Dear investors and media friends, welcome to Lite-On Technology's 2025 Q3 earnings conference. Before the conference begins, I would like to tell you that since Q4 last year, we have made a clear commitment to lead the company back to the growth track by focusing on the growth of high-value businesses. This year, we have not only achieved our goals but also laid a solid foundation for the next stage of growth with our agile expansion capabilities. Today, we will review the results of the first three quarters and let everyone understand how Lite-On is developing more forward-looking strategies and deployments despite uncertainty of the environment after completing many operational adjustments and transformations. Please wait a moment. The conference is about to begin. The executives present today include Lite-On's President Anson Chiu, CFO KT Lim. Today's agenda consists of three parts.
First, President Anson will explain the outlook and growth strategy. Next, CFO KT will present the financial and business performance of the first three quarters of 2025. Then, the Q&A session will be open for questions and further explanations by Anson and KT. First of all, I would like to invite President Anson to explain the outlook and long-term growth strategy.
All right. Good afternoon to all of our investor partners and friends from the media. First of all, I would like to say thank you for your support of Lite-On for so many years. Particularly, I know that you have very high expectations for our development strategy in the field of AI. So today, I'm very happy to be able to share with you some of our thinking and planning when it comes to cloud computing. As you all know, the development of AI technology in recent times has been very exciting. Looking at the pace of GPU upgrades from GB200 to GB300, as well as the Rubin and Kyber platforms in the future, all of this shows that the future will see explosive growth in demand for compute power. That's why we have developed a series of power supply and cooling solutions for future GPU platforms.
At last month's OCP Global Summit, which you saw in the video, we showcased our plans for technologies and products when it comes to power supply and cooling. So now, let's take a look at a video recapping some of our main highlights of OCP.
You saw in the video, as you looked at the video, I was looking at you all, so it really seemed to me that the people here at the conference today, we have a very large turnout, so everybody is very interested, and that makes me very excited as well, so as you saw in that video, at the OCP Global Summit this year, we announced our next-generation megawatt-level integrated power supply and liquid cooling solution. This includes the 800-volt VDC power rack, as well as other components you might be more familiar with, such as the BBU, the capacitor shelf, and our newest generation 2.1-megawatt in-row CDU, our 280-kilowatt in-rack CDU, and our 140-kilowatt liquid-to-air sidecar. All of these are liquid cooling solution systems, so this shows Lite-On's very high competence at power supply management and liquid cooling.
And it also shows off our core competence in vertical integration from key components to system integration. This makes us a one-stop shop for our client needs and a solutions provider for customers as they build up their high-performance AI infrastructure. And that is why in the first three quarters of this year, we've seen very rapid growth, both QOQ and YOY, in two-digit growth. Unfortunately, in the third quarter, we were still constrained by our production capacity limits in power supply. Otherwise, we would probably have had an even better performance. Looking ahead at the fourth quarter, in addition to our existing products, as our shipments and power shelf and BBU continues to grow, our next generation of products, including the 110-kilowatt power shelf, the CDU, and the 400-volt power rack, will all enter production in this quarter. And they will begin mass shipments next year.
In order to meet our customers' demands next year, we have engaged in expanding our capacity at all of our main production hubs in Vietnam, Kaohsiung, and Texas. We've more than doubled our capacity, and next year, with all of these new products, we will need to continue to expand capacity at these important production sites in order to meet our customers' future growth needs. As you all know, this year marks the 50th anniversary of Lite-On's founding, so I'm very happy to be able to tell you that Lite-On has returned to our growth track. We've told you about our commitment for Lite-On to become more than a component supplier. We will continue to transform towards becoming a system integration and solutions provider, so we will continue to invest more in R&D in our core businesses and develop high-value products and innovative technologies.
This will enable us to meet our goal, which is double-digit annual growth in both revenue and profits. That is our mid and long-term strategic goal. That concludes my opening remarks. Thank you for coming today, and we hope you have a good rest of the day. Thank you.
I'd like to invite our CFO, KT, who will present the financial results of the first three quarters.
Good afternoon, everyone. Now, I'm going to present to you our results of Q3. Lite-On's Q3 revenue was NT$44.9 billion, GP NT$11.2 billion, with a rate of 25%, OP NT$4.7 billion, with a rate of 10.4%, net profit after tax NT$4.65 billion, EPS NT$2.05, which is a record high recently. Overall, revenue in Q3 went up 11% QOQ and 22% YOY, in which revenue from cloud and AIoT has more than doubled YOY.
GP went up 26% QOQ with a rate of 25%, up 2.9 percentage points QOQ. OP went up 26% QOQ with a rate of 10.4%, up 1.2 percentage points QOQ, mainly benefiting from growth of high-value businesses, optimization of global operational efficiency, and also close collaboration with our supply chain. So these are the three main reasons. Net profit after tax TWD 4.6 billion, EPS TWD 2.05, up 47% QOQ. Next slide, please. The results of the first three quarters of 2025. Revenue of the first three quarters TWD 121.7 billion, GP TWD 28.4 billion with a rate of 23.3%, OP TWD 12.1 billion with a rate of 9.9%. Net profit after tax TWD 11.3 billion, EPS TWD 4.94. In YOY terms, benefiting from growth of the three major segments and growing share of high-value businesses, GP went up 32% YOY and GPM up 1.6 percentage points YOY.
OP went up 28% YOY and OPM up 0.4 percentage points YOY, so net profit after tax in the first three quarters, TWD 11.3 billion. EPS, TWD 4.94, up 27% YOY. Now, let's look at the three major business segments in Q3 2025. Cloud and AIoT and Optoelectronics together accounted for 64% of revenue, up 4% QOQ. OP went up 26% QOQ. All the three segments saw both YOY and QOQ growth. Cloud and AIoT revenue, TWD 21.5 billion, accounting for 48%, up 28% QOQ. Thanks to shipment growth of new generation high-end cloud power products, revenue went up by about 40% QOQ. OP, TWD 3.3 billion, up 78% QOQ. Optoelectronics revenue, TWD 7 billion, accounting for 16%, down 8% QOQ, mainly affected by the structural adjustment of the auto electronics market. However, visible light mini LED and infrared light core applications in optoelectronic semiconductors continue to go up. OP, TWD 600 million, down 18% QOQ.
Now, in terms of ITC revenue, despite the negative environment, the revenue reached TWD 16.5 billion, accounting for 36% of total revenue, up 2% QOQ, in which shipments of IT high-end power, low-orbit satellite, and smart input devices went up. OP, TWD 1.7 billion, up 17% QOQ. Now, let's look at our balance sheet. In Q3, current assets went up by TWD 7.8 billion QOQ. Current liabilities went up by TWD 6 billion QOQ. The quick ratio and current ratio were 1.14 and 1.44, respectively, which are relatively stable. Net cash position, TWD 51.7 billion, down about TWD 900 million QOQ, mainly due to TWD 4.5 billion cash dividend payout this quarter. Working capital management includes accounts receivable, accounts payable, and inventory levels. In YOY terms, accounts receivable and inventory days went down by four and five days, respectively. Cash cycle improved by four days, YOY.
Now, if we review the past few years since 2021, high-value businesses boost revenue and profit. In the first three quarters of this year, GPM reached 23.3% and OPM was 9.9%. Revenue in the first three quarters grew 23% YOY and OP went up 28% YOY, reflecting high-quality growth. The share of cloud and AIoT and optoelectronics in total revenue has increased to 62% in the first three quarters of 2025, from 51% back in 2021. Cloud and AIoT revenue reached TWD 53.8 billion, up nearly 50% compared to the same period in 2021. The growing share of high-end businesses has led to overall profit growth. Now, let's look at the overview of the first three quarters. So you can just look at the slide because I have told you about the content. Okay. Thank you so much.
Thank you, KT.
In the BOD meeting this morning, to strengthen our core businesses and accelerate overseas expansion, the BOD decided today to increase capital in the Vietnamese subsidiary by $200 million to support CapEx required for operational growth and capacity expansion. Second, to approve the issuance of domestic unsecured convertible corporate bonds with a maximum total amount of TWD 12 billion. The issuance will be done through auction and through inquiry-based underwriting. The issuance period is five years, and the coupon rate is 0%. This aims to strengthen the capital structure and support the company's long-term operations and growth. These are the results from the first three quarters. Now is the Q&A session. You can ask questions, and we will provide more explanations. Thank you.
Hello. I'm Doris Gao from Billfair.
First of all, I would like to ask KT. I remember that in last quarter's investors' conference, you mentioned that you prepaid some tariffs for your customers and that these payments would be reverted in the future. So my question is, has all $400 million in prepayments been reverted in the fourth quarter, and is this reflected in our gross margin for the third quarter?
Yes.
Regarding the tariffs for the second quarter, we've had some discussions with our customers, and we've reached an agreement, and the issue is now resolved. Thank you.
All right. I have a follow-up, which is that we see that in the third quarter, operating expenses was higher than historical levels, and is this due to additional R&D, and can you comment on the percentage of R&D as a part of total revenues in the third quarter?
Well, I think we all know that in the third quarter, the tariff situation, the policy was still changing. So we were very uncertain if that was going to be the tariff situation. So all of the additional tariff expenses were paid by us on behalf of our customers. And then later, the customers reverted these payments back to us. But I believe you asked how this reversion was presented. And actually, it was incorporated into our non-sales profits as part of our pricing. But for us, because the tariffs were so high, as you know, the tariffs from Taiwan to the U.S. is 20%. So we believed that this would really distort our P&L picture. So you can say that the tariffs were recognized in our SG&A. So the SG&A went up. But we didn't want to see that.
So for the third quarter, we discussed with our customers to recognize the tariff payments as something that we're doing on their behalf. So it's not part of our SG&A because if we did recognize them in our SG&A, it would really change our cost structure. So you see that the GP went up, the SG&A went up, but by the fourth quarter, what you'll see is that they will go back to regular levels. But regardless of whether it's in GP or SG&A, it does not affect our operating profits. So GP may go up, SG&A may go up, but operating profits will maintain at historical levels.
Okay. Thank you, Anson. I would like to follow up with a question about the fourth quarter. We see that AI is experiencing very high growth momentum. So do you think seasonality would be different from historical levels?
We are still going to be very optimistic for the fourth quarter because of AIoT momentum. Is that the case?
Yes. So last year, what we saw was that we had QOQ growth in the fourth quarter. And the most important thing is that, as our CFO said, the share of high-value AI products is continuing to rise. And currently, we're seeing that AI products are less seasonal than ICT products. So currently, we believe that the fourth quarter will maintain the pace that we had last year as well.
All right. Thank you. My last question is about the CB, TWD 12 billion. Is this because of production capacity expansions in Taiwan, Vietnam, and the United States?
Well, for the CB, it's mostly to strengthen Lite-On's development in our core businesses for the future. And this does include expansions overseas. So through this kind of capitalization, we want to increase our liquidity in the capital markets.
So Anson, KT, Julia, I'm Sharon from Morgan Stanley. I have two questions to follow up. First of all, Anson mentioned that the operating margin reflects the operational performance. So the tariff prepayments do not affect the operating margins. So it seems from the third quarter numbers that operating performance was very good. Long-term, what are your expectations for the operating margins? Will this continue to fall between 10% and 11%, or do you think there's an opportunity for operating margins to continue to improve and increase as the product mix improves? That's my first question.
Sorry. We missed one question about R&D expenses. So as I said previously, our company's policy is that we would like to grow our gross profit, our GP, and we want to invest these increases back into our CapEx. So this would create a virtuous cycle. Ultimately, we want to hold our operating profits at about 10%. And that's what we're going to do at the current point in time. As GP grows and we invest more in OpEx, the most important thing is R&D expenses. So if we continue to develop new products and new technologies, obviously, that would be very beneficial to our future growth. And as we know, as business grows and revenues grow, the operating expenses as a share will go down. So that will be the track we take in the future. We will continue to improve our GP and invest this into our CapEx. If we're looking at the third season, third quarter, I think as we maintain 45-50 billion in revenue, R&D will continue to account for 5-6% of that. I mentioned that our preliminary goal is for this to reach 6%. But as our GP goes up and revenue goes up, the absolute value of what we're investing into R&D will continue to grow, but the percentage will go down, and it'll hold between 5.5-6%.
Okay. So to clarify, you said that the increased gross profit will be used to subsidize our operating expenses, not CapEx, correct?
Correct.
Okay. My second question is also for Anson, which is, can you share with us what the company's outlook on 2026 is?
Well, our preliminary outlook is that as long as there are no major changes to the AI market, there is no reason to be pessimistic whatsoever. So I think it would be good to look at the fourth quarter. Most likely, our outlook for the next year would be similar to our performance in the fourth quarter. So if in the fourth quarter we continue this high level of performance, you can look forward to a similar level of performance for 2026. We will continue to realize both quarter-over-quarter and year-over-year growth.
Okay. So I remember a slide on your outlook for the fourth quarter, and it said that for the core businesses, there would be both QOQ and YOY growth. So this is not your expectation for the whole company's revenue, just core businesses. Is that a correct reading?
If you look at the growth of our core business in KT's presentation, you would see that for AI, for high-end power supplies, including PowerShelf and BBU, the year-over-year growth is actually over 50%. For high-end power supplies and BBU, currently, they account for nearly half of our overall revenues. From that, you can see why we're so confident that we will be able to maintain double-digit growth.
All right. My final question, can KT share with us your outlook on this year's CapEx budget as well as how this budget may change in the next year, in the coming year?
As I've said previously, we will continue to invest in expansions across the U.S., Vietnam, and Kaohsiung and expand our production capacity. Looking at our projections for this year, I believe that CapEx this year will grow by at least 25% compared to last year. And it will continue to be between TWD 6-7 billion. And next year, as we continue to expand overseas, I believe the trend will continue.
Okay. Do you mean that next year CapEx will grow by 25%?
Yeah. I think it will be at least TWD 7 billion, I think.
Anson, sorry, I want to check with you. You talked about accounting for half. Do you mean half of cloud and AIoT or just AI-related products?
Well, the overall revenue.
Well, if that's the case, then AI products already account for more than half of the company's revenue?
Well, when we look at our business segments, we have three business segments, right? So we talked about high-end power supply. So that accounts for almost 40% of the company. In the future, it will reach 50%. That's roughly the case.
Anson, I have one question. Last time, you mentioned the goal of AI accounting for 15%-20% of revenue. Last time, you said that you would try to achieve 20%. Has there been any change since then? And in Q3, you said that there's insufficient power supply capacity. Will this impact remain in Q4 or otherwise?
Well, last time, I told you that AI accounting for 15% for the full year. But according to the recent update, we might be able to achieve 20% this year. And next year, it will be far higher than 20%. That's for sure. And as I explained earlier, in Q3, indeed, because of lack of capacity in PSU, PowerShelf, and BBU, so a lot of products can only be shipped in Q4. In Q1 and Q2, we started to expand capacity. But, due to equipment lead time constraints and operator recruitment, we continue to expand capacity every quarter. But so far, we haven't been able to meet customer needs. In Q4, we will continue to increase our capacity. And next year in Vietnam and Kaohsiung and also in Plano, Texas, we will continue to expand our capacity.
Sorry. I have to check with you once again, Anson. You said AI, high-end power supply plus BBU accounting for almost half of the revenue.
Well, if you only talk about AI, yes.
Yeah. So PowerShelf. So you mean cloud-related things, AI products?
Yeah.
So if we look at cloud and AIoT business segment, these products account for how much in this business segment?
Well, they account for almost half of this business segment. This is what I meant a while ago, actually. Well, in cloud and AIoT business segment, we don't just have power. We also have, well, a lot of business will come from Racks and CDU in the future. Right now, they don't have a big share yet. But when we ship system products to customers, these products will start to account for a bigger share in the future.
Hello, Anson, Katie, and Julia. I'm Michelle from Fubon. You talked about that in OCP. You showcase high-voltage products. So I want to understand, in terms of 400V and 800V DC power racks, when will they be shipped? Thank you.
Well, we started to work with CSP customers in terms of development. So in Q4, some samples will be sent to customers, and mass production will take place next year. This is for 400V. As for 800V, it will take place in 2027. But product development started already this year.
And in 2027, along with customers' Kyber platform, mass production for 800V will take place in 2027. Understood. Well, NVIDIA now has some new power supply partners. So I want to understand your competitiveness. There are many mainland Chinese players entering. So faced with fierce competition, what is your positioning? Thank you. Well, over the past 40 years, we've always been in the area of power supply. We are the second-largest power supply player worldwide. Now, we are seeing many mainland Chinese suppliers entering. That's normal because this is a big market. And there are mainland Chinese and even American companies who want to enter this market. We also see some infrastructure companies such as Schneider, ABB. They used to work on infrastructure. They also want to actively enter this market. The main reason is because this pie is large enough. We are optimistic about any competition.
The most important thing is to strengthen our core capabilities. As long as we have our core capabilities, we are not too worried about any competition.
One follow-up question. You said AI accounting for 20% of revenue this year. How much is power? How much is BBU or liquid cooling? Thank you.
Okay. Let me explain briefly. When we talk about AI-related revenue, that mainly is about power supply products, PSU or PowerShelf. If that's 100%, then in it, about 80% comes from PowerShelf, PSU, etc., and 15%-20% comes from BBU. That's the breakdown.
What about next year in terms of BBU? You were actively expanding capacity, and you saw some order momentum, so what's the customer penetration situation and adoption for BBU next year? Thank you.
Our capacity next year is already all booked, so it will be at least as good as this year.
Thank you.
Hello, Anson. First of all, I want to confirm with you. You said in H1, AI accounted for 15%-16% of revenue and 20% for the whole year. So in Q3, it was already higher than 20%?
Yes.
Okay. Second question. You talked about 400V with some samples shipped to customers by the end of this year. So I want to ask you, when you look at 400V and the power rack architecture and also the configurations such as wattage, BBU, supercap, what's the production value? Or could you give us some ideas?
It really depends on customer needs. It's very customized. Right now, in the industry, there's no standard in terms of configurations. What I can share with you is that the power rack that we give to customers uses 500 kW as the design architecture. As for the future development, I think different companies will use different things. It's hard to tell you the configurations or the percentages. It depends on customers' products and systems. I think it depends on customers. It's not that all customers use the same things.
All right. So now we have more than one 400-volt CSP customer.
Well, we have more customers than that, but for us, it's the same structure.
Okay. One final question. We've been talking about SSTs, solid-state transformers. So from your perspective, what is this technology and what role will it play for this industry in the future?
Well, looking at the 800-volt designs for HVDC, we know that power is trending toward direct current, DC. So SST is designed to transform the electrical current into the right voltage of DC for the data centers.
Lite-On has begun investing in R&D in this field, and we've established a design center for this to plan out our future SST products. This is still in a preliminary phase, but I think that everybody agrees that higher voltage direct currents will be a major solution for the future.
Okay. Thank you.
Hello. I'm Esame from JPMorgan. I would like to ask again about AI exposure. Can you offer a breakdown between ASIC and GPU? And another question about 500-kilowatt application. Is that more of an ASIC application or a GPU application? It's for CSPs, so it's more ASIC. As for the question about the breakdown for AI and non-AI, I would say it's about half and half. CSPs and others are about half and half. Even for PowerShelf and BBU, they were both split half and half between ASIC and GPU.
For PSU units, we know that for a single PowerShelf, there would be six PSUs in there. So it's very difficult to provide a breakdown. Since we make our own PSUs, and some of these PSUs go into our own PowerShelves, and these PowerShelves, some of them will go to ASIC, some of them will go to GPU. So for the end application, I would say it's about half and half. But when it comes to the amount of power, I think more power goes into ASIC.
Okay. One last question. We have in-row CDUs and liquid-to-air cooling. So what is Lite-On's perspective on the development of these two technologies in the future? Will there be a migration to liquid-to-liquid?
In the future, as we look at product design trends, it would really depend on what their design is. Because currently, liquid-to-liquid is obviously quite widely used.
But from an infrastructure perspective, liquid-to-air may be a better solution. So it all depends on the application. The application decides which cooling solution is more appropriate, as well as the wattage. For example, in the future, if everything is one megawatt and if it's all in one rack, then liquid-to-air would probably be more advantageous. Well, liquid-to-liquid is all within the rack. It's within the rack, but liquid-to-air is outside the rack. So at higher wattages, liquid-to-air is more efficient. But both of them can actually coexist. It's not one or the other.
Hello. I'm Jerry from Yuanta Securities. My first question is about cooling. I know that some CDUs will be shipped to enterprise customers in the fourth quarter. What about the coming year? Are there any new updates that you can share?
Well, for enterprise CDUs, as I mentioned in our presentation, there will be some mass production in the fourth quarter, and the shipments will begin in the first quarter next year, and also at OCP, we showcased our solutions for various platforms. We have 2.1 megawatt cooling solutions for both platforms, and we also have cooling solutions designed for both Ruben and Kyber and at different wattages. Because cooling is something that we need to design and customize based on customer needs, so it's not like the power supplies where we have a standard that we can assemble into PowerShelfs. For cooling, it would all depend on our customers' designs, so why did we settle on 2.1 megawatts? Because in the future, all of these racks would be at least one megawatt and perhaps as high as 1.6 megawatts.
But when the power rack reaches one megawatt, you can't have cooling that's only 1.6 megawatts. You need more. So for 2.1 megawatts, that's a three-plus-one design, three-plus-one units of 500-kilowatt cooling solutions. And then all of them together would be 2.1 megawatts. So we designed this for one platform. But for other platforms, we have other designs as well. So we have the 140-kilowatt solution, etc. So currently, how many customers are you talking to, or what clear orders do you have for shipping next year for cooling? Well, we have one demonstration project that's underway, and it's customized based on our customer's needs. So it'll be installed on our customer's systems, and we will have a whole solution for that customer. So for liquid cooling, do we have any targets for next year, or what is your outlook?
We have not set a clear number because currently, we're still in a preliminary stage. So we will be getting other customers for this technology. But currently, the share in our overall revenues is still quite low. And of course, throughout this process, we want to build up our own capacity and competence, and then eventually, we'll achieve a higher share for liquid cooling. Okay. My next question is about production capacity. For PSU and BBU, what percentage capacity increase do you see? For example, 50% maybe? Well, for BBU, the share is very high. The share that BBU takes in our production capacity is very high. Actually, this year, we did not foresee that demand would be so high, but that was what our customers wanted.
So that's why we were a little bit unprepared this year because we did try to expand our capacity, but the equipment, the personnel, the space all had constraints. So we had our Kaohsiung production plan, our Texas plan, but we even had to depend on some support from our mainland China plant as well. But the new capacity will be ready by the fourth quarter. And we are discussing with our customers, we want to maintain this level of production in the future. But all of the capacity we have right now is booked. But if we do expand even more in the future, we do worry a little bit about the production risks that will bring because the share may be a little too high. So we want to maintain this at a relatively healthy level. Okay. My last question is about DCDC module.
What is the current R&D progress, and do you ship to AI server DC-DC module customers at all, or are there any such products? Currently, no. But we continue to develop because next year, we have some enterprise and also some AI demand along with high-voltage DC demand. So we continue to develop in this area, but currently, there's no shipment to our customers. But this technology, well, let me put it this way. In the past, we didn't touch this area because there are many intellectual property issues. We didn't want that to become our risk. But now, what I can tell you is that in order to avoid such a risk, we work with some major semiconductor companies to develop new technologies. And I think next year, we should be able to showcase our products to customers. This is the current progress. Thank you.
Hello, Anson.
I want to ask you a question. You talked about BBU in Q4, that the capacity will be ready in Q4, and next year, it will stay at this scale. But next year, CapEx will be TWD 7 billion, which will be higher than this year. So what are we going to add in the U.S., Vietnam, and Kaohsiung, and how much for each place?
Well, in Vietnam, in addition to moving some ITC products from mainland China to Vietnam, next year, in Vietnam, we will also have a plan focused on PowerShelf and PSU. So this is a foundation of our power supply capacity expansion. BBU will continue to be in Kaohsiung and in Plano. As I said, well, in Q4, only in Q4, our BBU capacity will be ready. Before that, it's not ready. So next year's capacity will be four times the capacity in Q4 this year.
So it will be much larger than this year. In terms of Kaohsiung, we will continue to have a PowerShelf, and PSU, we will continue to expand capacity in Kaohsiung. As for BBU, we will do final assembly in Plano. If we look at BBU production line, Plano is 30%, Kaohsiung 40%, and mainland China 30%. These are roughly the percentages. Hello, managers. I'm Wayne from Neuberger Berman. I want to ask you, if we look at the different quarters for cloud and AIoT and if we compare different quarters, in Q3, revenue was higher than Q2 by TWD 4.7 billion, but Q3's OP was higher than Q2 by TWD 1.4-TWD 1.5 billion, which means that your OPM is roughly 30% or so. How should we understand this?
Is it completely something that AI brings to you in terms of product mix change, or are there some other moving parts that we need to understand? Well, there was something incorrect in what you said. If we look at the amounts, AI in Q3 didn't increase by 4 billion. It went up by almost 7 billion. But we have other things that were going down, so the portfolio has changed. This is why our OP went up by about 1 billion. Okay. If we look at the past, for example, last year, revenue growth was 12 billion, and in the first half of this year, it was 16 billion, and as of now, it's 20 billion, so the incremental growth has accelerated. Is it just because of product mix change, or is it because AI content profit margin also goes up?
The incremental used to be 12%, but now it's more than 30%. Is it really purely because of product mix change? What about the AI part? Well, the AI part has remained more or less the same. But of course, there are different parts in AI, including PowerShelf and BBU. And PowerShelf and BBU have different GPs because PowerShelf is something completely made by ourselves. And in BBU, there are batteries, right? And for batteries, we work with external partners before the final assembly. So that increases our ASP, but the GP is lower than that of PowerShelf. When BBU goes up, our GP goes down slightly. This is quite complicated. It's not that easy to do the conversion.
Got it. Thank you.
We can have one last question.
Hello, managers. I'm Terry from KGI. Everyone asks about AI, so let me ask something different.
I'm going to ask you about non-core businesses. If you look at Q4 and next year, what is the outlook like? Thank you.
You mean non-AI? Yeah, such as ITC or Optoelectronics. Okay. This is my take. In AI, this year, we enjoyed high growth. As for non-AI, such as ITC or Optoelectronics products, we still enjoy YOY growth. Of course. Let me give you an example. Optoelectronics, our product applications have mini LED applications being added, and in terms of ITC products, we also add some new products, for example, gaming customers or some high-end non-PC and industrial power supply, something higher than 1,000 or even higher than 2,000-watt products. In terms of ITC, there are two areas where we performed well this year. First, low-orbit satellites. We are right now the biggest supplier in this area. Our market share is almost 60%.
It seems that we will continue to move towards 70%. As for game consoles, Nintendo, this year, as you know, their products sold pretty well this year, so we also benefit from that, and last year, we officially entered Sony game consoles, so in the game console market, we cover all of the three top players. We supply to all of them, so in AI, we continue to see high growth, and for non-AI things, we introduce new products and new customers. We develop new markets, and we maintain YOY growth as well, well, in the past, we were dealing with some non-core businesses, so new business growth couldn't cover those non-core businesses, but starting from last year, after the end of our lean-focused transformation, we don't have such non-core businesses to deal with anymore.
So I'm very confident to tell you that we will be able to continue to grow.
Second question for CFO. In Q3, the taxation was slightly lower. How do we expect taxation changes?
Well, because of international minimum taxation, the overall tax rate in Q4 will return to normal. But in Q3, we reached a consensus with the taxation bureau. Previously, they had some disagreement with our recognition. But after we provided some proving documents, basically, the taxation bureau agreed with our recognition approach. So in Q3, the tax rate became slightly lower. So it's roughly the same as in the first half of this year.
Got it. Thank you.
Good afternoon. I'm Mandy from Huanan. Last time, you mentioned that you had a CSP client from the United States.
But now, with the development of AI, the number of CSPs has grown from the six major CSPs of the past. Now, there are additional ones. So have you gotten additional customers, and have you increased the share of your existing customer?
Well, for CSPs, we've seen a lot of growth from our single customer. But in addition to this single customer, we will be adding, we have added, rather, more customers. And we will be adding another one next year as well. So our growth does not come from an additional share of one major customer, but we will continue to work to broaden our customer portfolio so that it provides a healthier base for future continued growth. All right. So thank you all for coming to this investors' conference. This concludes our event. All of the relevant information will be on our official website.
Thank you again for coming, and have a good rest of the day.