PDD Holdings reported Q1 revenue of RMB 106.2 billion—has its share price already hit bottom?
華虹半導體2026Q1業績直播
Key Takeaways (AI-Generated)
Financial Performance
- Revenue reached $660.9 million in Q1 2026, representing a 22.2% year-over-year increase
- Gross margin improved to 13%, up 3.8 percentage points year-over-year
- Net profit attributable to shareholders was $20.9 million, marking substantial year-over-year growth
- Strong performance maintained across all process technology platforms with high capacity utilization rates
Business Highlights
- 12-inch capacity revenue contribution rose to 62.7% while 8-inch production lines maintained profitability
- MCU, standalone Flash, and BCD products delivered the highest growth rates
- Proposed acquisition of Huawei Micro entered substantive review phase with Shanghai Stock Exchange
- Strong regional demand growth: China up 18.7%, North America up 51.9%, Europe up 43.2%
Financial Guidance
- Q2 2026 revenue expected to be in the range of $690-700 million
- Projected gross margin of 14-16% for Q2 2026
- Average wafer price increases expected around 10-15% throughout the year
- Some platforms potentially seeing up to 20-25% price increases
Opportunities
- AI-related applications driving increased demand for power management chips and silicon photonics
- Product innovation in compound semiconductors including gallium nitride and silicon carbide development
- Strategic partnerships being explored for compound semiconductor manufacturing through joint ventures
- Fab 9B capacity expansion with $6 billion investment targeting 40nm specialty technologies
Risks
- Supply chain disruptions from geopolitical tensions causing raw material price increases
- Market competition in power devices segment from increasing compound semiconductor competitors
Full Transcript (AI-Generated)
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Hua Hong Semiconductors First Quarter 2026 Earnings Conference Call. Today's call is hosted by Doctor Peng Bai, Chairman and President and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised that your dial in I listen only mode. However, at the conclusion of the management presentation, there will be a question and answer session. At each time you will receive instructions on how to participate. The earnings press release and third quarter 2026 summary slides are available to download at our company's website www.huahonggrace.com. Without further ado, I would like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer.
Daniel Wang
Thank you. Good afternoon everyone. Thank you for joining our Q1 2026 earnings conference. Today we will first have Doctor Pumbai, our Chairman and the President provided an overview of our first quarter performance. We I will then take you through our financial results in detail and offer guidance for the upcoming quarter. We then open the floor for a question and answer session. With that I turn the call over to Doctor Bai.
Dr. Bai
Thank you, Daniel. Good afternoon everyone. Thank you for joining our earnings call. Our home semiconductor generated revenue of the US 660.9 million in the first quarter of 2026, a year on year increase of 22.2%. Gross margin stood at 13%, a year on year increase of 3.8 percentage points. Both figures were in line with our guidance. Net profit attributable to shareholders of the parent company amounted to US 20.9 million, marking substantial year on year growth.
Despite the rapid capacity ramp up, the company maintained high capacity utilization rates with strong performance across all process technology platforms. MCU, stand alone Flash and BCD products delivers the highest growth rates. The company's results were supported by sustained efforts in cost reduction and efficiency enhancement and by a positive demand signal that started at the beginning of the quarter and become stronger over the course of the quarter.
The global semiconduct industry is undergoing accelerated transformation as AI at related applications play an increasing essential role in market dynamics. The unmistakenly positive impact of AI on worldwide semiconductor market demand. Persistent uncertainty in the global supply chain landscape make a more complex market picture that we're facing with Hua Hong Semiconductor remains steady fast in pursuit of its key objective of becoming a foundry leader in specialty process technologies with a core strategy of continuous focusing on market needs, strengthening process technology capabilities and substantially increasing production capacity scale.
In the first quarter, the ramp up of our 12 inch capacity progressed steadily with this revenue contribution rising to 662.7%, while our 8 inch production line maintained sound profitability. Meanwhile, the proposed acquisition of Huawei Micro has been accepted by the Shanghai Stock Exchange entering the substantive review phase. The acquisition is currently progressing according to the established schedule and is expected to be completed in the second-half of the year.
Finally, as a veteran of the industry, I remain confident in a bright future for semiconductor industry globally and in China. I'm fully committed to make King Hua Hong Semiconductor an increasingly important player in the industry and delivers sustainable value to our shareholders. Now I would like to hand the call over to our CFO, Mr. Daniel Wong, for his comments.
Daniel Wang
Thank you, Doctor Bai for your inspiring comments. Now let me walk you through a summary of our financial performance for the first quarter. Dan, provide our revenue and margin outlook for Q2 2026 before opening the floor for the Q&A session. First, let us review our financial results for the first quarter. Revenue was $660.9 million, Twenty 2.2% over Q1 2025, primarily driven by increased wafer shipments and improved average selling price and the .2% over Q 4/20/25.
Gross margin was 13 percent, 3.8 percentage points over Q1 2025, primarily driven by improved average selling price and cost reduction efforts and a flat with Q2 Q4 2025. Operating expenses were 105.6 million dollars, 8.8% over Q1 2025, primarily due to increased operating expenses for the new production line in Wuxi and 18.9% lower than Q4 2025, mainly due to decreased labor costs.
Other loss net was $2.4 billion seventy .5% lower than Q1 2025, primarily due to foreign exchange gains versus foreign exchange losses in Q1 2025, partially offset by decreased government subsidies, interest income and increased finance costs. It was other income net of $34.1 million in Q4 2025, mainly due to increased finance costs and decreased government subsidies. Income tax credit was $4.7 million, primarily due to a reversal of dividend withholding tax for 2025.
Net loss for the period was $17.3 million, narrowed by point 66.9% compared to Q1 2025 and 7.5% compared to Q 4/20/25. Net profit attributable to shareholders of the parent company was $20.9 million, 458.1% over Q1 2025 and 19.9% above Q4 2025. Basic earnings per share was point 1.2 cent, 1.2 cent. Annualized Roe was 1.2%.
Now let's take a closer look at our Q 1/20/20. Revenue performance from geographical perspective revenue From China was $525.2 million, contributing 79.5% of total revenue and an increase of 18.7% over Q1 2025, mainly driven by increased demand for MCU, other power management, IC, flash and IGBT products. Revenue from North America was $85.7 million, an increase of 51.9% over Q1 2025, mainly driven by increased demand for other power management, IC and MCU products.
Revenue from Other Asia was $28.2 million, an increase of 5.2% over Q1 2025, mainly driven by increased demand for MCU products, partially offset by decreased demand for Super Junction product. Revenue from Europe was $21.8 million, an increase of 43.2% over Q1 2025, mainly driven by increased demand for Smart Car, ICI, GB, T and MCU product.
With respect to technology platforms, revenue from embedded non volatile memory was $184.6 billion, an increase of 41.7% over Q1 2025, mainly driven by increased demand for MCU and smart car ICS. Revenue from a stand alone and volatile memory was $57.1 million, an increase of 33.2% over Q1 2025, mainly driven by increased demand for flash products. Revenue from Power Discreet was $170.9 million, an increase of 5% over Q1 2025, mainly driven by increased demand for IGBT and general MOSFET products, partially offset by increased decreased demand, Excuse Me for Super Junction products.
Revenue from Logic and the RF was $74.4 million, an increase of 11.4% over Q1 2025, mainly driven by increased demand for Logic and the CIS products. Revenue from Analog and Power Management IC was $173.9 million, the increase of 25.8% over Q1 2025, mainly driven by increased demand for other power management IC products.
Now let's turn to our cash flow statement. Net cash flows generated from operating activities was $130.4 million, 159.9% over Q1 2025, mainly due to increased receipts from customers. It was 47% lower than Q4 2025, largely due to decreased receipts of government grants and increased payments of Labor costs. Capital expenditures were $924.9 million in Q1 2026, including $886.1 million for Wahong 12 inch business and $38.7 million for Wahong 8 inch.
Other cash flow generated from investing activities was $67.9 million in Q1 2026, including $57.8 million decreased time deposits, $10 million interest income and $100,000 receipt of disposal of equipment. Net cash flows generated from financing activities with $638.7 million, including $649.4 million proceeds from bank borrowings and the $3.3 million proceeds from share option exercises, partially offset by $12.1 million interest payments and $1.1 million lease payments and point $8 million of bank principal repayments.
Now let's move to the balance sheet. Cash and the cash equivalents was four billion $867.9 million on March 31st, 2026 compared to four billion $893.8 million on December 31st, 2025. Other current assets increased from $787,000,000 on December 31st, 2025 to $894.6 billion on March 31st, 2026 mainly due to increased value add tax credit.
Property, plant and equipment was 7 billion $105.9 million on March 31st, 2026 compared to six billion $676.4 million on December 31st 1st, 2025 primarily due to capacity expansion in far home manufacturing. Interest bearing bank borrowings increased from three billion $190.8 million on December 31st, 2025 to three billion, $897.2 million on March 31st, 2026, primarily due to increased drawdowns of bank borrowings.
Total assets increased from 1:14 billion, $453.8 million on December 31st, 2025 to 14 billion $947.3 million on March 31st, 2026. Total liabilities increased to $5,663,000,000 on March 31st, 2026 from five billion $289.5 million on December 31st, 2025. That ratio increased to 37.9% on March 31st, 2026 from 36.6% on December 31st, 2025.
Finally, let's take a look at our second quarter outlook for our 2026. We expect revenue to be in the range of $690,000,000 to $700 million with a projected gross margin of 14% to 16%. This concludes my financial remarks. We're now begin the Q&A session. Operator, please assist.
Operator
Thank you, operator. Participants, as a reminder, if you wish to ask a question, please press *11 on your telephone keypad and wait for a name to be announced. To withdraw a question, please press *1 on one. Again, please Temple, welcome Pardo QNA roster. This will take a few moments. And now we're going to take our first question and it comes to Land of Lepping Huang from Hua Tai Securities. Your line is open. Please ask the question.
Lepping Huang
Thank you for taking my question. So congratulations for the very strong results. My first question is about the the impact of the memory super cycle. So I we see the further price hike of the memory last three months. So Doctor Baiso, what's your view on the report effect on this trend on the logic foundry investment, especially on your N flash business? Can we expect a further price hike in the memory will drive the ASP and the margin expansion in your logic foundry business in the remaining of this year? Thank you.
Dr. Bai
OK, thank you. Good to hear from you. Yes, let me take your question on the North Flash situation. You're right. First of all, the memory is in short supply starting with the DRAM and DRAM price, as you know we're not like 10X. Then that started, then they started spit over into Nam memory. Now it started spit over a little bit into N flash as well. It's not as as much spare over as I would like, but it's definitely we see the demand going up for our N flash memory that will translate into a a, a price increases but not as significant as a DRAM or not nearly as significant as a DRAM.
But we should expect to be 1015% price increases on the north flashes. So that would. Also we with a tight supply, we won't be able to satisfy all the demand, but we do get the benefit of a higher prices.
Lepping Huang
Yeah, thank you. So my second question is that the can you provide some update on the progress of your C5 expansion? So I remember you mentioned last time is I think start already construction in March and moving in the October. But these days we see very fast expansion of the most of the foundry and the memory company in the world. Do you see any delay of the equipment delivery? So have you or further and furthermore and today that with the US President visiting China, which is a very important milestone for the US China relations. So do you think that this will help your the equipment procurement coming in the rest of the year? Thank you.
Dr. Bai
OK, yes, let me update you on our Wuxi site. In terms of the capacity expansion. As you know the Wuxi site we had, we have two operating fabs already. The third one as you correctly pointed out started construction in March. So before I go to the third fab, which we call 9 B, the second fab has been on a capacity run bug since last year. It it's a Fab 9A, that capacity run bug should complete in Q3 this year, which means that we were reached the full capacity in Q3.
The output, there's a obviously delay in getting all the output with their full capacity, but we shouldn't be getting the full output starting probably by end of this year or beginning of next year. Now the third fab, Fab 9 B, we kick off the construction in March of this year. We are doing all the facility work right now because the shell is already there for the third fab. We expect the equipment start to come in, in the fourth quarter of this year.
To to your question about the equipment procurement, we do not see any impact in terms of the export control from the US export control on the equipment procurement for Fab 90. There has not been a issue for us then now the President Trump is in China as we speak. We certainly this environment is going to be further relaxed going forward. But we'll see how how is it come out. But after this point even even all the press reports now withstanding all the press reports notwithstanding over the last couple months we have now been impacted in terms of the now get in terms of getting the equipment we need to buy and also the the delivery time.
Lepping Huang
OK, Yeah, it's good to see. So final question is that the so we see the Hua Hong Group establish advanced packaging subsidiary. Also the market is very closely watching the next generation technology like silicon photonics. So, so, so for my question is that how the Fahong Groups advanced packaging subsidiary will coordinate with the Fahong Lisco and and how the and what the technology has on the silicon photonics and what's your plan on silicon, silicon photonics thinking?
Dr. Bai
OK, so let me take on your question, why the time? Why is the advanced packaging there? Yes, there is a newly established effort on advanced packaging that is not, it's under the Hua Hong Group, not the part of the the public company, not part of Quahong Semiconductor. Of course, we are having a lot of coordination at the Quahong Group level in terms of the technology role band as well as capacity planning. So in that regard, I certainly are called in. With existing Hua Hong Group companies, the advanced packaging is basically is definitely a high growth area in the industry and we expect that effort to substantially add some add to our offering, always expect to add to our revenue in the future at a group level.
Now the silicon photonic is another area that is growing significant pretty fast, especially with the AI and related application. We are also looking at getting to silicon photonic area then there is a quite a bit of a planning activity that's ongoing. And once something get finalized, I expect that will be soon that we were we update you on the detail, but the old suffice to say that yes, we we were getting to silicon photonics since we this is the growth there is adjacent to what we already do. So you should should have a lot of good synergy with what we already have and we we should expect that to be to be started pretty soon, right.
Lepping Huang
OK, thank you, thank you, thank you much.
Operator
Thank you. Now we're going to take our next question. And the next question comes from the line of Tracy Sui from CLSA Company. Your line is open. Please ask the question.
Tracy Sui
OK, thank you. Thank you, Doctor Bai, Daniel and senior management for giving me this opportunity for questions. So my first question is regarding your two Q 26 revenue guidance, would you please guide us how much growth may come from the shipment growth and how much from the ASP increase? Thank you.
Dr. Bai
You know it's roughly it's about, you know, we're talking about quarter to quarter around close to 5%, OK. And we're pretty confident with that number. It's coming in a combination of revenue, ASP growth and also volume growth.
Tracy Sui
Thank you. OK, thanks. And just following up for the wafer price, perhaps how you will expect your wafer price trend throughout this year and which type of trips you may see maybe a higher chance to further for the price list? Thank you.
Dr. Bai
Since we have a a diverse portfolio of of technology platform, we do see the price changes, Price increases vary across different platforms. The ones that are in higher demand, we'll see a higher price increases. The ones that demand some more muted the way we were probably trying to stay where it is or just with a with a very minor increases. The net result is that on average, I, I do see AI do think we're going to be consistent with the, the industry average about 10% plus minus some number there, here and there.
You have to realize the price increases. It takes time to get implemented ESS even you, you increase the prices is the order from that day forward. Let's see the new prices and so that you will take a, a sometimes to fully materialize all the, the, the increases to, to have them fully reflected in the financial results. But during the course of this year, I think we're definitely will be saying about on average some will increase more I guess some the we, we do this. Mainly based on market is a market driven methodology and if you see a lot of demand we can can supply we you we do tends to increase the prices a little bit more.
So some platform might see up to 20 percent, 25 even, but some are going to be close to where they are and maybe 5% on average you, I think 1010% is a reasonable assumption or 10 to 15 by end of this year somewhere there.
Tracy Sui
Got it. Yes, thank you, Doctor Bhai. And can I please also have a follow up question on Fab 9 B, Would you mind remind us how much is our CapEx plan and how much is the designed capacity and any updated timeline in terms of the CapEx investment and also the ramp up and what may be the process node and the type of cheap platform? Thank you.
Dr. Bai
I think the Fab 9 B, the overall project, I think we're going to be putting down CapEx wise about 60 billion maybe right around there. It would be 60. We actually originally said 69. We were trying to, I mean 666 billion now 60 for 66 billion, OK, like there's a take off 10 there. So originally I was thinking of 6 point something, but we will try to control it to be about 6 billion overall investment on that will be spent this year and next pretty much and it will start to equipment started coming towards the end of this year.
So we are talking about it will start to produce output in 2027, probably going to take a year and a half to two years to get all the capacity in place to get those. So you're talking about you in 2028 that that that might be will be at be at the full capacity. So that's the rough, rough schedule I'm I'm giving you and what might be the pros node type of trees, any color that you may able to share? Thank you.
There will be focus on specialty technologies. We see the IT will be a range of nodes, but the bulk will be 40 nanometer, so 40 nanometer plus minus something.
Tracy Sui
OK, sure. Thank you, Doctor Bai and thank you, Daniel. That's all for me and I will go back to the key.
Operator
Thank you, thank you, thank you. Now we're going to take our next question. And the next question comes the line of Jiang Wang from Citrix. Your line is open. Please ask your question.
Jiang Wang
OK. Thank you for taking my question. This is from City Securities. My first question is about, I'm wondering how was the demand change in analog and the power applications over the past quarters? And is there any further plans for the wafer price to increase on Q2? And have there been any price increase in the materials such as the silicon wafers? Thank you.
Dr. Bai
The analog area, our main product is power management ICS. We do see strong, strong demand there. That's the mostly related to AAI and AI related build out like the server boxes, they need a lot of power management chips and that's some partially offset by some of the consumer weakness because of the DRAM increases the consume we do see a memory price increases has a small depressing effect on consumer segment. Overall, it's a positive story for us because we. Obviously have products in both AI related field as well as consumer.
On average AI related stronger demand overwhelms at least more than compensate for the small weaknesses in consumer. So in every regard, I think the analog, the PIMIC area is a typical is a good example where you have one part of the market going strong, another part is a little bit muted, but overall still a positive in demand increasing story for us. So we, yes, we were, you will see price increases in this particular platform, a reasonable price increases here.
In term of the supply chain, because of the probably mostly because of the wall and some of the disruption that it causes, we do see some particular material, raw material, the prices go up. It's not across the board. Across the board is it's not a very significant factor yet and there but there's a few item that prices to go up quite high and we're managing that and those are manageable. But we don't expect, I do not expect that it will have a big overall impact. But yes, because of the mostly because of oil, oil in Middle East that that is causing some supply chain disruption.
In particular the one the all the oil related or gas oil related products and some of the item the prices spiked a little bit, but very few items. So it doesn't have much of A and in aggregate doesn't have average and average impact much.
Jiang Wang
All right. Thank you. OK, got it. Thank you, Doctor. Goodbye. And my second question is about do, does does our company have any plan or investment on the compound semiconductor such as the gallium, gallium arsenide or silicon carbide or even on Indian phosphide? That's my second question.
Dr. Bai
Thank you for asking. The answer is yes, we are. We have started efforts in Ganem nitrite. We already have TD activity going on. So we were getting to Ganem nitrite and as well as silicon carbide, the compound semic conductor, those two that complement our silicon based power devices that we have decided to get into. The way we get into might be a little bit different like a silicon carbide, we might have a joint venture with some existing existing joint venture in terms of the Capital Management.
When Ganem nitride, we might, we might seek a partner and when we get into the volume manufacturing phase. So that part is still being kind of a plant or is not the finalized, but the question, the answer to your question, yes, yes, we were getting to Canon nitride. We are getting to Canon nitride and silicon carbide effort because we have a large silicon based power device capacity and we also have a large base of customer and they are also asking us to get into the Kanban so that Kanban semiconductor to complement our existing existing silicon based power devices.
Jiang Wang
OK, sorry. Go on please. I can't hear you. My apologies. Please continue. We don't hear anybody speaking online. Next. Yes, of course. Now we're OK. OK. That's all my questions. Thank you.
Operator
Thank you. Very clear. Thank you, John. Yeah. Participants, as a reminder, if you wish to ask a question, please press *11 on your telephone keypad. And now we're going to take our next question. And the question comes line of Timothy Wang from Oriental Asset Management. Your line is open. Please ask your question.
Timothy Wang
Hello, Doctor Bai. Hello, Daniel, He is from Oriental Asset Management. My name is Timothy Wong. My my first question. My first question would be I would like to confirm whether we are acquiring 7 nanometers or below to our portfolio since through the acquisition of Quali Micro as some report, some news reports suggest. Thank you. This is my first question, sorry we did you get that question well, you know can you repeat that question again or you have not?
Yes, OK. I would like to confirm whether we are acquiring 7 nanometer or below to our portfolio through the acquisition of Hua Li Micro as some report suggested. Thank you.
Dr. Bai
Couple of things, why is our Q1 results does not include Hawaii Micro that's still outside the Hua Hong Semiconductor because it has now complete the acquisition. Second, Hawaii Micro, the we're acquiring, what are we acquiring from for Hawaii Micro is basically what do we call Fab 5 asset and the Fab 5 asset business. Those are based on 55 nanometer and 40 nanometer IC products. That's what we're acquiring.
Timothy Wang
Yes, I, I, I actually I didn't, I didn't believe such reports. So thank you for your clarification. And my second part of my question is, I would like, would you mind giving up some color on the on the explosion of CPO silicon photonics optics, how would these trends would benefit us?
Dr. Bai
I think right now in a lot of from technical standpoint of view, a lot of a high compute platform, the interconnect become a bottleneck. Therefore people are looking for ways to speed up the interconnect. Silicon photonics is one way. Now there's some detail there that depend on the disk whether you're talking about the stack to stack like a box to box communication, the OR some chip to chip. So you you actually require slightly different circum photonic technology, but that's the area that that would require silicon photonics type of product.
This is consistent with now AI is driving is driving a lot of the market growth. So if you believe in that thesis that AI is going to drive a lot of growth, then you would believe that. You would say that there's going to be going to be more. Demand for silicon product, silicon photonics related products because the AI obviously the other system level is a high compute. So that's, that's the, the, and from from Hua Hong standpoint of view, we, we, our technology, although silicon photonic is a new technology for us, but it's not, it's also adjacent technology for us.
It's not too different, too far away from what are we already doing? We're already doing a lot of CAS which require BBCDA, lot of BCDBAS, we require a lot of backside processing, get into advanced packaging area. So there is quite a bit of synergy from technology standpoint of view. So that's why we think it's a good area for us to get into because there is going to be market demand and it's also play into kind of our strengths or our adjacent area of growth.
Timothy Wang
Thank you, thank you. Thank you very much and congratulations for all the progress.
Operator
Thank you, thank you, thank you. Now we're going to take our next question and the question comes line of Zhang Kuai from Orion Securities. Your line is open. Please ask your question.
Zhang Kuai
All right, just stock by and Doctor and Mr. Wong, my first question is about the memory price. How how do you see the memory price in the next few quarters?
Dr. Bai
Well, the price is a sensitive topic and in the in the in the end, the price will be set by supply demand balance. As long as the we continue to have short supply, then we have a little bit of opportunity to inch up the prices. We actually will stop price increases when the supply demand balance is reached. So at this point in starting this year, we start to see tightness of the supply and we continue to see that. So we are going through one round of price increases.
We have gone through the one round of prices increases that's not fully reflected in in. It will take a little bit of time to to see how it's impacting the order and how is it impacting the overall market. But we will be watching that and then decide whether the balance is reached or if it's not reached. So we may inch up. Little bit more. I'm the frank and. Open about this one, but you further the price, the demand is this. Supply demand is more or less at the at the good good. Balance, we're probably gonna pause or gonna stop increase in prices as I said there for the year we expect on average I said earlier 1010% maybe if we were we're lucky we'll be 15 percent, 10 to 15 and memory is one of the platform that increases probably will be above the average.
Zhang Kuai
OK, Thank you. My second question is about the AI server opportunity. As we know, we already are making some like analog for some for AI server and also we can see power discrete the, the, the usage are also increasing in AI server. So from our point, how do you see the, the, the opportunity for us? Maybe just now you also mentioned like silicon photonics or maybe combine all this together. How do we see the opportunity
Dr. Bai
The power devices overall marketing actually you're crying is actually increasing because of the all the AI boxes need power devices plus some of the new like robotics or the industrial demand is also increasing the power, the demand for power, power devices. So the issue there probably is not so much overall market demand. We do see that part is reasonably healthy. The power devices, you know the, the, the issue is the probably the supply also increases quite fast, especially the compound semiconductor like I said, early silicon carbide start to contribute significant portion to power devices.
So that here you have a situation where the, the supply demand balance is now that off. Therefore for us to win business, we have to be, it's a competitive market. It's a you have to compete with with with our, our our competitors. Now we do have a good silicon based power device technology. We have LED in that area. I think the part that we need to do more is to get the compound semiconductor as part of offering. That's why earlier I said we are getting into silicon carbon and the Ganium nitride, the compound semiconductor so that we can first provide a more complete solution to our customers and also give our customers more, more choices, more flexibility in terms of coming up with a optimal combination of the power devices to support increasing demand.
So that's the situation. I see the silicon photonics a different story. That is we're studying from scratch. That is a nation, a new, new development that is getting more and more important. I think that we don't have a silicon phenomics offering right now. So for us anything we get there will be a net addition to our to our business.
Zhang Kuai
OK, thank you a lot. Bye.
Operator
Thank you. Now we're going to take our next question and the question comes line of Charlie Chan for Morgan Stanley. Your line is open. Please ask your question.
Charlie Chan
Hi Doctor Bai and Daniel, thanks for taking my question. So I actually have two questions. 1 is about your PM emic capacity expansion. I'm not sure if it's a right understanding, but could it be like a BCD process? Do you think you can extend the capacity given, given so strong and also customers are willing to pay higher price and if they cannot get a capacity from from your fab where they can go to get the sufficient supply?
Dr. Bai
Yeah, the power management part. It does use BCD technology problem, you are correct. Well, that's the technology problem we're talking about BCD. So that's number one. Number two, we are expanding the BCD capacity. That is already one of the highest capacity problem we already have. But we are expanding as we speak in, in, in both Wuxi as well as maybe in Huawei Micro that we are about to acquire. So we will get the higher capacity because we're not meeting the customer needs.
Third, you are correct that PCD area, it's a competitive, it's a competitive marketplace. There's many player there, but we have been one of the biggest player in China and partly because we have a good, we think we have a good technology advantage and we also have some very valuable strategic customer that work with us. So that so we think we can, we can increase the capacity and still be able to to get a good, good price on them. So that's why we are we are doing, doing the capacity expansion. And this is also an area that we focusing on in terms of technology development to try to get to next generation faster so that we keep that technology edge for us.
Charlie Chan
All right, Thanks, Doctor. Bye. And my, my second part of this question is so, so I also cover some Tony's Foundry, for example, UNC Vanguard, if I may code. Those are your Interstate peers. But it seems like their first quarter, second quarter refreshment sort of outgrow I think 1 Q that growing grow single digits, 2 Q like high single digit Q on Q. So I'm not sure after your capacity expansion, do you feel like you can win back some customers, No major consumer side or those non, non China customers, no major US customers or Taiwan customers. Back to your, your, your, your, your set for PMIC production.
Dr. Bai
Our payment business has been has grown in Q1. If we had more capacity, we probably could have done better. So as our new capacity come online, online, we do think that we can keep growing that part of business. We, we, we already have customer from overseas from US and, and Europe for that matter. And because they the for European customer, they have this in China, for China strategy that we, we do benefit from. And the US company mostly because of their business growing very fast. So they need more supply.
So in in in that sense that we think. BCD area or PIMIC area, it is one area that is benefiting from the AI and AI related growth and also all the other like the car also need a PIMIC and and the robotics. Overall, the only end market from end market standpoint is the only place we see some weaknesses in the consumer segment that we do see that. So the hope is that the the area that's been growing keep on growing like AI and robotics and and the cars auto and the the consumer maybe will come back because they can't keep delaying those those they can't keep on pushing out the new model forever. So they have to also get on the growth or stop the decrease a little bit. So that's the overall picture I see.
Charlie Chan
Great, thanks. And my my second question is some clarification your comments. So your prepared remark you, you you said of talk about hopefully some relaxation of the export control and equipment, but I think you're 9 right as you you just describe it. Like a 40 nanometer, is that the case? Why? Why there's a kind of extra control or you were referring to your your, but what is a Feb 8? So can you clarify your previous comment about the equipment restriction?
Dr. Bai
I was not talking about Harley. I was talking about just yeah, correct. Why I also said we have not been impacted in terms of the by the export control, in terms of the equipment we really need to buy. When I say if the restriction is more relaxed in general, we will get more choices. It's always good to have more choice so that I might be able to have a little bit more optimal combination of the tools. It's another issue if we can.
Charlie Chan
OK. Oh, I see. It's kind of nice. Nice. Yes, yes, OK, so, so nice to have so, so even it says it says core, it doesn't change your extension for fav 9. Is that right way to think about this? That's quite cool. And and and lastly, I think one of the previous callers asked about some and show new, new business, right. So I think for global ASME supply chain, I think there are lots of really component for example interposer bridge dye silicon capacitors, there's APIC, you know, so, so do you have any demand on for those? I think the previous question was about CPO related, but I want I wanted to ask about all those kind of Coas or 2.5 D packaging related components. No matter silicon capacitor in the poster bridge dye or PIC, do you have any demand for those components?
Dr. Bai
Good question. We do see demand for high density capacitor. So we are, we are having a an effort there to do the capacitors deep trench or otherwise. So those high density, high density capacitors so that it looks like it's, it is being there for, for a while now that we should start to see some revenue coming. The in terms of the the other one, can you ask the question, oh, in interposer interposer, interposer is also something that we are very open to it.
I think that my that, that we are exploring some option there that's still in the early stages that probably going to go with when we have our advanced packaging coming online, the interposer will also become significant part of the overall packaging effort.
Charlie Chan
OK, great. Thanks for your answers.
Operator
Thank you. Thank you. Ladies and gentlemen, that's all time we have for questions. I will now hand back to Mr. Daniel Wang for closing remarks.
Daniel Wang
Well, you know, thank you very much for joining us today. I mean you guys had a lot of wonderful question, all these questions. Well, where has been very, very. Helpful. And we look forward to speaking with you again and hope perhaps see you in the next quarter. Thank you very much.
Operator
Thank you. This concludes today's conference call. Thank you for participating, man. I'll all disconnect. Have a nice day.
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