Core Viewpoint - The company reported strong financial results for FY26 Q3, with significant year-over-year growth in revenue and profits, driven by its data center business and upcoming acquisitions, particularly in photonic interconnect technology [3][16]. Financial Performance - Revenue for FY26 Q3 reached $2.075 billion, a 37% increase year-over-year and a 3% increase quarter-over-quarter; Q4 revenue is projected at $2.2 billion, a 21% year-over-year increase [3]. - GAAP gross margin was 51.6%, up 28.6 percentage points year-over-year; Non-GAAP gross margin was 59.7%, down 0.8 percentage points year-over-year but up 0.5 percentage points quarter-over-quarter [3]. - Non-GAAP operating profit was $753 million, a 67% increase year-over-year, with an operating margin of 36.3%; Q4 Non-GAAP operating profit is expected to be $794 million, a 30% year-over-year increase [3]. - Non-GAAP net profit was $655 million, a 76% increase year-over-year, with a net profit margin of 31.6%; Q4 Non-GAAP net profit is projected at $677 million, a 27% year-over-year increase [3]. Business Segments - Data center revenue was $1.52 billion, a 38% year-over-year increase and 2% quarter-over-quarter; it accounted for 73% of total revenue, primarily driven by growth in photonic interconnect business [4]. - The company's ASIC business, which includes customized XPU products, is expected to see significant revenue contributions from upcoming projects, with over 15 design wins anticipated to generate more than $2 billion in revenue by FY29 [7]. - The enterprise networking segment generated $240 million, a 57% year-over-year increase, while the communications segment saw revenue of $170 million, up 98% year-over-year [11]. Future Outlook - Q4 data center revenue is expected to grow by 20% year-over-year, driven by a rebound in custom ASIC business and continued growth in interconnect, switching, and storage [13]. - The company announced a $3.25 billion acquisition of Celestial AI, expected to enhance its photonic interconnect capabilities and contribute significantly to future revenue [13]. - For FY27, the company anticipates revenue exceeding $10 billion, with data center revenue projected to grow by 25% [13][16]. - Management expects data center revenue growth to exceed 25% in FY28, with ASIC custom business revenue potentially doubling [13][16].

Core Insights - Lixun Precision reported strong financial performance for Q3 2025, with revenue of 220.91 billion RMB, a year-on-year increase of 24.69%, and a net profit of 11.52 billion RMB, up 26.92% [1] - The company expects full-year net profit for 2025 to be between 16.52 billion RMB and 17.19 billion RMB, representing a growth of 23.59% to 28.59% compared to the previous year [1] Financial Performance - For Q3 2025, Lixun achieved a revenue of 96.41 billion RMB, reflecting a 31.03% year-on-year growth, and a net profit of 4.87 billion RMB, which is a 32.49% increase [1] - The company’s revenue growth is attributed to the synergy across its major business segments, which include consumer electronics, communication and data centers, and automotive electronics [1] Business Strategy - Lixun plans to deepen its globalization strategy, leveraging overseas production bases to meet regional market demands and provide resilient, cost-effective manufacturing solutions [2] - The company aims to diversify its business by increasing investments in emerging fields such as AI hardware, data center interconnectivity, thermal management, smart vehicles, and robotics [2] Market Outlook - The company anticipates stable and slightly increasing market demand in Q3 and Q4 2025, supported by strong sales of the new iPhone 17 series, which saw a 14% increase in sales compared to the iPhone 16 series in the first 10 days post-launch [4] - Lixun's core business segments, particularly in consumer electronics, are expected to benefit from the growing demand for AI-enabled devices and components [3][4] Technological Advancements - Lixun is addressing challenges in the data center sector, particularly regarding power consumption and heat dissipation in high-density environments, by developing innovative optical interconnect solutions [5][6] - The company has introduced multiple solutions, including LPO and CPO technologies, which significantly reduce power consumption and enhance cooling efficiency [6][7] Automotive Electronics - The automotive electronics segment is experiencing robust growth, driven by the increasing penetration of smart cockpits and advanced driver-assistance systems [8] - Lixun is expanding its capabilities in core automotive components through collaborations with major manufacturers and leveraging its comprehensive R&D and manufacturing capabilities [8] Shareholder Returns - Lixun has approved a cash dividend distribution of 1.60 RMB per 10 shares, totaling 1.165 billion RMB, which represents 10.12% of the net profit for the first three quarters of 2025 [8]