台積電 ADR (TSM) 2016 Q4 法說會逐字稿

Happy New Year, everyone. Welcome to TSMC's fourth quarter 2016 earnings conference and conference call. This is Elizabeth Sun, TSMC's Senior Director of Corporate Communications and your host for today.

大家新年快樂。歡迎參加台積電2016年第四季財報發表會及電話會議。我是台積電企業傳播資深總監伊莉莎白·孫，也是今天的主持人。

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 lines are in listen-only mode. As this conference is being viewed by investors around the world, we will conduct this event in English only.

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，您的撥入線路將處於只聽模式。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 fourth quarter of 2016 followed by our guidance for the first quarter of 2017. Afterwards, TSMC's chairman, Dr. Morris Chang, will provide our key messages and conduct the Q&A session where TSMC's two presidents and co-CEOs, Dr. Mark Liu, and Dr. CC Wei, will be joining Chairman Chang and Ms. Ho in answering your questions.

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年第四季的營運情況，並隨後對2017年第一季做出展望。隨後，台積電董事長張忠謀博士將發表重要演講並進行問答環節，台積電兩位總經理兼聯席首席執行官劉德華博士和魏哲家博士將與張董事長和何女士一起回答大家的問題。

For those participants on the call, if you do not yet have a copy of the press release, please, 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。

Now, I would like to turn the podium to TSMC's CFO, Ms. Lora Ho, with the summary of operations and current quarter guidance.

現在，我想請台積電財務長 Lora Ho 女士介紹營運狀況和本季業績指引。

Good afternoon, you hear me okay? Okay.

下午好，你聽見我說話了嗎？好的。

Thank you for joining us today. My presentation will start with financial highlights for the fourth quarter, the recap of our 2016 performance, followed by the guidance of the current quarter.

感謝您今天加入我們。我的演講將從第四季度的財務亮點開始，回顧我們的 2016 年業績，然後是本季度的指導。

Fourth quarter revenue rose 0.7% sequentially to TWD262 billon, exceeding the high end of our guidance given in October due to a stronger demand for TSMC's 16 nanometer technology and the more favorable foreign exchange rate than our original forecast. Gross margin increased by 1.6 percentage point quarter-over-quarter to 52.3%, mainly driven by continued cost improvement efforts. Operating margin also increased at 1.1 percentage point sequentially to 41.9%, while R&D expense continued to grow, reflecting a higher level of 7 nanometer and 10 nanometer development activities.

第四季營收季增 0.7% 至 2,620 億新台幣，超過我們 10 月給出的預期上限，原因是市場對台積電 16 奈米技術的需求強勁，且外匯匯率比我們最初的預測更為有利。毛利率季增 1.6 個百分點至 52.3%，主要得益於持續的成本改善努力。營業利潤率也較上季成長 1.1 個百分點，達到 41.9%，而研發費用持續成長，反映出 7 奈米和 10 奈米開發活動的水平更高。

Overall, our fourth quarter EPS reached TWD3.86, and ROE was 30% for the quarter.

整體而言，我們第四季每股獲利達新台幣3.86元，當季淨資產殖利率達30%。

Now, let's take a look at wafer revenue contribution by application. During the fourth quarter, communication and computer increased 11% and 7% on the prior quarter respectively while consumer and industrial standard decreased by 43% and 6% respectively.

現在，讓我們來看看按應用劃分的晶圓收入貢獻。第四季度，通訊和電腦類產品較上季分別成長11%和7%，消費和工業標準類產品較上季分別下降43%和6%。

On full year basis, all four segments experienced year-on-year growth. Communication increased 16% YoY and represented 62% of our total wafer revenue, the computer increased 15%, consumer grew 32%, industrial/standard rose 1%.

從全年來看，四個部門均實現了同比增長。通訊業務年增 16%，占我們晶圓總收入的 62%，電腦業務成長 15%，消費業務成長 32%，工業/標準業務成長 1%。

Now, let us take a look at the revenue by technology. Combined revenue from 16 nanometer and 20 nanometer reached 33% of wafer revenues in the fourth quarter, up from 31% in the third quarter. Our 28 nanometer contribution remains strong at 24% of revenue. Advanced technology, meaning 28 nanometer and below, accounted for 57% of total wafer revenue in the fourth quarter.

現在，讓我們來看看按技術劃分的收入。第四季度，16奈米和20奈米的合併收入佔晶圓收入的33%，高於第三季的31%。28 奈米科技對我們營收的貢獻依然強勁，達到 24%。先進技術，即28奈米及以下技術，佔第四季晶圓總收入的57%。

On a full year basis, the combined 16/20 nanometer contribution increased by 8 percentage points, and reached 28% of total wafer revenue in 2016. Advanced technologies, 28 nanometer and below, accounted for 54% of total wafer revenue, up from 48% in 2015.

從全年來看，16/20奈米合計貢獻增加了8個百分點，達到2016年晶圓總收入的28%。28奈米及以下先進技術佔晶圓總收入的54%，高於2015年的48%。

Moving on to the balance sheet, we ended the fourth quarter with cash and marketable securities of TWD632 billion, an increase of TWD115 billion. On the liability side, current liabilities increased by TWD61 billion. On the financial ratios, accounts receivable turnover days increased three days to 45 days. For inventory, our days of inventory decreased three days to 41 days, mainly driven by the reduction of work-in-process.

再來看資產負債表，截至第四季末，我們的現金和有價證券總額為 6,320 億新台幣，增加了 1,150 億新台幣。負債方面，流動負債增加610億新台幣。財務比率方面，應收帳款週轉天數增加3天至45天。就庫存而言，我們的庫存天數減少了 3 天至 41 天，主要由於在製品減少。

Now let me make a few comments on cash flow and CapEx. During the fourth quarter, we generated about TWD185 billion cash from operations, and spent TWD113 billion in capital expenditure. As a result, we generated free cash flow of TWD73 billion and our overall cash balance increased TWD77 billion, to reach TWD541 billion at the end of the quarter.

現在，讓我對現金流和資本支出發表一些評論。第四季度，我們的經營現金流約為1850億新台幣，資本支出約1130億新台幣。結果，我們產生了 730 億新台幣的自由現金流，我們的整體現金餘額增加了 770 億新台幣，在本季末達到 5,410 億新台幣。

In US dollar terms, our fourth quarter capital expenditure reached $3.5 billion and the total year CapEx was $10.2 billion. This is a bit higher than our prior guidance of slightly above $9.5 billion, mainly due to accelerated delivery of advanced technology tools.

以美元計算，我們第四季的資本支出達到 35 億美元，全年資本支出為 102 億美元。這比我們先前預測的略高於 95 億美元略高，主要原因是先進技術工具的加速交付。

Now, I would like to give you a recap of our performance in 2016. 2016 was a good year for TSMC as once again, we set new records in terms of revenue and earnings. Our revenue grew 12.4% year-over-year, and reached TWD948 billion, or up 10.6% to $29.4 billion in US dollar term. As a result, wafer shipment increased across nearly all technology nodes.

現在，我想向大家回顧一下我們2016年的表現。2016年對台積電來說是豐收的一年，我們在收入和獲利方面再次創下新紀錄。營收年增12.4%，達9,480億新台幣，以美元計算成長10.6%，至294億美元。結果，幾乎所有技術節點的晶圓出貨量都有所增加。

Gross margin increased 1.4 percentage points to 50.1% in 2016, mainly due to continued cost reduction efforts and to a lesser extent, the more favorable foreign exchange rate. Our operating margin also increased 2 percentage points to reach 39.9%. Our effective tax rate was 13.5% in 2016, same as in 2015 and full year earnings per share was TWD12.89, an increase of 9% year-over-year. Excluding major one off items, namely share disposal gains and a closure of our Solar operations in 2015, and the negative impact from the earthquake in 2016, our EPS would have grown 17.4% year-over-year in 2016.

2016年毛利率上升1.4個百分點至50.1%，這主要得益於持續的成本削減，以及較為有利的外匯匯率（但程度較小）。我們的營業利益率也增加了2個百分點，達到39.9%。2016年本公司有效稅率為13.5%，與2015年相同，全年每股收益為12.89新台幣，較去年同期成長9%。不計入重大一次性項目，即 2015 年股票處置收益和太陽能業務的關閉，以及 2016 年地震帶來的負面影響，我們的每股收益在 2016 年將同比增長 17.4%。

On cash flow, we spent TWD328 billion in capital expenditure. While we generated TWD540 billion in operating cash flow, and TWD212 billion in free cash flow. We also paid TWD156 billion in cash dividend, an increase of 33% from the 2015.

現金流方面，我們資本支出3280億新台幣。同時，我們產生了5,400億新台幣的經營現金流，以及2,120億新台幣的自由現金流。並派發現金股利1,560億新台幣，較2015年增加33%。

From a semiconductor industry standpoint, we estimate that the semiconductor market is likely to have remained flat year-on-year. While fabless grew 5% and foundry rose 8%, the outperformance of foundry over the overall semiconductor industry was mainly driven by the strong demand from 4G powered smartphones in the China market, the replacement upgrade of gaming and emergence of artificial intelligence.

從半導體產業的角度來看，我們估計半導體市場可能比去年同期保持穩定。雖然無晶圓廠成長了 5%，代工廠成長了 8%，但代工廠的表現優於整個半導體產業，主要原因是中國市場對 4G 智慧型手機的強勁需求、遊戲的更新換代以及人工智慧的興起。

Compared to foundry's 8% growth, TSMC's 11% growth in US dollar underscore our further market segment share gain of 55% in 2015 to 56% in 2016, which is mainly propelled by our leadership in 16 nanometer and 20 nanometer.

與晶圓代工 8% 的成長相比，台積電以美元計算成長了 11%，這突顯了我們的市佔率進一步成長，從 2015 年的 55% 成長到 2016 年的 56%，這主要得益於我們在 16 奈米和 20 奈米領域的領先地位。

We estimated fabless days of inventory ended 2016 at slightly above seasonal level by about two days.

我們估計，2016 年底無晶圓廠庫存天數略高於季節性約兩天。

I have finished my remark on the financial summary, now let me turn on to the first quarter outlook.

我已經完成了對財務摘要的評論，現在讓我來談談第一季的展望。

Moving on to the first quarter 2017, we forecast the demand is weaker than the prior quarter due to mobile product seasonality and slightly above seasonal supply chain inventory at the end of 2016.

展望 2017 年第一季度，我們預測由於行動產品的季節性以及 2016 年底季節性供應鏈庫存略高，需求將弱於上一季。

Based on our current forecast an exchange rate assumption of $1 to TWD32, we expect the first quarter revenue to be between TWD236 billion and TWD239 billion, which represents 8.9% to 10% sequential decline.

根據我們目前的預測，即 1 美元兌 32 新台幣的匯率假設，我們預計第一季營收將在 2,360 億新台幣至 2,390 億新台幣之間，環比下降 8.9% 至 10%。

Gross profit margins will be between 51.5% and 53.5%, and operating margin will be between 40.5% and 42.5%.

毛利率將在51.5%至53.5%之間，營業利益率將介於40.5%至42.5%之間。

This concludes my remarks.

我的發言到此結束。

Now, I would like to turn the podium to the chairman for his comments.

現在，我請主席發言。

Ladies and gentlemen, I first want to wish you a very happy, care free, healthy, and profitable, and hopeful new year. And Lora has just given her report on the last quarter and also she gave her outlook for the first quarter. I will just spend a few minutes to talk about 2017, the whole year.

女士們、先生們，首先我祝福大家新的一年快樂、無憂無慮、身體健康、財源廣進、充滿希望。洛拉剛剛提交了上個季度的報告，並給出了對第一季的展望。我只想花幾分鐘來談談 2017 年全年的情況。

For 2017, we expect smartphone unit growth of 6%, from 1.47 billion units to 1.55 billion units. Of this smartphone growth, we expect the high end of smartphone will grow 3%, the mid end will grow 5% and the low end will grow 8%. For 2017, we also expect that PC units will decline 5%, tablets will decline 7%, DCE units will decline 5%, and IOT units will grow 34%.

2017年，我們預期智慧型手機銷量將成長6%，從14.7億支增至15.5億支。在智慧型手機成長中，我們預計高階智慧型手機將成長 3%，中階智慧型手機將成長 5%，低階智慧型手機將成長 8%。對於 2017 年，我們也預期個人電腦出貨量將下降 5%，平板電腦出貨量將下降 7%，DCE 出貨量將下降 5%，而物聯網出貨量將成長 34%。

Again, for 2017, we expect semiconductor market will grow 4%, foundry revenue will grow 7%. We expect TSMC revenue will grow 5% to 10% in US dollars. TSMC revenue, we expect to grow 5% to 10% in US dollars.

再次，對於2017年，我們預期半導體市場將成長4％，代工收入將成長7％。我們預計台積電的收入將以美元計算成長5%至10%。台積電的營收，我們預計以美元計算將成長5%到10%。

We believe that in the first half of 2017, our growth over the same period last year will be close to 10% [based on NT dollar](corrected by company after the call). And in the second half of 2017, our growth over the same period last year will be close to 5%[based on NT dollar] (corrected by company after the call). We expect to continue to increase our R&D investments both in dollars and moderately in its percent of revenue. We also reaffirm our long-term growth projection which was made a couple of years ago. We think that in the 2015 to 2020 time period, TSMC revenue and operating profit will grow at a compound annual average rate of 5% to 10%, I'm sorry, 5% to 10%. And TSMC will maintain an ROE of above 20%.

我們相信，2017年上半年，我們的業績較去年同期成長將接近10%[以新台幣為基準](電話會議後公司已修正)。而2017年下半年，我們較去年同期的成長將接近5%[以新台幣為基準]（電話會議後公司已修正）。我們預計將繼續增加研發投資，無論是金額還是收入的比例。我們也重申了幾年前做出的長期成長預測。我們認為在2015年到2020年這段時間裡，台積電的營收和營業利潤的複合年均成長率將會是5%到10%，沒錯，就是5%到10%。而台積電的ROE將維持在20%以上。

That concludes my outlook for 2017 and I believe we are now open for questions.

這就是我對 2017 年的展望，現在我想我們可以開始提問了。

So 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 line, and should you wish to raise your question in Chinese, I will translate it to English before our management answers your questions.

我們的準備好的聲明到此結束。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。我們會從現場和線上收集問題，如果您希望用中文提出問題，我會將其翻譯成英文，然後我們的管理層會回答您的問題。

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, star and one.

對於通話中的各位，如果您想提問，請按電話鍵盤上的星號，然後按一。現在，明星和一。

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.

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, we will start the Q&A session. First, we will have Deutsche Bank, Michael Chou.

現在我們開始問答環節。首先，我們請到了德意志銀行的 Michael Chou。

Hi, Chairman, Co-CEOs, CFO, and Dr. Chang. My first question is regarding the outlook in the first half, given Q1 could be down 8% to 10% so in your guidance for the first half to be up 10% year-on-year. So does that imply you still expect your (inaudible) or we can say sequential growth for Q2 or Q3 going forward.

大家好，董事長、共同執行長、財務長和張博士。我的第一個問題是關於上半年的前景，鑑於第一季可能下降 8% 至 10%，因此您預計上半年將年增 10%。那麼，這是否意味著您仍然預計（聽不清楚）或我們可以說未來第二季或第三季將連續成長。

Maybe I will take the question.

也許我會回答這個問題。

Right. Michael, you are asking what is going to be our Q2 and Q3 sequential growth QoQ.

正確的。邁克爾，您問的是我們的 Q2 和 Q3 的環比增長情況如何。

Assuming not the --

假設不是——

What is the question, repeat the question?

什麼問題，重複問題？

You are asking us about the second quarter and third quarter quarter-over-quarter revenue growth outlook?

您問的是我們對第二季和第三季環比營收成長前景的預測？

We expect it to be a very significant positive number. [referring to 3Q over 2Q only](corrected by company after the call).

我們預計它將是一個非常顯著的正數。[僅指第三季相對於第二季的數據]（公司在電話會議後進行了更正）。

So maybe a follow up question for inventory. Given the Q1 outlook seems to be slightly below our estimate, so do you see the demand outlook for Q1 is weaker than you expected three months ago?

所以這可能是關於庫存的後續問題。鑑於第一季的前景似乎略低於我們的估計，那麼您認為第一季的需求前景是否比您三個月前的預期弱？

Did you hear the question, Lora?

你聽到這個問題了嗎，洛拉？

Michael was asking, do we see the Q1 as weaker than we anticipated three months ago.

麥可問道，我們是否認為第一季的表現比三個月前的預期弱。

Lora, will you -- could you answer?

洛拉，你能回答嗎？

Yes, it was weaker than we have anticipated a couple of months ago.

是的，它比我們幾個月前預期的要弱。

But could you specify which segment or what kind of applications?

但是您能否具體說明是哪個部分或哪種應用？

Basically, it's mobile products as we have stated in the press release.

基本上，正如我們在新聞稿中所述，它是行動產品。

Okay.

好的。

All right. Now the question will go to Credit Suisse, Randy Abrams.

好的。現在問題將交給瑞士信貸的蘭迪·艾布拉姆斯。

Yes, thank you. The first question, I wanted to ask your outlook is more in line with the industry where you are guiding 5% to 10% for foundry near similar levels. Could you talk about the factors to be more inline after gaining the last few years. And can you also address the China business, we are seeing the China foundries grow faster. SMIC is growing 20% to 30%, how does TSMC combat or defend share more on the mature nodes, where they're starting to grow faster?

是的，謝謝。第一個問題，我想問一下，您的展望是否更符合行業水平，您指導代工廠的利潤率接近 5% 至 10%。您能否談談過去幾年取得進展後更加一致的因素？您能否談談中國業務，我們看到中國代工廠發展得更快。中芯國際的成長速度為20%至30%，台積電如何在成熟節點上爭奪或保住更多的份額，而這些節點的成長速度正在加速？

Can you repeat the question?

你能重複一下這個問題嗎？

All right, Randy, your first question is made with respect to TSMC's 2017 growth outlook, where the chairman has just mentioned that 5% to 10%, which is very much in line with the semiconductor industry.

好的，蘭迪，你的第一個問題是關於台積電 2017 年的成長前景，董事長剛才提到 5% 到 10%，這與半導體產業的預期非常一致。

With the fab -- I'm sorry, with the foundry industry, yes.

有了晶圓廠——對不起，有了代工業，是的。

So he would like to know the underlying reasons why we are only growing sort of in line with the foundry.

因此，他想知道我們為何只能按照代工廠的步伐發展，其根本原因是什麼。

Why we are only in line with the foundry?

為什麼我們只跟代工廠對接？

And then China, where the Chinese foundry appear to be growing faster than the foundry industry and what is going to be our strategy in defending our market share or growing -- competing against them?

然後是中國，中國晶圓代工企業的成長速度似乎比晶圓代工產業更快，我們將採取什麼策略來捍衛我們的市場份額或與他們競爭？

Well, yes, I think that -- I really don't know how fast the Chinese foundries are going to grow but I do agree that their ambition is certainly to grow faster than the foundry average. Now, as to why we are only -- why I put -- projected just now that we are only going to grow the same rate as the foundry growth. Well, first of all, we may well be conservative, it's a little too early to say because I said it's now in answer to this gentleman's question that -- actually, I said when I was giving the message, that the second half -- the first half year-over-year will be 10% -- about 10% growth. And the second half will be around 5%, and well, you know, the second half is farther away again, but that always makes it more difficult to predict and rather than erring on the high side, we would rather err on the low side.

嗯，是的，我認為——我真的不知道中國代工廠的成長速度有多快，但我確實同意他們的目標肯定是比代工廠的平均成長速度更快。現在，至於為什麼我們只是——為什麼我剛剛預測——我們的成長速度只會與代工成長速度相同。嗯，首先，我們可能比較保守，現在說還為時過早，因為我說現在回答這位先生的問題——實際上，我在傳達信息時就說過，下半年——上半年同比增長將達到 10%——大約 10%。下半年將在 5% 左右，嗯，你知道，下半年又會更遠，但這總是讓它更難預測，我們寧願犯高錯誤，也不願犯低錯誤。

So that is the first reason.

這是第一個原因。

And there is another reason, that is -- this year, I think 2017 will be pretty strong in terms of technology, it will be a pretty strong 16 or 14 FinFET year, and our market share in 16, while it's quite high, is not as high as I would like, it's actually close to 70% or 65% to 70%. Now that is not quite as high as our 28 nanometer, which even now, you know, like almost 80% and now, 2017 is -- I think it's a pretty -- we think will be a pretty strong year.

還有另一個原因，那就是——今年，我認為 2017 年在技術方面會相當強勁，這將是 16 或 14 FinFET 相當強勁的一年，而我們在 16 的市場份額雖然相當高，但並不像我希望的那麼高，實際上接近 70% 或 65% 到 70%。現在這還沒有達到我們的 28 奈米水平，即使是現在，你知道，也已經接近 80% 了，而現在，2017 年 — — 我認為這是一個相當 — — 我們認為這將是相當強勁的一年。

And so we are running into a little air pocket here, if you call this staying par with the rest of the foundry air pockets, we call that an air pocket, well, we are running into a little air pocket. But then, the next steps, after of course is the 10 and 7 now. We see clear sky, we see clear sky anyway there. So those two reasons. First, possible a little conservatism, and second, there's a little concern, that our 16 does not have as high a market share as I like, as I would like, and 2017 happens to be a very strong, we think, a very strong 16 FinFET year.

所以我們在這裡遇到了一個小氣穴，如果你稱這與其他鑄造廠的氣穴保持一致，我們稱之為氣穴，好吧，我們遇到了一個小氣穴。但是，接下來的步驟，當然是現在的 10 和 7。我們看到晴朗的天空，無論如何我們都看到晴朗的天空。這兩個原因。首先，可能有點保守，其次，有一點擔心，我們的 16 沒有像我希望的那樣高的市場份額，而 2017 年恰好是我們認為非常強勁的一年，是 16 FinFET 非常強勁的一年。

Now, having said all of that, I will say that we certainly do not think we will lose market share. So, why I said that foundry will grow at 7% and we are going to grow at between 5% and 10%, which was further clarified that statement by saying that we're going to grow -- we're not going to grow less than foundry. Yes.

現在，說了這麼多，我想說，我們當然不認為我們會失去市場份額。那麼，為什麼我說代工將以 7% 的速度成長，而我們的成長速度將達到 5% 到 10% 之間，這進一步澄清了這一說法，即我們將會成長——我們的成長速度不會低於代工。是的。

A quick follow-up, if you plan introduce a 12-nanometer to enhance your 16, if you have plans for that.

快速跟進一下，如果您計劃引入 12 奈米來增強 16 奈米，如果您有這樣的計劃。

And then the second question I had was on profitability. Margins are holding up quite well in the first quarter, where normally utilization drops, it should fall a few points. So if you could talk about the factors holding it up. And then as we move through the year, how the expectation from that level, factoring we're ramping 10 nanometer, if you expect margin to improve from that level.

我的第二個問題是關於獲利能力。第一季利潤率保持得相當好，而通常利用率會下降，因此利潤率應該會下降幾個點。那你能談談阻礙這一進程的因素嗎？然後，隨著我們度過這一年，考慮到我們正在提升 10 奈米，如果您預計利潤率將從該水平提高，那麼對該水平的預期如何。

So, Randy, your second question actually has two separate questions, so, yes. First part of your second question is with respect to 12 nanometer and second question of the second question is with respect to the margin profile over this year.

所以，蘭迪，你的第二個問題實際上是兩個獨立的問題，所以，是的。第二個問題的第一部分是關於 12 奈米的，第二個問題的第二部分是關於今年的利潤率概況。

First question is what?

第一個問題是什麼？

With 12 nanometers.

採用 12 奈米製程。

12 nanometers. I think that, C.C., will you answer the first question?

12奈米。我認為，C.C.，你會回答第一個問題嗎？

Let me answer the question. You're asking about the 12 nanometer on what?

讓我來回答這個問題。您問的是 12 奈米甚麼的？

Yes, if TSMC has a strategy or plan to introduce an in-between 12 nanometer to protect share on the FinFET for customers not going to 10 or 7?

是的，如果台積電有策略或計劃推出介於 12 奈米之間的技術，以保護不使用 10 奈米或 7 奈米技術的客戶的 FinFET 份額呢？

Okay. In fact, we -- our strategy is continuously to improve every node in the performance, such as 28 nanometer. And we continue to improving the 16 nanometers technology. And we have some very good progress, and you might call it the 12 nanometer because we're improving in the density, logic density, performance and power consumption. Yes, we have that.

好的。事實上，我們的策略是不斷提高每個節點的性能，例如 28 奈米。我們將繼續改進16奈米技術。我們取得了一些非常好的進展，你可以稱之為 12 奈米，因為我們在密度、邏輯密度、性能和功耗方面都有所提高。是的，我們有。

The second question is the profile of the gross --

第二個問題是總收入的概況—

Gross margin profile.

毛利率概況。

We -- I think it will be fairly constant. I think in the second half 10 nanometer, because the 10 nanometer will be ramping up very strongly in the second half, will start to ramp in the first quarter, but it will ramp very strongly in the second half. And the big volume, for the year, of 10 nanometer is going to be in the second half. And the 10 nanometer will drag down the corporate margin in the second half by about 2 points. Now if you take that into consideration, then I would say that our structural profitability will be maintained. And by that I mean something in the 50% range. But take into consideration that in the second half 10 nanometer will drag down the corporate margin, corporate average, by about 2 points. Yes.

我們——我認為它會相當穩定。我認為下半年 10 納米，因為 10 納米將在下半年強勁增長，將在第一季開始成長，但在下半年將成長非常強勁。今年 10 納米的大規模生產將在下半年進行。而10奈米則會拖累企業下半年利潤率約2個百分點。現在，如果考慮到這一點，那麼我想說我們的結構性盈利能力將得到維持。我的意思是大約在 50% 的範圍內。但要考慮到下半年10納米將拖累企業利潤率，也就是企業平均利潤率約2個百分點。是的。

Okay. Next question will be coming from UBS, Bill Lu.

好的。下一個問題來自瑞銀的 Bill Lu。

Bill. Yes.

帳單。是的。

Hi, thank you and happy new year. Dr. Chang gave us the outlook for the various end-markets in 2017. Can you talk about your outlook for the HPC market as well in 2017? Maybe units is not the right way, but just in terms of the opportunity for TSMC.

你好，謝謝你，新年快樂。張博士為我們介紹了2017年各個終端市場的展望。您能談談對 2017 年 HPC 市場的展望嗎？或許單位並不是正確的方法，但就台積電而言，這只是一個機會。

So our outlook for high-performance computing in 2017, what is going to be the growth outlook for HPC in this year.

那麼我們對 2017 年高效能運算的展望，以及今年 HPC 的成長前景如何。

Okay. The HPC, high-performance compute, let me define that first. It covers server, infrastructure networking, machine learning, gaming, AR and VR. We see some other AI products who surface but we cannot estimate it. It is just too early to estimate it.

好的。HPC，高效能運算，讓我先定義一下。它涵蓋伺服器、基礎設施網路、機器學習、遊戲、AR 和 VR。我們看到一些其他人工智慧產品的出現，但我們無法估計。現在估計還為時過早。

Of course, this year you have seen the gaming AR/VR product starting to ramp. And this is a very new growth area and we see double-digit growth in the beginning. By the way, we -- currently, we have a strong share in the networking infrastructure and gaming already. And it's those other areas is coming to the plate for TSMC. So you can see -- this year you see a before-the-threshold kind of growth and there is a double-digit growth only, mostly in the product development phase.

當然，今年你已經看到遊戲 AR/VR 產品開始蓬勃發展。這是一個非常新的成長領域，我們一開始就看到了兩位數的成長。順便說一句，目前，我們在網路基礎設施和遊戲領域已經佔有很大的份額。而這些其他領域也正在成為台積電的業務重點。所以你可以看到——今年你看到了一種超越門檻的成長，而且只有兩位數的成長，主要是在產品開發階段。

If I can sneak in a question, 1-B, if you look at the GPU, how do you categorize it? Maybe this is for Lora. Historically it's really for PCs, but going forward as it is used in autos and AI, are you going to put it in computers, for industrials, or how do you categorize that?

如果我可以偷偷提出一個問題，1-B，如果你看 GPU，你如何對它進行分類？也許這是給 Lora 的。從歷史上看，它確實用於個人電腦，但未來隨著它用於汽車和人工智慧，您會將它應用到電腦、工業領域嗎，或者您如何對其進行分類？

GPU for graphics, we put it in the PC. GPU for the server accelerator, we'll put in the HPC, high-performance computing.

GPU 用於圖形處理，我們把它放在 PC 中。GPU 用於伺服器加速器，我們將其投入 HPC，即高效能運算中。

My second question is on capital spending. 2016 was a little bit higher than expected. What's the outlook for CapEx in 2017?

我的第二個問題是關於資本支出。2016 年比預期略高一些。2017 年資本支出前景如何？

2017 CapEx will be about $10 billion.

2017 年資本支出約 100 億美元。

Next question will be coming from Morgan Stanley's Charlie Chan.

下一個問題來自摩根士丹利的 Charlie Chan。

Thanks for taking my question. My first question is regarding the advisory report to the US President last Friday, because in a report, the US seems want to ensure their semiconductor leadership, especially in leading-edge, so what will be TSMC's strategy to fit in this policy direction and ensure your own leadership? Thanks.

感謝您回答我的問題。我的第一個問題是關於上週五給美國總統的諮詢報告，因為在報告中，美國似乎想確保他們在半導體領域的領先地位，特別是在前沿領域，那麼台積電將採取什麼策略來適應這一政策方向並確保自己的領導地位？謝謝。

You are referring to the advisory, the working -- actually I think it's the working group. And that report was written to President Obama. And there'll be a new President in a few days. And whether any of that report will be adopted as policy by the new President is still unknown.

您指的是諮詢、工作——實際上我認為是工作小組。該報告是寫給歐巴馬總統的。幾天後就會有新總統上任。但新總統是否會採納該報告作為政策仍不得而知。

But having said all that, I will say that Mr. Trump, President-Elect Trump, has said many times that he wants to create jobs in the United States. And we highly applaud that. TSMC actually has created, we believe, hundreds of thousands of jobs in the United States in the last 20-30 years of our existence. We -- for all practical purposes, we have created an industry, the fabless industry, in the United States, and we have grown it, and the fabless industry, I believe, employs hundreds of thousands of people in the United States. And we have done that by being here ourselves. So I think that we'll continue to create more jobs in the United States by helping the fabless industry in the United States. And the IDMs, they use us, there are many IDMs in the United States that use us. And by using us, they have grown faster. And they create jobs too.

但說了這麼多，我想說，川普先生，當選總統川普，已經多次表示，他希望在美國創造就業機會。我們對此表示高度讚賞。我們相信，台積電在過去的20到30年裡實際上已經在美國創造了數十萬個就業機會。出於實際目的，我們在美國創造了一個產業，即無晶圓廠產業，並且我們已經發展了它，我相信，無晶圓廠產業在美國僱用了數十萬人。我們親自來到這裡，做到了這一點。因此我認為，透過幫助美國的無晶圓廠產業，我們將繼續在美國創造更多的就業機會。IDM 也使用我們的產品，美國有許多 IDM 都使用我們的產品。透過利用我們，他們發展得更快。而且它們也創造了就業機會。

So now I -- as to -- I mean that's -- actually, of course, Mr. Trump's main policy to create jobs and of course he has said a lot of things about other things, all right, and I don't want to comment on them right now. As far as that report is concerned, yes, in fact, I think the report was preceded by the Commerce Secretary in the United States, Penny -- will somebody help me? Penny --?

所以現在我——至於——我的意思是——實際上，當然，川普先生的主要政策是創造就業機會，當然他還談了很多其他事情，好吧，我現在不想對它們發表評論。就該報告而言，是的，事實上，我認為該報告之前由美國商務部長彭妮發布——有人能幫我嗎？彭妮——？

Pritzker.

普立茲克。

Yes. And I think that I agree with most of the things, but -- I agree with most of the things in the report, in fact, I agree with most of the things that Penny said, but let's keep in mind that that report was written to President Obama.

是的。我認為我同意其中的大部分內容，但是——我同意報告中的大部分內容，事實上，我同意彭妮所說的大部分內容，但請記住，該報告是寫給奧巴馬總統的。

And, you know, and actually, even if President Obama continues in office, I mean the chance of his adopting the recommendations of a presidential task force are not very high. I mean, we have history to guide us. In fact, just tell you an anecdote, in 2006 I met President Bush, then President of the United States, and at that time his, President Bush's, task force, advisory task force on Iraq, had just submitted a report basically recommended the US withdrawing from Iraq. And President Bush did not adopt the recommendation. He actually adopted the contrary, which was to increase his troops in Iraq. So I mean that's just an example that quickly came to my mind, when somebody talks about, ah, a report has been written. No.

而且，你知道，實際上，即使歐巴馬總統繼續任職，他採納總統工作小組建議的可能性也不高。我的意思是，我們有歷史來引導我們。事實上，我告訴你一個故事，2006年我見到了當時的美國總統布希，當時布希總統的伊拉克問題特別工作組剛提交了一份報告，基本上建議美國從伊拉克撤軍。而布希總統並沒有採納這項建議。他卻採取了相反的做法，那就是增加駐伊拉克的軍隊。所以我的意思是，這只是一個我很快想到的例子，當有人談論，啊，一份報告已經寫好了。不。

Thanks, Chairman. This is very insightful.

謝謝主席。這是非常有見地的。

So my next question is to Lora because it's a more maintenance financial question. So your first quarter gross margin guidance seems to be similar to your first quarter, but your revenue scale is down like almost 5%. So, why the gross margin is improving in first quarter? And can you give us guidance about depreciation as well?

所以我的下一個問題是問 Lora 的，因為這是一個關於維護財務的問題。因此，您的第一季毛利率預期似乎與第一季相似，但收入規模下降了近 5%。那麼，為什麼第一季的毛利率會提高呢？您能給我們提供有關折舊的指導嗎？

We still have pretty big volume on 16 nanometer, the profit's improving, and 28 nanometer still accounts for a big part of our revenue this year, with very good profit. And we continue to do the cost reduction, so we can maintain a pretty good margin despite of decline in revenue in the first quarter, that's the reason.

我們16奈米的產量仍然很大，利潤正在提高，28奈米今年仍占我們收入的很大一部分，利潤非常好。而且我們繼續削減成本，所以儘管第一季收入下降，我們仍能維持相當好的利潤率，這就是原因。

Your second question asked about depreciation for the whole year. Okay, with the $10 billion CapEx in 2017, which will be slightly frontend-loaded by the way, so the depreciation year over year we expect to grow about high teens this year versus last year.

您的第二個問題詢問的是全年折舊情況。好的，2017 年的資本支出為 100 億美元，順便說一下，這筆支出將略微屬於前期投入，因此我們預計今年的折舊額同比去年將增長 15% 左右。

In terms of first quarter, since last year's CapEx was very much back-end loaded, we expect a more than 10% depreciation increase quarter-over-quarter in the first quarter.

就第一季而言，由於去年的資本支出主要集中在後端，我們預計第一季折舊額將較上季成長 10% 以上。

Operator, please proceed with the first caller on the line.

接線員，請繼續與線路上的第一位來電者通話。

Certainly. The question comes from the line of Roland Shu of Citigroup. Please go ahead.

當然。這個問題來自花旗集團的 Roland Shu。請繼續。

Hi, good afternoon. Can you hear me?

嗨，下午好。你聽得到我嗎？

Yes, I can. We can.

是的，我可以。我們可以。

Okay. Thanks for taking my question. First question, I just would like to ask about recently there is a 12-inch wafer price hike. So, would like to ask, what's the impact to the overall gross margin and how long do you think this 12-inch wafer supply and demand imbalance will last? Thank you.

好的。感謝您回答我的問題。第一個問題，我想問一下最近12吋晶圓價格上漲的情況。那麼想問一下，這對整體毛利率有什麼影響，您認為這種12吋晶圓的供需失衡會持續多久？謝謝。

I think I will repeat Roland's question here. He's asking us about the recent raw wafer price increase. What's the impact of the raw wafer price increase on our gross margin and how long do we expect the supply/demand imbalance in the raw wafer supply to last?

我想我會在這裡重複羅蘭的問題。他向我們詢問最近原料晶圓價格上漲的情況。原始晶圓價格上漲對我們的毛利率有何影響？我們預計原始晶圓供應的供需失衡將持續多久？

Lora?

洛拉？

The reason for the wafer price increase is because the imbalanced supply/demand situation, so it's more demand than supplies, and manufacturer were trying to reduce the loss or make more profit. So we anticipate some increase in raw wafer price.

晶圓漲價的原因是因為供需失衡，需求大於供給，廠商為了減少虧損或賺取更多利潤。因此我們預計原始晶圓價格會有所上漲。

In terms of the impact to TSMC, for this year we expect impact will be about 0.2% of our gross margin. Not very big but it's not very small either.

就對台積電的影響而言，我們預計今年的影響將占我們毛利率的 0.2% 左右。不是很大，但也不是很小。

In terms of when the situation -- sorry?

就當時的情況而言——抱歉？

Yes, yes, sorry. Continue. Sorry. Yes.

是的，是的，對不起。繼續。對不起。是的。

Let me just answer very simply. I mean, we do buy a lot of things and we have a lot of price -- every year, every year, we have a lot of price increases, and we have also a lot of price reductions from our vendors. And what we do, and I think we do it well, is to try to improve in the past five, six, seven years, improve our structural profitability to the present point. And what we're going to do from now on is at least to maintain that level of structural profitability. And to manage that requires taking a lot of things into account, including, you know, price increase there, price reduction there, cost reduction here, cost reduction there, et cetera, et cetera.

讓我非常簡單地回答一下。我的意思是，我們確實購買了很多東西，而且價格也有很多變化——每年，每年，我們的價格都會大幅上漲，而我們的供應商也會大幅降價。我們所做的，而且我認為我們做得很好的，就是努力在過去五、六、七年內不斷改進，將我們的結構性盈利能力提高到目前的水平。而從現在開始我們要做的至少就是維持這種結構性獲利水準。要做到這一點，需要考慮很多因素，包括那裡的價格上漲、那裡的價格下降、這裡的成本降低、那裡的成本降低等等。

Understood, yes. I know there is very limited impact to TSMC. Okay, thank you.

明白了，是的。我知道這對台積電的影響非常有限。好的，謝謝。

My second question is, your 8-inch revenue declined by double-digits year-on-year last year, despite overall revenue increased by 11% in US dollars last year. So, I would like to ask, where did this 8-inch weakness come from? And how does it look for this year?

我的第二個問題是，儘管去年你們的整體收入以美元計算成長了11%，但8吋收入卻比去年同期下降了兩位數。那我想問一下，這個8吋的弱點是從哪裡來的呢？今年的情況如何？

So, Roland is asking, last year, 2016, our overall revenue go up by 11% but our 8-inch wafer revenue declined double-digits. What causes such weaknesses? Secondly, what do you think this year is going to happen, whether or not our 8-inch weakness will persist to this year?

因此，羅蘭問道，去年，也就是2016年，我們的整體營收成長了11％，但我們的8吋晶圓收入卻下降了兩位數。是什麼原因造成這樣的弱點？其次，您認為今年會發生什麼，我們的 8 英寸弱點是否會持續到今年？

Yes, thank you.

是的，謝謝。

C.C., will you --

C.C.，你願意——

Okay. Last year, our 8-inch wafer business decreased close to double-digit, mainly because of a lot of products moving into 12-inch wafer. One of the examples is the fingerprint sensor; we have customers moving from 8-inch wafer to 12-inch wafer. And so this kind of a trend will continue. We expect this year will still decrease slightly, but then we have also do a lot of activities to increase our applications in the 8-inch wafer technology, so the decreasing will be much more minimized as compared with last year.

好的。去年我們的8吋晶圓業務下降了近兩位數，主要是因為許多產品轉向12吋晶圓。其中一個例子就是指紋感應器；我們的客戶從 8 吋晶圓轉向 12 吋晶圓。這種趨勢將會持續下去。我們預計今年仍會略有下降，但是我們也做了很多活動來增加我們在8英寸晶圓技術方面的應用，因此與去年相比，下降幅度會小得多。

Okay. So, can we expect the utilization for 8-inch will be much lower than previous, this year?

好的。那麼，我們是否可以預期今年 8 吋的使用率會比往年低很多？

The utilization will be closely the same or a little bit above as compared with the last year.

與去年相比，利用率將基本持平或略有上升。

Okay, understood. Okay, thank you.

好的，明白了。好的，謝謝。

All right, let's have the next caller on the line please.

好的，請接聽下一位來電。

Next question is from the line of Brett Simpson from Arete. Please go ahead.

下一個問題來自 Arete 的 Brett Simpson。請繼續。

Thanks very much. Dr. Chang, you mentioned 10 nanometer and 7 nanometer was clear sky from a competitive perspective. Just interested, if you look at peak capacity for 7 nanometer in wafer terms, will this be a bigger node for TSMC than 28 nanometer? Thank you.

非常感謝。張博士，您提到從競爭角度來看，10奈米和7奈米是一片光明。只是有興趣，如果從晶圓的角度來看待 7 奈米的峰值容量，這對台積電來說是否是一個比 28 奈米更大的節點？謝謝。

Brett, let me see if I get your question correct. You're asking us whether or not 10 nanometer and 7 nanometer will be bigger than 28 nanometer eventually, is that your question?

布雷特，讓我看看我是否正確理解了你的問題。您問我們 10 奈米和 7 奈米最終是否會大於 28 奈米，這是您的問題嗎？

In wafer terms, yes.

從晶圓角度來說，是的。

In wafer counts.

以晶圓數量計算。

Yes.

是的。

In business, in revenue, as well as in wafer counts, you are asking too much. We'll only answer one of the two, yes.

無論從業務、收入或晶圓數量來看，你的要求都太高了。我們只會回答其中一個，是的。

Only wafer terms.

僅限晶圓條款。

Only wafer counts, okay.

僅計算晶圓，好的。

Of 10 and 7, is that right?

10 和 7，對嗎？

10 and 7 wafer count will be slightly less than 28, slightly.

10和7的晶圓數量會比28稍微少一點。

Okay, that's helpful.

好的，這很有幫助。

But the revenue will be much bigger. Revenue will be much bigger.

但收入將會大得多。收入將會更大。

Thank you. And just a follow-up, with regards to HPC, we're seeing a lot of specialty memory, high-bandwidth memory, increasingly being packaged with your CoWoS. Does TSMC have any interest in developing stacked memories for HPC? Thank you.

謝謝。接下來，關於 HPC，我們看到很多專用記憶體、高頻寬記憶體越來越多地與 CoWoS 一起打包。台積電有興趣開發用於 HPC 的堆疊記憶體嗎？謝謝。

Okay. Will TSMC be interested in developing specialty memory such as the high-bandwidth memory ourselves to satisfy our business in CoWoS?

好的。台積電是否有興趣自行開發高頻寬記憶體等專用記憶體，以滿足我們在 CoWoS 的業務需求？

Well, we don't produce the special memory per se by TSMC but we are working with memory companies to provide the service and the HBM.

嗯，我們本身並不生產台積電的特殊記憶體，但我們正在與記憶體公司合作提供服務和 HBM。

And does TSMC expect -- yes -- would TSMC be interested in developing its own memories for HPC long term?

台積電是否預計——是的——台積電是否有興趣長期開發自己的用於 HPC 的記憶體？

No.

不。

Okay. Thanks very much.

好的。非常感謝。

All right. Let's come back to the floor. Next question will be coming from Goldman Sachs, Donald Lu.

好的。讓我們回到正題。下一個問題來自高盛的唐納德·陸。

(Spoken in foreign language). Very nice to see you, Chairman.

（用外語說）。很高興見到您，主席。

One question is on the demand outlook for next year. It seems like everything except the smartphone is declining, and smartphone is increasing only 6%. How do you get to 4% semi growth? Is the smartphone content going to increase?

一個問題是關於明年的需求前景。似乎除了智慧型手機之外的所有東西都在下降，而智慧型手機僅成長了 6%。如何實現4%的半成長？智慧型手機內容會增加嗎？

How do I get --?

我如何獲得--？

Right. Chairman says semiconductor growth is 4%. So, Donald's saying that smartphone is 6% --

正確的。董事長稱半導體成長率為4%。所以，唐納德說智慧型手機佔 6%——

Yes, and also smartphone mix is going to the low end, as well, so.

是的，而且智慧型手機組合也將走向低階。

That's a tough question, Donald. I'm trying to -- I mean, these numbers are all compiled by our own forecaster, and again he tells me what other forecasters are saying, and it seems that all of them are saying about 4%, 3%, 4%, or even more, 5%. Now you're asking, well, where do they come from?

這是一個很難回答的問題，唐納德。我試著——我的意思是，這些數字都是由我們自己的預測員彙編的，他又告訴我其他預測員的說法，似乎他們都說是 4%、3%、4%，甚至更高，5%。現在你會問，它們來自哪裡？

Mark says silicon content. Answer the question loudly please.

馬克說的是矽含量。請大聲回答問題。

You're right, the silicon content of smartphone will increase from 2016 to 2017.

你說得對，從2016年到2017年，智慧型手機的矽含量將會增加。

So, even the mix is going more to the low end --

因此，即使混合也更加偏向低端——

Even mix. We see the silicon content for all tiers increases, and the low end increases more. But overall the silicon content will increase high single-digit next year.

均勻混合。我們看到所有層級的矽含量都在增加，低端增加得更多。但整體而言，明年矽含量將增加高個位數。

I see. Great. Yes, we are making our forecast based on your forecast, so it's good to know why.

我懂了。偉大的。是的，我們是根據您的預測做出預測的，所以知道原因會很好。

My second question is more on the AI, although I, like Mark commented, with early stage, but it's pretty hot. So, how should we look at the opportunity for TSMC for AI? I mean, there's a big -- the server side, building the model, there's also the premise on the handset or PC. Which market will be bigger and how should we predict it in the future for TSMC? Is there any thoughts on that?

我的第二個問題是關於人工智慧的，雖然我和馬克評論的那樣，還處於早期階段，但它相當熱門。那麼，我們該如何看待台積電在AI方面的機會呢？我的意思是，伺服器端有一個很大的模型，還有手機或個人電腦上的前提。哪個市場會更大？對於台積電來說，未來我們該如何預測？對此有什麼想法嗎？

We will see -- we do see a lot of opportunity in, you know, we have four growth platforms. The first one is mobile, the smartphones. The second one is high-speed computing. The third one is IOT. The fourth one is automotive. And we do see a lot of opportunities for artificial intelligence in all those three platforms now. Perhaps Mark, will you care about -- will you care to say some more about the high performance computing and perhaps C.C. will say something more about IOT and automotive? Yes.

我們會看到——我們確實看到了很多機會，你知道，我們有四個成長平台。第一個是行動設備，即智慧型手機。第二個是高速運算。第三個是物聯網。第四個是汽車。現在我們確實看到這三個平台上人工智慧有很多機會。也許馬克，你願意多談談高效能運算嗎？也許 C.C.能否多談談物聯網和汽車？是的。

I think AI is coming as a killer application for the industry and people are excited. And one of the reason is there is a tremendous progress in the algorithms that makes the machine can do much more than traditional programming -- programmable machine. This is the machine can think and do things.

我認為人工智慧將成為業界的殺手級應用，人們對此感到興奮。原因之一是演算法取得了巨大進步，使得機器能夠完成比傳統程式設計（可程式機器）更多的事情。這就是機器能夠思考和做事。

So for the application side it's immense, as many of you must have read on these growing opportunities. All the cloud providers are in this field.

因此，對於應用程式方面來說，它是巨大的，正如你們許多人一定已經讀到的這些不斷增長的機會。所有的雲端提供者都在這個領域。

Now, in AI, for us, I think it's also an important opportunity for us. Let me just talk about the computing side of AI. AI needs deep learning and collecting a lot of data, therefore it requires very massive computation. And in the past years our technology development is collecting our pace and we now can provide the world's most competitive technology for those artificial intelligence computing purposes. That's number one. So the people who can get into this field is across the industry, using our technologies.

現在，在人工智慧方面，對我們來說，我認為這也是我們的一個重要機會。我僅談論人工智慧的計算方面。人工智慧需要深度學習和收集大量數據，因此需要非常龐大的運算量。在過去的幾年裡，我們的技術發展步伐不斷加快，現在我們可以為人工智慧運算領域提供世界上最具競爭力的技術。這是第一點。因此，能夠進入這個領域的人來自各個行業，並使用我們的技術。

Secondly is this AI is -- this application is new, so the all the algorithm or the architecture, they are all new. So the computing -- so the -- hello?

其次，這個人工智慧——這個應用是新的，所以所有的演算法或架構都是新的。那麼計算——那麼——你好？

You're on.

你上線了。

Okay. So the -- basically it's the playing field is leveled. It's not as before, where the high component is computing. It has to be a certain architecture to get into this field. This is a levelling playing field, so many players are into this field. That is where the massive innovation can come. So we are very excited. Also because of this we see the application will include many segments.

好的。所以 — — 基本上，競爭環境是公平的。它不再像以前那樣，高端部分是計算。要進入這個領域必須有一定的架構。這是一個公平的競爭環境，因此許多玩家都進入了這個領域。這就是大規模創新的發生之地。所以我們非常興奮。也因為如此，我們看到該應用程式將包含許多部分。

So we develop this advanced packaging, and that is an area that requires the AI application. And that area is also we spent several years getting to this and now already come to the fruit that be it InFO or the CoWoS and there'll be multiple generations of that advanced packaging.

因此，我們開發了這種先進的封裝，這是一個需要人工智慧應用的領域。我們也在該領域花費了數年時間，現在已經取得了成果，無論是 InFO 還是 CoWoS，而這種先進封裝也將有多代產品。

So, from the technology side, we are prepared to embrace this -- many people call it explosive growth.

因此，從技術方面來看，我們已經準備好迎接這一點——許多人稱之為爆炸性增長。

Mark, leave some time for C.C. too.

馬克，留點時間給 C.C.也。

(Multiple speakers) the AI.

（多位發言者）人工智慧。

Yes, but there's no -- I think there's a lot of growth opportunities for IOT and automotive too.

是的，但我認為物聯網和汽車也有很多成長機會。

Well --

出色地 -

In connection with AI as well.

也與人工智慧有關。

In connection with the AI, I think we need to have a lot of sensor connectivity. You know that right -- constituted a big -- all the data format and connect with that AI so they can do a lot of applications.

關於人工智慧，我認為我們需要大量的感測器連接。您知道嗎——構成了一個龐大的——所有數據格式並與人工智慧連接，以便它們可以做很多應用程式。

So we do believe that in the future that IOT, which is the data for our sensor connectivity, put all of them together and combine with other high speed -- high performance computing, and then form the fundamental basis of that there, of the AI. That's -- and we do expect the IOT periods to grow very fast, because of the -- in the future you will see a lot of applications, even the autonomous driving -- you need to look at all the background, all the environment surrounding a car. And also the car has to communicate with the cars together, so everything.

因此，我們確實相信，未來物聯網（即我們感測器連接的數據）將把所有數據整合在一起，並與其他高速高效能運算相結合，然後形成人工智慧的基本基礎。那是——我們確實預期物聯網時代會發展得非常快，因為——未來你會看到很多應用，甚至是自動駕駛——你需要查看所有的背景，汽車周圍的所有環境。而且汽車必須與其他汽車進行通信，一切皆是如此。

We protect the future in that the whole world, you will see a lot of connectivity, a lot of sensors. And that's where we constituted our IOT business.

我們保護未來，因為在整個世界，你會看到很多的連接，很多的感測器。這就是我們建立物聯網業務的地方。

Okay, the next question will be coming from Daiwa's Rick Hsu.

好的，下一個問題來自 Daiwa 的 Rick Hsu。

Hi. Happy new year, Dr. Chang and all. I guess my first question goes back the -- your second quarter and third quarter business outlook. I think, despite a weak Q1 revenue, Mr. Chairman was talking about your second quarter revenue and Q3 revenue will grow significantly. And you also mentioned about your 10-nanometer ramp up would be also meaningful in these two quarters.

你好。祝張博士和大家新年快樂。我想我的第一個問題是關於—您的第二季和第三季的業務展望。我認為，儘管第一季收入疲軟，但主席先生談到第二季收入，第三季營收將大幅成長。您也提到，10 奈米產能提昇在這兩個季度也將具有重要意義。

What's that main demand driver behind that growth momentum in terms of applications? Would that be just coming from mobile? Or across the board of mobile, professional gaming and et cetera?

從應用角度來看，這種成長動能背後的主要需求驅動力是什麼？那隻是來自行動裝置嗎？還是涉及行動、專業遊戲等領域？

Just repeat the question.

只需重複該問題即可。

Yes. It's, Rick, your question is what's the growth driver for our second quarter and third quarter business, is it only from mobile, or from other areas?

是的。里克，你的問題是，我們第二季和第三季業務的成長動力是什麼，僅來自行動領域，還是來自其他領域？

Well, actually, the simplest answer to your question is growth drivers are always customers' demand, you know. And -- but I will elaborate. I think we are more -- we do have more concentrated customers today than we did several years ago. So those particular customers' demand fluctuation impacts our seasonal -- I mean, our quarterly fluctuations a great deal -- a great deal. And so, seasonality, to us, doesn't mean very much any more. Every year's seasonality is different from the next year's or last year's.

嗯，實際上，對你的問題最簡單的回答是，成長動力始終是客戶的需求。而且——但我會詳細說明。我認為我們現在擁有比幾年前更集中的客戶群。因此，這些特定客戶的需求波動會對我們的季節性影響——我的意思是，我們的季度波動很大——很大。因此，對我們來說，季節性不再具有太大的意義。每年的季節性都與下一年或去年不同。

Last year we had a pretty low first quarter and a pretty strong second quarter. And then the third and fourth quarters were even stronger. Yes, I think, right? And this year, at least at this point, we see a somewhat different pattern. So, yes, it was -- it's customer demand. And of course, technology plays a part. 10 nanometers ramp-up.

去年第一季的業績表現較差，但第二季的業績表現強勁。第三節和第四節表現更加強勁。是的，我想，對吧？而今年，至少目前，我們看到了略有不同的模式。是的，這是客戶需求。當然，技術也發揮了一定作用。10 奈米加速。

Thank you so much. That's clear. The second question probably goes to Lora or maybe to Mr. Chairman as well. Can you give us more insight or color of your cash dividend this year? Any kind of ballpark number?

太感謝了。這很清楚。第二個問題可能是問 Lora 的，也可能是問主席先生的。您能否向我們詳細介紹今年的現金股利？有大概的數字嗎？

What was the question?

問題是什麼？

He wants to know additional color on this year's dividends per share.

他想了解今年每股股息的更多詳情。

Lora?

洛拉？

Okay. I have a short answer. We will increase cash dividends in 2017. Magnitude? I prefer to wait for the board meeting in February. You're going to know by then.

好的。我有一個簡短的回答。2017年我們將增加現金分紅。震級？我更願意等到二月的董事會。到那時你就會知道了。

Thank you so much.

太感謝了。

You won't have long to wait. I mean, February is something like -- I don't remember the exact date of the Board meeting.

您不必等待太久。我的意思是，二月大概是──我不記得董事會會議的具體日期。

February 14.

2月14日。

Yes.

是的。

This February.

今年二月。

Eighth and ninth. Well, I think, yes, I'll pause. The final decision is made by the annual shareholders' meeting and that's in June. The Board's recommendation on the dividend will be announced to the public after the Board meeting.

第八和第九。嗯，我想，是的，我會暫停一下。最終決定由六月的年度股東大會做出。董事會關於股利的建議將在董事會會議後向公眾公佈。

Thank you.

謝謝。

All right. Next question will be coming from HSBC, Steven Pelayo.

好的。下一個問題來自匯豐銀行的史蒂文‧佩拉約 (Steven Pelayo)。

Great. Thank you. The segments that you report to us, communications, consumer, computing and other, are helpful, but now two-thirds of your business is coming from computing, so we can't really divine a lot from that. We're all excited about automotive and AI and high performance computing, IOT. If we want to use those as the segments, what percentage of revenues does TSMC get from each of those categorizations today?

偉大的。謝謝。您向我們報告的通訊、消費者、計算和其他部分很有幫助，但現在您三分之二的業務來自計算，因此我們無法從中推斷出很多資訊。我們都對汽車、人工智慧、高效能運算和物聯網感到興奮。如果我們想用這些作為細分市場，那麼台積電目前從每個類別中獲得的收入佔比是多少？

(Inaudible).

（聽不清楚）。

For last year, roughly with the mobile, it's 55%, 56% and high performance computing, for the definition I just said, it's about 15%, roughly. And PC is not a growing sector, but is about 10%. And then IOT and automotive, both of them are less than 10%.

就去年而言，行動領域大概佔 55%、56%，而高效能運算，依照我剛才的定義，大概佔 15%。而個人電腦並不是成長產業，但成長率約 10%。然後是物聯網和汽車，兩者的比例都低於 10%。

Okay. Maybe a question for Lora. I'm very impressed with your gross margins in the first quarter, potentially going up, even on down maybe 10% in revenues. Could you talk a little bit about the nodes and the utilization rates, maybe, in the first quarter? Is 16-nanometer falling off significantly, yet you're making up the margin elsewhere? Help us understand maybe what's driving the margins in the first quarter, if we looked at each of the individual nodes and how they're going to perform?

好的。這可能是對 Lora 的一個問題。我對你們第一季的毛利率印象深刻，即使收入下降了 10%，毛利率仍有可能上升。您能否談談第一季的節點和利用率？16 奈米製程的下降幅度是否顯著，但你們卻在其他地方彌補差距？如果我們查看每個單獨的節點以及它們的表現，能否幫助我們了解第一季利潤率的推動因素？

The 16-nanometer is not falling off. I just said I wish our market share were higher, okay. It's not falling off.

16奈米並未落下。我只是說我希望我們的市場份額更高，好吧。它沒有掉下來。

So 16-nanometer will be flat, sequentially?

那麼 16 奈米將會逐漸趨於平穩嗎？

I'm sorry. Other than 16-nanometer not falling off, I didn't hear the question.

對不起。除了 16 奈米沒有脫落之外，我沒有聽到任何問題。

Steven, actually you are asking a product mix thing, right? It's -- there's more than product mix. Actually, it's improving profitability in each technology node, particularly 16-nanometer, and we have a very significant amount of revenue coming from 16-nanometer in the first quarter. And the 28-nanometer continued to be a very strong node.

史蒂文，實際上你問的是產品組合問題，對嗎？這不僅僅是產品組合。實際上，每個技術節點的獲利能力都在提高，尤其是 16 奈米，我們第一季的很大一部分收入來自 16 奈米。28 奈米仍然是一個非常強大的節點。

Those two nodes actually supported our first quarter margin pretty well, despite of lesser revenue growth or declined revenue growth. That was the main reason. And the past the -- as I said earlier -- continual cost improvement efforts in operation side, that also helps.

儘管收入成長較少或下降，但這兩個節點實際上很好地支撐了我們第一季的利潤率。這是主要原因。正如我之前所說，過去在營運方面持續進行的成本改進努力也有幫助。

Just a follow-up there. If you look at your full year gross margins, 2016, about 50% or so, you're suggesting maybe even as much as 53% or higher in the first quarter. Are TSMC's structural gross margins maybe higher this year that we can maybe look for a couple of hundred basis points' growth for full year 2017 gross margins?

這只是後續行動。如果你看一下 2016 年全年的毛利率，大約是 50% 左右，那麼第一季的毛利率甚至可能達到 53% 或更高。台積電今年的結構性毛利率是否會更高，以至於我們可以預期 2017 年全年毛利率將增加數百個基點？

What was the question?

問題是什麼？

All right, Steven, if I understand your logic, this question is, given 50% growth margin for TSMC for the full year, and 10-nanometer will take two points away from our margins in the second half, then that means first half our gross margin will be very good, to get the 50% average, and so --

好的，史蒂文，如果我理解你的邏輯，這個問題是，假設台積電全年的增長幅度為 50%，而 10 納米將在下半年從我們的利潤率中扣除兩個點，那麼這意味著上半年我們的毛利率將非常好，達到 50% 的平均值，所以——

Well, look. Let's not take all the numbers I say literally. I mean, when I said -- I mean, we do have a narrow range. It's not -- the range is not zero. When I say that we want to keep our structural profitability at about close to 50%, I mean, at least give me one or two points leeway, okay? It's not exact figures. Give me one or two points leeway. Yes. So it's like 49%, 50%, yes.

嗯，你看一下。我們不要從字面上理解我所說的所有數字。我的意思是，當我說——我的意思是，我們的範圍確實很窄。不是——範圍不為零。當我說我們希望將結構性盈利能力保持在接近 50% 左右時，我的意思是，至少給我一到兩個百分點的餘地，好嗎？這不是確切的數字。給我一、兩分的餘地。是的。所以大概是 49%、50%，是的。

We really can't even forecast the next quarter's gross margin that closely. We always have a range whether two or three points.

我們甚至無法如此精準地預測下一季的毛利率。我們總是有一個範圍，無論是兩分還是三分。

Yes, I mean, two or three points. We cannot be that precise.

是的，我的意思是兩三點。我們無法做到那麼精確。

But I think Steven's main question is, do we increase our structural profitability this year?

但我認為史蒂文的主要問題是，我們今年是否提高了結構性獲利能力？

Oh. Well, I think that most of that -- most of the improvement has already happened. It has already happened. If you look back six or seven years, we have improved it by several hundred basis points in the -- and that was not easy at all. That was not easy. And I think that I will say most of the improvement has already occurred, so from this point on, our priority is to maintain it.

哦。嗯，我認為大部分——大部分的改進已經發生了。這已經發生了。如果回顧過去六、七年，我們已經將其提高了幾百個基點——這並不容易。這並不容易。我認為大部分改進已經發生，所以從現在開始，我們的首要任務是保持這種改進。

If I could just sneak one more quick one in. When do you think 10-nanometers will be more than 10% of revenues? Which quarter of this year?

如果我能再偷偷地快速進去一個就好了。您認為什麼時候 10 奈米技術的營收佔比會超過 10%？今年哪個季度？

Which quarter 10-nanometer will exceed 10%.

哪個季度10奈米將超過10%。

Do we answer questions like that?

我們會回答這樣的問題嗎？

Sometimes in the second half of this year, yes.

是的，今年下半年有時會發生。

Well, if we answer questions like that I think it will be Lora. I mean, you don't have to answer.

好吧，如果我們回答這樣的問題，我認為答案會是 Lora。我的意思是，你不必回答。

The big volume comes on the second half. So, the whole year will be more than 10%.

大音量出現在下半場。所以，全年都會是10%以上。

Well, his question is when does it exceed the 10%, I think.

嗯，我認為他的問題是什麼時候超過 10%。

Third quarter.

第三季。

Really?

真的嗎？

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

好的，下一個問題來自里昂信貸公司的 Sebastian Hou。

Thank you, Dr. -- so Chairman and the two CEOs --

謝謝您，博士——主席和兩位首席執行官——

Careful now. He means margin. He doesn't mean gross margin.

現在要小心了。他的意思是保證金。他指的不是毛利率。

Yes, revenue.

是的，收入。

Revenue. Yes. Okay, good. Just wanted to be sure that Lora understood the question. Yes.

收入。是的。好的，很好。只是想確保 Lora 理解了這個問題。是的。

Thank you. So my first question is on the assumption of the growth rate that Chairman already mentioned about smartphone unit growth this year you expect 6%. And Mark mentioned about the silicon (multiple speakers).

謝謝。因此，我的第一個問題是，主席已經提到的成長率假設是，您預計今年智慧型手機銷售成長率為 6%。馬克提到了矽片（多個揚聲器）。

What did you say? I'm sorry, what did you say?

你說什麼？對不起，你說什麼？

The growth rate. Smartphone, Chairman mentioned units.

增長率。智慧型手機，主席提到單位。

Oh, smartphone? Okay.

哦，智慧型手機？好的。

Yes, 6% and silicon counters grow about high single-digit, per Mark, which means we're growing about 13%, 14%. And given that mobile account for 55% to 60% of the total revenue this year, which means smartphone alone, or mobile device alone, it contributes 7% to 8% of the growth of this year, whilst the growth in high performance computing and -- double-digit growth -- and also IOT growth, of 34% the whole market, which means -- seems like easily to reach the high end of the growth, even close to 10% for this year. I'm not sure if my assumption is right, or too bullish?

是的，6%，矽計數器的成長速度大約是高個位數，按照馬克的計算，這意味著我們的成長率約為 13% 到 14%。鑑於行動市場佔今年總收入的 55% 至 60%，這意味著僅智慧型手機或行動裝置一項，就貢獻了今年 7% 至 8% 的增長，而高效能運算的成長和兩位數的成長，以及物聯網的成長，佔整個市場的 34%，這意味著，似乎很容易達到成長的高端，甚至接近今年的 10%。我不確定我的假設是否正確，或過於樂觀？

Assumption is right, calculation may not be. The -- yes, I think that most of the growth this year will be -- come from smartphone. 80% of that. And that's because IOT and automotive are small. They do have a -- looking to 20% to 30% growth for those growth areas, but contribute to the whole company is still very small. So to compose the rest of it. So I think -- I don't calculate any up to that number. I think it's still in line about 7%, between 5% to 10% probably in the middle. That's my calculation.

假設是正確的，但計算可能不正確。是的，我認為今年的大部分成長將來自智慧型手機。其中80%。這是因為物聯網和汽車規模較小。他們確實希望這些成長領域能達到 20% 到 30% 的成長，但對整個公司的貢獻仍然很小。就這樣創作出剩下的部分。所以我認為——我沒有計算出任何達到這個數字的東西。我認為它仍然在7%左右，可能在5%到10%之間。這就是我的計算。

Okay, thank you. And my second question is on the President-Elect Donald Trump in the United States, that his policy is to create more job, and thank you, Chairman, for mentioning about how TSMC has helped create more jobs indirectly in the United States. But I'm wondering if you have already got some pressure from your customers in the US that maybe when they do the calculation factoring the tax incentives that they think that maybe having manufacturing back in the US will be more -- can help them to improve their profit? I'm not sure. So I'm just wondering whether you think about or ever consider building a fab in the US, and under what kind of the scenario and circumstances?

好的，謝謝。我的第二個問題是關於美國當選總統川普，他的政策是創造更多的就業機會，謝謝主席提到台積電如何間接幫助美國創造更多的就業機會。但我想知道，您是否已經感受到來自美國客戶的壓力，也許當他們計算稅收優惠因素時，他們認為將製造業帶回美國會更有助於他們提高利潤？我不知道。所以我只是想知道您是否考慮過或曾經考慮過在美國建造一座工廠，以及在什麼樣的情景和環境下？

Sebastian, your question is whether or not we have pressure from US-based customers wanting us to build a manufacturing site in the US so that they can capture --

塞巴斯蒂安，你的問題是，我們是否受到來自美國客戶的壓力，他們希望我們在美國建立一個生產基地，以便他們能夠——

No.

不。

-- incentive?

- 激勵？

No. Okay. My -- sorry, my second part of that question is under what scenario and circumstances will TSMC consider building a fab in US?

不。好的。抱歉，我的問題的第二部分是，在什麼情況下台積電會考慮在美國建造晶圓廠？

Will we ever consider going there and build a fab in --

我們是否會考慮去那裡建造一座晶圓廠？

I do not rule it out.

我不排除這種可能性。

Okay. Thank you.

好的。謝謝。

I do not rule it out, but I see a lot of sacrifices that we and our customers will have to make if we do that. Keep in mind that we earned our business in the United States, not by lower labor costs in Taiwan. In fact, on the whole, our labor costs in Taiwan -- our labor costs in Taiwan are not lower than the United States.

我並不排除這種可能性，但如果我們這樣做，我認為我們和我們的客戶將不得不做出很多犧牲。請記住，我們的業務是在美國獲得的，而不是靠台灣較低的勞動成本獲得的。其實從整體來看，我們台灣的勞動成本——我們台灣的勞動成本並不比美國低。

Now, we earn our business by being good. Let's give you an example. Every year we send thousands of engineers from one location to another, and we have three locations in Taiwan, Taichung, Hsinchu and Tainan. Now Taichung and Hsinchu are within daily commuting distance. Tainan -- and you can even make a point that Tainan and Hsinchu and Tainan and Taichung are within daily commuting distance also. It's a little hard but I know of people in New York, Manhattan, I know people that commute an hour-and-a-half, two hours each way every day. If you are willing to do that you can certainly commute between Tainan and Taichung or Tainan and Hsinchu also.

現在，我們透過良好的行為贏得業務。讓我們舉個例子。我們每年都會派遣數千名工程師從一個地方到另一個地方，我們在台灣有三個地點，台中、新竹和台南。現在台​​中和新竹已在每日通勤距離之內。台南－你甚至可以指出台南和新竹以及台南和台中也在每日通勤距離之內。這有點難，但我知道紐約、曼哈頓的人們，他們每天單程通勤時間要一個半小時​​、兩個小時。如果您願意的話，當然也可以往返於台南和台中或台南和新竹之間。

Now, backing up a few steps, you don't want to do that, it takes too long. It's still within weekly commuting distance. So every year we send literally over a thousand, 2000 engineers from one location to another who'll be there for months and that allows us to ramp up things quickly and to solve problems quickly also where one location, one fab has got a problem then another fab -- engineers from another fab can go ahead and help them. Literally thousands, thousands of engineers do that every year. Now if we have a plant in the US we won't be able to do that anymore.

現在，後退幾步，你不想這樣做，因為這花費的時間太長了。它仍然在每週通勤距離內。因此，每年我們都會派遣超過一千到兩千名工程師從一個地方到另一個地方，他們會在那裡待幾個月，這使我們能夠快速提高產量并快速解決問題，當一個地方、一個工廠出現問題時，另一個工廠的工程師可以前往幫助他們。每年都有成千上萬的工程師這樣做。現在，如果我們在美國有工廠，我們就不能再這樣做了。

Second point, we have thousands of vendor people here. Actually they're already in Hsinchu -- already in Hsinchu, Tainan and some in Taichung also. Thousands of engineers from our partners located here. These are things that are not low labor cost. These are things that we're going to lose if we set up a plant in the US. If we lose these things our customers will lose too.

第二點，我們這裡有數千名供應商。實際上他們已經在新竹了——已經在新竹、台南了，還有一些在台中。我們的合作夥伴有數千名工程師駐紮在這裡。這些都不是低勞動成本的事情。如果我們在美國建廠，我們就會失去這些東西。如果我們失去這些東西，我們的客戶也會失去。

Yes, I don't rule it out and actually I would never rule that out but year after year time and again we consider the subject and we have not made the decision to go there. Except of course early in our life we did set up WaferTech in the United -- and it's still going. It has between 1500 employees -- about 1500 employees. It's still going but other than that -- and that was set up in 1996. After that we consider the question every so often and we have not made the decision to set up a plant in the United States.

是的，我不排除這種可能性，事實上我永遠不會排除這種可能性，但是年復一年，我們一次又一次地考慮這個問題，但我們還沒有做出去那裡的決定。當然，在我們生命的早期，我們確實在美國成立了 WaferTech——而且它現在還在運作。它擁有大約 1500 名員工。現在它仍在運行，但除此之外 —— 它是 1996 年成立的。此後我們時常考慮這個問題，但一直沒有做出在美國建廠的決定。

Okay, with that we need to go back to the line. Operator, can you please have the next caller on the line?

好的，我們需要回到正題。接線生，請您讓下一位來電者接通嗎？

Certainly. The next question is from the line of Mehdi Hosseini from SIG. Please go ahead.

當然。下一個問題來自 SIG 的 Mehdi Hosseini。請繼續。

Yes, thanks for taking my question and Dr. Chang, good to hear your voice on the call. I have a question on the 10 nanometer. If your 16 nanometer market share is about 65%, what is your view on your market share when you migrate to 10 nanometer? And I have a follow up.

是的，感謝您回答我的問題，張博士，很高興在電話中聽到您的聲音。我對 10 奈米有一個疑問。如果您的 16 奈米市場份額約為 65%，那麼當您遷移到 10 奈米時，您對自己的市場份額有何看法？我還有一個後續行動。

Well, our market share in 10-nanometer. I think I vowed about once -- must have been a year ago because I was here last time a year ago -- I vowed then that every new node from now on we have a market share higher than our market share on 16.

嗯，我們在 10 奈米的市佔率。我想我曾經發誓——一定是一年前，因為我上次來這裡是一年前——我當時發誓，從現在開始，每個新節點的市​​場份額都要高於我們在 16 號節點的市場份額。

Okay, so more than 65%, is that your answer?

好的，超過 65%，這是您的答案嗎？

What?

什麼？

Would that be above 65%?

這會超過 65% 嗎？

Very definitely. Very definitely.

非常肯定。非常肯定。

Okay. Then when we look into 7 nanometer and some of your competitors have a different definition of 7. Can you help us understand how your N7, compete and is positioned against your competitors?

好的。那麼，當我們研究 7 奈米時，您的一些競爭對手對 7 有不同的定義。您能幫助我們了解您的 N7 如何與競爭對手競爭以及定位如何嗎？

So Mehdi is saying that our 7 nanometer definition is different from other companies' 7 nanometer definition, so how do we compete at 7?

所以 Mehdi 的意思是，我們的 7 奈米定義與其他公司的 7 奈米定義不同，那麼我們如何在 7 奈米上競爭？

Our 7 nanometer definition is different from somebody else's? Well, I'll let Mark answer.

我們對7奈米的定義和別人的不同嗎？好吧，我請馬克來回答。

I wouldn't want to comment on other people's 7 nanometer. Our 7 nanometer is under qualification now and it will be qualified as according to plan from the end of first quarter. And we have already more than 20 customers design-in on this 7 nanometer and this year alone we estimate will be 15, 20 tapeouts already. So this is our momentum build so far on a seven nanometer and no other competitor is getting to this stage of this leading edge technology.

我不想評論其他人的 7 奈米。我們的7奈米目前正在進行認證，並將從第一季末按計劃獲得認證。目前已經有超過 20 個客戶採用 7 奈米製程進行設計，光是今年我們估計就會有 15 到 20 個流片。這是我們迄今為止在七奈米技術上取得的進展，目前還沒有其他競爭對手能夠達到這項前沿技術的階段。

So we have -- we are to -- remember I mentioned last time we'll have 5 nanometer two years from now and forget about the name. That will be a full node shrink and that will sit competing well with any technology come out at that time.

所以我們有——我們要——記得我上次提到過，兩年後我們將擁有 5 奈米，忘記名字吧。這將是一次完整的節點縮小，並將與當時出現的任何技術展開良好的競爭。

Okay, let me add some on 7 nanometer. We will maintain our 7 nanometer competitiveness just like we do on 28 and 16. We will have a technology currently planned as 7 nanometer but with the EUV insertion in the second year of 7 nanometer, just one year -- approximately one year after. And that can greatly simplify the process and without increase the cost. And that is if customer can take advantage of minor design it can further reduce their density -- increase their density and reduce their die cost. That is our plan to maintain that competitiveness of the 7 nanometer the year after.

好的，讓我在 7 奈米上添加一些。我們將保持 7 奈米的競爭力，就像我們在 28 奈米和 16 奈米上一樣。我們將採用目前計劃的 7 奈米技術，但 EUV 將在 7 奈米技術的第二年引入，也就是一年後——大約一年後。這可以大大簡化流程，而不會增加成本。也就是說，如果客戶可以利用小型設計，就可以進一步降低其密度 - 增加其密度並降低其晶片成本。這就是我們的計劃，以在明年保持 7 奈米的競爭力。

So we think 7 nanometer is a well adopted node by all the customers and we plan for the subsequent technology to shore up the demand continuously. And we hope to use this technology -- I mean the second-year technology to prepare for the EUV production experience for the full fledged EUV technology on 5. Then our customers can have a very hopefully smooth getting to from our 7 to our 5 nanometer technology. So that is how we maintain our technology competitiveness.

因此，我們認為 7 奈米是所有客戶都廣泛採用的節點，我們計劃後續技術持續支撐需求。我們希望利用這項技術——我的意思是第二年的技術，為 5 上成熟的 EUV 技術做好準備，以獲得 EUV 生產經驗。然後，我們的客戶可以非常順利地從我們的 7 奈米技術過渡到 5 奈米技術。這就是我們保持技術競爭力的方法。

May I ask a clarification question?

我可以問一個澄清問題嗎？

Sure.

當然。

I think if I heard you correctly is you will insert -- if I heard you correctly you said you will insert EUV in this second year of your 7 nanometer, which suggests to me that you may actually be able to commercialize (technical difficulty) conclusion here?

我想如果我沒聽錯的話你會插入——如果我沒聽錯的話你說你會在 7 奈米的第二年插入 EUV，這對我來說意味著你實際上可能能夠實現商業化（技術難度）結論？

Mehdi, I'm afraid that your voice was broken at some point in time. Can you please repeat? We heard you, that you said that we will insert EUV in the second year of 7 nanometer and then you had something but it was cut off. Can you repeat that part?

麥赫迪，恐怕你的聲音在某個時候已經變啞了。你能再說一次嗎？我們聽到了您的消息，您說我們將在 7 奈米的第二年插入 EUV，然後您有一些事情要做，但它被切斷了。你能重複一下那部分嗎？

Sure. Yes, sorry about that. I just wanted to make sure I understand the EUV commentary correctly. You said that you will insert EUV in the second year of 7 nanometer. That suggests to me that you may actually be able to insert EUV before competitors that have said insertion would happen at 5. Is that the right conclusion as we compare and try to better understand your competitiveness at 7 nanometer?

當然。是的，很抱歉。我只是想確保我正確理解了 EUV 評論。您說過在7奈米的第二年會插入EUV。在我看來，這意味著你們實際上可能能夠在競爭對手之前引入 EUV，而這些競爭對手曾表示會在 5 奈米時引入 EUV。當我們進行比較並試圖更好地了解你們在 7 奈米方面的競爭力時，這是正確的結論嗎？

Yes, we will commercialize the 7 EUV in the second year of our 7-nanometer production. I wouldn't comment on when will our competitor insert their EUV. That is -- I don't intend to do the comparison here.

是的，我們將在 7 奈米生產的第二年將 7 EUV 商業化。我不會評論我們的競爭對手何時會引入他們的 EUV。也就是說——我並不打算在這裡進行比較。

Got it. Thanks so much for the details. I appreciate it.

知道了。非常感謝您提供的詳細資訊。我很感激。

Thank you. Now we come back to the floor. The next question will be going to Deutsche Bank's Michael Chou again.

謝謝。現在我們回到討論現場。下一個問題將再次由德意志銀行的 Michael Chou 提出。

Just two quick questions. One is, what will be the tax rate in 2017?

只要問兩個簡單的問題。一是2017年的稅率是多少？

It's similar to 2016, 13%, 14% effective tax rate.

與2016年類似，有效稅率為13%、14%。

Second question, sir. If we look at the first three years of 7 nanometer's TAM, will that be bigger than 28 nanometer for the first three years as well? Yes, 10. Total addressable market.

第二個問題，先生。如果我們看一下 7 奈米的 TAM 的前三年，它會比前三年的 28 奈米更大嗎？是的，10。總目標市場。

Total available --

總計可用 --

Total addressable market.

總目標市場。

Addressable market, yes. In terms of dollar much bigger.

是的，可尋址市場。就美元而言，規模更大。

Much bigger.

大得多。

Okay then going to HSBC's Steven Pelayo again.

好的，那我們再去找匯豐銀行的史蒂文‧佩拉約 (Steven Pelayo)。

Just two quick questions from me as well. With 2016 finished now I believe if I remember correctly from your 20-F 2015 you had two customers that were 16% of revenues each. I'm curious, what was your customer concentration in 2016?

我也只想問兩個簡單問題。2016 年已經結束，如果我沒有記錯的話，從您的 2015 年 20-F 報表中可以看到，您有兩位客戶，每家公司的收入佔比為 16%。我很好奇，2016 年您的客戶集中度是多少？

I think in general our top five customers account for about 50% of revenue and top 10 about 70%. This percentage hasn't changed much over years.

我認為整體而言，我們的前五大客戶約佔收入的 50%，前十大客戶約佔 70%。這個比例多年來沒有太大變化。

Any more details on the ones you disclosed that are over 10% of revenues? I can wait for the 20-F.

您揭露的佔收入 10% 以上的部分還有更多細節嗎？我可以等 20-F。

Please wait for 20-F.

請等待 20-F。

Okay. My second question was you generated over TWD200 billion in free cash flow this year on TWD950 billion in revenues. Roughly 20%, 22% of revenue is free cash flow. Quite nice but if you're talking about high teens growth in depreciation this year, maybe 10% growth in your EBIT you're probably going to add another TWD80 billion or so by my calculation to your free cash flow, which could get you over 30% of revenues. Is that a realistic target to think about this year, TSMC generates more than 30% of revenues in free cash flow?

好的。我的第二個問題是，今年貴公司營收為 9,500 億新台幣，創造了超過 2,000 億新台幣的自由現金流。大約20%到22%的收入是自由現金流。相當不錯，但如果您談論的是今年折舊額的高增長，也許息稅前利潤增長 10%，那麼根據我的計算，您的自由現金流可能會再增加 800 億新台幣左右，這可能會為您帶來超過 30% 的收入。台積電今年的自由現金流收入佔比超過 30%，這是一個現實的目標嗎？

I cannot be that precise but I think our free cash flow will grow this year versus last year.

我無法那麼精確地估計，但我認為今年我們的自由現金流將比去年有所成長。

Now going to Credit Suisse, Randy Abrams.

現在去瑞士信貸，蘭迪·艾布拉姆斯。

I've got two quick follow ups. The lull that you're seeing in the business now, could you talk about how broad based that lull is, if it's across application in markets or if it's select parts? The lull -- you mentioned a lull in the business that you're moving through. How broad is that lull across application or your customer base?

我有兩個快速的後續問題。您現在看到的業務低迷狀態，您能否談談這種低迷狀態的廣泛性，是跨市場應用還是特定部分？平靜期－您提到了您正在經歷的業務平靜期。這種停滯狀態在整個應用程式或客戶群中有多廣泛？

The lower end?

下端？

The lull. No, you talked about like a slowdown, so for that slowdown if you could talk by application if it's across your business broad based or if it's isolated to certain areas.

平靜。不，您談到了經濟放緩，那麼對於這種放緩，您是否可以透過應用程式來談論它是否遍及整個業務範圍，或者是否僅限於某些特定領域。

First half of this year, what's the weaker area of our demand, right?

今年上半年我們的需求比較弱的領域是哪些呢？

(Inaudible).

（聽不清楚）。

I think mobile.

我認為是移動的。

What was the question?

問題是什麼？

The question is with respect to the first half of this year what will be the area that the demand is relatively weaker?

問題是，就今年上半年而言，哪些領域的需求相對較弱？

Do you want market sector?

您想要市場部門嗎？

Yes, market. Broad based.

是的，市場。基礎廣泛。

(Multiple speakers)

（多位發言者）

Can you answer that question, Lora?

你能回答這個問題嗎，蘿拉？

What was the question? Sorry. Can you please tell me what was the question?

問題是什麼？對不起。你能告訴我問題是什麼嗎？

How broad based is the slowdown and which applications are you seeing that slowdown and any areas holding up stronger?

這種放緩的程度有多廣泛？您認為哪些應用領域出現了放緩？哪些領域表現得更強勁？

First quarter?

第一季？

First quarter or first half.

第一季或上半年。

Well, I think Mark, do you know the answer, Mark?

嗯，我想馬克，你知道答案嗎，馬克？

Let me answer the question. The slowdown really come from the seasonality of our major customers in the mobile areas. And there will be minor inventory correction because as Lora mentioned, exiting last year is two days above inventory and exiting first quarter may be slightly higher still. So we see some minor inventory correction going after but we don't see a major slowdown at all.

讓我來回答這個問題。成長放緩的真正原因在於我們行動領域主要客戶的季節性。而且庫存會有小幅調整，因為正如 Lora 所提到的，去年的庫存比現在高出兩天，而第一季的庫存可能還會略高一些。因此，我們看到庫存出現了一些小幅調整，但並沒有看到大幅放緩。

And the second follow up for the R&D expense. I think you talked about increase. If you could talk about the range you see R&D moving in an increased percent of sales.

第二次跟進的是研發費用。我認為您談論的是增加。如果您能談談範圍，您會看到研發在銷售額中所佔的百分比增加。

R&D as a percent of sales, right?

研發佔銷售額的百分比，對嗎？

You talked about it rising.

您談到了它的上升。

Right, we say we are going to increase the R&D spending as well as the percentage, so what's the percentage?

對，我們說要增加研發支出，還要增加比例，那麼比例是多少呢？

It's approximately 8%.

大約是8%。

Percent.

百分比。

8%.

8%。

Last year it was 7.5%. This year it will be slightly above 8%.

去年這一比例為7.5%。今年這一比例將略高於8%。

When I said a moderate increase in its percent, I mean several tenths basis points, alright? Several tenths basis points.

當我說百分比適度增加時，我的意思是零點幾個百分點，好嗎？零點幾基點。

Alright, follow up question from Goldman's, Donald Lu.

好的，接下來是高盛的唐納德·盧的提問。

I have a question on inventory -- in Q4 has declined quite substantially and will it increase substantially in Q1 and would that be potential boost to gross margins in Q1?

我有一個關於庫存的問題——第四季庫存大幅下降，第一季庫存會大幅增加嗎？這是否會對第一季的毛利率產生潛在的提升作用？

I don't believe so. Not in Q1.

我不這麼認為。不在第一季。

Okay, follow up question from Credit Lyonnais, Sebastian Hou and I think that should be our last question for this conference today.

好的，接下來是里昂信貸銀行 Sebastian Hou 的提問，我認為這應該是我們今天會議的最後一個問題。

Thank you for letting me ask. My question is, is there any impacts you see there from the minimum wage hike and (inaudible) new regulation by the government, Taiwan Government?

謝謝你讓我問這個問題。我的問題是，您認為台灣政府上調最低工資標準和（聽不清楚）新規定會產生什麼影響嗎？

What was the question?

問題是什麼？

On the cost side.

在成本方面。

Okay, what's the impact of the government's new policy on (inaudible) and the minimum wage.

好的，政府的新政策對（聽不清楚）和最低工資有什麼影響。

Yes, our first estimate is that it will increase our cost about 30 basis points, 30 basis points. That's right isn't it, Lora?

是的，我們的第一個估計是它將使我們的成本增加約 30 個基點，30 個基點。確實如此，不是嗎，洛拉？

That's right, 0.3% of cost.

沒錯，成本的0.3%。

Yes.

是的。

So it's on the cost of goods sold.

所以這是基於銷售商品的成本。

And my second question is on the 2016 CapEx. That turns out to be actually slightly higher than the last conference revision, about like TWD500 million, so I wonder whether that's just a cash pull-in -- cash payment pull-in or any other plan change of the capacity?

我的第二個問題是關於 2016 年資本支出。事實證明，這實際上比上次會議修訂的數字略高，約為 5 億新台幣，所以我想知道這是否只是現金吸引 - 現金支付吸引或任何其他容量計劃變更？

It's just pull-in of a payment. There's nothing changing in capacity build up.

這只是一筆付款而已。產能建設沒有任何變化。

Thank you.

謝謝。

Okay, I think we have concluded our Q&A session. Before we conclude today's conference please be advised that replay of the conference will be accessible within three hours from now. Transcript will become available 24 hours from now.

好的，我想我們的問答環節已經結束了。在我們結束今天的會議之前，請注意，會議的重播將在三小時內提供。成績單將於 24 小時後提供。

Again, I wish you a very happy new year.

再次祝您新年快樂。

Okay, thank you for joining us today. We hope you will join us again next quarter. Good bye and have a good day.

好的，感謝您今天加入我們。我們希望您下個季度再次加入我們。再見，祝你有美好的一天。