Demand for AI computing power continues to accelerate, with Foxconn Industrial Internet Co., Ltd. (601138) delivering strong first-quarter results for 2026. The company reported operating revenue of 251.078 billion yuan, a 56.52% increase compared to the same period last year. Net profit attributable to shareholders of the listed company reached 10.595 billion yuan, surging 102.55% year-on-year. After adjusting for non-recurring gains and losses, net profit was 10.250 billion yuan, up 109.05%, indicating that growth was primarily driven by core business operations.
Cash flow performance also improved significantly. Net cash flow from operating activities amounted to 25.024 billion yuan for the quarter, a substantial increase from 1.299 billion yuan in the prior-year period. Cash received from sales of goods rose to 262.381 billion yuan, showing notable growth. Basic earnings per share increased to 0.53 yuan from 0.26 yuan a year earlier.
The cloud computing segment was the primary driver of growth during the period. Revenue from cloud computing business nearly doubled year-on-year, with shipments of AI GPU cabinets increasing by 3.8 times and shipments of AI ASIC servers growing by 3.2 times.
Cloud computing revenue doubled, while AI server shipments surged more than threefold. This segment served as the core growth contributor this quarter. Revenue increased approximately 100% year-on-year, supported by expanding customer reach and enhanced automated delivery capabilities in production lines.
The significant growth in AI GPU cabinet and AI ASIC server shipments reflects continued high capital expenditure by global cloud service providers on AI infrastructure. Notably, some cloud service clients transitioned from outright purchase to consignment models for raw materials in new orders. Under this model, clients procure materials directly and commission the company for processing, leading to a narrower revenue recognition scope (excluding material costs) but providing positive support for profit margins. This structural change is key to understanding the relationship between the company's revenue and profitability.
The communication and mobile network equipment business also maintained growth momentum. Shipments of high-speed switches with 800G and above capacity increased 160% year-on-year and 46% quarter-on-quarter. More strategically, sample shipments of CPO (Co-Packaged Optics) all-optical switches began this quarter. This technology is considered a crucial evolution for high-density interconnects in AI data centers, and sample shipments mark the transition from research and development to product commercialization.
Research and development expenses for the quarter were 2.336 billion yuan, up approximately 4% year-on-year. The company stated it will continue to deepen its strategic focus on AI-related businesses.
On the income statement, gross margin improved to approximately 7.3%, up from 6.7% a year earlier, reflecting positive contributions from product mix optimization. Operating costs were 232.623 billion yuan against revenue of 251.078 billion yuan. R&D expenses accounted for a slightly lower proportion of revenue. General and administrative expenses remained stable at 1.562 billion yuan. Financial expenses increased by about 47% to 838 million yuan, mainly due to a rise in interest expenses from 544 million yuan to 986 million yuan, linked to changes in short-term borrowing levels.
Asset impairment losses for the quarter were 997 million yuan, up from 583 million yuan a year ago, an increase associated with expanded inventory levels that warrants ongoing monitoring. Non-recurring items totaled 345 million yuan, including fair value change gains of 346 million yuan, representing about 3.3% of net profit, with limited overall impact.
On the balance sheet, total assets stood at 457.188 billion yuan as of quarter-end, largely unchanged from the beginning of the year. Inventory balance increased by approximately 16.4 billion yuan to 167.332 billion yuan, a rise of about 10.9%, mainly due to higher AI server orders and stockpiling, which also occupied working capital. Accounts receivable decreased by about 7.4% to 102.501 billion yuan, indicating improved collection efficiency alongside stronger operating cash flow. Short-term borrowings dropped by approximately 21.8 billion yuan to 82.402 billion yuan from 104.229 billion yuan at the start of the year.
Net cash outflow from financing activities was 29.047 billion yuan, which included 92.307 billion yuan used for debt repayment and 7.322 billion yuan for dividend distributions and interest payments (including concentrated annual dividend payments). Net assets attributable to shareholders of the listed company reached 176.218 billion yuan, an increase of 9.44 billion yuan or 5.66% from the beginning of the period. Weighted average return on equity (ROE) was 6.18%, up 2.70 percentage points from the same period last year.
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