Hua Hong posts 513% Q1 profit surge

Hua Hong Semiconductor reported a sharp first-quarter profit jump on May 14, adding to signs that China’s domestic foundries are benefiting from stronger specialty-chip demand and a broader artificial-intelligence buildout. The Shanghai- and Hong Kong-listed chipmaker said net profit attributable to owners of the parent rose 513% from a year earlier, while revenue and gross margin also increased. The company’s results came as Chinese foundries navigate U.S. export controls and push ahead with local capacity expansion. Hua Hong also issued second-quarter guidance that pointed to further sequential growth. ### How big was the first-quarter profit increase? Hua Hong Semiconductor said net profit attributable to owners of the parent reached $20.9 million in the quarter ended March 31, up from $3.75 million a year earlier. Revenue rose 22.2% to $660.9 million from $540.9 million, according to the company’s quarterly results announcement. Gross margin was 13.0%, up 3.8 percentage points from the same period a year earlier and flat from the fourth quarter, the company said. Hua Hong said both revenue and gross margin were in line with its guidance for the quarter. ### What did the company say drove the gain? Bai Peng, Hua Hong’s chairman and president, said on the company’s earnings call that first-quarter revenue was supported by higher wafer shipments and stronger average selling prices. (www1.hkexnews.hk) The company said production-capacity ramp-up also contributed to the quarter’s performance. The South China Morning Post reported that Hua Hong and larger peer SMIC both forecast second-quarter sales growth as demand tied to artificial intelligence and a memory-supply crunch supported the market. Bai told analysts, according to the report, that Hua Hong hoped recent meetings between Chinese President Xi Jinping and U.S. President Donald Trump could help ease export controls. (finance.yahoo.com) ### Did investment spending still weigh on the business? Hua Hong said operating cash flow more than doubled from a year earlier even as it continued to expand production. Third-party summaries of the results said the company’s quarter was supported by capacity ramp-up and better pricing despite ongoing investment costs tied to expansion. The company has been building out its 12-inch manufacturing base, and outside summaries of the earnings said revenue from 12-inch fabs accounted for more than 60% of total revenue. (scmp.com) Hua Hong did not describe that mix in the headline highlights of its May 14 filing, but it said the quarter reflected progress in ramping newer capacity. (macrostream.ai) ### What did Hua Hong tell investors about the current quarter? For the second quarter, Hua Hong guided revenue to about $690 million to $720 million and forecast gross margin of 13% to 15%. That compares with first-quarter revenue of $660.9 million and a gross margin of 13.0%. The company posted its first-quarter results and presentation materials on May 14 and held its earnings conference call the same day, according to its investor-relations calendar. (moomoo.com) Hua Hong trades in Hong Kong under stock code 1347 and on Shanghai’s STAR Market under 688347. ### How does this fit into the wider China foundry picture? SMIC and Hua Hong have been cited by analysts and regional media as key beneficiaries of China’s push for semiconductor self-sufficiency, particularly in mature-node and specialty processes. (www1.hkexnews.hk) The South China Morning Post said both companies expected second-quarter growth, with Hua Hong’s management downplaying the immediate effect of U.S. export controls on expansion plans. (huahonggrace.com) On April 28, Reuters items indexed by market-data services reported that the United States had ordered some chip-equipment companies to halt certain shipments to Hua Hong, underscoring the policy backdrop around the company’s expansion. Those restrictions remain part of the context for investors assessing Hua Hong’s capacity growth and equipment access. (scmp.com) ### What comes next for investors to watch? May 14 is the latest confirmed milestone in the company’s reporting calendar, with first-quarter results, presentation materials and the earnings call all released that day. Hua Hong’s next formal update is likely to be its interim reporting cycle later in 2026, while investors will also track whether second-quarter revenue lands within the company’s $690 million-to-$720 million range and whether gross margin reaches the guided 13% to 15%. (marketscreener.com) (huahonggrace.com)