Taiwan’s electronics manufacturers have adapted swiftly. In less than three years, firms like Foxconn—traditionally known for smartphones and laptops—have shifted focus as AI servers now drive revenue. This change is far from subtle, with server production soaring to NT$426.7 billion (around US$13.2 billion) from January to July 2024, marking an impressive annual growth rate of 153.9%.
The island now produces over 90% of the world’s AI servers, a feat built on decades of expertise honed in industries like notebook manufacturing. Companies such as Wistron and Quanta, both working closely with Nvidia, have enjoyed revenue jumps of 92.7% and 65.6% respectively in just the first seven months of this year.
Even Foxconn has felt the shift. Whereas consumer electronics once accounted for 54% of its revenue in 2021, AI servers and cloud infrastructure now contribute 41%. Quanta Computer forecasts that AI servers will comprise 70% of its server revenue by year’s end – a trend driven by key projects for tech giants like Microsoft and Google. Meanwhile, Wistron has secured bold orders for Nvidia’s HGX and DGX servers, as well as AMD’s latest AI server boards. Demand is so strong that Nvidia has dedicated an entire Wistron plant in Taiwan solely to AI server production.
This transformation not only brings predictable revenue and sustained demand but also simplifies Taiwan’s business landscape. Despite the possibility that its 90% market share may decline as manufacturing spreads globally, industry experts like Robert Cheng from BofA Global Research see the change as a strong strategic alignment. With tighter partnerships forming between traditional electronics makers and AI chip firms, Taiwan’s manufacturers are well-equipped to navigate future challenges.
