Foxconn Industrial Internet's 2025 "New High" Report Card: Performance Surge Under AI Tailwinds and Undercurrents in Capital Flows

Question: How does AI Industrial Fulian balance AI expansion with cash flow pressure?

Interface News Reporter Zhao Yangge

Driven by the powerful wave of AI, Industrial Fulian (601138.SH) delivered a seemingly perfect “report card” in 2025: revenue approaching one trillion yuan, net profit hitting a record high, demonstrating its strong growth momentum as an industry leader.

However, behind this dazzling performance, there are concerning financial undercurrents. The net cash flow from operating activities plummeted sharply, contrasting sharply with soaring profits. Large amounts of funds are tied up in inventory and accounts receivable, and the company’s short-term loans and accounts receivable factoring amounts have surged.

Is this annual report a celebration of AI dividends or a warning of risks amid aggressive expansion?

Revenue and net profit both hit record highs

In 2025, Industrial Fulian achieved an operating revenue of 902.887 billion yuan, an increase of 48.22% year-on-year; net profit attributable to shareholders reached 35.286 billion yuan, up 51.99%; net profit after deducting non-recurring gains and losses was 34.188 billion yuan, up 46.02%. This means that in 2025, both revenue and profit scale set new records since the company’s establishment in 2015.

Industrial Fulian plans to distribute a cash dividend of 6.5 yuan per 10 shares (tax included), totaling 12.901 billion yuan. Including mid-year dividends, the total cash dividends for 2025 will amount to 19.451 billion yuan.

From business segments, cloud computing is undoubtedly the main engine driving growth, contributing 602.679 billion yuan in revenue in 2025, an increase of 88.7% year-on-year. Notably, revenue from AI server-related services provided to cloud service providers grew more than threefold.

Secondly, the communication and mobile network equipment segment achieved revenue of 297.851 billion yuan, a slight increase of 3.46%, maintaining overall stability. It is worth noting that benefiting from the technological trend of data center networks transitioning from 400G/800G to 1.6T, high-speed switch products above 800G in this segment saw a 13-fold increase in revenue in 2025.

“In 2025, the company’s overall operational efficiency and profitability significantly improved, mainly driven by the increasing proportion of AI-related business within cloud computing,” said Zheng Hongmeng, Chairman of Industrial Fulian, in a letter to shareholders, openly expressing the company’s confidence in seizing the “AI opportunity.”

In 2025, Industrial Fulian took frequent actions to embrace the AI wave, including visible strategic layouts such as:

• As the largest shareholder of Dingjie Digital Intelligence (300378.SZ), supporting its issuance of 828 million yuan in convertible bonds to fund the “Digital Intelligence Ecosystem Empowerment Platform” project, aiming to enhance the accuracy and relevance of AI applications in the industrial vertical large model field and deepen AI collaborative applications in core industrial software;
• Participating in Pre-IPO financing rounds of multimodal large model company Zhipu (02513.HK) and IPO of MiniMax Group Inc. (00100.HK);
• Strategic investments in Lingyun Guang (688400.SH), forming good business synergy in AI vision and computing infrastructure with Industrial Fulian.

Industrial Fulian believes that major global cloud service providers are entering a new expansion cycle for AI infrastructure capital expenditure. Industry demand is shifting from model development to large-scale inference applications, with exponential growth in token consumption, posing unprecedented challenges to data center throughput capacity and construction scale.

TrendForce predicts that global AI server shipments will grow by 28.3% year-on-year in 2026, further boosting the overall server market growth rate to 12.8%.

Tightening cash flow, surge in short-term loans

Behind this impressive performance, the financial report also reveals some overlooked details, exposing another side behind the brilliance.

First, the continuous decline in gross profit margin.

While revenue and net profit both increased significantly, Industrial Fulian’s gross profit margin showed a downward trend. Data shows that from 2023 to 2025, gross profit margins were 8.06%, 7.28%, and 6.98%, with 2025 hitting a new low since the company’s founding. In 2016, gross profit margin was as high as 10.65%, but it has been declining as the scale expanded.

Another key indicator—profit margin (net profit as a percentage of operating revenue)—also followed a similar trajectory, dropping from 5.28% in 2016 to 3.91% in 2025, reflecting the company’s cost control and overall operational efficiency.

Second, large amounts of accounts receivable and inventory tying up funds.

Despite significant growth in revenue and net profit, the net cash flow from operating activities sharply declined. In 2025, it was only 5.238 billion yuan, a 78.01% decrease from 23.82 billion yuan in 2024.

Why did net profit increase substantially but not translate into actual cash inflows? The answer lies in the rapid expansion of accounts receivable and inventory.

Financial statements show that at the end of 2025, accounts receivable and notes receivable totaled 110.744 billion yuan, an increase of 17.17% from 2024, surpassing the 100 billion yuan mark for the first time. Inventory value reached 150.913 billion yuan, also a record high, up about 77% from 85.266 billion yuan at the end of 2024. It is clear that a large amount of funds are frozen in “accounts receivable + inventory.” In 2025, the company’s net cash ratio (net cash flow from operating activities/net profit) was only about 0.15, meaning that for every 100 yuan of book profit, only 15 yuan actually reached the hands of the company.

Source: Tonghuashun

In response to these data, Industrial Fulian explained: “Mainly due to the sustained growth of the AI server market, strong customer demand, and increased inventory buildup.” Looking at the specific composition of inventory, raw materials account for the largest proportion, exceeding 60 billion yuan, with finished and semi-finished products around 30 billion yuan each, consistent with the company’s explanation of “active stocking.”

Interface News notes that upstream raw material costs are beginning to transmit downward. Industrial Fulian’s raw materials include core components such as printed circuit boards (PCBs) and integrated circuits (ICs). Its strategy of large-scale pre-stocking is a response to strong downstream demand and potential upstream price increases.

Third, the sharp rise in short-term loans.

In addition to cash flow being heavily squeezed, the company’s future payment obligations are also enormous. For example, at the end of 2025, accounts payable and notes payable totaled 137.955 billion yuan, far higher than 93.835 billion yuan at the end of 2024, a year-on-year increase of about 47%. This is the first time this figure has exceeded 100 billion yuan since the company’s founding.

Another example is the continued increase in construction-in-progress investments. Data shows that at the end of 2024, Industrial Fulian’s construction-in-progress was 3.173 billion yuan, rising to 7.825 billion yuan by the end of 2025.

Against this backdrop, to cope with short-term liquidity pressure, Industrial Fulian has chosen to significantly leverage. According to disclosures, short-term borrowings surged from 35.992 billion yuan at the end of 2024 to 104.229 billion yuan at the end of 2025, an increase of 189.59%. Meanwhile, long-term borrowings are only 3.625 million yuan, indicating most of the company’s leverage is concentrated in short-term debt, facing considerable repayment pressure.

Financial analyst Ma Jinghao commented that relying on “short-term borrowing to fund long-term” and external financing to sustain expansion can accelerate growth during economic upswings but may become a “death knell” during downturns.

As a result, Industrial Fulian’s asset-liability ratio rose from 51.77% at the beginning of 2025 to 63.37% at year-end, a new high since 2019.

Source: Tonghuashun

In 2025, Industrial Fulian engaged in non-recourse accounts receivable factoring, and since most of the risks and rewards of the receivables had been transferred, the company terminated recognition of accounts receivable amounting to 290.386 billion yuan. The factoring cost paid that year was 1.044 billion yuan, recorded as an investment loss. In 2024, the amount of accounts receivable terminated was 76.954 billion yuan; in 2023, there was no such operation.

According to Baidu Encyclopedia, accounts receivable factoring refers to the transfer of existing or future accounts receivable rights to a factor, which provides financing, accounts receivable management or collection, or payment guarantee services. Companies can obtain early financing by transferring overdue accounts receivable, accelerating capital turnover.

The explosive growth in Industrial Fulian’s 2025 performance is accompanied by significant financial details. How to sustain expansion while balancing operational pressures depends on the wisdom of the company’s management.