Industrial Fulian's 2025 Performance Soars: Profits and Concerns Coexist Amid AI Boom

Industrial Fulian (601138.SH) reported that in 2025, the company’s annual revenue surpassed 900 billion yuan, reaching 902.887 billion yuan, a year-on-year increase of 48.22%; net profit reached 35.286 billion yuan, up 51.99% year-on-year. Behind this achievement, AI business has become the core driving force, with cloud computing accounting for over 60% of revenue, among which AI server business growth is particularly prominent.

Quarterly data shows that the company’s profitability is showing a strong upward trend. In 2025, net profits attributable to the parent company for the four quarters were 5.2 billion yuan, 6.9 billion yuan, 10.4 billion yuan, and 12.8 billion yuan, with the third and fourth quarters consecutively surpassing 10 billion yuan. Revenue also increased steadily, with each quarter reaching 160.4 billion yuan, 200.3 billion yuan, 243.2 billion yuan, and 299 billion yuan, respectively, with the fourth quarter setting a new quarterly high of 299 billion yuan.

Cloud computing business has become the main engine of performance growth. The segment achieved revenue of 602.679 billion yuan for the full year, an 88.70% increase year-on-year, accounting for 66.7% of total revenue. Among them, AI server business performed remarkably, with cloud service provider AI server revenue increasing more than threefold year-on-year, and in the fourth quarter, the growth was even 5.5 times compared to the same period last year. Products related to GPU and ASIC solutions also saw rapid growth, with the company’s delivery capacity and supply chain integration remaining among the industry’s top levels.

The communication equipment sector shows structural changes. Although the full-year revenue for communication and mobile network equipment increased only 3.46% to 297.851 billion yuan, revenue from 800G and above high-speed switches grew 13 times year-on-year, with the mass production of 1.6T switches accelerating, and CPO technology gradually being implemented. The company’s technical routes cover Ethernet, Infiniband, and NVLink Switch solutions to meet the interconnection needs of ultra-large data centers.

Terminal precision components maintained steady growth. Benefiting from the expansion of the AI smartphone market, shipments in this segment achieved double-digit growth. In contrast, the industrial internet segment revenue was 694 million yuan, down 26.15% year-on-year, but it accounts for a very small proportion of the overall business.

Cost structure shows that material expenditure continues to rise. Direct material costs accounted for 92.50% of total costs, an increase of 1.12 percentage points from the previous year, with absolute value rising from 515.6 billion yuan to 775.8 billion yuan, an increase of 50.45%. Labor costs accounted for 2.19%, and depreciation and amortization accounted for 0.69%, both showing a downward trend. The top five customers accounted for 62.01% of sales, indicating high customer concentration.

Cash flow status has attracted market attention. The full-year net operating cash flow was 5.238 billion yuan, down 78.01% year-on-year, mainly due to increased inventory investments leading to capital immobilization. In the fourth quarter, operating cash flow recovered to 9.378 billion yuan, slightly turning the annual figure positive. At the end of the period, contract liabilities stood at 3.113 billion yuan, a 790% increase from the beginning of the period, reflecting a significant increase in customer prepayments.

R&D investment ratio declined slightly. The full-year R&D expenses were 11.151 billion yuan, accounting for 1.24% of revenue, further down from 1.75% in 2024. The company’s global layout continues to deepen, with Mexico’s revenue of 307.044 billion yuan surpassing Vietnam’s 83.055 billion yuan, becoming the largest overseas manufacturing base, with the two regions contributing over 43% of main business revenue combined.

The dividend plan reached a new high. The company proposes a cash dividend of 6.5 yuan per 10 shares, totaling 12.901 billion yuan, with an annual cash dividend of 19.451 billion yuan and a payout ratio of 55.12%. The shareholding structure shows that nine of the top ten shareholders are actually controlled by Hon Hai Precision, holding approximately 83.74% of shares.

Industry prosperity continues to improve. According to TrendForce, global AI server shipments are expected to maintain a high growth rate of 28.3% in 2026, with capital expenditure by the eight major cloud service providers projected to exceed $710 billion, a 61% increase year-on-year. Chairman Zheng Hongmeng stated in a letter to shareholders that AI computing infrastructure will become a core development area in the future, but challenges such as international political and economic changes and raw material cost fluctuations should be watched carefully. As of the close on March 10, the company’s total market value was approximately 1.08 trillion yuan.