On September 22, Goldman Sachs released a report expressing a positive outlook on Hua Hong Grace (01347.HK), forecasting sequential revenue growth of 11% and 15% in the third and fourth quarters of 2026, respectively, surpassing the 9% growth in the second quarter. This growth is primarily driven by increased AI investments in China and customers' preference for domestic products to ensure stable supply. The report noted that Hua Hong continues to expand its production capacity, with utilization rates remaining high, benefiting from strong market demand and technological upgrades. Generative AI has become a key growth driver, boosting demand for embedded flash, NOR flash, and power management ICs. Additionally, Hua Hong completed the acquisition of a 97.5% stake in HLMC in September, making it a wholly-owned subsidiary and incorporating it into the group's financial statements. Goldman Sachs believes that this acquisition will broaden Hua Hong's 12-inch manufacturing platform, supporting its long-term capacity and technological upgrades. Goldman Sachs expects strong demand to sustain high capacity utilization, boost average selling prices, and improve gross margins. The company plans to increase its 12-inch wafer capacity by approximately 40% for Fab9A by the end of the third quarter of 2026, achieving full production in the first half of 2027. Goldman Sachs maintains a Buy rating on Hua Hong's Hong Kong-listed shares with a target price of HK$335.