Hua Hong Semiconductor Limited

Wuxi Industry Development Group recently issued the country's first key core technology breakthrough sci-tech innovation bond, 26 Xi Chan K2, on the Shanghai Stock Exchange, with a total size of 600 million yuan, a term of three years, and a coupon rate of 1.58 percent. Proceeds from this bond will be invested specifically in the construction of the Hua Hong FAB9B project, which will build a 12-inch specialty process wafer production line with a planned monthly capacity of 55,000 wafers. It represents scarce domestic capacity for automotive-grade and high-end industrial-grade chips, focusing on niche segments such as non-volatile memory, power devices, and analog chips, while carrying out core technology breakthroughs in key areas including Bluetooth radio frequency chip processes, next-generation high-voltage driver processes, and embedded flash memory processes. Once completed, the project will help close the domestic supply gap in high-end specialty process chips and effectively raise the level of self-reliance and controllability of critical chips. In recent years, Wuxi Industry Group has launched a number of first-of-their-kind projects, including bonds dedicated to the aerospace sector and a computing-in-memory sci-tech innovation bond. To date, its cumulative issuance of sci-tech innovation corporate bonds has reached 8 billion yuan, ranking first in Wuxi and second in Jiangsu, and it has successfully invested in high-precision and cutting-edge projects such as SJ Semiconductor, Zhipu AI, Geekplus, and Dobot. Wuxi Industry Group said that going forward it will seize capital market opportunities, continue to leverage the leading role of patient capital, long-term capital, and strategic capital, and deepen its presence in key areas such as integrated circuits, artificial intelligence, and commercial aerospace, injecting new momentum into Wuxi's efforts to build itself into an industrial sci-tech innovation hub.

Chinese chip stocks rose today, September 15, after the Chinese government unveiled a five-year plan to strengthen the electronics manufacturing supply chain and accelerate technology development in the industry. Cambricon Technologies jumped 4.2%, Moore Threads gained 1.4%, and Hua Hong Semiconductor rose 0.3%, while Semiconductor Manufacturing International Corp moved little. NAURA Technology, a major semiconductor equipment supplier, climbed 2.6%. The plan was drafted by the Ministry of Industry and Information Technology together with the National Development and Reform Commission, covering the years 2026 to 2030 and setting out 17 tasks to strengthen the foundations of China's electronic information manufacturing industry, develop promising new industries, and increase the resilience of the industrial supply chain. The Chinese government aims for revenue of large companies in the electronic information manufacturing industry to exceed 30 trillion yuan by 2030, while the industry's research and development investment ratio will rise to 3.5%. For the semiconductor industry, the plan focuses on boosting integrated circuit capabilities and accelerating the development of key technologies, while improving coordination within the country's supply chain. Meanwhile, China's 15th Five-Year Plan for economic and social development also designates integrated circuits as a strategic sector for technology development across the entire chain, aiming to accelerate breakthroughs in weak links in the industrial and supply chains. The announcement of the plan comes as China pushes to reduce its dependence on foreign semiconductor technology amid US restrictions on advanced chips, equipment, and memory technology, with the Chinese government increasingly focusing on developing domestic alternatives spanning chip design, manufacturing, equipment, and materials.

The General Office of the Shanghai Municipal People's Government issued the 15th Five-Year Plan for the Development of Strategic Emerging Industries in Shanghai, proposing to further comprehensively elevate the capability level of the integrated circuit industry, accelerate the research, development, and industrialization of high-end chips, and focus on developing high-end chips, AI-empowered design, advanced packaging, novel devices, and new-architecture chips. Meanwhile, CXMT announced that the over-allotment option for its initial public offering has been fully exercised, corresponding to an additional issuance of 1.003 billion shares, bringing total share capital to 67.884 billion shares. Hua Hong Semiconductor released its semi-annual report, with operating revenue of 9.574 billion yuan, up 19.41 percent year on year, and net profit of 399 million yuan, up 436.69 percent year on year. Lianxun Instruments saw net profit grow 903 percent year on year. In addition, MiniMax disclosed that its August annualized recurring revenue exceeded 800 million US dollars, and its token consumption in July reached 20 times the level at the start of the year.

On the evening of August 26, multiple listed companies released positive announcements. Jiamusi Electric Machine said its nuclear power business is currently at full production, and the new multifunctional high-temperature high-pressure nuclear main pump full-flow test bench project, with an investment of 381 million yuan, has been completed, with comprehensive testing capability leading in China. Kinwong Electronic expects to make more positive progress with North American hyperscale cloud provider customers by 2027. Hengtong Optic-Electric's net profit in the first half of the year rose 93.38% year on year, and revenue from its optical communications business grew more than 130% year on year. Hua Hong Semiconductor's net profit in the first half of the year rose 436.69% year on year, with shipments hitting a record high. Lianxun Instruments' net profit in the first half of the year rose 903% year on year, and it plans to transfer 4.8 shares for every 10 shares from capital reserve. New China Life Insurance's net profit in the first half of the year rose 54% year on year, and it plans to pay a cash dividend of 0.73 yuan per share. Shennan Circuits' net profit in the first half of the year was 2.251 billion yuan, up 65.55% year on year. Yili Group plans to buy back shares for no less than 1 billion yuan and no more than 2 billion yuan. Leaderdrive's net profit in the first half of the year rose 31.25% year on year, and its embodied intelligent robot business grew substantially in scale. Northern Copper's net profit in the first half of the year was 1.396 billion yuan, up 186.61% year on year. Dapu Microelectronics signed a sales order for enterprise-grade PCIe SSDs worth 515 million US dollars, accounting for 152.70% of its 2025 main business revenue. COSCO Shipping Specialized Carriers' net profit in the first half of the year was 1.371 billion yuan, up 66.24% year on year.

InnovestX Securities views AI as still a key driver for Chinese tech, as hyperscalers accelerate capital spending to support data centers and AI computing, while foreign chip technology restrictions push China to build a domestic supply chain. The firm expects the share of AI server system production in China to reach more than 90% by 2030, up from about 70% in 2025, and the share of chip production for AI inference to rise to more than 50% from below 10% over the same period. Capital expenditure estimates for Chinese hyperscalers Alibaba, Tencent, ByteDance and Baidu have been revised up by 28%, 74%, 67% and 82% respectively, reflecting an acceleration in expanding AI and data processing capabilities. Mr. Sittichai Duangrattanachaya, Head of Investment Strategy at InnovestX Securities, said at the economic and investment seminar "Final Call 2026" that the next phase of the AI game is not about investing in the trend, but about finding winners in each layer of the ecosystem, from chips to data centers and energy. Investors should shift from buying the AI theme to selecting companies that genuinely benefit from AI. He recommended three groups of Chinese stocks: China Internet and Tech such as Tencent, Alibaba and GDS; China Semiconductor such as SMIC, Hua Hong and NAURA; and China Non-Tech such as CATL, HKEX and AIA.

As of August 19, 88 companies on the Shanghai Stock Exchange's STAR Market had disclosed their 2026 semi-annual reports, with combined operating revenue of 204.3 billion yuan and net profit of 18.9 billion yuan, up 32% and 154% year on year respectively. Among them, 71 companies were profitable, 51 posted profit growth, and 11 turned losses into gains. The 12 STAR 50 index constituents that have disclosed semi-annual reports recorded combined operating revenue of 117.4 billion yuan and net profit of 9.2 billion yuan, up 25% and 216% year on year, contributing nearly 60% of the board's disclosed revenue and nearly half of its net profit. The domestic computing power ecosystem was the clearest main theme in the first half. SMIC's second-quarter sales revenue reached 3.006 billion US dollars, a record quarterly high, while Hua Hong Semiconductor posted sales revenue of 717.5 million US dollars in the same period, also a record high. Design-side companies such as Cambricon and Hygon Information delivered substantial earnings growth. Innovative drugs and high-end equipment also stood out. BeiGene's first-half net profit attributable to the parent company rose 627.1% year on year, and it raised its full-year total revenue guidance to between 6.6 billion and 6.8 billion US dollars. AVIC UAS saw operating revenue rise 272.48% year on year. At the same time, interim dividends among STAR Market companies increased notably. Since the start of 2026, 86 new share buyback plans have been disclosed, with a combined maximum amount of 11.448 billion yuan, and 29 new shareholding increase plans have been disclosed, with a combined maximum amount of 1.005 billion yuan.

SMIC and Hua Hong Semiconductor both posted record second-quarter revenue, as AI-driven semiconductor demand continued to strengthen. SMIC's second-quarter revenue exceeded 3 billion US dollars, with net profit surging nearly fourfold, and the company expects third-quarter revenue to grow 2 to 4 percent quarter on quarter. Hua Hong Semiconductor also reported record second-quarter revenue, with net profit up 386 percent year on year, and third-quarter revenue guidance reaching as high as 780 million US dollars. Ping An Securities expects the global wafer fabrication equipment market to reach 143.9 billion US dollars in 2026, with advanced process nodes, DRAM, and NAND capacity expansion as the main growth drivers.

SMIC and Hua Hong Semiconductor released their second quarter 2026 financial results after market close on August 13, with both wafer foundry leaders posting sharp increases in sales revenue and profit. SMIC's quarterly sales revenue exceeded 3 billion US dollars, up 36.1 percent year on year, while net profit attributable to shareholders reached 479 million US dollars, surging 262 percent from a year earlier. Hua Hong Semiconductor's sales revenue hit a record high of 717.5 million US dollars, up 26.8 percent year on year, and profit attributable to owners of the parent rose 385.9 percent to 38.6 million US dollars. Capacity utilization at both companies continued to climb, with SMIC reaching 93.7 percent and Hua Hong Semiconductor running at full capacity of 102.8 percent. Looking ahead to the third quarter, SMIC expects revenue to grow 2 to 4 percent quarter on quarter, with gross margin guidance of 26 to 28 percent. Hua Hong Semiconductor expects sales revenue of approximately 770 million to 780 million US dollars, with gross margin of about 16 to 18 percent.

China has started industrial-scale production of immersion deep ultraviolet lithography machines, marking a major step in its semiconductor self-reliance strategy. The state-owned Shanghai Aishengna Electronic Technology Group is responsible for the project. Sources say the Chinese DUV machines still need to pass several testing stages and their performance still lags behind ASML's machines. The production plan targets around five units this year, rising to about twenty units in 2027, with the first batch scheduled for delivery to SMIC, Hua Hong Semiconductor, and CXMT within this year.

China has started manufacturing domestically developed immersion deep ultraviolet lithography machines, US news site The Information reported. The machines are expected to be delivered within this year to major Chinese semiconductor makers such as SMIC, Hua Hong Semiconductor, and CXMT, marking an entry into a market long monopolized by the Netherlands' ASML. Initial production will be limited, with about five units expected this year and around twenty by 2027. ASML shares fell more than 8%.

Chinese chip stocks rallied strongly yesterday, with SMIC rising around 8% and Hua Hong jumping nearly 20%, driven by several positive factors. One was a report that Z.AI, a Chinese AI company, has built a large data center using entirely domestically manufactured chips, boosting confidence that China can develop AI infrastructure despite restricted access to advanced US AI chips. This fueled expectations for domestic chipmakers like SMIC and Hua Hong. Chinese chip stocks also rebounded swiftly after heavy selling earlier, in line with a broader recovery in Asian chip shares, while the market anticipates supportive measures from the Chinese government. Investors are watching the Politburo meeting in late July, where the government is expected to continue backing the AI and semiconductor industries to promote technological self-reliance.

The pace of M&A and restructuring project implementation on the STAR Market continues to accelerate, with the core efficiency of the capital market in serving the transformation and upgrading of hard-tech enterprises and industrial integration being continuously released. Since the release of the 'Eight STAR Market Measures', STAR-listed companies have disclosed over 220 equity acquisition transactions cumulatively, including 59 major asset restructurings. In 2026, 53 new M&A transactions and 7 major asset restructurings have been disclosed. Recently, Primarius Technologies' acquisition of RelChip and Hua Hong Grace's acquisition of Huali Microelectronics have successively obtained registration approvals from the China Securities Regulatory Commission. Willsemi's acquisition of Shunlei Technology has been approved by the Shanghai Stock Exchange's restructuring committee. Advanced Micro-Fabrication Equipment's acquisition of Hangzhou Zhonggui has become the first case on the STAR Market to apply the simplified review procedure for M&A and restructuring. A series of differentiated and simplified review policies have been implemented one after another, including innovative arrangements such as acquisitions of unprofitable assets, differentiated pricing, and market-based valuation methods, significantly enhancing the efficiency and feasibility of transaction implementation.

Hua Hong Grace has obtained registration approval from the China Securities Regulatory Commission for its plan to acquire a 97.4988% stake in Huali Micro through share issuance and to raise matching funds. The matching funds to be raised will not exceed 7.556 billion yuan.

STMicroelectronics has delivered the first batch of STM32 wafers fully produced in China by partner Huahong to local customers, marking a key step in its China-for-China supply-chain strategy. The company reported a 26% year-over-year increase in industrial revenues for the first quarter of 2026, with distribution inventories normalized and book-to-bill well above 1 across all end markets and regions. STM expects solid growth in general-purpose microcontrollers in 2026, supported by localized STM32 supply and improving order momentum. The initiative aims to strengthen STM's position in industrial automation, robotics, and physical AI applications amid competition from Infineon and NXP.