Foxconn has hit a turning point. For the first time, it has made more money from building AI servers than from assembling Apple’s iPhones.

In the three months to June, sales from its cloud and networking products, which include AI servers, made up 41% of Foxconn’s total revenue, compared with 35% from smartphones.

Overall, Foxconn’s profit for the quarter was about 27% higher than a year ago, helped by record sales worth roughly A$86 billion.

The company says it expects AI server sales to keep climbing sharply in the months ahead, predicting they’ll be about 170% higher than last year in the next quarter, and roughly triple what they were in the March quarter.

Orders are being driven by huge investments from US tech giants racing to expand their AI data centres. Each server rack, built around Nvidia’s latest chips, can sell for millions of dollars, and Foxconn has become Nvidia’s top manufacturing partner for these systems.

For Foxconn, this marks a dramatic change in its business model. For years, the company’s fortunes have risen and fallen with Apple’s annual iPhone cycle. Now, it’s riding the wave of a much bigger technology shift – the global build-out of AI infrastructure.

Foxconn is delighted with its latest results, but conscious geopolitical frictions could easily complicate matters.

Foxconn CEO Young Liu recently told an investors conference, “The year-on-year growth from AI servers exceeded 60% in the second quarter of this year, demonstrating the momentum of the industry.”

But he also noted, “The real challenge is not about the tariff itself, but the uncertain variability of the policy, which is a real test of a company’s agility. The manufacturing sector cannot be moved immediately. It needs planning in advance.”

Increasingly, the Apple iPhone is yesterday’s hero

The symbolism in the change in Foxconn’s revenue mix is stark.

Apple, once the world’s most valuable company and long seen as Foxconn’s golden goose, has so far played a minor role in the AI boom. Meanwhile, Nvidia has taken Apple’s place at the top of the tree, and suppliers like Foxconn are retooling to feed the surging demand for AI computing power.

The ramifications of this go well beyond Foxconn’s balance sheet. AI servers are the backbone of the current tech arms race, powering everything from advanced chatbots to industrial automation.

If Foxconn’s pivot is any guide, the centre of gravity in the tech supply chain is shifting away from consumer electronics and towards the hardware that makes large-scale AI possible.