Financial Performance - Hua Hong Semiconductor achieved sales revenue of US$2,004 million for the year 2024, reflecting a steady quarter-on-quarter improvement in overall financial performance [18]. - The company reported a profit attributable to owners of the parent of US$449.9 million for 2024, with earnings per share (EPS) increasing to US$0.345 [14][16]. - The gross profit margin improved to 34.1% in 2024, up from 21.3% in 2023 [12][13]. - Hua Hong Semiconductor's revenue for 2024 was US$2,004 million, a decrease of 12.3% compared to the previous year [151]. - Revenue from semiconductor wafers accounted for 94.9% of total revenue, amounting to US$1,900,929 thousand, down 12.9% year-over-year [152]. - Revenue from systems and fabless companies represented 95.8% of total revenue, totaling US$1,919,000 thousand, a decline of 9.0% year-over-year [153]. - The company's revenue in China was US$1,636,528 thousand, making up 81.6% of total revenue, down 7.8% from the previous year [155]. - Gross profit decreased by 57.9% to US$205.13 million in 2024, mainly due to lower average selling prices and increased depreciation costs [172]. - The company's net cash flows generated from operating activities were US$459.50 million, a decrease of 28.4% compared to 2023 [192]. Production and Capacity - The second 12-inch production line in Wuxi commenced operations ahead of schedule, contributing to the company's "8-inch + 12-inch" strategy [19]. - The company maintained an average annual capacity utilization rate close to 100%, securing a leading position among global wafer foundry enterprises [151]. - Wafer shipments (8-inch wafer equivalent) increased by 10.8% year-on-year, reaching 4,545 thousand wafers in 2024 [161]. - Capacity utilization for 8-inch wafer equivalent rose to 99.5% in 2024, an increase of 5.2 percentage points from 2023 [160]. - The company successfully commenced mass production at the Huahong Manufacturing Project (Hua Hong Fab 9) by the end of 2024, with plans to introduce 40nm process nodes in 2025 [167]. Strategic Initiatives - The company plans to enhance production capacity and optimize its "Specialty IC + Power Discrete" product portfolio in 2025 [21]. - The Hua Hong Manufacturing Project is expected to drive steady revenue growth starting in 2025, laying a solid foundation for future performance improvement [19]. - The company aims to deepen strategic collaboration with customers and partners to meet rising demand driven by supply chain localization in the Chinese market [21]. - The company aims to continue leveraging its technological expertise and proactive sales strategies to navigate market challenges and capitalize on growth opportunities [151]. - The Analog & Power Management and Logic & RF platforms showed strong revenue growth, driven by demand in AI-related applications [156]. - The Analog & PM (Power Management) platform saw significant revenue growth in 2024, driven by strong demand in AI supporting power applications [164]. Governance and Management - Junjun Tang appointed as Chairman and Executive Director effective December 31, 2024, with extensive experience in the integrated circuit industry [38]. - Dr. Peng Bai to become President and Executive Director starting January 1, 2025, bringing over 30 years of experience in integrated circuits manufacturing [40]. - Mr. Suxin Zhang resigned as Chairman and Executive Director on December 31, 2024 [53]. - Mr. Limin Zhou resigned as a Non-Executive Director on March 7, 2025 [55]. - Mr. Songlin Feng appointed as Independent Non-Executive Director effective March 28, 2024, with over 32 years of experience in semiconductor research [63]. - Company maintains a strong governance structure with a diverse board of directors and senior management team [41]. - The Company has a nine-member Board comprising two Executive Directors, four Non-Executive Directors, and three Independent Non-Executive Directors [87]. - The Board held six meetings during the year ended 31 December 2024, with all Directors given the opportunity to put items on the agenda [97]. - The Company complied with the Corporate Governance Code during the year ended 31 December 2024 [84]. - Independent Non-Executive Directors represent more than one-third of the Board, ensuring compliance with Listing Rules [93]. - The roles of the Chairman and the President are separate, with the Chairman overseeing overall management and the President handling day-to-day operations [94]. - The Company has implemented mechanisms to ensure independent views are available to the Board, reviewed annually for effectiveness [92]. - Directors are required to keep abreast of their responsibilities and the Company's business activities [102]. - The Company has arranged appropriate insurance to cover potential liabilities of Directors and Officers regarding legal actions [96]. Financial Management - The company has established relationships with major banks including China Construction Bank and China Development Bank for financial support [32]. - For the year ended 31 December 2024, the remuneration paid to the auditors for audit services was US$0.73 million, and for non-audit services was US$0.01 million [115]. - Cash and cash equivalents decreased by 20.2% to US$4,459.13 million at the end of 2024, primarily due to cash flow analysis factors [191]. - Administrative expenses increased by 8.8% to US$351.28 million, mainly due to higher R&D expenses and new fab start-up costs [173]. - Cash and cash equivalents decreased from US$5,585.2 million as of 31 December 2023 to US$4,459.1 million as of 31 December 2024, representing a decline of approximately 20.1% [195]. - If interest rates had been 100 basis points higher or lower, profit before tax for the year would have been US$20,053,000 lower or higher, indicating significant sensitivity to interest rate changes [197]. - Approximately 18% of sales were denominated in currencies other than the functional currency of the subsidiaries, while 61% of costs of sales were in the subsidiaries' functional currency [198]. - Interest-bearing bank borrowings with a carrying amount of US$1,502.3 million were denominated in US$, exposing the company to foreign currency risk [199]. - A 5% strengthening or weakening of the US$ against the RMB would result in profit before tax being approximately US$99.6 million lower or higher, highlighting the impact of currency fluctuations [200]. Workforce and Diversity - The gender ratio of the Group's workforce as of 31 December 2024 was approximately 74% male to 26% female [120]. - The Company believes that gender diversity is important and has achieved compliance with the relevant listing rules following the appointment of a new director [118]. - The Company will continue to maintain a balance of diverse perspectives on the Board conducive to growth [119].

受益于AI（人工智能）相关需求的快速增长及消费电子领域的复苏，公司模拟与电源管理实现营业收 入4.48亿美元，同比增长25.1%；逻辑与射频实现营业收入2.72亿美元，同比增长34.4%。值得一提的 是，公司消费电子市场需求仍相对平稳，该终端营业收入占比达63.0%。 华虹半导体管理层在年报中表示，在新一年中，华虹半导体将坚定推进产能扩张，确保华虹制造项目按 计划进行产能爬坡；持续优化先进"特色IC+功率器件"的工艺及产品组合，提升高价值产品占比；深化 与客户及终端生态伙伴的战略协同，应对中国市场供应链本土化所带来的持续需求提升。 （文章来源：证券日报） 本报讯 （记者张文湘见习记者占健宇）3月27日，华虹半导体有限公司（以下简称"华虹半导体"）披露 2024年全年财报。公告显示，2024年华虹半导体实现销售收入20.04亿美元，第一季度至第四季度销售 收入分别为4.60、4.79、5.26、5.29亿美元，呈逐季增长趋势；此外，公司2024年归母净利润达5810.8万 美元，毛利率为10.2%。 在当前激烈的竞争格局下，特色工艺晶圆代工市场仍面临需求与价格压力。面对严峻的挑战，华虹半导 体坚持致力于差异化技 ...

Group 1 - The core viewpoint of the articles highlights the strong performance and strategic advancements of Huahong Semiconductor, with a focus on its revenue growth and production capacity expansion [1][2] - In 2024, the company achieved a sales revenue of $2.004 billion, with a year-on-year increase of 10.8%, and shipped 4.545 million wafers, maintaining a high average capacity utilization rate of 99.5%, which is an increase of 5.2 percentage points from 2023 [1] - The successful launch of the second 12-inch production line in Wuxi marks a significant milestone in the company's "8-inch + 12-inch" strategy, focusing on automotive-grade chip manufacturing with a planned monthly capacity of 83,000 wafers [1] Group 2 - The global semiconductor market is expected to continue its moderate recovery in 2025, which aligns with Huahong Semiconductor's commitment to a diversified development strategy [2] - The company plans to enhance its "8-inch + 12-inch" production platform by integrating more advanced "specialty IC + power device" processes, aiming to provide comprehensive and high-quality wafer foundry services to global customers [2] - As Huahong's manufacturing projects enter the capacity ramp-up phase, it will gradually release more capacity, allowing for flexible capacity allocation to better meet customer demands [2]

Financial Performance - Hua Hong Semiconductor achieved sales revenue of US$2,004 million for the year 2024, with near-full average capacity utilization[19]. - Hua Hong Semiconductor's revenue for 2024 was US$2,004 million, a decrease of 12.3% compared to the previous year[152]. - Revenue from semiconductor wafers accounted for 94.9% of total revenue, amounting to US$1,900,929 thousand, down 12.9% year-over-year[153]. - Revenue from systems and fabless companies was US$1,919,000 thousand, representing 95.8% of total revenue, a decline of 9.0% year-over-year[154]. - The company's revenue from China was US$1,636,528 thousand, making up 81.6% of total revenue, a decrease of 7.8% year-over-year[156]. - The loss for the year was US$140.385 million, compared to a profit of US$126.425 million in 2023, reflecting a significant decline in profitability[177]. - Gross profit for 2024 was US$205.128 million, down 57.9% from 2023, mainly due to decreased average selling prices and increased depreciation costs[173]. - The company reported a 30% increase in net profit for the last quarter, totaling $75 million, compared to the previous quarter[1]. Market Outlook and Strategy - The global semiconductor market is expected to continue its moderate recovery in 2025, driven by increased demand in AI applications and other sectors[22]. - Hua Hong Semiconductor plans to enhance production capacity expansion and optimize its advanced "Specialty IC + Power Discrete" product portfolio in 2025[22]. - The company aims to increase the proportion of high-value products and deepen strategic collaboration with customers and ecosystem partners[22]. - The Hua Hong Manufacturing Project is expected to drive steady revenue growth starting in 2025[20]. - The company is focused on seizing opportunities in the new growth cycle of the semiconductor industry to create sustainable value for shareholders[22]. - Future outlook indicates a projected revenue growth of 15% for the next fiscal year, driven by new product launches and market expansion strategies[1]. Production and Capacity - The company successfully commenced production at its second 12-inch production line in Wuxi ahead of schedule, marking a significant milestone in its "8-inch + 12-inch" strategy[20]. - Wafer shipments increased by 10.8% year-on-year, reaching 4,545 thousand wafers in 2024[162]. - Capacity utilization for 8-inch wafer equivalent rose to 99.5%, an increase of 5.2 percentage points from 2023[161]. - The company plans to ramp up production capacity in 2025 with the new 12-inch production line, aiming for sustained revenue growth[170]. Research and Development - The company is investing $200 million in research and development for new technologies aimed at enhancing integrated circuit manufacturing capabilities[1]. - The Analog & Power Management platform achieved significant revenue growth in 2024, driven by strong demand in AI applications and stable wafer input volumes[165]. - The Logic & RF platform experienced rapid revenue growth, with mass production of 55nm BSI image sensor chips for high-end smartphones[166]. - The 55nm and 65nm technology nodes showed robust revenue growth, with a 50.4% increase in revenue for the 55nm & 65nm segment[158]. Corporate Governance - The company appointed Dr. Peng Bai as President and Executive Director on January 1, 2025, succeeding Mr. Suxin Zhang who resigned on December 31, 2024[41][54]. - The Board comprises nine members, including two Executive Directors and three Independent Non-Executive Directors, ensuring compliance with Listing Rules[88]. - The Company has implemented corporate governance procedures that comply with the principles in the Corporate Governance Code[83]. - The Company has maintained compliance with the Code provisions during the year ended December 31, 2024[85]. - The roles of the Chairman and the President are separate, with the Chairman overseeing overall management and the President handling day-to-day operations[95][96]. Shareholder Communication and Value - The board of directors has approved a dividend payout of $0.10 per share, reflecting a commitment to returning value to shareholders[1]. - The Company has established a shareholders' communication policy to ensure equal and timely access to information for shareholders[125]. - The Company emphasizes its core values of integrity, teamwork, and innovation as key drivers for future growth and customer empowerment[1]. Financial Position and Liabilities - Cash and cash equivalents decreased by 20.2% from US$5,585.2 million in 2023 to US$4,459.1 million in 2024, mainly due to decreased receipts from customers and increased capital investments[192][196]. - Total current liabilities rose by 60.7% from US$972.4 million in 2023 to US$1,562.2 million in 2024, with significant increases in trade payables (26.7%) and other current liabilities (85.1%) due to higher capital expenditures[192][188]. - Interest-bearing bank borrowings increased from US$2,099.6 million in 2023 to US$2,197.9 million in 2024, reflecting increased drawdowns of bank borrowings[189]. - Other current assets surged by 175.5% from US$212.6 million in 2023 to US$585.9 million in 2024, primarily due to increased value-added tax credit[183].

Investment Rating - The report maintains a "Buy" rating for Huahong Semiconductor (1347 HK) with a target price of HK$44.00, representing a potential upside of 28% from the current price of HK$34.30 [2][9]. Core Insights - The new president, Dr. Bai Peng, has a solid background in IDM and foundry sectors, and he aims to enhance performance and efficiency by migrating some products to more advanced processes [7]. - The company is expected to benefit from the "China for China" strategy, competitive pricing compared to overseas peers, and the gradual ramp-up of its new 12-inch production line in Wuxi [7]. - The integration of Huahong's subsidiary, Huali Microelectronics, is anticipated to bring significant operational improvements and potential profit increases [7]. - Despite a slight increase in average selling prices (ASP), strong demand driven by consumer electronics is expected to continue into the first half of 2025 [8]. - Revenue forecasts for 2025 and 2026 have been adjusted downwards by 5% and 6% respectively due to pricing pressures, but the overall growth strategy remains intact [8][11]. Summary by Sections Financial Adjustments - The target price has been raised from HK$30.40 to HK$44.00, reflecting a revised P/B multiple of 1.5x for 2025 [9][13]. - The 2025E EPS has been adjusted down from US$0.12 to US$0.09, a decrease of 22% [3][11]. - Revenue estimates for 2025E and 2026E have been reduced to US$2,339 million and US$2,770 million, respectively, with year-on-year growth rates of 17% and 18% [11]. Valuation - The report emphasizes a P/B valuation approach, with the target P/B multiple increased to 1.5x, indicating a more optimistic outlook for Huahong's industry positioning and technology portfolio [13][14]. - The estimated book value per share for 2025 is projected at US$3.72, leading to a target price of HK$44.00 [14]. Market Comparison - Huahong's current P/B ratio of 1.2x is at a discount compared to its peers, such as UMC at 1.7x and SMIC at 2.5x, highlighting its valuation attractiveness [9][14].

Summary of Huahong Semiconductor Conference Call Company Overview - Huahong Semiconductor is the second-largest wafer foundry in mainland China, following SMIC, with multiple production bases including Shanghai Huahong Hongli, Wuxi Plant 7, and Plant 9. The overall capacity utilization rate is expected to remain above 100% in 2025 [4][5]. Historical Development - The company's history can be divided into three phases: 1. Formation of Huahong NEC with Japan's NEC, focusing on low-profit businesses. 2. Completion of mergers and acquisitions, listing on the Hong Kong Stock Exchange in 2014, and gradual expansion. 3. Expansion beyond Shanghai and listing on the A-share market in 2023. Revenue growth was stable before the chip shortage, which significantly increased during the shortage [3]. Core Business and Market Position - Huahong focuses on mature process technologies, including non-volatile memory, power devices, analog and power management ICs, and logic and RF components. Power devices are the largest revenue segment, with a strong push into the automotive market [4][6]. Future Growth Drivers - Key growth drivers include: - Recovery in terminal demand in 2025. - Increased domestic substitution demand due to U.S. sanctions. - Expansion in the automotive market, particularly in MCU and power device segments [7]. Financial Performance and Projections - The company anticipates improvements in profit and gross margins by 2025, despite rising depreciation costs. The gross margin for 8-inch wafers is approximately 30%, with a target of 40% by 2025. The target price based on a 1x PB valuation for 2026 is projected at HKD 30.1, and HKD 45.1 based on a 1.5x PB valuation [4][13]. Recent Stock Performance - Recent stock price increases are attributed to the global semiconductor cycle, positive sentiment in the Hong Kong market, and the company's proactive positioning across various product lines [8]. Impact of Market Recovery - The recovery in the Chinese market is occurring earlier than in Europe and the U.S., benefiting Huahong, especially in the automotive sector where semiconductor content in electric vehicles is increasing [9]. Integration of Huahong Plant 5 - The integration of Huahong Plant 5 is expected to enhance overall profitability, although the gross margin for 12-inch wafers remains negative. The company aims to improve margins significantly by 2025 [11]. Development of Huahong Plant 6 - Huahong Plant 6 focuses on more advanced processes, such as 28nm and 24nm technologies, which have potential for further development and could enhance the company's technological capabilities [12]. Risks and Challenges - Key risks include slower-than-expected ramp-up at Wuxi Plant 2, weaker-than-expected recovery in downstream markets, intensified competition in the mature process foundry sector, and potential impacts from U.S. sanctions [14].

产能释放驱动 24Q4 收入修复，受益 AI 带动半导体需求回升 证券研究报告 | 公司动态点评 2025 年 02 月 21 日 华虹半导体（01347.HK） | 财务指标 | 2023A | 2024A | 2025E | 2026E | 2027E | | --- | --- | --- | --- | --- | --- | | 营业收入（百万美元） | 2286 | 2004 | 2257 | 2610 | 3125 | | 增长率 yoy（%） | -7.7 | -12.3 | 12.6 | 15.6 | 19.7 | | 归母净利润（百万元） | 280 | 58 | 108 | 247 | 307 | | 增长率 yoy（%） | -37.8 | -79.2 | 85.2 | 129.5 | 24.4 | | ROE（%） | 4.4 | 0.9 | 1.7 | 3.8 | 4.5 | | EPS 最新摊薄（元） | 0.16 | 0.03 | 0.06 | 0.14 | 0.18 | | P/E（倍） | 31.8 | 153.3 | 82.8 | 36.1 | 29.0 | | P/B（ ...

Summary of Huahong Semiconductor Conference Call Company Overview - **Company**: Huahong Semiconductor - **Industry**: Semiconductor Foundry Key Points and Arguments Industry and Market Dynamics - In 2024, Huahong Semiconductor experienced a decline in wafer foundry prices, but a gradual recovery is expected in the second half of the year, with high capacity utilization rates and improving gross margins approaching breakeven [2][3][4] - The company anticipates maintaining high capacity utilization in 2025, with new capacities from the Wuxi Phase II and Jiuchang plants gradually being released, aiming for a full capacity of 83,000 wafers by the end of 2027 [2][4] Financial Performance and Projections - The company faced challenges in 2024, particularly in the first half, with 8-inch and 12-inch wafers under significant price pressure, hitting a low point in Q2 but recovering in Q3 and Q4 [3] - The fourth quarter loss was primarily due to foreign exchange losses from the appreciation of the US dollar, with plans to convert some dollar debt to RMB to mitigate future volatility [3][16] - Wuxi plant's gross margin exceeds 30%, but high depreciation costs have prevented profitability; significant improvements in gross margin and profit are expected post-depreciation period [3][17] Research and Development Focus - The company will continue to invest heavily in R&D, adjusting technology nodes to meet market demands, particularly in high-value platforms and products [2][5] - The new CEO is expected to lead the company into new areas while adhering to a specialty process route, focusing on cost reduction and efficiency [2][5] Product and Capacity Allocation - The company plans to allocate capacity across various platforms, with approximately 20,000 to 25,000 wafers for memory, and around 20,000 wafers for logic, RF, and image sensors, with flexibility to adjust based on market demand [2][11] - The local market revenue share has approached 80%, with plans to enhance localization capabilities while actively expanding international markets for balanced growth [2][12][13] Market Outlook and Demand - Significant growth is expected in power management, RF, and embedded platforms in 2025, driven by increased demand from AI data centers [2][9][10] - The company is optimistic about the recovery of high-performance logic and RF sectors, with AI's growth providing substantial opportunities [9][10] Strategic Partnerships and Local for Local Strategy - The company has established trust with several international semiconductor firms and plans to provide 12-inch wafer production services to global clients [22][23] - Collaboration with STMicroelectronics has been ongoing for over 20 years, focusing on power semiconductors and MCUs [22] Challenges and Future Expectations - The semiconductor market is expected to face challenges, but the company remains confident in its ability to navigate these through strategic R&D and operational efficiency [26] - The automotive chip sector is seen as a growth area, currently representing 5% to 6% of total sales, with significant potential for expansion [25] Conclusion - Huahong Semiconductor is positioned for recovery and growth in 2025, with a focus on enhancing product offerings, optimizing capacity, and expanding market reach while managing costs effectively [26][27]

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 36.00, representing a potential upside of 15.6% from the current price of HKD 31.15 [4]. Core Insights - The company is expected to improve operational efficiency driven by new production capacity, leading to both volume and price increases. The overall wafer average selling price (ASP) is projected to rise by 8% year-on-year in 2025, despite anticipated price competition in mature processes [6][4]. - The company plans to optimize its order structure to address differentiated demand, focusing on securing foundry needs from overseas manufacturers and expanding into AI-related products [6]. - Financial forecasts indicate a recovery in revenue and net profit, with projected revenues of USD 2.45 billion in 2025 and USD 3.44 billion in 2027, alongside net profits of USD 113.72 million and USD 382.16 million for the same years, respectively [6][14]. Financial Summary - For the fiscal year ending December 31, 2023, the company reported total revenue of USD 2.29 billion, with a gross margin of 21.3% and a net profit of USD 280.03 million. The revenue is expected to decline by 7.7% in 2024 but rebound by 22.5% in 2025 [3][14]. - The company’s gross margin is projected to improve from 10.2% in 2024 to 20.5% by 2027, reflecting enhanced operational efficiency and cost management [3][14]. - The company’s market capitalization stands at HKD 53.54 billion, with a price-to-earnings ratio estimated at 21.1 for 2023, increasing to 117.5 in 2024 before stabilizing [4][3]. Operational Performance - The company’s production capacity utilization remains high, with a 12-inch capacity utilization rate of 100.9% and an 8-inch capacity utilization rate of 105.8% as of Q4 2024 [6]. - The company is accelerating the ramp-up of its new 12-inch production capacity in Wuxi, expected to reach a monthly capacity of 40,000 wafers by mid-2025 and 83,000 wafers by mid-2026 [6]. Shareholder Information - Major shareholders include Huahong Group (20.25%), Huaxin Investment (13.22%), and Shanghai United Investment (11.01%) [4].

Investment Rating - The report assigns a "Buy" rating to the company with a target price of HKD 36.00, representing a potential upside of 15.6% from the current price of HKD 31.15 [4]. Core Views - The company is expected to improve operational efficiency driven by new capacity, leading to both volume and price increases. The overall wafer average selling price (ASP) is projected to rise by 8% year-on-year in 2025, despite anticipated price competition in the mature process segment [6][4]. - The report anticipates a gradual recovery in financial performance, with revenue forecasts for 2025-2027 set at USD 2.45 billion, USD 2.96 billion, and USD 3.44 billion respectively, alongside net profits of USD 113.72 million, USD 279.54 million, and USD 382.16 million [6][4]. Financial Summary - For the fiscal year ending December 31, 2023, the company reported total revenue of USD 2.29 billion, with a gross margin of 21.3% and a net profit of USD 280.03 million. The revenue is expected to decline by 7.7% in 2024, followed by a recovery with a projected growth of 22.5% in 2025 [3][15]. - The gross margin is forecasted to improve from 10.2% in 2024 to 20.5% by 2027, reflecting operational improvements and cost management [3][15]. - The company’s earnings per share (EPS) is projected to increase from USD 0.03 in 2024 to USD 0.22 in 2027, indicating a significant recovery in profitability [3][15]. Operational Insights - The company is focusing on optimizing its order structure to address differentiated demand across various segments, including embedded storage and power management [6]. - The production capacity utilization remains high, with a 12-inch capacity utilization rate of 100.9% and an 8-inch capacity utilization rate of 105.8% as of Q4 2024 [6]. - The company plans to accelerate the ramp-up of its new 12-inch capacity in Wuxi, aiming for a monthly capacity of 40,000 wafers by mid-2025 [6]. Market Position - The company is strategically positioned to capture demand from overseas manufacturers, including STMicroelectronics and Infineon, as they expand their operations in China [6]. - The report highlights the potential asset quality improvement and capacity increase following the planned injection of Shanghai Huahong Microelectronics into the company [6].