The income charts inform a narrative that might have appeared inconceivable simply three years in the past: AI servers at the moment are producing extra money than iPhones for Taiwan’s manufacturing giants. For the primary time in many years, Taiwan’s manufacturing titans are watching their bread-and-butter client electronics companies get overtaken by synthetic intelligence infrastructure – a shift that’s rewriting the playbook for an business that was constructed on assembling the world’s smartphones and laptops.
What took Apple practically 20 years to construct, AI servers have displaced in lower than three years, signalling an inflexion level that corporations like Foxconn are navigating actively, diversifying past conventional client electronics.
The dimensions of Taiwan’s server dominance
Taiwan’s commanding place in international server manufacturing has positioned it completely for the AI growth, with the island accounting for over 90% of world AI server builds and roughly 80% of all server shipments worldwide. Its dominance stems from many years of experience in electronics manufacturing, initially developed by means of the pocket book laptop business, since advanced into an essential benefit within the age of synthetic intelligence.
In keeping with statistics launched by Taiwan’s Ministry of Financial Affairs in October 2024, the island’s server manufacturing worth from January to July 2024 reached NT$426.7 billion (roughly US$13.2 billion) in worth, in seven months surpassing the entire worth for 2023 and representing an annual development fee of 153.9%.
Main gamers expertise income surges
The impression of AI servers on Taiwan’s manufacturing giants has been nothing wanting transformational. Nvidia companion Wistron’s income for January to July rose 92.7%, whereas Quanta’s grew 65.6% in the identical interval. The numbers replicate a broader pattern affecting your entire ecosystem of Taiwan’s authentic design producers (ODMs).
Foxconn, the world’s largest contract producer, has skilled maybe probably the most dramatic shift. Client electronics accounted for 35% of Foxconn’s whole income within the second quarter of this yr, whereas the cloud and networking enterprise represented 41%. In 2021, client electronics represented 54% of its income. Now could be the primary time AI servers and cloud infrastructure have overtaken the corporate’s conventional smartphone manufacturing enterprise.
Quanta Pc’s AI server focus
Quanta Pc, which provides AI servers powered by Nvidia chips, said that AI servers are on observe to account for 70% of its whole server income this yr, because of improved yield charges and a greater studying curve for Nvidia’s GB300 chip-based servers. AI servers accounted for greater than 60% of its whole server income within the first half of this yr.
Quanta is the world’s second-largest server meeting contractor, taking roughly 17% of the market. Its main focus is AI server tasks from the 4 main CSPs (Microsoft, Amazon, Google, and Meta). The corporate has secured orders for Nvidia’s newest GB200 servers and has been increasing manufacturing capability to fulfill elevated demand.
Wistron’s strategic positioning
Wistron has at present secured orders for Nvidia’s HGX Stage 6 and DGX Stage 10 servers, and obtained orders for the brand new technology AMD MI300 sequence AI server boards. Nvidia this week booked a complete Wistron server plant in Taiwan to construct AI servers, highlighting the depth of demand and the strategic significance of securing manufacturing capability.
Quanta Pc plans to extend manufacturing capability for AI servers within the US, and its factories there are booked as much as the top of 2025. The capability constraint displays the “insane demand” that characterised the AI server market all through 2024 and into 2025.
Market share and monetary impression
The monetary transformation within the sector has been outstanding. Quanta Pc reported that AI servers are on observe to account for 70% of its whole server income this yr, with AI servers already accounting for greater than 60% of its whole server income within the first half of 2025, in accordance with chief monetary officer Elton Yang.
Wistron has demonstrated the transformative impression of AI servers on manufacturing economics, with the corporate’s income for January to July 2025 rising 92.7% in comparison with the identical interval within the earlier yr. The dramatic development displays the premium nature of AI server manufacturing in comparison with conventional client electronics.
The impression extends to Taiwan’s broader server ecosystem, with corporations securing multi-year manufacturing contracts that reach properly into 2026, indicating sustained demand and income visibility that was hardly ever seen within the client electronics period.
Strategic implications and future outlook
“The month-to-month gross sales soar for Taiwan ODMs within the first half of 2025 is proof of this pattern,” Robert Cheng, head of Asia know-how {hardware} analysis at BofA International Analysis, informed Reuters, referring to authentic design producers like Foxconn that contract manufacture merchandise for his or her purchasers.
The scenario displays a repositioning of Taiwan within the international know-how provide chain. The place corporations as soon as competed totally on value and manufacturing effectivity for client electronics, AI servers require larger ranges of technical sophistication, nearer collaboration with chip designers, and extra stringent high quality management.
“We expect this shift towards AI servers, no matter kind it takes, is nice for Taiwan’s tech business,” Cheng stated, noting Taiwanese corporations’ potential to shift quickly to cater to the altering wants of their prospects.
Nonetheless, challenges lie forward. Taiwan’s present 90% share of the worldwide AI server market might quickly decline as producers increase manufacturing elsewhere. Firms are already establishing manufacturing amenities within the US, Mexico, and different places to serve native markets and adjust to provide chain necessities.
Business-wide transformation
The AI server growth has catalysed modifications that reach past particular person corporations to reshape Taiwan’s whole electronics manufacturing ecosystem. Conventional boundaries between several types of know-how merchandise are blurring as producers develop new capabilities and forge nearer partnerships with AI chip corporations.
The transformation additionally highlights Taiwan’s distinctive place within the international know-how provide chain. The mixture of superior manufacturing capabilities, established relationships with main know-how corporations, and proximity to key semiconductor amenities has created a aggressive benefit that continues to drive development.
As synthetic intelligence functions proceed to want extra refined computing infrastructure, Taiwan’s producers seem well-positioned to capitalise on demand. The problem will likely be sustaining the nation’s know-how management whereas adapting to altering geopolitical and market circumstances which will require extra distributed international operations.
The shift from client electronics to AI servers exemplifies Taiwan’s potential to reinvent itself in response to technological change, preserve its central function within the international know-how ecosystem, adapt and innovate.
See additionally: Huawei unveils high-end AI chip for servers alongside MindSpore framework
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