Okay. Good afternoon and good morning, everyone. Welcome to BizLink's third quarter earnings call, hosted by UBS. I am Ally Chen, covering the industrial sector and market strategy. Before we start the call, I would like to ask for your support in the Extel survey. Please vote for me and UBS at the categories of Taiwan and Industrial. Thank you for your support. Now, let me hand over the call to the management, Mike.
Thank you, Ally, and also thank you to UBS. Good afternoon, everyone, and welcome to BizLink's third quarter 2026 earnings conference call. Thank you for joining us today. Our financial results and accompanying presentation materials are available on our investor relations website. Again, I know probably some of you guys do use Outlook, so if you have not been able to receive those materials, they are also on our IR website. Please do feel free to go to there to get the materials as well. Today's call will begin with Charles, who will review our financial performance and business development. Florian will then discuss our operational progress and expanding capabilities, followed by Felix, who will share his perspective on our strategic positioning and Outlook. We will then proceed to the question and answer session.
As in the previous calls that we've done, please feel free to enter your questions into either the public or the private chat. Before we begin, please note that today's discussion may contain forward-looking statements based on current expectations and assumptions. Actual results may differ materially due to various risks and uncertainties. Please refer to the safe harbor notice in our news materials for further information. Finally, we'd like to thank again UBS, Ally, thank you, for hosting our results call once again. With that, I'll turn the call over to Charles.
Okay. Thank you, Mike, and good afternoon, everyone. Before reviewing our third quarter financial performance, I want to put it into the context of BizLink's continuing development and the increasingly sophisticated business that we're building. Maybe just let me set a frame.
BizLink's third quarter results reflect continued progress in expanding our business and strengthening our operating performance. Over the past several years, we have broadened our customer relationship, enhanced our engineering and manufacturing capabilities, and increased our participation in some of the world's most demanding technology markets. Our latest results demonstrate how this effort are translating into greater scale and improving profitability. Our third quarter results demonstrate continued improvement in profitability. Gross margin expanded while disciplined expense management brought our OpEx ratio to a record low. Together, this improvement lifted operating margin to a new high.
As we expand our revenue base, we're generating greater efficiency across manufacturing, engineering, and administrative functions, supporting larger and more sophisticated customer programs without a proportional increase in operating expenses. This is particularly meaningful because our growth increasingly comes from products requiring greater engineering depth, faster response time, tighter manufacturing tolerance, and more demanding qualifications. Below the operating line, we continue to pursue initiatives to improve our effective tax rate and strengthen the conversion of sales into net profit.
The important takeaway is that BizLink is not simply becoming larger. We're becoming more productive with an operating model increasingly capable of supporting growth while delivering stronger profitability. Turning to our business, HPC continues to benefit from sustained investment in AI infrastructure.
For the first nine months of 2026, HPC power connectivity grew 97% year-on-year, while data connectivity grew 49% year-on-year, contributing to overall HPC growth of 77% year-on-year. Power has been a particularly strong contributor as customers address the increasing electrical requirement of more powerful computing systems. In data connectivity, we have continued supporting successive technology generations across copper and optics, with product transition creating both opportunity and operating challenges. Our capital equipment business has also delivered exceptional performance. Since the 2023 base year, BizLink's SPE business has substantially outgrown the broader wafer fabrication equipment market. This outperformance continued during the first nine months of 2026, when SPE revenue grew 48% year-on-year.
Our growth reflects expanding customer participation, increasing content within equipment platforms, and greater manufacturing responsibility as SPE becomes more sophisticated in areas like deposition and etching, and in lithography and inspection to a lesser extent. Across our other businesses, market conditions remain mixed, but we continue seeing progress in factory automation, specialized engineering application, and market benefiting from electrification and infrastructure modernization. This business provides important diversification while contributing engineering expertise and customer relationship across the group. On a first nine-month basis, FA sales are up 18% year-on-year. Healthcare is up 7% year-on-year. Energy is up 13% year-on-year, and EVs up 21% year-on-year. I would now like to put our recent performance into a long-term perspective.
Looking back at BizLink's development since the first quarter of 2012, we have passed several important monthly revenue milestones, progressing from $50 million to $100 million, and subsequently to $200 million. We have doubled our monthly revenue in progressively less time, even as our scale has grown.
What makes this particularly noteworthy is that our customers' requirements have become substantially more demanding along the way. We're not simply manufacturing greater quantity of the same products. We're supporting higher bandwidth, greater electrical power, tighter manufacturing tolerance, and increasingly sophisticated assemblies. As we work toward our next stage of growth, the focus remains on building the capacity, the capability, and operating platform required to support a substantially larger business. In other words, BizLink has been scaling faster while solving harder problems. This reflects the evolution of our operating platform.
Greater scale provides additional engineering resources, broader manufacturing capabilities, stronger purchasing leverage, and deeper customer relationship. These strengths allow us to address opportunity that would have been difficult to pursue at an earlier stage of our development. At the same time, managing successive technology generation requires considerable discipline. New product must be qualified and brought into production while existing program continue to operate.
Our progress in HPC power and data connectivity demonstrate our ability to execute through these transitions, while SPE performance reflect our increasing ability to support more complex manufacturing requirements. Interplex contributed only seven days of revenue to our third quarter consolidated results, while October representing its first full month of consolidation. Its initial operating momentum has exceeded our expectation at the time of the acquisition.
This is consistent with the broader strengths that we have observed among comparable precision mechanical supplier, with year-to-date revenue growth approaching a doubling. Importantly, this momentum reflects the strengths of Interplex's existing business. Looking ahead, we see additional opportunity to build on this foundation by combining our complementary engineering capabilities, customer relationship, and manufacturing expertise. We expect this opportunity to develop progressively as our team work more closely together.
Felix will discuss the strategic implication in greater detail. Our objective throughout this expansion has been to build productive scale while maintaining financial discipline. High revenue alone is insufficient. We must continue improving manufacturing efficiency, resource utilization, operating discipline, and the return generated by our investment while maximizing our flexibility to adapt to changes and to maintain confidence of our supply chain partners. The profitability improvement achieved this quarter demonstrate that this effort are delivering results.
As our opportunity expand, capital allocation become increasingly important. Different business require different form of investment. In HPC, much of our focus is on new product development, qualification, manufacturing readiness for successive technology generations. In capital equipment, investment is more heavily oriented toward expanding manufacturing capability and supporting customers' growing production requirement. We evaluate this investment against customer demand, execution requirement, and expected returns, while maintaining strict discipline over working capital and operating expenses to protect cash and flexibility.
Following our recent capital raising and the Interplex acquisition, we remain focused on prudent balance sheet management and converting our investment into stronger earnings and cash generation over time. As we approach 2027, our business is entering its next stage of development with a larger revenue base, broader capability to address customers' rising demand, and stronger operating leverage.
We recognize that technology transition and customer deployment schedule can create quarterly variability, but the progress we have achieved provide a stronger financial foundation for the opportunity ahead. Ultimately, our objective is not scale at any cost. It is productive scale that supports sustainable earnings, cash generations, and attractive return on capital. With that, I will turn the call over to Florian.
Thank you, Charles. Charles has discussed the financial progress we are making as BizLink continues to expand. I would like to focus on the operational capabilities supporting that progress and how we are preparing our organization to address increasingly demanding customer requirements. Across our business, we see a common development.
Customers increasingly expect suppliers to do more than deliver individual components only. They require engineering support, manufacturing readiness, supply chain flexibility, and the ability to take responsibility for increasingly complex assembly and even subsystems. This is particularly evident in HPC and SPE, where product complexity, manufacturing precision, and deployment requirements continue to increase. A successful technology demonstration is only the beginning. Turning that technology into a reliable commercial product requires qualification, process development, production readiness, and very important, consistent execution. Innovation creates opportunities. Industrialization turns them into businesses.
We have strengthened our organization around dedicated industry specialists and engineering teams that understands the needs of their respective markets. At the same time, we have been improving knowledge transfer across our manufacturing network and building our intellectual property, allowing proven processes and capabilities developed for one customer or application to support opportunities elsewhere.
Sales, operations, and finance and accounting excellence initiatives, manufacturing automation, and greater use of digital tools like RPA are helping us to improve productivity as the business expands. Process automation also allows us to support rising administrative complexity without a proportional increase in headcount. These capabilities are particularly valuable as customer programs become larger, product generations change more quickly, and manufacturing requirements become more complex. HPC provides a clear example of how these capability translate into commercial execution. As computing performance rises, the surrounding physical infrastructure becomes more demanding.
Power must deliver and cool higher electrical loads, copper must support greater bandwidth and signal integrity, and optics require increasingly precise manufacturing processes and integration. Our power business has benefited from successful transitions towards more demanding product generations. These programs require close collaboration with customers and careful coordination across engineering, qualification, procurement, and manufacturing. Our ability to prepare for new requirements sooner while supporting existing production has been an important contributor to our growth.
In data, copper remains an important part of the infrastructure ecosystem, particularly where electrical interconnects offer attractive performance, cost, and deployment characteristics. At the same time, we are expanding our participation in optical connectivity as customers address increasingly demanding bandwidth and connectivity requirements. Different technologies will continue serving different applications, making engineering flexibility an important competitive advantage. Our optical business has made meaningful progress in both technology development and commercial execution.
During 2026, we demonstrated optical shuffle solution at OFC, a CPO switch tray solution at COMPUTEX, and a 12.8T XPO transceiver at OCP. These illustrate our growing capabilities in precision optical assembly, packaging, and also integration. We are advancing next-generation optical scale-up interconnects, including the development of micro-VCSEL-based technologies. These efforts build on our capabilities in precision optical assemblies and manufacturing, position us to address increasingly demanding connectivity requirements as HPC evolves.
Our progress in optics is translating into tangible operation results. Since January, XFS has more than doubled its monthly revenue run rate while improving profitability also, demonstrating the benefits of scaling an increasingly sophisticated optical interconnect business. This provides a vital foundation as we expand our participation in next-generation optical infrastructure. We continue developing relevant technology while supporting the optical connectivity requirements that exist today already.
The industry will likely adopt multiple architectures, each with different requirements for bandwidth, reach, power consumption, and packaging. Our manufacturing and integration capabilities allow us to participate in this evolution without depending on a single technological solution. Our demonstrations at COMPUTEX and later at OCP also highlighted how we are preparing for the transition toward fully liquid-cooled AI rack environments.
We showcased an expanding portfolio spanning high-current power distribution, liquid cooling solutions such as cold plates, manifolds, and liquid cooling interconnects, as well as monitoring and leak detection capabilities. Together with our established electrical and data connectivity expertise, these developments strengthen our ability to support increasingly complex AI rack architectures and expand our content opportunities. In capital equipment, we are seeing a similar progression towards greater manufacturing responsibility. Semiconductor production equipment OEMs are addressing increasingly complex processes while expanding production.
They need partners capable of supporting increasingly sophisticated assemblies, subsystem manufacturing, testing, and integration, allowing them to concentrate more resources on their core technologies. We have been strengthening the engineering, manufacturing, quality, and supply chain capabilities required to support this broader scope of work. Our expanding participation demonstrates the value of these capabilities, while the experience gained from increasingly complex programs strengthen our ability to support future opportunities.
Beyond HPC and capital equipment, our industrial business continued demonstrating the breadth and adaptability of our engineering platform. We have seen improving activity in FA, while our specialized cable assembly and integration capabilities support application across robotics, aerospace, marine, medical technology, semiconductor metrology, power transformation, energy storage, and transportation. Some of these markets are established contributors, while others remain in early qualification or commercial development.
Together, they demonstrate how expertise developed for one industry can support opportunities in another industry, while our continued focus on productivity and operating efficiency strengthens the competitiveness of these businesses. This brings me to an important aspect of our operating model, our engineering and manufacturing toolbox.
Over the years, BizLink has developed a broad collection of capabilities across cables, connectors, precision assemblies, electrical power, optical connectivity, specialized manufacturing, and subsystem assembly. Each capability has value individually, but the greater the opportunity comes from combining them according to the requirements of a particular customer or application. We do not approach every customer with the same product or solution. Instead, we draw from the capabilities available across the group, bringing together the right engineering expertise, manufacturing processes, and resources to address the problem at hand.
As our toolbox becomes more comprehensive, we can solve more demanding problems and deepen our participation in customer programs that would previously have been beyond our scope. Our operational priorities are clear. Strengthen engineering competence, shorten time to market, improve production ramp-up speed, expand automation, strengthen our procurement leverage, and maintain manufacturing flexibility across regions. As customer requirements become more complex, manufacturing readiness and execution speed will become increasingly key in supplier selection.
We are strengthening collaboration across our businesses and manufacturing network while retaining the specialized expertise that individual industry requires. Interplex adds another important set of capabilities to our toolbox. Its experience in precision mechanical engineering, chassis, enclosures, and subsystem integration complements our existing electrical and optical connectivity capabilities. These combinations can support more sophisticated customer requirements, particularly where mechanical structures, power distribution, connectivity, and cooling must be considered together.
Our objective is to extend these capabilities systematically across customer programs and applications. We have already demonstrated that we can support increasing technological complexity while improving operational execution. The next stage is to apply that experience more broadly, allowing our organization to support larger program, faster ramps, and greater manufacturing responsibility. With that, I will turn the call over to Felix.
All right. Thank you, Florian. Charles has demonstrated how our increasing scale is translating into stronger financial performance, while Florian has explained the engineering and manufacturing capabilities behind that progress. I would like to discuss what these developments mean for BizLink's strategic positioning and the next stage of our growth.
We increasingly view HPC as a long-duration investment cycle rather than a single technology generation. Computing platforms are advancing rapidly, creating increasingly demanding requirements for power delivery, data connectivities, mechanical structure, cooling, and system integration. These elements are becoming more closely interconnected, creating opportunities well beyond the compute devices themselves. At the same time, infrastructure investments will not progress in a straight line. Constraints in power availabilities, networking, facilities, equipment supply, and system integrations can affect deployment schedules. Technology architectures will also continue evolving as customers optimize performance, cost, reliability, and deployment efficiency.
The underlying demand for computing infrastructure remains compelling, but the timing and composition of investment will change along the way with the potential of spec upgrades within the same platform. This distinction is important because it reinforces the value of maintaining a broad set of relevant capabilities rather than depending on single technology or product generations. We see a similar long-term opportunity in SPE, that's semiconductor production equipment.
Our customers are preparing for increasingly complex manufacturing process, with many maintaining strong investment expectations extending toward 2030 and beyond. Our substantial outperformance of the broader equipment market over the past few years demonstrates how greater manufacturing responsibilities and deeper customer participation can create opportunities beyond underlying industry's growth. Our strategy is built around participating in technical change rather than predicting a single winning architecture. Different computing platforms will co-exist, including GPUs and ASICs.
Copper and optical connectivities will continue serving different requirements, while power architectures evolve according to system design and customer preference. We want to remain platform agnostic, but not technology indifferent. We actively participate in technology development, collaborate with customers and industry partners, and invest selectively in capabilities that can remain relevant across successive generations. We do not need to predict every winning architecture. We need to remain relevant across them.
Interplex Datacom represents an important step in this strategy and in our evolution toward higher value AI rack infrastructure solutions. By combining its precision mechanical engineering, enclosure, and subsystem assembly capabilities with our established electrical and optical connectivity portfolio, we are expanding both our addressable market and our ability to deliver more comprehensive solutions. As AI rack architectures become more sophisticated, power delivery, connectivity, mechanical structures, cooling infrastructures, and subsystem integrations must increasingly be considered together.
Our combined capabilities position us to address a broader portion of these requirements and engage with customers at a more comprehensive level. We believe this combination can establish a differentiated competitive position, enabling us to compete more effectively in increasingly sophisticated rack architectures and while creating opportunities for greater content per system.
Our ambition is not simply to participate in a larger market, but to become a stronger, more capable supplier of high-value HPC solutions. We will focus on differentiated components, assemblies, and selected subsystems that complement our customers' activities, deepening our relevance as their infrastructure requirements evolve. The strategic relevance of Interplex also extends beyond the AI data center. Precision mechanical engineering and subsystem integrations can complement our existing capabilities in SPE, semiconductor production equipment, and other specialized industrial applications.
We will pursue these opportunities progressively, building on established customer relationships and demonstrating the value of our combined engineering capabilities. Our SPE business provides another example of this approach. By expanding manufacturing capabilities and taking on more sophisticated assemblies and subsystems, we have raised our relevance within customer programs. This requires sustained investment in manufacturing readiness, quality system, capability, capacity, and regional support. But it also creates opportunities for deeper and more durable customer relationship.
In fact, our customers have become increasingly collaborative in helping us scale our capabilities and capacity to better support their own growth. As our involvement moves earlier into customer development programs and extends across more critical functions, we believe our competitive position becomes increasingly defined by engineering collaboration, qualification experience, and execution capabilities, rather than just price alone. Our acquisition track record also demonstrates our ability to successfully integrate and scale specialized business.
Since joining BizLink, quarterly revenue at SPE has quadrupled, while eaSys has nearly doubled. These achievements demonstrate how our broader customer relationship, manufacturing resources, and operational capabilities can help acquired business reach a substantially greater scale. Across our businesses, our objective is to deepen customer engagement by bringing together the breadth of capabilities available across BizLink. Rather than simply increasing the number of products we offer, we want to solve more complex problems, participate earlier in product development, and increase our value within customer programs.
As Florian discussed, our expanding engineering and manufacturing toolbox allow us to address requirements beyond individual components. A customer may initially engage us for a cable or connector, but the underlying application may also require precision mechanical structures, power distribution, optical connectivities, or specialized assemblies.
By understanding these requirements together, we can improve manufacturability, assume a broader scope of work, and extend our capabilities into adjacent applications and industries. This also reinforces collaboration across our business groups, business units, and regional operations. As we look toward 2027 and beyond, capability building will remain a central strategic priority. In HPC, we will continue developing next-generation copper and fiber solutions, together with more sophisticated power and connectivity products. In capital equipment, we will expand manufacturing capabilities and support customers' growing production requirements.
Across the group, we will strengthen box build and advanced assembly capabilities that can support opportunities in multiple industries. We will retain the industry specialization and accountabilities of our business group and business unit structure while enhancing regional collaborations. As our customers expand into new applications and geographies, the abilities to combine expertise and manufacturing resources across the organization will become increasingly valuable.
We also remain focused on the financial returns generated by these investments. Growth alone does not create lasting shareholder value. We must translate increasing scale and technical depth into stronger profitability, efficient capital utilization, and sustainable cash generation. As illustrated by our historical capital returns, we have made meaningful progress in strengthening the productivity of BizLink while expanding into more sophisticated technologies and applications. Maintaining this discipline will be particularly important as we invest for the next stage of growth.
Looking ahead, we remain optimistic about the structural opportunities across HPC, SPE, and our broader portfolio. At the same time, we recognize that technology transitions, customer development schedules, and capacity constraints will create considerable dynamics along the way. Our confidence comes from the capabilities we have developed, the customer relationships we have established, and the operating progress we have demonstrated, not from assuming that every market will grow without interruptions.
Over the past 30 years since our founding, BizLink has become substantially larger. More importantly, we have become a more capable company. We are supporting increasingly complex products, participating in broader customer programs, and combining expertise across technologies and industries. Our third quarter results provide further evidence that this transformation is delivering tangible benefits. We are generating stronger operating leverage, expanding our participation in important growth market, and building capabilities that can support the next stage of our development.
Our ambition is not simply to grow with the markets we serve. It is to become increasingly capable of solving the problems that determine how those market develop. This is how we intend to continue scaling faster while solving harder problems. Thank you for your continued interest and long-term support. I will now turn the call back to Mike.
Thank you, Charles, Florian, and Felix. This concludes our prepared statement section. Now let us begin the Q&A section. As I said in the opening, please type in your questions. I see there's a couple in the queue. We will answer as many of them as possible in the remaining time. I want to remind everyone that there will be no forward-looking quantitative comments. Actually, there's quite a few questions around Interplex, given that it's our latest deal and it was quite sizable, and of course, it will become increasingly meaningful for us as well. There are financial and looking at some strategic topics. For this one, I'd like to hand it over to two speakers, starting off with Charles, and then handing it over to Felix.
All right, thank you. Then maybe let me talk a little bit about the numbers and how we look at them. If we really look at the initial performance, I think we discussed how we expected the Interplex now to contribute, not just right when we announced the acquisition. As I mentioned in the prepared remarks that Interplex only contributed seven days of revenue in our third quarter 2026 results, so it's basically invisible in this release. But we already announced our October sales more than one week ago, and I believe everybody noticed there's a big jump. Why? Because October actually represent the first full month of consolidation of Interplex result into the overall business result. I think everybody would notice that its momentum actually is quite visible. To us, I think it exceeded our expectation at the time of acquisition.
So maybe just let me give you a quick peek. That is just a one-time release for your model building purposes. If we look at October revenue, actually there is $67 million that is coming from Interplex alone. Just for your attention that actually we only provide this as a one-time reference and to help you establish the model baseline. That means that actually this is not going to be part of our regular revenue disclosures. I think that Interplex performance from here now is going to be reflected in our overall consolidated result. That also, if we look at that, we also look at comparable precision mechanical suppliers. I think they all show exceptionally strong growth. Some may even approaching double year-to-date. Also in Q3, I think P&L only includes seven days, but the balance sheet already include their asset and liabilities.
All this acquisition-related amortization and margin implication that would be addressed as our accounting is finalized. That would be the number part. I will also hand over to Felix for discussion on strategic thoughts.
Yeah. I think everybody know that the evolving speed of AI technology is super fast. Right now, for each CSP, they may have different requirements and also spec where they want to do things differently. For each CSP or each ODM to come up to take care of their every components by themself or to develop a whole system by themself, it would take a lot of their resources, and also probably some of them will not be able to do that. We are adding Interplex into BizLink's portfolio enable us to evolve more in the and also help more our customers in developing their next generation products. Just consider if one system, let us put it simply, if you have 10 components.
Before, if you expect a CSP or ODM to take care of every components by themself or to check whether the components have certain design problem, it will probably take them 10 engineers. However, if we are able to add that to our portfolio, able to come up with the system, subsystems, and for them, so that they just need to see what we co-develop, and they tell us what the spec they need, then it is easier for them, and for us, it is also easier because for us, it is our in-house capability. I think that is the main benefits. Again, it is not only about AI data center, but also we see that in SPE, semiconductor production equipment, and even medical industry. We see more and more of that.
I think adding Interplex into BizLink portfolio is very important and gives us quite a lot of advantage compared to other players.
Thank you, Charles, Felix, for the feedback. Again, Interplex is quite meaningful for us, as you can see quite a bit of the content that we have shared so far is relevant to what we think and what we see ourself going forward to. Second, in terms of optics, we continue to see a lot of questions on optics. Of course, we have been quite public in some of our displays, and we just mentioned a couple of products. The questions we have seen are going to be more sort of operational, and again, more strategic in nature. For this, I would like to hand over to Florian as well as for Felix as well.
All right. Thanks, Mike. Looking at XFS, I think I already told or said that in our remarks that XFS has more than doubled its monthly revenue run rate since the beginning of the year, and at the same time was also improving the profitability. I think this is clearly showing the market sentiment and also how it is evolving in the last couple of months. This demonstrates the progress in scaling this existing business. However, please be reminded that this is no forward-looking statement, and this is also always depending on the market absorption of changing towards the optics business, and there is still ongoing discussions also from technology side when the technology is ready.
If we are talking about our differentiation between the XFS and competitors, I think the strength of XFS, and it was also the reason why we acquired them, is the precision optical assembly, the connectorization on one side, but on the other side, the process of manufacturing and the ability to scale it up very quickly, alongside with packaging expertise for higher data density, but also manufacturing execution. These are the main differentiators, I think, and technologies, capabilities, what was the reason that we acquired the XFS. It turns out that this is really something where we can build up our also strategy for the future. Because density and also the complexity from customer side is increasing, and therefore, these capabilities are gaining importance.
You can see that when you look at the OFC, where we displayed our optical shuffle, or COMPUTEX, the CPO switch tray solution which we showed there, or also on the OCP lately, the 12.8T XPO. This is illustrating the technical progress. However, the technological development in the market is at the moment not very clear. Different technologies are there, and we will see also in the future probably different technology have their market space. But also, with our next generation, we will also include micro-VCSEL-based approaches. Also, because the technology variety is so big, we will also go into technical partnerships with external partners to make sure that we are getting also our market share in optics also in the future. That's roughly the answers I can give you, but let's hand over to Felix, please.
Yeah. So as in our earlier remarks, the copper and optics will coexist for a while, and we are not talking about, say, well, one system definitely only copper, the other system only fiber. For us, a complete, let's say, data center, you probably will see more copper within the rack, but you see more fibers outside the rack. I mean, for the longer distance, the data transmissions, of course, for power, still a lot of coppers. So, I think, with the capability, we're talking about capability building as well. I mean, again, so it's like for us to involve in the whole, let's say, data center and the HPC involvement, we need to be equipped with the capabilities of both copper and fiber. So, XFS, their strength is they produce high-quality fiber patch cords and connectors.
I mean, of course, we see some of the fiber assembly, if it's not for high-speed data transmission, it doesn't have to be so high grade, right? So, I mean, probably lower grade will be enough. However, for data center, we do need very high-grade optical cable, optical assemblies. So XFS, actually, they are contributing on this one with their quality, with their experiences, and expertise to produce high-quality assembly, optical assembly consistently. That's the value of adding XFS, and that complete the puzzle we have in the high-speed AI data center.
So Florian, Felix, thanks for providing the color on our optics business, and of course, XFS is sort of our way, at least initially, to sort of address what we're seeing. Of course, still a lot of possibility going forward as we hinted at in the remarks as well. For the next one, a big part, and because sort of the, that's something that we would like to touch on, is the power side within HPC. Again, this is going to be for Florian and Felix. Florian, if you will, please.
Yes. All right. Thanks. I mean, the rising compute density is driving the high current power connectivity, and you have seen that we have grown almost 100% in the power area. This also shows that our foundation and our technology we have here is very competitive. This is also leading to this high current power connectivity is leading to more demanding rack-level distribution. There are the other products coming in there. Our product development supports not only the current deployments, but also we are preparing currently for the next generation and the subsequent architecture. As we also pointed out in our remarks, this is only possible if we have a close collaboration with our customers and make a co-development of these technologies together with our customers. In our view, LVDC and high voltage direct current adoption will depend on customer systems design.
This is different from customer to customer, so this is also adding complexity. This will also depend on qualifications, but also infrastructure readiness once the data centers are built, and this will then determine also the rollout schedules. In our view, the transition to these new architectures is unlikely to be uniform across the customers. It's very different. Also, depending on the specific situation, the customers are also, for example, with the power readiness and so on. Again, when we are discussing shipment timing or individual deployments, or qualification changes and so on, we cannot disclose those customer details. However, this is also a very dynamic situation, where we as a company have to react very flexible and support the customer from the actual needs they have, and this is what we do and what our teams do out in the field.
That's from my side, but over to you, Felix.
Yeah. For power solutions, we are not just talking about a power cable. We're talking about multiple components from busbars to power whips to connectors to busways to a lot of things. For us to develop, to match our capability for next generation, when we develop the next generation power solutions, actually, we are talking about multiple capabilities and able to serve more than just AI data centers, but also for others as well. I think when we develop something, it's definitely not just for a single generation product. It's not only for one particular application. With our footprints in multiple industries, and as I said, I mean, we are in the, especially right now, we talk about AI data centers, but also we talk about SPE, the other applications.
The products, the technology we have will be able to serve this market, and that actually provide more opportunities than simply just AI data center. With our development speed, I think that will serve our growth very well.
Florian. Felix, once again, thank you. This touches the power side of business, and I see we have room for maybe just one more question. Now, we would like to keep this a little bit of a bigger picture. In particular, this is quite an involved question. What are the principal drivers and uncertainties for 2027 growth and profitability following our strong results that we just announced? For this one, I would like to hand it over to Roger. Bigger picture of Charles' financial, Felix strategy. Roger?
Okay. Thanks, Mike. I think, yeah, we still think the major driver for our 2027 would be mainly from the HPC, especially on the AI-related business. Of course, we also see very strong demand for the SPE semiconductor production equipment. We also see very balanced or also good demand from the other market segment. Okay. We think we are still very optimistic about 2027. Okay. Of course, regarding the uncertainty, as we all know, in the past few days, there are many developments, especially in the major AI player. The good thing is that we actually work with many players in the AI industry. Of course, we will watch very carefully, but we also see many other opportunities still coming in the pipeline.
We think, of course, we believe the revenue growth will be there, and how to make sure that we maintain the same, the good performance here in Q3 is that we have seen many opportunities in the pipeline. Because I see that online there is some concern about the material price rise and the component shortage. I think one question for us is that we will continue working on a new project, which will bring the higher margin. Okay? Of course, we work with our suppliers because for the interconnect solution here, we really do not see too much shortage in our material. Of course, we see the rising price and our supply chains working very hard to overcome the challenge. Okay. Our priority is to strengthen our competitiveness and create substantial shareholder value rather than just pursue the short-term growth at any cost. Okay?
Okay. Maybe I will talk a little bit about the margin. I think the third quarter profitability, actually the profile, also still reflect our gross margin improvement and also discipline spending. That is also something that we continue to work on through our manufacturing and sales and all kind of excellence initiative that we keep working inside while that supply chain remain volatile through the recent development. But one thing that is pretty sure that our financial priority is to maintain a productive scale. We continue to support many complex customer programs without proportional rise in operating expenses. But that doesn't mean that we don't invest. Why? Because that is continue to push our capability to service customers in engineering, in technology, in all kind of capability to build our toolbox is still quite important to build our long-term value, our long-term value creation.
One thing is that we will continue to preserve investment discipline and monitor our working capital. That would be something that we continue to protect our margin, protect our profitability. Maybe I will hand over to Felix.
Yeah. Growth opportunities, of course, we talk about HPC power, successive copper and optical generations, SPE customer programs, and Interplex, the first full year in the group. These are distinctive drivers with different ramp characteristics. However, capability investments also differ by business. HPC emphasize new product development and qualifications, and SPE, again, semiconductor production equipment, emphasize on manufacturing capabilities and also support for customers' production expansion. The outlook remains constructive, but not without risk. Components supply, product transitioning, qualification, deployment schedules, capacity realizations, and customer timing, all will be factors. Okay. Again, we are talking about the results.
Again, Roger, Charles, Felix, thanks for the input on that one. I see time is up. Again, thanks to the management team. This concludes our Q&A section. Replay of this conference call will be available on our IR website within 24 hours. Again, I do realize there is an outage issue, and that is why we do have a website for everyone to go check out. If you have any further questions, please feel free to reach out to BizLink IR team. We thank you very much for joining today's call. You may now disconnect.