Hua Er Jie Jian Wen·2025-08-07 12:33Core Viewpoint - The company reported mixed Q2 results, showing strong year-on-year revenue growth but a significant decline in net profit, indicating challenges faced by the wafer foundry giant [1][5]. Financial Performance - Q2 revenue was $2.209 billion, a year-on-year increase of 16.2% but a quarter-on-quarter decrease of 1.7%; total revenue for the first half was $4.46 billion, up 22.0% year-on-year [5][7]. - Q2 gross profit was $449.8 million, down 11.1% quarter-on-quarter, with a gross margin of 20.4%, a decrease of 2.1 percentage points from Q1 but an increase of 6.5 percentage points year-on-year; the gross margin for the first half was 21.4%, up 7.6 percentage points year-on-year [5][8]. - Q2 net profit was $132.5 million, a 19% year-on-year decline, falling short of market expectations of $167.1 million [5][9]. - Capacity utilization rate improved to 92.5%, up 2.9 percentage points quarter-on-quarter [5][9]. Guidance and Outlook - Q3 revenue guidance indicates a quarter-on-quarter growth of 5%-7%, while gross margin guidance is set at 18%-20%, below market expectations of 21% [1][10]. - Capital expenditures for Q2 were $1.885 billion, a significant increase of 33.2% from Q1, reflecting the company's aggressive expansion strategy [1][10]. Operational Insights - The company’s 12-inch wafer production accounted for 76.1% of total revenue, with consumer electronics applications representing the highest share at 41.0% [7][8]. - The Chinese market contributed 84.1% of total revenue, maintaining a stable position compared to Q1 [8][9]. - Operating expenses surged to $299.1 million in Q2, a 52.4% increase quarter-on-quarter and a 68.1% increase year-on-year, highlighting cost control challenges amid rapid expansion [9][10]. Cash Flow and Capital Management - Operating cash flow improved to $1.07 billion in Q2, a significant recovery from a negative $160 million in Q1, indicating restored business cash generation capacity [10]. - The company held $5.08 billion in cash and cash equivalents, with total liquid assets amounting to $13.05 billion, providing ample resources for continued expansion [10].