Tech assembly giant Foxconn just announced that for the first time ever, AI and data servers now generate a larger share of its revenue than smartphone manufacturing. The manufacturing subcontractor is best known for its infamous deal to put together Apple’s iPhones, primarily in China. According to Reuters:
Foxconn on Thursday forecast a significant rise in third-quarter revenue as the world’s biggest iPhone maker said it had for the first time made more money from its AI server business than from smart electronics last quarter.
Nvidia’s biggest server maker and Apple’s top iPhone assembler has been riding a data centre boom, as cloud computing firms such as Amazon, Microsoft, and Alphabet‘s Google spend billions of dollars to expand their AI infrastructure and research capacity. Cloud and networking products, which include servers, accounted for 41% of its revenue in the second quarter, while smart consumer products represented 35%, the company said.
NLPC has previously addressed the risks of of U.S. corporations that rely on Chinese manufacturing. We filed a shareholder proposal in 2023 that requested an audit of Apple’s operational risk from conducting business in China. One of our concerns was that Apple’s Foxconn iPhone factory in China, had become both an ethical blight and a logistical challenge, and the company is still struggling to move its supply chains.
Apple’s competitors have fallen into the same trap. While Foxconn is headquartered in Taiwan and maintains a large presence there, the majority of its operations are in China, employing 1.4 million people across 28 facilities as of 2012 (the company does not provide up to date China employment numbers). That means the U.S. tech industry is further entangled with the Chinese economy and its communist leadership.
The real solution is to make these products in the US, or other friendly nations, where they can be insulated from Chinese influence and aggression. Foxconn is starting to make moves in the right direction:
The company said on Thursday its capital spending would rise more than 20% this year, as it plans to boost server production capacity in its manufacturing sites in Texas and Wisconsin.
Some of Foxconn’s assembly for Apple is also being shifted to India, but big tech still has a long way to go.
