Hua Hong Semiconductor Limited

Q2 2026 revenue was $717.5 million, up 26.8% year over year and 8.6% sequentially. Gross margin was 16.5%, up 5.6 percentage points year over year and 3.5 points quarter over quarter. The CFO reported net profit attributable to shareholders of $30.6 million, up 385.9% year over year, and basic EPS of $0.022, up 340% year over year. Operating cash flow was $330.1 million, capex was $356.6 million, and cash and cash equivalents were $4.53 billion at June 30, 2026. For Q3 2026, management guided revenue to $770 million to $780 million and gross margin to 16% to 18%.

Chairman and President Peng Bai said the quarter reflected continued operational improvement, higher utilization, and growth across all process platforms, especially stand-alone and embedded nonvolatile memory. He framed the business as benefiting from an AI-driven upturn that is lifting demand in memory, logic, and analog areas, and said the company is seeing tight supply in some products. His tone was upbeat and confident, emphasizing that steady capacity expansion, specialty-tech upgrades, and product-mix optimization should keep supporting growth.

CFO Daniel Wang said the Q2 revenue increase was driven by higher wafer shipments and improved average selling prices, with gross margin also helped by price improvement and cost-reduction efforts, partly offset by higher depreciation. Operating expenses were $109.1 million, cash from operations was $330.1 million, capex was $356.6 million, and financing cash outflow included $569 million of bank principal repayments. He said cash and equivalents were $4.53 billion and debt ratio declined to 36.3% from 37.9% at March 31, while Q3 gross margin should be 16% to 18%.

Analysts pressed on what is driving ASP gains, and management said pricing is improving because supply-demand balance has tightened, especially in MCU, memory, and power-related products tied to AI applications. On the Q3 outlook, management said roughly 60% of revenue growth should come from ASP and 40% from volume, with strong momentum in embedded memory, stand-alone memory, power discrete, RF, and power management ICs. Questions on capacity flexibility drew a response that some technologies are fungible, but conversion is limited by tool differences and the need to preserve long-term product balance. Analysts also asked about the Huali Micro acquisition, and management said final completion is expected within about a month, with technology sharing, scale, and procurement synergies expected to improve efficiency.