Amid intensifying competition in the mature-node segment, Hua Hong Semiconductor is pivoting toward higher-value process technologies. The company posted a fourth quarter of 2024 net loss of US$25.2 million, a stark contrast to the US$35.4 million profit a year earlier, according to HKET. Management attributed the loss primarily to foreign exchange fluctuations, with basic earnings per share at US$-0.015.
Revenue in the fourth quarter of 2024 climbed 18.4% compared to the same period last year to US$540 million, fueled by increased wafer shipments. Gross margin improved to 11.4%, rising 7.4%, benefiting from stronger fab utilization and operational efficiencies.
For 2024, net profit plummeted 79.2% to US$58.1 million, while annual revenue fell 12.3% to US$2 billion. Gross margin declined from 11.1% to 10.2%, reflecting pricing pressures and cost dynamics. Looking ahead, Hua Hong forecasts the first quarter of 2025 revenue between US$530 million and US$550 million, with a projected gross margin of 9% to 11%.
Strategic growth through expansion
Reports from Nikkei Asia and China's Securities Times attribute the year-over-year decline to a weaker average selling price, though higher shipment volumes partially offset the impact.
CEO Peng Bai outlined plans to ramp up research and development investments in next-generation process technologies while expanding fab capacity to meet rising demand from emerging sectors. Hua Hong also seeks to deepen partnerships with global and domestic clients while enhancing efficiency and cost management.
Bai highlighted consumer market recovery and emerging applications as key drivers of growth in image sensors and power management ICs. However, he acknowledged that the mid-to-high-end power semiconductor segment still requires further development.
Despite heightened industry competition, Bai emphasized that Hua Hong's revenue and fab capacity remain stable, with quarterly performance showing steady improvement. He also noted that fab utilization is approaching 100% in 2024, putting the company ahead of industry peers. Hua Hong has earmarked US$2.7 billion in capital expenditure for 2024, nearly tripling its 2023 investment to support growth initiatives.
Consumer electronics continues to be Hua Hong's largest revenue driver, accounting for over 60% of total sales, according to industry sources.
Focus on advanced technology and AI
Looking ahead to 2025, Hua Hong plans to accelerate research and development investments in advanced nodes and production capacity expansion. The company's 12-inch wafer fab in Wuxi has already begun volume production. Moving forward, Hua Hong will prioritize 28nm and 22nm process technologies, shifting away from legacy nodes like 65nm and 55nm.
With surging demand for AI applications, Hua Hong is positioned for the next wave of growth, tapping into AI-driven semiconductor advancements.
