Custom-chip servers are now growing twice as fast as GPU racks at FII, tying more of its revenue to cloud customers' in-house chip programs.
Foxconn Industrial Internet (FII), the Shanghai-listed maker of servers and network equipment, said nine-month net profit rose 79.55% to RMB40.38 billion as demand for AI computing hardware kept climbing. Revenue for the period rose 55.88% to RMB941.41 billion, and both figures already exceed the company’s results for all of 2025, The Paper reported on October 29.
Third-quarter revenue rose 57.73% to RMB383.55 billion and net profit rose 60.35% to RMB16.63 billion, the fifth straight quarter above RMB10 billion and a record for a single quarter. Profit excluding one-off items rose 64.82% to RMB16.47 billion, and basic earnings per share for the quarter rose 61.54% to RMB0.84. FII attributed the growth to sustained demand for AI computing, rising market share with its main customers and strong business with cloud service providers.
The breakdown by product shows where that demand is going: servers built around cloud companies’ own custom chips grew faster than racks built on Nvidia GPUs.
Custom-chip servers outgrew GPU racks in the third quarter
FII’s cloud computing revenue rose 75% from a year earlier and 25% from the second quarter. AI-ASIC server shipments rose 150% from a year earlier and 80% from the second quarter, while AI-GPU rack shipments rose 70% and 15%. ASICs, application-specific integrated circuits, are chips designed for a specific customer’s workloads, used in place of general-purpose GPUs.
An AI rack is a complete cabinet of servers, networking and power equipment that a data center installs as a single unit. The company said its new generation of AI racks has begun shipping and that its market share on that generation is higher than on the previous one, The Paper reported.
Networking grew alongside servers. Network equipment revenue rose 120% from a year earlier and 25% from the second quarter, and shipments of switches running at 800G and above rose 80% and 25%. Switches route data between servers, and the fastest models link the accelerators in large AI clusters. FII also cited growth in WiFi 7 routers and equipment for low-orbit satellite broadband.
Profit is growing faster than revenue on thin margins
Nine-month gross profit rose 63.32% to RMB66.71 billion, giving a gross margin of 7.09%, up 0.33 percentage points, IT Home reported from the announcement. Profit excluding one-off items was RMB39.45 billion, up 82.15%. Third-quarter revenue alone was equal to about 69% of the first half’s RMB557.86 billion, a sign that shipments accelerated through the year. FII credited a better product mix for profit outpacing revenue. With nine-month revenue up 55.88% and profit up 79.55%, earnings grew about 24 percentage points faster than sales.
Operating cash flow over nine months was RMB3.22 billion, against an outflow a year earlier, which the company attributed mainly to higher collections from customers. The debt-to-asset ratio stood at 67.09%, and return on equity for the third quarter alone was 8.41%, according to IT Home. For the nine months, return on equity reached 21.77%, up 7.39 percentage points, and basic earnings per share rose 80.53% to RMB2.04.
The thin margin explains how revenue on this scale produces a smaller profit than some component makers earn: FII’s nine-month profit is less than twice that of optical-module maker Zhongji Innolight, on more than 13 times the revenue. Other suppliers in the AI server chain, including Luxshare, are trying to win a share of the same orders.
The shares fell 7% despite record profit
FII’s stock closed down 7.03% at RMB45.22 on October 29, the day of the results, on a day when Zhongji Innolight and GigaDevice also fell.
The product data points to the next questions. If custom-chip servers keep growing faster than GPU racks, more of FII’s revenue will depend on a handful of cloud companies’ in-house chip programs. The ramp of the new rack generation, and whether the higher market share FII cites holds through the fourth quarter, will decide whether quarterly profit keeps setting records. FII did not give a forecast for the fourth quarter.