台積電 ADR (TSM) 2016 Q3 法說會逐字稿

Welcome to TSMC's third quarter 2016 earnings conference and conference call. This is Elizabeth Sun, TSMC's Director of Corporate Communications and your host for today. Today's event is webcast live through TSMC's website at www.tsmc.com. If you are joining us via the conference call, your dial-in number are in listen-only mode. As this conference is being viewed by investors around the world, we will conduct this event in English only.

歡迎參加台積電2016年第三季財報發表會及電話會議。我是台積電企業傳播總監伊莉莎白·孫，也是今天的主持人。今天的活動透過台積電網站 www.tsmc.com 進行網路直播。如果您透過電話會議加入我們，您的撥入號碼將處於只聽模式。由於本次會議將受到全球投資者的關注，因此我們將僅以英語進行此活動。

The format for today's event will be as follows. First TSMC's Senior Vice President and CFO Ms. Lora Ho will summarize our operations in the third quarter of 2016, followed by our guidance for the fourth quarter of 2016. Afterwards, TSMC's two Presidents and Co-CEOs Dr. Mark Liu and Dr. C.C. Wei and Ms. Ho will jointly provide our key messages. Then we will open both the floor and the line for the Q&A.

今天的活動形式如下。首先台積電資深副總裁兼財務長何麗華女士將總結我們2016年第三季的營運情況，隨後對2016年第四季做出展望。隨後，台積電兩位總經理兼聯席執行長劉德華博士、陳建昌博士分別致詞。魏女士和何女士將共同傳達我們的關鍵訊息。然後我們將開放現場提問和線上提問。

For those participants on the call, if you do not yet have a copy of the press release, you may download it from TSMC's website at www.tsmc.com. Please also download the summary slides in relation to today's earnings conference presentation.

對於電話會議的參與者，如果您還沒有新聞稿的副本，您可以從台積電網站 www.tsmc.com 下載。請同時下載與今天的收益會議簡報相關的摘要投影片。

As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the Safe Harbor notice that appears on our press release.

像往常一樣，我想提醒大家，今天的討論可能包含前瞻性陳述，這些陳述受重大風險和不確定性的影響，可能導致實際結果與前瞻性陳述中的結果有重大差異。請參閱我們新聞稿中的安全港通知。

And now I would like to turn the podium to TSMC's CFO Ms. Lora Ho for the summary of operations and current quarter guidance.

現在，我想請台積電財務長 Lora Ho 女士總結營運狀況並介紹本季業績指引。

Thank you, Elizabeth. Good afternoon, everyone, and thank you for joining us today. My presentation will start with the financial highlights for the third quarter, followed by the guidance for the fourth quarter.

謝謝你，伊麗莎白。大家下午好，感謝大家今天的參與。我的演講將從第三季的財務亮點開始，然後是第四季度的指導。

We have just finished another strong quarter. Despite a less favorable foreign exchange rate, our third quarter revenue increased 17% sequentially to TWD260 billion, exceeding the high end of our guidance given in July, due to the strong demand in overall smartphone market.

我們剛剛結束了又一個強勁的季度。儘管外匯匯率不太有利，但由於整體智慧型手機市場需求強勁，我們的第三季營收仍較上季成長 17%，達到 2,600 億新台幣，超過了我們 7 月給出的預期上限。

Gross margin declined 0.8 percentage point sequentially to 50.7% mainly due to an unfavorable foreign exchange rate and the margin dilution from higher 16-nanometer contribution, partially balanced by a higher utilization rate and cost improvement.

毛利率環比下降 0.8 個百分點至 50.7%，主要原因是不利的匯率和 16 奈米貢獻增加導致的利潤率稀釋，但利用率提高和成本改善部分抵消了這一影響。

R&D expense continued to increase, reflecting a high level of development activities for 7-nanometer. Since our revenue grew faster than R&D expense, total operating expense to revenues was 9.9%. Operating margin was 40.8% in the third quarter.

研發費用持續增加，反映出7奈米開發活動的高水準。由於我們的營收成長速度快於研發費用，總營運費用佔營收的 9.9%。第三季營業利益率為40.8%。

Overall, our third quarter earnings per share reached TWD3.73, a 33% increase Q over Q and a 28% year over year and ROE for the third quarter was 31.2%.

整體而言，第三季每股盈餘達3.73新台幣，較上一季增加33%，較去年同期增加28%，第三季淨資產收益率達31.2%。

Now let's take a look at the revenue contribution by application. Our third quarter business benefited from the new mobile product launches as well as the robust overall smartphone demand. Revenue increased across the board in all product segments. Communications and industrial/standard increased by 19% and 16% respectively, while computer and consumer also increased by 3% and 8% respectively.

現在讓我們來看看應用程式的收入貢獻。我們的第三季業務受益於新行動產品的推出以及強勁的整體智慧型手機需求。所有產品領域的收入均全面成長。通訊和工業/標準分別成長了19％和16％，而電腦和消費也分別成長了3％和8％。

In terms of revenue by technology, combined revenue from 16 and 20-nanometer continued to grow and represented 31% of wafer revenue in the third quarter compared to 23% in the second quarter. Meanwhile, our 28-nanometer capacity remained fully utilized and represented 24% of our wafer revenue in the third quarter.

從技術收入來看，16 奈米和 20 奈米的綜合收入持續成長，佔第三季晶圓收入的 31%，而第二季為 23%。同時，我們的28奈米產能仍被充分利用，佔第三季晶圓收入的24%。

Moving on to balance sheet, we ended the [third](corrected by company after the call) quarter with cash and marketable securities of TWD517 billion which is TWD151 billion lower than the second quarter. That was as a result of TWD156 billion of cash dividend payment in July. Correspondingly, current liabilities decreased by TWD141 billion.

再來看資產負債表，我們在[第三]季度結束時（電話會議後公司進行了更正）現金和有價證券總額為 5170 億新台幣，比第二季度減少了 1510 億新台幣。這是由於 7 月派發了 1,560 億新台幣的現金股息。相應流動負債減少1,410億新台幣。

On financial ratios, accounts receivable turnover days decreased by 1 day to 42 days. Days of inventory decreased by 10 days to 44 days mainly due to reduction in work in progress as a result of stronger wafer shipment and an improving cycle time on advanced nodes.

財務比率方面，應收帳款週轉天數減少1天至42天。庫存天數減少 10 天至 44 天，主要由於晶圓出貨量增加以及先進節點週期時間縮短導致在製品減少。

Now let me make a few comments on cash flow and CapEx. During the third quarter we generated TWD126 billion from operations, spent TWD104 billion in capital expenditure, paid out TWD156 billion in cash dividend and repaid TWD12 billion of corporate bonds. Our overall cash balance decreased TWD158 billion to TWD464 billion at the end of the third quarter.

現在，讓我對現金流和資本支出發表一些評論。第三季度，公司營業收入1260億新台幣，資本支出1040億新台幣，派發現金股利1560億新台幣，償還公司債120億新台幣。截至第三季末，我們的整體現金餘額減少了1,580億新台幣，至4,640億新台幣。

In US dollar terms, the capital expenditure spent in the first three quarters of 2016 totaled $6.7 billion. Our full-year CapEx budget is now expected to be slightly above $9.5 billion, which is at the low end of our guidance.

以美元計算，2016年前三個季度的資本支出總計67億美元。我們預計全年資本支出預算將略高於 95 億美元，處於我們預期的低端。

I have finished my financial summary. Now let's turn to the fourth quarter outlook. Based on our current business outlook and exchange rate assumption of $1 to TWD31.50, we expect fourth quarter revenue to be between TWD255 billion and TWD258 billion which represents 1% to 2% sequential decline, gross profit margin to be between 50.5% and 52.5%, and operating margin to be between 40% and 42%.

我已經完成了財務總結。現在讓我們來看看第四季的展望。根據我們目前的業務前景和 1 美元兌 31.50 新台幣的匯率假設，我們預計第四季度營收將在 2,550 億新台幣至 2,580 億新台幣之間，環比下降 1% 至 2%，毛利率將在 50.5% 至 52.5% 之間，營業率 40% 至 4%。

This concludes my remarks. Now I would like to turn the podium to Mark for his comments.

我的發言到此結束。現在我想請馬克發表評論。

Good afternoon. I would like to start delivering our key messages. Let me start from our near-term outlook. We concluded our third quarter with 17% quarter-to-quarter and 22% year-to-year revenue growth. This strong growth was driven by our major customer's new mobile product launch and a stronger than seasonal growth from our other customers.

午安.我想開始傳達我們的關鍵訊息。讓我從我們的近期展望開始。我們的第三季營收季增 17%，年增 22%。這一強勁成長得益於我們主要客戶推出的新行動產品以及其他客戶強於季節性的成長。

In the third quarter we gained our foundry market share across most technology nodes. With strong sell-through we estimate fabless DOI exiting the third quarter will be only slightly above seasonal level.

第三季度，我們在大多數技術節點上獲得了代工市場份額。由於銷售強勁，我們估計第三季的無晶圓廠 DOI 將僅略高於季節性水準。

We saw the smartphone sales improving coming into second half this year. High-end smartphone demand today is better than we previously expected. The 4G Plus deployment in China and the 4G upgrade in emerging markets also drive end demand.

我們看到今年下半年智慧型手機銷量回升。如今高階智慧型手機的需求比我們之前預期的要好。中國的4G Plus部署和新興市場的4G升級也帶動了終端需求。

PC gaming and the TV gaming markets driven by product refresh are showing good growth. Also deep learning is increasingly applied to many diversified areas. So we forecast our fourth quarter revenue to be about flat from the third quarter.

受產品更新驅動的PC遊戲和電視遊戲市場呈現良好的成長態勢。深度學習也日益被應用到許多不同的領域。因此，我們預測第四季的營收將與第三季持平。

The demand for high-end smartphone will continue to improve. We estimate the year-end inventory reduction will be relatively mild. So exiting 2016, the fabless DOI will be slightly higher than seasonal level by about 2 days.

高階智慧型手機的需求將持續提升。我們預期年底庫存減少幅度將相對溫和。因此，2016 年結束時，無晶圓廠 DOI 將比季節性略高約 2 天。

For the whole year of 2016 we forecast semiconductor market revenue, excluding memory, will have 1% growth, foundry revenue will have 7% growth, and TSMC revenue will achieve 10% growth in US dollars and 11% to 12% in NT dollars.

2016年全年我們預估半導體市場營收（不含內存）成長1%，晶圓代工營收成長7%，台積電營收以美元計算可望成長10%，以新台幣計算則可望成長11%至12%。

Now I come to the leading-edge technology status and competition. First on 7-nanometer, our 7-nanometer technology development is well on track. The progress of yield improvement and device performance development are both on schedule. We are confident our 7-nanometer technology to be ahead of our competition. Our plan of risk production qualification in 1Q 2017 remains unchanged. Our 7-nanometer has been adopted not only by high-end mobile consumers -- customers, but also by high-performance computing customers for GPU, gaming, PC and tablet, virtual reality, server, FPGA, automotive and networking applications. They all have aggressive product tapeout plans, starting from early second quarter 2017. So we expect work on silicon qualification of more than 15 customer product tapeouts in 2017.

下面我來談談前沿技術的現況和競爭。首先是7奈米，我們的7奈米技術開發進展順利。良率提升及裝置性能開發進度均依計畫進行。我們相信我們的 7 奈米技術將領先於競爭對手。我們2017年第一季的風險生產資格計畫維持不變。我們的 7 奈米不僅被高階行動消費者所採用，而且還被 GPU、遊戲、PC 和平板電腦、虛擬實境、伺服器、FPGA、汽車和網路應用的高效能運算客戶所採用。他們都制定了積極的產品流片計劃，從 2017 年第二季初開始。因此，我們預計 2017 年將有超過 15 個客戶產品完成矽片鑑定工作。

Now on 5-nanometer, since the beginning of this year, our 5-nanometer technology has graduated from pathfinding to enter technology development phase. Recently, our EUV technology development made good progress. The throughput and reliability of EUV scanners, the sensitivity of EUV photoresist, and the quality of EUV mask blank and the pellicles all improved. Of course there's still a way to go.

現在說到5奈米，從今年年初開始，我們的5奈米技術已經從探索階段進入技術開發階段。最近我們的EUV技術開發取得了良好的進展。EUV 掃描儀的吞吐量和可靠性、EUV 光阻的靈敏度以及 EUV 掩模版和防護膜的品質均得到了提升。當然還有一段路要走。

We will use EUV lithography extensively in our 5-nanometer flow to improve density, simplify process steps and reduce cost. Our plan of risk production qualification in first half 2019 remains unchanged.

我們將在 5 奈米流程中廣泛使用 EUV 微影技術來提高密度、簡化製程步驟並降低成本。我們2019年上半年風險生產資質計畫維持不變。

Now I want to report to you about our growth platforms. I will report to you our first two growth platforms. The first is mobile platforms. We believe mobile will continue to be a growth driver for TSMC in the next few years. We forecast worldwide smartphone unit growth rate be at mid single digit in the next five years.

現在我想向大家報告我們的成長平台。我將向你們報告我們的前兩個成長平台。第一是移動平台。我們相信，未來幾年行動業務將繼續成為台積電的成長動力。我們預測未來五年全球智慧型手機銷售成長率將達到中等個位數。

The silicon content of smartphone will continue to increase, driven by increasing smartphone features such as dual camera, security sensing, AR/VR and migration to 4G, 4G+ and 5G, particularly in high-end smartphones. Those high-end smartphone features will also proliferate to mid and low-end smartphones.

受雙鏡頭、安全感應、AR/VR等智慧型手機功能的不斷增加以及向4G、4G+和5G遷移的推動，智慧型手機的矽含量將持續增加，尤其是在高階智慧型手機中。這些高階智慧型手機的功能也將擴展到中低階智慧型手機。

There are other smartphone features yet to be seen. For example, deep learning for AI inference will also increase smartphone silicon content in the next five years. More high-performance processor will be used for context-aware applications and provide new user experience.

還有其他智慧型手機功能尚待發現。例如，用於人工智慧推理的深度學習也將在未來五年內增加智慧型手機的矽含量。更高效能的處理器將用於情境感知應用程式並提供新的使用者體驗。

For this mobile platform we will complete developing 7-nanometer in 2017, upgrade 7-nanometer in 2018 and complete developing 5-nanometer in 2019 to support smartphone and high-end mobile products on an annual cadence.

對於該行動平台，我們將在 2017 年完成 7 奈米的開發，在 2018 年升級 7 奈米，並在 2019 年完成 5 奈米的開發，以每年的節奏支援智慧型手機和高階行動產品。

For mid to low-end mobile and wearable products we will continuously offer cost-reduction technologies with 28HPC+, 16FFC and its derivative technologies.

針對中低階行動及穿戴式產品，我們將持續提供28HPC+、16FFC及其衍生技術等降低成本的技術。

Included on our mobile platform there are TSMC's highly innovative and differentiated InFO advanced packaging for low power and small form factor. We also offer our next-generation CIS technology, RF technology, SOI RF front-end, power management IC, fingerprint, near-field communication and various MEMS sensor technologies in this mobile innovation platform. We believe we are in -- we are very well positioned to grow in this mobile market in the next few years.

我們的行動平台採用了台積電高度創新和差異化的 InFO 先進封裝，可實現低功耗和小尺寸。我們也在這個行動創新平台上提供我們的下一代CIS技術、RF技術、SOI RF前端、電源管理IC、指紋、近場通訊和各種MEMS感測器技術。我們相信，我們已做好準備，在未來幾年內在這個行動市場中成長。

Now I turn to high-performance computing platform. In addition to mobile, we have also identified high-performance computing as another area of growth. In the trend of digital world, more and more devices are connected and more and more data are generated, collected, filtered, processed and analyzed at all levels, at local, in the network as well as in the cloud. This trend calls for more pervasive silicon processers for those computing nodes.

現在我來談談高效能運算平台。除了行動領域，我們也將高效能運算視為另一個成長領域。在數位化世界的趨勢下，越來越多的設備被連接起來，越來越多的數據在本地、網路以及雲端各個層面被產生、收集、過濾、處理和分析。這一趨勢要求這些運算節點採用更普及的矽處理器。

Recently, deep learning market calls for new levels of parallelism and new levels of compute efficiency from our customers. These rapid development of artificial intelligence technology allowing machine ability to see, hear and predict has huge implication in many industry verticals like healthcare, media, consumer, automotive and so forth. The silicon content to support AI applications I think will be huge.

最近，深度學習市場要求我們的客戶達到新的並行度和新的運算效率水準。人工智慧技術的快速發展使機器具有了看、聽和預測的能力，對醫療保健、媒體、消費者、汽車等許多垂直行業具有巨大的影響。我認為支援人工智慧應用的矽含量將是巨大的。

We forecast the total wafer revenue opportunities, excluding memory, in this market segment could reach more than $15 billion in five years. To capture these opportunities, we offer optimized 7-nanometer in 2017 and optimized 5-nanometer in 2019 in TSMC's high-performance platform. These technology offers include high-performance standard cell library, optimized metal interconnect and optimized EDA design flows for high-performance computing design.

我們預測，該市場領域（不包括記憶體）的總晶圓收入機會在五年內可能達到 150 億美元以上。為了抓住這些機遇，我們在台積電的高性能平台上於 2017 年推出了優化的 7 奈米，並於 2019 年推出了優化的 5 奈米。這些技術包括高效能標準單元庫、最佳化的金屬互連和針對高效能運算設計最佳化的 EDA 設計流程。

On our advanced packaging side, we will continue to offer 2.5D and 3D IC integration solutions, in addition to the current CoWoS as part of our high-performance computing platform. They will support increased memory bandwidth for low-power, high-performance computation.

在我們的先進封裝方面，除了目前的 CoWoS 作為我們高效能運算平台的一部分外，我們還將繼續提供 2.5D 和 3D IC 整合解決方案。它們將支援增加記憶體頻寬，以實現低功耗、高效能運算。

Thank you for your attention. I turn the microphone to C.C. Wei.

感謝您的關注。我把麥克風轉向 C.C.韋。

Thank you, Mark. Good afternoon, ladies and gentlemen. Let me start with 10-nanometer status. We have transferred our 10-nanometer from R&D to production in third quarter this year. Our first 10-nanometer customer product has been produced with reasonable yield. Defect density and device performance continue to improve in much the same way as we did at the ramp-up stage of every leading edge technology node.

謝謝你，馬克。女士們、先生們，午安。我先從 10 奈米的現況說起。我們已於今年第三季將 10 奈米技術從研發轉入生產。我們的第一款10奈米客戶產品已經投產，產量合理。缺陷密度和設備性能繼續改進，其方式與我們在每個前沿技術節點的升級階段所做的改進方式大致相同。

So far we have received five production tapeouts for high-end mobile products. We are preparing capacity for 10-nanometer production ramp up by the end of this year and expect shipment in first quarter next year.

到目前為止，我們已經收到五份高階行動產品的生產流片。我們正在為今年年底前提高10奈米生產能力做準備，預計明年第一季出貨。

Currently, there are about 2,500 engineers and 1,200 technicians that are working in the fabs on 10-nanometer. Additional 1,000 engineer and 500 technicians will be added to our 10-nanometer production team by the end of this year for the preparation of volume ramp in 2017.

目前，約有 2,500 名工程師和 1,200 名技術人員在 10 奈米晶圓廠工作。今年年底前，我們的 10 奈米生產團隊還將增加 1,000 名工程師和 500 名技術人員，為 2017 年的產量提升做好準備。

As to our 16-nanometer FinFET, the defect density and cycle time continue to improve and are very competitive. In addition to mobile application processor, other applications such as cellular baseband, graphic processor for video game, AR/VR, deep learning and AI have strongly adopted our 16-nanometer solutions. As a result, our 16-nanometer business this year is expected to become more than five-fold of this level compared to last year.

至於我們的 16 奈米 FinFET，缺陷密度和週期時間不斷改善並且非常具有競爭力。除了行動應用處理器外，其他應用如蜂巢基帶、電玩圖形處理器、AR/VR、深度學習和AI等都大力採用了我們的16奈米解決方案。因此，我們今年的16奈米業務預計將比去年成長五倍以上。

In order to support the applications for mid to low-end smartphone and wearable products, we continue to work with customers to further shrink the die size while improving the performance in 16FFC.

為了支援中低階智慧型手機和穿戴式產品的應用，我們繼續與客戶合作，進一步縮小晶片尺寸，同時提高16FFC的效能。

Now on 28-nanometer, the demand for our 28-nanometer technologies has continued to be strong throughout this year and is expected to last through many years. So we are judiciously adding some bottleneck tools to meet the strong demand. Applications related to mid and low-end smartphones as well as the WiFi, digital TV, set-top box, flash controller and others has found TSMC's 28-nanometer a desirable solution. With our differentiated technology, stable yield, shorter cycle time and large capacity, we have been very competitive in this node and are confident to maintain our market segment share for this node.

現在到了 28 奈米，今年對 28 奈米技術的需求一直很強勁，預計這種需求將持續很多年。因此，我們明智地添加了一些瓶頸工具來滿足強勁的需求。中低階智慧型手機、WiFi、數位電視、機上盒、快閃記憶體控制器等應用領域，台積電28奈米是理想的解決方案。憑藉我們的差異化技術、穩定的良率、更短的周期時間和更大的產能，我們在這個節點上具有很強的競爭力，並有信心保持我們在這個節點的市場份額。

All the nodes from 28-nanometer all the way to 0.35 micron and even to 1 or 2 micron technology has been an important contributor to TSMC's profitability. We developed a broad portfolio of logic-based specialty technologies such as the CMOS image sensor, embedded flash, power management IC, fingerprint sensor, and MEMS to backfill our legacy logic capacity which is converted into these specialty technologies. And we continue to earn good margin from this business.

從28奈米一直到0.35微米甚至1、2微米技術的各個節點都是台積電獲利的重要貢獻者。我們開發了廣泛的基於邏輯的專業技術，例如CMOS影像感測器、嵌入式快閃記憶體、電源管理IC、指紋感測器和MEMS，以填補我們轉化為這些專業技術的傳統邏輯能力。我們繼續從這項業務中獲得豐厚的利潤。

Today we have more than 8 million 12-inch equivalent wafer annual capacity from these older nodes. We believe this is by far the industry's largest capacity on those older nodes.

如今，我們透過這些舊節點已經擁有了每年超過 800 萬片 12 吋當量晶圓的產能。我們相信這是迄今為止業內在這些老節點上最大的容量。

Now let me talk about one of our growth platform, automotive. There are many new applications being developed in automotive industry such as ADAS, night-vision, smart and green energy, electrical vehicles etc.

現在讓我來談談我們的成長平台之一——汽車。汽車產業正在開發許多新應用，例如 ADAS、夜視、智慧和綠色能源、電動車等。

We believe those new applications will trigger or have triggered the new opportunities and requirements on semiconductor industry. For example, inside a car there will be a lot of sensors to collect environmental information, RF devices to connect with the outside world, more video displays, etc. The car also need a very powerful MCU or many powerful MCU to analyze data for better safety and functionality.

我們相信這些新的應用將會引發或已經引發半導體產業的新機會和新要求。例如，汽車內部會有很多感測器來收集環境訊息，射頻設備來與外界連接，更多的視訊顯示器等等。汽車還需要一個非常強大的 MCU 或多個強大的 MCU 來分析數據，以實現更好的安全性和功能性。

TSMC has been working with customer to develop necessary technology to capture those opportunities. Today we offer a broad range of technologies including advanced logic, embedded flash, CMOS image sensor, MEMS, and BCD to serve customers' need.

台積電一直與客戶合作開發必要的技術來抓住這些機會。如今，我們提供廣泛的技術，包括先進邏輯、嵌入式快閃記憶體、CMOS 影像感測器、MEMS 和 BCD，以滿足客戶的需求。

In addition to technology offer, we also put a lot of effort on quality and reliability for automotive platform. For example, in Q3 this year we started to provide ISO 26262 compliant IPs for 16FFC for automotive ecosystem. With our manufacturing excellence, which has been demonstrated in high-volume production with stable yield, and the broad range of technologies, we are ready to serve this growing market.

除了提供技術之外，我們還在汽車平台的品質和可靠性方面投入了大量精力。例如，今年第三季度，我們開始為汽車生態系統的 16FFC 提供符合 ISO 26262 標準的 IP。憑藉我們在穩定產量和大批量生產中展現出的卓越製造能力以及廣泛的技術，我們已準備好為這個不斷增長的市場提供服務。

We estimate the total market of automotive-related ICs, measured in wafer value excluding memory was about $4 billion in 2015 and about $6 billion by 2020. We expect our wafer business from automotive-related ICs will more than double from 2015 to 2020.

我們估計，以不包括記憶體的晶圓價值衡量，汽車相關積體電路的總市場在 2015 年約為 40 億美元，到 2020 年約為 60 億美元。我們預計，從2015年到2020年，我們的汽車相關積體電路晶圓業務將成長一倍以上。

Now let me talk about IoT. IoT is another growth area we have identified. This market is fragmented with diversified products. We estimate the total market of IoT-related ICs, again measured in wafer value excluding memory, was about $2 billion in 2015 and expected to reach about $6 billion in 2020.

現在我來談談物聯網。物聯網是我們發現的另一個成長領域。該市場分散且產品多樣化。我們估計，物聯網相關積體電路的總市場（同樣以不包括記憶體的晶圓價值衡量）在 2015 年約為 20 億美元，預計到 2020 年將達到約 60 億美元。

For those IoT products, we have focused our efforts on providing ultra low-power technologies. For example, we offer 55-nanometer, 40-nanometer ultra-low power for low- to mid-performance IoT products, and 28 ultra low-power and 16FFC for high-performance applications. Furthermore, we also integrate the ultra low-power RF, embedded flash as well as sensor solutions such as CMOS image sensor and MEMS, to enable machine-to-machine or human-to-machine interface.

對於那些物聯網產品，我們致力於提供超低功耗技術。例如，我們為低效能到中效能的物聯網產品提供 55 奈米、40 奈米超低功耗，為高效能應用提供 28 超低功耗和 16FFC。此外，我們還整合了超低功耗射頻、嵌入式快閃記憶體以及CMOS影像感測器和MEMS等感測器解決方案，以實現機器對機器或人對機器的介面。

With our broad range of low power technologies and specialty technologies we believe we are well positioned to capture the growth opportunity in the IoT market. And we expect to grow our IoT business at a faster pace than the overall IoT market in the next few years.

憑藉我們廣泛的低功耗技術和專業技術，我們相信我們有能力抓住物聯網市場的成長機會。我們預計未來幾年我們的物聯網業務的成長速度將快於整體物聯網市場。

Now I will talk about InFO. TSMC's InFO has been in volume production since second quarter this year. Currently, there are more than 2,000 engineers and technicians working in our Longtan site for InFO production. While we are confident that InFO will contribute more than $100 million revenue to us in fourth quarter this year, we continue our effort on cost reduction and yield improvement, also with good result. More customers have engaged with us on the InFO technologies for the purpose of enhancing their product performance. Major application is still in mobile product. We are now qualifying for the next-generation InFO technology. A few hundred more engineers are expected to be added to our Longtan site when we begin our next-generation InFO production in year 2017.

現在我將討論 InFO。台積電的InFO自今年第二季起已投入量產。目前，我們有超過 2,000 名工程師和技術人員在龍潭工廠從事 InFO 生產。我們有信心，InFO 將在今年第四季度為我們貢獻超過 1 億美元的收入，同時我們將繼續努力降低成本和提高產量，並取得了良好的結果。越來越多的客戶與我們合作，採用 InFO 技術來提高他們的產品效能。主要應用還是在行動產品上。我們現在正在為下一代 InFO 技術做準備。當我們在 2017 年開始生產下一代 InFO 時，預計將有數百名工程師加入我們的龍潭工廠。

Now let me talk about the Nanjing project. Our Nanjing project was announced last December. It includes a wholly-owned 12-inch wafer manufacturing facility and a design service center for the purpose of providing closer support to our customers in China and to further extend our business opportunities. We broke ground for the fab in early July. The production is expected to start in second half 2018 with 16-nanometer. We believe it will be the most advanced fab producing 16-products in China at that time.

現在我來談一下南京計畫的情況。我們的南京計畫是去年12月宣布的。其中包括一座全資擁有的12吋晶圓製造工廠和一個設計服務中心，旨在為我們在中國的客戶提供更緊密的支援並進一步擴展我們的業務機會。我們於七月初破土動工建造這座工廠。預計將於 2018 年下半年開始生產，採用 16 奈米製程。我們相信，屆時它將成為中國最先進的生產16位產品的晶圓廠。

Our design service center in Nanjing has already started functioning with more than 50 engineers now and expect to grow to about 100 by next year. We expect this design center will greatly help our customers in China to shorten their learning cycle and speed up their new product introduction to the market.

我們位於南京的設計服務中心已經開始運作，目前擁有50多位工程師，預計明年將成長到100名左右。我們期望該設計中心能夠極大地幫助我們在中國的客戶縮短他們的學習週期並加快他們的新產品推向市場。

Thank you for your attention. Now I'll turn the podium to Lora.

感謝您的關注。現在我將講台轉向 Lora。

I would like to make a few comments on capital expenditure, profitability and dividends. The first regarding CapEx. TSMC's 2016 capital budget is estimated to be slightly above $9.5 billion, which is closer to our low end of our guidance. We have guided $9.5 billion to $10.5 billion three months ago. It is mainly due to improving cycle time estimated for 10-nanometer; we are able to shorten the lead time for capacity installation, which leads to a reduction of our 2016 estimated CapEx. However, this reduction in 2016 will not change our planned capacity for 10-nanometer in 2017.

我想就資本支出、獲利能力和股息發表一些評論。第一個是關於資本支出。台積電2016年的資本預算預計略高於95億美元，更接近我們預期的低端。三個月前，我們預期投資規模將達 95 億美元至 105 億美元。這主要歸功於10奈米預計的週期時間的改善；我們能夠縮短產能安裝的準備時間，從而減少 2016 年預計的資本支出。然而，2016 年的減產不會改變我們 2017 年 10 奈米的計畫產能。

Our estimate for the capital intensity going forward remains unchanged at around low to mid 30% level for the next few years.

我們對未來幾年資本密集度的估計保持不變，約為 30% 至 30% 的低點至中位數水準。

I will talk about profitability. In the past few years, despite the higher CapEx which leads to a substantial increase in depreciation expenses, we have been able improve our structural profitability significantly. We plan to keep our structural profitability at a high level by continually working on price, cost and utilization rate with careful planning of capacity. Going forward, we expect to be able to maintain our gross margin rate at close to 50% level.

我將談論盈利能力。過去幾年，儘管資本支出增加導致折舊費用大幅增加，但我們仍能顯著提高結構性獲利能力。我們計劃透過持續優化價格、成本和利用率並精心規劃產能，將結構性獲利能力保持在高水準。展望未來，我們預計能夠將毛利率維持在接近50%的水平。

My last comment is about the dividend. Given our target revenue growth rate for the 2016 to 2020 five-year period to be compounded annual growth of between 5% and 10%, and our capital intensity to stay at low to mid 30% of our revenue, we anticipate an improving free cash flow after debt service in the next few years. Therefore, we also expect our dividend per share to increase in the next few years. This concludes my remarks.

我最後的評論是關於股息的。鑑於我們2016年至2020年五年期間的目標收入增長率為5%至10%之間的複合年增長率，且我們的資本密集度將保持在收入的30%左右，我們預計未來幾年償還債務後的自由現金流將會改善。因此，我們也預計未來幾年每股股息將會增加。我的發言到此結束。

All right. This concludes our prepared statements. Before we begin the Q&A session, I would like to remind everybody to limit your questions to two at a time to allow all participants an opportunity to ask questions. Questions will be taken both from the floor and from the call. Should you wish to raise your question in Chinese, I will translate that into English before our management answers your question. For those of you on the call, if you would like to ask a question, please press the star then one on your telephone keypad now. Questions will be taken in the order in which they were received. If at any time you would like to remove yourself from the questioning queue, please press the pound or the hash key.

好的。我們的準備聲明到此結束。在我們開始問答環節之前，我想提醒大家每次提問限制為兩個，以便所有參與者都有機會提問。問題將從現場和電話中回答。如果您想用中文提出問題，我會將其翻譯成英文，然後我們的管理層才會回答您的問題。對於通話中的各位，如果您想提問，請立即按下電話鍵盤上的星號，然後按下 1。我們將按照收到問題的順序進行處理。如果您想隨時退出提問佇列，請按井號鍵或雜湊鍵。

Now let's begin the question and answer session. First person to raise their hand is Deutsche Bank, Michael Chou.

現在我們開始問答環節。第一個舉手的是德意志銀行的 Michael Chou。

Thank you. My first question is regarding the 16-nanometer UTR next year. Given that your key customer may shift to 10-nanometer next year for high-end products, so what is your expectation for UTR next year in 16-nanometer?

謝謝。我的第一個問題是關於明年的 16 奈米 UTR。鑑於你們的主要客戶明年可能會轉向10奈米來生產高端產品，那麼你們對明年UTR在16奈米方面的表現有何預期？

For UTR, actually you are asking for the 16-nanometer business next year. Actually there are some mid and low-end smartphone who are entering into this node. So, so far so good.

對於 UTR，實際上您要求的是明年的 16 奈米業務。實際上有一些中低階智慧型手機正在進入這個節點。所以，到目前為止一切都很好。

So does that mean you will have a similar UTR level next year versus this year?

那麼這是否意味著明年的 UTR 水平將與今年相似？

Roughly.

大致。

Roughly. Thank you. Second question is regarding your 28-nanometer market share next year. Do you expect it to be still very dominant next year versus this year, given rising competition from the other foundries?

大致。謝謝。第二個問題是關於明年你們的28奈米市佔率。鑑於來自其他代工廠的競爭日益激烈，您是否預計明年它仍將佔據主導地位？

I just mentioned that we are confident to maintain the market segment share, so yes.

我剛才提到我們有信心保持市場份額，所以是的。

A follow-up question for 28-nanometer, do you expect tier-two foundries can gain market share in high-K/metal gate area more substantially next year, because given that it seems that UMC may try to increase high-K/metal gate shipment next year?

關於 28 奈米的後續問題，您是否預計二線代工廠明年可以在高 K/金屬閘極領域獲得更大的市場份額，因為看起來聯華電子明年可能會嘗試增加高 K/金屬閘極的出貨量？

Could you please repeat your question on high-K/metal gate.

您能否重複一下關於高 K/金屬閘極的問題？

Yes. Given that UMC may try to increase high-K/metal gate shipment next year, so how do you have a high market share in 28-nanometer next year?

是的。鑑於聯電明年可能會嘗試增加高K/金屬閘極的出貨量，那麼明年如何在28奈米領域獲得較高的市場份額？

I just mentioned that lot of customer find our solutions very desirable. And so, again I would like to say that we are confident to maintain our market segment share.

我剛才提到，很多客戶都認為我們的解決方案非常理想。因此，我想再次說，我們有信心保持我們的市場份額。

Thank you.

謝謝。

Next question will be coming from Credit Suisse, Randy Abrams.

下一個問題來自瑞士信貸的蘭迪·艾布拉姆斯 (Randy Abrams)。

Okay. Yes, thank you. You gave us some good figures on the growth drivers in new areas. Traditionally, IDMs have had a lot of market share in high-performance computing, automotive and even microcontroller and IoT. Your foundry share is 55%. If you could give some approximation what you expect your share in these where you put HPC $15 billion, auto about $6 billion, IoT growing to $6 billion. Like if could you talk about what your market share in these traditionally IDM applications.

好的。是的，謝謝。您為我們提供了一些有關新領域成長動力的很好的數據。傳統上，IDM 在高效能運算、汽車甚至微控制器和物聯網領域佔有很大的市場份額。您的代工份額為 55%。如果您可以給出一個大概的估計，那麼您預計在這些領域中的份額是多少，其中 HPC 為 150 億美元，汽車為 60 億美元，物聯網將成長到 60 億美元。例如，您能否談談您在這些傳統 IDM 應用程式中佔據的市場份額。

On the high performance computing, I cited $15 billion next five years. It's really a rough estimate. Many of the application we cannot really grasp today, like artificial intelligence. We don't know how fast and in what form it will grow. So this is based on current knowledge.

在高效能運算方面，我提到未來五年將達到 150 億美元。這確實是一個粗略的估計。很多應用程式我們今天還不能真正掌握，例如人工智慧。我們不知道它會生長得有多快、以何種形式生長。這是基於當前的知識。

And we've been -- indeed this high-performance computing include data center, network, storage and all the silicon attached with the data center. And also include AR and VR and gaming and that's our definition, not including artificial intelligence yet.

事實上，這種高效能運算包括資料中心、網路、儲存以及與資料中心相關的所有矽片。也包括 AR、VR 和遊戲，這是我們的定義，但還不包括人工智慧。

Today, in this sector, we have about 30% share. Of course we want to grow with the total segment and we also want to increase our share, together with other IDMs.

如今，我們在這個領域佔有約30%的份額。當然，我們希望與整個細分市場共同成長，也希望與其他 IDM 一起增加我們的份額。

And could you talk about the automotive, what the contribution -- well, you talked about doubling the revenue. If you could give a starting point for market share in automotive?

您能談談汽車業務嗎？它的貢獻是什麼？您剛才談到收入翻倍。您能給汽車市場份額的起點嗎？

We are working on this automotive platform across all the technology nodes actually. So we expect to grow this area much faster than the market showed. Today, most of our product is on the MCUs. And we expect that going into a lot of high-speed computation, just like Mark pointed out, and also a lot of sensors will come with it. And so we expect to grow the market. So I don't know if that whether I answered your question on the automotive?

實際上，我們正​​在所有技術節點上開發這個汽車平台。因此，我們預計該領域的成長速度將比市場快得多。今天，我們的大多數產品都在 MCU 上。正如馬克所指出的那樣，我們預計它將進行大量的高速運算，而且還會配備大量的感測器。因此我們期望市場能夠擴大。所以我不知道我是否回答了您關於汽車的問題？

Or if you could give how much automotive is today for TSMC, as a percentage of revenues?

或者您能否給出目前汽車業務佔台積電總收入的百分比？

She just gave me some hint. It's below $1 billion.

她只是給了我一些提示。低於10億美元。

My second question about the margins where you're guiding a little bit down in sales, but the margins are improving. And it looks like for next year, if I caught it right, it was 49% to 50%, but it's moved up a bit to 50%. You talked some on cycle time, it's a factor from cycle time improvement. If you could talk about what strides you're making on the cycle time or if there's other factors driving that margin improvement?

我的第二個問題是關於利潤率的，您預測銷售額會略有下降，但利潤率正在提高。如果我沒記錯的話，明年的比例應該是 49% 到 50%，但現在稍微上升到了 50%。您談到了一些週期時間，這是周期時間改進的一個因素。您能否談談您在周期時間方面取得了哪些進展，或者是否有其他因素推動利潤率的提高？

Cycle time, when I referred to the CapEx I was talking about cycle time improvement actually help the capital to be more efficient. That's why we can spend less money but you get the same capacity investment. Of course, cycle time helps yield as well. So that means when you start production then the yield can reach to optimal sooner, of course that will help the margin as well.

週期時間，當我提到資本支出時，我指的是週期時間的改善實際上有助於提高資本效率。這就是為什麼我們可以花更少的錢，但您卻能獲得相同的產能投資。當然，週期時間也有助於提高產量。這意味著當你開始生產時，產量可以更快達到最佳，當然這也有助於提高利潤率。

You were talking about the 2017. In my prepared message, I was talking about our effort on structural profitability improvement, our confidence on maintaining 50% level. Given this year's depreciation is only increased a little bit, and our CapEx is very much back-end loaded as you can see first half only about 30% and second half maybe 70%, so we expect the margin will -- we expect depreciation will go up next year. Although I cannot quantify the number because we are still working on a CapEx number for next year, so but with all those plus and minus reasons, we are still confident that the margin will be close to 50%.

您說的是 2017 年。我在準備好的演講中談到了我們在結構性獲利能力改善方面的努力，以及我們對維持50%水準的信心。鑑於今年的折舊僅略有增加，而且我們的資本支出很大程度上是後端負載，正如您所見，上半年只有約 30%，下半年可能為 70%，因此我們預計利潤率將會 - 我們預計明年折舊將會上升。雖然我無法量化這個數字，因為我們仍在研究明年的資本支出數字，但考慮到所有這些加減原因，我們仍然有信心利潤率將接近 50%。

Just one quick follow up, on the fourth quarter you have a couple of headwinds from currency and utilization, I guess, slightly lower. So just the improvement sequentially, is that from a 16-nanometer yield learning or if there's a factor that's offsetting that to drive the improvement in fourth quarter?

只需快速跟進一下，在第四季度，您會遇到一些來自貨幣和利用率的不利因素，我猜，會略低一些。那麼，連續的改善是來自於 16 奈米產量的學習，還是有其他因素抵消了這一影響，從而推動了第四季度的改善？

16-nanometer will be a key reason because you know we are ramping very fast in 16-nanometer. In 16-nanometer it's the second year of production. I think you still remember you asked me, when can the 16-nanometer reach the corporate level? We expect the 16-nanometer it will reach the corporate level by first quarter 2017. So fourth quarter is very close to that corporate level. So that really helps our margin rate.

16 奈米將是一個關鍵原因，因為你知道我們在 16 奈米領域的發展非常快。16 奈米製程生產已進入第二年。我想你還記得你問過我，16奈米甚麼時候可以達到企業水準？我們預計16奈米將在2017年第一季達到企業水準。因此第四季非常接近該企業水準。這確實有助於提高我們的利潤率。

Okay, thank you.

好的，謝謝。

Next our questions will be coming from Citigroup's Roland Shu.

接下來我們的問題來自花旗集團的 Roland Shu。

Good afternoon. Last quarter we thought the customers are probably going to adjusting inventory in 4Q but looking at your 4Q guidance now, it seems that customers are actually still building the inventory. So will this inventory correction be delayed to first quarter next year and we are going to see a sub-seasonal first quarter next year?

午安.上個季度我們認為客戶可能會在第四季度調整庫存，但從現在您對第四季度的指導來看，似乎客戶實際上仍在建立庫存。那麼，庫存調整是否會推遲到明年第一季，並且明年第一季的庫存將低於季節性？

I mentioned -- Our estimate fourth quarter will be flat. It's because the -- we see the end market demand is still healthy and therefore we also estimate the previously anticipated inventory reduction at the end of the fourth quarter will be mild.

我提到過——我們預計第四季將持平。這是因為——我們看到終端市場需求仍然健康，因此我們也估計先前預期的第四季末庫存減少幅度將是溫和的。

This -- also supported by our major customers' 16-nanometer ramp. So that supports the fourth quarter results. So I think this -- the end of this year is more peaceful than previous years.

這也得到了我們主要客戶的 16 奈米升級的支持。這支持了第四季度的業績。所以我認為今年年底比往年更平靜。

Okay, so that means that inventory correction probably won't be the case in first quarter next year?

好的，那麼這意味著明年第一季可能不會出現庫存調整嗎？

Right. But the fourth quarter -- I don't think there's a major inventory adjustment in the fourth quarter either of general customers. But there are seasonalities. There are seasonalities that is not -- we cannot avoid it. And particularly the big customers' seasonality. That is the -- I think the only factor that affects the fourth quarter. But many things can still happen between now and then. So right now it's too early to tell.

正確的。但第四季——我認為第四季一般客戶也不會出現重大的庫存調整。但也有季節性。存在不可避免的季節性因素—我們無法避免。特別是大客戶的季節性。我認為這是影響第四季的唯一因素。但從現在到那時，仍有許多事情可能發生。所以現在說還太早。

Okay, thanks. My second question is from different angle. Intel is licensing ARM's physical IP for 14- and the 10-nanometer process manufacturing. I know you don't comment your customer and the competitors directly. However, from the industry and from technical perspective, how do you think the impact to the overall foundry and that impacts to TSMC going forward? Thank you.

好的，謝謝。我的第二個問題是從不同的角度提出的。英特爾正在授權 ARM 的物理 IP 用於 14 奈米和 10 奈米製程製造。我知道您不會直接評論您的客戶和競爭對手。但是，從產業和技術角度來看，您認為這對整個代工廠以及台積電未來有何影響？謝謝。

Well, I think that strengthens the ARM-based CPU in the processing world. And we have traditionally very strong in ARM-based ecosystem. As -not just the ARM and also many architectural license people. So it's proof that this, in order to get to the non-data-center world this is the ecosystem you're going to ride. How much threat? We don't know -- we, of course we never underestimate our competitions. Yes.

嗯，我認為這增強了基於 ARM 的 CPU 在處理領域的地位。我們在基於 ARM 的生態系統方面傳統上非常強大。不僅僅是 ARM，還有許多建築許可證人員。所以這證明，為了進入非資料中心世界，這就是你要依賴的生態系統。威脅有多大？我們不知道——當然，我們永遠不會低估我們的競爭對手。是的。

Okay, thank you.

好的，謝謝。

Next question will be coming from UBS, Bill Lu.

下一個問題來自瑞銀的 Bill Lu。

Hi there. Good afternoon. First question is a follow-up on HPC. Mark said that this business becomes more than $15 billion by 2020. Can you talk a little bit more about the different segments of HPC and what do you think are the big opportunities within that $15 billion?

你好呀。午安.第一個問題是關於 HPC 的後續問題。馬克表示，到2020年，這項業務的規模將超過150億美元。您能否進一步談談 HPC 的不同部分以及您認為這 150 億美元中存在哪些重大機會？

Secondly, when I talk to your customers, it seems like a lot of people think that you need 7-nanometers for this to take off. So this is maybe hockey-sticking after 7-nanometers. I'm wondering if you would agree with that -- what is the linearity of that business? Thank you.

其次，當我與你們的客戶交談時，似乎很多人認為你們需要 7 奈米才能實現這一目標。因此，這也許是 7 奈米之後的曲棍球突破。我想知道您是否同意這一點——該業務的線性度是什麼？謝謝。

You -- first part you ask what is the component of HPC? Well, it includes many things associated with the data center. It includes the network processors and also includes the switches. And in our domain we include gaming and VR and AR and so forth. So for those market we are in a good position. However, for data center we are trying to get into a good position.

您—第一部分您問 HPC 的組成部分是什麼？嗯，它包括很多與資料中心相關的東西。它包括網路處理器，還包括交換器。我們的領域包括遊戲、VR、AR 等等。因此，對於這些市場，我們處於有利地位。然而，對於資料中心，我們正在努力進入一個良好的位置。

Yes, indeed we see our growth -- we expect our growth momentum will shift from high -- from mobile to high performance computing around 2019. So that's the ballpark estimate. It will depend on our 70 -- 7-nanometer, but also there are many other processors. There are many other processors that are still using 10-nanometer, still using 16-nanometer. And even 28-nanometer in this high performance computing sector.

是的，我們確實看到了我們的成長——我們預計我們的成長勢頭將在 2019 年左右從高移動轉向高效能運算。這就是大概的估計。這將取決於我們的 70-7 奈米，但還有許多其他處理器。還有許多其他處理器仍在使用 10 奈米，仍在使用 16 奈米。甚至在高效能運算領域也採用了 28 奈米技術。

I'm sorry if I wasn't clear. I appreciate the answer but I'm just wondering, within HPC if you can look at -- of the things that you talked about -- data centers and switches, etc., VR, AR -- how big is each or maybe you can rank them in terms of the opportunity?

如果我沒有表達清楚，我很抱歉。我很感謝您的回答，但我只是想知道，在 HPC 中，您是否可以看看您所談論的資料中心和交換器等、VR、AR，它們各自的規模有多大，或者您可以根據機會對它們進行排名嗎？

Oh boy. I haven't bring it with me. So -- but this is -- these are the industry models. They're existing industry models, you can estimate. It's not very special. Not particularly TSMC's secret. Okay.

哦天哪。我沒有帶它。所以——但這是——這些是行業模型。它們是現有的產業模型，你可以估算一下。沒什麼特別的。這並不是台積電的秘密。好的。

Okay, great. Thank you. My second question is on packaging. I think roughly maybe about a year ago maybe a little bit more, you talked about InFO being about TWD100 million by fourth quarter of this year with a gross margin below corporate average. If we now look into second half of 2017 can you give us the same kind of forecast with InFO and CoWoS both in terms of revenue opportunity and margins? Thank you.

好的，太好了。謝謝。我的第二個問題是關於包裝的。我想大概是一年前，或者更早一點，您談到今年第四季的 InFO 約為 1 億新台幣，毛利率低於企業平均水平。如果我們現在展望 2017 年下半年，您能否在收入機會和利潤率方面為我們提供與 InFO 和 CoWoS 相同的預測？謝謝。

Well, I cannot predict that 2017 second half, but I can tell you that revenue will be greater. Margin will be better.

嗯，我無法預測 2017 年下半年的情況，但我可以告訴你收入會更高。利潤會更好。

That's actually a very happy answer. Let's go to the line now. Operator, please have the caller on the line.

這實際上是一個非常令人滿意的答案。我們現在就去排隊吧。接線員，請讓來電者繼續通話。

Thank you. Our next question comes from the line of Donald Lu from Goldman Sachs. Please go ahead.

謝謝。我們的下一個問題來自高盛的唐納德·陸。請繼續。

Oh, hi. My first question is can you comment on your silicon content for smartphones for this year and next year? And if you can specify low end and high end as before that will be good.

噢，你好。我的第一個問題是，您能否評論一下今年和明年智慧型手機的矽含量？如果您可以像以前一樣指定低端和高端，那就太好了。

The second question is on your 10-nanometer yield ramp. Is the progress within expectation or is that a little better or worse? And also I think you commented that the shipment for the first product will start in 20 -- Q1 next year. And maybe you can specify whether early Q1 or later Q1? Thank you.

第二個問題是關於 10 奈米產量提升的問題。進展是否在預期之內，或者說是稍微好一點還是差一點？而且我認為您曾說過第一批產品將於明年第一季開始出貨。也許您可以指定是第一季初還是第一季末？謝謝。

Okay, first of all, I have to inform everybody the caller is from Goldman Sachs, Donald Lu. And Donald, your first question is about smartphones -- average silicon content of a smartphone, right?

好的，首先我要告訴大家，來電者是高盛的唐納德·陸。唐納德，您的第一個問題是關於智慧型手機的－智慧型手機的平均矽含量，對嗎？

Yes, and also high end, low end, if you can separate the two?

是的，還有高端和低端，是否可以將兩者分開？

Yes, that's right. You want the breakdown between high end, low end and medium end?

是的，沒錯。您想知道高端、低端和中端之間的細分嗎？

Yes. And the next --

是的。接下來——

And your second question is with respect to 10-nanometers in terms of the yield as well as the projected shipment of 10-nanometer next year by quarter?

您的第二個問題是關於 10 奈米的產量以及明年各季度 10 奈米的預計出貨量？

Yes. Yes.

是的。是的。

All right, Donald. I will try to answer the first part of your question regarding the silicon content. If we look at the revenue per box on a smartphone, we have seen the dollar per box actually continue to increase and 2015, 2016 a slight increase. We expect the content will continue to increase in 2017 with weighted average about $10 per box -- for us. So this is especially on the high end part. That's where the increase coming from for us.

好的，唐納德。我將嘗試回答您關於矽含量的問題的第一部分。如果我們看一下智慧型手機每台設備的收入，我們會發現每台設備的價格實際上正在持續增加，並且在 2015 年和 2016 年略有增加。我們預計 2017 年含量將持續增加，對我們來說，加權平均每箱約 10 美元。所以這尤其體現在高端部分。這就是我們的成長來源。

So I remember the average content this year is about TWD8 per phone? And you've been talking about $10 next year?

所以我記得今年的平均內容是每支手機大約 8 台幣？您一直在談論明年的 10 美元嗎？

No, this year is more than $9. Same for last year. We expect the dollar will go up to about $10 next year.

不，今年超過 9 美元。和去年一樣。我們預計明年美元將升至10美元左右。

Got it. Thank you.

知道了。謝謝。

Second question was with respect to 10-nanometer, the yield. (Multiple speakers).

第二個問題是關於 10 奈米的產量。（多位發言者）

The 10-nanometer yield ramp -- whether it's within expectation similar to 16-nanometer or it's more challenging -- yes.

10 奈米的產量提升——是否在與 16 奈米類似的預期範圍內，或者更具挑戰性——是的。

It is similar. It's similar. But of course the 10-nanometer is much tougher than the 16-nanometer FinFET that -- as compared with the one year ago.

很類似。很類似。但當然，與一年前相比，10 奈米比 16 奈米 FinFET 堅固得多。

Got it. And also you commented that you'll enter volume production. The volume product tape-out will start in early next year, Q1 next year, is that the guidance?

知道了。您也表示將進入批量生產階段。大量產品流片將於明年年初（即明年第一季）開始，這是預期嗎？

Yes. We start production at the end of this year but the wafer will be out in the first quarter and enter into the volume production after that.

是的。我們在今年年底開始生產，但晶圓將在第一季推出，然後進入量產。

Okay, so the volume production tape-out will start in Q4 this year?

好的，那麼量產流片將於今年第四季開始嗎？

That's right.

這是正確的。

Got it. Thank you.

知道了。謝謝。

We can have the next caller on the line operator, please.

請接線生接聽下一位來電。

Thank you. Your next question comes from the line of Brett Simpson from Arete Research. Please go ahead.

謝謝。您的下一個問題來自 Arete Research 的 Brett Simpson。請繼續。

Thanks very much. My first question on 7-nanometer -- can you maybe talk about how many customers are committed? I know you talked about tape-outs for next year, but how many customers in total are committed to 7-nanometer? And if you plan to convert your 10-nanometer capacity to 7-nanometer over time, do you think your peak capacity of 7-nanometer will be higher than 28-nanometer?

非常感謝。關於 7 奈米的第一個問題——您能否談談有多少客戶承諾採用該技術？我知道您談到了明年的流片計劃，但總共有多少客戶致力於 7 奈米製程？如果您打算隨著時間的推移將 10 奈米容量轉換為 7 奈米，您是否認為 7 奈米的峰值容量會高於 28 奈米？

All right, I will repeat Brett's questions. I think he's asking us about 7-nanometer first -- how many customers do we have at 7-nanometers -- total. And then if we will convert some capacity eventually of 10-nanometer to 7-nanometer, will we be able to generate 7-nanometer business, eventually, bigger than 28-nanometer business?

好的，我將重複布雷特的問題。我認為他首先問的是有關 7 奈米的問題——我們總共有多少 7 奈米客戶。那麼，如果我們最終將 10 奈米的部分產能轉換為 7 奈米，我們是否能夠產生最終比 28 奈米業務更大的 7 奈米業務？

7-nanometer wafers -- yes. Wafer capacity.

7奈米晶圓——是的。晶圓產能。

And 7-nanometers capacity.

以及7奈米容量。

Yes.

是的。

Okay.

好的。

7-nanometer customer are many. I don't remember how many, but more than 20. Many of them are working on their tape-out next year as well as 2018. 7 -- we expect the 7-nanometer business to -- of course will be larger than 28-nanometer. Capacity-wise we don't -- it could be comparable. It could be -- it really depends on the later on customers' product launch how successful they will be. But we are planning probably within -- it's comparable within the range. There's no significantly drop capacity-wise. So in that terms the business will be much bigger, in dollar sense.

7奈米客戶很多。我不記得有多少，但肯定超過20個。其中許多公司正在為明年和 2018 年的流片做準備。7——我們預期 7 奈米業務——當然會比 28 奈米更大。從容量方面來看，我們沒有——這可能是可比的。有可能—這實際上取決於客戶以後推出的產品能否成功。但我們計劃的可能是在——在範圍內可比。從容量來看，沒有明顯下降。因此從美元角度來看，該業務規模將會更大。

That's very helpful. And second question was on the Nanjing fab in China. Is that going to be TSMC moving existing capacity from Taiwan to China or will this be incremental capacity you're adding with Nanjing?

這非常有幫助。第二個問題是關於中國南京工廠的。這是台積電將現有產能從台灣轉移到中國大陸嗎？還是你們在南京增加的增量產能？

All right, the question is with respect to our Nanjing fab. Brett is asking whether we'll be using our existing capacity from Taiwan to be used in Nanjing, or will it be incremental capacity?

好的，問題是關於我們的南京工廠的。布雷特問我們是否會將台灣現有的產能用於南京，還是增加產能？

The majority of the capacity will be moving from Taiwan fab to Nanjing.

大部分產能將從台灣工廠轉移到南京。

Okay. Thanks very much.

好的。非常感謝。

Okay, let's come back to the floor. Next question will be coming from Morgan Stanley's Charlie -- Charlie Chan.

好的，讓我們回到正題。下一個問題來自摩根士丹利的 Charlie Chan。

Thanks for taking my question. My question is also on 7-nanometer. It sounds like customers' demand are very strong for 7-nanometer and you just mentioned that the 10-nanometer cycle time is shorter than your expectation. So is it possible you can bring in the mass production timing of 7-nanometer to so called the later 2017? If your risk production in 1Q next year will be smooth Thanks.

感謝您回答我的問題。我的問題也是關於 7 奈米的。聽起來客戶對 7 奈米的需求非常強烈，而您剛才提到 10 奈米的週期時間比您的預期要短。那麼，您是否可以將 7 奈米的量產時間提前到所謂的 2017 年下半年呢？如果您明年第一季的風險生產順利的話謝謝。

I hope our preparation can be ahead of schedule, which we're working on to ensure our customer, when they do the product launch they get more matured condition. However, if you're asking we're pulling the ramp that will be affected by many factors. It depends on their product launch timing. And nor do we want to produce much inventory either. So that is a business decision rather than a technical decision.

我希望我們的準備工作能夠提前完成，我們正在努力確保我們的客戶在推出產品時能夠獲得更成熟的條件。然而，如果你問我們拉坡道會受到許多因素的影響。這取決於他們的產品發佈時間。我們也不想生產太多庫存。所以這是一個商業決策而不是技術決策。

Okay, understood. And also on 7-nanometer, so do you expect customers' number or tape-out number to be more than 16-nanometer? I mean because 7-nanometer cost could be much higher than 16-nanometer. So when you communicate with your customer, how will they justify the higher cost in terms of photo mask, wafer price, IP costs, etc.

好的，明白了。同樣是 7 奈米，那麼您預計客戶數量或流片數量會超過 16 奈米嗎？我的意思是，7 奈米的成本可能比 16 奈米高得多。因此，當您與客戶溝通時，他們將如何證明光掩模、晶圓價格、IP 成本等方面的較高成本是合理的？

Right now it's hard. What I cited that customer number really is at this point those customer already working with us on 7-nanometer. Okay, it's by no means the total number of customers. As any node, when technology gets mature there are many, many smaller customers or more innovative other, new companies which come on board. So if you look at the 16-nanometer, they're quite a bigger number than what I tell you on 7-nanometer. But as time goes on, I believe 7-nanometer customer will continually increase.

現在很難。我提到的客戶編號實際上是那些已經在 7 奈米領域與我們合作的客戶。好吧，這絕對不是顧客總數。與任何節點一樣，當技術成熟時，就會有許多的小客戶或其他更具創新性的新公司加入。因此，如果你看一下 16 奈米，你會發現它們的數字比我告訴你的 7 奈米要大得多。但隨著時間的推移，我相信7奈米客戶會不斷增加。

One is in addition to the mobile application I expect high performance application -- VR, AR, artificial intelligence application -- will come -- added to our customer portfolio -- product portfolio. And that is the reason we see in one way the entry barrier is higher, so less customers can get into but the application of that technology will be wider than before. So that is what I -- what we see.

一是除了行動應用之外，我預計高效能應用——VR、AR、人工智慧應用——將會加入我們的客戶組合——產品組合。這就是為什麼我們看到的進入門檻在某種程度上更高，因此進入的客戶更少，但該技術的應用將比以前更廣泛。這就是我——我們所看到的。

Okay. Thank you. So lastly, very quick on the third quarter revenue, I guess the question is to Lora. So I just want to clarify, do you think the revenue upside third quarter mainly coming from the 20-nanometer or 16-nanometer? Because you mentioned that the margin dilution comes from 16-nanometers so it seems to imply the upside coming from 16-nanometer in third quarter.

好的。謝謝。最後，關於第三季的收入，我想這個問題是問 Lora 的。所以我只想澄清一下，您認為第三季的營收成長主要來自 20 奈米還是 16 奈米？因為您提到利潤率的稀釋來自 16 奈米，所以這似乎意味著第三季的上行空間來自 16 奈米。

Actually the third quarter revenue is supported by smartphone growth. When I say smartphone, it's more than 16-nanometer. Of course it includes 16-nanometer -- but also the companion chip that goes along to support smartphone.

實際上，第三季的收入是由智慧型手機的成長所支撐的。當我說智慧型手機時，它超過 16 奈米。當然它包括 16 奈米——但也包括支援智慧型手機的配套晶片。

Okay, so it's smartphone demand across different nodes?

好的，那麼這是跨不同節點的智慧型手機需求嗎？

Yes.

是的。

Okay, thanks.

好的，謝謝。

All right. The next question will be coming from JP Morgan's Gokul Hariharan.

好的。下一個問題來自摩根大通的 Gokul Hariharan。

Thank you. My first question is on HPC. I think you provided a rough estimate of $15 billion wafer revenue in five years. Just to get some granularity on that, is that the total market demand, including IDM, fabless, everything, or does it just be foundry opportunity within that market? Because as you mentioned, some of the segments have very dominant IDM players. Some of them, like GPU, are a lot more fabless.

謝謝。我的第一個問題是關於 HPC 的。我認為您給出的粗略估計是五年內晶圓收入達到 150 億美元。只是為了詳細了解一下，這是整體市場需求，包括IDM、無晶圓廠、一切，還是只是該市場內的代工機會？因為正如您所提到的，某些領域擁有非常主導的 IDM 參與者。其中一些，例如 GPU，是無晶圓廠的。

What I cited are the wafer revenue in terms of foundry revenue. But we -- many of our customer -- fabless customer wants to get into that market and any product can be foundried, by the way, okay? So we just play together in that sector. That's all. Yes.

我所引用的是代工收入中的晶圓收入。但是我們——我們的許多客戶——無晶圓廠客戶都想進入那個市場，順便說一下，任何產品都可以代工，好嗎？所以我們只是在那個領域一起玩。就這樣。是的。

Okay. All right. So would you say that server is still a big portion of that opportunity? Or you're not including the server opportunity which is predominantly IDM in that $15 billion.

好的。好的。那麼您是否認為伺服器仍然是這一機會的重要組成部分？或者你沒有將主要為 IDM 的伺服器機會納入這 150 億美元。

Server is included in that opportunity.

伺服器包含在該機會中。

Okay. All right. Second question is on 7-nanometer. I think you mentioned about 15 customer tape-outs already ready for next year. Are there a significant number of HPC-related tape-outs there, or the starting tape-outs are mostly high end mobile in that 7-nanometer?

好的。好的。第二個問題是關於 7 奈米的。我想您提到大約有 15 個客戶已經為明年做好了準備。那裡是否有大量與 HPC 相關的流片，或者開始的流片大多是 7 奈米的高端行動裝置？

There are a significant number of HPC products -- tape-outs. But in terms of volume it will be high -- mobile product volume will be much higher in the beginning.

有大量的 HPC 產品 — — 已完成投片。但就數量而言，它會很高——行動產品的銷量一開始會高得多。

And maybe, last one, I think you had mentioned 10-nanometer you'll have more than 70% market share. Any rough thoughts in 7-nanometer, is it going to be 90% to 95%. Any early thoughts on how you think about 7-nanometer market share?

也許，最後一個，我想您提到 10 奈米將擁有超過 70% 的市場份額。您對 7 奈米有什麼粗略的想法嗎？它會是 90% 到 95% 嗎？您對 7 奈米市佔率有何看法？

High. We'd say high. Higher than 10-nanometer. We want to do every nanometer higher than the previous one.

高的。我們會說很高。高於10奈米。我們希望每一個奈米都比前一個奈米更高。

Fair enough.

很公平。

The next question will be coming from Credit Lyonnais, Sebastian Hou.

下一個問題來自里昂信貸銀行的 Sebastian Hou。

Thank you, Dr. Sun. My first question is on the packaging business. So InFO and CoWoS. Did I understand correctly that the TSMC will take full responsibility for packaging of logic and memory and my question is how to split the yield issues of memory with the memory partner? And as this part of the business continues to grow in terms of revenue percentage and dollar amounts and how do you expect this to -- will this increase the business risk for you and how do you see that impact your risk, yield and profitability?

謝謝您，孫醫師。我的第一個問題是關於包裝業務的。所以是 InFO 和 CoWoS。我是否理解正確，台積電將全權負責邏輯和內存的封裝，我的問題是如何與內存合作夥伴分擔內存的產量問題？隨著這部分業務在收入百分比和金額方面的持續成長，您對此有何預期？這會增加您的業務風險嗎？您認為這會對您的風險、收益和獲利能力產生什麼影響？

To answer your question, no, we don't take full responsibility, as you said on the memory portion. Memory we will work with the memory supplier but it's mainly their responsibility to make it reliable and fully functional and can be cooperative into InFo technology. But we don't take the full responsibility, as you just mentioned.

回答你的問題，不，我們不承擔全部責任，正如你在記憶體部分所說的那樣。內存我們將與內存供應商合作，但他們的主要責任是確保其可靠、功能齊全，並能與 InFo 技術合作。但正如你剛才所提到的，我們並不承擔全部責任。

Okay. I think my question is -- sorry, I should have asked more clearly. So my question is, when the packaging -- for example the fail -- the yield rate is not good but you have to be responsible for that cost including the memory cost, right?

好的。我想我的問題是──抱歉，我應該問得更清楚一些。所以我的問題是，當封裝——例如失敗——時，產量率並不好，但你必須對該成本負責，包括記憶成本，對嗎？

Oh. That's a good question. Once a part fail, which we don't expect too often, of course -- once the part fail we trace it back. We work with the customer identify whose responsibility it is.

哦。這是個好問題。一旦某個部件發生故障（當然，我們不希望這種情況經常發生），我們就會追溯它。我們與客戶合作，確定這是誰的責任。

Okay. So the yield rate is -- (inaudible) the yield rate problem is led by your memory partners and that cost will be attributed to them but not you?

好的。因此收益率是 - （聽不清楚）收益率問題是由您的記憶合作夥伴引起的，並且成本將歸咎於他們而不是您？

That's correct.

沒錯。

Okay. And my second question is a very simple one. Just I noticed that your 0.11-micron and 0.13-micron revenue increased quite a lot in terms of quarter on- quarter and year on year in the third quarter. Can you give us some hints and colors on what type of application and products are that? Thank you.

好的。我的第二個問題非常簡單。我剛才注意到，你們第三季的0.11微米和0.13微米營收季比和年成長都相當多。您能否給我們一些提示和說明那是什麼類型的應用程式和產品？謝謝。

Okay. On 0.11-micron and 0.13-micron we, as I mentioned, we developed some specialty technologies and so I give you -- yes, the one or major reason probably is some of the Power Management IC.

好的。正如我所提到的，我們在 0.11 微米和 0.13 微米上開發了一些特殊技術，所以我給你——是的，一個或主要原因可能是一些電源管理 IC。

Thank you.

謝謝。

Next question will be coming from Daiwa's Rick Hsu.

下一個問題來自 Daiwa 的 Rick Hsu。

Yes, hi. Good morning -- sorry, good afternoon. My first question is I think Lora was talking about your revenue CAGR in the next -- well, three years to five years will be 5% to 10% per annum. I wonder if you could give us some ballpark number. If I want to break it down on the incremental revenue increase across the board with your four demand drivers like you include HPC, mobile, auto and IoT, could you give us some idea the contribution from each category?

是的，你好。早安——抱歉，下午好。我的第一個問題是，我認為 Lora 談論的是未來三到五年的收入複合年增長率——嗯，每年將是 5% 到 10%。我想知道您是否能給我們一個大概的數字。如果我想根據四個需求驅動因素（包括 HPC、行動、汽車和物聯網）全面細分增量收入成長，您能否告訴我們每個類別的貢獻？

I cannot. I think Mark said last quarter in the five-year timeframe half of our growth will come from the mobile field and about a quarter for high performance computing area. And the other quarter will be from IoT. That's the ballpark I think.

我不能。我認為馬克上個季度說過，在五年的時間範圍內，我們一半的成長將來自行動領域，約四分之一來自高效能運算領域。另一季將來自物聯網。我認為這就是大概情況。

All right, thank you. All right. The second question is I think this year your revenue growth is going to be pretty strong based on your 5% to 10% guidance. And that also increase the comparison base for next year. So if I want to ask for some color about your next year's growth it's going to be a 5% to 10% range, would you be -- would that be closer to the lower end or higher end?

好的，謝謝。好的。第二個問題是，我認為根據您 5% 到 10% 的預期，今年您的營收成長將會非常強勁。這也增加了明年的比較基數。因此，如果我想詢問您明年的成長情況，那將是 5% 到 10% 的範圍，您會——這會更接近低端還是高端？

I will not comment 2017 growth at this moment. You can just follow our indications. We still believe in the five years to 10 years compound annual growth rate will be between 5% to 10%. Of course, some year will be higher. Some year will be lower. But this is our goal -- to drive the compound growth rate 5% to 10%.

我目前不會評論 2017 年的成長情況。您只需按照我們的指示即可。我們仍相信未來5年到10年的複合年增長率將在5%到10%之間。當然，有些年份會更高。有些年份會更低。但這是我們的目標——推動複合成長率達到 5% 至 10%。

Thank you so much.

太感謝了。

I think we will need to go to the line first before we come back to the floor for the follow-up questions. Operator, could you please have the next caller on the line please?

我認為我們需要先回答問題，然後再回到現場回答後續問題。接線生，請您讓下一位來電者接通好嗎？

Thank you. Our next question comes from the line of Steven Pelayo from HSBC. Please go ahead.

謝謝。我們的下一個問題來自匯豐銀行的史蒂文‧佩拉約 (Steven Pelayo)。請繼續。

Yes, just a couple of clarifications first. Your China revenue -- despite total Company revenue being up so much, your China revenue in dollars was down pretty significantly. It seems to happen every third quarter, but I guess I'm surprised, given some of the strength that we've seen in China smartphone. Maybe you can comment a little bit about what's going on in China, what you're seeing there and thoughts for the fourth quarter.

是的，首先需要澄清幾點。儘管公司總收入大幅成長，但以美元計算的中國收入卻大幅下降。這種現像似乎每個第三季都會發生，但考慮到中國智慧型手機市場的一些強勁表現，我想我還是感到驚訝。也許您可以稍微評論一下中國正在發生的事情、您在那裡看到的情況以及對第四季度的看法。

And then the second clarification question that I had was just on gross margins. You had said that around 50% for next year. I'm curious if that's more of a full-year number or when I think about it on a quarterly basis -- can you talk a little bit about seasonality in large customers, rising depreciation? I know in the past you've smoothed it a little bit as well in the first half by starting wafers. I guess I'm worried a bit about first half next year gross margins. Can they also still be close to 50% in a seasonally soft period? Those were my two clarification questions.

我的第二個澄清問題是關於毛利率的。您曾說過明年的比例約為 50%。我很好奇，這是否是一個全年的數字，或者當我以季度為基礎考慮時——您能否談談大客戶的季節性、折舊增加的情況？我知道在過去，您在上半年通過開始晶圓業務已經使情況稍微平穩了一些。我想我有點擔心明年上半年的毛利率。在季節性疲軟時期，他們的銷售額還能接近 50% 嗎？這是我要澄清的兩個問題。

Steven, you talk so fast it's even beyond me. So I really -- I haven't caught your first question quite well, but I think the second question you want us to explain about gross margins for next year, right?

史蒂文，你說話太快了，我都聽不懂。所以我真的——我沒有很好地理解你的第一個問題，但我認為第二個問題是你想讓我們解釋一下明年的毛利率，對嗎？

Primarily during the seasonally soft period so in the first half of the year, can your gross margins still sustain about 50% as you had suggested, I think, for the full year?

主要是在上半年的季節性疲軟時期，我認為你們的毛利率是否還能像你們所說的那樣，在全年維持在 50% 左右？

Are you asking about 2017? Okay. Yeah. 2000 --?

你問的是 2017 年的情況嗎？好的。是的。2000年——？

Correct. First half next year and a seasonally softer period, can gross margin sustain 50%?

正確的。明年上半年是淡季，毛利率還能維持50%嗎？

I will not particularly comment on quarter gross margin outlook but if you hear what I said earlier, in the longer term we intend to keep it about 50%. Of course, some quarters depending on the seasonality and utilization may swing a little bit. And we have the 10-nanometer which will be dilution to our margin as it comes on. But over and over I think 50% -- about 50% is probably good direction.

我不會特別評論季度毛利率前景，但如果你聽到我之前說的話，從長遠來看，我們打算將其保持在 50% 左右。當然，某些季度根據季節和利用率可能會有一點波動。我們擁有 10 奈米技術，隨著它的推出，我們的利潤率將會降低。但我反覆思考，認為 50%——大約 50% 可能是好的方向。

Okay, let me just jump to my last longer-term question. Midway through the third quarter one of your competitors now, Intel, seems to have rebuild their foundry effort. TSMC's been under attack many times in the -- over the years and you guys have done a great job with your scale, your tech leadership, existing relationships, your customer agnosticism, if you will. But I'm just curious -- is there anything different this time with some of the competitive threats out there? Are you hearing any differences from a customer perspective, or even from just a competitive perspective on pricing or incentives -- or just the general specmanship that's going on right now? Any thoughts on competitive landscape this time around?

好的，讓我直接回答最後一個長期問題。第三季中期，你們的競爭對手之一英特爾似乎已經重建了他們的代工業務。多年來，台積電多次受到攻擊，但你們在規模、技術領導力、現有關係以及客戶不可知論等方面都做得非常出色。但我只是好奇——這次面臨的一些競爭威脅有什麼不同嗎？您是否從客戶的角度，甚至從定價或激勵措施的競爭角度，或者只是從目前正在發生的一般規格的角度，聽到了什麼差異？對這次的競爭格局有什麼看法？

Steven, can you speak slower? Because really, the bandwidth is very narrow, so only part of the spectrum was received.

史蒂文，你能說慢一點嗎？因為實際上頻寬非常窄，所以只能接收到部分頻譜。

Maybe it's my (multiple speakers)

也許是我的（多位發言者）

Maybe I can summarize your very long question. You are just asking, what's the impact to TSMC if Intel becomes very serious about foundry, right?

也許我可以總結一下你這個很長的問題。你只是問，如果英特爾認真看待代工，會對台積電產生什麼影響，對嗎？

Well, they certainly have threatened in the last 90 days with a greater level of intensity. And so I'm curious if anything's different from a competitive landscape perspective this time around. In the past you have done a great job fighting off competition. Do you see anything different this time around?

嗯，他們在過去 90 天確實以更大強度發出了威脅。因此我很好奇，從競爭格局的角度來看，這次是否有什麼不同。過去，你們在擊敗競爭對手方面做得非常出色。這次你看到什麼不同了嗎？

We intend to do a great job going to the future too.

我們也打算在未來做出偉大的成就。

Okay, fair enough, guys. Thank you.

好吧，夥計們，夠公平的。謝謝。

Thank you. Thank you, Steven. Let's come back to the floor. Okay, follow-up question first come from Credit Suisse, Randy Abrams.

謝謝。謝謝你，史蒂文。讓我們回到正題。好的，後續問題首先來自瑞士信貸的蘭迪·艾布拉姆斯 (Randy Abrams)。

Thank you. Last year there was CapEx savings where the mobile products migrated 20-nanometer to 16-nanometer and there was capacity conversion. Could you talk about the outlook for the 16-nanometer node, if you expect to backfill as some of the leading products move? Or you could see the same type of move of converting capacity from 16-nanometer down to 10-nanometer and 7-nanometer. Then is it efficient to make that capacity conversion?

謝謝。去年，由於行動產品從 20 奈米遷移到 16 奈米並進行了產能轉換，因此節省了資本支出。如果您預計隨著一些領先產品的推出而出現回補，您能否談談 16 奈米節點的前景？或者你可以看到相同類型的轉換能力從 16 奈米下降到 10 奈米和 7 奈米。那麼進行這種產能轉換是否有效率？

We build our capacity according to the demand, of course. And so the next year we expect customer move -- especially the high-end smartphone -- to move from 16-nanometer to 10-nanometer. And then we expect the second wave and third wave customer to enter into 16-nanometer. So far we will convert some of the 16-nanometers capacity into 10-nanometer. We will, if the demand is not as high as this year.

當然，我們會根據需求來建立我們的產能。因此，我們預計明年客戶（尤其是高階智慧型手機）將從 16 奈米轉向 10 奈米。然後我們預計第二波和第三波客戶將進入 16 奈米。目前，我們將把部分 16 奈米產能轉換為 10 奈米產能。如果需求不如今年高的話，我們就會這麼做。

And you are talking about the conversion efficiency -- it's quite high.

您談到了轉換效率——它相當高。

Okay. So when you're saying, so your base case is no conversion; it's only on a demand disappointment that you -- like your base case is you can fill that capacity? Okay.

好的。所以當你這麼說的時候，你的基本情況就是沒有轉換；只有在需求令人失望的情況下，你——就像你的基本情況一樣，你能填補這個產能嗎？好的。

The second question, you used to disclose IDM business every quarter. It's no longer in the quarterly -- but IDM last year grew from 15% to 18%. So it's actually a reversal that IDMs grew as a percent of sales. If you could talk about that bucket, which it seemed like it continued to come down relative to Fabless. But with some of the mergers like NXP-Freescale, are you seeing as a result of that any change in outsourcing or for your overall IDM business any change?

第二個問題，你們過去每季都會揭露IDM業務。它不再是季度數據——但去年 IDM 增長了 15% 至 18%。因此，IDM 的銷售額百分比成長實際上是一種逆轉。如果您可以談論這個桶，它似乎相對於 Fabless 而言繼續下降。但是隨著 NXP-Freescale 等合併的發生，您是否看到外包或整體 IDM 業務發生了任何變化？

Did you say the IDM revenue growth is 18%.

您說的是IDM收入成長率是18%。

Yes, in the annual time it was 18%. The year before it was 15%.

是的，以年率計算是18%。前一年這一比例為 15%。

IDM?

IDM？

For IDM.

對於 IDM。

IDM outsourcing or IDM?

IDM外包還是IDM？

Well, just IDM as your percent of revenue. Like the total bucket of IDM.

嗯，IDM 只是你的收入百分比。就像 IDM 的總桶子一樣。

I see. We indeed, our growth more recent years comes from fabless, also from IDM outsourcing and from system companies. As a matter of fact, if I look at the recent history, the growth fastest is from system companies, then the IDM outsourcing then the fabless growth.

我懂了。確實，我們近年來的成長來自於無晶圓廠、IDM外包和系統公司。事實上，如果我回顧最近的歷史，成長最快的是系統公司，然後是IDM外包，然後是無晶圓廠的成長。

If I can add, this year the number will be similar to last year.

如果我可以補充的話，今年的數字將與去年相似。

Thank you.

謝謝。

Okay. Next follow-up question will be coming from Citigroup's Roland Shu.

好的。下一個後續問題來自花旗集團的 Roland Shu。

Thank you. I just have one follow-up question for your inventory level. I know your inventory is mainly from WIP and also finished goods. However, looking at this 3Q you have a 17% higher revenue compared to second quarter but your inventory has declined about 10%. Agree you said you ship off this WIP. However, in 3Q you probably have much more wafer starts also. So that actually will be turned to the WIP. So just I want to understand what is the percentage for your finished goods in your inventory? Are you -- did you ship off these finished goods to your customer in 3Q?

謝謝。我只想問一個關於你們庫存水準的後續問題。我知道您的庫存主要來自在製品和成品。然而，從第三季來看，你們的收入比第二季高出 17%，但庫存卻下降了約 10%。同意你說的你已經發送了這個 WIP。然而，在第三季度，你可能還會有更多的晶圓啟動。因此這實際上將轉向 WIP。所以我只是想知道你們庫存中成品所佔的百分比是多少？您是否在第三季將這些成品發送給了您的客戶？

Simple answer is yes. We have very low finished goods inventory. If you understand our business model that's the way it should be. So majority part of our inventory is WIP.

簡單的答案是肯定的。我們的成品庫存非常低。如果您了解我們的商業模式，那應該是這樣的。因此，我們的庫存大部分都是在製品。

Okay.

好的。

So when we're talking about cycle time it does help to reduce the inventory because you don't need to build that earlier. So you can do pretty efficiently.

因此，當我們談論週期時間時，它確實有助於減少庫存，因為您不需要更早建立庫存。所以你可以做得非常有效率。

Okay, so how much cycle time you have been reduced in 3Q?

好的，那麼第三季你們的周期時間減少了多少？

Actually most of the cycle time reduction comes from the manufacturing side. I'll give you one example. I cannot nail down between the second quarter and the third quarter but I'll tell you that last year and this year we probably improved by 20%. We shortened that cycle time.

實際上，大部分週期時間的縮短來自於製造方面。我給你舉一個例子。我無法確定第二季和第三季的具體數字，但我可以告訴你，去年和今年我們的業績可能都提高了 20%。我們縮短了該週期時間。

Okay, there are follow-up questions first from Morgan Stanley's Charlie Chan.

好的，首先是摩根士丹利的 Charlie Chan 的後續問題。

Thanks. So, Mark, a couple of weeks ago you announced that TSMC's going to kick off the 3-nanometer R&D. But that doesn't really show in your competitors' roadmaps, not even the 5-nanometer. So what is TSMC seeing that your competitors don't see in terms of technology breakthrough or any customers demanding for that 3-nanometer? Thanks.

謝謝。馬克，幾週前你宣布台積電將啟動 3 奈米研發。但這並沒有真正體現在競爭對手的路線圖中，甚至連 5 奈米也沒有。那麼，就技術突破或客戶對 3 奈米的需求而言，台積電看到了哪些競爭對手沒有看到的東西呢？謝謝。

I'm sure our competitors are working on it. So I just have the chance last week in TSIA's annual meeting. I spelled out our 3-nanometer status. And everybody's working on it I believe. At least the top three or four. And it's still in the pathfinding mode and how to do the transistor I think everybody is searching it. Maybe it's not obvious at this point, but that is what the researching is about. So we intend to invest heavily in the much forward-looking R&D anticipating all kinds -- both in the Moore's Law scaling as well as the 3D IC integration. So we intend to fulfill the future system requirement this way and to fit our technology just for the future system requirement, instead of just so-called CPU cadence. Thanks.

我確信我們的競爭對手正在努力實現這一目標。所以我上週剛好有機會參加 TSIA 的年度會議。我詳細說明了我們的 3 奈米狀態。我相信每個人都在為此努力。至少是前三或前四名。它仍然處於尋路模式，我認為每個人都在尋找如何製作晶體管。也許現在還不明顯，但這就是研究的目的。因此，我們打算大力投資前瞻性的研發，預測各種情況——包括摩爾定律的擴展以及 3D IC 整合。因此，我們打算以這種方式來滿足未來的系統需求，並使我們的技術適應未來的系統需求，而不僅僅是所謂的 CPU 節奏。謝謝。

So in your long-term revenue mix, so Lora just mentioned that the long-term your mix will be half from mobile, one quarter from HPC, one quarter from IoT.

因此，在您的長期收入組合中，Lora 剛才提到，長期收入組合將是一半來自移動，四分之一來自 HPC，四分之一來自 IoT。

So what is it today? I mean the mix today from these three segments?

那麼今天是什麼？我的意思是今天這三個部分的混合？

We didn't separate the revenue on the way you describe. We just have a communication -- computer, consumer, industrial/standard, which you can find from our management report, which a very big part is communication and the increasing important part is industrial and standard, computer getting smaller.

我們並沒有按照您描述的方式分離收入。我們只是有通信——電腦、消費者、工業/標準，您可以從我們的管理報告中找到，其中很大一部分是通信，越來越重要的部分是工業和標準，電腦越來越小。

Okay.

好的。

Okay, follow-up questions also will be coming from Credit Lyonnais, Sebastian Hou.

好的，後續問題也將來自里昂信貸公司的 Sebastian Hou。

Thank you. I have questions from -- more from the -- in terms of margin from the application perspective. So if you look at your future growth driver, smartphone, or just mobile and high performance computing and automotive and IoT. We understand mobile so far account for a large chunk of your business revenue contribution. And automotive and high performance computing right now is still relatively smaller. But I believe this part will be -- presumably this part -- these two businesses will grow faster. So in terms of the margin will these two parts of the business carry higher than the other business margin? And how do you see this impact your margin? Will it bring more upside to your margin down the road?

謝謝。我有更多的疑問，關於從應用角度獲得的利潤。因此，如果你看看未來的成長動力，智慧型手機，或者只是行動和高效能運算以及汽車和物聯網。我們了解，到目前為止，行動業務佔您業務收入的很大一部分。而目前汽車和高效能運算的規模仍然相對較小。但我相信這部分——大概是這部分——這兩項業務將會成長得更快。那麼從利潤率來看，這兩部分的業務利潤率會高於其他業務嗎？您認為這會對您的利潤產生什麼影響？它會為你未來的利潤帶來更多好處嗎？

Right. Lora just mentioned we try to keep our 50% to -- around 50% margin. Of course, the higher the better and we want to work on our value add for our customers.

正確的。Lora 剛才提到，我們試圖維持 50% 到 50% 左右的利潤率。當然，越高越好，我們希望為客戶增加價值。

Okay. And my follow-up questions on that is on your 7-nanometer because you have two variants for mobile and high performance computing platform, and do you see any margin or profitability difference between these two variants?

好的。我的後續問題是關於你們的 7 奈米技術，因為你們有兩個用於行動和高效能運算平台的版本，你們認為這兩個版本之間的利潤率或獲利能力有什麼差異嗎？

At this point it's too early -- too early to say. We're just working with our customers. You know the price changes year-by-year. So how it pans out is yet to be seen. I certainly hope the high performance computing margin is higher than our mobile because -- and look at Intel's margin. But we still at the same time want to enable our customer to enter that high performance computing market. And that is the consideration. At this point we do not assume major differences but of course we work with our customer to get their margin high -- therefore, we benefit our margin too.

現在說這些還為時過早。我們只是與我們的客戶合作。你知道價格每年都在變動。因此，其結果如何還有待觀察。我當然希望高效能運算的利潤率高於我們的行動利潤率，因為——看看英特爾的利潤率。但我們同時仍希望幫助我們的客戶進入高效能運算市場。這就是考慮因素。在這一點上，我們不會假設存在重大差異，但當然我們會與客戶合作以獲得高利潤——因此，我們的利潤也會受益。

Thank you.

謝謝。

All right, finally the follow-up question will be coming from Deutsche Bank's Michael Chou.

好的，最後的後續問題來自德意志銀行的 Michael Chou。

About the outlook by segment for Q4?

關於第四季各細分領域的前景？

We have guided kind of flat fourth quarter, so on the segment side we expect communication and computer will grow slightly and consumer industrial will decrease. So net is flat.

我們預計第四季度業績將持平，因此在細分市場方面，我們預計通訊和電腦業務將略有成長，而消費工業業務將下降。所以網子是平的。

All right. Regarding the 16-nanometer market share what is your expectation for next year versus this year? Will that be similar?

好的。關於 16 奈米市場份額，您對明年的預期與今年相比如何？那會類似嗎？

It will be similar.

將會類似。

Thank you.

謝謝。

All right in that happy note we will conclude third quarter's conference and conference call. Thank you for joining us this time and I will see you next quarter.

好的，在愉快的心情下，我們將結束第三季的會議和電話會議。感謝您這次加入我們，下個季度再見。