AI brings Foxconn a chance to cut its reliance on Apple

{"text":[[{"start":4,"text":"Apple’s largest iPhone assembler is starting to look like an unlikely winner of the AI era. In March, Foxconn reported a 46 per cent year-on-year jump in monthly sales, the fastest growth for that month in its history. Where the Taiwanese company once looked structurally constrained in profitability and expansion, it is now enjoying a lucrative new growth engine."}],[{"start":26.65,"text":"Smartphone assembly was Foxconn’s largest revenue source for more than a decade. But now, more than 40 per cent of the group’s sales come from cloud and networking products, as of the third quarter. On the surface, the transition that Foxconn, which is listed in Taiwan as Hon Hai Precision Industry, is undergoing looks like a simple shift from one kind of customer to another. "}],[{"start":48.75,"text":"But the transition is far bigger than that. Foxconn’s cloud and networking division, which assembles AI servers, is now growing at a pace that the smartphone market cannot match. The iPhone still dominates in terms of volume but sales of smartphones are cyclical. They are also limited by longer intervals between model upgrades. AI infrastructure is currently in a more aggressive investment cycle driven by urgency and the demands of large technology companies — as Tesla’s surprise announcement of a $25bn capital expenditure budget for 2026 shows."}],[{"start":null,"text":"

"}],[{"start":83.2,"text":"It’s a significant change in profitability as well as growth. Devices like the iPhone are a high-volume business, with pricing tightly controlled by customers and little room for differentiation. That left Foxconn with a consistently thin operating margin of below 3 per cent for the past decade, despite its size. AI systems are more complex, higher-value products that allow for greater engineering input and better pricing, even when considering costly components."}],[{"start":113.05000000000001,"text":"Foxconn is by no means the best positioned company in the AI boom. But it is moving towards a more durable demand base shaped by multiyear spending plans. More importantly it helps diversify customer concentration away from Apple as it now has exposure to hyperscalers, even if that demand remains concentrated among a handful of very large clients. "}],[{"start":135.70000000000002,"text":"Meanwhile, AI systems require more customisation than mass-produced consumer devices, especially around cooling and power efficiency. That should mean assemblers have more leeway to add value in integration work and system-level engineering. That alone is a meaningful shift for a company once heavily reliant on Apple. AI has given Foxconn an opportunity to unwind that structural vulnerability. "}],[{"start":167.40000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1777003045_3297.mp3"}