Mid-Year Report X-Ray: Who Is Actually Capturing the Profits Along the AI Power Supply Chain?

This structure is not unfamiliar. During the 5G optical module cycle from 2019 to 2021, industry leaders similarly experienced explosive profit growth, negative operating cash flow, and simultaneously high inventory and accounts receivable—followed by a sharp slowdown in growth and inventory write-downs after the network construction peak in H2 2021. This time, the 1.6T upgrade has only just begun volume ramp-up, and CPO and 800V technologies are slated to sustain momentum through 2027—potentially extending the upcycle’s duration. Yet history delivers a hard validation point: cash flow must recover during Q4—the traditional collection season—and accounts receivable aging must tighten. Failure to do so risks replaying the 2021 write-down script. Consumer Layer: Real Growth, Thin Margins, Heavy Working Capital Requirements Growth among consumer-layer leaders is indisputable—but the financial form of that growth presents distinct challenges. Foxconn Industrial Internet’s AI server revenue surged 230%, with operating cash flow reaching RMB 7.39 billion—a truly robust performance—yet its contract manufacturing net margin stands at only 4.3%: massive scale, but hard-earned, low-margin earnings. Hygon Information’s CPU and DCU revenue rose 66%, solid growth indeed—but operating cash flow turned negative RMB 430 million, and advance payments ballooned to RMB 4.77 billion; profits have effectively been converted into inventory awaiting fulfillment. The most emblematic cautionary tale comes from liquid cooling. Invinex—one of the highest-profile companies in the liquid cooling space—saw its attributable net profit decline 14.3% in H1, exhibiting revenue growth without corresponding profit growth. Its accounts receivable totaled RMB 3 billion—exceeding half-year revenue. While narratives around liquid cooling penetration grow ever louder, the income statement remains conspicuously uninvited. Whether this segment can deliver hinges on watching for a gross margin inflection point in Q3—not the number of press conferences held. The Timing Gap of New Architectures: Zero Revenue ≠ Falsification, But Neither Does It Warrant Prepayment The biggest earnings expectation gap in the mid-year reports centers on SST (Solid-State Transformers) and 800V HVDC systems. The facts are stark: zero industry-wide revenue at scale. Kstar’s exact wording in its financial report is that its product remains in the “verification and pilot-integration phase, with no large-scale orders yet”; Sifang Co., Ltd.’s 10kV SST has been launched—but generated no revenue; Zhiguang Electric’s equivalent product was just unveiled—also with zero revenue. Among numerous firms branding themselves as 800V HVDC players,禾望电气 (Hovow) reported a 35.6% YoY decline in attributable net profit and a 45.5% drop in profit excluding non-recurring items—clear decoupling between concept and performance. What *did* generate real revenue in H1 were not the new architectures themselves—but their immediate neighbors: Zhongheng Electric’s data center power supply revenue reached RMB 808 million, up 98%, accounting for 64% of total revenue—the most concrete beneficiary—yet its operating cash flow stood at negative RMB 269 million; Shenghong Power’s power quality management business delivered 29% revenue growth and 44% profit growth, with a healthy 40.7% gross margin and positive cash flow—the strongest financial quality in this layer; Jinko Technology’s data center-related revenue soared 122.6%, with backlog standing at RMB 10.7 billion—solid order visibility—but cash flow turned negative and accounts receivable hit RMB 3.36 billion. Does zero revenue constitute falsification? No—but timing must be rigorously accounted for. Reviewing the industrial history of power semiconductors, it typically takes 18–24 months—from sample delivery and verification to mass vehicle adoption—for IGBT modules and SiC automotive-grade devices. If SSTs begin scaling alongside the broad deployment of 800V architecture in H2 2027, today’s zero-revenue status falls precisely within the normal historical timeline. This is a matter of rhythm—not evidence that the direction has been falsified.

NVIDIA's 'Assistance' Secures Position in the 800V Ecosystem; Innoscience Surges Another 25% in a Single Day

Under this roadmap, Innoscience will, over the next two years, prioritize capturing the benefits of surging demand for 800V architecture—providing end-to-end GaN-based power solutions for its Kyber rack system. According to publicly available information, this collaboration focuses on revolutionizing power supply for AI data centers, tackling the critical energy consumption pain point of high-performance computing clusters. NVIDIA expects to begin mass production of its Rubin Ultra platform in 2026 (single-rack power exceeding 600 kW), for which Innoscience’s GaN devices will be deployed in centralized rectifiers (HVDC) for high-voltage conversion, as well as in rack-mounted DC-DC power modules enabling highly efficient 800V→48V conversion. Its technical advantages include: superior high-voltage compatibility—its GaN devices withstand voltages above 800 V—with energy conversion efficiency elevated to 98.5%, reducing losses by 30% versus conventional silicon-based solutions; and strong spatial optimization capability—its device footprint is just one-fifth that of silicon-based equivalents—enabling single-rack power density to exceed 300 kW and reducing data center floor area by 40%. Overseas Sales Surge 118%—Innoscience’s GaN Global Expansion Accelerates Further Public disclosures indicate that Innoscience, founded in December 2015, is a high-tech enterprise dedicated to R&D and industrialization of third-generation semiconductor gallium nitride (GaN) on silicon substrates. It is also the world’s first IDMs to achieve mass production of 8-inch GaN-on-silicon wafers—possessing significant first-mover technological advantages and vertically integrated supply chain capabilities. As the world’s only silicon-based GaN chip company offering a full voltage-range product portfolio, Innoscience’s mass-produced and under-development products span 15 V to 1200 V. Its next-generation 700 V GaN device platform has completed customer qualification and is expected to enter mass production in 2025; its 1200 V platform and high-voltage vertical GaN (V-GaN) series—including the 1200 V platform—have already completed R&D validation. According to the company’s 2024 annual report, Innoscience achieved an overall chip yield of 95% in 2024, driving a nearly 40% reduction in unit manufacturing cost and accelerating profitability improvement. These production-line and technological advantages are clearly reflected in its financial results. The report shows that from 2024 through H1 2025, Innoscience demonstrated robust revenue growth and operational breakthroughs. On the revenue front, it achieved RMB 828 million in 2024—a 39.8% YoY increase—and has maintained ultra-high growth for four consecutive years. Operational efficiency improved markedly: gross margin surged from -61.6% in 2023 to -19.5% in 2024, narrowing losses by 42.1 percentage points. Behind this lies accelerated realization of economies of scale. In 2024 alone, Innoscience onboarded 471 new customer design-ins, added 21 direct sales customers and 13 distributors. With this surge in customer base, it shipped 660 million GaN chips for the year—an exponential growth in volume. By regional market performance, the domestic market remained stably high-growth, rising 31.2% year-on-year to RMB 700 million—still its core market. Although overseas markets contributed a relatively small share of revenue, their growth rate was exceptionally rapid. In 2024, overseas sales reached RMB 126 million, up 118.1% YoY; its revenue contribution jumped from 9.7% to 15.3%.

Earnings Call Transcript: Innospec Tops Q2 2026 Forecasts as Shares Rise

Aug 5, 2026

Innospec Inc exceeded Q2 2026 forecasts with adjusted EPS of $1.27 and revenue of $491.4 million, driving a 2.7% stock rise. Management highlighted double-digit segment growth and plans to boost Performance Chemicals capacity by over 10% by early 2027.

Investing.com

2026-04-02

Tudor Investment Corp Lowers Holdings in Innospec Inc.

2026-04-04

Innospec Inc. Reports Q4 2025 Earnings with $455.6M Revenue

2026-04-05

Innospec Schedules First Quarter 2026 Earnings Release and Conference Call

2026-04-07

Barentz Inks Distribution Agreement with Innospec in Canada

2026-04-07

Innospec Schedules First Quarter 2026 Earnings Release and Conference Call