Amid escalating trade tensions between China and the United States and ongoing economic contraction domestically, the Chinese semiconductor industry is facing unprecedented challenges. Financial reports indicate that the performance of dozens of A-share semiconductor companies has declined significantly or resulted in losses, with industry leaders such as SMIC and Cambricon also not spared. The Chinese semiconductor industry is currently experiencing its darkest moment.
On May 8th, Huahong Semiconductor Co., Ltd. (referred to as “Huahong Semiconductor”) released its financial report for the first quarter of 2025, shocking the market with the data. During that quarter, the net profit attributable to shareholders of the listed company was only RMB 22.76 million, a staggering 89.73% decrease compared to the same period last year.
The net profit reflecting the company’s core business after deducting non-recurring gains and losses was RMB 16.10 million, a sharp 92.30% decline year-on-year. As the core wafer foundry enterprise under the Huahong Group, the decline in performance of Huahong Semiconductor reflects immense pressure on its core business in the current market environment.
As a state-owned semiconductor giant under the Huahong Group, the company’s performance for the full year of 2024 was also concerning, with a net profit attributable to the parent company of only $58.108 million, a significant 79.2% decrease year-on-year.
The plight of Huahong Semiconductor is not an isolated case. According to data from Wind, in the first quarter of 2025, 48 A-share semiconductor industry companies in China saw a decline in net profit, with 13 companies shifting from profit to loss. The top three companies with the largest profit declines – Unisoc, Innosilicon, and Topjoy Technology, all saw profit decreases exceeding a shocking 1000%.
Multiple companies admitted in their financial reports that the industry is facing challenges such as weak downstream demand and pricing pressure on products. For example, Unisoc stated that in the first quarter, the downstream market was fiercely competitive, with continuous price declines, leading to significant inventory impairment losses. Canaan Creative also faced a severe situation, with a dramatic 59.23% year-on-year revenue decline due to fluctuations in downstream customer demand.
Looking at the full-year 2024 performance, major players in the Chinese semiconductor industry are generally struggling with slowing growth or declining performance:
– SMIC, China’s largest integrated circuit chip manufacturer, saw a 23.3% decrease in net profit in 2024.
– ZTE Corporation reported a net profit of $8.425 billion, down 9.66% year-on-year.
– Leading AI computing chip company Cambricon continued to incur losses of $452 million, with accumulated losses exceeding $5.4 billion over 8 years.
– Tsinghua Unigroup’s net profit was $1.179 billion, a significant 53.43% decrease year-on-year.
– Leading LED chip company Sanan Optoelectronics reported a net profit of $253 million, down 31% year-on-year.
– GPU leader Jingjia Micro recorded a loss of $165 million, a 376.7% decrease year-on-year.
– Processor chip company Beijing Junzheng reported a net profit of $366 million, a 31.84% decrease year-on-year.
– Integrated circuit design company VeriSilicon’s net profit was $134 million, a 28.01% decrease year-on-year.
The situation is equally concerning in the semiconductor materials and equipment sector, with chemical company Jiurui Electronic Materials reporting a net loss of $180 million; high-purity process system integrator Zhipurity Technology’s net profit plummeted by 93.75%; semiconductor equipment manufacturer NSMicro’s net profit dropped by 19.08%; and Shanghai Silicon Industry, a major silicon wafer producer, incurred its first annual loss since going public, with a high loss of $971 million.
Industry analysts point out that the escalation of the US-China trade war and the US technology blockade have had a significant impact on the Chinese semiconductor industry. Export controls, restrictions on high-tech equipment, and disruptions in the supply chain of key raw materials have put Chinese semiconductor companies in a difficult position in terms of research and development, production, and market competition. The subdued downstream demand further exacerbates industry pressures, leading some companies to make significant provisions for impairment losses amidst product pricing challenges and inventory pile-ups.
Despite the Chinese authorities’ recent efforts to promote semiconductor industry localization and the introduction of multiple supportive policies, it is difficult to completely offset external pressures in the short term. State-owned enterprises like the Huahong Group may have certain advantages in terms of funding and technology, but they still need to address the challenges of global market competition and technological iteration.