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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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.
[Operator Instructions]
The earnings press release and fourth quarter 2020 summary slides 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, to 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'll now turn the call over to our Executive Director and President, Mr. Tang.
[Foreign Language]
[Interpreted] Good morning, everyone. Thank you for joining our earnings call.
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 USD 280 million, an increase of 15.4% quarter -- year-over-year and an increase of 10.7% quarter-over-quarter.
Benefiting from recovery of the consumer and communications market and the continuous optimization of product structure, gross profit margin also exceeded guidance at 25.8%. In particular, we are proud that sales revenue of Wuxi fab grow over 100% compared to the previous quarter.
2020 was definitely a new review in the face of COVID-19 and the challenge semiconductor industry environment. All our colleagues put their unrelenting efforts together to ensure the company operates in a safe and stable environment.
The 8-inch production line continues to improve operating efficiency under the condition of full capacity utilization. Moving up the tools, R&D programs and customer engagements of the 12-inch line are all significantly ahead of the original plan.
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 double-digit growth quarter-over-quarter.
R&D and the qualification work for NOR, BCD super junction and IGBT made on the 12-inch production line has 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.
In 2020, full year sales revenue reached USD 951.3 million, a historical high. Looking forward to 2021, we will continue to expand our technology platforms, such as industrial MCUs, and 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.
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 2021. And then we will move on to the question-and-answer session.
First, let me summarize financial performance as of the fourth quarter. Revenue hit another all-time high of $281 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 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 a versus $0.020 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.
Now I will discuss the operating results for both the Hua Hong 8-inch wafer fabs and our 12-inch wafer fab Wuxi. For Hua Hong 8-inch fabs. First, let me have a look -- 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 points 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, now 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 minus $4.4 million, $7.1 million more favorable than Q3 2020.
Now 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 Q3 -- Q4 2019, mainly driven by increased demand for MCU products. Revenue from United States was $20.4 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 product. 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 power management IC 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 e square products.
Now 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 traded 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 Wuxi fab, and $32.8 million for the 3/8-inch fabs.
Other cash flow generated from operating activities were $81.9 million in Q4 2020, including $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, $0.6 million 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, $0.5 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 weak prepayments.
Property, plants and equipment was $2,510.4 million on December 31, 2020, compared to $2,272.5 million of 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 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 associates, 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 earnings 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.
[Operator Instructions] First question come from Randy Abrams from Crédit Suisse.
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 2 of that fab?
[Foreign Language] [Interpreted]
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 towards their R&D progress. For the first half, we -- the mass production for all the 14 projects. So it's lot of efforts to our second quarter's growth -- second half growth, sorry.
We are building our several main technology platforms, and we are engaging more products from our customers -- both existing customers and new customers, and that means we'll grow even faster this year.
We can see the situation for the first quarter will be better than expected. We expect to wafer start maybe 35,000 to 40,000 wafer per month in mid this year. We are also planning for the next step capacity expansion, and we're moving most of the equipments in the second half of this year, and maybe we expect to have about 65,000 capacity by end of this year. We also thankful for all the investors for your support. Thank you.
Second question I wanted to ask on the CapEx, I think the cash outlay ended up $1.1 billion 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 guidance?
Randy. So yes, that was good. Actually, the CapEx for 2020, the actual spending was -- on cash basis was $1.1 billion, $937 million was spent by Wuxi, about $150 million were spent on the 3/8-inch fab. And for 2021, I think we're going to be probably spending about -- in total, okay, for Wuxi separately. For Wuxi it's going to be about $1.2 billion, $800 million is going to be of the capacity expansion, Mr. Tang just mentioned earlier, from 40,000 to 65,000 wafer capacity. And then there's another 400 -- that's $1.2 billion. It's $800 million 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 first half of 2021.
And as far as the 3/8-inch fab, I think we're going to be spending $150 million. So in total, about $1.35 million.
Okay. Great. And what would the depreciation then be for 2021? And how does that ramp through the year?
The depreciation expenses for -- I think, I mentioned this earlier, really, there's no change at this point. It is about for the 38-inch fabs, it's going to be around $1.3 million, okay? And for the Wuxi fab, it would be about $76 million. So I'm sorry, I'm sorry. Let me give you that again. It is $1.4 million for the 3/8-inch and $170 million for the Wuxi fab, for the 12-inch fab. So it's about -- together, it would be about $310 million.
Okay. Yes, not much change. Okay, the last question on the OpEx, where the agents have had the R&D grant. If you could give an outlook for those cranes are normally lumpy, how that would trend if those prints would continue or if the OpEx would go back to third quarter levels?
Yes. The -- I think the OpEx will be pretty stable throughout the 2021, okay. And I think the operating expenses were -- we're talking about in total, the 3/8-inch fabs will be about, I would say, $130 million a year. And for the Wuxi fab, it will probably be around $200 million largely because of R&D effort that we have to do.
For the government grants, I think for the 3/8-inch fabs, these are pretty stable. I would say, overall, it would be around, total, about $20 million a year. And for Wuxi, on a cash flow basis, last year, we got $95.1 million, about 80-plus percent goes to capital, which will be depreciated, and about 14%, 14%, I think, it was -- the split was basically 86% went to capital, 14% went to spending, so offset seeing expenses. I would expect it will be along that line for this coming year.
Okay that's helpful. And to clarify, the $130 million for 8-inch, is that -- so if we take the grant out, it will be $110 million? Or is the $130 million already take out the $20 million for the grants?
The $130 million is actually -- it's a net number.
Our next question is comes from Sebastian Hou from CLSA.
My first question is that if I look at your fourth quarter numbers, so it turns out, the result is good. It's about like $10 million, $11 million -- in terms of revenues about $10 million to $11 million above your prior guidance. But the -- almost you have 4 percentage point extra in the gross profit margin compared to your guidance midpoint. So well we understand that definitely the Q4 will turn out to be better utilization rate, but that the magnitude of the bids are still quite big. If you look at only $10 million in revenues, but there's a 4 percentage point of the gross, yes, GPM bid. So just wondering if the company is trying to be more conservative in our guidance? And 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?
Well, Sebastian that was a very, very good question. I mean, I think, in general, I think we did fairly well in the fourth quarter. I think revenue was up. So the additional revenue that we got, it's basically -- it's mostly -- it is gross profit, okay? So the overall fixed costs, basically, came down because of extremely high utilization rate, okay? So that really helped to boost the gross margin.
Now as far as -- for the first quarter 2021, the revenue is, at this point, 25%. Well, 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 our employees. So that will affect gross margin as well as operating expenses as well. I mean, so I think, with that in mind, I think you can imagine that number is pretty reasonable. Certainly, I mean, the demand continues to be very, 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 factoring some of the annual maintenance?
Yes, absolutely. Absolutely. We still -- one of our fabs, 8-inch fab, was -- had [indiscernible] done in Q4 and 2 other fabs actually did in the first quarter.
How much of the capacity loss we are talking about in Q1 compared to Q4?
Yes. I think it's about -- for each fab is about average 3 to 5 days. But I mean, as I said, the reason this is going to be the best Q1 ever. It's going to be -- actually, it's going to be another record high as long as we hit that number. 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. And then given that, I'd like to get some update on the EBITDA breakeven and overall breakeven target for Wuxi fab considering we now target more aggressive capacity ramp-up, at the same time, also stronger customer demand to fill the fab. Are you still seeing the -- overall, the -- you likely to reach to EBITDA breakeven, right first half this year, and overall breakeven second half this year,
what that plan has changed?
Excellent question. EBITDA, if you look at Q4, I mean, it was a fantastic number. We're very -- getting very, very close. I'm pretty confident, with the way it's going, we should be able to get EBITDA positive sometime this year, okay? Sometime this year. And we certainly would love to see P&L breakeven very, very soon, hopefully within the next 12 months. But it's not going to be easy because the depreciation expense is just going to be getting higher and higher. I just said it's going to be $170 million just on depreciation expenses. To overcome that, it's -- you need to have very strong revenue growth.
And we expect we're going to do very well this year. As Mr. Tang earlier said, that this is going to be a growing year. It's going to be a very, very strong year for us. I mean, very strong year for us with the way it's going.
Great. My next question is on the pricing. And the tin is across the mature foundry space. I think the -- I remember that the past few quarters, I think, our company has been prioritizing filling up our capacity while ramping the Wuxi fab so didn't really strike many price hike. But it looks like our -- basically all our -- most of our foundry peers has been doing that in the past few quarters. So wondering what's your strategy right now considering the overall kind as appears to be more severe? Or what's your product mix optimization strategy at this point?
Excellent question. As I said in many, many occasions, Hua Hong Semiconductors have a very, very competitive market pricing strategy, okay? 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're absolutely correct. In 2020, the price came down largely because of COVID and also utilization rate came down in the first half. So for that reason, we actually -- our price actually -- we actually made some concession in order to maintain fairly good utilization rate, okay? But now the market has come back, okay? I would expect, in the next several quarters, I mean, even throughout this year, I think our prices, in general, will go up, but it's not going to have just a drastic sudden increase on price. It's going to go -- we -- it's going to go gradually -- in a gradual fashion, I think, throughout the next 4 quarters throughout the year in 2021, okay? I think that's -- I would expect that's going to -- that would be something that is going to be most likely to be the case, okay?
So yes, I mean, I would say, look, looking forward, I think we're going to see a nice price increase throughout the quarters.
Thanks Daniel on the color. Just follow-on back the price going up, gradual price, the upper revision, this guidance, I think the -- 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 in the same -- within the same technology platforms. You're also going to see through mix product product mix improvement because this is something we do on a monthly basis, we make sure every month, we're going to have the best loading or we're going to have the best mix in terms of pricing.
And last question from me, I'll go back to the queue. On the -- if I look at the breakdown of the business, the discrete business was mostly flat in the past 3 quarters and your automotive industrial applications were down gradually even in the Q4. So what happened? Because apparently, I think there's a lot of the talks recently about the automotive chip recovery and the shortage and EV sales is very hot. So 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 flow to our business. So do you see -- what's the reason behind that? And also, how do you see that could change the outlook for this quarter and this year?
I think, overall, our automotive business was very, very small. And automotive business was actually a low year in 2020. I mean just overall for the semiconductor industry. But I think things will improve. We're engaging with more and more customers that are doing automotive business, okay? I think I see that would improve over time, okay? It is still a smaller segment in our overall business. But I think definitely, there's 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. So yes, I mean, that will be a big potential for us, okay?
At this point, it's 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 talked about automotive business from a market perspective.
[Interpreted]
[Interpreted]
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. And we also consider that, during the building -- construction process of our Wuxi fab, and we bought the TS 16949 qualification for the automotive last year and it's solid consolidation for our next business development. There were [indiscernible] and also some sensors. But as you know, the automobile business has a very high standard for the quality and reliability. So 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 very decent growth very soon. And that's it. Sebastian?
That's good.
Your next questions come from Andrew Lu from Sinolink Securities.
The first 1 is regarding the Q1 guidance. Our Q1 guidance still sits behind the Vanguard, SMIC, 4% to 8% sequential growth. My question is, SMIC in the U.S. Black List it's why the company can still grow faster than us?
Andrew, I didn't quite get your question. I mean, you're talking about -- in terms of guidance, we're behind on Vanguard.
Behind the Vanguard and the SMIC?
I mean, look, Andrew, we had a fantastic growth in Q4, okay? I mean, double-digit growth, one of the best ever, okay? And normally Q1, you will have some seasonality. There's 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 is going to be released in the next several quarters. And that expansion will continue, okay?
As I said earlier, we're going to, first, make sure we're going to ramp up to 40,000. This 40,000, we're going to be initially I've said, we're going to move from 20,000 in the beginning of the year to about 40,000 to the end of this year, but now Mr. Tang just said that we're going to get to 40,000 in the -- sometime mid of this year or maybe Q3, okay? So with that sort of acceleration on capacity expansion, I mean, you can imagine our growth will be huge. So I think we have a great Q1. I mean, this is a great guidance. If we do well, we probably can even exceed it. We have always been realistic, pragmatic in terms of -- as far as giving guidance -- as far how we give guidance, how that goes.
So yes, I mean, that's $288 million, I think, that is a great guidance. I think the street loves it.
Daniel, do we have a year 2020 -- this year guidance, full year guidance, revenue guidance?
Well, Andrew, we normally don't give that type of numbers, okay? We only give -- we do it quarterly. But with the sort of the growth we -- that we're expecting, I would say, I mean, this can be a very, very strong year for us.
And we say over 30% will be a easy target?
We don't want to give a number at this point, okay? But I think the demand will continue to be very, very strong. And I think we're very, very confident we're going to be able to fill whatever capacity we've built, we're going to be able to fill it right away, okay? So it's pretty clear at this point. We're going to get to 40,000 wafers -- we're going to be doing about 40,000 wafers by end of this year. So that's -- I think that's going to be a pretty good growth.
My second question is, I remember, last time, the company talking about focus on 55-nanometer technology. That's before the SMIC in the U.S. Black List. Since the SMIC right now in the U.S. Black List, are we planning go beyond this mature 12-inch go to 40, 28 or even below?
[Foreign Language] [Interpreted]
In the the Wuxi fab plan, we have technology-focused on 90 nanometers to 55 nanometers, and we almost complete all the technology platforms on these technology nodes. So in our 20 years development in our Hua Hong history, we always focus on the specialty technologies from 90 nanometer, 65 nanometers, 55 nanometers. We built many specialty technology platforms with strong market demand like power discrete, CIS, NOR and embedded nonvolatile memories.
And thanks to all our customers' support in the previous 10 years, we succeeded in those specialty technologies and build our positions in industry. And 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. Thank you for your question, Andrew.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
Your next question comes from Ng Szeho from China Renaissance.
For the 8-inch capacity has been kept flat for the last for 4, 5 quarters. So I just wonder what our strategy will be for the 8-inch. And also, the utilization is kind of 8-inch for a over 100% for 2 consecutive quarters, which is good. But how much more we can overdrive our 8-inch capacity? That's my #1 question.
Szeho, that's excellent question. We have been basically trying to optimize the 3-inch fabs throughout this year, I mean, throughout 2020, 2020 last year. And we continue to do that. I think there's still good potential. As we start to migrate some of the smart cards, basically, our plan is to move all the smart cards from the 8-inch to 12-inch, so you'll be able to get more efficiencies from 12-inch for smart cards. So that part of the capacity we can fill more with MCUS, okay? MCU is, as you know, it's a very profitable business, and it is going strong for us, okay? Last year, it had 20% -- more than 20% to 25% growth last year, okay? So we continue to do that, okay? That's a way to improve margin there, okay? Improve revenue, okay? And also, there's still some space there. We can potentially still add a little bit there, okay? But our focus is on 12-inch fab right now. Once that is done, we can certainly continue to -- there's still space. We can continue to optimize the mix, okay? 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 3/8-inch fabs. That will help us continue to improve the revenue as well as the margin.
But I mean, 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 [indiscernible]. We want to get that 3 fabs 1 day to get $1 billion revenue. I think we can do it.
Yes. I recall it. Yes. And 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, I mean, for example, Q4, super junction was -- it was not a great year for super junction last year, okay? But maybe we can even look at it for the whole year. Let me get through that. For 2020, super junction was about 9.1%. IGBT is 4.9% of the overall revenue, okay? Super junction was not a great year. I mean, 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 of -- it was a slow year for automotive, okay? I mean, a lot of that went to fast chargers, okay? So 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 yes, it's 9%. And then I think IGBT definitely is going to be growing here for IGBT this year. So we're going to continue for -- IGBT will continue to be a strong year. It -- last year was close to 5%. I think this year, it's going to be more.
So 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?
Yes, yes. Margin is going to be -- I think, because of the strong demand, because our utilization rate is going to -- especially for the 3/8-inch fab will continue to be above 100%. I think it will be somewhere 100% to 105%, okay? So we would expect overall price and margin will all get better this year.
Your next question comes from Ning Ding from CICC.
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 '21? Because I just want to elaborate what kind of application the product could ramp up fast this year.
Thank you. It is a good question. For Wuxi, I mean for -- I think many things are going. We have like 6 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 -- we continue going to see CIS. It's going to be a major product there, high volume. Smart cards, that's going to be another application, okay? I think it's going to be anywhere up to 3,000 to 5,000 a month. And then discrete, we're running close to 7,000 wafers a month right now, okay? We have a capacity virtually, we have 10,000 capacity for discrete allocated. And then the other thing is NOR Flash, NOR Flash, eventually, we're going to be around 5,000 to 10,000. So these are 4 major products that will basically, this year will be a major revenue contributor for Wuxi fab.
Yes, sure. And second, can you give us some color on your 12-inch ASP trench because most of the shipment current I suppose should be like CIS. So 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 have more discrete -- power discrete to the 12-inch?
Yes. But our overall mix will also get better as we do more -- for example, NOR, CIS on the high-end applications, for example, 2 -- now we're doing 2 mega pixel. Eventually, we're going to be doing 8 mega pixel. Yes. Yes. So I think overall, I think that the ASP for 12-inch will improve, it will from now move beyond 1,000, that's our goal, eventually will even get better. But the important thing right now it is to whatever capacity we release, we'll make sure we get it field.
Our next question is comes from Edison Lee from Jefferies.
In fact, my question was quite similar to the previous [indiscernible] mainly on the Wuxhi ASP. Because we saw that in fourth quarter, your wafer shipment increased by 110% Q-on-Q, and revenue increased by 115% Q-on-Q, that mist ASP has gone up a little bit. I just want to see 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 throughout the quarters in 2021?
See, again, that's an excellent question. Thank you very much. I think, yes, my answer is, yes, over time, things will get better, okay? We're still in the process of getting this fab to be ramped up, okay, where the speed was very -- has been very, very fast, okay? We virtually moved from beginning of last year with a few thousand. Now we're already at 30,000 wafers now, okay? So the goal is to get 40,000. As we move -- as we start to release more and more capacity, we want to make sure this capacity going to be get -- will be filled right away, okay? So yes, I mean, initially, the important -- the critical thing for us is to get the capacity filled. And then, once it's filled, then we will start to improve the product mix and also the ASP. That's what we have to do. So yes, over time, things will get better and even getting -- I would say, a year from now, I think, even be better, okay? I mean the goal is, eventually, we want to make this 55-nanometer fab, a very high-quality fab. When you say high quality, means, it's got a great product mix. And also, it's got a great spa. Okay. Can you imagine it's going to be like anywhere between 1,000 to 1,200 piece for things other than discrete, discrete because of its manufacturing process, ASP is relatively lower, but it doesn't mean it has a lower margin, okay? So yes, the question to your question is, just after -- definitely, it is in our mind.
Okay. That's great. I have a follow-up question, actually, it's 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%. So that implies some ASP increase there. So investors expect ASP to be slightly coming up in 2021 on 8-inch? Or do you think it's going to be flattish?
I think, because of strong demand, we expect that demand will continue throughout the next several quarters, okay? At least through throughout 2021. Yes, the question -- the answer is, we definitely see ASP improvement possibility throughout the process.
Okay. And for 4Q '20, the ASP increase is mainly due to price increase or just different product mix?
It is both. It is both. In fact, you're going to see more, I mean, this year.
Our next question comes from Steve Young from Crew Fund.
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you the next question is coming from Sebastian Hou from CLSA.
I just have one thing that I think, Daniel, you mentioned about, I think, here we still have the ambition and target to grow your AH business to USD 1 billion at some point. And also there's still some room to expand capacity. But what I look at your expansion plan versus your peers, SMIC, which apparently they are planned to add like 40,000 -- no less than 45,000 of 8-inch capacity this year. It looks like we are more conservative on that front. And is it more because the strategy wise, we are more focused on filling up -- ramping out Wuxi? Or there's also some equipment availability problem at the 8-inch? And why I think your competitor appears to be having the way to find those equipment to make up to plan that kind of aggressive expansion, but we are not? Just trying to understand the discrepancy.
Sebastian, that was an excellent question. I mean, I think, it would be very difficult to get, at this juncture, at this moment, to be able to secure 40,000 8-inch capacity, I think, it's just unrealistic, in my view, okay? I'm not going to be commenting on other people's business plan, but I think it would be difficult for us to do that. I mean, to to give extra 40,000 8-inch wafer capacity unless you're just buying a step -- just completely -- just take over into the fab, okay? That is the thing. So for us, we're going to be concentrating on 12-inch capacity expansion on the 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 3/8-inch fabs. As I said, I think $1 billion is still a very good possibility.
Got it. A follow-up on that is, are we seeing any bottleneck or extended lead time to get the -- to procure the -- even the mature 12-inch capacity -- I'm sorry, equipment at this point?
Well, we're virtually buying new equipment, okay? Because these equipment are very reliable, we're getting them in a 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 we're getting -- overall, we're getting a very good deal from various -- all the bank vendors.
So we can conclude that there is no problem or limitation on accessing this equivalent that's used on 55 to 90 nanometers? is that right?
No, there's no issue at all. I mean, we're getting all the equipment we want.
Ladies and gentlemen, that's 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 would join us again next quarter. I wish you all continue to be -- to stay safe and healthy. Finally, we wish you all have a very happy and prosperous year of [indiscernible]. Thank you very much.
Ladies and gentlemen, thank you for your attendance. You may all disconnect.