工业富联(601138) - 2025 Q2 - 季度财报

Definitions This section provides definitions of key terms used throughout the report Company Profile and Key Financial Indicators This section provides an overview of the company's basic information and presents its key financial performance metrics Company Information and Contact Details This chapter provides the company's basic business registration details, stock profile, and investor relations contact information, with no significant changes reported Key Company Information | Item | Information | | :--- | :--- | | Company Full Chinese Name | Foxconn Industrial Internet Co., Ltd. | | Company Chinese Abbreviation | FII | | Legal Representative | Zheng Hongmeng | | Stock Abbreviation | FII | | Stock Code | 601138 | | Listing Exchange | Shanghai Stock Exchange | Key Accounting Data and Financial Indicators During the reporting period, the company achieved robust performance growth with revenue increasing by 35.58% and net profit attributable to shareholders by 38.61%, while operating cash flow significantly decreased by 70.76% due to increased inventory for server business expansion Key Accounting Data (January-June 2025) | Key Accounting Data | Current Period (Jan-Jun) (Thousand RMB) | Prior Period (Thousand RMB) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Operating Revenue | 360,759,653 | 266,091,235 | 35.58 | | Net Profit Attributable to Listed Company Shareholders | 12,113,357 | 8,739,098 | 38.61 | | Net Profit Attributable to Listed Company Shareholders (Excluding Non-recurring Items) | 11,667,840 | 8,533,233 | 36.73 | | Net Cash Flow from Operating Activities | 1,407,028 | 4,811,444 | -70.76 | | Total Assets | 383,128,084 | 317,523,519 | 20.66 | Key Financial Indicators (January-June 2025) | Key Financial Indicators | Current Period (Jan-Jun) (RMB/share) | Prior Period (RMB/share) | Change | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 0.61 | 0.44 | 38.64% | | Diluted Earnings Per Share | 0.61 | 0.44 | 38.64% | | Weighted Average Return on Net Assets (%) | 7.64 | 6.02 | Increase by 1.62 percentage points | - Total non-recurring gains and losses amounted to RMB 446 million during the reporting period, primarily from disposal of non-current assets, government grants, and fair value changes of financial assets[23][25] Management Discussion and Analysis This section provides an in-depth analysis of the company's operational performance, industry trends, and strategic initiatives Industry and Main Business Overview In the first half of 2025, the company maintained its leading position in AI servers, precision components, and high-speed switches, benefiting from the expanding global AI infrastructure and driving rapid growth in related businesses - The AI server market continues to grow, with an estimated output value of $298 billion in 2025, accounting for over 70% of the total server market value, where the company demonstrates significant technological and production advantages[29][30] - AI phones are driving a premium replacement cycle, with global GenAI-equipped phone shipments expected to exceed 400 million units in 2025, representing approximately one-third of the market share, benefiting the company's precision component business[31] - AI computing demand is driving the high-speed network equipment market, particularly high-speed switches, with the company's 800G switches achieving significant shipments and steadily increasing market share[32][33] - National policies continue to bolster '5G + Industrial Internet,' providing strategic opportunities for the company's industrial internet solutions business as it strives to lead digital transformation in manufacturing[34][35] Discussion and Analysis of Operations In the first half of 2025, the company capitalized on AI opportunities, achieving RMB 360.76 billion in revenue, a 35.58% increase, and RMB 12.11 billion in net profit, a 38.61% increase, driven by expanding AI server contributions and strong growth in communication and mobile network equipment Key Performance in H1 2025 | Indicator | Amount (Billion RMB) | YoY Growth | | :--- | :--- | :--- | | Operating Revenue | 3,607.60 | 35.58% | | Net Profit Attributable to Shareholders | 121.13 | 38.61% | - Cloud computing business showed significant growth, with overall server revenue increasing over 50% in Q2, cloud service provider server revenue growing over 150% year-on-year, and AI server revenue increasing over 60%, with GB200 series products achieving mass production ramp-up[36] - Communication and network equipment business experienced rapid growth, with precision component shipments increasing by 17% in the first half, and 800G high-speed switch revenue nearly tripling compared to full-year 2024[37] Analysis of Core Competencies The company's core competencies include its proactive global presence, robust supply chain, strong technological innovation, leading intelligent manufacturing, excellent management, and valuable customer relationships, supported by 7,362 active patents and 8 self-built 'Lighthouse Factories' - The company has established global high-end intelligent manufacturing bases and digital management systems, efficiently meeting global delivery demands and offering one-stop supply chain services through investments in semiconductors and industrial software[38] - As of the end of the reporting period, the company holds 7,362 active and authorized patents, a 6.5% year-on-year increase, with a high proportion related to sustainable development, reflecting deep integration of technological innovation and sustainability[39] - The company has internally built 8 and externally empowered 6 world-class 'Lighthouse Factories,' becoming a global benchmark for manufacturing digital transformation and enabling a shift from automation to robotics through industrial AI[40] - The company possesses a strong management team and a comprehensive talent development mechanism, maintaining long-term stable cooperative relationships with leading global brand clients, demonstrating significant customer resource advantages[41][42][43] Key Operating Performance During the reporting period, the company's main business drove performance growth, primarily due to increased AI server market share, leading to significant increases in inventory and short-term borrowings and a decrease in operating cash flow to support server orders, while overseas assets, mainly in Singapore, constituted 66.61% of total assets, and the company engaged in strategic investments and foreign exchange hedging Analysis of Main Business During the reporting period, operating revenue and cost of sales increased by 35.58% and 35.76% respectively, driven by AI server market growth, while net cash flow from operating activities decreased by 70.76% due to increased server inventory, and net cash outflow from investing activities expanded by 58.86% for global capacity expansion Analysis of Major Financial Statement Item Changes | Item | Current Period (Thousand RMB) | Prior Period (Thousand RMB) | Change (%) | Explanation for Change | | :--- | :--- | :--- | :--- | :--- | | Operating Revenue | 360,759,653 | 266,091,235 | 35.58 | AI server market growth, increased company share | | Cost of Sales | 336,934,278 | 248,177,186 | 35.76 | Due to increase in operating revenue | | Net Cash Flow from Operating Activities | 1,407,028 | 4,811,444 | -70.76 | Server business growth, increased inventory demand | | Net Cash Flow from Investing Activities | -5,300,730 | -3,336,783 | -58.86 | Expanding global capacity layout, increased fixed asset purchases | Analysis of Assets and Liabilities As of the end of the reporting period, total assets reached RMB 383.1 billion, a 20.66% increase from year-end, with inventory significantly up by 44.20% and short-term borrowings by 69.98% due to increased server orders and working capital needs, while overseas assets, primarily in Singapore, accounted for 66.61% of total assets Changes in Major Asset and Liability Items | Item Name | Current Period End (Thousand RMB) | Change from Prior Year-End (%) | Explanation | | :--- | :--- | :--- | :--- | | Inventory | 122,949,245 | 44.20 | Primarily due to increased inventory for significantly higher server orders | | Short-term Borrowings | 61,180,033 | 69.98 | Primarily due to increased server orders and the company's need to supplement working capital for inventory | | Contract Liabilities | 2,007,943 | 474.32 | Primarily due to increased advance receipts | - The company's overseas assets amounted to RMB 255.186 billion, accounting for 66.61% of total assets, with Cloud Network Technology Singapore Pte. Ltd. being the primary overseas operating and order-receiving legal entity[49][51] Analysis of Investment Status The company strategically invests in the AI computing power industry chain under its '2+2' strategy, including the acquisition of Guangzhou Tianying Precision Tools Co., Ltd. to expand into high-end medical devices, while utilizing foreign exchange derivatives for hedging purposes without engaging in speculative trading - The company closely adheres to its '2+2' strategy, focusing investments on the AI computing power industry chain, including AI computing infrastructure and application fields, while accelerating digital transformation[52] - In March 2025, the company announced its subsidiary's acquisition of Guangzhou Tianying Precision Tools Co., Ltd., aiming to accelerate its presence in the high-end medical device industry as a horizontal expansion of its intelligent manufacturing segment[53] - The company engaged in foreign exchange derivative option transactions for hedging purposes, aiming to lock in target exchange rates and mitigate adverse impacts from significant currency fluctuations, with all operations based on normal production and business activities[55] Analysis of Major Holding and Participating Companies During the reporting period, key subsidiaries Cloud Network Technology Singapore Pte. Ltd. and Fuyu Precision Components Co., Ltd. significantly contributed to the company's performance, while adjustments to subsidiary structure through equity disposals and acquisitions had no material impact on overall operations or results Operating Performance of Major Subsidiaries (January-June 2025) | Company Name | Main Business | Operating Revenue (Thousand RMB) | Net Profit (Thousand RMB) | | :--- | :--- | :--- | :--- | | Cloud Network Technology Singapore Pte. Ltd. | Servers, Storage, Network Equipment | 264,544,218 | 3,870,925 | | Fuyu Precision Components Co., Ltd. | High-precision components for network and telecom equipment | 26,577,000 | 1,616,738 | - During the reporting period, the company disposed of equity in Shenzhen Hengqu Motor Co., Ltd. and acquired equity in Guangzhou Tianying Precision Tools Co., Ltd. and Liwei Precision International Co., Ltd., with these changes having no material impact on overall operating performance[58] Potential Risks The company faces key risks including macroeconomic and industry fluctuations, exchange rate volatility, customer concentration, and raw material price fluctuations, which it addresses through global expansion, R&D investment, hedging, customer collaboration, and supply chain optimization - The company faces multiple risks including macroeconomic conditions, industry technological iteration, exchange rate fluctuations (primarily non-RMB settlements), customer concentration (high revenue proportion from top five clients), and raw material price volatility[59][60][61][62][64] Other Disclosures The company continues to advance its 'Quality Improvement, Efficiency Enhancement, and Return Focus' initiative, achieving significant progress in core business, governance, investor relations, and shareholder returns, with a record RMB 12.704 billion in dividends for 2024, while its MSCI ESG rating improved to 'A' and it joined the UN Global Compact, demonstrating strong sustainability commitment - The company is deepening its 'Quality Improvement, Efficiency Enhancement, and Return Focus' initiative, concentrating on core areas like AI infrastructure, accelerating global capacity expansion, and leveraging AI technology to enhance production efficiency and product yield[65] - Regarding investor returns, the company distributed a cash dividend of RMB 6.4 per 10 shares in 2024, totaling a record RMB 12.704 billion, with a dividend payout ratio of 54.72%, while steadily advancing its share repurchase and cancellation plan[67] - The company demonstrated excellent ESG performance, with its MSCI ESG rating rising to 'A,' ranking first in the electronics industry, placing in the top 4% globally in S&P Global CSA assessment, and joining the United Nations Global Compact (UNGC)[68] Corporate Governance, Environment, and Society This section details the company's corporate governance practices, environmental protection initiatives, and social responsibility efforts Corporate Governance During the reporting period, there were no changes in the company's directors, supervisors, or senior management, and the board resolved not to distribute profits or convert capital reserves into share capital, while the 2019 equity incentive and 2022 employee stock ownership plans continued as scheduled - The Board of Directors resolved not to distribute cash dividends, bonus shares, or convert capital reserves into share capital for the current reporting period[70] - The company's 2019 equity incentive plan and 2022 employee stock ownership plan continued to be implemented during the reporting period, with some options exercised and some restricted shares unlocked[71][73] Environmental Information The company prioritizes environmental protection, with 11 subsidiaries subject to environmental information disclosure, strictly adhering to regulations on emissions, pollution control, and environmental assessments, achieving multiple ISO certifications, and actively pursuing water management and clean technology innovations, resulting in 253 million kWh of electricity savings and 246,955 tons of CO2 equivalent reduction in H1 2025 - The company has 11 subsidiaries included in the list of enterprises required to disclose environmental information by law, with 6 designated as key water pollutant discharge units and 2 as key atmospheric pollutant discharge units, all strictly adhering to emission standards[74][75] - All 44 of the company's global subsidiaries are 100% ISO14001 certified, with 14 green factory designations and 15 UL 2799 Platinum certifications for zero waste to landfill, demonstrating significant systematic management effectiveness[89] - The company actively promotes clean technology innovation, optimizing data center energy efficiency in cloud computing and leveraging robotics, intelligent manufacturing, and recycled material technologies to support the industry's low-carbon transition[91][92] Carbon Reduction Achievements in H1 2025 | Carbon Reduction Measure | Achievement | | :--- | :--- | | Energy Saving Projects | Implemented 378 projects, cumulative electricity savings of approximately 253 million kWh | | CO2 Equivalent Reduction | 246,955 tons | | Renewable Energy Use | Obtained 315 million kWh in H1, expected annual share over 70% | Social Responsibility The company actively fulfills its social responsibilities, investing RMB 208,000 in rural revitalization, benefiting 1,859 people, and providing employment for nearly 1,800 individuals from poverty-stricken areas, while also donating over RMB 10 million for disaster relief and engaging in disability support and educational assistance programs - During the reporting period, the company invested RMB 208,000 in rural revitalization and provided employment for 990 local and poverty-stricken individuals in Lankao Park and over 800 in Shenzhen Longhua Park through special recruitment[104] - The company donated over RMB 10 million, including RMB 10 million to the earthquake-stricken areas of Xigaze, Tibet, and actively conducted disability-friendly recruitment and charitable education support activities[106][107] Significant Matters This section covers key corporate events, including commitment fulfillment, related party transactions, major contracts, and fundraising utilization Fulfillment of Commitments During the reporting period, the company's actual controller, shareholders, related parties, and the company itself strictly fulfilled all commitments made during the initial public offering, including share lock-ups, avoidance of horizontal competition, and regulation of related party transactions, with no breaches reported - The company and relevant parties have timely and strictly fulfilled commitments made during or continuing into the reporting period, such as share lock-ups, resolution of horizontal competition, and management of related party transactions[109] Significant Related Party Transactions The company has estimated and disclosed its routine related party transactions for 2025, which were implemented as planned during the reporting period, with no significant changes or undisclosed matters - The company has disclosed the 'Announcement on Estimated Routine Related Party Transactions for 2025' in its interim announcement, with no other significant related party transactions requiring disclosure during the reporting period[131] Major Contracts and Their Performance As of the end of the reporting period, the company's guarantee balance for subsidiaries was RMB 3.582 billion, representing 2.36% of net assets, primarily comprising a $500 million loan guarantee for wholly-owned subsidiary CNT SG and an authorized guarantee for its up to $2 billion medium-term note program (not yet utilized) Total Company Guarantees (As of Reporting Period End) | Item | Amount (Thousand RMB) | | :--- | :--- | | Total Guarantees for Subsidiaries (B) | 3,581,650 | | Total Guarantees (A+B) | 3,581,650 | | Total Guarantees as % of Company Net Assets | 2.36 | - The company provided a guarantee for a $500 million loan to its wholly-owned subsidiary CNT SG and authorized a guarantee for its overseas medium-term note program of up to $2 billion (not yet utilized during the reporting period)[135] Explanation of Proceeds Utilization Progress The company's net proceeds from its initial public offering totaled RMB 26.716 billion, with RMB 25.68 billion cumulatively invested by the end of the reporting period, representing a 96% utilization rate, and during the period, the 'High-Efficiency Computing Data Center Construction Project' was terminated, with remaining funds reallocated to the new 'Next-Generation Smartphone Precision Component R&D Center Project' Overall Utilization of Proceeds | Item | Amount (Ten Thousand RMB) | | :--- | :--- | | Net Proceeds | 2,671,644 | | Total Cumulative Investment as of Reporting Period End | 2,568,018 | | Cumulative Investment Progress | 96% | - During the reporting period, the company terminated the 'High-Efficiency Computing Data Center Construction Project' due to slow equipment procurement caused by changes in international circumstances, reallocating the remaining proceeds to the 'Next-Generation Smartphone Precision Component R&D Center Project'[159][161] Share Changes and Shareholder Information This section details changes in the company's share capital and provides an overview of its shareholder structure Changes in Share Capital During the reporting period, the company's total share capital decreased from 19.868 billion shares to 19.859 billion shares, primarily due to the unlocking of restricted shares, the exercise of equity incentives increasing shares by 915,300, and the repurchase and cancellation of 9.4626 million shares - During the reporting period, the company's total share capital decreased by 8,547,321 shares, with the total share capital at period-end being 19,859,465,126 shares[164] - Share changes primarily resulted from equity incentive exercises (an increase of 915,302 shares) and share repurchases and cancellations (a decrease of 9,462,623 shares)[165][166] Shareholder Information As of the end of the reporting period, the company had 311,115 common shareholders, with a stable top ten shareholder structure where controlling shareholder China Galaxy Enterprise Limited held 36.72%, and most top ten shareholders were controlled by Hon Hai Precision Industry Co., Ltd. Top Ten Shareholders' Holdings | Shareholder Name | Shares Held at Period End | Proportion (%) | | :--- | :--- | :--- | | China Galaxy Enterprise Limited | 7,293,115,611 | 36.7236 | | Futaihua Industrial (Shenzhen) Co., Ltd. | 4,364,680,127 | 21.9778 | | Ambit Microsystems (Cayman) Ltd. | 1,902,255,034 | 9.5786 | | Foxconn Technology Group Co., Ltd. | 1,635,887,159 | 8.2373 | | Honfujin Precision Electronics (Zhengzhou) Co., Ltd. | 597,861,110 | 3.0105 | | HKSCC Nominees Limited | 491,090,095 | 2.4728 | | Argyle Holdings Limited | 327,104,697 | 1.6471 | | Joy Even Holdings Limited | 247,590,604 | 1.2467 | | Rich Pacific Holdings Limited | 155,355,705 | 0.7823 | | Shenzhen Super Optoelectronics Co., Ltd. | 116,316,087 | 0.5857 | Information on Directors, Supervisors, and Senior Management During the reporting period, Chairman and General Manager Zheng Hongmeng's shareholding increased by 100,000 shares to 800,000 shares at period-end due to the exercise of stock options - Chairman and General Manager Zheng Hongmeng's shareholding increased from 700,000 shares at the beginning of the period to 800,000 shares at period-end due to option exercise[178] Bond-Related Information This section provides details on the company's bond and convertible bond status Corporate Bonds and Convertible Corporate Bonds During the reporting period, the company had no outstanding corporate bonds, enterprise bonds, non-financial enterprise debt financing instruments, or convertible corporate bonds - The company has no applicable corporate bonds (including enterprise bonds), non-financial enterprise debt financing instruments, or convertible corporate bonds[184] Financial Report This section presents the company's unaudited financial statements and detailed notes on accounting policies and financial items Financial Statements This semi-annual financial report is unaudited, showing total assets of RMB 383.128 billion and equity attributable to parent company owners of RMB 151.670 billion as of June 30, 2025, with total operating revenue of RMB 360.760 billion and net profit attributable to parent company shareholders of RMB 12.113 billion for the first half of 2025 - This semi-annual report is unaudited[5] Consolidated Financial Statement Core Data (As of June 30, 2025 / January-June 2025) | Item | Amount (Thousand RMB) | | :--- | :--- | | Total Assets | 383,128,084 | | Total Liabilities | 231,140,143 | | Total Equity Attributable to Parent Company Owners | 151,669,890 | | Total Operating Revenue | 360,759,653 | | Net Profit Attributable to Parent Company Shareholders | 12,113,357 | | Net Cash Flow from Operating Activities | 1,407,028 | Company Overview and Basis of Financial Statement Preparation The company, established in 2015 and listed on the Shanghai Stock Exchange in 2018, primarily designs, develops, manufactures, and sells electronic equipment products including communication and mobile network devices, cloud computing, industrial internet, and robotics, with its financial statements prepared on a going concern basis in accordance with Chinese Enterprise Accounting Standards - The company's main business involves the design, research and development, manufacturing, and sales of electronic equipment products such as communication network equipment, cloud service equipment, precision tools, and industrial robots[217][220] - The financial statements are prepared on a going concern basis and in accordance with the Enterprise Accounting Standards and relevant regulations issued by the Ministry of Finance of China[222][223] Significant Accounting Policies and Estimates This chapter details the company's key accounting policies and estimates, covering business combinations, consolidated financial statements, financial instrument classification and impairment, inventory valuation, fixed asset depreciation, intangible asset amortization, revenue recognition, leases, and share-based payments, with critical judgments and estimates pertaining to financial asset classification, credit risk assessment, revenue recognition models, and income tax calculations - Financial assets are categorized into three types based on the business model for managing them and their contractual cash flow characteristics, with loss provisions for accounts receivable measured at the expected credit losses over their entire lifetime[241][247] - Revenue is recognized when the customer obtains control of the related goods or services, typically upon delivery to the carrier or customer confirmation for domestic sales, and based on international trade terms for overseas sales[296] - The company applies simplified treatment for short-term leases (not exceeding 12 months) and low-value asset leases, without recognizing right-of-use assets and lease liabilities[306] - Key accounting estimates and judgments include the measurement of expected credit losses, recognition of income tax and deferred income tax, determination of net realizable value for inventory, and estimated useful lives of fixed and intangible assets[311][316][317][319] Notes to Consolidated Financial Statement Items This chapter provides detailed notes on major items in the consolidated financial statements, highlighting ample monetary funds, significant increases in inventory and accounts payable due to business expansion, recognition of share-based payment expenses from equity incentive and employee stock ownership plans, continuous R&D investment primarily in employee compensation and material consumption, and substantial related party transactions mainly involving purchases and sales of goods and services with the controlling shareholder and other affiliates - The book value of inventory at period-end was RMB 122.949 billion, a significant increase from RMB 85.266 billion at the beginning of the period, primarily due to increased inventory to meet higher server orders[387][48] - Accounts payable at period-end amounted to RMB 122.842 billion, a significant increase from RMB 93.835 billion at the beginning of the period, reflecting expanded procurement volumes[429] - Total R&D expenses during the reporting period were RMB 5.095 billion, with employee compensation being the largest component at RMB 3.020 billion[469] - During the reporting period, the company's total purchases of goods and acceptance of services from related parties (primarily Hon Hai Precision and its subsidiaries) amounted to RMB 11.065 billion, while sales of goods and provision of services to related parties totaled RMB 1.766 billion[545][546]