Hua Hong Semiconductor (1347) investor relations material

Executive summary

• Q2 2026 revenue reached a record $717.5 million, up 26.8% year-over-year and 8.6% sequentially, driven by higher wafer shipments, improved ASPs, and strong demand, especially in AI-related applications.

• Gross margin improved to 16.5%, up 5.6 percentage points year-over-year and 3.5 points sequentially, reflecting pricing and cost reduction efforts.

• Net profit attributable to shareholders was $38.6 million, a 385.9% increase year-over-year and 84.6% above Q1 2026, reversing prior losses.

• High fab utilization and growth across all process technology platforms, particularly in non-volatile memory products.

• Regulatory approval for the acquisition of Huali Microelectronics, expected to enhance technology portfolio, scale, and profitability.

Financial highlights

• Revenue: $717.5 million, up 26.8% year-over-year and 8.6% sequentially.

• Gross margin: 16.5%, up 5.6 percentage points year-over-year and 3.5 points sequentially.

• Operating expenses: $109.1 million, up 11.4% year-over-year, mainly due to higher labor costs.

• Net profit attributable to shareholders: $38.6 million, up 385.9% year-over-year.

• Basic EPS: $0.022, up 340% year-over-year.

• Annualized ROE: 2.4%, up 2 percentage points year-over-year.

• Net cash from operating activities: $338.1 million, up 99.3% year-over-year.

• Capital expenditures: $356.6 million in Q2 2026.

• Cash and cash equivalents: $4.53 billion as of June 30, 2026.

• Interest-bearing bank borrowings: $3,567.5 million, down from $3,897.2 million sequentially.

• Debt ratio: 36.3%, down from 37.9% sequentially.

Outlook and guidance

• Q3 2026 revenue expected between $770 million and $780 million, with gross margin projected at 16%-18%.

• Revenue growth in Q3 driven by both ASP (60%) and volume (40%) increases, especially in MCUs and embedded memory.

• Full ramp-up of Fab 9A expected in Q3, with output impact in Q4 and 2027; Fab 9B to begin ramping in 2027.