In a pivotal shift for the global electronics manufacturing giant, Foxconn Technology Group has reported that its revenue from artificial intelligence servers has eclipsed earnings from its longstanding partnership with Apple Inc. for the first time. This milestone, achieved in the second quarter of 2025, underscores the company’s aggressive pivot toward high-growth AI infrastructure amid softening demand in consumer electronics. Hon Hai Precision Industry Co., as Foxconn is formally known, disclosed in its latest earnings that AI server sales accounted for 41% of total revenue, outpacing the 35% from smartphones, which include iPhone assembly for Apple.

The surge is driven by booming demand for data center equipment powered by advanced chips from Nvidia Corp. and others. Foxconn’s AI server business grew more than 60% year-over-year in the quarter, contributing to a record net profit of NT$44.36 billion ($1.4 billion), up 27% from the previous year. This performance beat analyst expectations and highlights how the AI boom is reshaping supply chains traditionally dominated by personal devices.

A Historic Revenue Realignment

According to a detailed report from Nikkei Asia, this marks a “milestone reached as uncertainty over tariffs clouds consumer electronics segment.” The publication notes that Foxconn Chairman Young Liu emphasized the company’s strategic focus on AI during an earnings call, projecting a staggering 170% year-over-year growth in AI server revenue for the third quarter. For the full year, Liu anticipates AI-related sales to exceed NT$1 trillion ($33 billion), fueled by orders for Nvidia’s next-generation GB200 systems.

This realignment comes as Foxconn navigates geopolitical tensions, including potential U.S. tariffs on Chinese imports. The company has expanded manufacturing in countries like India, Vietnam, and Mexico to mitigate risks, while doubling down on AI investments. Recent posts on X, formerly Twitter, from industry analysts like Dan Nystedt highlight Foxconn’s confidence, with one noting the firm’s AI server business poised for over 170% growth in Q3, aligning with broader enthusiasm for AI infrastructure.

Implications for Apple and Broader Industry Shifts

Foxconn’s traditional reliance on Apple, which once generated the bulk of its revenue through iPhone production, is now being overshadowed by the AI wave. Apple’s own fiscal reports, such as its Q1 2025 earnings shared on X by users like Brandon Butch, show iPhone revenue at $69.14 billion, but growth has slowed compared to services and other segments. Foxconn’s diversification reduces its exposure to Apple’s cyclical smartphone sales, which have faced headwinds from market saturation and competition.

Industry insiders point to this as part of a larger trend where contract manufacturers are chasing AI-driven profits. A recent article from Reuters back in March 2025 quoted Foxconn expecting server revenue to surpass iPhone earnings within two years—a prediction that materialized ahead of schedule. The report cited Chairman Liu’s comments at Nvidia’s GTC conference, underscoring early bets on AI servers.

Future Projections and Strategic Expansions

Looking ahead, Foxconn is forecasting accelerated growth, with AI servers expected to drive overall revenue up significantly in the second half of 2025. The company’s investments in electric vehicles and cloud computing further bolster its portfolio, as detailed in a fresh update from ETAuto, which reports a 170% Q3 AI revenue jump while navigating U.S.-China trade challenges.

Analysts on X, including posts from Techmeme, echo this sentiment, noting the 60%+ Q2 surge and its outperformance against Apple-related products. This positions Foxconn as a key player in the AI ecosystem, partnering with hyperscalers like Amazon and Microsoft. However, challenges remain, such as supply chain disruptions and intensifying competition from rivals like Quanta Computer.

Risks and Opportunities in a Volatile Market

Despite the optimism, uncertainties loom. Potential tariffs under a new U.S. administration could impact costs, as hinted in various web reports. Foxconn’s expansion into EVs, including partnerships with Fisker and others, aims to offset any consumer electronics slowdown, but execution risks persist.

Ultimately, this revenue flip signals a transformative era for Foxconn, moving from assembly-line dominance to AI innovation leadership. As one X post from Money News Today put it, “Foxconn’s AI pivot delivers!” with Q2 profits soaring on server demand. For industry watchers, this evolution not only redefines Foxconn’s business model but also reflects the inexorable rise of AI across global tech supply chains.