Hua Hong Semiconductor (1347) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $478.5 million, down 24.2% year-over-year but up sequentially, driven by increased wafer shipments despite lower ASPs.

• Gross margin improved to 10.5% from 6.4% in Q1 2024 but remained below 27.7% in Q2 2023.

• Net profit attributable to shareholders was $6.7 million, a sharp decline from $78.5 million in Q2 2023 and $31.8 million in Q1 2024.

• Capacity utilization improved, with 8-inch fabs exceeding 100% and 12-inch fab at 96–97.9%, reflecting strong operational performance.

• The semiconductor market is stabilizing, with recovery led by consumer electronics and improving demand across most segments except IGBT.

Financial highlights

• Q2 2024 revenue was $478.5 million, down from $631.4 million in Q2 2023 but up from $460 million in Q1 2024.

• Gross margin was 10.5%, down from 27.7% in Q2 2023 but up from 6.4% in Q1 2024.

• Net profit margin was -8.7% (vs. 1.2% YoY, -5.5% QoQ).

• Operating expenses rose 17.8% year-over-year and 15% sequentially, mainly due to new fab and labor costs.

• Net cash flow from operating activities was $96.9 million, down 39.9% year-over-year but up 138.3% sequentially.

Outlook and guidance

• Q3 2024 revenue is expected to be $500–$520 million, with gross margin guidance of 10%–12%.

• ASP is expected to have bottomed in Q2, with gradual price increases anticipated in Q3 and Q4.

• Gross margin improvement will be moderate, with further gains expected as market recovery continues.

• Second 12-inch fab to begin trial production by year-end 2024, releasing capacity in Q1 2025.