In 2025, Huaqin Technology (also known as Huaqin Co., Ltd.) generated RMB 171.437 billion in revenue, a year-on-year increase of 56.02%. Revenue from the data center business exceeded RMB 40 billion, with AI servers accounting for over 70% of that segment. The company projects that its data center business will continue to grow by 30% to 50% in 2026. The shift in revenue mix deserves more attention than the sheer increase in revenue scale.
In 2023, the data center segment was still grouped with automotive electronics and software as part of the new business category. By 2024, the company reframed its business structure from 2+N+3 to 3+N+3, elevating the data center business to a core segment alongside mobile devices and personal computers. For Huaqin, the key question for the next phase is not whether the data center business can keep growing, but whether it can simultaneously improve profit margins, turnover efficiency, and capital efficiency now that it has become a major revenue driver.
The revenue mix has already changed, but the earnings structure still needs to prove itself
From 2023 to 2025, Huaqin's revenue expanded from RMB 85.338 billion to RMB 171.437 billion, nearly doubling. During the same period, the gross margin fell from 11.33% to 9.30%, and then further to 7.97%. R&D investment increased from RMB 4.548 billion to RMB 6.377 billion, but as a percentage of revenue it declined from 5.33% to 3.72%. These figures are better interpreted as revenue expanding faster than R&D spending, rather than as a contraction in technology investment. Huaqin is taking on higher-value computing and data products, but at this stage, the scale expansion has not yet driven a corresponding improvement in overall gross margin.
In 2025, the gross margin for the mobile device business stood at 9.24%, while the computing and data business recorded a gross margin of 6.26%. The AIoT business and the innovation business posted margins of 11.13% and 14.05%, respectively. The company does not disclose a separate gross margin for AI servers, and the computing and data segment also includes personal computers, so the 6.26% figure cannot be used directly to judge the profitability of AI servers. Still, this structure at least suggests that after the rapid ramp-up in the data business, the company's overall earnings profile remains similar to that of large-scale hardware manufacturing.
Foxconn Industrial Internet provides a useful comparison. Its cloud computing business grew 88.7% year-on-year in 2025, with a gross margin of 5.73%, while net operating cash flow fell 78.01% year-on-year. The two companies have different business structures, so direct comparisons are not appropriate, but both illustrate a common point: revenue growth in high-value AI hardware does not necessarily correspond to a simultaneous rise in manufacturing gross margins, and inventory buildup and delivery cycles can also increase working capital needs.
Scale expansion is beginning to place a heavier burden on the balance sheet
Huaqin's cash flow and debt changes further reflect this trend. From 2023 to 2025, net operating cash flow as a percentage of revenue fell from 4.51% to 1.25%, and then to negative 0.13% in 2025. Over the same period, the debt-to-asset ratio rose from 59.54% to 69.95% and then to 72.62%, while the interest-bearing debt ratio climbed from 12.80% to 16.36% and then to 20.99%. In 2025, cash paid for goods and services reached RMB 162.714 billion, growing faster than revenue. Net cash outflows from investing activities totaled RMB 7.384 billion, while net cash inflows from financing activities reached RMB 6.692 billion. The scale expansion has driven a simultaneous increase in procurement, capacity construction, and external financing needs.
This shift should be viewed in the context of industry dynamics. Downstream cloud vendors continue to expand their AI infrastructure spending, and server manufacturers must prepare high-value components and production capacity in advance. What truly matters is not the debt ratio itself, but whether the inventory, receivables, and financing needs created by this expansion can be effectively released through subsequent deliveries and collections. Some improvement appeared in the first half of 2026. Net operating cash flow recovered to RMB 643 million, and the gross margin rose to 8.13%. However, inventory jumped from RMB 14.624 billion at the end of 2025 to RMB 28.423 billion, a 94.36% increase in six months, while the debt-to-asset ratio rose further to 76.08%. The simultaneous improvement in cash flow and continued expansion of asset levels suggests that operational pressure has eased, but the capital tie-up has not yet completed its decline.
Platform ambitions must ultimately translate into labor efficiency and capital efficiency
Huaqin's platform strategy is already visible in changes to its business scope and customer structure. Revenue from the top five customers declined from 68.52% in 2021 to 54.13% in 2025, indicating a reduction in customer concentration. The product range has also expanded from phones, tablets, and personal computers to servers, switches, automotive electronics, and robotics. But a platform strategy creates real value only if it results in more than the ability to produce a wider variety of products. If R&D, procurement, supply chain, manufacturing, and customer resources can be reused across different product categories, expanding scale should theoretically show up as higher organizational and capital efficiency.
Headcount data therefore deserves separate attention. In 2023, Huaqin had approximately 34,900 employees. By 2025, that number had risen to 70,000, a growth of about 100.57%. Over the same period, the share of production staff rose from 52.73% to 59.09%, while the share of technical staff fell from 32.20% to 28.50%. The new hires were directed more toward production and delivery functions. While headcount grew rapidly, total compensation increased at a much slower pace. According to company data, total employee compensation rose from RMB 6.781 billion in 2023 to RMB 10.647 billion in 2025, an increase of about 57.01%. Wages, bonuses, allowances, and subsidies grew from RMB 5.608 billion to RMB 8.184 billion, an increase of about 45.93%. During the same period, headcount grew by about 100.57%. Thus, the increase in total compensation does not by itself indicate a rise in per-employee investment. In fact, average compensation per employee fell from RMB 209,700 in 2023 to RMB 166,000 in 2025, a decline of about 20.84%.
Changes in the workforce composition explain part of this. A higher share of production workers, a lower share of technical staff, the expansion of manufacturing bases, regional shifts, and the influx of new hires all tend to reduce the company's overall average compensation. But the change in profit per employee makes this issue even more significant. In 2023, Huaqin generated profit of RMB 77,500 per employee. That figure dropped to RMB 50,200 in 2024 before recovering to RMB 57,900 in 2025. From 2023 to 2025, profit per employee fell about 25.29%, slightly more than the roughly 20.84% decline in average compensation per employee. In other words, while pay per employee declined, profit output per employee also decreased. This suggests that the company's workforce expansion over the past two years has not yet translated into improved per-employee profitability.
There may be clear cyclical factors at play. During the early stages of AI server expansion, new production bases, and overseas capacity, employees must be hired in advance, with revenue and profits following later. On the other hand, the data center business generates large revenue but carries limited manufacturing margins, which could also explain why revenue growth has outpaced profit per employee. As a result, profit per employee is a more relevant metric to track going forward than headcount alone. Some improvement appeared in 2025. Average compensation per employee edged up slightly from RMB 165,000 in 2024 to RMB 166,000, remaining broadly stable, while profit per employee rebounded from RMB 50,200 to RMB 57,900, an increase of about 15.34%. A single year of improvement is not enough to confirm a trend, but it at least shows that labor efficiency has not been declining in one direction consistently. As new capacity and new business lines gradually move toward stable operations, whether profit per employee can continue to recover will be an important gauge of whether the earlier organizational expansion is beginning to generate economies of scale.
Management compensation and shareholder dividends offer another window into the company's resource allocation. From 2023 to 2025, total annual compensation for management rose from RMB 31.5557 million to RMB 47.8207 million, an increase of about 51.54%. Compensation for the top three executives grew from RMB 10.6383 million to RMB 16.4663 million, an increase of about 54.78%. During the same period, cumulative annual dividends increased from RMB 869 million to RMB 1.299 billion, an increase of about 49.48%. During a phase of rapid business expansion, the company must simultaneously fund workforce growth, capital expenditures, inventory buildup, receivables growth, and shareholder returns. For Huaqin, what matters most looking ahead is not the volatility of operating cash flow in any single year, but whether the core business's ability to generate cash improves in step with scale. If revenue growth gradually converts into stable cash flow, it would suggest that the platform strategy is taking shape. If working capital absorption remains persistently higher than profit growth, it would mean that scale expansion still requires substantial capital support.
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