---
endpoint: analytics
pattern: Technology
status: done
latency_ms: 246715
conversation_id: 5109db1a-6fe9-483c-aa27-e9943dd9110f
citations: 14
created: 2026-05-31 19:43:04Z
---

# Provide a one‑year narrative of FII, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# FII (601138 CH) — One-Year Narrative (May 2025 → May 2026)

Over the past twelve months, **Foxconn Industrial Internet (FII / 工业富联)** evolved from a stock weighed down by margin concerns and Trump-era tariff risk into one of the highest-velocity AI infrastructure beneficiaries in the A-share market — with sentiment compounding alongside revenue acceleration that crossed the threshold from "AI-exposed iPhone assembler" to "primary GB / Rubin rack integrator."

---

## 1. Setting the Stage — Spring 2025 (Pre-tariff pause backdrop)

Coming into the period, FII had just closed FY2024 with **record revenue of Rmb609.14bn (+27.9% YoY)** and net profit of Rmb23.22bn (+10.3%) [8]. The board approved a cash dividend of **Rmb6.4 / 10 shares (54.7% payout ratio, Rmb12.71bn total)** — the highest in the A-share electronics sector [9].

But the share-price set-up was unfavourable. CLSA's **2 May 2025 "On Track Delivery" note** captured the dual headwinds: (i) GB200 mass production was "still not very smooth" and (ii) Trump tariff policy was unresolved on the Apple side. CLSA cut target PE from 16x to 14x and **lowered TP from Rmb23.2 to Rmb20.3** — citing concern over a potential AI capex slow-down in 2026 and tariff overhang [1][3]. Investor sentiment at that time was **defensive**: the stock was traded as a tariff-pressured iPhone supplier first and an AI server play second.

### 1Q25 financial print (anchor)

| Metric (Rmbm) | 1Q24 | 1Q25 | YoY |
|---|---|---|---|
| Revenue | 118,688 | 160,415 | +35.2% |
| Gross profit | 9,066 | 10,803 | +19.2% |
| Gross margin | 7.6% | 6.7% | –0.9 ppt |
| Net profit | 4,185 | 5,231 | +25.0% |

Source: CLSA, company [2]

Cloud was already accelerating: **AI server revenue +>50% YoY, cloud-provider server revenue +>60% YoY** [10]. Management framed Q2 boldly: "AI server revenue in Q2 will have the potential to double, both compared to Q1 2025 and Q2 2024," with AI servers crossing **>50% of total server revenue** [10].

---

## 2. Mid-2025 — Tariff Pause, GB Ramp, Validation

The tariff narrative loosened in May–July 2025 as the China–US "Tariffs on pause" framework emerged (CLSA *China Technology* notes, Apr–May 2025). With Apple exposure de-risked at the headline level, the market's incremental dollar started to flow into FII's **GB200 / GB300 rack ODM thesis** rather than its consumer-electronics base.

Management leaned in. The company emphasised:

- **71 production bases across three continents** (48 in Asia incl. 29 in mainland China, 20 in Americas, 3 in Europe), explicitly positioned as the supply-chain resilience answer to tariff regionalisation [11].
- A **40%+ market-share aspiration** in next-gen AI cabinets, framed as a "preliminary" goal that would be exceeded as Blackwell/Rubin shipments scaled [10].
- **GTC participation** showcasing the next-gen GB300 cabinet platform — the public signal that FII would not lose AI server share at the generational handover.

This is when the valuation re-rate began. Through the back half of 2025, FII's gross margin progressed sequentially each quarter — by management's own description, *"毛利率从去年二季度开始逐季提升"* (gross margin has improved quarter-by-quarter since Q2 last year) — driven by structural vertical integration in cooling, power systems, and switch fabric rather than scale dilution [13].

---

## 3. Late 2025 — FY25 Surprise, ROE Inflection

By the time FY2025 results were discussed in the 16 April 2026 investor call, the narrative had fundamentally shifted. Management disclosed:

- **2025 ROE jumped to 21.7%** (vs ~15.9% in 2024), explicitly attributed to AI-driven mix shift and tighter capital efficiency [14].
- Inventory built up sharply, but management framed this as **"AI业务高速成长带来的战略性资金占用"** — strategic working capital tied to GB-series volume preparation, not operational deterioration [14].
- Asset-liability ratio held at ~63%; no liquidity concerns.

The market response was decisive: FII was no longer being benchmarked against EMS/contract assembly peers but against AI infrastructure pure-plays. The PE multiple expanded as earnings growth re-accelerated, validating CLSA's earlier (Oct 2024) thesis that 20x average 25/26CL PE was the right anchor once GB200 visibility crystallised [6].

---

## 4. 1Q26 Print — The Decisive Quarter (Apr–May 2026)

The Q1 2026 interim report (released April 2026) crystallised the new growth profile:

| 1Q26 Headline | Rmb '000 | YoY |
|---|---|---|
| Revenue | 251,078,078 | **+56.52%** [15] |
| Profit before tax | 12,323,577 | +109.39% [15] |
| Net profit (parent) | 10,594,857 | +102.55% [15] |
| Operating cash flow | 25,024,028 | **+1,826.20%** [15] |
| EPS (Rmb/share) | 0.53 | +103.85% [15] |
| Weighted ROE (Q1 only) | 6.18% | +2.70 ppt |

**Segment drivers** (1Q26):
- **Cloud computing revenue doubled YoY** (+100%) [19]
- **AI GPU rack shipments +3.8x YoY** [17]
- **AI ASIC server shipments +3.2x YoY** [17]
- **800G+ high-speed switch shipments +1.6x YoY, +46% QoQ; CPO co-packaged optics switch samples began shipping** [16]
- Some hyperscaler customers also transitioned from "buy-and-sell" to "consign" procurement — a model shift the company flagged but did not quantify [17]

Management framed AI infrastructure as having "become a core growth engine" with cloud +100% YoY [19].

---

## 5. May 2026 — Vera Rubin Defence & CPO Optionality

Through May 2026, FII held two heavily-attended IR sessions (15–18 May with ~30 funds; 20 May with 12 funds incl. CITICS-CLSA, BNP Paribas, Huatai, CICC). Two narratives dominated:

**(a) Vera Rubin defence.** Market rumours that the Rubin platform would be redesigned/delayed pushed peer stocks lower. FII pushed back firmly: *"公司下一代平台并未出现延期,当前正按既定计划推进生产整备与组装改样"* (the next-gen platform has not been delayed; production preparation is on schedule) [18]. Management said design changes were "routine engineering optimisations" of a new platform introduction. This calmed sentiment around generational risk — an issue that had dragged the prior Aug 2024 CLSA downgrade [from Rmb34.40 → Rmb26.00].

**(b) CPO and ASIC optionality.** Management quantified the addressable market opportunities:
- CPO switch market trajectory cited: **USD 46M (2024) → USD 420M (2025) → USD 3.2bn (2026) → USD 8.1bn (2030); CAGR ~137% 2024–2030** [18][20]
- ASIC AI server share trajectory: **27.8% of AI server shipments in 2026, rising toward ~40% by 2030** (TrendForce data referenced by management) [20]
- AI data center liquid-cooling penetration: 14% (2024) → 40% (2026), supporting in-house cooling/power vertical integration as a margin driver [18]

The May commentary was, in effect, a multi-stage narrative arc: scale-out → scale-up → CPO → ASIC, each layer offering a distinct margin profile better than vanilla ODM assembly.

---

## 6. Sentiment & Valuation Arc — Concise Timeline

| Date | Event | CLSA TP / Stance | Investor Mood |
|---|---|---|---|
| Aug 2024 | 2Q24 GM compression (–1.6 ppt QoQ); AI server dilution worry | TP cut to **Rmb26.00**, 18x 25CL PE | Cautious on margins |
| Oct 2024 | "Decent Delivery" — GB200 ramp Nov, "first vendor to deliver globally" [4][5] | TP raised to **Rmb28.80**, 20x 25/26 PE [6] | Re-energised on AI visibility |
| May 2025 | 1Q25 print solid but tariff + AI capex worry | TP cut to **Rmb20.3**, 14x 26CL PE [1] | Defensive |
| Mid-late 2025 | Tariff pause + GB margin progression | (no fresh CLSA note in scope) | Re-rate begins |
| Apr 2026 | FY25 ROE 21.7%; 1Q26 revenue +56% [14][15] | — | Aggressive AI infrastructure bid |
| May 2026 | Vera Rubin de-risk + CPO/ASIC optionality [18][20] | — | Bull narrative consolidating |

---

## 7. What Shaped the Year — Key Synthesis

1. **Business performance**: From a margin-pressured 2Q24 trough (GM 6.0%) to a 1Q26 explosion in earnings power (net profit +102.55%, operating cash flow +1,826%) [15]. The leading edge was **AI GPU racks (+3.8x) and ASIC servers (+3.2x)** [17].
2. **Market conditions**: Tariff overhang in early 2025 → tariff pause → Apple exemption clarity → Blackwell ramp → GB300 → Rubin platform — each step removed a tail risk and revealed a growth lever.
3. **Company actions**: Vertical integration (cooling, power, NIC/DPU, switches, CPO samples), 71-base global footprint for tariff resilience, **Rmb12.7bn cash dividend at 54.7% payout** to signal balance-sheet confidence [9][11], plus a Rmb500m buyback authorisation.
4. **Investor sentiment & valuation**: Multiple compression in May 2025 (14x 26CL PE [3]) → multiple expansion through FY25 results and 1Q26 print. By May 2026, FII had repositioned from "Apple-tariff supplier with AI exposure" to **"core AI factory ODM with optionality on CPO/ASIC + vertically integrated margin lift"** — the share register increasingly populated by AI-thematic funds (J.P. Morgan AM, Morgan Stanley, BNP Paribas, P72, CITIC CLSA all participating in recent IR meetings).

The thread tying it together: **margin/tariff fears in early 2025 were resolved by execution, not narrative** — and once execution arrived in the 1Q26 print, the multiple followed.

---

**Sources**
[1] CLSA — "FII - O-PF (On track delivery)" (2 May 2025) — 607957908LinqAlpha.PDF — Valuation revise-down; lower TP to Rmb20.3
[2] CLSA — same note — Quarterly earnings summary (1Q23–1Q25)
[3] CLSA — same note — Valuation details (14x 26CL PE)
[4] CLSA — "FII - O-PF (Decent delivery)" (30 Oct 2024) — 607942680LinqAlpha.PDF — AI server ramp / GB200 outlook
[5] CLSA — same note — GB200 NVL36 25CL volume estimate (85k units)
[6] CLSA — same note — TP raised to Rmb28.80; 20x average 25/26 PE
[7] Q1 2025 Earnings Call — Foxconn Industrial Internet Co., Ltd. — 1Q25 revenue growth (+35.2%)
[8] Q1 2025 Earnings Call — FY2024 revenue Rmb609.14bn (+27.9%)
[9] Q1 2025 Earnings Call — 2024 dividend Rmb6.4 / 10 shares (54.7% payout)
[10] Q1 2025 Earnings Call — Cloud provider AI server outlook
[11] Q1 2025 Earnings Call — 71 global operating bases
[12] FII Investor Activity Record No. 2026-001 (16 Apr 2026) — Q1 2026 outlook
[13] Same — Vertical integration / margin structure
[14] Same — FY2025 ROE 21.7%
[15] FII Q1 2026 Interim Report — Headline financials
[16] Same — Communication/network segment (800G+, CPO)
[17] Same — Cloud business (AI GPU rack +3.8x, ASIC +3.2x)
[18] FII Investor Activity Record No. 2026-002 (15–18 May 2026) — Vera Rubin delivery defence
[19] FII Investor Activity Record No. 2026-003 (20 May 2026) — Cloud +100% YoY 1Q26
[20] Same — ASIC server share trajectory (TrendForce)

## Citations

- [7] **Q1 2025 Foxconn Industrial Internet Co., Ltd.** · external
- [8] **Q1 2025 Foxconn Industrial Internet Co., Ltd.** · external
- [9] **Q1 2025 Foxconn Industrial Internet Co., Ltd.** · external
- [10] **Q1 2025 Foxconn Industrial Internet Co., Ltd.** · external
- [11] **Q1 2025 Foxconn Industrial Internet Co., Ltd.** · external
- [12] **富士康工业互联网股份有限公司投资者关系活动记录表20260416** · external
- [13] **富士康工业互联网股份有限公司投资者关系活动记录表20260416** · external
- [14] **富士康工业互联网股份有限公司投资者关系活动记录表20260416** · external
- [15] **Foxconn Industrial Internet Co., Ltd., Q1 2026 Report** · external
- [16] **Foxconn Industrial Internet Co., Ltd., Q1 2026 Report** · external
- [17] **Foxconn Industrial Internet Co., Ltd., Q1 2026 Report** · external
- [18] **富士康工业互联网股份有限公司投资者关系活动记录表-20260515-20260518** · external
- [19] **富士康工业互联网股份有限公司投资者关系活动记录表20260520** · external
- [20] **富士康工业互联网股份有限公司投资者关系活动记录表20260520** · external

