A notice of initiation of an investigation from the U.S. International Trade Commission ( ITC ) has propelled two leading A-share companies, Luxshare Precision (002475. SZ ) and Foxconn Industrial (601138. SH ), to the forefront of attention.
On October 9th local time, ITC announced the official initiation of a 337 investigation regarding patent infringement claims raised by the American power supplier V regarding the issuance of its r Corporation token (hereinafter referred to as "V Token Issuance r"), which mainly target vertical power supply systems (VPD), related components, and computing systems that contain the aforementioned products.
On the afternoon of October 11, Foxconn Industrial Group announced that this investigation involved the company and three of its holding subsidiaries. The previous day, Luxshare Precision Technology Co., Ltd. disclosed in a statement that the company and its holding subsidiary, Dongguan Luxshare Technology Co., Ltd., were identified as the parties under investigation. Both listed companies stated that this does not have any actual or significant adverse impact on their current production and operations.
Regarding the stage of the products under investigation, Foxconn Industrial Internet stated that the related products are in the internal verification and evaluation phase; Luxshare Precision Technology mentioned that the products involved are mainly used in the integration power supply solutions for power modules and processors in the data center sector and are currently in the customer verification phase, having not yet entered mass production.
This 337 investigation is not targeted at a single company. It is reported that Delta Electronics, Infineon, Xinyuan Systems ( MPS ), and other companies in the server industry chain are also on the list of defendants. At a time when the power supply architecture of data centers in AI is being rapidly upgraded, this patent dispute, which is still in its initial stages, has brought the issue of "power supply close to the chip" to the forefront.
The investigation points to "vertical power supply," involving the AI power supply sector.
The 337 investigation is conducted by ITC in accordance with Section 337 of the United States' Tariff Act of 1930, primarily targeting intellectual property infringement such as patents and trademarks in imported products.
The core of this investigation is VPD (vertical power supply system), which mainly involves patent infringement claims raised by the American V-token issuing company Corporation. According to publicly available information from ITC, V-token issuing company has previously initiated 337 investigations against various enterprises in the industry chain regarding data center power supply technologies on multiple occasions. At present, this investigation is still in its initial stages, and ITC has not yet made any substantive determinations regarding these infringement claims.
Announcements from Foxconn Industrial Internet indicate that V Token Issuer r has accused the company and its controlling subsidiaries FII USA Inc (Foxconn Industrial Internet America, Inc.), Ingrasys Technology Inc (Hongbai Technology Co., Ltd.), and Ingrasys Technology USA Inc (American Hongbai Technology Co., Ltd.) of infringing on a patent related to a “vertical power supply system” held by V Token Issuer r. Upon internal verification, it has been found that this 337 investigation involves products that are currently in the internal validation and evaluation stage, and does not have a substantial impact on the company’s current production, operations, or performance.
The products under investigation by Luxshare Precision are 'mainly used in the integration power supply solutions for power modules and processors in the data center sector.' Given that 'the products involved in the investigation are still in the customer verification stage and have not yet entered mass production,' the company believes that this investigation 'is not expected to have a significant adverse impact on the company's current production and operations or its financial performance for the period.'
The product is under investigation to determine whether it will have an impact on customer verification. Lixun Precision's announcement did not provide any explanation. The announcement also noted that this 337 investigation is still in the filing stage, and there is uncertainty regarding the outcome of the case ruling.
A reporter from Yicai checked Lixun Precision's semi-annual report for 2026, and the terms "vertical power supply" or "VPD" did not appear in the entire document. However, in the "Power Management" section of its "Communication and Data Center Business," the company clearly stated that it is seizing the industrial opportunities brought about by the evolution and upgrade trend of the AIDC power supply architecture from 12V to 48/50/54V rack-level solutions and 800V high-voltage direct current.
Specifically regarding the shipment of power supply products, Lixun Precision has already started mass production and shipment of the DC-DC low-voltage server module power supply; the VPD involved in this case represents a more advanced stage of integration between the power supply module and the processor, and the announcement clearly states that it has not yet entered mass production.
In contrast, Foxconn's semi-annual report only mentions 'power supply' in one place. The company states: 'Leveraging our vertical integration advantages, our level of automation and intelligent manufacturing capabilities continue to improve. We now cover key aspects such as entire cabinet design, liquid cooling, and power supply management, and can provide customers with integrated computing power solutions.'
As for the countermeasures, the two companies have different approaches. Luxshare Precision stated that it immediately initiated research on the involved patents and related products, and is actively organizing technical, legal, and business teams to develop specific strategies and work plans based on previous experience in handling similar cases. In the future, the company will proactively respond to litigation, continue to advance the analysis of related patent technologies, evaluate product solutions, and make necessary technical optimizations, while also strengthening communication with relevant customers and supply chain partners.
Foxconn Industrial Group stated that the company has actively carried out intellectual property application, protection, and rights enforcement work by establishing an intellectual property department and staffing it with relevant professionals. In addition, when selecting suppliers, the company also requires them to provide non-infringement guarantees and licenses for the use of related technologies to avoid any impact on the company's rights and interests from patent market competition. The company said it will continue to monitor the developments of the case, carefully assess the potential impact on its production and operations, and resolutely safeguard the legitimate rights and interests of the company and all shareholders.
Can Lixun Precision's strategic investment be implemented on schedule?
In its semi-annual report's 'Outlook for 2026' section, Luxshare Precision stated: With the continuous introduction of new products from core consumer electronics customers and the ODM / JDM projects, key areas such as high-speed electrical connections, optical connections, thermal management, and power management in the communications and data center sectors seeing accelerated mass production, as well as the further realization of the integrated effects of Leoni and the expansion of new business with global automotive electronics customers, the company's strategic investments made in the earlier stages are expected to gradually transform into incremental growth momentum in the second half of the year.
The power management involved in this investigation is precisely one of the four directions mentioned concurrently in this outlook. Whether the initiation of an investigation will impede the implementation of previous strategic investments is a key concern for investors.
By cross-referencing the announcements with the content of the semi-annual report, a distinction can be made: in the semi-annual report, it is clearly stated that DC-DC low-voltage server module power supplies are being mass-produced and shipped on a large scale, and the transition from three-stage power supplies to one-stage power supplies has been successfully achieved. As for the "high-power and ultra-high voltage power supply product solutions for computing scenarios over the next two years," the company's description is that they are "actively being planned."
Specific to the business situation, Lixun Precision achieved revenue of 16.609 billion yuan in its communication and data center business in the first half of this year, a year-on-year increase of 49.66%, with a gross margin of 17.29%. During the same period, the company's overall revenue was 174.504 billion yuan, a year-on-year increase of 40.16%, and the gross margin was 11.78%. Power management is one of the four directions within this major business category.
According to the disclosure, the revenue growth in this business segment is driven by high-speed interconnection, thermal management, and power management. Among these, copper interconnection continues to advance with 224G, 448G, and the next generation of even higher-speed layouts. Optical interconnection achieved mass production and shipment of 800G in the first half of the year, and thermal management liquid cooling products have also entered mass production and are being rapidly adopted by core clients in North America. It is expected that in the second half of the year and next year, there will be different stages of progress, including obtaining supplier qualifications, small-scale deliveries, and large-scale mass production.
In the case of Foxconn Industrial Internet, among the entities sued are two subsidiaries registered within the United States. The company's main products include server equipment, data center equipment, cloud computing, etc. The significant increase in shipments of AI servers was a major driving force behind the performance growth in the first half of the year. However, the announcement did not break down the revenue contribution of the products involved or the attribution of customers, so the relevant impacts remain to be observed.
There are different interpretations of the nature of this investigation in the market. Some securities firm research reports suggest that this move is actually a routine patent licensing tactic by V Token Issuance r targeting nearly 20 companies globally, and not a targeted sanction; Lixun's involvement with the VPD product is still in the sample delivery phase, with an impact on current profits of less than 1%. The fact that the company has been sued actually proves that its VPD technology has passed verification by North American customers.
This investigation is still in its initial stages, and the ultimate outcome remains uncertain. For Foxconn Precision and Industrial Foxconn, the subsequent mass production and customer adoption of their data center power supply business will continue to be a focal point of market attention.
