Foxconn Shifts Focus to AI as iPhone Dominance Fades

Foxconn, the world’s leading electronics manufacturer, is gradually reducing its reliance on Apple as revenue from AI servers and cloud solutions surpasses iPhone assembly for the first time.

AI Revenue Overtakes iPhone – A Strategic Turning Point

Once known as Apple’s largest iPhone assembler, Taiwan’s Foxconn has announced a major strategic shift. According to its latest Q2 earnings report, revenue from AI server manufacturing, cloud infrastructure, and networking equipment has exceeded consumer electronics like iPhones — a historic milestone for the company.

This move is not a sudden decision. Since Young Liu took over as Foxconn Chairman in 2019, the company has pursued a long-term strategy to diversify revenue streams and reduce its dependence on the slowing smartphone market. Beyond Apple, Foxconn is now a key partner for Nvidia, a dominant force in artificial intelligence.

Why Foxconn is Moving Away from Apple

Industry analysts highlight the risks of over-reliance on iPhone production, especially as global smartphone demand has plateaued compared to the explosive growth two decades ago. With iPhone sales stagnating, Foxconn has been forced to seek growth opportunities in emerging sectors such as AI servers, electric vehicles, and semiconductor manufacturing.

While electric vehicles and chip production have yet to make a major financial impact, AI-related hardware is driving substantial growth, thanks to the surge in demand for AI computing power and the global boom fueled by technologies like ChatGPT. Nvidia’s soaring valuation further strengthens Foxconn’s growth prospects in this space.

Foxconn Still Retains iPhone 17 Production

Despite shifting priorities, Foxconn remains Apple’s top iPhone assembler, continuing to handle production for the upcoming iPhone 17. However, the company is investing heavily in recruitment incentives amid Apple’s supply chain diversification and efforts to reduce reliance on China.

Recently, Foxconn’s Zhengzhou plant posted a hiring notice on WeChat, offering bonuses of up to 8,000 yuan (≈$1,100) for workers who stay for at least three months — nearly double the July bonus of 4,500 yuan. Hourly wages for iPhone assembly have also risen to 28 yuan (≈$3.90), higher than other departments, such as Bluetooth headset assembly at 22 yuan per hour.

Could Foxconn Become an AI Powerhouse?

As AI reshapes the tech industry, Foxconn is transitioning from a traditional contract manufacturer to a strategic partner in next-generation technologies. This pivot is seen as essential for maintaining its competitive edge in an era where smartphone growth is slowing dramatically.