The revenue charts tell a story that would have seemed impossible just three years ago: AI servers are now generating more money than iPhones for Taiwan’s manufacturing giants. For the first time in decades, Taiwan’s manufacturing titans are watching their bread-and-butter consumer electronics businesses get overtaken by artificial intelligence infrastructure – a shift that’s rewriting the playbook for an industry that was built on assembling the world’s smartphones and laptops.
What took Apple nearly two decades to build, AI servers have displaced in less than three years, signalling an inflexion point that companies like Foxconn are navigating actively, diversifying beyond traditional consumer electronics.
The scale of Taiwan’s server dominance
Taiwan’s commanding position in global server manufacturing has positioned it perfectly for the AI boom, with the island accounting for over 90% of global AI server builds and approximately 80% of all server shipments worldwide. Its dominance stems from decades of expertise in electronics manufacturing, originally developed through the notebook computer industry, since evolved into an important advantage in the age of artificial intelligence.
According to statistics released by Taiwan’s Ministry of Economic Affairs in October 2024, the island’s server production value from January to July 2024 reached NT$426.7 billion (approximately US$13.2 billion) in value, in seven months surpassing the total value for 2023 and representing an annual growth rate of 153.9%.
Major players experience revenue surges
The impact of AI servers on Taiwan’s manufacturing giants has been nothing short of transformational. Nvidia partner Wistron’s revenue for January to July rose 92.7%, while Quanta’s grew 65.6% in the same period. The numbers reflect a broader trend affecting the entire ecosystem of Taiwan’s original design manufacturers (ODMs).
Foxconn, the world’s largest contract manufacturer, has experienced perhaps the most dramatic shift. Consumer electronics accounted for 35% of Foxconn’s total revenue in the second quarter of this year, while the cloud and networking business represented 41%. In 2021, consumer electronics represented 54% of its revenue. Now is the first time AI servers and cloud infrastructure have overtaken the company’s traditional smartphone manufacturing business.
Quanta Computer’s AI server focus
Quanta Computer, which supplies AI servers powered by Nvidia chips, said that AI servers are on track to account for 70% of its total server revenue this year, thanks to improved yield rates and a better learning curve for Nvidia’s GB300 chip-based servers. AI servers accounted for more than 60% of its total server revenue in the first half of this year.
Quanta is the world’s second-largest server assembly contractor, taking approximately 17% of the market. Its primary focus is AI server projects from the four major CSPs (Microsoft, Amazon, Google, and Meta). The company has…
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