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 secured orders for Nvidia’s latest GB200 servers and has been expanding production capacity to meet increased demand.
Wistron’s strategic positioning
Wistron has currently secured orders for Nvidia’s HGX Level 6 and DGX Level 10 servers, and obtained orders for the new generation AMD MI300 series AI server boards. Nvidia this week booked an entire Wistron server plant in Taiwan to build AI servers, highlighting the intensity of demand and the strategic importance of securing manufacturing capacity.
Quanta Computer plans to increase production capacity for AI servers in the US, and its factories there are booked up to the end of 2025. The capacity constraint reflects the “insane demand” that characterised the AI server market throughout 2024 and into 2025.
Market share and financial impact
The financial transformation in the sector has been remarkable. Quanta Computer reported that AI servers are on track to account for 70% of its total server revenue this year, with AI servers already accounting for more than 60% of its total server revenue in the first half of 2025, according to chief financial officer Elton Yang.
Wistron has demonstrated the transformative impact of AI servers on manufacturing economics, with the company’s revenue for January to July 2025 rising 92.7% compared to the same period in the previous year. The dramatic growth reflects the premium nature of AI server manufacturing compared to traditional consumer electronics.
The impact extends to Taiwan’s broader server ecosystem, with companies securing multi-year production contracts that extend well into 2026, indicating sustained demand and revenue visibility that was rarely seen in the consumer electronics era.
Strategic implications and future outlook
“The monthly sales jump for Taiwan ODMs in the first half of 2025 is evidence of this trend,” Robert Cheng, head of Asia technology hardware research at BofA Global Research, told Reuters, referring to original design manufacturers like Foxconn that contract manufacture products for their clients.
The situation reflects a repositioning of Taiwan in the global technology supply chain. Where companies once competed primarily on cost and manufacturing efficiency for consumer electronics, AI servers require higher levels of technical sophistication, closer collaboration with chip designers, and more stringent quality control.
“We think this shift toward AI servers, whatever form it takes, is good for Taiwan’s tech industry,” Cheng said, noting Taiwanese firms’ ability to shift rapidly to cater to the changing needs of their customers.
However, challenges lie ahead. Taiwan’s current 90% share of the global AI server market may soon decline as manufacturers expand production elsewhere. Companies are already establishing manufacturing facilities in the US, Mexico, and other locations to serve local markets and comply with supply chain requirements.
Industry-wide transformation
The AI server boom has catalysed changes that extend beyond individual companies to reshape Taiwan’s entire electronics manufacturing ecosystem. Traditional boundaries between different types of technology products are blurring as manufacturers develop new capabilities and forge closer partnerships with AI chip companies.
The transformation also highlights Taiwan’s unique position in the global technology supply chain. The combination of advanced manufacturing capabilities, established relationships with major technology companies, and proximity to key semiconductor facilities has created a competitive advantage that continues to drive growth.
As artificial intelligence applications continue to need more sophisticated computing infrastructure, Taiwan’s manufacturers appear well-positioned to capitalise on demand. The challenge will be maintaining the country’s technology leadership while adapting to changing geopolitical and market conditions that may require more distributed global operations.
The shift from consumer electronics to AI servers exemplifies Taiwan’s ability to reinvent itself in response to technological change, maintain its central role in the global technology ecosystem, adapt and innovate.
See also: Huawei unveils high-end AI chip for servers alongside MindSpore framework
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