Song Chuan’s Gross Margin Tops 30% as Revenue Sets Four Quarterly Records

Preface

Song Chuan Precision (松川精密, 7788-TW), a relay manufacturer, is experiencing a period of rising business momentum as demand remains strong for artificial intelligence (AI) and energy storage applications. Its September 2026 revenue reached NT$877 million, the second-highest monthly result on record, while third-quarter revenue climbed to NT$2.735 billion, setting a new quarterly high for the fourth consecutive quarter. Profitability has also strengthened, with monthly gross margin exceeding 30%. This article reviews the company’s recent revenue and earnings, the growing contribution of high-voltage, high-current products, its capacity investments in Taiwan, Mexico, and Vietnam, and the wider investment environment among cloud service providers and Taiwanese power-supply companies. The key question is whether Song Chuan can sustain its expansion and reach another revenue peak in the fourth quarter.

Lazy bag

Song Chuan’s results reflect rising demand for components used in AI infrastructure and energy storage. Revenue reached NT$2.735 billion in the third quarter of 2026, marking a fourth consecutive quarterly record, while September revenue rose 73.3% year over year. Monthly gross margin stood above 30%, and the company reported net profit after tax of NT$122 million for the month. High-voltage, high-current products for data-center inverters, server power supplies, and UPS systems accounted for 17% of revenue in the first half of 2026. Capacity expansion and customer demand will be central to whether revenue can set another high in Q4.

Main Body

Song Chuan Precision’s recent performance has been supported by demand for products used in AI infrastructure and energy storage. The company’s September 2026 revenue was NT$877 million, up 73.3% year over year. Although below the record set in July, September represented the second-highest monthly revenue in the company’s history. The result helped lift third-quarter revenue to NT$2.735 billion, a new record and the fourth consecutive quarter in which revenue reached a fresh high.

Management and market observers are looking ahead to the fourth quarter. Institutional estimates cited in the source expect Q4 revenue to be broadly in line with the third quarter, while leaving open the possibility of another record. This outlook depends in part on whether demand across AI-related applications remains strong and whether production capacity can keep pace with customer requirements. The forecast is an expectation rather than a confirmed result.

The cumulative figures underline the pace of expansion. Revenue for January through September 2026 reached NT$6.852 billion, exceeding the company’s total revenue for all of 2025. The nine-month figure was up 44% year over year. The monthly trend was especially strong in the third quarter: July revenue rose to NT$986 million, the first time it had exceeded NT$900 million, representing month-over-month growth of 19.09% and year-over-year growth of 99.38%. Revenue in August and September then each ranked among the company’s historical monthly highs.

Profitability also improved. Song Chuan reported monthly net profit after tax of NT$122 million, up 1.96 times year over year. Monthly gross margin held above 30%, and earnings per share after tax for the month were NT$1.53. Including the company’s first-half financial results, net profit after tax for January through July 2026 totaled NT$593 million, while earnings per share for the same seven-month period reached NT$7.05. These figures indicate that the revenue growth was accompanied by higher earnings, although future profitability will depend on product mix, operating costs, and the pace of new capacity coming online.

A significant part of the growth is associated with high-voltage, high-current products used in data-center inverters, server power supplies, and uninterruptible power supply (UPS) systems. Shipments of these products began to increase noticeably in the second half of 2025. Their share of the company’s revenue rose from 12% in the comparable period a year earlier to 17%, an increase of 5 percentage points. The trend reflects the growing importance of components that support power conversion and continuity in data centers and other demanding applications.

For the first half of 2026, high-voltage, high-current products for data-center inverters, server power supplies, and UPS systems represented 17% of revenue. Their shipment value reached NT$700 million, compared with NT$388 million in the same period of 2025, an increase of 80%. The difference between the product mix share and shipment value figures reflects the specific periods and measures cited: one describes the share of revenue, while the other gives the value of shipments in the first half. Together, they show that these applications have become a larger contributor to Song Chuan’s business.

To respond to rising demand, the company is expanding production capacity. Song Chuan plans to invest more than NT$400 million this year to add capacity in Mexico and Vietnam. The company completed expansions at its Chiayi plant in Taiwan and its Vietnam Alliance plant early in 2026, and it is continuing to develop capacity in Mexico and Vietnam. Its capital spending plan for the year has been raised to more than NT$400 million.

The Mexico facility may have further room to expand. The company has indicated that the planned investment there does not yet include potential demand associated with expansion by an important power-supply customer. Song Chuan is monitoring that customer’s development and production schedule, as well as the direction and scale of any increase in demand. The Mexico plant still has 50% of its production expansion capacity available. Song Chuan may use that room to deepen its participation in Taiwan’s power-supply industry ecosystem, coordinating any additional expansion with key customers’ needs and production progress.

The company’s investment plans form part of a wider industry response to rising demand for AI computing. Major global cloud service providers continue to increase capital expenditure as competition in AI intensifies. In Taiwan, Lite-On Technology (光寶, 2301-TW) and Delta Electronics (台達電, 2308-TW) are also accelerating plans to expand power-supply production capacity. Both companies have capital expenditure plans of NT$40–50 billion and are seeking land in Texas, United States, for further expansion. These moves illustrate the scale of investment underway across the power infrastructure supply chain.

For Song Chuan, the next stage will involve balancing strong demand with the practical requirements of manufacturing growth. New capacity must be brought online in step with customer schedules, while production quality, delivery reliability, and profitability are maintained. The rise in high-voltage, high-current product shipments gives the company exposure to expanding AI and data-center applications, but those opportunities also make customer forecasts and investment timing important. The company’s fourth-quarter revenue may match its third-quarter level or potentially exceed it; the outcome will depend on demand, production readiness, and customer ramp schedules.

Overall, Song Chuan’s record revenue, stronger monthly earnings, and gross margin above 30% show that its recent growth has been accompanied by improved financial performance. Its expanding role in data-center power products and planned capacity additions provide a basis for continued growth. At the same time, a further quarterly record is not guaranteed. Investors and industry observers will be watching the pace of customer demand, the utilization of new facilities, and whether the company can convert its capacity investments into sustained shipments and earnings.

Key Insights Table