Ladies and gentlemen, thank you for standing by, and welcome to Hua Hong Semiconductor fourth quarter 2020 earnings conference call. Today's call is hosted by Mr. Junjun Tang, President and Executive Director, and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised that you are dialed in are in a listen-only mode. However, at the conclusion of the management presentation, there will be a question-and-answer session, at which time you will receive instructions on how to participate. The earning press release and fourth quarter 2020 summary slide are available to download at our company website, www.huahonggrace.com. Without further ado, I would like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Thank you. Please go ahead.
Good morning, everyone. Thank you all for joining our fourth quarter 2020 earnings conference. Today, we will first have Mr. Junjun Tang, our Executive Director and President, make some remarks on our fourth quarter performance. President Tang will address in Chinese, and Kathy Chien, our Deputy Director of Investor Relations, will be translating for him. After that, I will discuss our financial results and provide guidance for the next quarter. This will be followed by our question-and-answer session. I now turn the call over to our Executive Director and President, Mr. Tang.
[Foreign language]
Good morning, everyone. Thank you for joining our earnings call.
[ Foreign language]
We are very satisfied with the results of the fourth quarter. Driven by the strong demand for MCU, IGBT, super junction, split gate trench, CIS, and other products, sales revenue far exceeded guidance and reached a record high of $280 million, an increase of 15.4% year-over-year, and an increase of 10.7% quarter-over-quarter.
[ Foreign language]
Benefiting from recovery of the consumer and the communications market, and the continuous optimization of product structure, gross profit margin also exceeded guidance in 25.8%. In particular, we are proud that sales revenue of our Hua Hong Wuxi fab grew over 100% compared to the previous quarter.
[ Foreign language]
2020 was definitely an unusual year. In the face of COVID-19 and the challenges in the semiconductor industry environment, all our colleagues put their unremitting effort together to ensure the company operates in a safe and stable environment.
[ Foreign language]
The 8-inch production line continues to improve operating efficiency under the condition of full capacity utilization. Moving of the tools, R&D progress, and customer engagement of the 12-inch line are all significantly ahead of the original plan.
[ Foreign language]
Demand for IGBT, MCU, CIS, and other products is extremely strong, leading the company's sales revenue to continuously hit historical highs. From the second quarter to the fourth quarter, sales revenue achieved a double-digit growth quarter-over-quarter.
[ Foreign language]
R&D and the qualification work for NOR, BCD, super junction, and IGBT made on the 12-inch production line have been completed, adding new momentum to the company's medium and long-term development. These outstanding results should be entirely attributed to all employees, customers, and vendors.
[Foreign language]
In 2020, full-year sales revenue reached $951.3 million, a historical high. Looking forward to 2021, we will continue to expand our technology platforms, such as industrial MCUs and next-generation super junction, while rapidly increasing production capacity. Opportunities belong to those prepared. We are confident to lead the company to a new height.
[ Foreign language]
Now, I would like to hand the call over to our CFO, Mr. Daniel Wang, for his comments.
Thank you, Mr. Tang, for the inspiring comments. Now, let me begin with a summary of our financial performance for the fourth quarter and a recap of the whole year 2020, followed by an outlook on revenue and margin for the first quarter of 2021. Then we will move on to the question-and-answer section. First, let me summarize financial performance as of the fourth quarter. Revenue hit another all-time high of $280.1 million, an increase of 15.4% over the prior year, and 10.7% over the prior quarter, mainly driven by increased demand for CIS, MCU, and IGBT products. Cost of sales was $207.8 million, 17.6% above Q4 2019, and 8.4% over Q3 2020, primarily due to increased wafer shipments.
Gross margin was 25.8%, 1.4 percentage points below Q4 2019, mainly due to decreased average selling price, partially offset by improved capacity utilization, and 1.6 percentage points over Q3 2020, mainly due to improved capacity utilization. Operating expenses were $61.1 million, 14.3% below Q4 2019 and 17.6% below Q3 2020, mainly due to increased government grants for research and development, partially offset by increased depreciation expenses. Other income net was $24.5 million, 1.4% over Q4 2019, and 1.8% above Q3 2020, primarily due to increased foreign exchange gain and share of profit of an associate, partially offset by decreased government subsidies. Income tax expense was $7.4 million, 55.1% above Q4 2019, primarily due to increased taxable profit. Profit for the period was $28.2 million versus $14 million in Q4 2019 and $1.1 million in Q3 2020.
Net profit attributable to shareholders of the parent company was $43.6 million, compared to $26.2 million in Q4 2019 and $17.7 million in Q3 2020. Basic earnings per share was $0.034 versus $0.02 in Q4 2019 and $0.014 in Q3 2020. Annualized ROE was 7.2%, 2.4 percentage points over Q4 2019 and 4 percentage points above Q3 2020. I will discuss the operating results for both the Hua Hong 8-inch wafer fabs and our 12-inch wafer fab in Wuxi. For Hua Hong 8-inch fabs, first let's have a look at the Hua Hong 8-inch wafer fab. Revenue was $244.4 million, 3.8% over Q4 2019, and 3.4% above Q3 2020, mainly due to increased demand for MCU, LED lighting, and power management products. Gross margin was 28.6%, 0.4 percentage point over Q4 2019, and 1.4 percentage points above Q3 2020, mainly due to improved capacity utilization.
Operating expenses were $16 million, 57.9% below Q4 2019, and 48.1% below Q3 2020, primarily due to increased government grants for research and development. Profit before tax was $67.1 million, 53.7% over Q4 2019, and 49% over Q3 2020. For Hua Hong Wuxi, let us have a look at the performance of the 12-inch wafer fab. Revenue was $35.7 million versus $7.4 million in Q4 2019, and $16.6 million in Q3 2020. Operating expenses were $45.2 million, 35.3% above Q4 2019 and 4% over Q3 2020, mainly due to increased depreciation expenses. EBITDA was -$4.4 million, $7.1 million more favorable than Q3 2020. I will provide more details on our revenue from Q4 2020. Revenue from China was $197.1 million, contributing 70.4% of our total revenue, and an increase of 28.4% over Q4 2019, mainly driven by increased demand for CIS, IGBT, general MOSFET, and LED lighting products.
Revenue from Asia was $33.6 million, an increase of 3.1% compared to Q4 2019, mainly driven by increased demand for MCU products. Revenue from U.S. was $28.4 million, a decrease of 11.1% compared to Q4 2019, primarily due to decreased demand for logic and general MOSFET products. Revenue from Europe was $14.4 million, a decrease of 14.3% compared to Q4 2019, mainly due to decreased demand for general MOSFET products. Revenue from Japan was $6.7 million, a decrease of 16.6% compared to Q4 2019, mainly due to decreased demand for logic products. With respect to technology platforms, revenue from embedded non-volatile memory was $97 million, a decrease of 1% compared to Q4 2019, primarily due to decreased demand for smart card ICs, largely offset by increased demand for MCU products.
Revenue from discrete was $94.2 million, an increase of 7.2% over Q4 2019, mainly driven by increased demand for IGBT and general MOSFET products, partially offset by decreased demand for super junction products. Revenue from logic and RF was $45.9 million, an increase of 99.1% compared to Q4 2019, largely driven by increased demand for CIS products. Revenue from analog and power management IC was $39.5 million, an increase of 30.3% compared to Q4 2019, mainly driven by increased demand for LED lighting and other PMICs products. Revenue from standalone non-volatile memory was $2.9 million, a decrease of 12.3% compared to Q4 2019, primarily due to decreased demand for EEPROM products. Let us take a look at the cash flow statement.
Net cash flows generated from operating activities were $84.5 million in Q4 2020, compared to net cash flows used in operating activities of $7.3 million in Q4 2019, largely due to stronger collection of trade and notes receivables and the increased receipts of VAT tax return, partially offset by increased prepayments. Capital expenditures were $305 million in Q4 2020, including $272.2 million for the Hua Hong Wuxi fab and $32.8 million for the three 8-inch fabs. Other cash flow generated from operating activities were $81.9 million in Q4 2020, including, one, $80.1 million of receipts of government grants for equipment and two, $1.7 million of interest income.
Net cash flows generated from financing activities were $319.9 million in Q4 2020, including, one, $673.7 million of proceeds from bank borrowings, and two, $1.6 billion proceeds from share option exercise, partially offset by, one, $352.3 million of repayment of a bridge loan, two, $1.6 million of interest expense for bank borrowings, and three, $1.5 million of lease payment. Now let's move to the balance sheet. Cash and cash equivalents was $922.8 million on December 31, 2020. Compared to $716.5 million on September 30, 2020. Inventories increased from $205.2 million on September 30, 2020 to $226.5 million on December 31, 2020, primarily due to increased wafer demand from customers. Other current assets increased from $77.6 million on September 30, 2020 to $135.7 million on December 31, 2020, primarily due to increased repayments.
Property, plants, and equipment was $2,510.4 million on December 31, 2020, compared to $2,272.5 million on September 30, 2020. Total assets increased from $4,022.7 million on September 30, 2020, to $4,568.6 million on December 31, 2020. Our total bank borrowings were $566.2 million on December 31, 2020. Total liabilities increased to $1,214.5 million on December 31, 2020, from $848 million on September 30, 2020, primarily due to increased bank borrowings. Debt ratio increased to 26.6% on December 31, 2020, from 21.1% on September 30, 2020. Now, I would like to give you a recap of our performance for the entire year of 2020. Revenue was $961.3 million, an all-time high, and an increase of 3.1% over the prior year. Cost of sales was $726.5 million, 11.7% above 2019, primarily due to increased wafer shipments and increased depreciation costs.
Gross margin was 24.4%, 5.9 percentage points lower than 2019, mainly due to decreased average selling price and increased labor and depreciation expenses. Operating expenses were $269.3 million, 50.8% above 2019, largely due to increased development, labor, and depreciation expenses. Other income net was $80.6 million, up 3.7% from 2019, primarily due to, one, foreign exchange gain versus foreign exchange loss in the previous year. And two, increased share of profit of an associate, partially offset by decreased fair value gain on financial assets at fair value through profit or loss and interest income. Net profit was $33.3 million compared to $155 million in 2019. Net profit attributable to shareholders of the parent company was $99.4 million, compared to $162.2 million in 2019. Basic earning per share was $0.077 compared to $0.126 in 2019. ROE was 4.2%.
Finally, let me give you a top-level outlook for the first quarter 2021. We expect revenue to be approximately $288 million, and our gross margin to be between 23% and 25%. This concludes my financial remarks. Now, we would like to start the question-and-answer session. Operator, please help. Thank you.
Ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Your first question comes from Randy Abrams from Credit Suisse. Please ask your question.
Okay. Yes, thank you, and good result. I wanted to ask the first question. If you could give an update on the Wuxi fab, both from a capacity ramp-up when the capacity reaches 40,000 and then also plans for phase two of that fab.
[ Foreign language]
Randy, thank you for your question. Hua Hong Wuxi gets very rapidly improvement last year. Despite the COVID-19, our Wuxi team stick to their position to accelerate for their R&D progress. For the first half, we got mass production for all the 14 projects. It put a lot of effort to our second half growth.
[ Foreign language]
We are building our several main technology platforms, and we are engaging more products from both existing customers and new customers, and that means we will grow even faster this year.
[ Foreign language]
From now, we can see the situation for the first quarter will be better than expected.
[ Foreign language]
We expect to wafer start maybe 35,000- 40,000 wafer per month in mid this year.
[ Foreign language]
We are also planning for the next step capacity expansion. We are moving most of the equipment in the second half this year. We expect to have about 55,000 capacity by end of this year.
[ Foreign language]
We are so thankful for all the investors for your support.
[ Foreign language]
Thank you.
Okay. [Foreign language] Hey, second question I wanted to ask on the CapEx. The cash outlay ended up $1.1 billion versus earlier, it looked like it will be $1.4 billion for 2020. Could you give an update on the 2021 CapEx and also, I think, prior depreciation guide mark?
Hi, Randy. Yeah, that was good. Actually, the CapEx for 2020, the actual spending was, on cash basis, $1.1 billion. $937 million was spent by Hua Hong Wuxi. About $150 million was spent on the 8-inch fabs. For 2021, I think we're going to be probably spending about, in total, for Hua Hong Wuxi separately. For Hua Hong Wuxi, it's going to be about $1.2 billion. $800 million is going to be on the capacity expansion Mr. Tang just mentioned earlier, takes us from 40,000- 65,000 wafer capacity.
That's $1.2 billion. It's $800 million is for the expansion, and the other $400 million is basically the things we have to spend to get to the 40,000 wafer capacity. There's still payment we have to make during the first half of 2021. As far as the 8-inch fabs, I think we're going to be spending about $150 million. So in total, about $1.35 billion.
Okay, great. What would the depreciation then be for 2021? How does it ramp through the year?
The depreciation expenses, I think I mentioned this earlier. Really, there's no change at this point. It is about, for the 8-inch fabs, it's going to be around $130 million. For the Hua Hong Wuxi fab, it'd be about $76 million. I'm sorry. Let me give you that again. It is $140 million for the 8-inch fabs and $170 million for the Hua Hong Wuxi fab, for the 12-inch fab. Together, it would be about $310 million.
Okay. Yeah, not much change. Okay. The last question on the OpEx, where the 8-inch fab had the R&D grant. If you could give an outlook for those grants are normally lumpy, how that would trend if those grants would continue, or if the OpEx would go back to third quarter levels.
Yeah. I think the OpEx will be pretty stable throughout 2021. Okay? I think the operating expenses will be, we are talking about in total, the three 8-inch fabs will be about, I would say, $130 million a year. For the Hua Hong Wuxi fab, it would probably be around $200 million, largely because of R&D effort that we have to do. For the government grants, I think, for the three 8-inch fabs, these are pretty stable. I would say overall it would be around a total of about $20 million a year.
For Hua Hong Wuxi, on a cash flow basis, last year we got $95.1 million. About 80%+ goes to capital, which will be depreciated. Then about 14%, I think. The split was basically 86% went to capital, 14% went to spending, so offset spending expenses. I would expect it will be along that line for this coming year.
That is helpful. To clarify, the 130 for 8-inch, so if we take the grant out, it would be 110, or is the 130 already take out the $20 million for the grant?
The $130, actually, it's a net number.
Okay, great. Thanks a lot for the color and good results.
Thank you.
The next questions come from Sebastian Hou from CLSA. Please ask your question.
Thank you. Good morning. My first question is that, if I look at your fourth quarter numbers, it turns out the result is good. In terms of revenue, it's about $10 million-$11 million above your prior guidance. But almost you have 4 percentage point extra in the gross profit margin compared to your guidance midpoint. We understand that definitely the Q4 turned out to be better utilization rate, but that magnitude of the beat are still quite big. If you look, there's only $10 million revenues, but there's a 4 percentage point of the GPM beat. I'm just wondering if the company is trying to be more conservative in our guidance. Also whether that's the case when we look at our Q1 guidance, where your revenue is up, but the midpoint gross profit margin guidance is down quarter-on-quarter. Thank you.
Well, Sebastian, that was a very good question. I think, in general, I think we did fairly well in the fourth quarter. I think revenue was up. The additional revenue that we got, it's mostly gross profit. The overall fixed costs basically came down because of extremely high utilization rate. That really helped to boost the gross margin. As far as for the first quarter 2021, the revenue is, at this point, 25%. I would not say, we're normally, in general, we're conservative, but in the first quarter, normally we have the Chinese New Year, and right before that, we normally give a good bonus to all employees. That will affect gross margin as well as operating expenses as well. I think with that in mind, I think you can imagine that number is pretty reasonable.
Certainly, the demand continues to be very strong. If we can do better, I think we still have a chance to achieve.
Okay. A follow-up on that is, does your Q1 guidance still factor in some of the annual maintenance?
Yeah, absolutely. One of our 8-inch fabs had maintenance done in Q4, and two other fabs actually did in the first quarter.
How much of the capacity loss are we talking about in Q1 compared to Q4?
I think for each fab is about average four to five days. As I said, the reason this is going to be the best Q1 ever, actually it's going to be another record high as long as we hit that number. You know, largely because of extremely strong demand. The utilization rate has been consistently, for the past several quarters, above 100%. We're looking at that number throughout. We expect that will continue throughout the rest of 2021.
Okay. Given that, I'd like to get some update on the EBITDA breakeven and overall breakeven target for Hua Hong Wuxi fab, considering we now target the more aggressive capacity ramp. At the same time, also stronger customer demand to fill the fab. Are you still seeing the overall, you'd like to reach the EBITDA breakeven by first half this year and overall breakeven second half this year? Would that plan have changed?
Excellent question. You know, EBITDA, if you look at Q4, it was a fantastic number. We are getting very close. I am pretty confident with the way it is going. We should be able to hit EBITDA positive sometime this year, okay? Sometime this year. We certainly would love to see P&L breakeven very soon, hopefully within the next 12 months. It is not going to be easy because the depreciation expenses is just going to be getting higher and higher. I just said, it is going to be $170 million just on depreciation expenses.
To overcome that, you need to have very strong revenue growth. We expect we are going to do very well this year. As Mr. Tang just earlier said that this is going to be a growing year. It is going to be a very strong year for us. I mean, very strong year for us with the way it is going.
Great. Thanks. My next question is on the pricing and the supply chain across the mature foundry space. I remember that the past few quarters, I think our company has been prioritizing filling up our capacity while ramping up Hua Hong Wuxi fab, so did not really strike many price hike. It looks like basically, most of our founder peers has been doing that in the past few quarters. So wondering, what is your strategy right now, considering the overall trend appears to be more severe, or what is your product mix optimization strategy at this point?
Excellent question. As I said in many occasions, Hua Hong Semiconductor has a very competitive market pricing strategy overall. I think we have many different technology platforms. Each technology platform has a very strong market price. Just in overall, our price is market price, okay? Yes, you are absolutely correct. In 2020, the price came down largely because of COVID-19, and also utilization rate came down in the first half. So for that reason, our price actually, we actually made some concession in order to maintain fairly good utilization rate, okay? Now the market has come back, okay? I would expect in the next several quarters, even throughout this year, I think our pricing just in general will go up. It is not going to have just a drastic, sudden increase on price.
It's going to go in a gradual fashion, I think, throughout the next four quarters, throughout the year, in 2021, okay? I would expect that would be something that is going to be most likely going to be the case, okay? Yes. I would say, looking forward, I think we're going to see a nice price increase throughout the quarters.
Thanks, Daniel. I'm going to call it. Just follow on that, the price going up, gradual price, upper revision, this guidance. I want to understand, is it a combination of both the product mix optimization and also the like-to-like price adjustment on the same product, same customers?
I think it's going to be both, okay? I think you're going to see price increase within the same technology platforms. You're also going to see through product mix improvement, because this is something we do on a monthly basis. We just make sure every month we're going to have the best loading. In other words, we're going to have the best mix in terms of pricing.
The last question from me, I go back to the queue. If I look at the breakdown of business, the discrete business was mostly flat in the past three quarters, and your automotive industry applications were down gradually, even in the Q4. What happened? Because apparently, I think there's a lot of talks recently about the automotive chip recovery and the shortage, and EV itself is very hot. Theoretically, we would thought that your discrete and automotive business are in the sweet spot to capture this growth momentum. But it seems like that has not happened to our business. What's the reason behind that? Also, how do you see that could change in the outlook for this quarter and this year? Thanks.
I think overall, our automotive business was very small, and automotive business was actually a low year in 2020, just overall for the semiconductor industry. But I think things will improve. We are engaging with more and more customers that are doing automotive business. I think I see that would improve over time. It is still a small segment in our overall business, but I think definitely there is going to be a lot of potential here.
We have actually visited a lot of automotive related design companies that are actually very interested in doing business with us. I myself talked to a few people recently, customers. Yeah, that would be a big potential for us. At this point, it is very still sort of low, single digit, but I think certainly that is going to be a very important segment for us going forward. I will let Mr. Tang talk about automotive business from market perspective.
[ Foreign language]
The new energy vehicle is very hot. From our company's perspective, our automobile business is not a big segment, but we grow every year
[ Foreign language]
We also consider that during the construction process of our Hua Hong Wuxi Fab, and we got the IATF 16949 qualification for the automotive last year, and it is a solid consolidation for our next step business development
[ Foreign language]
There were power discrete and also some sensors, but as you know, the automobile business have a very high standard for the quality and reliability. There will be a long qualification process and a long qualification process from customer end. So we are accelerating our business here, and we believe we have a very decent growth very soon. That is it. Sebastian?
Yeah. That is good. Thanks, and gentlemen for your color. That is all from me.
Your next questions come from Andrew Lu from Sinolink Securities. Please ask your question.
Thank you for taking my questions. The first one is regarding the Q1 guidance. Our Q1 guidance seems still behind the Vanguard, SMIC 4%-8% special growth. My question is, if SMIC is in the U.S. blacklist, why the company can still grow faster than us?
Hey, Andrew, I did not quite get your question. You are talking about in terms of guidance, we are behind our Vanguard? And then what about-
Yes. Behind the Vanguard in the SMIC.
Look, Andrew, we had a fantastic growth in Q4, okay? Double-digit growth, one of the best ever, okay? Normally, Q1, you will have some seasonality, just demand and also annual maintenance. But even with Q1, we still have a very strong growth. It's going to be the best Q1 and the best quarter ever for us, okay? I certainly would not underestimate this sort of growth, okay? This is just the beginning. I think this is going to be a growing year. We have a lot of capacity that will be released in the next several quarters. That expansion will continue, okay? As I said earlier, we're going to first make sure we're going to ramp up to 40K. This 40K, initially I said we're going to move from 20 in the beginning of the year to about 40 to the end of this year.
But now, Mr. Tang just said that we're going to get to 40 sometime mid of this year or maybe Q3, okay? So with that sort of acceleration on capacity expansion, you can imagine our growth will be huge. So, I think we have a great Q1. This is great guidance. If we do well, we probably can even exceed it. We have always been realistic, pragmatic, as far as how we give guidance, how that goes. So yeah, that's 288. I think that is a great guidance. I think the Street loves it.
Daniel, do we have this year guidance, full-year guidance, revenue guidance?
Well, Andrew, we normally don't give that type of numbers, okay? We do it quarterly. But with the growth that we're expecting, I would say this is going to be a very strong year for us.
Can we say over 30% will be an easy target?
We don't want to give a number at this point. But I think the demand will continue to be very strong, and I think we're very confident we're going to be able to fill whatever capacity we build, we're going to be able to fill it right away. So it's pretty clear at this point we're going to get to 40,000 wafers. We're going to be doing loads about 40,000 wafers by end of this year. So I think that's going to be a pretty good growth.
Thank you. My second question is, I remember last time the company talking about a focus on 16/55 nanometer technology. That's before the SMIC in the U.S. blacklist. Since SMIC right now in the U.S. blacklist, are we planning to go beyond this mature 12 inch, go to 40, 28 or even below?
[ Foreign language]
In our Hua Hong Wuxi fabs plan, we are technology focused on 90 nm- 55 nm, and we almost complete all the technology platforms on these technology nodes
[ Foreign language]
In our 20 years development in our Hua Hong company's history, we always focused on the specialty technologies from 90 nm, 55 nm . We built many specialty technology platforms with strong market demand, like power discrete, CIS, NOR, and embedded non-volatile memories
[ Foreign language]
Thanks to all our customers support in the previous 20 years, we succeeded in those specialty technologies and build our positions in industry.
[ Foreign language]
The market is a dynamic one, and the market demand also always changing. So we will develop ourselves to meet the customers and market demand
[ Foreign language]
Thank you for your question, Andrew.
[ Foreign language]
[ Foreign language]
Your next question comes from Ng Szeho from China Renaissance. Please ask your question.
Hi, good morning. For the 8-inch capacity, has been kind of flat for the last four or five quarters. I just wonder what our strategy will be for the 8-inch. Also, the utilization is kind of high for the 8-inch, over 100% for two consecutive quarters, which is good. But how much more we can overdrive our 8-inch capacity? That is my number one question.
Szeho, that is excellent question. We have been basically trying to optimize the three 8-inch fabs throughout this year. I mean, throughout 2020 last year. We continue to do that. I think there is still good potential. As we start to migrate some of the smart card ICs, basically our plan is to move all the smart card ICs from the 8-inch- 12-inch, so we will be able to get more efficiencies from 12-inch for smart card ICs. That part of the capacity we can fill more with MCUs. Okay?
MCU, as you know, it's a very profitable business and it is going strong for us. Last year it had more than 20%-25% growth last year. We continue to do that. That's a way to improve margin there, improve revenue. There's still some space there. We can potentially still add a little bit there. Our focus is on 12-inch fab right now. Once that is done, there's still space, we can continue optimize the mix. We can continue add a little more capacity. We continue to do the upgrade. That's why we're spending $150 million a year just on the three 8-inch fabs. That will help us continue to improve the revenue as well as the margin. As I said, the upward limit potential is not that great, but we should continue.
As I said many times in the past, I still have a dream. We want to get that three fabs one day to get a billion dollars revenue. I think we can do it.
Yep, I record it. Second question on the discrete portfolio. Can you share with us what percentage of the revenue coming from super junction and what percentage coming from IGBT?
Well, overall, for example Q4, it was not a great year for super junction last year. Maybe we can even look at it for the whole year. Let me get to that.
Sure.
For 2020, super junction was about 9.1%. IGBT is 4.9% of the overall revenue. Okay? Super junction was not a great year. Last year, super junction actually came down compared to a year ago because in 2019 we did about $114 million. Last year we did about $87 million. Okay? Largely because it was a slow year for automotive.
Okay? A lot of that went to fast chargers. Okay? I think we have a potential to go up this year. Our overall revenue will go up. In terms of absolute dollar, it will go up. As a percentage, let's see what that number is going to be. But yeah, it's at nine, and then I think IGBT definitely is going to be growing a year for IGBT this year. We're going to continue, for IGBT will continue to be a strong year. Last year was close to 5%. I think this year it's going to be more.
I see. Is it fair to say that for the discrete portfolio, you're holding a more positive view going into 2021, both the revenue momentum and also the margin upside?
Yeah. Margin is going to be, I think because of the strong demand, because our utilization rate, especially for the three 8-inch fabs, will continue to be above 100%. I think it will be somewhere 100% -1 05%. Okay? We would expect overall price and margin will all get better this year.
Okay, lovely. Yeah. Okay. All right. Thank you very much. Congratulations.
Thank you.
Your next question comes from Ning Ding from CICC. Please ask your question.
Hi, good morning. Good results. My first question is a follow-up on your Wuxi fab. Can you give us the breakdown of Wuxi fab both by the end of 2020 and 2021? Because I just want to elaborate what kind of application the product will ramp up fast this year.
Thank you, April. That was a good question. For Wuxi, I think many things are going. We have six major technology platforms that are going for us, that are currently getting qualified or going through the R&D process. I think for this year, we're definitely going to continue to see CIS. It's going to be a major product there, high volume. Smart card ICs, that'd be another application. I think it's going to be anywhere up to 3K- 5K a month. Then discrete, we're running close to 7,000 wafers a month right now. We have a capacity virtually, we have 10K capacity for discrete allocated. Then the other thing is NOR flash. NOR flash, eventually we're going to be around 5K- 10K. So these are four major products, that will basically, this year, will be a major revenue contributor for our Wuxi fab.
Yeah, sure. Second, can you give us some color on your 12-inch ASP trend? Because most of the shipment, I suppose, should be like CIS. Do you think the ASP will be stable or slightly go down as we add more capacity to your 12-inch?
Why will it go down? I don't understand.
Just want to make sure the blended ASP, because we may add more power discrete to the 12-inch.
Yeah, but our overall mix will also get better as we do more, for example, NOR, CIS on the high-end applications. For example, now we're doing a lot of 2 megapixel. Eventually we're going to be doing 8 megapixel. So I think overall, I think that the ASP for 12-inch fab will improve. From now move beyond 1,000. That's our goal. Eventually, will even get better.
Sure. Thank you, Daniel. Happy New Year.
Remember now, the important thing right now, it is to, whatever capacity we release, we make sure we get it filled.
Okay, got it. Thanks.
Your next questions come from Edison Lee from Jefferies. Please ask your question.
Oh, hi. Thank you very much once again for my question. My question is quite similar to the previous analyst, mainly on the Wuxi ASP. Because we saw that in fourth quarter, your wafer shipment increased by 110% quarter-over-quarter, and the revenue increased by 115% quarter-over-quarter. That means the ASP has gone up a little bit. I just want to see for 1Q this year and maybe for the rest of the year, what is the driver there, and do you expect ASP to continue to go up throughout the quarters in 2021?
Lee, again, that's an excellent question. Thank you very much. I think yes. My answer is yes, over time, things will get better. We are still in the process of getting this fab to be ramped up. The speed has been very, very fast. We virtually moved from beginning of last year with a few thousand. Now we are already look at 30,000 wafers now. The goal is to get 40,000. As we start to release more and more capacity, we want to make sure this capacity will be filled right away. Initially, the critical thing for us is to get the capacity filled. Then once it is filled, then we will start to improve the product mix and also the ASP. That is what we have to do. Yes, over time, things will get better.
I would say a year from now, I think even be better. The goal is eventually, we want to make this 55 nm fab a very high-quality fab. When you say high quality, it means it has a great product mix, and also it has a great ASP. Can you imagine it is going to be anywhere between $1,000 - $1,200 a piece for things other than discrete. Discrete, because of its manufacturing process, the ASP is relatively lower. But it does not mean it has a lower margin. Yes. To your question is, definitely it is in our mind.
Okay. That is great. I have a follow-up question. Actually, it is on the same point, but for the 8-inch. Because I also saw that for 4Q, your wafer shipment went up by 1.3%, but your revenue went up by 3.4%. That implies some ASP increase there. Should investors expect ASP to be slightly going up in 2021 on 8-inch, or do you think it is going to be flattish?
I think because of strong demand, we expect that demand will continue throughout the next several quarters. Okay? At least throughout 2021. Yes. The answer is we definitely see ASP improvement possibility throughout.
Right.
Throughout the process.
Okay. For 4Q 2020, the ASP increase is mainly due to price increase or just different product mix?
It is both. In fact, you're going to see more this year.
Okay. That's great. That's all I have. Thank you, Danny.
Okay.
Your next question is coming from Steve Yang from CW Fund. Please ask your question.
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The next question comes from Sebastian Hou from CLSA. Please ask your question.
Oh, thanks for taking my follow-up. I just have one thing that I think, Daniel, you mentioned about, I think you still have the ambition and target to grow your 8-inch business to $1 billion at some point, and also there's still some room to expand capacity. But when I look at your expansion plan versus your peers, Semiconductor Manufacturing International Corporation, which apparently their plan to add no less than 45k at 8-inch capacity this year. It looks like we are more conservative on that front. Is it more because the strategy-wise, we are more focused on ramping up Hua Hong Wuxi or there's also some equipment availability problem at the 8-inch? Why I think their competitor appears to be having a way to find those equipment to make up or to plan that kind of aggressive expansion, but we are not. Just trying to understand the discrepancy. Thanks.
Sebastian, that was an excellent question. I think it'd be very difficult to get, in this juncture, at this moment, to be able to secure 40,000 8-inch capacity. I think it's just unrealistic in my view. I'm not going to be commenting on other people's business plan, but I think it'd be difficult for us to do that. Just to get extra 40,000 8-inch wafer capacity. Unless you're just buying a set, just completely take over another fab. That is the thing. So for us, we're going to be concentrating on 12-inch capacity expansion on the Hua Hong Wuxi fab. We're going to continue to do that. We're going to be very focused. We're going to continue to optimize our three 8-inch fabs. As I said, I think a billion dollars is still a very good possibility.
Got it. A follow on that is, are we seeing any bottleneck or extended lead time to procure even the mature 12-inch equipment at this point?
Well, we're virtually buying new equipment, okay? Because these equipment are very reliable. We're getting them in good price. We have great relationship with all the vendors. I think just in general, I think with the way it is going, I think overall, we're getting a very good deal from all the vendors.
We can conclude that there's no problem or limitation on accessing this equipment that's used on 55 nm- 90 nanometers. Is that right?
There's no issue at all. We're getting all the equipment we want.
Okay. That's great. Thanks.
Ladies and gentlemen, that is all the time we have for questions. I will now hand back to Mr. Daniel Wang for closing remarks.
Well, again, thank you all for joining us today, and we had a wonderful conversation. We hope you can join us again next quarter. I wish you all continue to stay safe and healthy. Finally, we wish you all have a very happy and prosperous Year of the Ox. Thank you very much.
Ladies and gentlemen, thank you for your attendance. You may all disconnect.