(Yicai) Feb. 14 -- Shares of Hua Hong Semiconductor fell after the Chinese chipmaker reported its first net loss since listing on the Hong Kong Stock Exchange in 2014 in the fourth quarter of last year because of exchange rate fluctuations and intensified competition.

Hua Hong [HKG: 1347] closed 2.5 percent down at HKD25.65 (USD3.29) in Hong Kong today, after plunging 5.2 percent yesterday. Its Shanghai-listed stock [SHA: 688347] dropped 3.3 percent to CNY46.79 (USD6.43), after sliding 2.6 percent yesterday.

Hua Hong yesterday reported a net loss of USD25.2 million in the fourth quarter, compared with a net profit of USD35.4 million a year earlier and USD44.8 million in the third quarter. Sales revenue totaled USD539.2 million, up 18 percent and 2.4 percent, respectively.

The Chinese low-end chip market is facing intense competition. With new factories kicking off production, supply has exceeded demand, leading to reduced sales and greater downward pressure on prices, Hua Hong's President Bai Peng said during the earnings conference call.

In response, the company plans to shift its focus to higher-end domains, developing more advanced 28- and 22-nanometre process nodes rather than mature 55- and 65-nm process nodes, Bai noted.

Hua Hong holds USD1.5 billion in US dollar-denominated bonds, and the 2 percent appreciation of the US dollar against the Chinese yuan in the fourth quarter caused the loss, Chief Financial Officer Daniel Wang said during the earnings conference call.

"We are uncertain whether exchange rate fluctuations will impact profitability again in the first quarter of this year," Wang noted. "In the long term, we plan to convert all US dollar-denominated debts into yuan-denominated ones to avoid the impact of exchange rate fluctuations."

For the first quarter, the Shanghai-based company expects sales revenue of USD530 million to USD550 million, with a gross profit margin of 9 percent to 11 percent, compared with 11.4 percent in the fourth quarter of last year.

Hua Hong reported a net profit of USD58.1 million for the full year 2024, down 79 percent from the previous year. Revenue fell 12 percent to USD2 billion, mainly because of decreased average selling prices, partially offset by increased wafer shipments.

Editor: Futura Costaglione