IEI Technology Conference: Demand for Netcom and high-end video is strong, and order visibility is expected to be until 2028

Industrial computer manufacturer IEI (3022) said at the conference today that its Netcom business has been strong this year and has become a major growth engine. The order visibility of several major customers has already reached 2027, and some materials and parts have increased their stocking levels. Among them, a major Israeli information security customer has contributed approximately 1.5 billion yuan in revenue this year. High-end video systems have also entered mass production since the second quarter, and the momentum is expected to continue into 2028.

Li Yaocong, Vice President of Information Security at IEI, said that Netcom has two main growth drivers this year. First, a major Israeli customer completed product generation replacement last year. This customer undergoes a platform update approximately every three years. IEI only supplied the smallest platform from the previous generation. This generation has stepped into the mid-range platform and has become the customer's largest supplier in Taiwan. The annual revenue contribution is approximately double that of last year.

Another growth driver comes from high-end video conferencing systems. Li Yaocong pointed out that related products began to enter mass production in May this year. In the third quarter, production capacity and production adjustments stabilized, and shipments to North American customers were further expanded. Together with Israeli customers, Netcom's operating growth was boosted in the second and third quarters.

Jiang Chongliang said that high-end video products have begun to contribute revenue this year and are high-value-added orders. The order visibility has reached 2028. He recently went to the United States to discuss next-generation products with customers, and the new generation will further introduce AI applications.

In addition to Netcom and high-end video, IEI is also accelerating the layout of physical AI (Physical AI) and locking in humanoid robot controller business opportunities. It has now obtained formal orders from Chinese customers and started small-scale mass production. Another Swiss customer has obtained a sample order. The company uses an onboard computer as the robot controller platform to integrate functions such as visual input, I/O and power management, and continues to expand the application of autonomous mobile robots (AMR) in semiconductor factories.

Jiang Chongliang said that IEI has early access cooperation with AMD and Intel. When the chip is still in the early development stage, it participates in the joint development of platforms and applications. As major chip manufacturers accelerate the deployment of local AI, the company is optimistic about application opportunities such as physical AI and agent AI (Agentic AI), and continues to invest in software and hardware integration and edge AI platforms.

As for the Deutsche Bahn project, Li Yaocong pointed out that the product has been tested on the client for nearly a year and is currently operating stably. However, affected by the change of German government and the adjustment of the operation direction of Deutsche Bahn, the project schedule is expected to be extended to the second quarter of next year. However, the original operating growth this year has not been greatly affected by project delays. If shipments start next year, it is expected to add a new growth momentum.

In terms of the supply chain, Jiang Chongliang believes that the order visibility of several major customers has reached 2027. In response to the shortage and price increase of components such as memory and passive components, the company has also prepared some materials in advance until 2027. In addition to strategic procurement, some customers also support advance material preparation through prepayment. Li Yaocong said that major Israeli customers also accept the increase in raw material costs through the PPV mechanism, reducing the impact of price increases on IEI's gross profit margin.