HUA HONG SEMI(SH:688347) Ge Long Hui·2025-08-19 04:56Core Viewpoint - Huahong Company is planning to acquire the controlling stake of Huali Micro through a combination of issuing shares and cash payments to resolve competition issues related to its IPO commitments [1][5]. Group 1: Acquisition Details - The acquisition target is the equity corresponding to the assets of Huahong's fifth factory, which operates in the same competitive space as Huali Micro in the 65/55nm and 40nm technology nodes [5][7]. - The transaction is currently in the planning stage, with Huahong Company in discussions with potential transaction parties, including Shanghai Huahong Group and several investment funds [5]. - Due to uncertainties surrounding the transaction, Huahong Company's stock will be suspended from trading starting August 18, 2025, for a period not exceeding 10 trading days [5]. Group 2: Production Capacity and Financial Performance - Huahong Group is a leading global foundry giant, with its factories including Huahong's first, second, third, and seventh plants, and Huali Micro's fifth and sixth plants [7]. - The fifth and sixth plants are fully automated 12-inch wafer fabs, with the fifth plant covering 65/55 and 40nm technology nodes [7]. - In Q2, Huahong Company reported a sales revenue of $566 million, an 18.3% year-over-year increase and a 4.6% quarter-over-quarter increase, with a gross margin of 10.9% [9]. - The company expects Q3 sales revenue to be approximately $620 million to $640 million, with a gross margin between 10% and 12% [9]. - Future revenue growth is anticipated from the ramp-up of the ninth plant's capacity, with plans to have it fully operational within 2-3 quarters [10]. Group 3: Future Capacity Planning - Huahong Company is also planning new capacity, with gradual production expected to begin in 2027 [11].