With the rapid development of information technology, the server market is becoming the core area of global technology competition. In particular, the surge in demand for AI servers continues to drive profound changes in the market landscape. Recently, an analysis from Omdia predicted that Foxconn will jump to become the world's largest server supplier, and if the prediction is successful, it will be the first case of a non-US company topping this market since 2018. This not only reflects the dynamic transformation of the global server market, but also provides new ideas for the future development of the industry. China Exportsemi will try to analyze the reasons behind the rise of Foxconn from the perspectives of technology, market and policy, and discuss the future trend of the server industry.
Behind the rise of Foxconn
Market Driver: Driven by the global AI wave
According to a report by market research firm Omdia, the global server market in 2024 will be highly concentrated: the top 10 user companies will account for 60% of global server purchases, while the top 10 server manufacturers will meet more than 70% of market demand. Foxconn's ability to emerge in this market is mainly due to the rapid growth of AI servers.
Specifically, U.S. cloud service giants such as Microsoft, AWS, Google Cloud, and Meta dominate capital expenditures in data centers, with these companies alone contributing most of the global server market. By establishing in-depth cooperation with these giants, Foxconn has successfully met its demand for AI server customization and rapidly expanded its market share.
Deepening of technical cooperation
Foxconn's success is also inseparable from its strategic layout in AI server technology. For example, Foxconn has partnered with Nvidia to become the producer of the Blackwell GPU reference design. With this collaboration, Foxconn's NVL36 and NVL72 racks are widely used in high-performance computing and AI inference tasks, further enhancing its competitiveness in the market.
In addition, Foxconn has actively deployed its self-research capabilities, and the expansion of its AI server product line has not only enhanced the company's voice in technology, but also enhanced its ability to adapt to market changes.
Growth of the global AI server market
The explosive growth of the market size
According to Intelligence Research Group, the global AI server market size has reached $21.1 billion in 2023 and is expected to increase to $31.79 billion in 2025. This growing trend is inseparable from the rapid application of AI technology in various fields. From autonomous driving and smart manufacturing to generative AI, AI servers are the core building blocks that drive these innovations.
The role of cloud service providers has been strengthened
The rise of cloud service providers in this space is also a contributing factor. According to statistics, the capital expenditure of global cloud vendors on data center construction is expected to account for more than 50% of the total investment in 2024. These companies are not only the main purchasers of servers, but also continue to promote the iterative upgrade of servers through technical cooperation with manufacturers. For example, Meta has deployed a next-generation training cluster based on Foxconn's AI servers in its data centers to support the development of generative AI.
Challenges and opportunities for Foxconn
Supply chain and regulatory pressures
Despite the bright market outlook, Foxconn also faces both supply chain and regulatory challenges. In 2024, global demand for GPUs continues to outstrip supply capacity, leading to the postponement of AI projects for some companies. In addition, the global regulatory framework for large-scale AI development is not yet in place, which may pose some uncertainty for the growth of the server market.
Figure: The global server market will usher in more brutal competition in 2025
Technology and cost pressures
As the AI server market expands, Foxconn needs to continue to invest in R&D to meet customers' higher requirements for performance and energy efficiency. At the same time, the intensification of market competition also forces manufacturers to continuously reduce costs and improve product cost performance.
Market Trends & Outlook
Future market growth potential
Omdia predicts that capital expenditures in the global server market will grow by 22% in 2025 to exceed $280 billion, and will approach $500 billion by 2030. This data shows that the growth potential of the AI server market is still huge, especially as generative AI, edge computing, and the Internet of Things become more popular, and servers will become the core infrastructure that supports the development of these technologies.
The rise of diversified cooperation models
In the future, Foxconn may further deepen cooperation with chip companies, cloud service providers and software companies, and explore a business model that integrates the whole industry chain. This will not only enhance its competitiveness in the market, but also help drive the overall progress of the server industry.
Conclusion
The rise of Foxconn marks a profound change in the competitive landscape of the server market. Driven by the demand for AI technology and cloud services, Foxconn has successfully become the new leader in the global AI server market by virtue of its technological advantages and flexible market strategy. Although supply chain and regulatory issues remain challenges that cannot be ignored, Foxconn's technology accumulation and market position provide it with a strong competitive advantage.
With the rapid development of the server industry, the market competition will be more fierce in the future. Technological innovation and industrial cooperation will be the key to differentiating enterprises. Foxconn's success not only provides a reference for other companies, but also demonstrates the rising power of Made in China in the global high-tech industry.
Through this article, I hope to provide readers with a deep understanding of the reasons behind the rise of Foxconn and look forward to the future development trend of the server market.
