HUA HONG SEMI Q1 revenue increased by 18.66%, net profit declined by 89.73% | Financial Report Insights

Hua Hong Semiconductor's Q1 revenue increased by 18.66% to USD 541 million, with sales revenue growing by 17.6% year-on-year. Regarding the Q2 performance guidance, the company expects its main business revenue to be between USD 550 million and USD 570 million; the gross margin for the main business is expected to be between 7% and 9%.

On May 8, Hua Hong Semiconductor announced its Q1 2025 report:

• In Q1 2025, the company achieved operating revenue of RMB 3.913 billion (approximately USD 541 million), a year-on-year increase of 18.66%, in line with the company's previous performance guidance.
• The net profit attributable to shareholders of the listed company was RMB 22.7634 million, a significant decline of 89.73% compared to RMB 222 million in the same period last year.
• Basic earnings per share were RMB 0.01, a year-on-year decrease of 92.31%.
• Q1 sales revenue was USD 541 million, a year-on-year increase of 17.6% and a quarter-on-quarter increase of 0.3%.
• The gross margin was 9.2%, an increase of 2.8 percentage points year-on-year, but a decrease of 2.2 percentage points quarter-on-quarter.

It is noteworthy that on the same day, another major player in the domestic wafer foundry sector, Semiconductor Manufacturing International Corporation (SMIC), announced its Q1 performance, showing revenue of USD 2.247 billion (approximately RMB 16.3 billion), a quarter-on-quarter increase of 1.8% and a year-on-year increase of 29.4%; net profit increased by 166.5% year-on-year. Looking ahead to Q2, SMIC expects revenue to decline by 4% to 6% quarter-on-quarter, with a gross margin between 18% and 20%, significantly down from 22.5% in Q1.

Capacity Utilization Remains High

Dr. Bai Peng, President and Executive Director of Hua Hong, commented on the Q1 performance:

“Hua Hong Semiconductor's Q1 sales revenue was USD 541 million, with a gross margin of 9.2%, both in line with guidance. Overall performance continues the trend since 2024, with steady growth in sales revenue, continuous optimization of product structure, and full capacity utilization. The ramp-up progress of Hua Hong's manufacturing projects is in line with expectations, which is positively significant for the company's upcoming revenue growth, product mix optimization, and enhancement of core competitiveness.”

Dr. Bai continued:

“In terms of the market, downstream demand and competitive landscape have largely continued the trends since the second half of 2024. However, with recent changes in the international environment and related policies, the entire semiconductor industry will face significant uncertainties in customer demand, procurement costs, and industry chain structure. In this changing situation, Hua Hong Semiconductor will maintain its composure, continue to accelerate effective capacity expansion, enhance R&D capabilities, actively explore market opportunities, deepen cost reduction and efficiency enhancement, and manage potential supply chain disruptions, aiming to reduce risks while improving performance.” For the second quarter of 2025, Hua Hong Semiconductor provided the following guidance:

• Main business revenue is expected to be between USD 550 million and USD 570 million;
• Main business gross profit margin is expected to be between 7% and 9%.

Significant Increase in R&D Investment

In the first quarter, the company's R&D investment reached CNY 477 million, a year-on-year increase of 37.21%, with R&D investment accounting for 12.19% of operating revenue.

The financial report shows that the net cash flow from operating activities in the first quarter was CNY 361 million, a year-on-year decrease of 18.57%. Meanwhile, cash outflows from investing activities increased significantly, mainly used for the purchase and construction of fixed assets, intangible assets, and other long-term assets.

As of the end of the first quarter of 2025, Hua Hong Semiconductor's total assets were CNY 86.889 billion, a slight decrease of 1.19% compared to the end of 2024; the equity attributable to shareholders of the listed company was CNY 43.722 billion, a slight increase of 0.27% compared to the end of the previous year.

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