iPhone is no longer 'number one' at Foxconn

Users experience iPhone at Apple store. Photo: Bloomberg .

Foxconn Chairman Young Liu said at an investor conference on March 14 that revenue from its cloud and networking businesses will soon surpass that of its consumer electronics division, meaning iPhone assembly will no longer be the number one revenue source for the Taiwan-based company.

Foxconn’s cloud business is driven by demand for AI servers, but U.S. tariffs could impact the entire industry.

“CEOs at all of our clients have pointed to tariff uncertainty as a major concern. Given the current U.S. government practices, it’s really hard to predict growth next year,” Liu said.

Still, Foxconn predicts significant growth in its cloud and networking businesses.

“The cloud and networking division saw its revenue contribution increase significantly, from 22% in 2023 to 30% last year, driven by strong growth in the server market.

The division's revenue is expected to closely follow the consumer electronics segment, and will soon become the company's largest business unit," said Foxconn's chairman.

Responding to investor concerns about DeepSeek, Liu said the Chinese startup’s low-cost approach doesn’t affect its AI infrastructure investment.

“We think demand is still very strong. We won’t see peak demand this year,” he stressed.

Foxconn will see a new milestone if its cloud revenue surpasses its consumer electronics division. For more than a decade, Apple has been Foxconn’s biggest customer. The iPhone assembly division has played a key role in making the company the world’s largest contract electronics manufacturer.

Liu also shared that Foxconn will respond positively to the Trump administration’s “made in America” strategy. Foxconn already has factories in California, Texas, Ohio and Wisconsin.

An AI system of Foxconn. Photo: Bloomberg.

Before Mr. Trump threatened to impose tariffs on Mexican goods, Foxconn said it was building the world's largest AI server factory in Guadalajara, Mexico.

When asked if he was worried about iPhone sales as the smartphone market slowed down, Liu emphasized that Foxconn "has great confidence in Apple" and will continue to cooperate extensively with the company.

Foxconn's net profit in the fourth quarter of 2024 fell 13% year-on-year to $1.4 billion . Total revenue for the year increased 11% to a record ( $207 billion ), with earnings per share reaching $0.33 , the highest in 17 years.

Revenue from AI servers, mainly Nvidia systems, will increase 150% by 2024, while the overall server business will grow 79% year-on-year. Liu said Foxconn’s AI server division will reach $30.3 billion this year, aiming to increase its market share to more than 40%.

Foxconn’s terminal and consumer electronics businesses remain the foundation for the company’s stable cash flow, according to Chairman Young Liu. However, challenges remain related to politics and tariff uncertainty.

Foxconn will also focus on humanoid robots, smart manufacturing and medical applications. In the electric vehicle sector, the Taiwanese company will soon announce a deal with a Japanese automaker in the next 1-2 months, Nikkei said.

Foxconn forecasts revenue growth in 2025, driven by demand for cloud computing and networking. Meanwhile, the smartphone segment may stagnate, while computer products will decline by 3-15%.