iPhone maker Foxconn is riding the AI ​​boom, but analysts believe its EV strategy is a better long-term bet.

But now, the world’s largest contract manufacturer is recognized for more than the iPhone.

In August, the world’s largest contract manufacturer reported this quarterly profits rose 6% year-on-year to 35 billion New Taiwan dollars ($1.1 billion). Revenue also rose to 1.55 trillion New Taiwan dollars ($48.1 billion).

The reason? Foxconn’s business makes AI servers.

Last year was “all about artificial intelligence,” Foxconn Chairman Young Liu said in a pre-recorded opening speech before taking the stage at the company’s annual Tech Day on Oct. 8 in Taipei.

On the same day, Foxconn revealed it is making the world’s largest manufacturing facility for the GB200, a key component of Nvidia’s next-generation Blackwell computing platform.

“Everyone is asking for Blackwell. The demand is terrifyingly high,” Benjamin Ting, Foxconn’s senior vice president of cloud enterprise solutions, told the Tech Day audience on Tuesday.

Liu later told reporters that the new Foxconn factory was planned to be built in Mexico.

Right place, right time

Foxconn controls about 40 percent of the global server market share, and the rise in AI revenue could be a case of “right place, right time,” says Kirk Yang, president of Kirkland Capital and a longtime Foxconn watcher. The company could leverage both “years of server experience” and a close working relationship with Nvidia.

However, Yang believes another recent Foxconn venture is a better bet for the company: electric cars.

Foxconn, which has been in the EV business since 2019, officially unveiled two more EV prototypes this week. The first is the Model D, a multipurpose utility vehicle, and the Model U, a “mid-size” electric bus.

As with consumer electronics, Foxconn plans to produce electric vehicles for existing car brands.

Foxconn’s electric vehicles have yet to gain major traction in international markets, winning only corporate customers in its home base of Taiwan, and Yang warns that it may take years to penetrate the automotive supply chain.

However, the company’s model of making products for other brands may soon attract some overseas markets.

“If we look at revenues for new markets, electric vehicles are still very promising,” says Helen Chiang, who leads Asia semiconductor research, including automotive chips, for market intelligence firm IDC.

Car companies outside of China, such as those in Japan, have been slower to transition to electric vehicles and may be attracted to Foxconn’s offering of a ready-made, customizable model. Chiang said that growth in the electric vehicle market has slowed and some mainstream car brands have slowed research and development for electric vehicles, and she believes it could be beneficial for those companies to work with Foxconn and leverage the Taiwanese company’s strength in manufacturing and costs.

Foxconn’s EV division already has a connection to Japan. Its director of electric vehicle strategy, Jun Seki, spent more than three decades at Nissan and two years at Japanese electric motor maker Nidec before moving to Foxconn in early 2023. Seki said Nikkei Asia Foxconn expects to sign production deals with two Japanese automakers by the end of this year.

Foxconn could also find success with commercial vehicles rather than personal cars. Chinese EVs could end up dominating the market for the latter as fierce price competition at home leads to more affordable models abroad.

“The focus of players in China is still on the consumer at the moment,” says Chiang.

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