Servers Will Soon Become Foxconn’s Biggest Business, Surpassing iPhone Assembly

At the time of the publication of the quarterly report of Taiwanese contract electronics manufacturer Foxconn, analysts at Bloomberg Intelligence already expressed the opinion that cloud equipment will account for more than 40% of this company this year. Foxconn management is convinced that soon server and telecommunications equipment will bring in more money than consumer electronics.

Image source: Foxconn

Chairman of the Board of Directors Young Liu announced this at a quarterly earnings conference, according to Nikkei Asian Review. The cloud and network solutions business increased its share of the company’s revenue from 22% to 30% last year. This year, it will approach consumer electronics in terms of revenue share, and “very soon will become Foxconn’s largest business,” the head of the Taiwanese manufacturer said.

Yang Liu also touched on the topic of geopolitics, since together with tariff changes it significantly affects the entire industry. He expressed readiness to build new production lines in the United States. The company already has facilities in California, Texas, Ohio and Wisconsin. Foxconn will have to adjust its production network in different countries to changing geopolitical conditions, as the company representative explains.

Foxconn’s management does not believe that iPhone sales are losing momentum, and the contractor will continue to cooperate with Apple in the deepest possible way. Nothing will change in this regard, as Yang Liu assured.

Revenue from AI server sales jumped 150% last year, while Foxconn’s server business as a whole increased revenue by 78%. This year, according to the company’s executive, revenue from AI server sales should reach $30 billion, and the company’s share of the global market will exceed 40%. The peak demand for such equipment has not yet been reached, according to Foxconn’s management, and this will help the company increase its overall revenue this year. In the smartphone segment, revenue will remain at last year’s level, but in the PC segment, it may fall by 3 to 5%.

Foxconn is also poised to engage in supply chains and assembly services for humanoid robots, particularly for the industrial automation and medical markets. These are priorities the company set for itself five years ago.

Finally, the main intrigue of Foxconn’s earnings conference was the management’s announcement of its intention to conclude an electric vehicle deal with a certain Japanese automaker in the next month or two. Given that Foxconn had previously been rumored to be working with troubled Japanese company Nissan Motor, such a collaboration could well materialize.