Foxconn stands poised to make history in the global server market, with projections indicating it will surpass American competitors to claim the top position by late 2024.
The technology manufacturing giant’s ascent marks a significant shift in the competitive landscape of the server industry, which has traditionally been dominated by U.S. companies.
Foxconn’s growth is being driven by the increasing demand from prominent American cloud service providers, including Microsoft, Amazon, Google, and Meta. These industry leaders are seeking servers specifically optimized for artificial intelligence (AI) workloads. As cloud technologies and AI play a significant role in economic expansion, Foxconn is strategically positioning itself in this evolving market.
With anticipated shipment volumes indicating substantial growth, Foxconn’s Original Design Manufacturer (ODM) business is expected to experience remarkable expansion in 2024, potentially surpassing Dell, which is projected to generate $25 billion by the year’s end.
In contrast, Dell, which overtook HPE in 2018, is now expected to earn approximately $13 billion in server revenue for 2024. This dynamic shift within the server market appears to be benefiting Foxconn as it navigates the competitive landscape.
Amid increasing competition, it is worth noting that in 2024, the four largest cloud service providers will account for almost half of all data centers expenditures. These companies are strengthening their foothold in the highly competitive server market and driving demand for cutting-edge solutions, especially those designed for AI workloads. Notably, the rising demand for AI-ready servers has coincided with Microsoft stock chart showing consistent upward momentum, reflecting the growing value of AI and cloud infrastructure to its business model. Vendors collaborating with NVIDIA are thriving as AI application development and deployment take center stage.
Meanwhile, other players are making notable strides. Quanta Cloud Technologies (QCT) is ranked fifth with $15 billion, while ZT Systems and Super Micro Computer, each with $19 billion, have more than doubled their server sales in 2024. However, the landscape is far from static. AMD has acquired ZT Systems, though it plans to sell off the manufacturing division, including Inventec’s stake in ZT Systems. On the other hand, Super Micro has faced setbacks, losing significant orders that raise questions about its future in this competitive market.
Dell has also had a strong finish to the year, securing new strategic customers such as CoreWeave and xAI. The company has expanded its offerings to include professional services and reference projects, including AI consulting. Staying competitive will require Dell and others to adopt greater flexibility and innovative engineering, with some strategies drawing parallels to automated trading systems.
The server market is on a trajectory of sustained growth, with projections indicating that it will reach $380 billion by 2028 and approach $500 billion by 2030. While this growth hints at a potential peak in the future, there is a notable emphasis on cloud providers that specialize in AI solutions, highlighting the transformative nature of these investments.
This evolving landscape presents opportunities for both established companies and emerging players, such as CoreWeave, which is poised to challenge industry leaders like Oracle by the year 2025. Additionally, as Foxconn accelerates its server business and secures substantial orders from cloud providers, we are witnessing the emergence of a new technological era. In this context, Original Design Manufacturers (ODM) are becoming increasingly vital participants in the global server supply chain.
