"China's No. 1 AMOLED" Why Losses Keep Growing? HammerHead Display's Hong Kong IPO Breakthrough Reveals Underlying Anxiety

In China’s display industry narrative, OLED has long been regarded as one of the core technologies of the next generation. Over the past decade, Chinese manufacturers have successfully made partial technological progress in this field, which was long dominated by foreign companies, through massive capital investment and policy support.

Among these efforts, Shanghai Hehui Optoelectronics is a symbolically significant company. It is one of China’s earliest manufacturers to achieve AMOLED mass production and has maintained the top position domestically in tablet and notebook OLED panels for a long time. From a technical and market share perspective, this company is almost an invisible champion in China’s mid-size OLED sector.

However, another set of data presents a stark contrast: five years after going public, it still hasn’t turned a profit, with a net loss exceeding 2.5 billion yuan in 2024, and a long-term negative gross margin. On one side is the industry narrative of “technological catch-up,” and on the other is the financial reality of “long-term production, long-term losses.”

Recently, this A-share Sci-Tech Innovation Board listed company officially passed the Hong Kong Stock Exchange hearing and is about to re-enter the capital market. So why has this leading semiconductor manufacturer in its niche market yet to break free from losses?

China’s AMOLED Leader: Backed by State Assets + Huahong Management Genes

Hehui Optoelectronics’ foundation is a typical blend of “Shanghai state assets + Huahong technology.”

Founded in 2012, the company was established with the support of Shanghai’s state-owned assets system. Its core management team includes members from China’s key semiconductor sector—the Huahong system.

Chairman Fu Wenbiao personally experienced the difficult start of the national “909 Project” and served as Chairman of Huahong Group; General Manager Liu Huilan also has extensive experience in Huahong and the panel industry. This deep industry background gave Hehui Optoelectronics a very high starting point at its inception.

Relying on the controlling stake of Shanghai Lianhe Investment Co., Ltd., Hehui not only secured abundant initial capital but also gained the confidence to experiment under policy support.

It is this confidence that led Hehui to pursue a unique technological path. Amid fierce competition in mobile phone screens, Hehui keenly bet on the then-blue-ocean “medium and large size” AMOLED field.

By its third year, Hehui built China’s first AMOLED mass production line, with a 4.5-generation line officially put into operation; later, it also established a 6th-generation AMOLED line, gradually developing rigid, flexible, and hybrid technologies.

From tablets to laptops to smart cockpits, Hehui leveraged its unique “combination of rigidity and flexibility” production line flexibility to be the first to realize mass production of hybrid and tandem technologies, developing rapidly.

This strategy has increasingly demonstrated its value in recent years. As the PC industry’s demand for high-end displays rises and the demand for high-resolution screens in automotive smart cockpits explodes, the mid-size OLED market is accelerating. Data shows that by 2030, penetration rates of OLEDs in tablets and laptops are expected to rise from 5.5% in 2024 to 23.9%.

Hehui has already established a strong competitive edge in this niche. In 2024, in the field of tablet and notebook AMOLED panels, its sales and revenue ranked first in China, with nearly half of the market share, demonstrating dominance in this segment. In automotive displays, it has become a core supplier for new entrants like NIO, Geely Zeekr, and SAIC IM.

It can be said that Hehui represents a crucial link in China’s OLED industry’s transition from mobile phone accessories to breakthroughs in medium and large sizes.

To some extent, the phased reduction of holdings by Shanghai Integrated Circuit Fund in 2025 can also be seen as a signal: this company has passed the stage of technology validation and is stepping up its independent development capabilities.

However, industry logic is often more ruthless than policy predictions. Hehui’s “first-mover advantage” appears fragile in the face of the capital-consuming beast that is OLED.

The Profit Paradox for Latecomers: Long-term Production, Long-term Losses

Financial data shows that Hehui is facing a relatively awkward situation.

Over the past three years, its revenue has been relatively resilient, fluctuating but growing, yet losses have continued to widen. In 2024, revenue approached 5 billion yuan, but net losses still reached 2.5 billion yuan; gross margin remains negative at -23.8%, indicating that revenue has yet to cover costs.

This is due to both the structural logic of the OLED industry and limited internal drive within the company.

In the display industry, OLED is a typical capital-intensive, technology-driven manufacturing sector. A high-generation production line often requires hundreds of billions of yuan in investment, with depreciation and equipment amortization continuously eroding profits—calling it a “money-consuming beast” is no exaggeration.

The deeper reason for persistent unprofitability lies in its inherently flawed business model. As a latecomer, Hehui’s process accumulation is much shorter than that of international leaders, resulting in slow efficiency and yield improvements, keeping unit manufacturing costs above industry averages for a long time. Additionally, it lacks independent control over upstream materials and equipment and cannot vertically integrate with downstream brands, suffering from dual pressures upstream and downstream.

More critically, the “medium and large size” moat of Hehui’s core advantage is about to face challenges.

On one side, Samsung Display’s G8.6 generation IT-OLED line, launched this year, will significantly lower the production costs of medium and large-sized panels. For Hehui’s existing 4.5- and 6-generation lines, this is a dimensionality reduction attack. As Samsung’s new lines ramp up, Hehui’s slight cost advantage will be further diluted.

On the other side, BOE and CSOT, with more complete supply chains and larger capacities, have already established strong market advantages in mobile and IT displays; vendors like Visionox and Tianma are continuously expanding their share in niche segments.

On the demand side, the global consumer electronics market is in a cyclical adjustment period, with terminal demand convergence becoming consensus. Longer replacement cycles for tablets and laptops, rapid but small-scale penetration of automotive displays, and other variables place Hehui in a precarious situation:

Faced with Samsung’s cost pressure and domestic competitors’ scale expansion, the demand side may not provide enough room.

This is the “profit paradox” Hehui faces: technological breakthroughs do not necessarily translate into business success. The so-called “first-mover advantage” becomes more of a false prosperity without scale effects and continuous technological iteration.

Re-Listing Is Just a Time Win, Not a Cure

Going public in Hong Kong clearly aims to help Hehui escape these difficulties and seek external support. In the broader industry cycle, Hehui’s Hong Kong listing is not isolated.

In this major technological cycle, China’s semiconductor industry is experiencing a clear wave of capital and industry restructuring.

Since the release of policies like the “New National 9 Regulations,” “Sci-Tech Innovation Board Eight Regulations,” and “Mergers and Acquisitions Six Regulations,” industry consolidation has been underway. From 2024 to 2025, M&A activity in A-share semiconductor sector has surged—from mergers like Guangxin Information and Sugon to Jiangfeng Electronics’ acquisition of Kaide Quartz—capital is reshaping the industry landscape at an unprecedented pace.

Meanwhile, many semiconductor companies are rushing to Hong Kong’s stock market. As an A-share listed company, Hehui also seeks to expand its scale and industry integration through a larger capital platform.

First, although valuation logic for hard-tech companies in Hong Kong is strict, its international capital platform can help Hehui attract more diversified strategic investors and even serve as a springboard for cross-border M&A. Given the continuous losses in A-shares limiting refinancing, Hong Kong may be the only window for Hehui to access vital liquidity.

Second, listing in Hong Kong is a key step for Hehui to break out of a single capacity race and move toward ecosystem collaboration. The second half of OLED competition is no longer just about capacity and yield but about technology, capital, supply chain coordination, and customer ecosystem.

Hehui urgently needs to leverage capital operations to extend upstream into materials, bind more terminal giants downstream, and even acquire and integrate scattered small and medium capacities within the industry to rapidly expand scale and hedge against the cost advantages of global giants.

Earlier, Shanghai Integrated Circuit Fund’s reduction of holdings seemed like a planned retreat, but it was also a form of pressure. A Hong Kong listing might buy Hehui a valuable time window, but capital is never a panacea. The company must now face a critical question: how to transform into a truly profitable industry enterprise.

Source: Hong Kong Stock Research Society