Hua Hong Semiconductor (1347) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached $540.9 million, up 17.6% year-over-year and 0.3% sequentially, with gross margin at 9.2%, driven by increased wafer shipments and high capacity utilization at 102.7%.

• Net profit attributable to shareholders was $3.8 million, down from $31.8 million in Q1 2024 but improved from a $25.2 million loss in Q4 2024.

• Product portfolio optimization and ramp-up of the second 12-inch production line continued as planned.

• Customer demand and competitive landscape remained consistent with trends since H2 2024, but global policy changes have increased industry uncertainties.

Financial highlights

• Gross margin improved by 2.8 percentage points year-over-year but declined 2.2 points sequentially due to higher depreciation.

• Operating expenses rose 23.7% year-over-year to $97.1 million, mainly from higher engineering wafer costs, but fell 12.2% sequentially.

• Net loss was $52.2 million, compared to $25.3 million loss in Q1 2024 and $96.3 million loss in Q4 2024.

• Basic EPS was $0.002, down from $0.019 in Q1 2024, but up from -$0.015 in Q4 2024.

• Net profit margin was -9.6%, down from -5.5% in Q1 2024 but improved from -17.9% in Q4 2024.

Outlook and guidance

• Q2 2025 revenue expected between $550 million and $570 million, with gross margin projected at 7%-9%.

• Management expects 2025 to be slightly better than 2024, barring major disruptions from tariffs or power sales.

• Gross margin pressure expected to persist as new fab ramps up, with improvement targeted through cost control and efficiency.

• Management anticipates continued uncertainties in customer demand, procurement costs, and supply chain due to global environment and policy changes.