ZTE Server Shipments Plunge 28% in Q3, Erasing Record Gains from

Sugon/Nettrix Q3 Shipments Contract to 50k Units; High-End Pivot

According to the latest DataTrack data, in the third quarter of 2025 (September), global server shipments for Sugon (including Nettrix) slipped to 50.0 thousand units, a significant decline of 16.7% compared to the previous quarter's 60.0 thousand units, and slightly lower than the 51.0 thousand units in the same period last year. This marks the second consecutive quarter of decline following a sequential drop in the second quarter, indicating a clear cooling of shipment momentum since hitting a peak of 68.0 thousand units in early 2025. However, in sharp contrast, according to public market information, Sugon's revenue for the quarter bucked the trend with a year-on-year increase of 27.5%, and net profit grew significantly, presenting a typical "volume contraction, price rise" trend. Observing historical data, the third quarter is typically a seasonal off-peak period for the company. Looking back at 2022 and 2024, third-quarter shipments were 40 thousand units and 51 thousand units respectively, both at relative lows for those years. While the performance of 50.0 thousand units this time aligns with seasonal patterns, the magnitude of the decline over two consecutive quarters (from 68k in Q1 to 50k in Q3) still indicates weakness in demand for the general-purpose server market, or a strategic adjustment by the company to actively cut low-margin orders. An in-depth attribution analysis reveals that the divergence between shipment volume and financial data stems primarily from drastic changes in the product mix. As the US further tightened export controls on mid-to-high-end AI chips (such as Nvidia H20) in 2025, the Chinese market accelerated its shift toward adopting domestic computing chips from Hygon and Huawei. As Hygon's largest shareholder and core partner, Sugon saw a significant increase in the shipment proportion of its high-unit-price AI liquid-cooled servers and supercomputing clusters. This substantially raised the average selling price (ASP), offsetting the decline in general-purpose server shipments. Additionally, Digitimes also pointed out that Chinese Cloud Service Providers (CSPs) slowed their procurement pace in the third quarter due to trade negotiation deadlocks and a higher base in the first half of the year, which was also one of the reasons for the overall sales volume retreat. Looking ahead, in the short term (1-2 months), as we enter the fourth quarter—a traditional peak season for government and telecommunications budget write-offs—shipment volume is expected to rebound to over 60 thousand units, returning to a growth trajectory. In the medium term (3-6 months), the key for 2026 lies in whether the supply of domestic chip capacity remains smooth. With the continued implementation of "Eastern Data, Western Computing" and domestic localization (Xinchuang) tenders, high-end AI servers will remain the core growth engine. Investors need to monitor whether supply chain capacity (such as CoWoS packaging bottlenecks) limits potential order delivery capabilities, leading to the risk of "having orders but no stock." Relevant market information sources: https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQG-FhcUHnT5Lphny5MpkfwHX6T8a-Tth6L9um3B3PhdOb2AJ-3fTCRhobDvAJTjqF7YJwLvZB5j8_pmfaKyFQfUK1b89Gtd4JCSdmLUVQUybNWSHlcBBINxYPFQugjbGBgKh21wKtncECYNwPsgo_ry-MyRg8c0HSvFw1B9jejHmNaFwxzOIHc8Jut2IZ_8zxD8fNdp56VDNiw329lzFIvky6uMLmbZcC82mvSf https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQECOgLJXB_61z8LsUFBiUAf1coBHp3X3OrKkiigx3EvVgL5XU3PzU5U4BjrJR4cmbsLYC8ovj4LsdsbKCI12yPkBS0sdnI5gix4I8xCZplUd11L6MZaTgQnHpn62eAvQUaHJkH3mx8s-QHysvdq1gqisgkpPRV1 https://vertexaisearch.cloud.google.com/grounding-api-redirect/AUZIYQFWAFq9qnBpA02OYbjr7AyCUPqMiI-0zeIV9u40g4gPQlNv5W9N6Lpo_n6TbSntQAvJnMvp5HEjGNVumokcMIk9gnyn7-tC8SiYMD4ssAsbY1VC2jvYIVYkrRZisPl5ht96HvDPqlpVNEXO0BRUmK14_g==