Hua Hong Grace

Business

Hua Hong Grace Semiconductor (华虹宏力半导体有限公司, formerly Hua Hong Semiconductor, renamed in May 2026) is China second largest foundry and a specialty-process specialist. Where SMIC chases scale across logic, Hua Hong sells mature-node specialty processes: embedded and stand-alone non-volatile memory, microcontrollers, power discretes such as MOSFETs, logic and radio frequency, and power management chips (2026 interim report). Those are the chips inside appliances, cars, industrial gear and power supplies, not flagship phone processors.

The company is headquartered in Shanghai, with fabs in Shanghai and Wuxi. Its Wuxi Phase II project, Fab 9, had its planned monthly capacity of 83,000 wafers fully moved in by the end of June 2026, and the interim report says it is progressing its proposed acquisition of a 97.5% equity interest in Huali Micro, a fellow Shanghai foundry.

Scale and mix

• Revenue was US$1.378bn in the first half of 2026, up 24.5% year on year, with wafer shipments up 17.9% to a record high. Gross margin was 14.8%, up 4.8 points, and profit attributable to shareholders was US$59.57m, up 409.0%.
• The second quarter was a record: revenue of US$717.5m, up 26.8% year on year and 8.6% quarter on quarter, at a 16.5% gross margin, on higher shipments and better average selling prices. Revenue from China was 78.6% of the quarter total.
• The company has now delivered ten consecutive quarters of sequential revenue growth to the second quarter of 2026, a run driven by domestic demand for microcontroller, flash, power and logic chips rather than by leading-edge nodes.

Caveats

Hua Hong earns far less per wafer than SMIC: a 14.8% first-half gross margin against SMIC 22.9%, and a 16.5% second-quarter margin against SMIC 25.3%. The gap is the business model, not just execution: specialty mature nodes sell at lower prices, and the new 12-inch capacity at Fab 9 adds depreciation before it adds profit. Capital expenditure was US$356.6m in the second quarter alone, mostly for 12-inch facilities, so the company is spending heavily to keep the growth run going. The Huali Micro acquisition, if completed, would add scale in the same mature-node market, but it is still a proposal in the interim report, not a done deal.