Today's agenda consists of three parts. First, CFO KT will explain the financial and business performance of Q3 and Q1 to Q3 2026. Next, President Anson will explain the company's operational outlook and growth strategy. During the Q&A session, Anson and KT will provide further explanations and answer the questions. First, CFO KT will explain the performance of Q3 and Q1 to Q3 2026. Thank you, KT.
Good afternoon. First, let me introduce the results for Q3 2026. LITE-ON Technology's Q3 revenue was TWD 57.4 billion, GP, TWD 14.9 billion, GPM, 25.9%, OP, TWD 8.7 billion, OPM, 15.1%. Net profit after tax, TWD 7.4 billion, EPS, a record high at TWD 3.27. Overall, Q3 revenue went up by 28% YoY and 9% QoQ, which was Cloud & AIoT revenue growing by nearly 60% YoY. GP went up by 32% YoY, GPM 25.9%, up 0.9 percentage points YoY, better than the 24.7% in H1.
OP went up by 85% YoY, OPM 15.1%, up 4.7 percentage points YoY, also better than the 12.8% in H1. This mainly benefits from strong demand for next-gen AIDC infrastructure. The share of high-value businesses continue to increase. Meanwhile, global capacity expansion brings economies of scale, while smart manufacturing optimizes operational efficiency, driving overall profit growth. Net profit after tax, TWD 7.4 billion, EPS, TWD 3.27, up 60% YoY, a quarterly record high.
Moving on to Q1 to Q3 2026 results. Q1 to Q3 revenue was TWD 153.5 billion, up 26% YoY, GP, TWD 38.6 billion, GPM of 25.2%, OP, TWD 21 billion, OPM, 13.7%. Net profit after tax, TWD 18.3 billion, EPS, TWD 8.08, up 63% YoY. Compared with the same period last year, Cloud & AIoT continued its strong growth. Q1 to Q3 revenue grew by 80% YoY. GP went up by 36% YoY, up 1.9 percentage points YoY.
OP went up by 73% YoY, up 3.8 percentage points YoY, showing the expansion of high-value businesses and improving operational efficiency and profitability at the same time. Net profit after tax in Q1 to Q3 was TWD 18.3 billion, EPS, TWD 8.08, up 64% YoY, another record high. For Q3 2026, the revenue from three major segments can be seen on the screen.
For Q3 revenue from the three major segments, it went up by 28% YoY, OP, TWD 8.7 billion, up 85% YoY, in which in Cloud & AIoT revenue was TWD 33.8 billion, up 57% YoY, accounting for 59% of total revenue. It benefits from the growing shipments of next-gen high-end cloud power products. OP, TWD 7.1 billion, more than doubling YoY. In Optoelectronics, revenue was TWD 1.8 billion, up 17% YoY, accounting for 14%. Core applications of high-end optoelectronic semiconductors in cloud computing, industrial control, and new energy continue to growth.
OP, TWD 700 million, up 19% YoY. In IT/CE, revenue was TWD 15.5 billion, down 6% YoY, accounting for 27%. Due to systematic material shortages. Consumer market pull in momentum slowed. And thanks to diversified deployment, LITE-ON's shipments of LEO, or low earth orbit satellite power, doubled, keeping the segment's YoY revenue drop smaller than the market overall. OP, TWD 1.6 billion, down 3% YoY. Overall, we continue to strengthen high-growth, high-value core businesses, increasing both the overall operating scale and profitability.
Now, please look at the balance sheet of LITE-ON in Q3. In Q3, current assets, accounts receivable went up by TWD 2.1 billion QoQ. Inventory went up by TWD 11 billion QoQ. To manage critical material supply, meet customer safety stock requirements, and manage global operations, we launched strategic procurement and material preparation to strengthen supply chain resilience and delivery capabilities.
In current liabilities, short-term bank loans went up by TWD 10.5 billion QoQ. Accounts payable went up by TWD 7.7 billion QoQ . Q3 current assets went up by TWD 13 billion QoQ. Current liabilities went up by TWD 22.2 billion. Quick ratio and current ratio at 0.82x and 1.27 x, respectively. To implement our growth strategy, capital was used for strategic procurement and stockpiling, CapEx, and strategic investment.
Our performance of growth due to high-value cloud computing business since 2022. Since 2022, high-value cloud computing business has grown. The revenue share of Cloud & AIoT went up to 56% in Q1 to Q3. It was just 33% back in Q1 to Q3 2022. Revenue has grown multifold in size. GPM in Q1 to Q3 was 25.2%, and OPM was 13.7%. Revenue went up by 26% year-over-year, and OP went up by 73% year-over-year.
High-value businesses have continued to drive excellent growth in both revenue and profit. Let us now move on to ROIC enhancement. For long-term, forward-looking investments, the focus is on AI infrastructure to generate stable ROIC. ROIC performance continued to prove the success of our strategic transformation and capital allocation. Since 2024, we have actively invested in AI, cloud, and high-value growth sectors, generating a steady ROIC.
CapEx in Q1 to Q3 this year was TWD 13.1 billion, and ROIC remained robust at 34%. Full-year performance is expected to be better than the historical average. While actively managing capital, improving efficiency, and expanding AI infrastructure capability, the growth of high-value businesses not only drives revenue and profit, but also creates long-term shareholder value. This is an overview for Q3 and Q1 to Q3 2026.
For Q3, revenue was TWD 57.4 billion, up 28% year-over-year and up 9% quarter-over-quarter, in which Cloud & AIoT grew by 57% year-over-year. GP, TWD 14.9 billion, up 32% year-over-year. GPM, 25.9%, up 0.9 percentage points year-over-year, better than 24.7% in H1. OP, TWD 8.7 billion, up 85% year-over-year. OPM, 15.1%, up 4.7 percentage points year-over-year, better than the 12.8% in H1. It benefits from the growing demand for next-gen AI DC infrastructure, global capacity expansion, and the growing share of high-value businesses, improving profitability.
Net profit after tax, TWD 7.4 billion. EPS, TWD 3.27, up 60% year-over-year, a quarterly record high. For Q1 to Q3, the revenue was TWD 153.5 billion, up 26% year-over-year. GP went up by 36% year-over-year. GPM, 25.2%, up 1.9 percentage points year-over-year. OP went up by 73% year-over-year. OPM, 13.7%, up 3.8 percentage points year-over-year. Net profit after tax, TWD 18.3 billion.
EPS, TWD 8.08, up 64% year-over-year, another record high. Thanks to smooth shipments of high-end AI server power, cloud products, and power management systems, Cloud & AIoT revenue grew by 80% year-over-year. Core applications of high-end optoelectronic semiconductors in cloud computing, industrial automation, and new energy continue to grow. In IT/CE, shipments of high-end power and LEO satellite power doubled.
At the same time, in October, LITE-ON completed its first sustainability-linked syndicated loan of TWD 36 billion. We thank the bank consortium for supporting our long-term development. The loan will support our continued global AI deployment and strategic investment, enhance operational resilience and global competitiveness, and deepen ESG and low-carbon transformation, laying a more solid foundation for next stage of growth. This concludes my presentation.
Thank you, KT, for your explanation. Next, President Anson will explain the company's operational outlook and growth strategy. Thank you.
All right. Thank you. First of all, thank you to all of our investment partners and friends in the media for attending this conference. I would also like to thank KT for his exhaustive presentation on our third quarter performance. I think the most important message here is that in the third quarter, we continued this very strong momentum we talked about in the second quarter. As we said from last time, we have set a new record for the third quarter.
So it is a new milestone, but it is also all part of our roadmap. For this quarter, I think my key messages will continue from the last conference, which is that we will continue to deepen our expansion into power supply, energy storage and conversion, cooling solutions, system-level racks, and high-speed opto-communications.
AI will continue to be our core growth engine, and we will continue to advance toward the goal of becoming an important partner for global AI infrastructure. In order to accelerate our progress toward this goal, I am sure, as you all know, we have begun a series of strategic moves this year. First of all, in June, we acquired Epic. This strengthened our key technological capabilities in DC/DC power offerings.
This October at OCP, we showcased our newest 800 VDC DC/DC product line, which attracted the attention of many of our CSP clients. In July, in the optical communication field, we made a strategic investment into DenseLight, which continued our strategic expansion into optical engines, optical modules, and rack-level optical connections. This allows us to seize upon the growth opportunity of high-speed optical communications in AI data centers.
In September, we invested into DCX, a Polish specialized liquid cooling designer and manufacturer. At OCP, we showcased a 2.6 MW enterprise-level CDU cooling system. So, these integrated our existing power supply technology to provide an integrated solution that can meet the needs of our large CSP AI data centers. You may also have noticed that our board decided today to spin off PowerCAN Precision.
In addition to its existing rack business, PowerCAN will also work closely with DCX to accelerate their development in liquid cooling. This series of strategic moves means that we are focusing on many major aspects, including optical, mechanical, electronics, and cooling. This kind of wide specialization allows us to improve our competitiveness and create long-term corporate value. As I said, our cloud business in the third quarter continued to grow, and this drove profits that were higher than the first half.
Our customers' new platform upgrades has driven demand for higher power and higher integration power supply management systems. Our board announced today a strategic investment into Xinanrui to expand our technological capabilities in high-power converters and sensors. Together with our volume advantage, this will deepen our strategic presence in AIDC power supply management products, as well as the new generation AI data center infrastructure.
Looking forward to the fourth quarter, our cloud power supply business will continue to see both year-over-year and quarter-over-quarter growth. We are seeing that CSP customers are still experiencing growing demand for their new platforms. The products include the 8.5 kW PSU and BBU ASIC servers, which will enter mass production. The new generation Vera Rubin 110 kW and Helios 42-in power shelf will also enter mass production in the fourth quarter.
At the same time, the next generation AI power management system, the 800 VDC Power Rack, will also enter final qualification. As I said, this is all according to our existing plans, and I am sure that all of this will not only strengthen our growth momentum for the fourth quarter, it will also allow us to be very optimistic about our development next year. Thank you.
All right. Thank you, Anson, for your presentation. Next is our Q&A, so let's open the floor. We will have Anson and KT answer your questions.
Hello, executives. Can you hear me?
Hi.
I have a question.
Go ahead.
Yesterday, another company in power supply also had an earnings conference, and they mentioned that currently in U.S., there have been some challenges regarding building data centers, like electricity shortage and capital securement. What is your view on this? Thank you.
Y esterday, I also listened to the explanation of companies in the same industry, and the message that they deliver, I think, is very similar to our view. From our client side, I do see some issues regarding electricity supply. What you see in Q1 shows that orders come in a lower volume in Q1, and I explained that the electricity supply is indeed a bottleneck. After that problem was solved in Q2, order intake went up quickly.
In Q3, there might have still been some slowdown, and I think that is inevitable in the development process. As you know, electricity is always a bottleneck, and our clients are actively solving these issues. From their earnings conference, I believe you can obtain a relevant message. Their investment in CapEx so far indicates no downward trend in developing this industry, and they are still relatively optimistic about the AI industry development next year. Originally, we saw some possible uncertainty, but they are very certain to increase CapEx investment in this industry. Thank you.
Thanks, Anson. I have a follow-up question. Based on your answer and the fact that there are some material shortages, whether there is any impact to the delay of PSU or BBU or other products of our company. You also mentioned double growth in Q4. Considering previous factors, whether there is any change to the current guideline on the view of growth? Regarding 800 HVDC products, whether the shipment will go as follow? Also, Q3 GPM was a little bit lower than Q2. What is the reason? Thank you.
In previous earning conference, I mentioned due to delay in shipment in Q1 and Q2, GP was higher in Q2. I already answered this in previous earning conference. Our expectation for H2 overall GPM would still be higher than H1.
Secondly, regarding material shortage, I also explained that starting last year, we started strategic procurement on critical components such as PCB, high-voltage capacitor, and semiconductors. That led to increase in our inventory, and because of slower order in Q1, in Q2, we started to employ higher percentage of sea freight and less air freight, and led to eventually higher volume of products.
Thanks to these two factors, I think we can rest assured that in Q4, we will be able to meet customers' demand, however that may be. Regarding the question on 800 volts products, the first batch of sample was sent in the end of August last quarter. This time in November, we would have the second batch of sample being sent.
The first batch was about product qualification. The second time was about a system integration qualification. After that passed, the shipment will probably start first season, first quarter next year. The schedule and the amount of shipment would still depend on the customer's deployment, and also on whether the electricity issues would be solved by then. There are some variables still, but I think generally speaking, Q1 next year, we will see shipments going out.
I would like to add that in previous quarter, in previous earnings conference, I mentioned due to changes in order and shipment, we explained that you should look at the average figure in H1, and Q3 overall performs better than the average in H1.
Good afternoon, Anson, KT, Julia. I'm Doris from BofA. I have some housekeeping question. First, in Q3, our OpEx ratio was pretty good. How do we view expenditures going forward? Because I remember LITE-ON previously announced that the focus for you in terms of expenditure is on R&D. Is the range for R&D still between 5%-5.5% or more? Second question on the CapEx. Another company in the industry mentioned that they are expanding capacity in Asia. What's your view on expanding locations in Asia or increasing resource investment? Is there any update on CapEx for this year and next year? Thank you.
I will answer question one, and the second question will be answered by KT later. For R&D, we begin with 3% or more in the previous years to 5% currently. Actually, 5% is less than our expectation. We explained earlier, we expect the amount to be at least 6% based on our current GPM. I think 6% should be quite suitable for our GPM right now.
All right. Most importantly, I need to explain that the R&D investment is behind our expectation, especially in the U.S. We actually put in a lot of effort in setting up labs in U.S. and recruiting talents there, but the schedule have been slower than expected. But we are still moving toward the target of 6% investment CapEx in R&D.
Whatever happens in the future, we will continue to invest in R&D in terms of CapEx, especially on next-gen product development. We need more R&D investment to accelerate product development. This is what we should do, and we are trying hard to accelerate it. As for CapEx, I want to also explain, in Asia, apart from Vietnam, the existing Hai Phong plant- Stop it next month, actually, in our new plant, Quang Ninh, will be opened.
Stage 2 in Kaohsiung is also ready. Our operation permit will probably be approved in December, and the investment and the input from these two plants would probably be able to support our capacity requirement for the next two years, because these two plants outside of China would double our capacity. So, for the next two to three years, they will allow our capacity to be ready. This does not include North America.
In McKinney, Texas, we expect Q2 next year, they will be operational. With that capacity adding to our overall capacity, for the next three to five years, I think we wouldn't have any problem supporting our operation. Regarding expenditure, I will allow KT to answer.
Regarding CapEx, we reported last time that the CapEx this year is at around TWD 18 billion. Due to some recent additional deployment, currently, the figure for CapEx will increase to TWD 19.7 billion. If we consider the possible capacity expansion next year under our discussion with customer, we expect the CapEx to be higher than this year.
Anson, KT, and Julia, good afternoon. I'm Michelle from Fubon Securities. I would like to ask about the margin for the third quarter. I know there were some one-time factors behind this number in the first two quarters, so what about the third? Was there all because of product portfolio optimization and economies of scale, or were there also one-time factors? What about the fourth quarter margin? What is your outlook?
Well, I don't think there were any one-time factors behind the third quarter margins, but they were in line with our expectation. As I said, the gross margin for the third quarter was better than that of the first half of the year. Looking at the fourth quarter, we believe that for cloud products, we will achieve both year-over-year and quarter-over-quarter growth. I think further optimization of our product portfolio will mean that the gross margin will continue to be good.
Okay. For the fourth quarter, if the cloud products are growing, what about the other product lines in the fourth quarter?
Well, for consumer and ICT products, in the second half of the year, what we are seeing is a relatively large decline in ICT products, a bigger decline than expected. Looking at the market overall, we believe it will decline by about 20%.
As you can see, in the third quarter, this product category only saw a decline of 3% year-over-year, and that's mostly because when it comes to LEO satellite, we actually saw a 100% growth year-over-year. So this business was able to compensate for the decline in ICT and consumer products. As for other product categories, we believe that everything is on track to proceed in line with our 5%-10% expectation, 5%-10% annually.
You mentioned that AI will account for about 30% of the revenue this year. What about the share next year?
Well, next year, the share will be higher. I think that's clear. Because when we talk about cloud, ASP is growing, and our main product line will increase from 5 kW to 8 kW, or even bigger for power shelves. Also, the Power Rack will bring more revenue next year as well. So my forecast is that AI will account for 40%-50% of our overall revenue next year.
Hello. I'm Terry from KGI, and I have two questions. The first is a follow-up to the previous question about expenditure, because your answer chiefly concerned R&D. So what about something major? What is the forecasted expenditure ratio overall? Because right now, it is about 10%. That is quite low. Can we look forward to this very low level in the next few quarters, or are there any one-time factors behind it? Next, we talked about DC/DC in the presentation. How is development proceeding, and when will DC/DC start contributing to revenue?
When it comes to expenditure, we talked about how R&D is about 5% currently, and we are looking to increase that to 6%. Overall CapEx is about 11%, 12%. I think that is a reasonable level, because our gross margin is also going up. This growing margin, part of it will be going to R&D, and I think that is reasonable. I think the expenditure ratio will go up by about 1%.
As for the DC/DC product, this year, I think this product is now in the hands of our customers. Of course, a new product would take some time for qualification, but we believe that since this product is designed to be a very high-end product for our customers, it should be able to go through qualification relatively rapidly. My forecast is that by the third quarter next year, the DC/DC brick will start contributing to revenue. Of course, as a share of overall revenue, it would not be a very high share. But the total addressable market is very large for this. It is probably 30 billion, so it is definitely worthwhile.
Good afternoon. I would start off again with a question about expenditures. I know there has already been two questions about it, but what I am seeing is that the absolute expenditure for the third quarter is actually going down compared to the second quarter. Again, I want to ask, are there any one-time factors behind this, in addition to any R&D changes?
No, there are no one-time factors.
Okay. For the second question, looking at inventory, we are seeing that inventory has been going up for some time, and you talked about how in the third quarter, there were some limitations imposed by customers because things like electricity supply, so shipments did not really meet expectations. We are seeing that inventory is going up. From your perspective, in the fourth quarter, even if high-end power supplies will see quarter-over-quarter and year-over-year growth, from the overall environment, would this improve? Would the electricity supply issue improve, or are there any other factors behind that?
I think things will improve in the fourth quarter. Why? Our customers know about our inventory situation. We tell the customers about it. When we tell customers about the inventory, we tell them, "Okay, if you are slowing down, then we are going to slow down as well."
But our customers are telling us to continue with the forecasted amounts, to prepare the inventory in line with their forecasts so that they are not met with any shortages, when push comes to shove. I am sure that in the fourth quarter, the customer demand is still there, and if they can resolve their issues, I am sure the shipments will speed up better than the third quarter. I think that is for sure.
Okay, so the absolute value of the inventory is going up, and the number of days is going up as well. I wonder about the accounting implications. Of course, the inventory will eventually go out, and that's no problem. But in the short term, will there be some accounting issues with this inventory?
Well, compared to the past few quarters, the ratio of inventory going out has maintained at a stable level. It has not grown worse.
Okay, so looking at this table, because you talked about the Helios 42-in power shelf in your presentation. That's an AMD product, I believe. Since this is going to ship soon, can you talk about the spec? For example, the PSU, is it 12 kW, or what kind of spec is it?
Well, I cannot tell you because we do have a confidentiality agreement in place, but since AMD has talked about Helios, I believe that we can talk about this product. But any details we cannot talk about because it's a matter of a contract between us and the customer.
It's okay we don't talk about the spec, but any components or on the design side that indicates possible bottlenecks that may jeopardize future shipments? Not at all. Because from the design perspective, we will consider those possible issues, so we wouldn't choose critical or unique items for design because we want to control the design ourselves. Maybe there's some difference in spec or in application, but for our choice of components or for the design topology, the difference wouldn't be too big compared to other products.
I would like to add, as our President mentioned, the most that we can expose now is the term Helios 42-in. This is the result of communication with the customer. The platform has been very clear. They visit twice a year, which disclaim their determination to control supply chain and shipment.
Regarding the product design you mentioned, this is reflected in customers' requirement for rack design. This year, ASIC customers and GPU customers alike, for their next-gen rack, they want three things for power: high power, high efficiency, and high density. Beginning this year, we saw AI server PSUs at 5.5 kW. That's the starting point. For next-gen GPU or ASIC customers, they want something that goes from there up. This is the requirements from the customers that we see. When we design for customers, we go toward that direction, high power, high efficiency, and high density.
One more question. We mentioned the CapEx amount. It actually went up another 10%. Can you explain the main driver for this change?
There have been a few reasons. First of all, capacity expenditure. We will continue to make investments in this regard. At the same time, we also make improvement to increase optimization.
Hello, Anson, KT, Julia. Another question from me. I have a question regarding this presentation slide. I remember previously when we talked about 800 VDC, you showcased the number of 660 kW, but this time it has been updated to 880. I presume they are for the same platform, next-gen. My question is this improvement comes from redundancy enhancement on the customer side, or is this from our own product optimization? Why the update to 880 volts?
We began with lower megawatts, but later, mainly due to a worry about slower schedule, we discussed with the customer, and the customer agreed that we began with 660 first. In the process, we realized 880 is feasible, so we update that to 880. That was the reason, but we already announced 660 in that quarter, and we did not have time to update it to 880, but that is the reason why.
In terms of layout or the internal spec, there have not been too much update. Is that correct?
From 8 kW to 18.3 kW, the form factor would be the same. It is just that the component or the design topology may be different in some regards. From our perspective and customers' perspective, 880 definitely would be better than 660. I also reported before that one of our customer directly went to 1.5 MW. It really depends on what the customer valued the most, what is their requirement, and we customize based on their requirement. That is what makes Power Rack special. We can make better customization.
Another follow-up question for KT regarding capacity expansion. Does it include BBU, or no plan for expansion for BBU?
You mentioned capacity expansion. For the demand next year compared to this year, we see an additional 20%-30% increase.
Another question from me.
Oh, go ahead, yeah.
I also have a follow-up question for BBU. Even though it is quite early right now to look at next year, but if we look at the growth potential for power and BBU, what is your view? This year, is BBU larger than PSU?
Correction, it is in reverse.
Your view, it will be the same?
Yes. The proportion of BBU will maintain at a relevant large portion. I calculated and I determined, it seems that for automotive products, the performance have been quite good from the previous quarters.
This year, the automotive products has went up compared to same period last year, and we also see more growth next year. Two reasons. Number one, we had existing automotive car light modules, and we have been making selections purposely. We chose those with higher GPM, and after some optimization, our current modules have better modules and better demands. Also, for automotive products, we also had a cockpit central camera module, which had been qualified by customers and shipping started.
This also contributed to the revenue of automotive product? You meant new products drove the growth of this sector?
Yes. I am referring to a camera that you would place in the cockpit for safety reason. To car OEMs. We are talking about the overhead console.
Yeah, go ahead.
Hello. I have a question regarding liquid cooling, whether there is any business update or progress on customer qualification, and which type of customer prioritize this, CSP or others? Second question regarding capacity expansion for BBU, you mentioned 30%, and if we also look at the capacity in U.S., what would be the overall growth next year for PSU?
Let me first answer your question regarding BBU. The capacity increase would not only focus on Asia. Actually, it would mainly be in U.S. So, the capacity in the U.S. would be in sync with capacity in Asia. From the business standpoint, we do see a 30% growth, but from a volume standpoint, the growth may go over 30%. Got it. Regarding CDU, in Q1 this year, we reported the launch of the first CDU of 120 kW. That was for enterprise customer.
In the process of design and production, we did encounter some challenges. All the way until Q3, we officially launched this product and started delivering it to our enterprise customers. So, happy to report that the first 120 kW CDU for enterprise customer have been mass-produced in Q3. In Q4, the production would go even larger. The forecast for next year have been obtained already, so that would definitely drive our growth in revenue. For the second product, the next-gen 220 kW CDU, it is under design right now.
For the liquid cooling products and product developments in this sector, we have made some strategic change to accelerate development in this product segment. We decided to spin off a business unit for chassis, the PowerCAN company. This is a company subsidiary 100% owned by us. They can use a more flexible way to secure better talents to accelerate our development in liquid cool products. This is a strategy that we adopt to accelerate product development in this regard.
Good afternoon. My first question, it might be a bit early to ask this, but I would like to understand your outlook on the three major business groups, their growth for 2027, and your overall GPM and OPM for 2027.
Just one.
The second question is about raw materials, because I know that you strategically procure some raw materials for longer terms. I was wondering, how long can your inventory supply your customers? Like three months or six months? How much inventory is there? Also, as the price of some raw materials increase, if there are any shortages in the future, will you see any price pressures coming from the raw materials? Thank you.
So, two questions, right? For 2027, we are actually budgeting for 2027 right now. Currently, I cannot give you any internal numbers, but I can give you some external perspectives on how these markets will change and develop in the coming year. So, in the presentations, you know that we have three major fields. First of all, ICT and consumer products, including LEO satellites, the mid-voltage and low-voltage power supplies.
So, for this market, I foresee a fairly flat performance next year, similar to the second half of this year. So, that is not a great performance. But when it comes to LEO satellites, we are seeing that demand will grow for power applications because of design changes in the products next year. So, for LEO satellites, we see a continued growth trend next year. So, that is for our ICT business. So, obviously, our customers understand this as well.
Our customers are increasing their ASPs, but that will be reflected in our prices to our customers as well. So, we will be discussing with our customers when it comes to this and reaching alignment. As for Optoelectronics, I think industrial control and new energy are seeing very good performance this year, probably a growth of 20%-30%. Next year, when it comes to industrial control and new energy, these will also drive growth as well. So, Optoelectronics can probably maintain a growth rate of about 10% next year. So, that is for O ptoelectronics.
Everybody is very focused and impressed by the cloud power supply product line, because as I said, next year, some of the more high-powered products, such as the 8 kW+ , the PSUs, the 110 kW products, those high-value products will be increasing in share next year, which will increase our ASP. Our Power Racks will begin shipping in the first quarter of next year.
If that proceeds on schedule, I am sure that our AI server power supply business will be able to maintain our growth trajectory of this year of about 70% growth. Overall, with this portfolio of products, we are quite optimistic about our company's growth next year, and we will continue to increase our gross margin in accordance with our plans. That is for next year.
As for the raw materials question, I am sure you all know that for a lot of our raw materials, they have lead times of over a year, particularly semiconductors. Some materials, such as PCBs, are seeing shortages, and those lead times are being extended to three to four months or even half a year.
Looking at our strategic procurements, we work on a cycle of about half a year. For example, for semiconductors, when we sign agreements with our suppliers, we sign three-year agreements to ensure that our production capacity can continue without interruption. Of course, the price will be renegotiated from time to time based on the market conditions, but it allows us to lock in our production capacity.
Whether we are talking about semiconductors, PCBs, capacitors, these very critical components, we usually prepare a stock of about half a year, and then we do regular reviews to adjust our priorities when it comes to procurements. That is how we work.
Michelle from Fubon. Anson, KT, Julia, good afternoon. I would like to ask again about BBUs, because you mentioned that PSUs are seeing higher growth rates than BBUs, and I am wondering if that is because of battery core supply issues for BBUs, so that they are not growing as quickly as PSUs.
That is more because a lot of enterprises do not necessarily need the BBUs. BBUs are mostly for cloud service providers. For PSUs, we also have the near-cloud and enterprise customers as well. The overall volume is much higher than BBUs.
Okay, so we are seeing 20% growth for BBUs this year, and next year it will be over 30%, correct?
Yes, we are seeing 30% + next year.
Okay. In our last conference, you mentioned orders from two new CSP clients. Can I have an update on that? Have they begun contributing to revenues yet?
When it comes to CSPs, we begin with the server shelf products, but they are obviously most interested in the Power Rack product. I can say that the customer has just audited our Vietnam plant, and the audit has been smooth. The order and actual products will all probably begin shipping next year. That means actual project. The share will not be so high. We can anticipate that in about 2028, we will be seeing another wave of growth coming from the CSPs.
Okay, understood. For the 800 volts product, if the shipments will begin the first quarter of next year, do you have any target penetration rates? For example, among CSPs and their HVDCs?
This is hard to say because these are new products, so we have no real numbers right now to make this kind of forecast. This is not something our customers are just going to tell us. What we can see is only their actual orders and the actual deliveries. It is only when we start seeing that we can start guessing at how much they are going to order and what their penetration rate is going to be.
Because the existing data centers, once their designs have been locked in, they will not change, so they will not be using this kind of new technology. This new product will go into new data centers, and how many new data centers they are going to build, it is something that only they know. We are not sure about that.
Okay, we can have one more question.
Sorry. To follow up on the question about material shortages. Among the four major cloud service providers, one of them seems to be encountering shortages on the rack end, and we are hearing about some delays. Are you seeing any delays in the rack and resulting in any delays for the Power Rack?
If I were to guess, I would say that this is inevitable and expected because this is something that is new. As I said, they might not even be ready for safety inspection yet. This kind of new component could experience some short-term shortages when it comes to the material.
Of course, customers do not tell us this, but I am sure that this new product R&D and the use of new components, including the safety inspection phase, there is a lot of uncertainty associated with it. So I am sure that is a factor. But I think the trend remains unchanging, and it seems that it is going back on track because our samples have been delivered on schedule based on what our customers have asked. They have not asked us for any delays. So, I am still optimistic about this.
Okay. Thank you all for your questions and participation. This entire conference will be made available on our official website, and that concludes our conference for this quarter. Please have a nice weekend. Thank you.