Another One? Huahong Suddenly Surges 16%, 7nm Rumors Ignite Semiconductor Sector

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Source | Deep Blue Finance

Written by | Wang Xin

On the afternoon of March 16, the A-share semiconductor sector suddenly surged, with Huahong company’s stock price soaring, reaching a peak increase of over 16%.

Funds suddenly “boosted” their investments, all because of a single piece of news: China’s second-largest chip manufacturer, Huahong Group’s subsidiary Huahong Microelectronics, has developed a 7-nanometer process technology that can be used to produce AI chips.

In today’s capital markets, the words “7 nanometers” are almost an emotional switch. If the news is true, it means another tech company has entered the door to advanced process technology!

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Surged over 16%, driving the semiconductor sector higher

This afternoon, Huahong, with a total market value exceeding 200 billion yuan, once jumped over 16%, reaching a high of 139.33 yuan during trading. The H-shares also soared by 11%. The entire semiconductor sector was lifted.

Zhaoyi Innovation hit the daily limit, Langke Technology, Yingxin Development (rights protection), and Taiji Industrial hit the limit, Jinyang Solar, Guoke Micro, Yachuang Electronics (rights protection), and Buwei Storage all rose over 10%; on the Hong Kong side, SMIC and Jingmen Semiconductor followed suit, with Zhaoyi Innovation and Lankei Technology rising over 7%.

The news scene was lively. The GTC 2026 conference is being held in San Jose, California, with OpenAI, Google, Meta, Microsoft, and Tesla all attending. GF Securities said this conference is not only a catalyst for Nvidia but could also be a catalyst for the entire semiconductor sector, expecting Nvidia to showcase its second-generation CPO switch.

There are also rumors of price hikes. Texas Instruments, NXP, and Infineon, three major chip manufacturers, recently announced price increases starting April 1. Today, there are reports that TSMC, GlobalFoundries, and Powertech Semiconductor will also raise prices in April, with increases of over 10%.

But the heaviest “deep water bomb” comes from foreign media reports cited by domestic media.

According to the latest reports, insiders say that China’s second-largest chip manufacturer, Huahong Group, has developed 7-nanometer process technology for AI chip production. The sources reveal that Huahong’s subsidiary Huahong Microelectronics is preparing to launch the 7nm process at its Shanghai factory.

This marks China’s second company after SMIC to reach the “7-nanometer high ground.”

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Huahong “breaks into” 7nm, with Huawei’s strong support

Why is the market so excited? Besides the long-anticipated 7nm, Huahong was not originally a company focused on advanced process technology. For a long time, it was labeled as a “power device foundry.”

To understand why Huahong suddenly received a revaluation from the market, we need to look at its origins.

Huahong’s story began with the 1996 “909 Project,” the largest investment project in China’s electronics industry history. That year, amid the pile-driving sounds in Pudong, Shanghai, Huahong was born.

Over the next two decades, Huahong experienced many ups and downs. After suffering heavy losses in DRAM, it transformed into a wafer foundry, then focused on power semiconductors to become the “king of power device foundries,” and in 2023, it listed on the STAR Market, raising 21.2 billion yuan, setting the record for the largest IPO in A-shares that year, achieving a dual listing in A and H shares. But the capital market has always questioned: can Huahong make AI chips?

Now, Huahong has given an answer.

According to reports citing insiders, Huawei has been collaborating with Huahong on 7nm technology, with development supported by domestic suppliers including SiCarrier, a device manufacturer supported by Huawei.

This news has attracted attention because Huahong’s Huahong Microelectronics currently mainly produces logic chips at 22nm and 28nm. Jumping directly from 22nm to 7nm is a significant technological leap.

Another interesting point is that the GPU designer Biren Technology, listed on the U.S. Entity List, has already started tape-out using Huahong’s 7nm process line. If this can be further confirmed, it means the 7nm line is not just a laboratory demonstration but has customers onboard.

While the market celebrates the breakthrough in 7nm, Huahong also made a major move on the capital side. In December last year, Huahong announced plans to acquire a controlling stake in Huahong Microelectronics and raised 7.56 billion yuan to upgrade the technology and R&D of the wafer foundry. Industry insiders generally believe this money will likely be used for domestic equipment procurement.

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Beyond the celebration, three things need to be understood

However, behind the market frenzy, there are also some cautious voices.

First is technological implementation. It’s well known that a technological breakthrough is one thing, but mass production and yield are another. Huahong’s 7nm yield and costs still need time to verify.

Second is performance progress. Looking at financial reports, Huahong is still in the ramp-up stage of its production lines. As of Q3 2025, the company’s revenue increased by 19.82% year-on-year to 12.583 billion yuan, but net profit attributable to shareholders was only 2.5 billion yuan, down 56.52% year-on-year. Gross margin pressure, high depreciation, and cyclical fluctuations in mature processes continue to impact profitability. Turning technological breakthroughs into performance results usually takes more time.

Third is valuation expectations. As of the close on March 16, Huahong’s rolling P/E ratio in A-shares was as high as 4,307 times. This means that even if the 7nm process leads to explosive performance, the current stock price has already priced in very optimistic expectations.

Meanwhile, the share price for the acquisition of Huahong Micro’s controlling stake was set at 43.34 yuan per share, 44.79% below the previous day’s A-share closing price. This reflects the support from major shareholders and also indicates that, in the eyes of insiders, the “reasonable price” may be far below the exuberant secondary market prices.

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Conclusion

Every advance in advanced process technology carries symbolic significance.

In recent years, U.S. restrictions on advanced process equipment and high-end GPUs have made China’s semiconductor industry more aware: dependence on others is too risky, and domestic alternatives must be cultivated.

If Huahong’s 7nm process can gradually achieve stable mass production, China’s landscape in advanced process technology will be further expanded.

This path of independence is bound to be bumpy, but at least now, another company has taken a step forward.

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