Apple is no longer 'number one' with Foxconn

Revenue from AI servers surpassed consumer electronics for the first time, showing Foxconn's new direction amid market downturn.

Foxconn logo. Photo: Reuters .

In an announcement on August 15, Foxconn said that profits from its AI server division surpassed those of Apple-related products for the first time. This is considered an important milestone as Apple's major partner wants to diversify its sources of profit.

A major supplier to both Apple and Nvidia, Foxconn expects cloud computing to continue growing, while lowering its full-year outlook for its consumer electronics division.

“AI servers recorded growth of over 60% in the second quarter of this year compared to the same period last year, clearly demonstrating the industry's momentum,” said rotating CEO Kathy Yang during Foxconn's investor conference.

Foxconn's new momentum

Ms. Yang emphasized that AI server revenue in the third quarter is expected to grow more than 170% compared to the same period last year, and triple the previous quarter. For the whole year, the AI server segment is expected to bring in about $33 billion for Foxconn.

The milestone comes as Foxconn looks for new growth drivers to offset the downturn in the smartphone industry.

“We easily achieved our target of getting more than 50% of our revenue from cloud computing this year, driven by really strong demand. The total AI server shipments for the rest of the year will increase quarter by quarter,” said Foxconn spokesman James Wu.

iPhone 16 Pro Max and iPhone 16 Pro. Photo: The Verge .

Foxconn's net profit rose 27% year-on-year to about $1.47 billion in the second quarter. Its operating profit margin was 3.16%, up 0.28 percentage points year-on-year. However, the group saw its gross profit margin fall 0.9 percentage points to 6.33%.

After the first 7 months of the year, Foxconn's revenue increased by 17.62%, reaching nearly 135 billion USD . The main contributor came from AI server sales, especially Nvidia's GB200 series. The consumer electronics business remained flat due to the impact of US tariff policies.

Foxconn is preparing for customer consumer electronics product launches in the third quarter, but the company is uncertain about growth for the rest of the year due to tariff and exchange rate uncertainties, Yang said.

“The challenge is not actually tariffs, but policy uncertainty, which makes it difficult for a company to be flexible. Manufacturing cannot change overnight, it needs to be planned in advance,” Yang said.

Foxconn's difficulties

According to Foxconn's rotating CEO, the company has built 230 facilities worldwide and established a team of logistics and import-export experts in 25 countries to support customers in coping with complex geopolitical situations.

Foxconn's capital expenditure in the first half of the year reached $2.66 billion , up 25% year-on-year, to expand its AI server infrastructure and global manufacturing scale, the report showed.

Workers at a Foxconn factory. Photo: Bloomberg .

Foxconn itself is in a difficult situation as Nvidia and Apple both face dual pressure from the US and China.

Foxconn Industrial Internet (FII), a subsidiary of Foxconn listed in Shenzhen (China), a key unit in Foxconn's server manufacturing business, recorded a stock increase of nearly 69% in one month (from 25.9 yuan to 43.68 yuan) after the US allowed Nvidia to continue selling H20 chips to China.

In addition, despite US President Donald Trump's threat to impose a 50% tariff, many Apple suppliers still plan to assemble iPhones in India because they believe this market will be tax-free.

In the US, Foxconn is building a new AI server facility in Texas to serve Nvidia and Apple, aiming to become a key player in the AI server supply ecosystem in the US. According to Nikkei , these moves may please Mr. Trump, who has always called for bringing technology manufacturing activities back to the US.

Earlier in April, Foxconn also sold all of its land and electric vehicle facilities in Ohio, a move that signals the company’s commitment to shifting its focus from electric vehicles to AI servers.

Source: https://znews.vn/apple-khong-con-la-so-mot-voi-foxconn-post1577208.html