Foxconn, Apple's primary assembler, now derives below 29% of revenue from the company, a permanent shift driven by AI server demand. The Zhengzhou plant, once handling 80% of global iPhone production, reflects Apple's diversification efforts. Foxconn's cloud and networking division, building AI servers, now accounts for 51% of revenue, marking its first half-year dominance. This structural change, highlighted by CEO Michael Chiang, prioritizes cloud investment as a key growth driver.

TSMC, another key supplier, sees AI chip packaging demand rise over 50% next year. While Foxconn shares rose 17% this year, investor concerns linger due to AI market volatility. Apple's push to reduce China reliance contrasts with Foxconn's AI-focused pivot.

The shift aligns with broader tech trends, though skepticism about an AI bubble persists. Foxconn's revenue diversification mirrors TSMC's growth, underscoring AI's rising role in manufacturing. Analysts note this transition may reshape global supply chains long-term.

Investors remain divided, balancing optimism over AI potential against market uncertainties. Foxconn's strategy signals a permanent move away from reliance on smartphone contracts, focusing instead on high-growth AI infrastructure.