Summary of Zhongfu Circuit Conference Call Company Overview - **Company**: Zhongfu Circuit - **Industry**: PCB (Printed Circuit Board) manufacturing, with a focus on AI-related power supply solutions Key Points and Arguments Industry Position and Strategy - Zhongfu Circuit is a leading player in the AI sector, with its three-phase power supply covering North America and some domestic clients. The HVDC (High Voltage Direct Current) first-phase power supply is expected to enter mass production next year, benefiting from the growing demand for AI server power supplies [2][5][6] - The company's strategic focus has shifted towards North American AI business, as AI clients offer higher profit margins compared to non-AI products. The proportion of AI orders is expected to continue increasing [2][4] - The company has been developing three-phase power supplies since 2018-2019 and is one of the earliest suppliers in this field [5] Financial Performance - In Q3 2025, Zhongfu Circuit experienced revenue and gross margin growth primarily driven by increased PCB orders in the AI sector. Domestic and overseas orders have significantly increased, although North American AI clients have not fully ramped up their orders yet [3] - The gross margin improvement is attributed to domestic factories reaching full production capacity, which reduces overhead costs [3] Product Development and Market Trends - The value of products is positively correlated with power, but the growth is non-linear. For instance, the value of a 3,000-4,000 watt single-chip project is expected to increase by 30%-50% compared to current levels [2][8] - The trend towards larger modules is evident, as they provide higher value despite being more complex to produce [9] - The company is also focusing on embedded and narrow board technologies, but the immediate priority is to execute existing projects effectively [12] Supply Chain and Production Challenges - The Thai factory is expected to improve its operational status in Q4 due to overseas clients shifting orders, although achieving profitability in the short term remains challenging [32][33] - The pricing of orders in Thailand is 10-20% higher than domestic prices, but high management and manufacturing costs may offset these advantages [35] Competitive Landscape - Zhongfu Circuit differentiates itself by covering both first-phase and three-phase product lines, unlike competitors like Jiangxi Weiergao, which primarily focus on first-phase products [14] - The company has established partnerships with several key clients, which positions it well for future certification requirements as the AI market matures [7] Future Outlook - The company aims to become a leader in the AI product sector, with plans to expand its market share in onboard power supplies and HVDC applications [26] - The overall gross margin is currently around 15%, significantly influenced by the proportion of domestic clients. Increasing the share of high-margin AI products is crucial for enhancing overall profitability [27] Miscellaneous Insights - The company is cautiously exploring the automotive power chip sector while prioritizing AI embedded projects to ensure effective resource allocation [28] - There is a general expectation of limited market changes in 2026, despite some opportunities [29] - Domestic AI clients are gradually increasing their power supply needs, although they still rely heavily on North American supply chains [30] Pricing and Cost Management - The price of traditional first-phase and AC to DC conversion boards ranges from 1,500 to 2,000 RMB per square meter, while HVDC products range from 7,000 to 20,000 RMB, and three-phase power supplies start at around 22,000 RMB [24] - The impact of rising raw material costs, such as copper-clad laminates, on profit margins is minimal, as the company is managing costs through price adjustments and product structure optimization [37][38]

Summary of Zhongfu Circuit Conference Call Company Overview - Zhongfu Circuit focuses on communication and data center businesses, which are expected to account for nearly 50% of revenue by 2025, driven by the high pricing and profitability of the AI industry. The company is currently facing capacity constraints but has a strong order situation [2][4][16]. Investment and Production Capacity - Since its IPO in 2021, Zhongfu Circuit has invested approximately 400 million yuan in domestic and Thai factories, focusing on HDI thick copper boards and high-end AI power-related products, which are expected to gradually start production and yield benefits [2][5][6]. - The domestic factory is operating at nearly full capacity, while the Thai factory has a lower utilization rate but is expected to see significant increases in the fourth quarter [3][16]. Business Segmentation and Performance - The company’s product segments include: - Communication and data center: ~50% - Industrial products: ~20% - Automotive electronics: ~20% - Consumer electronics: ~10% [4][7]. - Overall performance in the first three quarters of 2025 showed a growth of approximately 3-4%, primarily benefiting from the AI industry's high pricing and profitability [4]. Technological Advancements - The introduction of NVIDIA's 800V DC power architecture is a significant advantage for Zhongfu Circuit, with collaborations on nearly all front-end solutions. This architecture is expected to enhance the value of PCB boards significantly starting in 2026 [2][9][10]. - The transition from 480V AC to 800V DC will introduce new power levels and modularization, which will increase the value of HVDC products [10]. High-End Product Strategy - Currently, high-end products account for about 30-40% of revenue, with a goal to increase the market share of embedded components and advanced power supplies, targeting over 50% in the future [12][11]. - The company aims to develop 16×16 layer to 30 layer HBI products, with average prices exceeding 10,000 yuan [12]. Competitive Positioning - Zhongfu Circuit maintains a leading position in advanced packaging through collaborations with top chip companies and is actively seeking customer opportunities in traditional PCB sectors [13]. - The company plans to supply high-end products from both its He Shan and Thai factories, with significant orders from major global clients [14]. Future Outlook - The company anticipates that high-end PCB capacity is not yet oversaturated, with ongoing demand, particularly in overseas markets [22]. - The automotive sector is expected to see good growth next year, but the company will focus on high-margin products with technological barriers, avoiding low-margin projects [23]. Cost and Pricing Dynamics - The rise in copper foil prices affects mid-to-low-end products but not high-end products, leading to a strategy of increasing high-end product share while reducing competition in lower-tier products [25]. - The company expects a turning point in profit margins to occur soon, potentially in the fourth quarter or early next year, focusing on high-end products to drive profitability [26]. Conclusion - Zhongfu Circuit is strategically positioned to capitalize on the growth of the AI industry and advanced power solutions, with significant investments in production capacity and a clear focus on high-end product development. The company is well-prepared to meet increasing demand while navigating challenges in capacity and market dynamics.