Zhongji Innolight Responds to Q2 Capex Increase: Plant Expansions, Most to Convert to Revenue in 2027
Zhongji Innolight addressed its second-quarter capital expenditure increase and operating cash flow decline, citing strong downstream demand and proactive inventory building. The company completed a Hong Kong listing in 2026, raising $7 billion for expansion and materials. Prepayments locked beyond one year rose by over RMB 1 billion quarter-on-quarter. Most infrastructure spending will convert to revenue in 2027, with some customers already providing 2027 orders and others negotiating long-term agreements.
The company completed a Hong Kong listing in 2026, raising $7 billion to support capacity expansion and raw material preparation.
Regarding the decline in operating cash flow in the second quarter, Zhongji Innolight said that downstream demand is strong, and the company is actively preparing production and materials while meeting deliveries. In the first half of 2026, operating cash flow expenditures were mainly used to purchase raw materials, partly for normal procurement and partly for advance stocking. Among the prepayments and other long-term assets related to material preparation, other long-term assets mainly reflect prepayments locked in for more than one year, which increased by more than RMB 1 billion quarter-on-quarter in the second quarter.
Infrastructure spending has a long investment cycle, and most will begin to convert into revenue in 2027. Regarding orders, in the past the optical module industry typically signed three-month orders; currently some customers have already provided orders for 2027, and some customers are negotiating long-term agreements.