxconn holds nearly 40% global market share in both general-purpose and AI servers. The CEO views AI infrastructure as a structural, long-term industrial revolution rather than a temporary boom, expecting continuous growth fueled by increasing demand for high-performance computing power.
Foxconn's Q2 revenue grew 16% to NT$1.79 trillion ($59.73 billion), with its operating profit rising 27% to NT$56.6 billion ($1.9 billion). The Cloud and Networking Products division delivered 41% of Foxconn's total revenue in Q2, surpassing the Smart Consumer Electronics unit for the first time.
Looking ahead, Foxconn anticipates further growth in its AI server business. The company expects sales of server racks to grow by 300% in Q3, and full-year revenue from AI servers to top NT$1 trillion ($33 billion). The development of modular data centers, a joint venture with TECO, is expected to accelerate the shipment of AI server racks.
CEO Terry Gou is confident that tariffs will pose challenges but also provide opportunities for Foxconn to optimize its global supply chain. He believes that the expansion into new markets and serving a wider range of customers will present long-term development opportunities for Foxconn. Gou also thinks that tariffs can be transformed into a competitive advantage for Foxconn.
Investments in AI infrastructure are expected to continue to expand through 2026 and beyond, positioning Foxconn as a major player in the projected $80+ billion AI server market by 2026. Foxconn's future plans focus on scaling up AI server production, geographic expansion, vertical integration, and sustaining innovation partnerships.
- Foxconn's AI server business, which accounts for half of its total server revenue, experienced a 170% year-on-year increase in Q3 2025, placing it at the forefront of the artificial intelligence (AI) server market.
- In a shift from its traditional smartphone manufacturing business, Foxconn's revenue from AI and cloud networking has surpassed it, with AI infrastructure seen as a structural, long-term industrial revolution by CEO Terry Gou.
- Foxconn anticipates further growth in its AI server business, expecting sales of server racks to grow by 300% in Q3 and full-year revenue from AI servers to top NT$1 trillion ($33 billion).
- CEO Terry Gou views tariffs as potential challenges, but also opportunities for Foxconn to optimize its global supply chain, expand into new markets, and serve a wider range of customers, potentially transforming tariffs into a competitive advantage.
