Everyone, welcome to our first quarter of 2025 result analyst meeting. Now we are going to review and report the financial numbers of Q1. As usual, we are going to walk you through, walk you through the Q1 results. Q1 revenue reached TWD $118.9 billion, representing a 30% year-on-year growth and a 4% quarter-over-quarter increase. This also marks a record high for single-quarter revenue, mainly driven by strong shipments to data centers, including our power and cooling businesses. Gross profit in Q1 was TWD $ 37.8 billion, up 40% year-on-year and 8% quarter-on-quarter.
Thanks to stronger shipments, I mean, to data center segment and the reduced impact from Q4's one-off factors, gross profit margin in Q1 was 31.8% versus 29.5% a year ago and 30.8% in Q4. Q1 OPEX came in at TWD $ 23.8 billion, up 21% year-on-year but down 3% quarter-on-quarter.
Looking ahead, we expect OPEX growth to moderate in the coming quarters. Despite higher OPEX, the OPEX ratio remained stable at 20% in Q1, down from the 21.4% recorded in Q4 2024 and Q1 2024, supported by better economics of scale. R&D expense to sales was 9.3% compared to 9.8% in Q4 and a year ago. SG&A spending to sales was 10.7% compared to 10.6% in Q4 and a year ago. Thanks to the favorable tripping margin and OPEX ratio, our OP margin in Q1 improved to 11.8% from 9.4% in Q4 and 8.1% a year ago.
The operating profit in Q1 increased by 90% over a year ago and 31% over Q4 2024. Quarter-over-quarter, thanks to the robust demand in data center business, we found solid sequential growth in infrastructure segment, while the other three segments showed relatively modest improvement.
Year-on-year, infrastructure saw the strongest revenue growth, followed by power electronics, driven by solid data center demand, while automation also showed steady improvement from a low base. However, mobility continued to struggle due to the market weakness. Earning-wise, sequentially, all segments showed profit rebound from Q4, which was affected by one-off impairment charges on intangible assets and goodwill. Year-over-year, infrastructure returned to profitability, and power electronics expanded substantially, both supported by strong data center demand. Mobility turned to a loss due to a continuous soft market environment, while automation improved substantially from a low base. In terms of Q1, Q1 up also rebounded to TWD 1.6 billion from TWD 900 million loss in Q4, which had been impacted by a goodwill impairment loss. In Q1, we had TWD 15.7 billion profit before test.
Q1 EBITDA was TWD 23 billion, up 54% year-on-year and 35% quarter-on-quarter. Q1 test expense was about TWD 3.6 billion. The net profit after test was about TWD 10.2 billion, up 78% year-on-year and 43% quarter-on-quarter. Q1 EPS was TWD 3.94. Before we get into the Q&A session, I would like to provide some comments, quick comments on our Q1 results. As you can see from the Q1 numbers, our Q1 revenues were strongly supported by our power and infrastructure business, which is mainly driven by the AI data center. As we mentioned in the previous analyst meetings, if you look at the GPU structure, the AI data centers are definitely, I mean, going to require more and more energy.
That is why before we get into this Q&A session, I would like to take a moment to share a global research report written by Economist Impact, part of the Economist Group and supported by Delta. This study surveyed 608 senior executives across the world. 41% of respondents are C-level executives or board members, and nearly three quarters are from companies with annual revenues exceeding $500 million. According to a survey by The Economist, nearly 40% of AI vendors are most concerned not about performance, but about the stability of the power grid. No matter how fast AI gets, it can outrun an unstable energy system. In terms of the, I mean, the, I mean, first, the importance of AI is rising, I mean, significantly.
If we look at the challenges, I mean, for the sustainable AI, I think when asked about the barriers to achieving sustainable AI, 38% of respondents highlighted the need for a stable electricity supply or a more resilient power grid. In addition, 32% pointed to the importance of collaboration and data sharing, while 33% emphasized technological and process innovation. In response to these challenges, Delta has developed relevant solutions. Let me just introduce them briefly. Basically, Delta offers microgrid technology integrated with smart energy management. This helps reduce the burden on existing power grids, minimizes transmission losses, improves resilience, and lowers the risk of blackouts, which is especially critical for supporting AI services. Considering the AI data centers, they are all highly power-hungry. Besides power stability, energy efficiency is also becoming increasingly important.
That's the reason why we believe the solution of microgrids is going to play a crucial part in the future power distribution system, especially considering the unstable nature of renewable energies. Also considering the time you need, I mean, to construct a power plant and the time you need to construct an AI data center. For the former one, it actually takes more than four to five years, but for constructing AI data centers, it may only take two years. That's why it's really important that we figure out a way to help provide more stable power supply in response to increasing AI demand. If you look at this slide, today, 44% of executives already recognize AI energy efficiency as important. This figure is expected to rise sharply, I mean, to 78% within the next 12 months.
Moreover, 42% of AI supply chain companies are prioritizing edge computing as a key strategy to enhance energy efficiency. What really matters to us is not just only the cloud, the cloud AI, because considering, I mean, the data, the cybersecurities, more important is actually the edge AI for us. That is why edge computing, or let's say the edge AI, is going to, I mean, is going to become a key strategy for the corporates like us to enhance our AI capabilities. As AI computing demands, I mean, continue to grow. Let's discuss how Delta is addressing the associated power and cooling challenges. With AI servers requiring significantly higher power, Delta provides end-to-end optimized power solutions from the grid to the chip. We also offer highly efficient liquid cooling technology to effectively manage the increasing heat load and improve overall system efficiency.
As you may probably know, the power deliveries or the power supply system within data centers are highly complicated. I mean, the more power consumptions, the higher energy loss during those processes. That is the reason why Delta has been addressing those issues by improving our energy efficiency during the power conversions. In terms of the challenges and our data center, Delta's data center solutions, there are several key challenges. First of all, existing data centers often have limited space and infrastructure. Organizations require fast and easy deployment solutions. IT teams also frequently lack sufficient experience with AI-specific setups. We address these issues with containerized AI data centers, offering rapid deployment, integrated power, and thermal management with low latency. Also with high data confidentiality.
Looking ahead, like 69% of executives expect AI sustainability to become a more important priority for their organizations within the next year. 64% anticipate that their companies will release formal AI sustainability policies. Meanwhile, 96% of AI users expect their suppliers to set clear sustainability goals within the next 12 months. In February, the AI Action Summit was held in Paris, co-hosted by France and India, focusing on the economic opportunities enabled by AI. At this summit, the Alliance for Sustainable AI was officially launched, involving 47 technology companies, 40 countries, and organizations such as the International Energy Agency and the United Nations Development Programme . Delta is honored to be the first Taiwanese company to join this important global initiative. Yeah, we are proud to share that Delta has become the first Taiwanese company to join this, I mean, Alliance for Sustainable AI.
This highlights our strong commitments to driving both technological innovation and environmental sustainability on the global stage. Okay, that's a quick overview of the research we wanted to share today. Now let's get into the Q&A session today. I have a few questions. First of all, could you please comment on your views on the ongoing demand for AI, for the AI-related businesses in the coming quarters? I think in terms of the guidance for Q2, considering there are so many uncertainties given the current tariff policy environment. With this 10% basic tariff and also the 90 days the United States government gave other countries, we believe that the Q2 revenues may grow seasonally compared to Q1.
For Q4 and for Q3 and for Q4, because there are still way too many uncertainties. I think it might be a bit early to provide a definitive view at this point. I think I would like to maybe add some points on top of the CEO's comment. Once, I mean, speaking of the uncertainties, I think the uncertainties is not just around how much tariff the U.S., I mean, government is going to apply to other countries. It's also about whether the U.S., I mean, government really wants to maybe shift the entire supply chain back to the U.S. Those uncertainties actually make the corporates very difficult to stimulate a fixed plan for now. It's not just, I mean, in other countries, I mean, outside of the U.S. I think there are also many debates and discussions in the U.S. communities.
It actually takes, it actually is going to take time to see how this whole thing is going to play out. In my personal opinion, I think this whole thing is not going to be very clear until the early summer, until this early summer. That is why, as I mentioned, I mean, as a corporate, we do have to, I mean, act in response to the very changing, I mean, tariff environment. However, I do not think it is a good idea if we just, I mean, bet on one side. What if we bet on the right side? That is why I think you really need to take some time to see how the whole thing is going to play out. Considering the tariff policy, will Delta expand production capacity in the U.S. due to tariffs?
Currently, at this point, we still have 50% of our total capacity, I mean, in China. We also have a pretty large portion in terms of the capacity in Thailand and India. Although we also have, I mean, some production capacity in the US. We are also building three new factories in the US. Our capacity expansion plans have not really changed because of the tariffs. Our primary goal for the US expansion is to be closer to the customers and provide better system solutions and services. Also, I mean, the manufacturing costs in the US are significantly higher than in Asia. That is actually critical for electronics manufacturing. Therefore, system assembly is feasible, but to replicate the component manufacturing from Asia might be extremely difficult.
We don't have a plan to significantly change our production capacity at this point. The next question is, will the tariffs Delta pay be recorded under cost of goods sold or operating expenses? How will payments from customers be treated? Actually, tariffs paid by the company are generally recorded as expenses, similar to the freight costs. Since tariffs are reflected in the product pricing to customers, there is a chance that maybe both the revenues and gross margin can increase a bit, but so do the expenses, which might offset each other. Can I say that, I mean, according to what you said, this tariff is not going to have any significant impact on your GP margin?
I would say it's not going to impact our GP margin significantly because most, I mean, most of our businesses are based on this so-called FOB nature or model. Then we also, I mean, have the ongoing discussions with our customers to discuss whether the customers are going to, I mean, to take the responsibility, I mean, for the increased costs. Currently, I don't think the tariff is going to have a huge impact on our GP margin. The next question is related to your, I mean, legal issues with Vicor. I think as we mentioned or explained in the previous analyst meeting, I think I'm not really in the position to comment on how the counter company or counterparty is going to act, I mean, after the final decision of ITC. Considering, I mean, as the power architecture actually continues to evolve.
As you can see from our results, especially results in Q1, the revenue contributions from our power business, also the cooling business. Yeah, the revenues from those businesses actually continue to increase over the previous quarter. I think that is just where we stand at this point. I'm not in a position to provide any comments on other companies' performance. Given that in Q4, I mean, Q4 of last year, actually, you have booked a bigger part of, I mean, impairment charges on the intangible assets and goodwill. Can you provide any guidance or give us, I mean, any colors on whether you have any plans to do this, I mean, reevaluation this year? In terms of this, I mean, assets evaluation, we actually do this, I mean, asset reevaluations or reassessment on an annual basis every year.
Typically, it's at the end of every year. We wouldn't know, I mean, the future assets value just as of now. We have to wait and see when it's close to, I mean, when the time projects, I mean, to the end of the year. I couldn't be able to provide any comments or guidance at this point. The next question is, has the company's liquid cooling business for data centers been negatively affected by delays? I mean, sorry, by the tariff. How much revenues, as a percentage of the overall revenues, does this liquid cooling business contribute in Q1? This business segment has been our largest growth driver this year, already contributing about 6% of revenue in Q1. So far, it hasn't been significantly impacted by this tariff environment.
My first question is related to the outlook for the EV business this year. Can the EV business maintain profitability this year? The second question is related to your OPEX ratio. As we can see from the Q1 results, Q1 OPEX ratio was 20%. Can we say or can we expect this OPEX ratio is going to be the norm for the coming quarters? Another question is also related to the company's effective tax rate has increased significantly. Is this due to, I mean, Thailand's adoption of the 15% minimum tax? What is the outlook going forward? For this, I mean, effective tax rate question. This year's recognized income tax expense assumes that countries like Thailand and Singapore will have to implement the OECD's minimum 15% tax rate. We have taken a conservative approach without factoring in possible rebates or incentives.
Speaking of the OPEX ratio going forward, I mean, because there are actually two variables, I mean, in terms of the OPEX ratio. For this 20% OPEX ratio in Q1, as we actually expect to see the seasonal increase in our revenues, it is hard to say for sure whether this 20% OPEX rate level is going to be the norm in the coming quarters. In terms of your question related to the EV business outlook, I think for the EV market, it was already quite challenging. With the consumer confidence hit by tariffs, the situation or the market may continue to be soft for a while.
Actually, according to a latest, I mean, survey done by McKinsey recently, which is investigating the consumers in China, Europe, and the U.S. market for their next passenger car, will they consider to get an EV for their, I mean, will they consider to get an EV car for themselves? Actually, in the China market, there is only like 10+% of the consumers saying that for the next car they are going to get, it is not going to be the EVs. The numbers in Europe and in the U.S. are actually higher than 50%, which actually indicates the consumer confidence in the EVs. Given all those, I mean, numbers and factors, and also the current market uncertainty, I think we will need to wait for some time to see the market resume growth.
For the Q2 guidance, could you please give us a rough idea? I mean, are you expecting maybe single-digit increase or a double-digit increase for Q2, a sequential increase for Q2? I think as we repeatedly said, there are still way too many uncertainties in the current environment. It is really hard to provide any definitive comment or guidance at this point. Will the AI-related business, as a percentage of your overall revenues, continue to ramp up this year? As we repeatedly said, given all those uncertainties, we are not really able to provide any guidance at this moment.
Okay, then in terms of, I mean, considering the current tariff environment, are you seeing any customers of Delta have been really actively or aggressively pulling the components or merchandise within these 90 days? I think there are also many variables, I mean, for this question, because for the many products we make, actually the components. Even though we might be able to fulfill the customer's demand and we do want to, I mean, but if other components, I mean, the suppliers of other components, they are not really able to meet the customer's requirements. Those components the customers aggressively pull into their warehouses or their factories will become their inventories. That is actually another concern for the customers. It is really a very highly dynamic process.
One thing I can say here is considering the highly diversified production basis Delta has, and then also the capability of, I mean, very quickly respond to customers' requirements. I think we are really flexible in terms of responding to customers' requirements. This whole tariff thing is not just impacting Delta alone; it's actually impacting every company. Given all those reasons, I think this tariff factor is not going to change the competitive landscape of Delta. It's also, sorry, it's not going to change the competitive position of Delta. We believe that we have the capability to agilely, I mean, fulfill customers' requirements. Considering the geographic, I mean, sorry, geopolitical issues, and then also the highly versatile macro environment, will you consider to establish a second headquarter in other countries? We always have this plan, actually.
We used to actually have another headquarter in Shanghai. I mean, currently we are also planning to have another headquarter, I mean, in Thailand. That is actually part of our risk management plan. We have always been doing so. The next question is related to the CapEx plan. In terms of the CapEx for this year, I think it's just like what we shared in the previous analyst meeting. I think it's going to be maybe over TWD 30 billion unless we are, I mean, unless we have the plans of, I mean, acquiring any new office buildings or to acquire maybe a piece of land. The next question is, has the company seen any pooling orders due to these tariff concerns? Can you share how much of the orders are related to this, I mean, the tariff concerns?
I think it's hard for, I mean, us to, I mean, we can, what we can say is we did see pretty solid demand for the products, especially for our power and infrastructure businesses. But it's really hard to identify which, I mean, which one is related to these tariff concerns or so-called pooling orders. It's hard to provide a percentage. If there are no, I mean, no further questions, we will see you in the next quarter. Thank you for coming. Thank you.