By Shares of Hua Hong Semiconductor have taken a significant hit after the company reported a drop in quarterly profit and provided guidance for weaker sales. This decline comes as the global chip industry continues to experience a downturn.
- Hong Kong-listed shares of Hua Hong Semiconductor fell by 13% to 17.48 Hong Kong dollars (US$2.24) on Friday, bringing the total losses for the year to 36%. The benchmark index was also down 1.6%, with tech stocks slipping, partly influenced by Nasdaq’s weakness overnight.
- In Shanghai, where the state-owned company started trading in August with a successful initial public offering of nearly US$3 billion, the stock experienced a 4.2% decline.
The Chinese chip maker reported that its revenue for the third quarter dropped by 9.7% compared to the previous year, totaling US$568.5 million. Furthermore, its net profit took a sharp hit with an 87% plunge to US$13.9 million.
The company provided a forecast that indicates a further decrease in revenue for the final quarter of the year. Hua Hong Semiconductor expects its sales to range between US$450 million and US$500 million. If these predictions hold true, it would mark the company’s weakest sales level since the third quarter of 2021.
Junjun Tang, the executive director of Hua Hong Semiconductor, acknowledged the challenges faced by the company in a statement. He described the macro environment as “complex and constantly changing,” highlighting that “the semiconductor market has not yet recovered.”
Analysts from leading brokerage firms, including Jefferies and Morgan Stanley, have downgraded Hua Hong Semiconductor and adjusted their target prices accordingly. These decisions were made in response to the industry-wide weakness observed in the chip sector.
Kaiyuan Securities analyst Xiang Liu acknowledged that the chip industry’s struggles are not limited to Hua Hong Semiconductor alone. Liu noted that the company’s recent capacity expansion reflects its long-term confidence in future growth.
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