(Yicai) May 15 -- Shares of Hua Hong Semiconductor fell despite the second-largest wafer foundry on the Chinese mainland saying its profit soared more than five times in the first quarter, thanks to high prosperity in the global chip market driven by the artificial intelligence boom.

Hua Hong [SHA: 688347] fell 1.2 percent to CNY155.98 (USD22.99) a share as of lunch break in Shanghai, after swinging between a gain of 6.8 percent and a drop of 6.2 percent in the morning trading session. Its Hong Kong-listed stock [HKG: 1347] tumbled 3.9 percent to HKD122 (USD15.58).

Net profit soared 458 percent to USD20.9 million in the three months ended March 31 from a year earlier, the Shanghai-based company said in an earnings report released late yesterday. Revenue rose 22 percent to USD660.9 million.

Income will likely reach USD690 million to USD700 million this quarter, with a gross margin of between 14 percent and 16 percent, Hua Hong said.

"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 became stronger over the course of the quarter," said Bai Peng, chairman and president of Hua Hong.

The global semiconductor industry is undergoing accelerated transformation, with AI and related applications playing an increasingly central role in market dynamics, Bai stressed. Hua Hong's core strategy is to focus on market needs, strengthen process technology capabilities, and boost production capacity, he added.

Hua Hong's China revenue climbed 19 percent to USD525.2 million in the first quarter, mainly driven by increased demand for microcontroller units, power management integrated circuits, flash, and insulated gate bipolar transistor products. Income from North America jumped 52 percent to USD85.7 million.

Semiconductor Manufacturing International Corporation, China's largest contract chipmaker and main rival of Hua Hong, also released its quarterly report on the same day, with its net profit climbing 5 percent to USD197.4 million and revenue rising 12 percent to USD2.5 billion.

SMIC expects revenue to grow by 14 percent to 16 percent in the second quarter from the previous one, with gross margin ranging from 20 percent to 22 percent.

Shares of SMIC [SHA: 688981] jumped 4.2 percent to CNY122.88 apiece in Shanghai, while in Hong Kong, the stock [HKG: 0981] rose 4.1 percent to HKD74.40 (USD9.50).

Editors: Dou Shicong, Martin Kadiev