Lianqiang's Second Quarter Profits Achieve Quality Growth, AI Wave Outlook Optimistic Until Next Year

Lianqiang (2347-TW) held a corporate briefing on October 10. The company's second-quarter profit structure has undergone a qualitative change with significant revenue scale expansion, and the quarterly and first-half profit indicators have shown outstanding performance. Lianqiang Vice President Du Shuchuan pointed out that the rigid demand for AI servers and data center upgrades for commercial use is extremely strong, which will continue to be the core driving force for growth in the second half of the year and future long-term operations.

Lianqiang's 2026 second-quarter consolidated revenue first exceeded the 200 billion Taiwan dollars mark, reaching 201 billion Taiwan dollars, up 115% year-over-year and 59% quarter-over-quarter. Second-quarter operating income reached 4.8 billion Taiwan dollars, up 250% year-over-year, with after-tax net income of 3.9 billion Taiwan dollars and earnings per share of 2.34 Taiwan dollars, up 197% year-over-year. The cumulative first-half consolidated revenue reached 327.4 billion Taiwan dollars, up 77% year-over-year, already accounting for nearly 80% of last year's annual revenue. First-half after-tax net income was 68.64 billion Taiwan dollars, with earnings per share reaching 4.12 Taiwan dollars, and the return on equity improved to 19%.

Regarding financial indicators and changes in gross margin, the second-quarter gross margin fell to 3.4%, mainly due to receiving a large-scale project worth tens of billions of Taiwan dollars, with relatively low project gross margins. However, the operating expense ratio dropped significantly to 1%, lifting the operating profit margin to 2.38%. The first-half operating profit margin reached 2.49%, a record high, with significant operating leverage effects.

In terms of segmented product items, among commercial value businesses, the performance of servers was the strongest, with second-quarter revenue growing fivefold. Storage systems and network equipment grew by nearly 50% and 30% respectively, while cloud services grew steadily by 9%. In terms of consumer products, business notebooks and desktops grew by 44%, and consumer notebooks grew by 33%, with overall computer business growing by 37%, indicating strong rigid demand in markets such as Europe and the United States. eSports products grew by 7%, and wearable devices and other consumer electronics maintained double-digit growth.

Du Shuchuan analyzed that AI deployment has moved from the previous concept verification stage to large-scale production deployment for enterprise end-users. The demand, which was previously concentrated in large cloud service provider data centers, has gradually extended to large enterprises and industrial computer manufacturers, driving a wave of upgrades for data center hardware facilities and AI terminal devices. The semiconductor business has also shown a strong structure of quantity and price increases due to supply-demand imbalances and price surges in high-end semiconductors and memory.

In terms of regional markets, the second-quarter revenue in mainland China and Taiwan benefited from commercial demand and large-scale projects, both of which doubled. The Indonesian market grew by more than 20%, the Australia-New Zealand market grew by 10%, and the Hong Kong market also turned to positive growth in July. Among them, mainland China is actively promoting the localization of information technology equipment for government and state-owned enterprises, and Lianqiang is deepening cooperation with Huawei, Inspur, Tsinghua Tongfang, and Xinchuang enterprises. Taiwan has secured large projects from banks and semiconductor design companies, while the mobile phone business in the Australia-New Zealand and Indonesian markets achieved high growth of 50% and 72% respectively.

Looking ahead to the second half of the year and long-term trends, Du Shuchuan stated that low-priced mobile phones cannot be launched due to rising component costs, and the market is shifting to mid-to-high-priced products. After price adjustments, it is difficult for prices to fall back, and price premiums will continue to ferment. The second half of the year, accompanied by the traditional consumption peak season, new AI computing platforms, and the launch of new Apple products, has a very optimistic outlook for operations in the second half of the year and next year. The company will continue to optimize operating efficiency through the smart supply chain platform.