Tianfu Communication continues to expand capacity: how have Sinomach Precision Industry and CTI improved their operations?

Tianfu Communication’s capacity expansion: what already has a foundation, and what remains at the sample stage?

Tianfu Communication said there had been no significant change in the CPO/NPO production ramp-up schedule it had recently observed. Products supporting CPO, including FAU and ELS, already have a solid foundation in performance, yield and delivery and will continue to ramp up in line with customer demand. NPO-related products remain at the sample stage, making the business progress of the two approaches markedly different.
Demand for passive devices continues to grow rapidly, and capacity expansion covers both pluggable optical modules and CPO/NPO. The business strategy balances growth in existing products with the introduction of new technologies, rather than relying on a single technology approach.
The company is optimistic about CPO/NPO because, as per-channel transmission rates increase, these solutions offer certain advantages in power consumption, bandwidth density and system integration efficiency. Translating those technical advantages into business growth still depends on customer demand, product adoption and volume ramp-up.

Supply of key bottleneck materials for Tianfu Communication’s active optical devices began to improve from the end of the second quarter compared with the first half of the year. Once materials arrive, they must still go through production and delivery cycles. The company expects the positive effects to emerge gradually in the third and fourth quarters, so there is a time lag between improved supply and the benefit to results.
On global delivery, the company said that relevant import and export policies announced at the time did not restrict optical device products. Its mass-production base in Thailand can meet customers’ needs to expand capacity at multiple sites globally, providing capacity support for cross-regional delivery.

Sinomach Precision Industry’s bearing business was affected by cyclical changes in the wind power industry in the first half of the year, and its revenue decline has continued to narrow since the second quarter. The improvement means the rate of decline has eased; it cannot yet be described as a return to revenue growth.
The company regards aerospace special bearings as a foundation of profitability. Its products cover key components throughout satellite and launch vehicle systems and supported the validation of the launch and recovery mission of the reusable Zhuque Three Yao Two launch vehicle. The company said the shift toward regular, high-frequency launches in commercial aerospace is gradually creating incremental business; it will also advance the development and commercialization of bearings for reusable rockets.

Both. The pharmaceutical and medical segment grew rapidly in the first three quarters. New contracts signed by CRO and the Shanghai quality research platform rose sharply, customer audits increased, and several international customers were brought on board. The medical business proactively scaled back routine testing and shifted toward functional medicine, with profitability continuing to improve.
The chip and semiconductor business places greater emphasis on order quality. Capacity for FA failure analysis and MA material analysis has ramped up, the share of high-end, high-margin business has increased, and operating efficiency has improved, raising gross margin and substantially reducing losses. The company is also proactively giving up low-margin business and prioritizing profitable orders with healthy cash flow.
Growth in consumer product testing also includes a contribution from new capacity: the ramp-up of new-energy vehicle testing capacity has driven growth in revenue and gross profit. Compared with order mix adjustments, this supports operating growth by increasing deliverable capacity.

Most of the businesses acquired to date are performing well, with Openview, Aoshi and Emicert maintaining rapid growth. SafetySA has completed personnel and team integration and is working on management expense optimization and centralized procurement. Its higher-margin chemical testing business has only just begun, and further improvement depends on business expansion and integration results.
Additional contributions also come with transaction conditions: some potential acquisitions have reached an advanced stage and, if successfully completed, are expected to support next year’s growth. Incremental EU export certification business for active medical devices is also contingent on the relevant acquisition being completed.