华虹公司：港股公告：2023中期报告

http://ddx.gubit.cn 2023-09-06 C华虹(688347)公司公告

Stock Code 股份代號: 1347

HUA HONG SEMICONDUCTOR LIMITED(Incorporated in Hong Kong with limited liability)（於香港註冊成立之有限公司）

2023中期報告INTERIM REPORT

EMPOWERING

THE INFORMATION AGE

EMPOWERING
	THE INFORMATION AGE

華彩芯未來

華彩芯		未來

INTERIM REPORT2023

DEFINITIONS

In this interim report, unless the context otherwise requires, the following terms shall have the meanings set out below.“Board”the board of Directors of the Company;“China”or“the PRC”the People’s Republic of China, but for the purpose of this interim report andfor geographical reference only, except where the context otherwise requires,references in this interim report to“China”and the“PRC”do not include Taiwan, theMacau Special Administrative Region and Hong Kong;“China IC Fund II”China Integrated Circuit Industry Investment Fund (Phase II) Co., Ltd.* (

), a company established in the PRC on 22October 2019;“Company”or“our Company”Hua Hong Semiconductor Limited, a company incorporated in Hong Kong withlimited liability on 21 January 2005 and, except where the context otherwiserequires, all of its subsidiaries, or its present subsidiaries where the context refersto the time before it became the holding company of its present subsidiaries;“Company Secretary”the company secretary of the Company;“Director(s)”the director(s) of the Company;“EPS”earnings per share;“Executive Director(s)”the executive Director(s) of our Company;“Group”our Company and our subsidiaries or, where the context so requires, thebusinesses operated by our subsidiaries or their predecessors (as the case maybe) with respect to the period before our Company became the holding company ofour present subsidiaries (or became associated companies of our Company);“HHGrace”Shanghai Huahong Grace Semiconductor Manufacturing Corporation* (

), a company incorporated in the PRC on 24 January 2013and a wholly-owned subsidiary of the Company;“HK$”Hong Kong dollars, the lawful currency of Hong Kong;“Hong Kong”the Hong Kong Special Administrative Region of the PRC;“Hong Kong Stock Exchange”The Stock Exchange of Hong Kong Limited;“Independent Non-ExecutiveDirector(s)”

the independent non-executive Director(s) of our Company;“JV Agreement”the joint venture agreement dated 18 January 2023 entered into among theCompany, HHGrace, China IC Fund II and the Wuxi Municipal Entity for the purposeof setting up a joint venture to carry out the JV Business;“JV Business”the manufacturing and sale of integrated circuits that the JV Company engages in,including the production of 12-inch (300 mm) wafers adopting 65/55 nm to 40 nmprocesses;

DEFINITIONS

“JV Company”Hua Hong Semiconductor Manufacturing (Wuxi) Co., Ltd.* (()

), a company incorporated in the PRC on 17 June 2022 for the purpose ofthe JV Business, the registered capital of which was held as to 100% by HHGraceand, upon completion of the relevant filing(s) with the PRC authorities under the JVAgreement and the JV Investment Agreement, became owned as to approximately

21.9% by the Company, 29.1% by HHGrace, 29% by China IC Fund II and 20% by

the Wuxi Municipal Entity;“JV Investment Agreement”the investment agreement dated 18 January 2023 entered into among the JVShareholders and the JV Company, pursuant to which the JV Shareholdersconditionally agreed to increase the registered capital of the JV Company toUS$4.02 billion;“JV Shareholders”the Company, HHGrace, China IC Fund II and the Wuxi Municipal Entity;“Listing Rules”the Rules Governing the Listing of Securities on The Stock Exchange of Hong KongLimited, as amended or supplemented from time to time;“Model Code”the Model Code for Securities Transactions by Directors of Listed Issuers as set outin Appendix 10 to the Listing Rules;“Non-Executive Director(s)”the non-executive Director(s) of our Company;“QST”QST Corporation (), a company incorporated in the PRC on13 September 2012 and a connected person of the Company until 1 September2020;“RMB”Renminbi, the lawful currency of the PRC;“SFO”the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), asamended or supplemented from time to time;“Shanghai Awinic”Shanghai Awinic Technology Co., Ltd. (), a companyincorporated in the PRC on 18 June 2008 whose shares are listed on the STARMarket of the Shanghai Stock Exchange (stock code: 688798);“Shanghai Huali”Shanghai Huali Microelectronics Corporation (), a companyincorporated in the PRC on 18 January 2010 and a connected person;“Shanghai Stock Exchange”the Shanghai Stock Exchange;“STAR Market”the Science and Technology Innovation Board of the Shanghai Stock Exchange;“US$”US dollars, the lawful currency of USA;“Wuxi Municipal Entity”Wuxi Xi Hong Guo Xin Investment Co., Ltd.* (), aprofessional investment company jointly controlled by municipal and district-levelstate-owned enterprises.

CORPORATE INFORMATION

INTERIM REPORT2023

Board of DirectorsExecutive DirectorsSuxin Zhang(Chairman)Junjun Tang(President)Non-Executive DirectorsGuodong SunJing WangJun YeIndependent Non-Executive DirectorsStephen Tso Tung ChangKwai Huen Wong, JPLong Fei YeCompany SecretarySui Har LeeAuthorized RepresentativesJunjun TangSui Har LeeAudit CommitteeStephen Tso Tung Chang(Chairman)Long Fei YeJun YeRemuneration CommitteeKwai Huen Wong, JP (Chairman)

Long Fei YeJing WangNomination CommitteeSuxin Zhang (Chairman)Kwai Huen Wong, JPLong Fei Ye

Website www.huahonggrace.com

AuditorErnst & Young

Certified Public Accountants27/F, One Taikoo Place979 King’s RoadQuarry Bay, Hong Kong

Hong Kong Legal AdvisorHerbert Smith Freehills23/F, Gloucester Tower15 Queen’s Road CentralHong Kong

Principal BanksChina Construction Bank Shanghai BranchNo. 900, Lujiazui Ring RoadPudong New AreaShanghai, PRCChina Development Bank Shanghai BranchNo. 68, Puming RoadShanghai, PRCChina Construction Bank Corporation Hong KongBranch28/F, CCB Tower, 3 Connaught Road, CentralHong KongBank of Communications Co., Ltd. Hong Kong Branch20 Pedder Street, CentralHong KongChina Development Bank Jiangsu BranchNo. 232, Middle Jiangdong RoadNanjing, Jiangsu, PRCAgricultural Bank of China Wuxi Xinwu SubbranchNo. 26, Hefeng RoadXinwu DistrictWuxi, Jiangsu, PRCChina Construction Bank Wuxi High and New TechnologyIndustrial Development Zone SubbranchNo. 26, Hefeng RoadXinwu DistrictWuxi, Jiangsu, PRCChina CITIC Bank Wuxi New District SubbranchNo. 26, Hefeng RoadXinwu DistrictWuxi, Jiangsu, PRCBank of China Wuxi High and New TechnologyIndustrial Development Zone SubbranchNo. 140, Wangzhuang RoadXinwu DistrictWuxi, Jiangsu, PRC

CORPORATE INFORMATION

Share RegistrarsHong Kong shares:

Tricor Investor Services Limited17/F, Far East Finance Centre16 Harcourt RoadHong KongA shares:

China Securities Depository and Clearing CorporationLimited, Shanghai BranchNo. 188 South Yanggao RoadPudong New AreaShanghaiRegistered OfficeRoom 2212, Bank of America Tower12 Harcourt Road, CentralHong KongPrincipal Places of Business288 Halei RoadZhangjiang Hi-Tech ParkShanghai, PRCPostcode: 201203No. 30, Xinzhou RoadXinwu DistrictWuxi, Jiangsu, PRCPostcode: 214028Stock CodesHong Kong Stock Exchange: 01347Shanghai Stock Exchange: 688347

INTERIM REPORT2023

KEY FINANCIALS

US$ million

US$ millionUS$Pro?t attributable to owners of the parentEPS

0.00

25.0%

30.0%

20.0%

15.0%

10.0%

5.0%

0.0%

1,2001,000

1,400

1,215.5

35.0%

24.2%

30.3%

29.9%

1,262.2

186.9

230.8

77.0

0.176

0.14

0.16

0.18

0.20

0.10

0.12

0.06

0.08

0.02

0.04

0.144

0.059

651.0

1H 20221H 20211H 20231H 20221H 20211H 2023

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Performance

1H 20231H 2022ChangeUS$’000US$’

UnauditedUnaudited

Revenue1,262,2231,215,4713.8%Cost of sales(884,970)(846,578)4.5%Gross profit377,253368,8932.3%Other income and gains50,67920,006153.3%Fair value loss on an investment property–(316)(100.0)%Selling and distribution expenses(5,090)(7,026)(27.6)%Administrative expenses(147,839)(138,914)6.4%Other expenses(46,126)(53,205)(13.3)%Finance costs(56,700)(14,980)278.5%Share of profits of associates3,5042,29952.4%Profit before tax175,681176,757(0.6)%Income tax expense(26,945)(21,407)25.9%Profit for the period148,736155,350(4.3)%Attributable to:

Owners of the parent230,758186,87723.5% Non-controlling interests(82,022)(31,527)160.2%RevenueRevenue reached an all-time high of US$1,262.2 million, an increase of 3.8% compared to 1H 2022, primarilybenefiting from improved average selling price.Cost of salesCost of sales was US$885.0 million, an increase of 4.5% compared to 1H 2022, primarily due to increased depreciationand utility costs.Gross protGross profit was US$377.3 million, an increase of 2.3% compared to 1H 2022, primarily driven by improved averageselling price, partially offset by increased depreciation and utility costs.Other income and gainsOther income and gains were US$50.7 million, an increase of 153.3% compared to 1H 2022, primarily due toincreased interest income and government subsidies.

INTERIM REPORT2023

MANAGEMENT DISCUSSION AND ANALYSIS

Selling and distribution expensesSelling and distribution expenses were US$5.1 million, a decrease of 27.6% compared to 1H 2022, primarily due todecreased labor expenses.Administrative expensesAdministrative expenses were US$147.8 million, an increase of 6.4% compared to 1H 2022, primarily due to increasedengineering wafer costs and decreased government grants for research and development.Other expensesOther expenses were US$46.1 million, a decrease of 13.3% compared to 1H 2022, primarily due to decreased foreignexchange losses.Finance costsFinance costs were US$56.7 million, an increase of 278.5% compared to 1H 2022, primarily due to increased interestrate of bank borrowings.Share of prots of associatesShare of profits of associates was US$3.5 million, an increase of 52.4% compared to 1H 2022, due to increased profitrealized by the associates.Income tax expenseIncome tax expense was US$26.9 million, an increase of 25.9% compared to 1H 2022, primarily due to increasedtaxable profit.Prot for the periodAs a result of the cumulative effect of the above factors, profit for the period was US$148.7 million, a decrease of 4.3%compared to 1H 2022. Net profit margin was 11.8%, a decrease of 1.0 percentage points compared to 1H 2022.

MANAGEMENT DISCUSSION AND ANALYSIS

Financial Status

30 June2023

31 December

2022ChangeUS$’000US$’

UnauditedAudited

Non-current assetsProperty, plant and equipment3,256,5623,367,716(3.3)%Investment property163,241169,363(3.6)%Right-of-use assets80,14578,4252.2%Investment in associates129,414130,721(1.0)%Equity instruments designated at fair value through other comprehensive income151,812178,632(15.0)%Other non-current assets89,50054,79463.3%Total non-current assets3,870,6743,979,651(2.7)%Current assetsInventories558,252578,060(3.4)%Trade and notes receivables310,705291,8566.5%Due from related parties16,80313,00629.2%Other current assets175,868182,996(3.9)%Pledged deposits167,0771,04215,934.3%Cash and cash equivalents1,850,9572,008,765(7.9)%Total current assets3,079,6623,075,7250.1%Current liabilitiesTrade payables227,907236,999(3.8)%Interest-bearing bank borrowings385,746426,756(9.6)%Due to related parties4,7206,096(22.6)%Government grants34,13337,714(9.5)%Other current liabilities451,860674,851(33.0)%Total current liabilities1,104,3661,382,416(20.1)%Net current assets1,975,2961,693,30916.7%Non-current liabilitiesInterest-bearing bank borrowings1,410,5441,481,580(4.8)%Lease liabilities18,31214,64425.0%Deferred tax liabilities21,93841,268(46.8)%Total non-current liabilities1,450,7941,537,492(5.6)%Net assets4,395,1764,135,4686.3%

INTERIM REPORT2023

MANAGEMENT DISCUSSION AND ANALYSIS

Explanation of items with fluctuation over 10% from 31 December 2022 to 30 June 2023Equity instruments designated at fair value through other comprehensive incomeEquity instruments designated at fair value through other comprehensive income decreased from US$178.6 million toUS$151.8 million, primarily due to changes in fair value and exchange realignment.Other non-current assetsOther non-current assets increased from US$54.8 million to US$89.5 million, primarily due to increased prepaymentsfor capital expenditure.Due from related partiesDue from related parties increased from US$13.0 million to US$16.8 million, primarily due to increased receivablesfrom certain of our related parties.Pledged depositsPledged deposits increased from US$1.0 million to US$167.1 million, primarily due to increased pledged deposits forbank borrowings.Due to related partiesDue to related parties decreased from US$6.1 million to US$4.7 million, primarily due to decreased payables to one ofour related parties.Other current liabilitiesOther current liabilities decreased from US$674.9 million to US$451.9 million, primarily due to decreased payables forcapital expenditures, prepayments from customers, and a payment of income tax for 2022.Lease liabilitiesLease liabilities increased from US$14.6 million to US$18.3 million, primarily due to new lease contracts, partially offsetby payments of lease liabilities in the period.Deferred tax liabilitiesDeferred tax liabilities decreased from US$41.3 million to US$21.9 million, primarily due to a reversal of dividendwithholding tax accrued for 2022.

MANAGEMENT DISCUSSION AND ANALYSIS

Cash Flow

1H 20231H 2022ChangeUS$’000US$’

UnauditedUnaudited

Net cash flows generated from operating activities293,058407,848(28.1)%Net cash flows used in investing activities(353,930)(227,059)55.9 %Net cash flows used in financing activities(36,934)(27,648)33.6 %Net (decrease)/increase in cash and cash equivalents(97,806)153,141(163.9)%Cash and cash equivalents at beginning of the period2,008,7651,610,14024.8 %Effect of foreign exchange rate changes, net(60,002)(55,631)7.9 %Cash and cash equivalents at end of the period1,850,9571,707,6508.4 %Net cash ows generated from operating activitiesNet cash flows generated from operating activities decreased from US$407.8 million to US$293.1 million, primarily dueto increased payments for materials and maintenance.Net cash ows used in investing activitiesNet cash flows used in investing activities were US$353.9 million, primarily including US$381.6 million for capitalinvestments, partially offset by US$27.7 million of interest income.Net cash ows used in nancing activitiesNet cash flows used in financing activities were US$36.9 million, including US$167.7 million of pledged deposits,US$128.1 million of bank principal repayments, US$57.5 million of interest payments, US$3.1 million of lease payments,and US$0.6 million of listing fees, partially offset by US$296.2 million of capital contribution from non-controllinginterests, US$21.1 million of proceeds from bank borrowings, and US$2.8 million proceeds from share option exercise.

Financial ResourcesThe Group adopts a prudent approach to cash and financial management to ensure proper risk control and low costof funds. The Group finances its operations primarily with internally generated cash flow and bank loans. As at 30June 2023, the Group had cash and bank balances of approximately US$1,851.0 million (of which approximatelyUS$1,245.7 million were denominated in RMB and approximately US$573.8 million in US dollars), representing adecrease of US$157.8 million as compared to US$2,008.8 million at the end of 2022.

LiquidityTo meet liquidity requirements in the short and long term, our policy is to monitor regularly the current and expectedliquidity requirements to ensure that we maintain sufficient reserves of cash and adequate committed lines of fundingfrom major financial institutions.Capital ManagementOur primary objectives of capital management are to safeguard our ability to continue as a going concern and tomaintain healthy capital ratios to support our business and maximize shareholders’value. We manage our capitalstructure and make adjustments in light of the changes in economic conditions. To do this, we may adjust the dividendpayment to shareholders, return capital to shareholders, or issue new shares. We are not subject to any externallyimposed capital requirements. No changes were made in the objectives, policies, or processes for managing capitalduring the six months ended 30 June 2023.

INTERIM REPORT2023

MANAGEMENT DISCUSSION AND ANALYSIS

Bank Loans

The particulars of bank loans of the Group as at 30 June 2023 are set out as below:

30 June 202331 December 2022US$’000US$’

UnauditedAuditedCurrentBank loans – unsecured240,966314,039Current portion of long term bank loans – secured144,780112,717

385,746426,756Non-currentSecured bank loans1,380,5441,451,580Unsecured bank loans30,00030,000

1,410,5441,481,5801,796,2901,908,336The Group is dedicated to improving financing method. As at 30 June 2023, the Group had outstanding bankborrowings of US$1,796.3 million, compared to US$1,908.3 million as at the end of 2022. The bank borrowingsincluded secured interest-bearing borrowings of US$1,525.3 million and unsecured interest-bearing borrowings ofUS$271.0 million. Bank borrowings of US$36.2 million had fixed interest rates ranging from 1.2% to 2.0% per annum.Except for bank loans of US$142.9 million which are denominated in RMB, all borrowings are denominated in USdollars.

Charges on Group AssetsAs at 30 June 2023, certain of Group’s property, plant and equipment with a net carrying value of US$1,460,173,000(31 December 2022: US$1,803,095,000), right-of-use assets of US$12,719,000 (31 December 2022: US$50,231,000),properties under development of US$84,850,000 (31 December 2022: US$88,033,000) and pledged deposits ofUS$167,077,000 (31 December 2022: Nil) were pledged to banks to secure the Group’s banking facilities.Pledged deposits with a carrying value of US$300,000 as at 30 June 2023 (31 December 2022: US$311,000) werepledged to secure the issuance of letters of credit.Other pledged deposits with a carrying value of US$27,000 as at 30 June 2023 (31 December 2022: US$27,000) werepledged to secure the payment of dividends to shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS

Exposure to Fluctuations in Exchange Rates

We have transactional currency exposures, arising primarily from sales or purchases by our significant subsidiariesoperating in Mainland China in US$ rather than the subsidiary’s functional currency, which is RMB. During the sixmonths ended 30 June 2023, approximately 23% of our sales were denominated in currencies other than the functionalcurrency of the subsidiary making the sale, whilst 62% of costs of sales were denominated in the subsidiary’sfunctional currency.In addition, we have currency exposures from interest-bearing bank borrowings, held by our subsidiary operating inMainland China. As at 30 June 2023, interest-bearing bank borrowings with a carrying amount of US$1,653 millionwere denominated in US$, instead of the subsidiary’s functional currency, which is RMB.As at 30 June 2023, if the US dollar had strengthened or weakened against the RMB by 5%, with all other variablesheld constant, our profit before tax for the period would have been approximately US$57 million lower or higher.For the six months ended 30 June 2023, the Group had not entered into any arrangement to hedge the aforementionedforeign currency risks. Nevertheless, the Company’s management will continue to monitor the foreign exchangeexposure position and will consider appropriate measures should the need arise.Contingent Liabilities

As at 30 June 2023, the Group did not have any contingent liabilities.

INTERIM REPORT2023

MANAGEMENT DISCUSSION AND ANALYSIS

Business ReviewIn the first half of 2023, the global and regional economy recovered slowly, the consumer market remained sluggish,and the foundry industry faced greater challenges. Nevertheless, HHGrace has maintained stable results. The solidrevenue performance can be attributable to the Company’s optimized product portfolio, the long-term support from ourcustomers, and the unremitting efforts of all employees. In the first half of 2023, the Company’s capacity utilization rateremained high, and its sales of eNVM/Standalone NVM process platforms and Discrete process platforms constantlymaintained double-digit growth year-on-year.Embedded/Standalone Non-Volatile Memory (eNVM/Standalone NVM) process platforms continued to maintain rapidgrowth in both R&D and sales. In terms of R&D, the 90nm embedded flash automotive-grade process and IP reliabilityverification, which are based on our NORD technology with independent intellectual property rights, have beencompleted, which can support the design and mass production of AEC-Q100 Grade1 MCU products and will continueto enrich the Company’s layout of automotive MCU solutions; the development of 65nm standalone NVM processplatform product has remained smooth. In terms of sales, the revenue and shipment of the platform achieved double-digit growth year-on-year in the first half of 2023.As the Company’s power discrete devices are increasingly applied to high-quality development markets, revenue ofthe process platform increased over 30% year-on-year in the first half of 2023 due to the Company’s rich variety ofpower discrete device processes, superior technology, and quality assurance, making it an important engine for theCompany’s stable results. Growth was continuously driven by the expanding electric vehicle and industrial applicationsmarkets worldwide, particularly in Mainland China. Due to constantly innovative technology R&D and a stable supplyguarantee, Hua Hong’s services have won recognition from global customers.Hua Hong Wuxi Phase I 12-inch fab (HH Fab7) operated smoothly, with a high capacity utilization rate in the first halfof 2023. Construction for a total monthly capacity of 94,500 wafers is expected to be completed by the end of theyear. On 18 January 2023, the Company, HHGrace, China IC Fund II and the Wuxi Municipal Entity entered into theJV Agreement, pursuant to which the parties conditionally agreed to establish a joint venture (i.e. the Wuxi Phase IIproject (HH Fab9)) through the JV Company and invest US$880.38 million, US$1,169.82 million, US$1,165.8 millionand US$804 million in cash, respectively, in the JV Company. Pursuant to the JV Agreement, the JV Company shallengage in the manufacturing and sale of integrated circuits and 12-inch (300mm) wafers adopting 65/55 nm to 40 nmprocesses. On the same day, the JV Shareholders and the JV Company entered into the JV Investment Agreementto convert the JV Company into a joint venture and increase the registered capital of the JV Company from RMB6.68million to US$4.02 billion. Details of the JV Agreement and the JV Investment Agreement are set out in the circular ofthe Company dated 24 February 2023. A groundbreaking ceremony for the Wuxi Phase II project (HH Fab9) was heldon 30 June 2023. The project has a planned monthly production capacity of 83,000 wafers, with a focus on advancedspecialty ICs and high-end power discrete devices for automotive-grade process manufacturing platforms.In the second half of 2023, the Company will continue to expand production capacity, accelerate processdevelopment, and cover a wider range of product categories. Despite the slow recovery of the end-user market, theCompany will continue to unswervingly promote its diversified development strategy, deploy more advanced“SpecialtyIC + Power Discrete”technologies in our“8-inch +12-inch”production platforms, and provide global customers withmore comprehensive and excellent technologies and services in the specialty wafer foundry field.

MANAGEMENT DISCUSSION AND ANALYSIS

Issue of RMB Shares after the Interim PeriodOn 27 June 2022, an ordinary resolution was proposed and approved at the extraordinary general meeting of theCompany in relation to the Company’s proposed issue of no more than 433,730,000 ordinary shares, to be subscribedfor in RMB by target subscribers in the PRC and to be listed on the STAR Market and traded in RMB (the“RMB ShareIssue”), under a specific mandate granted by the shareholders at that meeting. The validity period of the resolutionwas extended with the approval of the shareholders of the Company on 26 June 2023.The Board considers that the RMB Share Issue will enable the Company to access the PRC capital market by wayof equity financing and thus broaden the Company’s fund-raising channels and shareholder base and improve theCompany’s capital structure. Also, the Board considers that the RMB Share Issue will be able to further strengthen thefinancial position of the Group and serve general corporate purposes and working capital needs of the Group, as wellas to further enhance the Company’s corporate profile, visibility and market presence in the PRC market. Further, itis expected that the RMB Share Issue will enable the Company to enhance its production capacity and research anddevelopment capability which will then allow the Company to capture future growth opportunities and consolidate itsposition as a leading pure-play foundry in the PRC.By way of the RMB Share Issue, 407,750,000 ordinary shares of the Company (the“RMB Shares”) were issued andsubscribed for, with gross proceeds of RMB21,203 million (equivalent to US$2,974 million). After deducting issuancecosts (including underwriting fees and other issuance costs), the net proceeds were RMB20,921 million (equivalentto US$2,934 million), which resulted in an increase of RMB20,921 million (equivalent to US$2,934 million) in the sharecapital of ordinary shares. The offer price of each RMB Share was RMB52.00.The RMB Shares of the Company were listed and became available for trading on the STAR Market of the ShanghaiStock Exchange, with the stock code 688347, on 7 August 2023.For further details about the RMB Share Issue, please refer to the Company’s announcements dated 21 March 2022,12 May 2022, 27 June 2022, 4 November 2022, 30 January 2023, 13 April 2023, 10 May 2023, 17 May 2023, 28 May2023, 7 June 2023, 28 June 2023, 5 July 2023, 14 July 2023, 18 July 2023, 21 July 2023, 24 July 2023, 26 July 2023,27 July 2023, 31 July 2023 and 4 August 2023, and the Company’s circulars dated 7 June 2022, 5 June 2023 and 29June 2023.

INTERIM REPORT2023

MANAGEMENT DISCUSSION AND ANALYSIS

Future Plans for Material Investments and Capital Assets

As disclosed in the Company’s circulars dated 7 June 2022 and 5 June 2023, the Company intends to applythe proceeds from the RMB Share Issue to, among others, the“Hua Hong Manufacturing (Wuxi) Project”, the“8-Inch Factory Optimisation and Upgrading Project”and the“Specialty Technological Innovation and Research andDevelopment Project”.The“Hua Hong Manufacturing (Wuxi) Project”aims at engaging in the design, research, manufacturing, testing,packaging and sale of integrated circuits fabricated on 12-inch (300mm) wafers. The Company expects to establishproduction facilities and make required purchases of various types of equipment, such as inspection equipment,furnaces and implanters. The chips are expected to be used in technical products such as high-density smart cardintegrated circuits, microcontrollers, smart power management systems and system-on-chips. Production is expectedto commence in early 2025, with the monthly production capacity targeted to be 40,000 wafers by the second quarterof 2026.The“8-Inch Factory Optimisation and Upgrading Project”aims at upgrading a part of logic technology platformproduction lines and power device technology platform production lines, with a view to matching the technologicalrequirements of the relevant specialty platforms and enhancing the flexible manufacturing capability of the powerdevice technology platform.The“Specialty Technological Innovation and Research and development Project” aims at enhancing the Company’sproprietary innovation and research and development capabilities.For further details, please refer to the Company’s circulars dated 7 June 2022 and 5 June 2023.Save as disclosed above and in this interim report, the Group did not have other concrete plans for materialinvestments or capital assets as of 30 June 2023.

EPS

65/55 nm40 nm12(300mm)

2023

100%

21.9%29.1%29%20%

40.2

688798

www.huahonggrace.com

2023

2212

201203

21402801347688347

???

???有⺌公司

百萬美元

百萬美元美元

銷售收入毛利率

母公司擁有人應佔溢利每股盈利

二零二一年上半年

二零二二年上半年

二零二三年上半年

二零二一年

上半年

二零二二年上半年

二零二三年

上半年

二零二一年

上半年

二零二二年

上半年

二零二三年

上半年

二零二一年

上半年

二零二二年

上半年

二零二三年

上半年

0.00

25.0%

30.0%

20.0%

15.0%

10.0%

5.0%

0.0%

1,2001,000

1,400

1,215.5

35.0%

24.2%

30.3%

29.9%

1,262.2

186.9

77.0

0.14

0.16

0.18

0.20

0.10

0.12

0.06

0.08

0.02

0.04

0.144

0.059

651.0

230.8

0.176

2023

1,262,2231,215,4713.8%(884,970)(846,578)4.5%377,253368,8932.3%50,67920,006153.3%–(316)(100.0)%(5,090)(7,026)(27.6)%(147,839)(138,914)6.4%(46,126)(53,205)(13.3)%(56,700)(14,980)278.5%3,5042,29952.4%175,681176,757(0.6)%(26,945)(21,407)25.9%148,736155,350(4.3)% 230,758186,87723.5% (82,022)(31,527)160.2%

12.6223.8%

8.8504.5%

3.7732.3%

5,070153.3%

51027.6%

1.4786.4%4,61013.3%5,670278.5%

35052.4%2,69025.9%

1.4874.3%11.8%

1.0

2023

3,256,5623,367,716(3.3)%163,241169,363(3.6)%80,14578,4252.2 %129,414130,721(1.0)%151,812178,632(15.0)%

89,50054,79463.3 %3,870,6743,979,651(2.7)%558,252578,060(3.4)%310,705291,8566.5 %16,80313,00629.2 %175,868182,996(3.9)%167,0771,04215,934.3 %1,850,9572,008,765(7.9)%3,079,6623,075,7250.1 %227,907236,999(3.8)%385,746426,756(9.6)%4,7206,096(22.6)%34,13337,714(9.5)%451,860674,851(33.0)%1,104,3661,382,416(20.1)%1,975,2961,693,30916.7 %1,410,5441,481,580(4.8)%18,31214,64425.0 %21,93841,268(46.8)%1,450,7941,537,492(5.6)%4,395,1764,135,4686.3%

10%

1.7861.518

5,4808,9501,3001,6801001.671610470

6.7494.519

1,4601,830

4,1302,190

2023

293,058407,848(28.1)%(353,930)(227,059)55.9 %

(36,934)(27,648)33.6 %(97,806)153,141(163.9)%2,008,7651,610,14024.8 %(60,002)(55,631)7.9 %1,850,9571,707,6508.4 %

4.0782.931

3.5393.8162,770

3,6901.6771.2815,750310602.9622,110

18.51012.457

5.73820.0881.578

240,966314,039144,780112,717385,746426,756

1,380,5441,451,58030,00030,000

1,410,5441,481,580

1,796,2901,908,336

17.963

19.08315.2532.7103,620

1.2%2.0%1.429

1,460,173,0001,803,095,00012,719,00050,231,00084,850,00088,033,000167,077,000

300,000311,00027,00027,000

2023

23%62%

16.53

5%5,700

(eNVM/Standalone NVM)NORD90nmIPAEC-Q100 Grade1 MCU

MCU65nm(Discrete)

30%

94,500II

880.381,169.821,165.880465/55 nm40 nm12(300mm)

6.6840.2

8.3IC

IC + 8+12

2023

433,730,000

407,750,00021,2032,97420,9212,93420,9212,934

52.00

688347

12(300mm)40,000

2023INTERIM REPORT2023

REPORT ON REVIEW OF INTERIM CONDENSED

CONSOLIDATED FINANCIAL INFORMATION

3260

2410

To the board of directors of Hua Hong Semiconductor Limited(Incorporated in Hong Kong with limited liability)

IntroductionWe have reviewed the interim financial information set out onpages 32 to 60 which comprises the condensed consolidatedstatement of financial position of Hua Hong Semiconductor Limited(the“Company”) and its subsidiaries (collectively referred toas the“Group”) as at 30 June 2023 and the related condensedconsolidated statements of profit or loss, comprehensive income,changes in equity and cash flows for the six-month period thenended, and other explanatory notes. The Rules Governing theListing of Securities on The Stock Exchange of Hong Kong Limitedrequire the preparation of a report on interim financial informationto be in compliance with the relevant provisions thereof andHong Kong Accounting Standard 34Interim Financial Reporting

(“HKAS 34”) issued by the Hong Kong Institute of Certified PublicAccountants (“HKICPA”). The directors of the Company areresponsible for the preparation and presentation of this interimfinancial information in accordance with HKAS 34. Our responsibilityis to express a conclusion on this interim financial informationbased on our review. Our report is made solely to you, as a body,in accordance with our agreed terms of engagement, and for noother purpose. We do not assume responsibility towards or acceptliability to any other person for the contents of this report.

Scope of ReviewWe conducted our review in accordance with Hong Kong Standardon Review Engagements 2410Review of Interim FinancialInformation Performed by the Independent Auditor of the Entity

issued by the HKICPA. A review of interim financial informationconsists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and otherreview procedures. A review is substantially less in scope thanan audit conducted in accordance with Hong Kong Standards onAuditing and consequently does not enable us to obtain assurancethat we would become aware of all significant matters that mightbe identified in an audit. Accordingly, we do not express an auditopinion.

ConclusionBased on our review, nothing has come to our attention that causesus to believe that the interim financial information is not prepared, inall material respects, in accordance with HKAS 34.

Certified Public AccountantsHong Kong29 August 2023

INTERIM CONDENSED CONSOLIDATED STATEMENT OFPROFIT OR LOSS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

FOR THE SIX MONTHSENDED 30 JUNE

20232022(Unaudited)(Unaudited)Notes(US$’000)(US$’000)

Revenue

1,262,2231,215,471Cost of sales(884,970)(846,578)

Gross profit377,253368,893Other income and gains

50,67920,006Fair value loss on an investment property–(316)Selling and distribution expenses(5,090)(7,026)Administrative expenses(147,839)(138,914)Other expenses(46,126)(53,205)Finance costs(56,700)(14,980)Share of profits of associates3,5042,299

PROFIT BEFORE TAX

175,681176,757Income tax expense

(26,945)(21,407)

PROFIT FOR THE PERIOD148,736155,350

Attributable to:

Owners of the parent 230,758186,877 Non-controlling interests (82,022)(31,527)

148,736155,350

EARNINGS PER SHARE ATTRIBUTABLETO ORDINARY EQUITY HOLDERS OF THE PARENT:

Basic US$0.176US$0.144 – For profit for the period 0.1760.144

Diluted US$0.175US$0.142 – For profit for the period 0.1750.142

2023INTERIM REPORT2023

INTERIM CONDENSED CONSOLIDATED STATEMENT OF

COMPREHENSIVE INCOMEFOR THE SIX MONTHS ENDED 30 JUNE 2023

FOR THE SIX MONTHSENDED 30 JUNE

20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

PROFIT FOR THE PERIOD148,736155,350

OTHER COMPREHENSIVE INCOMEOther comprehensive income that may bereclassified to profit or loss in subsequent periods:

Exchange differences on translation of foreign operations(169,717)(188,701)

Net other comprehensive income that may bereclassified to profit or loss in subsequent periods

(169,717)(188,701)

Other comprehensive income that will not bereclassified to profit or loss in subsequent periods:

Equity investments designated at fair value through other comprehensive income:

Changes in fair value(20,548)(25,116)Income tax effect3,0823,767

Net other comprehensive income that will not bereclassified to profit or loss in subsequent periods

(17,466)(21,349)

OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX(187,183)(210,050)

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD(38,447)(54,700)

Attributable to:

Owners of the parent 95,07416,669 Non-controlling interests (133,521)(71,369)

(38,447)(54,700)

INTERIM CONDENSED CONSOLIDATED STATEMENT OFFINANCIAL POSITION

30 JUNE 2023

30 June2023

31 December

2022

(Unaudited)(Audited)Notes(US$’000)(US$’000)

NON-CURRENT ASSETS

Property, plant and equipment

3,256,5623,367,716Right-of-use assets80,14578,425Investment property163,241169,363Intangible assets31,17032,986Investment in associates129,414130,721Equity investments designated at fair value through other comprehensive income

151,812178,632Long term prepayments40,9377,742Deferred tax assets17,39314,066

Total non-current assets3,870,6743,979,651

CURRENT ASSETS

Properties under development143,674134,723Inventories558,252578,060Trade and notes receivables

310,705291,856Prepayments, other receivables and other assets 32,19448,273Due from related parties16,80313,006Pledged deposits167,0771,042Cash and cash equivalents1,850,9572,008,765

Total current assets3,079,6623,075,725

CURRENT LIABILITIES

Trade payables

227,907236,999Other payables and accruals397,826593,971Interest-bearing bank borrowings385,746426,756Lease liabilities4,4774,704Government grants34,13337,714Due to related parties4,7206,096Income tax payable49,55776,176

Total current liabilities1,104,3661,382,416

NET CURRENT ASSETS1,975,2961,693,309

TOTAL ASSETS LESS CURRENT LIABILITIES5,845,9705,672,960

continued/

2023INTERIM REPORT2023

INTERIM CONDENSED CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

30 JUNE 2023

30 June2023

31 December

2022(Unaudited)(Audited)Notes(US$’000)(US$’000)

NON-CURRENT LIABILITIES

Interest-bearing bank borrowings1,410,5441,481,580Lease liabilities18,31214,644Deferred tax liabilities21,93841,268

Total non-current liabilities1,450,7941,537,492

Net assets4,395,1764,135,468

EQUITYEquity attributable to owners of the parent

Share capital121,997,8291,994,462Reserves1,130,3671,036,008

Total equity attributable to owners of the parent3,128,1963,030,470Non-controlling interests1,266,9801,104,998

Total equity4,395,1764,135,468

Suxin ZhangJun Ye

DirectorDirector

INTERIM CONDENSED CONSOLIDATED STATEMENT OFCHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2023

Attributable to owners of the parent

Sharecapital

Mergerreserve

Shareoptionreserve

Otherreserve

andcontributed

surplus

Fair value

reserve

Assetrevaluation

reserve#

Statutoryreserve

fund

Exchangeuctuation

reserve

Retainedprots/(accumulatedlosses)Total

Non-controllinginterests

Totalequity

#US$’000US$’000US$’000US$’000US$’000US$’000US$’000US$’000US$’000US$’000US$’000US$’

(note 12)

At 1 January 20231,994,462645,494*13,346*35,685*(22,247)*99,257*191,125*(30,145)*103,493*3,030,4701,104,9984,135,468Profit/(loss) for the period––––––––230,758230,758(82,022)148,736Other comprehensive income for the period:

Change in fair value of equity investmentsdesignated at fair value through othercomprehensive income, net of tax

––––(17,466)––––(17,466)–(17,466)Exchange differences on translation offoreign operations

–––––––(118,218)–(118,218)(51,499)(169,717)

Total comprehensive income/(loss) for theperiod––––(17,466)––(118,218)230,75895,074(133,521)(38,447)Issue of shares3,367–(822)––––––2,545–2,545Equity-settled share option arrangements––107––––––10733140Capital contribution from non-controllinginterests––––––––––295,470295,470Transfer from retained profits generated by a

subsidiary

––––––29,259–(29,259)–––

At 30 June 2023 (unaudited)

1,997,829645,494*12,631*35,685*(39,713)*99,257*220,384*(148,363)*304,992*3,128,1961,266,9804,395,176At 1 January 20221,986,152645,494*14,572*35,685*25,055*99,257*140,426*221,381*(297,663)*2,870,359814,1883,684,547Profit/(loss) for the period––––––––186,877186,877(31,527)155,350Other comprehensive income for the period:

Change in fair value of equity investmentsdesignated at fair value through othercomprehensive income, net of tax

––––(21,349)––––(21,349)–(21,349)Exchange differences on translation of

foreign operations

–––––––(148,859)–(148,859)(39,842)(188,701)Total comprehensive income/(loss) for theperiod––––(21,349)––(148,859)186,87716,669(71,369)(54,700)Issue of shares1,342–(340)––––––1,002–1,002Equity-settled share option arrangements––910––––––9101071,017Transfer from retained profits generated by asubsidiary

––––––20,963–(20,963)–––At 30 June 2022 (unaudited)

1,987,494645,494*15,142*35,685*3,706*99,257*161,389*72,522*(131,749)*2,888,940742,9263,631,866# The asset revaluation reserve arose from a change in use from an

owner-occupied property to an investment property carried at fairvalue.* These reserve accounts comprise the consolidated reserves of

US$1,130,367,000 (31 December 2022: US$1,036,008,000) in theinterim condensed consolidated statement of financial position.

1,130,367,000

1,036,008,000

2023INTERIM REPORT2023

INTERIM CONDENSED CONSOLIDATED STATEMENT OF

CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

FOR THE SIX MONTHS

ENDED 30 JUNE20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax175,681176,757Adjustments for:

Finance costs56,70014,980 Share of profits of associates(3,504)(2,299) Interest income(25,421)(9,115)Loss/(gain) on disposal of items of property, plant and equipment

16(27)

Depreciation of property, plant and equipment234,954224,253 Changes in fair value of an investment property–316 Write-down of inventories to net realisable value42,6146,262 Amortisation of intangible assets5,8365,466 Depreciation of right-of-use assets3,2092,866Impairment/(reversal of impairment) of trade receivables

319(126) Equity-settled share option expense1401,017

490,544420,350

Decrease/(increase) in inventories673(41,044)Increase in properties under development(8,951)(17,554)Increase in trade and notes receivables

(19,113)(60,735)Decrease/(increase) in prepayments, other receivables and other assets17,084(16,481)Increase in amounts due from related parties(3,797)(7,302)Decrease in pledged deposits–1,851(Decrease)/increase in trade payables(9,092)108,878(Decrease)/increase in other payables and accruals

(99,536)59,188(Decrease)/increase in government grants(1,873)3,420(Decrease)/increase in amounts due to related parties

(1,376)8,129

Cash generated from operations364,563458,700

Income tax paid(71,505)(50,852)

Net cash ows generated from operating activities293,058407,848

continued/

INTERIM CONDENSED CONSOLIDATED STATEMENT OFCASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2023

FOR THE SIX MONTHS

ENDED 30 JUNE20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received27,6464,569Purchases of items of property, plant and equipment, prepaid lease payment and intangible assets

(381,586)(236,433)Proceeds from disposal of items of property, plant and equipment

10–

Receipt of government grants for property, plant and equipment

–4,805

Net cash ows used in investing activities(353,930)(227,059)

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from bank borrowings21,08884,384Proceeds from issue of shares2,8491,645Capital contribution from non-controlling interests296,197–Repayment of bank loans(128,092)(97,673)Increase in pledged deposits(167,738)–Interest paid(57,533)(13,784)Principal portion of lease payments(3,093)(2,220)Payment of share issued expense(612)–

Net cash ows used in nancing activities(36,934)(27,648)

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS

(97,806)153,141Cash and cash equivalents at beginning of period2,008,7651,610,140Effect of foreign exchange rate changes, net(60,002)(55,631)

CASH AND CASH EQUIVALENTS AT END OF PERIOD1,850,9571,707,650

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

1. Corporate Information

Hua Hong Semiconductor Limited (the“Company”) is a limitedliability company incorporated in Hong Kong on 21 January2005. The registered office of the Company is located at Room2212, Bank of America Tower, 12 Harcourt Road, Central,Hong Kong.The principal activity of the Company is investment holding.During the period, the Company’s subsidiaries (collectivelyrefer to as the“Group”) were principally engaged in themanufacture and trading of semiconductor products.In the opinion of the directors, the parent of the Company isShanghai Huahong (Group) Co., Ltd. (“Huahong Group”),which is a state-owned company established in the People’sRepublic of China (“PRC”) and supervised by the ShanghaiState-owned Assets Supervision and AdministrationCommission (“Shanghai SASAC”). The ultimate parent of theCompany is Shanghai SASAC.

2.1 Basis of Preparation

The interim condensed consolidated financial information forthe six months ended 30 June 2023 has been prepared inaccordance with HKAS 34Interim Financial Reporting. Theinterim condensed consolidated financial information doesnot include all the information and disclosures required in theannual financial statements, and should be read in conjunctionwith the Group’s annual consolidated financial statements forthe year ended 31 December 2022.The financial information relating to the year ended 31December 2022 that is included in the interim condensedconsolidated statement of financial position as comparativeinformation does not constitute the Company’s statutory annualconsolidated financial statements for that year but is derivedfrom those financial statements. Further information relating tothose statutory financial statements required to be disclosedin accordance with section 436 of the Hong Kong CompaniesOrdinance is as follows:

2212

2.1

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

2.1 Basis of Preparation (Continued)

The Company has delivered the financial statements for theyear ended 31 December 2022 to the Registrar of Companiesas required by section 662(3) of, and Part 3 of Schedule 6to, the Hong Kong Companies Ordinance. The Company’sauditors have reported on the financial statements for theyear ended 31 December 2022. The auditor’s report wasunqualified; did not refer to any matters to which the auditordrew attention by way of emphasis without qualifying thereport; and did not contain a statement under sections 406(2),407(2) or 407(3) of the Hong Kong Companies Ordinance.

2.2 Changes in Accounting Policies and

DisclosuresThe accounting policies adopted in the preparation of theinterim condensed consolidated financial information areconsistent with those followed in the preparation of the Group’sannual consolidated financial statements for the year ended31 December 2022, except for the adoption of the followingnew and revised Hong Kong Financial Reporting Standards(“HKFRSs”) for the first time for the current period’s financialinformation.HKFRS 17Insurance ContractsAmendments to HKFRS 17Insurance ContractsAmendment to HKFRS 17Initial Application of HKFRS 17 andHKFRS 9 – Comparative Information

Amendments to HKAS 1 and

HKFRS Practice Statement 2

Disclosure of Accounting Policies

Amendments to HKAS 8Definition of Accounting Estimates

Amendments to HKAS 12Deferred Tax related to Assets and Liabilities

arising from a Single Transaction

Amendments to HKAS 12International Tax Reform – Pillar

Two Model Rules

The adoption of above new and revised standards has nosignificant financial effect to the Group’s interim condensedconsolidated financial information.

2.1

662(3)

406(2)407(2)407(3)

2.2

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

3. Operating Segment Information

For management purposes, the Group is organised into onesingle business unit that includes primarily the manufactureand sale of semiconductor products. Management reviews theconsolidated results when making decisions about allocatingresources and assessing the performance of the Group.Accordingly, no segment analysis is presented.The principal assets employed by the Group are located inthe PRC. Therefore, no segment information based on thegeographical location of assets is presented for the period.Revenues are attributed to geographic areas based on thelocation of customers. Revenues regarding geographicalsegments based on the location of customers for the periodare presented as follows:

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

China (including Hong Kong)966,424902,087North America119,307131,277Asia (excluding China and Japan)84,248112,822Europe77,30950,698Japan14,93518,587

1,262,2231,215,471

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

4. Revenue and Other Income and Gains

An analysis of revenue and other income and gains is asfollows:

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Revenue from contracts with customersSale of goods1,262,2231,215,471

Other incomeRental income7,3847,633Interest income25,4219,115Government subsidies15,0012,338Others2,873893

50,67919,979

Other gainsGain on disposal of items of property, plant and equipment

–27

50,67920,006

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

4. Revenue and Other Income and Gains

(Continued)

An analysis of revenue and other income and gains is asfollows: (continued)

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Type of goods or serviceSales of semiconductor products and total revenue from contracts with customers

1,262,2231,215,471

Timing of revenue recognitionGoods transferred at a point in time and total revenue from contracts with customers

1,262,2231,215,471

The disaggregation of the Group’s revenue based on thegeographical region for the six months ended 30 June 2023 isincluded in note 3.

5. Prot Before Tax

The Group’s profit before tax is arrived at after charging/(crediting):

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Cost of inventories sold884,970846,578Write-down of inventories to net realisable value42,6146,262Impairment/(reversal of impairment) of trade receivables

319(126)Exchange differences, net46,11049,415

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

6. Income Tax

Profits arising in Hong Kong were subject to profits tax at therate of 16.5% during the period (six months ended 30 June2022: 16.5%). No provision for Hong Kong profits tax has beenmade as the Company and a subsidiary incorporated in HongKong had no assessable income during the period (six monthsended 30 June 2022: Nil).The Company’s subsidiary incorporated in the Cayman Islandsis not subject to corporate income tax (“CIT”) as it does nothave a place of business (other than a registered office) orcarry on any business in the Cayman Islands.All of the Group’s subsidiaries registered in the PRC and haveoperations in Mainland China are subject to PRC enterpriseincome tax on the taxable income as reported in their PRCstatutory accounts adjusted in accordance with relevant PRCincome tax laws based on a statutory rate of 25%.Pursuant to the relevant laws and regulations in the PRC andwith approval from the tax authorities in charge, preferentialtax treatment of 15% is available to entities recognised as Highand New Technology Enterprises. Shanghai Huahong GraceSemiconductor Manufacturing Corporation, one of the Group’ssubsidiaries was recognised as High and New TechnologyEnterprise and are entitled to a preferential tax rate of 15%(2022: 15%).Pursuant to the relevant laws and regulations in the PRC andwith approval from the tax authorities in charge, one of theGroup’s subsidiaries, Huahong Semiconductor (Wuxi) Co.,Ltd. (“Hua Hong Wuxi”), is entitled to an exemption from CITfor five years, commencing from the first year that Hua HongWuxi generates taxable profit, and a deduction of 50% on theCIT rate for the following five years. Hua Hong Wuxi was inaccumulated tax loss positions as of 30 June 2023, and thetax holiday has not begun to take effect.

16.5%

25%

15%15%15%

50%

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

6. Income Tax (Continued)

The major components of income tax expense of the Groupare as follows:

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Current income tax expense – PRC47,07132,740Current income tax expense – elsewhere2625Deferred tax(20,152)(11,358)

Total income tax expense26,94521,407

7. Earnings Per Share Attributable to Ordinary

Equity Holders of the ParentThe calculation of the basic earnings per share amounts isbased on the profit for the period attributable to ordinary equityholders of the parent and the weighted average number ofordinary shares of 1,307,657,291 in issue during the period (sixmonths ended 30 June 2022: 1,301,607,081).The calculation of the diluted earnings per share amountis based on the profit for the period attributable to ordinaryequity holders of the parent. The weighted average numberof ordinary shares used in the calculation is the number ofordinary shares in issue during the period, as used in the basicearnings per share calculation, and the weighted averagenumber of ordinary shares assumed to have been issued atno consideration on the deemed exercise or conversion of alldilutive potential ordinary shares into ordinary shares.

1,307,657,291

1,301,607,081

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

7. Earnings Per Share Attributable to Ordinary

Equity Holders of the Parent (Continued)

The calculations of basic and diluted earnings per share arebased on:

For the six monthsended 30 June

20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

EarningsProfit attributable to ordinary equity holders ofthe parent, used in the basic earnings per share calculation

230,758186,877

Number of shares

For the six months

ended 30 June

20232022

(’000)(’000)

SharesWeighted average number of ordinary sharesin issue during the period used in the basic earnings per share calculation

1,307,6571,301,607Effect of dilution-weighted average number of ordinary shares:

Share options11,00216,282

1,318,6591,317,889

8. Dividends

The directors did not declare any interim dividend for the sixmonths ended 30 June 2023 (six months ended 30 June 2022:

Nil).

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

9. Property, Plant And Equipment

During the six months ended 30 June 2023, the major changesin property, plant and equipment include:

? The Group acquired items of property, plant and

equipment with a cost of US$246,129,000 (six monthsended 30 June 2022: US$214,708,000).? Depreciation for items of property, plant and equipmentwas US$234,954,000 during the period (six months ended30 June 2022: US$224,253,000).? Assets with a net book value of US$45,000 were disposedof by the Group during the six months ended 30 June2023 (30 June 2022: US$61,000), resulting in a netloss/(gain) on disposal of US$16,000 (30 June 2022:

US$27,000).

10. Trade and Notes Receivables

30 June

2023

31 December

2022(Unaudited)(Audited)(US$’000)(US$’000)

Trade receivables240,229229,409Notes receivable72,33164,038

312,560293,447

Impairment of trade receivables(1,855)(1,591)

310,705291,856

An ageing analysis of the trade receivables, based on theinvoice date and net of provisions, is as follows:

30 June

2023

31 December

2022

(Unaudited)(Audited)(US$’000)(US$’000)

Within 3 months3218,559212,563Over 3 and within 6 months3619,68615,255Over 6 months and within 1 year61129–

238,374227,818

246,129,000214,708,000?

234,954,000224,253,000?

45,000

61,000

16,000

27,000

10.

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

11. Trade Payables

An ageing analysis of the trade payables of the Group as atthe end of the reporting period, based on the invoice date, isas follows:

30 June2023

31 December

2022

(Unaudited)(Audited)(US$’000)(US$’000)

Within 1 month1137,266141,338Over 1 but within 3 months1339,70060,772Over 3 but within 6 months3616,90311,699Over 6 but within 12 months61218,5709,388Over 12 months1215,46813,802

227,907236,999

12. Share Capital

Number ofsharesAmount(’000)(US$’000)

1 January 20231,306,8371,994,462Issue of shares with exercise of share options1,3103,367

30 June 2023 (unaudited)

1,308,1471,997,829

1 January 20221,301,1921,986,152Issue of shares with exercise of share options6211,342

30 June 2022 (unaudited)

1,301,8131,987,494

11.

12.

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

13. Commitments

The Group had the following capital commitments at the endof the reporting period:

30 June2023

31 December

2022(Unaudited)(Audited)(US$’000)(US$’000)

Contracted, but not provided for:

Property, plant and equipment 1,410,110284,304

13.

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

14. Related Party Transactions

(a) Name and relationship

Name of related partyRelationship with the Group

Huahong Group and its subsidiaries– Hua Hong International Inc. (“Huahong International”)Shareholder of the Company– Shanghai Huahong Zealcore Electronics Co., Ltd. (“Huahong Zealcore”)Subsidiary of Huahong Group– Shanghai Hongri International Electronics Co., Ltd. (“Hongri”)Subsidiary of Huahong Group– Shanghai Integrated Circuit Research and Development Center (“ICRD”) *Subsidiary of Huahong Group*– Shanghai Hua Hong Jitong Smart System Co., Ltd. (“Jitong”)Subsidiary of Huahong Group– Shanghai Huali Microelectronics Co., Ltd. (“Shanghai Huali”)Subsidiary of Huahong Group

SAIL and its subsidiaries– Shanghai Alliance Investment Ltd. (“SAIL”)Holding company of Sino-Alliance

International Ltd.Sino-Alliance International Ltd.

– Sino-Alliance International Ltd. (“SAIL International”)Shareholder of the CompanySino-Alliance International Ltd.SAIL International

Shanghai Huahong Technology Development Co., Ltd. (“HuahongTechnology Development”)

Associate of the Group– Shanghai Huahong Real Estate Co., Ltd. (“Huahong Real Estate”)Subsidiary of Huahong Technology Development– Shanghai Huajin Property Management Co., Ltd. (“Huajin”)Subsidiary of Huahong Technology Development

* ICRD, a subsidiary of Huahong Group, is no longer arelated party to the Group since 1 January 2023.

14.(a)

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

14. Related Party Transactions (Continued)

(b) In addition to the transactions disclosed elsewhere inthis financial information, the Group had the followingtransactions with related parties during the period:

For the six months

ended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Sales of goods to related parties (note (i))

(i) ICRD* *–2,098 Huahong Zealcore 7,6984,202 Hongri 7851,663

Purchases of goods from related parties (note (ii))

(ii) Hongri 10,8049,340 Huahong Zealcore 660373 Jitong 85 Shanghai Huali –20

Rental income from a related party (note (iii))

(iii) Shanghai Huali 7,0407,340

Service fee charged by a related party (note (iv))

(iv) Huajin 303175

Interest expense charged by a relatedparty under lease arrangement as a lessee (note (iv))

(iv) Huahong Real Estate 473370

Expense paid on behalf of a related party (note (v))

(v) Shanghai Huali 14,33816,884

14.

(b)

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

14. Related Party Transactions (Continued)

(b) (Continued)* The related party transactions with ICRD disclosed abovewere conducted from 1 January 2022 to 30 June 2022.Notes:

(i) The sales of goods to the related parties were made

according to the prices and terms agreed between therelated parties.(ii) The purchases of goods and intangible assets from relatedparties were made according to the prices and termsoffered by the related parties.(iii) The rental income received from a related party was based

on the prices and terms agreed between the relatedparties.(iv) The service fees and interest expense charged by related

parties were based on the prices and terms agreedbetween the related parties.(v) The expense paid on behalf of the related party is interest-free and repayable on demand.(c) Outstanding balances with related parties

The amounts due from/to related parties as at the endof the reporting period are unsecured, interest-free andsettled in accordance with the terms agreed with therelated parties.

14.(b)*

(i)(ii)(iii)(iv)(v)

(c)

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

14. Related Party Transactions (Continued)

(d) Compensation of key management personnel of theGroup

For the six monthsended 30 June20232022(Unaudited)(Unaudited)(US$’000)(US$’000)

Short term employee benefits1,8691,618Pension scheme contributions8054Equity-settled share option expense103196

Total compensation paid to key management personnel

2,0521,868

15. Fair Value and Fair Value Hierarchy of

Financial InstrumentsThe carrying amounts and fair values of the Group’s financialinstrument, other than those with carrying amounts thatreasonably approximate to fair values, are as follows:

Carrying amountsFair values30 June2023

31 December

2022

30 June2023

31 December

2022(US$’000)(US$’000)(US$’000)(US$’000)

(Unaudited)(Audited)(Unaudited)(Audited)

Financial assets

Equity investments designatedat fair value through other comprehensive income

151,812178,632151,812178,632

Financial liabilityInterest-bearing bank borrowings1,410,5441,481,5801,472,3221,537,685

14.(d)

15.

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

15. Fair Value and Fair Value Hierarchy of

Financial Instruments (Continued)The Group’s finance department headed by the financemanager is responsible for determining the policies andprocedures for the fair value measurement of financialinstruments. The finance department reports directly to thechief financial officer. At each reporting date, the financedepartment analyses the movements in the values of financialinstruments and determines the major inputs applied in thevaluation. The valuation is reviewed and approved by the chieffinancial officer.The fair values of the financial assets and liabilities areincluded at the amount at which the instrument could beexchanged in a current transaction between willing parties,other than in a forced or liquidation sale. The followingmethods and assumptions were used to estimate the fairvalues of those financial assets and liabilities measured at fairvalue:

The fair values of listed equity investments are based onquoted market prices adjusted by discount for illiquidity if theinvestments are still in the lock-up period. The fair values ofunlisted equity investments designated at fair value throughother comprehensive income have been estimated using amarket-based valuation technique based on assumptions thatare not supported by observable market prices or rates. Ifthere is a recent deal regarding the unlisted investments, thefair values are estimated based on the dealing price. If thereis no such deal to be referenced, the directors will determinecomparable public companies (peers) based on industry, size,leverage and strategy, and calculates an appropriate pricemultiple, such as price to book value (“P/B”) multiple and priceto sales value (“P/S”) multiple, for each comparable companyidentified. The multiple is calculated by dividing the enterprisevalue of the comparable company by net assets. The tradingmultiple is then discounted for considerations such asilliquidity based on company-specific facts and circumstances.The discounted multiple is applied to the corresponding netassets of the unlisted equity investments to measure the fairvalue. The directors believe that the estimated fair valuesresulting from the valuation technique, which are recordedin the consolidated statement of financial position, and therelated changes in fair values, which are recorded in othercomprehensive income, are reasonable, and that they werethe most appropriate values at the end of the reporting period.

15.

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

15. Fair Value and Fair Value Hierarchy of

Financial Instruments (Continued)Management has assessed that the fair values of the non-current portion of interest-bearing bank borrowings withfloating interest rate of the Company approximate to their fairvalues due to their floating interest rates.The non-current portion of lease liabilities of the Groupapproximate to their fair values since their carrying amountsare present value and the internal rates of return are closeto rates currently available for instruments with similar terms,credit risk and remaining maturities.The fair values of interest-bearing bank borrowings with fixedinterest rate have been calculated by discounting the expectedfuture cash flows using rates currently available for instrumentswith similar terms, credit risk and remaining maturities. TheGroup’s own non-performance risk for interest-bearing bankborrowings as at 30 June 2023 and 31 December 2022 wasassessed to be insignificant.Fair value hierarchyThe following tables illustrate the fair value measurementhierarchy of the Group’s financial instruments:

Financial assets measured at fair value30 June 2023

Fair value measurement categorised into

Level 1Level 2Level 3Total

US$’000US$’000US$’000US$’

(Unaudited)(Unaudited)(Unaudited)(Unaudited)

Equity investments designatedat fair value through other comprehensive income

2,040–149,772151,812

15.

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

15. Fair Value and Fair Value Hierarchy of

Financial Instruments (Continued)Fair value hierarchy (continued)

Financial assets measured at fair value (continued)31 December 2022

Fair value measurement categorised intoLevel 1Level 2Level 3Total

(US$’000)(US$’000)(US$’000)(US$’000)(Audited)(Audited)(Audited)(Audited)Equity investments designatedat fair value through other comprehensive income

2,442–176,190178,632During the period, there were no transfers of fair valuemeasurements between Level 1 and Level 2 and no transfersinto or out of Level 3 for both financial assets and financialliabilities (six months ended 30 June 2022: Nil).

15.

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

15. Fair Value and Fair Value Hierarchy of

Financial Instruments (Continued)Fair value hierarchy (continued)The recurring fair value measurement for the Group’sequity investments designated at fair value through othercomprehensive income and financial assets at fair valuethrough profit or loss, was made using significant unobservableinputs (Level 3) as at 30 June 2023. Below is a summary of thevaluation techniques used and the key inputs to the valuation:

Valuationtechnique

Signicantunobservable inputRange

Sensitivity of fair value tothe input

Unlisted equity investment AValuation

multiples

Average P/B multiple of peers

2023:1.3x-2.1x2022: 1.0x-2.6x

5%(2022: 5%) increase/decrease would result inincrease/decrease in fair value by 5%(2022: 5%)A1.3x-2.1x

1.0x-2.6x

5%5%

5%5%Discount for illiquidity2023:20%-30%

2022:20%-30%

5%(2022: 5%) increase/

decrease would result in

decrease/increase in fair

value by 5%(2022: 5%)20%-30%20%-30%

5%5%

5%5%Unlisted equity investment BValuation

multiples

Average P/S multiple of peers

2023:4.8x-12.9x2022:4.0x-10.9x

5% increase/decrease would

result in increase/decrease in

fair value by 5%B4.8x-12.9x

4.0x-10.9x

5%Discount for illiquidity2023:34%

2022:34%

5% increase/decrease would

result in decrease/increase in

fair value by 5%34%34%

15.

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

15. Fair Value and Fair Value Hierarchy of

Financial Instruments (Continued)

Fair value hierarchy (continued)The movements in financial assets categorised into Level 3during the period are as follows:

Equity investments

designated at fairvalue through other

comprehensive

income

(US$’000)

1 January 2023176,190Total loss recognised in other comprehensive income(20,250)Exchange realignment(6,168)

As at 30 June 2023 (unaudited)149,772

1 January 2022255,552Transfer to level 332,236Total loss recognised in other comprehensive income(25,116)Exchange realignment(11,600)

As at 30 June 2022 (unaudited)221,072

15.

2023INTERIM REPORT2023

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

16. Share Option Scheme

The Company operates a share option scheme (the“Scheme”)for the purpose of providing incentives and rewards to eligibleparticipants who contribute to the success of the Group’soperations.The Scheme includes two batches, each of which wereeffective on 4 September 2015 (the“2015 Options”) and on 24December 2018 (the“2018 Options”), respectively.On 29 March 2019, 500,000 options were granted to the chiefexecutive (“2018 Tranche A”). On 23 December 2019, 300,000options were granted to directors and key managementpersonnel (“2018 Tranche B”) and 2,182,000 options weregranted to other employees (“2018 Tranche C”).2015 OptionsThe following share options were outstanding under the 2015Options during the period:

Number of options

20232022(’000)(’000)

At 1 January–4,738Exercised during the period–(195)

At 30 June–4,543

2018 OptionsThe following share options were outstanding under the 2018Options during the period:

Number of options

20232022

(’000)(’000)

At 1 January23,43824,963Exercised during the period(1,310)(426)Forfeited during the period(13)(226)

At 30 June22,11524,311

16.

500,000A300,000

B2,182,000

NOTES TO THE INTERIM CONDENSEDCONSOLIDATED FINANCIAL INFORMATION

30 June 2023

17. Event after the Reporting Period

On August 7, 2023, the Company became listed on theSTAR Market of the Shanghai Stock Exchange. By way of theshare issue, 407,750,000 ordinary shares of the Companywere subscribed with gross proceeds of RMB21,203 million(equivalent to US$2,974 million). After deducting issuancecosts including underwriting fees and other issuance costs, thenet proceeds were RMB20,921 million (equivalent to US$2,934million), which resulted in an increase of RMB20,921 million(equivalent to US$2,934 million) in the share capital of ordinaryshares.

18. Approval of the Interim Condensed

Consolidated Financial InformationThe interim condensed consolidated financial information wasapproved and authorized for issue by the board of directors on29 August 2023.

17.

407,750,000

21,2032,974

20,9212,93420,9212,93418.

2023INTERIM REPORT2023

OTHER DISCLOSURES30 June 2023

2023INTERIM REPORT2023

OTHER DISCLOSURES30 June 2023

22,115,413

1.69%

SHARE OPTION SCHEMEThe Company adopted a share option scheme on1 September 2015, which became effective on 4September 2015. The share option scheme shall bevalid and effective for a period of 7 years commencingon the date of adoption. It has therefore expiredon 1 September 2022. No further options could begranted, and none has been granted, under the ShareOption Scheme from that date. As of 30 June 2023,the Company had options for 22,115,413 sharesoutstanding under the share option scheme, whichrepresented approximately 1.69% of the Company’sissued shares as of that date. The table below setsout details of outstanding options granted to Directorsand other grantees under the share option schemeand transactions during the six months ended 30 June2023:

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

Number of share optionsName or category of participants

Directors

Former directorsOther employeesIn aggregateMr. Junjun Tang

Granted on 4 September 2015–988,000–29,262,000––30,250,000Granted on 24 December 2018––680,000–33,820,000–34,500,000Granted on 29 March 2019500,000–––––500,000Granted on 23 December 2019–––––2,482,0002,482,000Cancelled/lapsed during the year 2015–––-130,000––-130,000Cancelled/lapsed during the year 2016–––-1,458,000––-1,458,000Cancelled/lapsed during the year 2017–––-1,353,399––-1,353,399Cancelled/lapsed during the year 2018–––-754,595––-754,595Cancelled/lapsed during the year 2019––-600,000-58,000-1,035,000-36,000-1,729,000Cancelled/lapsed during the year 2020–-119,000-80,000–-993,904-84,000-1,276,904Cancelled/lapsed during the year 2021-62,500–––-5,751,868-592,993-6,407,361Cancelled/lapsed during the year 2022––––-543,728-73,983-617,711Exercised during the period––––1,230,16680,1251,310,291Cancelled during the period–––––-5,000-5,000Lapsed during the period––––-8,167–-8,167Outstanding as at 1 January 2023437,500–––21,389,7231,611,64823,438,871Outstanding as at 30 June 2023437,500–––20,151,3901,526,52322,115,413Vesting period of share optionsNote 1Note 2Note 3Note 2Note 3Note 4

123234Exercise period of share optionsNote 5Note 6Note 7Note 6Note 7Note 8

567678Exercise price of share optionsHK$18.400HK$6.912HK$15.056HK$6.912HK$15.056HK$17.952

18.4006.91215.0566.91215.05617.952Weighted average closing price ofthe shares immediately before thedates on which the share options were exercisedHK$31.86HK$32.18 31.8632.18

2023INTERIM REPORT2023

OTHER DISCLOSURES30 June 2023

Note 1 Subject to conditions as set out in the grant notice,

one fourth of the options shall vest on each of 23December 2021, 12 August 2022, 11 August 2023and 29 March 2024Note 2 Subject to conditions as set out in the grant

notices, one third of the options shall vest on eachof 4 September 2017, 4 September 2018 and 4September 2019Note 3 Subject to conditions as set out in the grant notices,

for employees at or above the level of the vicepresident, one fourth of the options shall vest oneach of 24 December 2020, 24 December 2021,24 December 2022 and 24 December 2023; for theother employees, one third of the options shall veston each of 24 December 2020, 24 December 2021and 24 December 2022Note 4 Subject to conditions as set out in the grant notices,

for employees at or above the level of the vicepresident, one fourth of the options shall vest oneach of 23 December 2021, 23 December 2022,23 December 2023 and 23 December 2024; for theother employees, one third of the options shall veston each of 23 December 2021, 23 December 2022and 23 December 2023Note 5 The exercise period of share options is from 29

March 2021 to 28 March 2026Note 6 The exercise period of share options is from 4

September 2017 to 3 September 2022Note 7 The exercise period of share options is from 24

December 2020 to 23 December 2025Note 8 The exercise period of share options is from 23

December 2021 to 22 December 2026Please refer to note 16 of the Notes to the InterimCondensed Consolidated Financial Information forfurther details.

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

DIRECTORS’ AND CHIEF EXECUTIVE’SINTERESTS IN SHARES ANDUNDERLYING SHARES OF THECOMPANYAs of 30 June 2023, except as disclosed below, noneof the Directors nor the Chief Executive of the Companyhad any interests and short positions in the shares,underlying shares or debentures of the Company or anyassociated corporation (within the meaning of Part XVof SFO), as recorded in the register kept under section352 of the SFO, or as otherwise notified to the Companyand the Hong Kong Stock Exchange pursuant to theModel Code.

Name of DirectorCapacity

Number ofunderlying shares

held inlong position

(1)

Approximatepercentage ofinterests(1)

Mr. Junjun TangBeneficial owner

437,5000.03%(1)

Note:

(1) Long position in the underlying shares of the Company

under share options granted pursuant to the ShareOption Scheme. Please refer to page 62 for particularsof outstanding options as of 1 January 2023 and 30 June2023 respectively.

2023INTERIM REPORT2023

OTHER DISCLOSURES

30 June 2023

Substantial shareholders

Capacity andnature of ownership

Number ofshares held

Approximatepercentage ofaggregateownershipin issued share

capital**

Shanghai Hua Hong International, Inc.(Hua Hong International)

(2)

Legal and beneficial owner347,605,650

(1)

26.57%

(2)Shanghai Huahong (Group) Co., Ltd.(Huahong Group)

(2)

Interest in a controlled corporation347,605,650

(1)

26.57%

(2)Sino-Alliance International, Ltd. (Sino-Alliance International)

Legal and beneficial owner160,545,541

(1)(3)

12.27%

Sino-Alliance International, Ltd. (Sino-Alliance International)

Interest in a controlled corporation28,415,606

(1)

2.17%

Shanghai Alliance Investment Ltd. (SAIL)Interest in a controlled corporation188,961,147

(1)(4)

14.44%

Xinxin (Hongkong) Capital Co., LimitedLegal and beneficial owner178,705,925

(1)

13.66%

Xun Xin (Shanghai) Investment Co., Ltd.Interest in a controlled corporation178,705,925

(1)

13.66%

China Integrated Circuit Industry Investment Fund Co., Ltd.

Interest in a controlled corporation178,705,925

(1)

13.66%

SUBSTANTIAL SHAREHOLDERS’

AND OTHER PERSONS’OWNERSHIPIN THE SHARES AND UNDERLYINGSHARES OF THE COMPANY

As of 30 June 2023, persons other than a Director orChief Executive of the Company, having ownershipof 5% or more or short positions in the shares andunderlying shares of the Group, were as follows:

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

SUBSTANTIAL SHAREHOLDERS’

AND OTHER PERSONS’OWNERSHIPIN THE SHARES AND UNDERLYINGSHARES OF THE COMPANY(Continued)

Notes:

(1) Long positions in the shares of the Company.

(2) Hua Hong International is a wholly-owned subsidiary of

Huahong Group.

(3) Including 3,084 shares held in escrow by Sino-Alliance

International pursuant to an escrow arrangement.

(4) SAIL indirectly held beneficial ownership in the Company

through two wholly-owned subsidiaries, including Sino-Alliance International.* The percentages are calculated based on the totalnumber of issued shares of the Company as of 30 June2023, i.e., 1,308,147,031 shares.Except as disclosed above, so far as is known to any ofthe Directors and Chief Executive of the Company, as of30 June 2023, no other person or corporation had anybeneficial ownership or short positions in any shares orunderlying shares of the Company which was recordedin the register required to be kept by the Companypursuant to section 336 of the SFO.PURCHASE, SALE OR REDEMPTIONOF SECURITIES

Neither the Company nor any of its subsidiariespurchased, sold or redeemed any of the Company’slisted securities during the six months ended 30 June2023.GEARING RATIOThe Group monitors capital using a gearing ratio,which is net debt divided by total equity plus net debt.The Group includes, within net debt, trade payables,other payables and accruals, interest-bearing bankborrowings, lease liabilities and amounts due to relatedparties, less cash and cash equivalents. The Group’sgearing ratio as at 30 June 2023 was 9.94% (31December 2022: 11.94%).

(1)(2)

(3) Sino-Alliance International

3,084

(4) Sino-Alliance

International*

1,308,147,031

9.94%

11.94%

2023INTERIM REPORT2023

OTHER DISCLOSURES

30 June 2023

20,173,00077,000298,000

PERFORMANCE OF THE EQUITYINVESTMENTS

The table below sets out the breakdown of theperformance in respect of the equity investments duringthe six-month period ended 30 June 2023.

ShanghaiHualiQST

Shanghai

Awinic(USD’000)(USD’000)(USD’000)

Initial investment cost229,1331,7042,120Book value at the beginning of the period174,1702,0202,442Purchases–––Redemption–––Changes in fair value(20,173)(77)(298)Exchange realignment(6,096)(72)(104)Book value at the end of the period147,9011,8712,040Subscribed capital contribution/number of shares heldRMB

1,400,000,00010,377,050178,0001,400,000,00010,377,050178,000Percentage of equity interest held6.3428%0.6220%0.1072%Size compared to the total assets2.1%0.0%0.0%During the six-month period ended 30 June 2023, theGroup did not dispose of any equity interest in ShanghaiHuali, QST or Shanghai Awinic. Change in the fair valueof the Company’s equity investment in Shanghai Huali,QST, and Shanghai Awinic were minus US$20,173,000,minus US$77,000, and minus US$298,000 respectively.

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

IDM65/5528/22

26,269,00020,173,0006,096,000

MEMS

149,00077,00072,000

PERFORMANCE OF THE EQUITYINVESTMENTS (Continued)Shanghai Huali was established in 2010. As anindustry-leading IC wafer foundry company, ShanghaiHuali has advanced process technologies and offerscomprehensive solutions. It is devoted to providingone-stop wafer foundry technical services forprocess technology nodes from 65/55nm to 28/22nmfor design companies, IDM companies, and othersystem companies. Shanghai Huali has two 12-inchfully-automated wafer fabs in China.During the six-month period ended 30 June 2023, thebook value of the Company’s equity investment hasdecreased by US$26,269,000, including a decrease ofUS$20,173,000 in the fair value and a foreign currencystatement loss of around US$6,096,000. Accordingly,the Board is of the view that the performance ofShanghai Huali during the six-month period ended 30June 2023, has been in line with its expectations.QST was founded in September 2012 and has arobust IP portfolio, with over 83 patents issued. QSTis a leading sensor platform company engaged inthe development and marketing of Innovative MEMSsensors and solutions to simplify advanced perception,measurement, and control in consumer, automotive,and industrial applications.During the six-month period ended 30 June 2023, thebook value of the Company’s equity investment in QSTdecreased by US$149,000, mainly due to a decreaseof US$77,000 in the fair value and a decrease ofUS$72,000 in a foreign currency statement loss. As thebusiness of QST is still in its early development stage,the Board is of the view that the performance andstrategic planning of QST during the six-month periodended 30 June 2023 have been consistent with itsexpectations.Shanghai Awinic, founded in June 2008, is ahigh-tech company focusing on high-quality andhigh-performance IC design of mixed signal, analog,and RF for mobile phone, AI, Internet of Things,automotive electronics, wearables, and consumerelectronics. Shanghai Awinic is a listed company on theSTAR Market of the Shanghai Stock Exchange.

2023INTERIM REPORT2023

OTHER DISCLOSURES30 June 2023

PERFORMANCE OF THE EQUITYINVESTMENTS (Continued)During the six-month period ended 30 June 2023,the book value of the Company’s equity investment inShanghai Awinic decreased by US$402,000, includinga decrease of US$298,000 of fair value and a foreigncurrency statement loss of around US$104,000. TheBoard considers its investment in Shanghai Awinicas part of a long-term strategic investment, which willsee the Group and Shanghai Awinic collaborate inareas such as development of Analog, BCD (including12-inch 90nm), eFlash, Power Device, RF and ICtechnologies, and expansion of production capacity,with a view to providing more competitive productswith higher performance and quality to customers. TheBoard is of the view that the performance of ShanghaiAwinic during the during the six-month period ended 30June 2023 has been in line with its expectation.The Company confirms that it has complied with theaccounting policy of investments and other financialassets (policies under HKFRS 9, applicable since 1January 2018) as contained in the interim report of theCompany for the six-month period ended 30 June 2023.

402,000298,000104,000BCD1290eFlashIC

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

6,7006,300

EMPLOYEES AND REMUNERATIONPOLICIESAs of 30 June 2023, the Company had approximately6,700 employees in the PRC and overseas (30June 2022: approximately 6,300). The Company’sremuneration policy is reviewed periodically anddetermined by reference to the analysis on marketcompetitiveness, company performance, and individualqualifications and performance. Staff benefits includemedical schemes, mandatory social insurance andprovident fund etc.COMPLIANCE WITH THE DEED OFNON-COMPETITION AND DEED OFRIGHT OF FIRST REFUSALHuahong Group, SAIL and INESA, being controllingshareholders of the Company at the time, enteredinto a deed of non-competition (the“Deed of Non-competition”) dated 23 September 2014, details ofwhich have been set out in the paragraph headed“Non-competition Undertaking”in the section headed“Relationship with Controlling Shareholders”of theCompany’s prospectus dated 3 October 2014 (the“Prospectus”). In addition, Huahong Group andSAIL entered into a deed of right of first refusal (the“Deed of Right of First Refusal”) dated 10 June 2014,details of which have been set out in the paragraphheaded“Right of First Refusal”in the section headed“Relationship with Controlling Shareholders”of theProspectus.As of 30 June 2023, the Company has reviewed thewritten declaration from each of Huahong Group, SAILand INESA on their compliance with their commitmentsunder the Deed of Non-competition and the Deedof Right of First Refusal (as the case may be). TheIndependent Non-Executive Directors have reviewedthe status of compliance and confirmed that all thecommitments under the Deed of Non-competition andthe Deed of Right of First Refusal (as the case may be)have been complied with by the relevant parties.

2023INTERIM REPORT2023

OTHER DISCLOSURES30 June 2023

CORPORATE GOVERNANCEThe Company is committed to maintaining a highstandard of corporate governance with a view tosafeguarding the interests of its shareholders andenhancing corporate value and accountability.The Board is of the view that the Company hascomplied with the code provisions set out in theCorporate Governance Code as contained in Appendix14 of the Listing Rules during the six months ended 30June 2023.CODE OF CONDUCT FOR SECURITIESTRANSACTIONS BY DIRECTORSThe Company has adopted a code of conductregarding the Directors’securities transactions on termsno less exacting than the required standard set out inthe Model Code. Having made specific enquiries of allDirectors, the Company has received their confirmationthat they have complied with the required standard asset forth in the Model Code throughout the six monthsended 30 June 2023.AUDIT COMMITTEEThe Audit Committee, comprising one Non-executiveDirector and two Independent Non-executive Directorsof the Company, has reviewed and approved theunaudited results of the Group for the six months ended30 June 2023 and has discussed with management theaccounting principles and practices adopted by theGroup, internal controls and financial reporting matters.

HUA HONG SEMICONDUCTOR LIMITED

OTHER DISCLOSURES

30 June 2023

(www.hkexnews.hk)(www.huahonggrace.com)

PUBLICATION OF INTERIM REPORTON THE WEBSITES OF THE HONGKONG STOCK EXCHANGE AND THECOMPANY

The interim report for the six months ended 30 June2023 containing information required by Appendix 16of the Listing Rules will be dispatched to shareholdersand published on the websites of the Hong Kong StockExchange (www.hkexnews.hk) and the Company (www.huahonggrace.com) in due course.

By Order of the BoardHua Hong Semiconductor LimitedMr. Suxin ZhangChairman and Executive Director

附件：公告原文