Hon Hai bets big on AI servers as US demand surges and iPhone sales slow

Hon Hai Posts Strong Sales as Nvidia AI Server Demand Holds Steady in the US

Hon Hai, also known as Foxconn, reported August sales of NT$606.5 billion (approximately $19.8 billion), marking a 10.6% increase compared to last year. The growth is largely driven by sustained demand for Nvidia AI servers in the U.S. Despite a slowdown in iPhone assembly revenue, the company’s AI server business remains a key sales driver.

Server sales are expected to more than double this quarter. While analysts predicted a 16.4% sales increase for the third quarter, Hon Hai fell slightly short. However, the company remains confident that Q3 sales will grow both sequentially and year-over-year.

Hon Hai Boosts Server Production While iPhone Orders Fall

The consumer electronics segment, including iPhone assembly, is losing momentum. Although Apple remains a significant client, the shift toward AI infrastructure—especially Nvidia’s server demand—is becoming more prominent. Hon Hai is following the revenue trend and focusing on expanding AI server production.

To avoid tariffs from the ongoing U.S.–China trade tensions, Hon Hai is scaling up AI server manufacturing within the U.S., adding production lines in Wisconsin and Texas where it already maintains campuses. This move aligns with U.S. policies exempting companies moving production stateside from tariffs, especially as former President Donald Trump pushes for a 100% tariff on semiconductor imports.

A senior company official confirmed, “We’re expanding server production inside America.” This strategy helps Hon Hai avoid tariffs by manufacturing servers domestically.

China Pushes Back While Nvidia Doubles Down

On the China front, major firms like ByteDance and Alibaba continue to seek Nvidia’s H20 AI chips despite regulatory warnings. According to insiders, Chinese companies are monitoring their H20 orders closely while eyeing Nvidia’s upcoming B30A chip, based on the Blackwell architecture.

The B30A, if approved for export to China, will cost around $20,000–$24,000 per unit but offers six times the performance of the H20. Both chips are designed to comply with U.S. export controls, allowing Nvidia to maintain sales in China legally.

• China accounted for 13% of Nvidia’s revenue last year, making it a critical market.
• U.S. officials aim to prevent Chinese companies from moving entirely to domestic chip makers like Huawei.
• Nvidia’s software ecosystem keeps customers locked into its platform, even with reduced chip capabilities.
• The U.S. government reportedly negotiated a deal to receive 15% of H20 chip revenue from Nvidia.

Meanwhile, Chinese regulators have summoned companies like Tencent and ByteDance to question their continued purchases of U.S. chips, citing data security concerns. Although no official bans have been issued, firms remain under close watch.

This delicate situation places Hon Hai in a critical position, balancing strong U.S. AI server demand with ongoing geopolitical challenges in China.

For sales professionals interested in AI infrastructure trends and hardware production shifts, understanding these market dynamics is crucial. Expanding knowledge about AI server demand and trade impacts can help tailor sales strategies effectively.

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