Goldman Sachs released a research report stating that, as a leading Chinese semiconductor foundry, HUA HONG SEMI (01347) is expected to directly benefit from the trend of demand recovery. The company's solid gross margin improvement and optimized capacity utilization indicate stronger potential for earnings per share growth. The firm reiterated its "Buy" rating on HUA HONG SEMI and raised the target price from HK$117 to HK$134.

Goldman Sachs believes that HUA HONG SEMI will maintain an upward trajectory, supported primarily by factors including customer preference for local foundries, the increasing global market share of Chinese fabless companies within the supply chain, which drives structural growth opportunities; improving supply-demand dynamics in China's semiconductor industry; and continued capacity expansion as the next fab advances towards the 28/22 nanometer process node, signaling a long-term upward trend in average selling prices.

In light of recent signs of pricing momentum, the firm has concurrently raised its profit forecasts for HUA HONG SEMI for 2027 to 2029 by 1%, primarily based on a more optimistic revenue outlook (with 2027-2029 expectations raised by 1% to 2%). Goldman Sachs anticipates more robust revenue growth, as demand for specialty technology chips, such as power management ICs and image sensors, will also benefit from the expansion of AI servers and AI-powered edge devices.

Under conditions of sustained high capacity utilization, the firm expects HUA HONG SEMI to have greater scope to optimize its order mix, thereby achieving stronger revenue and profit performance.