台積電 ADR (TSM) 2018 Q4 法說會逐字稿

(foreign language) Happy new year to everyone. Welcome to TSMC's Fourth Quarter 2018 Earnings Conference and Conference Call. This is Elizabeth Sun, TSMC's Senior Director of Corporate Communications and your host for today. Today's event is webcast live through TSMC's website at www.tsmc.com. (Operator Instructions) As this is conference is being viewed by investors around the world, we will conduct this event in English only.

（外語）祝大家新年快樂。歡迎參加台積電2018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。今天的活動透過台積電網站 www.tsmc.com 進行網路直播。（操作員指示）由於本次會議將由世界各地的投資者觀看，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 2018 followed by the guidance for the first quarter of 2019. Afterwards, Ms. Ho and TSMC's CEO, Dr. C.C. Wei, will jointly provide company's key messages. Then TSMC's Chairman, Dr. Mark Lu, will host the Q&A session where all 3 executives will entertain your questions.

現今活動的形式如下：首先，台積電資深副總裁兼財務長何麗華女士將總結我們2018年第四季的營運狀況，然後介紹2019年第一季的業績指引。隨後，何女士與台積電執行長C.C.博士進行了會談。魏先生將共同提供公司的關鍵資訊。然後，台積電董事長陸兆禧博士將主持問答環節，三位高階主管將解答您的問題。

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 everyone 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 in 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 microphone to TSMC's CFO, Ms. Lora Ho, for the summary of operations and current quarter guidance.

現在，我想把麥克風交給台積電財務長何麗拉女士，請她總結營運情況並指導本季業績。

Thank you, Elizabeth. First of all, happy new year, everyone. Thank you for joining us today. My presentation will start with financial highlights as usual for the fourth quarter and a recap of 2018 for the whole year. Then after that, I will provide a guidance for the first quarter.

謝謝你，伊麗莎白。首先祝大家新年快樂。感謝您今天加入我們。我的演講將像往常一樣從第四季度的財務亮點開始，並對 2018 年全年進行回顧。然後，我將為第一季提供指導。

Fourth quarter revenue increased 11.3% sequentially to TWD 290 billion as our business benefited from the strong demand for our 7-nanometer technology covering both mobile and high-performance computing applications.

第四季營收季增 11.3% 至 2,900 億新台幣，這得益於我們業務對 7 奈米技術的強勁需求，該技術涵蓋行動和高效能運算應用。

Gross margin increased 30 basis points sequentially to 47.7% reflecting the absence of the virus incident that occurred in the third quarter, an improvement in back-end profitability, higher capacity utilization and the more favorable foreign exchange rate. These factors helped offset the unfavorable technology mix.

毛利率季增 30 個基點至 47.7%，反映出第三季未發生病毒事件、後端獲利能力改善、產能利用率提高以及外匯匯率更為有利。這些因素有助於抵消不利的技術組合。

Total operating expenses increased by TWD 2.7 billion, thanks to the operating leverage, only represented 10.6% of the revenue versus 10.8% in the prior quarter. And operating margin increased by 40 basis points sequentially to 37%.

由於營業槓桿的影響，總營業費用增加了 27 億新台幣，僅佔收入的 10.6%，而上一季為 10.8%。營業利益率較上季成長 40 個基點，達到 37%。

Overall, our fourth quarter EPS reached $3.86 and ROE was 24.6%.

總體而言，我們第四季度的每股收益達到 3.86 美元，淨資產收益率為 24.6%。

Now let's take a look at revenue by technology. 7-nanometer process technology continued to ramp strongly and accounted for 23% of wafer revenue in the fourth quarter. 10-nanometer was 6% and the combined 16/20-nanometer contribution accounted for 21%. Advanced technologies, 28-nanometer and below, accounted for 67% of wafer revenue, up from 61% in the third quarter.

現在讓我們來看看按技術劃分的收入。7奈米製程技術持續強勁成長，佔第四季晶圓營收的23%。10奈米佔6%，16/20奈米合計貢獻佔21%。28奈米及以下先進技術佔晶圓收入的67%，高於第三季的61%。

On a full year basis, 7-nanometer contribution reached 9% of wafer revenue in 2018. 10-nanometer was 11%. And the combined 16/20-nanometer contributions was 23% of wafer revenue. Advanced technologies accounted for 63% of total wafer revenue, up from 58% in 2017.

從全年來看，2018年7奈米貢獻達到了晶圓收入的9%。10奈米為11%。16/20奈米合計貢獻了晶圓收入的23%。先進技術佔晶圓總收入的 63%，高於 2017 年的 58%。

Now let's take a look at revenue contribution by application. During the fourth quarter, Communication increased 27%, while Computer, Consumer and Industrial/Standard decreased 2%, 35% and 3%, respectively. On a full year basis, Computer, Communication and Industrial/Standard increased 61%, 1% and 3%, respectively; while Consumer decreased 17%.

現在讓我們來看看應用程式的收入貢獻。第四季度，通訊領域成長了27%，而電腦、消費和工業/標準領域分別下降了2%、35%和3%。從全年來看，電腦、通訊和工業/標準分別成長了61%、1%和3%；而消費者則下降了17%。

Moving on to the balance sheet, we ended the fourth quarter with cash and marketable securities of TWD 695 billion, an increase of TWD 91 billion from the last quarter. On the liability side, current liabilities increased by TWD 19 billion.

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 6,950 億新台幣，較上一季增加 910 億新台幣。負債方面，流動負債增加190億新台幣。

On financial ratios, accounts receivable turnover days was 41 days. Days of inventory decreased 6 days, to 67 days due to stronger wafer shipment during the fourth quarter.

從財務比率來看，應收帳款週轉天數為41天。由於第四季晶圓出貨量強勁，庫存天數減少6天至67天。

Now let me make a few comments on cash flow and CapEx. During the fourth quarter, we generated about TWD 189 billion cash from operations and spent $114 billion in capital expenditures. As a result, we generated free cash flow of 75 billion and our overall cash balance increased 89 billion to reach 578 billion at the end of the fourth quarter. In the U.S. dollar terms, our fourth quarter capital expenditure reached 3.7 billion and a total USD 10.5 billion for the full year CapEx.

現在，讓我對現金流和資本支出發表一些評論。第四季度，我們從營運中產生了約 1,890 億新台幣的現金，並花費了 1,140 億美元的資本支出。結果，我們產生了 750 億美元的自由現金流，我們的整體現金餘額增加了 890 億美元，在第四季末達到 5,780 億美元。以美元計算，我們第四季的資本支出達到 37 億美元，全年資本支出總額達到 105 億美元。

Now I would like to give you a recap of our performance in 2018. 2018 was another growth year for TSMC as we continue to set new records in both revenue and earnings. Despite the weakening macroeconomic outlook and demand headwinds in certain end applications, our revenue grew 6.5% year-over-year in U.S. dollar terms and 5.5% in NT dollars terms to reach about TWD 1 trillion. Main contributor was the strong demand for our 7 and 10-nanometer wafers.

現在我想向大家回顧一下我們2018年的表現。2018 年是台積電又一個成長年，我們在營收和獲利方面繼續創下新紀錄。儘管宏觀經濟前景疲軟且某些終端應用需求面臨阻力，但我們的營收以美元計算年增 6.5%，以新台幣計算年增 5.5%，達到約 1 兆新台幣。主要因素是市場對 7 奈米和 10 奈米晶圓的強勁需求。

Gross margin decreased 2.3 percentage points to 48.3% reflecting a lower level of capacity utilization, the unfavorable technology mix and an unfavorable foreign exchange rate during the year.

毛利率下降 2.3 個百分點至 48.3%，反映出本年度產能利用率較低、技術組合不利以及外匯匯率不利。

Our operating margin decreased 2.2 percentage points to 37.2%, while we continue to increase investment in R&D for 7-nanometer and 5-nanometer technologies.

我們的營業利益率下降2.2個百分點至37.2%，同時我們繼續增加對7奈米和5奈米技術的研發投入。

Our effective tax rate was 11.7% in 2018, which was lower than 13.5% in 2017, due to lower retained earning tax.

2018 年我們的有效稅率為 11.7%，低於 2017 年的 13.5%，原因是留存盈餘稅較低。

Full year earnings per share was $13.54.

全年每股收益為 13.54 美元。

On cash flow, we generated 574 billion in operating cash flow for the whole year, spent TWD 316 billion or USD 10.5 billion in capital expenditure, leaving $258 billion in free cash flow. We also paid TWD 207 billion or $8 per share in cash dividend, which is an increase of 14% from the 2017 level.

現金流方面，全年營運現金流5,740億元，資本支出3,160億新台幣，即105億美元，自由現金流為2,580億美元。我們還派發了 2,070 億新台幣或每股 8 美元的現金股息，比 2017 年的水準成長了 14%。

I have finished my financial summary. Now let's turn to the forecast, first quarter guidance. Based on the current business outlook, we expect first quarter revenue to be between USD 7.3 billion and USD 7.4 billion representing 22% sequential decline.

我已經完成了財務總結。現在讓我們來看看預測、第一季指引。根據目前的業務前景，我們預計第一季營收將在 73 億美元至 74 億美元之間，季減 22%。

Based on the exchange rate assumption of USD 1 to TWD 30.6, our first quarter gross margin is expected to be between 43% and 45%. And operating margin is expected to be between 31% and 33%.

基於1美元兌30.6新台幣的匯率假設，我們第一季的毛利率預計在43%至45%之間。預計營業利潤率在31%至33%之間。

This concludes my financial presentation. Let me follow by making a few comments about the near-term demand and inventory, CapEx, and profitability.

我的財務報告到此結束。接下來，我想就近期需求和庫存、資本支出和盈利能力發表一些評論。

Now on your trend demand and inventory, we conclude the fourth quarter with revenue of 287.8 billion or USD 9.4 billion in line with the guidance given 3 months ago. This result was mainly driven by the continued steep ramp of our industry-leading 7-nanometer technology.

現在關於您的趨勢需求和庫存，我們第四季度的收入為 2878 億或 94 億美元，與 3 個月前給出的指導一致。這一結果主要得益於我們業界領先的 7 奈米技術的持續快速發展。

Concluding 2018, semiconductor excluding memory growth was 8%, while foundry grew 6%. TSMC's revenue grew 6.5% year-over-year in U.S. dollars mainly due to strong demand for our 7-nanometer technology.

截至 2018 年年底，不包括記憶體的半導體成長率為 8%，而代工成長率為 6%。台積電的收入以美元計算年增6.5%，這主要得益於市場對我們7奈米技術的強勁需求。

Moving into first quarter '19, our business will be dampened by the overall weakening of the macroeconomic outlook, mobile product seasonality and the high level of inventory in the semiconductor supply chain.

進入 2019 年第一季度，我們的業務將受到宏觀經濟前景整體疲軟、移動產品季節性以及半導體供應鏈高庫存水準的抑制。

Due to the overall softening economic environment, semiconductor supply chain inventory exiting 2018 stay at a much higher level than seasonal. We expect the excess inventory in the semiconductor supply chain will take a couple of quarters to digest. And the overall supply chain inventory will gradually approach to the seasonal level around the middle of this year.

由於整體經濟環境疲軟，2018 年半導體供應鏈庫存仍處於遠高於季節性的水平。我們預計半導體供應鏈中的過剩庫存將需要幾個季度來消化。而整體供應鏈庫存將在今年年中左右逐漸接近季節性水準。

Now let me make comments about the CapEx. As I have said before, we believe USD 10 billion to USD 12 billion capital budget will be sufficient to support our average growth of 5% to 10% per annum in the next few years.

現在讓我對資本支出發表評論。我之前說過，我們相信100億到120億美元的資本預算足以支持我們未來幾年每年5%到10%的平均成長。

Given the macroeconomic outlook in 2019, we are tightening this year's capital spending by several hundred million dollars to a level between USD 10 billion to USD 11 billion. That said, our commitment to support customers product ramp remained unchanged.

考慮到2019年的宏觀經濟前景，我們將今年的資本支出縮減數億美元，至100億美元至110億美元之間。儘管如此，我們支持客戶產品升級的承諾仍然沒有改變。

Out of this USD 10 billion to USD 11 billion CapEx for 2019, about 80% of the capital budget will be allocated for other advanced process technologies, which includes 7-nanometer, 5-nanometer and 3-nanometer. A little more than 10% will be spent for advanced packaging and mask making, and about 10% will be spent for specialty technologies. So this is about CapEx.

在2019年的100億至110億美元的資本支出中，約80%的資本預算將分配給其他先進製程技術，包括7奈米、5奈米和3奈米。其中略高於10%的資金將用於先進封裝和掩模製造，約10%的資金將用於特種技術。這是關於資本支出的。

Let me follow by making some comments about profitability. Okay, as I stated in our first quarter 2018, earnings call, I said TSMC's profitability is determined by the following 6 factors: Number one is leadership technology development and ramp up and pricing and cost reduction and capacity utilization and foreign exchange rate and last one is technology mix. All these factors, except capacity utilization, determine our standard gross margin.

接下來，我想對盈利能力發表一些評論。好的，正如我在 2018 年第一季財報電話會議上所說，台積電的獲利能力取決於以下 6 個因素：第一是領導技術開發和提升、定價和成本降低、產能利用率和外匯匯率，最後是技術組合。除產能利用率之外的所有這些因素決定了我們的標準毛利率。

I have just guided first quarter gross margin to decline by 3.7 percentage points sequentially at the midpoint of the guidance. This is primarily attributable to a lower utilization due to the overall weakening macroeconomic environment, the mobile product seasonality and the high level of inventory in the supply chain.

我剛剛預測第一季毛利率將比預期中位數環比下降 3.7 個百分點。這主要歸因於整體宏觀經濟環境疲軟、移動產品季節性以及供應鏈庫存水準高導致利用率較低。

Due to the recent changes in high-end smartphone business condition, our 7-nanometer capacity will see a substantial cutback on utilization rate in fourth quarter -- in first quarter and second quarter which is expected to hit our gross margin by more than 4 percentage points in each quarter. Going forward, to better manage our leading edge utilization rate, we will be working closely with customers for more effective capacity planning.

由於近期高階智慧型手機業務狀況的變化，我們的7奈米產能利用率將在第四季—第一季和第二季大幅下降，預計每季將影響我們的毛利率4個百分點以上。展望未來，為了更好地管理我們的前沿利用率，我們將與客戶密切合作，進行更有效的產能規劃。

Looking at other profitability factors for 2019, our 7-nanometer ramp-up remains very strong. We continue to provide value to customer and drive aggressive cost reduction. In the meantime, we are increasing our resource in specialty technologies development to backfill our mainstream capacity technology.

從 2019 年的其他獲利因素來看，我們的 7 奈米產能提升仍然非常強勁。我們繼續為客戶提供價值並積極降低成本。同時，我們正在增加專業技術開發資源，以補充我們的主流產能技術。

With all the above factors, we expect our gross margin in the second half of this year will be better than first half. And we believe our long-term gross margin target of about 50% is still a good target.

綜合以上因素，我們預計今年下半年的毛利率將好於上半年。我們相信，50%左右的長期毛利率目標仍然是一個好的目標。

Thank you for your listening. Now let me turn the podium to C.C. for his remarks.

謝謝您的聆聽。現在讓我把講台轉向 C.C.感謝他的評論。

Thank you, Lora. Good afternoon, ladies and gentlemen.

謝謝你，洛拉。女士們、先生們，午安。

Let me start with our 2019 full year outlook. We forecast a slowdown in global GDP growth from 3.2% in 2018 to 2.6% in 2019 due to the weakening macroeconomic conditions leading to a low growth for the semiconductor industry.

首先，我要對 2019 年全年進行展望。我們預測，由於宏觀經濟條件疲軟導致半導體產業成長緩慢，全球 GDP 成長將從 2018 年的 3.2% 放緩至 2019 年的 2.6%。

For the full year of 2019 we forecast the overall semiconductor market excluding memory will grow 1% while foundry growth will be flat.

我們預測 2019 年全年除記憶體以外的整個半導體市場將成長 1%，而代工成長將持平。

For TSMC, we estimate our business will grow only slightly in 2019 given the slowing economic environment. Our 2019 business will be supported by the continuing demand for our 7-nanometer where we see strong interests from our customer in high-performance computing, mobile and automotive.

對於台積電而言，鑑於經濟環境放緩，我們估計 2019 年我們的業務將僅略有成長。我們 2019 年的業務將受到對 7 奈米的持續需求的支持，我們看到客戶對高效能運算、行動和汽車領域的濃厚興趣。

Even with a slow year like 2019, we firmly believe AI and 5G are the megatrends that will drive the future semiconductor growth. And we reaffirm our long-term growth projection of 5% to 10% CAGR.

即使 2019 年是發展緩慢的一年，我們堅信人工智慧和 5G 是推動未來半導體成長的大趨勢。我們重申 5% 至 10% 複合年增長率的長期成長預測。

Now I will talk about our 5-nanometer status. Our N5 technology development is well on track, with customer tapeout schedule for first half 2019 and volume production ramp in first half 2020. We are already in preparation for N5's ramp. All applications that are using 7-nanometer today will adopt 5-nanometer.

現在我來談談我們的5奈米現況。我們的 N5 技術開發進展順利，客戶計劃於 2019 年上半年完成流片，並於 2020 年上半年實現量產。我們已經在為 N5 的坡道做準備。目前所有使用 7 奈米的應用都將採用 5 奈米。

In addition, we are expecting the customer product portfolio at N5 and see expanding addressable market opportunities. We expect more applications in HPC to adopt N5. Thus we are confident that N5 will also be a large and long-lasting node for TSMC.

此外，我們期待 N5 的客戶產品組合併看到不斷擴大的可尋址市場機會。我們預計 HPC 中會有更多應用採用 N5。因此我們有信心N5也將成為台積電的一個大型且持久的節點。

Now I will talk about the ramp-up of N7 and N7+. Our 7-nanometer has been a very steep and successful ramp in second half 2018 and we expect continued ramp through 2019. Our customer portfolio is growing stronger while more applications such as HPC and automotive are coming to N7 as well.

現在我來談談 N7 和 N7+ 的升級。我們的 7 奈米技術在 2018 年下半年取得了非常顯著且成功的發展，我們預計這一發展趨勢將持續到 2019 年。我們的客戶組合正在變得越來越強大，同時 HPC 和汽車等更多應用程式也正在進入 N7。

Customer tapeouts activities at N7 continue to be strong despite the cautious macro outlook. We are actually seeing an increase in silicon content for AI and 5G-related product designs. We expect that 7-nanometer to contribute more than 25% of our wafer revenue in 2019.

儘管宏觀前景謹慎，但 N7 的客戶流片活動依然保持強勁。我們實際上看到人工智慧和 5G 相關產品設計中的矽含量增加。我們預計 7 奈米將在 2019 年貢獻我們晶圓收入的 25% 以上。

Our N7+ yield rate is progressing well and comparable to N7. N7+ volume production is scheduled to begin in second quarter this year. As I have stated before, we are working with several customers on N7+ to support their second and third wave product designs, and we expect the N7+ price contribution to the 7-nanometer family will grow increasingly larger over the next few years.

我們的N7+良率進展順利，與N7相當。N7+預計今年第二季開始量產。正如我之前所說，我們正在與 N7+ 上的幾家客戶合作，以支持他們的第二波和第三波產品設計，我們預計未來幾年 N7+ 對 7 奈米系列的價格貢獻將越來越大。

Now I'll talk about TSMC's mature nodes strategy and our new 8-inch facility. For mature nodes, our strategy is that we do not increase larger capacity at mature nodes but rather we work with customers to develop specialty technologies that create differentiated and longer-lasting value to customers. Our recent plan for an extension at Fab6 in Tainan is a part of this strategy. The extension is not an increase of wafer capacity per se. But the purpose is to increase the clean room space for more specialty tools. With successful execution of our mature node strategy, we believe we will be able to continually deliver good profitability in the future.

現在我將討論台積電的成熟節點戰略和我們的新8吋工廠。對於成熟節點，我們的策略是不增加成熟節點的容量，而是與客戶合作開發專業技術，為客戶創造差異化、更持久的價值。我們最近在台南 Fab6 的擴建計畫就是這項策略的一部分。擴建本身並不會增加晶圓產能。但目的是增加無塵室的空間以容納更多專用工具。隨著我們成熟節點策略的成功實施，我們相信未來我們將能夠持續實現良好的獲利能力。

Finally, I will talk about our most important growth contributor in the next 5 year. As I just stated, we believe 5G and AI will be the megatrend underlying the ubiquitous computing which will drive the semiconductor growth in the future.

最後，我將談談未來五年我們最重要的成長貢獻者。正如我剛才所說，我們相信 5G 和 AI 將成為普適運算的根本趨勢，並將推動未來半導體的成長。

With the successful ramp of 7-nanometer, we are able to expand our customer product portfolio and can add applications related to PC and tablets to the HPC platform. With this inclusion, we believe HPC will become the largest contributor to our business in terms of revenue growth in the next 5 years.

隨著 7 奈米的成功發展，我們能夠擴展客戶產品組合，並可以將與 PC 和平板電腦相關的應用程式添加到 HPC 平台。透過此次納入，我們相信 HPC 將在未來 5 年內成為我們業務收入成長的最大貢獻者。

Thank you for your attention.

感謝您的關注。

All right. This concludes our prepared statements. Before we begin the Q&A session, I would like to remind everybody (Operator Instructions) Questions will be taken both from the floor and from the call. Should you wish to raise your questions in Chinese, I will translate it to English before our management answers your question. (Operator Instructions) .

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（操作員指示）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。（操作員指令）。

Now let's begin the Q&A.

現在我們開始問答。

First question will be coming from Crédit Suisse, Randy Abrams.

第一個問題來自瑞士信貸的蘭迪‧艾布拉姆斯 (Randy Abrams)。

The first question I had was on the guidance both for the sales and the CapEx. You're lowering sales outlook to just slight growth but only making a small change to CapEx. Could you talk about the assumptions you're making for further market share gains or demand recovery? And also the assumptions for 5-nanometer and EUV to keep the CapEx intact.

我的第一個問題是關於銷售額和資本支出的指導。您將銷售前景下調至略微成長，但僅對資本支出做出小幅調整。您能否談談您對進一步擴大市場佔有率或需求復甦所做的假設？而 5 奈米和 EUV 的假設可以保持資本支出不變。

Okay. Good afternoon. And I want to say happy new year again. Welcome to the investor conference. Your first question, I would like C.C. to answer.

好的。午安.我想再說聲新年快樂。歡迎參加投資者會議。你的第一個問題，我想問的是 C.C.來回答。

You're asking about we've only grow slightly but CapEx did not decrease dramatically. Good question. We now become more conservative on CapEx it's because of we forecast a slower -- a lower 5-nanometer demand at the initial ramp. However, we still have to prepare enough capacity to support our customers. And we believe that today, with more than few hundred million U.S. dollar is to reflect the reality of expecting the high-end smartphone a little bit slower growth. But this year, this year is because of 7-nanometers of capacity has been built. And the demand -- actually, we forecast the number of the units of the smartphone, especially high-end smartphone, to be negative growth. Although we are still want to say that. For TSMC, the year-on-year from 2019 compared to 2018, the smartphone -- the mobile business, we still grow slightly on this year regardless if the unit is dropping, okay. And as a result, we expect -- as I just said, we expect the foundry business will be flat, but TSMC still grows slightly.

您問的是，我們的資本支出僅略有成長，但並沒有大幅減少。好問題。我們現在對資本支出變得更加保守，因為我們預測初始產能提升的速度會比較慢——5 奈米的需求會較低。不過，我們仍然要準備足夠的產能來支持我們的客戶。而我們認為，今天超過幾億美元的投入是反映出對高階智慧型手機成長稍慢一點的預期的現實。但今年，今年是因為7奈米的產能已經完成了。而需求——實際上，我們預測智慧型手機，尤其是高階智慧型手機的銷售將呈現負成長。儘管我們仍然想這麼說。對於台積電來說，2019 年與 2018 年相比，智慧型手機——行動業務，無論銷量是否下降，今年我們仍然略有成長。因此，正如我剛才所說，我們預計代工業務將持平，但台積電仍將略有成長。

One follow-up to that and then I'll ask a second question, for that capital spending change you mentioned on EUV, could you talk now about kind of magnitude and steepness? Like what type of ramp we should expect next year for that node? And on the CapEx, are you making any consideration with the slower environment to reuse more equipment? So that's a follow-up to the first question.

接下來我會問第二個問題，對於您提到的 EUV 資本支出變化，您能談談其幅度和幅度嗎？例如，明年我們應該期待該節點出現什麼類型的坡道呢？在資本支出方面，您是否考慮在較慢的環境中重複使用更多設備？這是第一個問題的後續答案。

Yes, we do expect that we -- in the 5-nanometer we'll use some of the 7-nanometer's equipment. To answer your question more correctly actually why it only drop a little bit. A few hundred million U.S. dollar because of EUV tool actually we already buy a lot, all right? And we expect that will continue to grow also. So the ramp-up of the 5-nanometer now definitely was slower than we expected. But we still think it's a long-lasting node because of all our customers who are using 7-nanometer today are engaged with TSMC today in their product design. So and in addition to that, we also increased our product portfolio, our customers' product portfolio. And that will add something to HPC application. So look, it's not a very promising in this year but we still have the confidence that 5% to 10% CAGR will be sustained.

是的，我們確實希望在 5 奈米中使用一些 7 奈米的設備。更正確地回答你的問題實際上是為什麼它只下降了一點。因為EUV工具花了好幾億美元，實際上我們已經買了很多了，好嗎？我們預計這一數字還將持續成長。因此，現在 5 奈米的提升速度肯定比我們預期的要慢。但我們仍然認為這是一個持久的節點，因為我們今天所有使用 7 奈米的客戶都在與台積電合作進行產品設計。除此之外，我們也增加了我們的產品組合和客戶的產品組合。這將為 HPC 應用增添一些內容。所以看起來，今年的情況不太樂觀，但我們仍然有信心 5% 至 10% 的複合年增長率能夠持續。

A change on the second question, a follow-up 1 more. For the 5-nanometer, if you could just talk a little bit more what's driving some of the change in consideration if it's anything about the EUV readiness versus the cost structure, mature 7 versus 5. Maybe if you could go into if now you expect a bigger 7 initially, what the factor for that is?

對第二個問題進行了修改，增加了1個後續問題。對於 5 奈米，如果您可以再多談一下，是什麼推動了考慮中的一些變化，是否與 EUV 準備與成本結構有關，成熟的 7 與 5。也許您可以進一步說明，如果您現在最初預期的是更大的 7，那麼造成這種變化的因素是什麼？

Let's talk about EUV's readiness. We are progressing really well. So that's why I said the 7+, which is using the EUV, will start production in second quarter this year. And our 5-nanometer's technology development, a lot are based on the EUV's progress. And 5-nanometer's technology development is on track. So that's 1 thing. Why we lower down CapEx is because we expect the high-end smartphone's growth will not be as strong as we used to project before, okay? We lower it down a little bit but still, we still think the high-end smartphone will grow because of 5G and AI's application.

讓我們來談談 EUV 的準備情況。我們的進展確實很好。所以我說使用 EUV 的 7+ 將於今年第二季開始生產。而我們5奈米的科技發展，很多都是基於EUV的進步。5奈米技術的發展也已步入正軌。這是一件事。我們降低資本支出的原因是，我們預期高階智慧型手機的成長不會像我們之前預測的那麼強勁，好嗎？我們稍微降低了一點，但我們仍然認為高階智慧型手機將因 5G 和 AI 的應用而成長。

I guess the question was more EUV for it to be slower than original. What drove the change to the EUV or to the 5-nanometer?

我猜問題在於 EUV 比原來的速度慢。是什麼推動了 EUV 或 5 奈米的轉變？

I did not say the EUV will be slower.

我並沒有說 EUV 會更慢。

5-nanometer.

5奈米。

5-nanometer, no. It will continue.

5奈米，沒有。這種情況將會持續下去。

The CapEx this year, majority of it has been on 5, not even 3-nanometer. EUV's productivity continued to improve. And that modulate the CapEx we need to invest. So from the number we are very confident that our 5-nanometer will ramp according to our previous plan. However, we do put a more conservative, tighten up our CapEx under those confidence to improve the productivity and make sure the lead time is tightened up enough to minimize the CapEx.

今年的資本支出大部分都用於 5 奈米，甚至不是 3 奈米。EUV的生產效率持續提升。這會調節我們需要投資的資本支出。因此從數字上看，我們非常有信心我們的 5 奈米將按照我們先前的計劃進行提升。然而，我們確實採取了更保守的措施，在這種信心下收緊了我們的資本支出，以提高生產率，並確保交貨時間足夠緊縮，以最大限度地減少資本支出。

Okay. Lower 5-nanometer initial ramp though, could you talk about that? Like the rationale for that lower initial 5-nanometer ramp?

好的。不過，5 奈米初始坡道較低，您能談談這一點嗎？就像最初降低 5 奈米速度的理由一樣？

I just say we expect a higher growth, but right now, we're now a bit more conservative on the high-end smartphones.

我只是說我們期待更高的成長，但目前，我們對高階智慧型手機的態度更加保守。

(inaudible)

（聽不清楚）

Yes.

是的。

Next question will be coming from Citigroup's Roland Shu.

下一個問題來自花旗集團的 Roland Shu。

First question is, C.C, you said for the mobile business this year, you still expect some growth. But under your overall year, on the whole year revenue growth just slightly. So how about the growth of the other platform products: IoT, HPC and automotive?

第一個問題是，C.C，您說對於今年的行動業務，您仍然預計會有一些成長。但根據全年數據，全年收入僅略有成長。那麼其他平台產品：物聯網、高效能運算和汽車的成長如何？

Okay, Roland, you asked a good question. Smartphone grows slightly. IoT grows double-digit. Automotive will be flat. HPC, if we're excluding the cryptocurrency mining, HPC also grows slightly. But cryptocurrency is a big drop from 2018 to 2019. So if we put the cryptocurrency together in the HPC, it's a big drop. It's almost a double-digit.

好的，羅蘭，你問了一個很好的問題。智慧型手機略有成長。物聯網成長兩位數。汽車產業將保持平穩。HPC，如果我們排除加密貨幣挖掘，HPC 也會略有成長。但從 2018 年到 2019 年，加密貨幣出現了大幅下跌。因此，如果我們將加密貨幣放在 HPC 中，這將是一個巨大的下降。幾乎是兩位數。

May we have more color for the breakdown for these four platforms? The revenue breakdown in last year in 2018?

我們能否更詳細地細分這四個平台？2018年去年的收入明細？

This one maybe, Lora, you can directly answer on the number.

這個也許吧，洛拉，你可以直接用號碼回答。

For 2018, smartphone roughly accounts for 45% of our wafer revenue. HPC, about 30%, 32%. IoT, single-digit, 6%; automotive, 5%; digital electronics, 6% and there's other 5% here.

2018年，智慧型手機約占我們晶圓收入的45％。HPC，約30%，32%。物聯網，個位數，6%；汽車，5%；數位電子產品佔6%，還有其他5%。

And may I know how big of the contribution for cryptocurrency last year?

請問去年加密貨幣的貢獻有多大？

A lot.

很多。

We don't want to specify too much of the segment, particularly it belongs to one of the big customers. So...

我們不想過度指定該部分，特別是它屬於一個大客戶。所以...

And the other question is Lora said both 7-nanometer utilization will be dropped a lot in first half. But the whole year, the 7-nanometer revenue contribution commented by C.C. will be about 25%. So that means that -- above 25%. That means the second half, the 7-nanometer contribution will be very strong. So may we have more color? What kind of application is driving such a strong 7-nanometer demand?

另一個問題是，Lora 表示，上半年 7 奈米的利用率將大幅下降。但就全年來看，C.C.評論的7奈米營收貢獻為11.6%。約為25%。這意味著——超過 25%。這意味著下半年，7納米的貢獻將非常強勁。那我們可以有更多的顏色嗎？什麼樣的應用推動如此強勁的 7 奈米需求？

Okay. A lot of it because of seasonality of the high-end smartphone. So in the second half, we expect to ramp up the high-end smartphone again. The first half is a little bit kind of cyclical in the high-end smartphone.

好的。這很大程度上是因為高階智慧型手機的季節性。因此，我們預計下半年高階智慧型手機的銷售將再次成長。高階智慧型手機上半年的市場走勢有點週期性。

To be honest, this high-end smartphone drop in the first quarter is -- came a little bit sudden. So the inventory in the supply chain is quite a lot. So that may push the first half drop. But the second half, we expect the new product launch will carry on another wave of ramp.

說實話，第一季高階智慧型手機銷量的下降有點突然。所以供應鏈中的庫存是相當多的。因此這可能會導致上半年價格下跌。但下半年，我們預期新產品的推出將帶來另一波成長。

So Roland, I'll give you more color. How about that? The second half, we already said that we have more customers' product portfolio. So that will expand into the high performance computing. Some of the product will enter into production slightly from fourth quarter and extended to the next year.

所以羅蘭，我會給你更多的色彩。那怎麼樣？下半年，我們已經說過我們有更多的客戶產品組合。因此這將擴展到高效能運算。部分產品將從第四季開始小幅投入生產，並延長至明年。

For the 7-nanometer follow-up, I think 7+ will be also included in the whole 7-nanometer. And N7+ total revenue will still be somewhere around the TWD 1 billion.

對於7奈米的後續，我認為7+也會包含在整個7奈米中。而N7+總營收仍將在10億新台幣左右。

That's correct.

沒錯。

7+ is not a major node, but rather it is a technology good for second wave and third wave customers. So it is come up slower when the first wave products or first wave customers ready to convert to the lower -- to another improved version. So it's -- it doesn't conflict with our 5. 5 is another major node.

7+ 不是一個主要節點，而是一項適合第二波和第三波客戶的技術。因此，當第一批產品或第一批客戶準備轉換到較低版本（另一個改進版本）時，它的出現速度會比較慢。所以它 - 它與我們的 5 並不衝突。 5 是另一個主要節點。

Next question will be coming from Goldman Sachs' Bruce Lu.

下一個問題來自高盛的 Bruce Lu。

So I want to ask about smartphone semi content addressable market. TSMC management used to provide semi content for high-end smartphone, medium smartphone and low end smartphone in the past. Can we ask what kind of semi content growth either come in 1 or 2 years with different segments smartphone? And also, what kind of semiconductor growth for smartphone movie from 4G to 5G, especially for the addressable market for TSMC?

所以我想問一下智慧型手機半內容可尋址市場。台積電管理層過去曾為高階智慧型手機、中階智慧型手機和低階智慧型手機提供半導體內容。我們可以問一下，在未來 1 年或 2 年內，不同細分市場的智慧型手機將會出現什麼樣的半導體內容成長嗎？另外，從4G到5G，智慧型手機電影的半導體成長如何，特別是對於台積電的目標市場而言？

You want to specify what is semiconductors' content into the high-end smartphone, actually, you want to narrow down to a specific number just like before, I don't think we could do it today because of there's a lot of application, new application that add into, that's one, such as AI and something. We expect in the future AR/VR will be inside. The second thing is 5G itself will increase a lot in frequency band. And so that will add the silicon content inside. I'll give you a kind of feeling that the smartphone unit will drop a few percentage. TSMC will still grow the smartphone business. So that means there's a lot of increase in that revenue, it's because of silicon content, in terms of the smartphone business.

你想要具體說明高端智慧型手機中半導體的含量，實際上，你想像以前一樣縮小到特定數字，我認為我們今天無法做到這一點，因為有很多應用程序，新應用程式添加到其中，例如人工智慧等等。我們預計未來 AR/VR 將會出現。第二件事是5G本身在頻段上會增加很多。這樣就會增加裡面的矽含量。我給你一種感覺，智慧型手機的銷售量會下降幾個百分點。台積電仍將繼續擴大智慧型手機業務。所以，就智慧型手機業務而言，這意味著收入將大幅增加，這是因為矽含量增加。

But moving to 5G, as you mentioned that there are a lot of RF content those kind of semiconductor increase, do we see that having any impact to our business?

但轉向 5G，正如您所提到的，這類半導體中有很多 RF 內容的增加，我們是否認為這會對我們的業務產生任何影響？

You could -- you have a good question. Yes, move into 5G, the RF become more complicated. And so you have larger area in the RF chip. And so we expect silicon content per se that will increase. And so the silicon -- the content in the smartphone will increase.

你可以——你問了一個很好的問題。是的，進入 5G 後，RF 變得更加複雜。因此，射頻晶片的面積更大。因此我們預計矽含量本身將會增加。因此，智慧型手機中矽的含量將會增加。

But can we somehow quantify the number?

但我們能以某種方式量化這個數字嗎？

Not very.

不太。

Let me put some color. I mean, this is based on of course forecast number. So nothing -- may not be accurate but we have a picture about the silicon content supporting C.C. Wei's description. On a high-end smartphone, we see the silicon content increase. Actually it's increased every year, very fast. On the mid end, it will increase slightly. On the low end, it's less predictable, but we take the decrease is slightly. So that's the picture. And most of our business in the smartphone is -- belongs to the high-end. So we are going to enjoy the silicon content with the equipment of our technology, leading-edge technology.

讓我加點顏色。我的意思是，這當然是基於預測數字。所以沒有什麼——可能不準確，但我們有一張關於支持 C.C. 的矽含量的圖片。魏的描述。在高階智慧型手機上，我們看到矽含量的增加。實際上它每年都在增加，而且增長得非常快。在中端，它會略有增加。在低端，它不太可預測，但我們認為下降幅度略有。這就是圖片。我們的智慧型手機業務大多屬於高階產品。因此，我們將利用我們的技術、尖端技術來享受矽含量。

Okay. My second question will be that management just mentioned that 5% revenue growth CAGR will maintain. Management first mentioned that in 2017. And with slow growth in 2019, if you do that after-math, you now expect that more than double-digit growth for the coming 2 years?

好的。我的第二個問題是，管理層剛才提到將維持 5% 的收入複合年增長率。管理層在 2017 年首次提到這一點。鑑於 2019 年的成長緩慢，如果您進行事後計算，您現在預計未來兩年的成長將超過兩位數嗎？

You can calculate it.

你可以計算一下。

Do I read it correctly?

我讀得對嗎？

I want to reaffirm that the 5% to 10% that CAGR will sustain, we have confidence on that. And you calculate it.

我想重申的是，我們對複合年增長率將維持在 5% 至 10% 有信心。然後你計算一下。

So the 5-year is 2017 to 2021, right?

那麼 5 年就是 2017 年到 2021 年，對嗎？

Yes.

是的。

All right. Next question will be coming from CL Securities Sebastian Hou.

好的。下一個問題來自 CL Securities 的 Sebastian Hou。

My first question is I would like to get TSMC's brains on the overall semi-cycle inventory. Remember, 3 months ago, the company talked about that you are not too worried about the inventory situation compared to the 4Q '17. But today, you're talking about -- you just talk about that there's a lot of excess of inventory out there. So I was just wondering what has happened in the past 3 months? Is it more due to demand slowdown a lot or it's still more due to there are some hidden inventory now that emerged?

我的第一個問題是，我想了解台積電對整體半週期庫存的看法。記住，3 個月前，公司曾表示，與 2017 年第四季相比，您並不太擔心庫存狀況。但今天，您談論的是——您剛才談到市場上存在大量過剩庫存。所以我只是想知道過去三個月發生了什麼事？這更多的是因為需求大幅放緩，還是更多的是因為現在出現了一些隱藏的庫存？

I will say it's more due to the sudden drop in the demand rather than there's some hidden inventory that we cannot see.

我想說的是，這更多的是由於需求突然下降，而不是存在一些我們看不到的隱藏庫存。

Okay. Can you elaborate more on the -- which application, which end application has seen the most significant declined in demand?

好的。您能否詳細說明一下—哪個應用程式、哪個終端應用程式的需求下降最為顯著？

High-end smartphone is one thing, and then others seeing the drop, actually you can imagine that cryptocurrencies mining, they dropped quite a lot. And then related to that might be some of the high-performance computing that you can see from other applications that related to the cryptocurrency mining.

高階智慧型手機是一回事，然後其他人看到價格下降，實際上你可以想像加密貨幣挖礦，價格下降了很多。與此相關的可能是您可以從與加密貨幣挖礦相關的其他應用程式中看到的一些高效能運算。

And in terms of the inventory digestion, I think Lora talked about that. The inventory will go back to a more seasonal average level by mid of this year. So usually, in the down cycle, we usually see the supply chain will tend to overcut inventory to below normal. So in mid this year that means that we are now ready or is that below normal level can before or after that?

關於庫存消化，我認為 Lora 已經談到了這一點。到今年年中，庫存將恢復到更符合季節性的平均值。因此，通常情況下，在經濟下行週期中，我們通常會看到供應鏈傾向於將庫存削減至低於正常水準。那麼，今年年中是否意味著我們已經準備好了，或者低於正常水平是否在此之前或之後？

We expect it to be a reasonable level that it can extend the business. And we expect that this kind of a demand will recover gradually from first quarter, second quarter and then moving to the second half of this year. So that's why we expect at mid--- in the middle of this year all the inventory will go back to the reasonable or seasonal level. Whether it will be much lower or something like that, we did not expect that yet.

我們預計這將是一個可以擴展業務的合理水平。我們預計這種需求將從今年第一季、第二季開始逐漸恢復，然後進入下半年。所以這就是為什麼我們預計今年年中所有庫存將恢復到合理或季節性水準。至於是否會低很多或類似的情況，我們還沒有預料到。

Okay. Just one last question from me is if you compare this down cycle to the past, I know that TSMC has not offered utilization rate details for many years already. But just to give us a rough idea. On the current utilization rate you are seeing now in first half of this year compared to the UTR we've seen in 2015, 2012. Or say post a financial crisis, is it likely to be the lowest point that we have seen since then?

好的。我的最後一個問題是，如果將這個下行週期與過去進行比較，我知道台積電已經多年沒有提供利用率細節了。但這只是給我們一個大概的想法。就今年上半年的當前使用率而言，與 2015 年、2012 年的 UTR 相比。或者說金融危機過後，這是否可能是我們自那時以來所經歷的最低點？

This -- as Lora just presented, the utilization impact this quarter is really mostly come from 7-nanometer. Although other nodes utilization is lower, but if you compare with the last downturn, if you take 2009 for example it's not that low. So 7-nanometer really is the major underutilized. We think it's temporary.

正如 Lora 剛才介紹的那樣，本季的利用率影響實際上主要來自 7 奈米。雖然其他節點的利用率較低，但如果與上次經濟衰退相比，以 2009 年為例，利用率並沒有那麼低。因此，7 奈米確實是未充分利用的。我們認為這只是暫時的。

So can we assume -- is it fair for us to assume that the UTR is not as slow as in the 2009 yet but there is already lower than what we have seen in 2011, '12 that cycle in 2015 cycle?

那麼我們可以假設——我們可以公平地假設 UTR 還沒有像 2009 年那樣慢，但 2015 年周期中的 UTR 已經低於我們在 2011 年、2012 年看到的水平嗎？

You are right, you are right.

你說得對，你說得對。

Next question will be coming from UBS Bill Lu.

下一個問題來自瑞銀的 Bill Lu。

First question is we've seen a pretty sharp drop-off in demand. And Dr. Wei I think made a comment that in the future, we will work with customers to plan for capacity differently. Wondering if you could talk a little bit more about that as far as what can be done. Is it better planning? Is it diversification? Is it the different payment terms? Can we just talk a little bit about what are some of the things?

第一個問題是我們看到需求急劇下降。我認為魏博士曾表示，未來我們將與客戶合作，以不同的方式規劃產能。想知道您是否可以就此進一步談談可以採取哪些措施。是不是有更好的規劃？這是多元化嗎？是付款條件不同嗎？我們能稍微談談其中的一些事情嗎？

Well, in fact, this is kind of the way we deal with our customer. So there will be a better planning process. TSMC as well as TSMC's customer, I believe that we are learning a lot during this cycle and then we will be more prudent or have found ways at TSMC and customer can work together for the better planning of the capacity in the future without -- to summarizing in one wording, we will be more conservative. But again, we will not lose our support to our customer.

嗯，事實上，這是我們對待客戶的方式。因此將會有一個更好的規劃過程。台積電以及台積電的客戶，我相信我們在這個週期中學到了很多東西，然後我們會更加謹慎，或者說我們已經找到了台積電和客戶可以共同合作的方法，以便更好地規劃未來的產能，而不是——用一句話來總結，我們會更加保守。但同樣，我們不會失去對客戶的支持。

Wider product portfolio is another factor you mentioned.

更廣泛的產品組合是您提到的另一個因素。

Second question is for Lora. Can you talk about the depreciation for this year? And I'm asking that because I feel like TSMC over the last year, 1.5 years has brought quite a few EUV tools. And I believe you don't depreciate until these tools are in production, right? And so if you look at the CapEx trend versus the depreciation trend, is there a different linearity because all of a sudden the tools you bought, I don't know, 10, 15 tools need to be depreciated.

第二個問題是問 Lora 的。可以談談今年的折舊情況嗎？我之所以會問這個問題，是因為我覺得台積電在過去一年半的時間裡推出了不少 EUV 工具。而且我相信這些工具直到投入生產才會貶值，對嗎？因此，如果您查看資本支出趨勢與折舊趨勢，是否存在不同的線性，因為突然之間您購買的工具（我不知道，10、15 個工具）需要折舊。

You're right. We started depreciating the tool when it gets into the productions. The depreciation pattern versus the CapEx changes is not linear, also because whether the CapEx is front end loaded, back end loaded also will impact the whole year depreciation. But I can tell you based on the 10 to 11 billion CapEx this year, we expect the depreciation will increase by mid-single-digit, which is versus last year was double-digit. So you see, it's all about 10 to 11 billion, but depreciation change can be quite different.

你說得對。當工具投入生產時，我們就開始貶值。折舊模式與資本支出變化的關係並不是線性的，因為資本支出是前端加載還是後端加載也會影響全年折舊。但我可以告訴你，基於今年 100 億至 110 億的資本支出，我們預計折舊額將增加中等個位數，而去年則為兩位數。所以你看，這都是大約100到110億，但折舊變化可能會大不相同。

Sorry I need to walk through the math a little bit. What is that assuming for, I guess, the 7+? Because I just want to figure out the next couple of years, as EUV ramps up, are we going to see a pickup or how does that work?

抱歉，我需要稍微解釋一下數學。我猜，7+ 的假設是什麼？因為我只是想知道接下來的幾年，隨著 EUV 的加速發展，我們是否會看到回升，或者它會如何運作？

I don't recall there is a sudden increase. It's a more modest increase year-over-year.

我不記得有突然增加的情況。與去年同期相比，增幅較為溫和。

All right. I think it's about time that we should go to the line for the questions from analysts waiting in the line.

好的。我認為現在是時候我們應該去排隊回答排隊等候的分析師的問題了。

So operator, could you please have the first caller on the line?

接線員，請您讓第一位來電者接通電話好嗎？

Yes, the first question is from the line of Brett Simpson from Arete Research.

是的，第一個問題來自 Arete Research 的 Brett Simpson。

I did have a question on inventory levels. Can you help me frame where the industry inventory levels are at the moment, maybe the inventory days versus a quarter ago? And what would you say is normal inventory levels in inventory days? Can you look exactly how elevated the inventory levels are at the moment?

我確實對庫存水準有疑問。您能否幫我估算一下目前產業的庫存水平，例如與上一季相比的庫存天數？您認為庫存天數的正常庫存水準是多少？能具體看看目前的庫存水準有多高嗎？

Brett, I think you probably talk to too close to the microphone, so I'm not hearing you quite well, but I think you are asking the inventory level. The excess inventory that we see it now versus we saw 3 months ago. And you like to have a little bit color on that difference. Is that your question?

布雷特，我想你可能離麥克風太近了，所以我聽不太清楚，但我認為你問的是庫存水準。與三個月前相比，我們現在看到的庫存過剩。您希望這種差異具有一點色彩。這是你的問題嗎？

Yes. I think and also just to understand what normal inventory levels are in your view.

是的。我認為，也只是想了解您認為正常的庫存水準是多少。

Three months ago, we estimate the inventory exiting 2018 is several days above seasonal. Now we look at it more like a 10 days above seasonal.

三個月前，我們估計 2018 年的庫存量比季節性庫存量高出幾天。現在我們將其視為比季節性高出 10 天的情況。

And you said Smartphone seasonality was also going to be weak in Q1. What are you suggesting the communication division revenue in Q1 versus Q4 revenue?

您說過第一季智慧型手機的季節性也會較弱。您認為第一季和第四季通訊部門的收入如何？

Well, I think the main reason is because of high-end smartphone seasonality. So that's a -- and typically, Q1 is a low season for the high-end smartphone. But this kind of high inventory is because of a sudden drop (in demand) from the 4Q last year and extended to the first quarter this year. And that's why the inventory suddenly increase so much. Did that answer your question?

嗯，我認為主要原因是高階智慧型手機的季節性。所以，通常來說，第一季是高階智慧型手機的淡季。但這種高庫存是因為從去年第四季開始需求突然下降，並延續到今年第一季。這就是庫存突然增加這麼多的原因。這回答了你的問題嗎？

Can you help maybe quantify -- thank you. Can you perhaps quantify how big a drop in Q1 your Communication revenue will be because of the Smartphone seasonality?

您能幫忙量化一下嗎？謝謝。您能否量化一下，由於智慧型手機的季節性影響，第一季您的通訊收入將下降多少？

Okay. Lora, would you answer this?

好的。蘿拉，你能回答這個問題嗎？

So you're asking the by segment how do we see the changes in first quarter. Communication in the first quarter will drop the most followed by the computer. Consumer actually will grow slightly and Industrial/Standard will grow (decline) very significant. So I think the decline in 3 sectors are all double-digit decline in the first quarter.

所以你問的是，按細分來看，我們如何看待第一季的變化。第一季通訊下降幅度最大，其次是電腦。消費者實際上會略有成長，而工業/標準將會大幅成長（下降）。所以我認為第一季三個產業的降幅都是兩位數。

And one last question on 7-nanometer, what percent of sales in Q1 do you expect to come from 7-nanometer? And you're suggesting a very strong 7-nanometer ramp in second half when the industry gets back to normal inventory levels. Is there a risk that demand for 7-nanometer exceeds supply? And to what extent can you get customers to pull in 7-nanometer and start ramping earlier in Q2 of this year?

關於 7 奈米的最後一個問題，您預計第一季的銷售額中有多少百分比來自 7 奈米？您建議，當產業恢復正常庫存水準時，下半年 7 奈米產能將強勁成長。7奈米是否存在需求超過供應的風險？你能在多大程度上讓客戶採用 7 奈米製程並在今年第二季稍早開始量產？

We're trying to understand your question. So you're asking us about 7-nanometer since we said that there's going to be a strong cutback on 7-nanometer. Are you asking what percentage of 7-nanometer is part of our Q1 revenue and then what will be the level in the second half for 7-nanometer?

我們正在嘗試理解您的問題。所以你問我們關於 7 奈米的問題，因為我們說過 7 奈米將會大幅削減。您是想問，7 納米在我們第一季的收入中所佔比例是多少，以及下半年 7 納米的水平會是多少？

Let me answer. Let me try to clarify the ramping of 7-nanometer this year. We already ramped the 7-nanometer last year and that's our first generation 7-nanometer. Coming to the first quarter, the 7-nanometer composition is about 21% of our corporate revenue already. Now this year, we are preparing to ramp the second generation 7-nanometer. We don't have a specific name, different customer have different flavors. But overall, it's their second generation products to be launched this year. So or the 7-nanometer number for the second generation will be drastically increased during this ramp in the second half of this year.

讓我來回答一下。讓我試著解釋一下今年 7 奈米技術的進展。我們去年已經實現了 7 奈米的量產，這是我們的第一代 7 奈米。到第一季度，7奈米成分已占我們公司收入的21％左右。今年，我們正準備推出第二代 7 奈米技術。我們沒有特定的名稱，不同的顧客有不同的口味。但總體來說，這是他們今年推出的第二代產品。因此，第二代 7 奈米的數量將在今年下半年的成長過程中大幅增加。

I'm sorry, just to clarify, can you indicate what 7-nanometer as a percent of sales might be in Q1 and does this mark the trough for 7-nanometer in 2019?

抱歉，我只是想澄清一下，您能否指出 7 奈米在第一季的銷售額佔比是多少，這是否標誌著 2019 年 7 奈米的低谷？

Question is what's the percentage of 7-nanometer in our revenue in Q1 and whether or not that percentage is the trough, is the lowest for this year.

問題是，7 奈米在我們的第一季收入中所佔比例是多少，以及這個比例是否是今年的最低點。

Lora, can you answer that?

蘿拉，你能回答這個問題嗎？

Okay. Mark just mentioned the 7-nanometer accounts for 21% of our first quarter revenue. We see that percentage of total revenue will continue to grow. So I will say that percentage-wise first quarter will be the trough.

好的。馬克剛才提到 7 奈米占我們第一季收入的 21%。我們看到總收入的百分比將繼續增長。所以我想說，從百分比來看，第一季將是低潮。

So operator let's go to the next caller on the line.

接線員，讓我們接通下一位來電者。

Next question is from the line of Mehdi Hosseini from SIG.

下一個問題來自 SIG 的 Mehdi Hosseini。

I have 1 follow-up regarding your high-performance compute expectation for 2019. I believe cryptocurrency accounted for only a few of percentage of overall revenues in the first half of '18. So why is there still an overhang on your HPC revenue mix? I believe you said including crypto, it will be -- HPC will be down double digits. And I'm just trying to better understand how it has trended from '18 to '19? And I have a follow-up.

關於您對 2019 年高效能運算的期望，我有一個後續問題。我認為加密貨幣僅佔 2018 年上半年總收入的一小部分。那麼，為什麼您的 HPC 收入組合仍有問題？我相信您說過，包括加密在內，HPC 將會下降兩位數。我只是想更了解它從 18 年到 19 年的趨勢如何？我還有一個後續問題。

So Mehdi, I think you are asking us about HPC this year, if crypto accounted for a few points of our business in 2018 and how much crypto will be accounting for our business in 2019.

所以 Mehdi，我想你問的是今年我們關於 HPC 的情況，加密貨幣是否佔了我們 2018 年業務的幾個點，以及加密貨幣將占我們 2019 年業務的多少。

Yes.

是的。

Okay. This year, we don't forecast -- we become conservative in forecasting this volatile business. So the cryptocurrency mining this year is much, much less than last year. And to what percentage, I don't think it's -- I can release it right now.

好的。今年，我們不做預測——我們對這個波動性大的行業的預測變得保守。因此，今年的加密貨幣挖礦比去年少得多。至於比例是多少，我不認為——我現在可以公佈。

It is a conservative -- this is a conservative estimation of cryptocurrency.

這是一個保守的——這是對加密貨幣的保守估計。

You have a new HPC customer program. How come those ramps are not enabling you to ramp HPC in 2019 rather than just slightly up?

您有一個新的 HPC 客戶計劃。為什麼這些成長無法幫助您在 2019 年提升 HPC，而只是稍微提升？

So Mehdi's comments is that if we have this expanding customer portfolio in HPC, why is it that HPC, excluding crypto mining, can only grow slightly this year?

因此，Mehdi 的評論是，如果我們在 HPC 領域擁有不斷擴大的客戶組合，那麼為什麼 HPC（不包括加密挖掘）今年只能略有成長？

All right, good question. It's because of our customer we expand in our customer portfolio and product portfolio. But their ramp will start from probably in the second half this year with the small-volume and then going to the mass production next year. That's why this year, we saw just slightly increase on the HPC business excluding the cryptocurrency.

好的，好問題。正是因為我們的客戶，我們才擴大了客戶組合和產品組合。但他們的生產可能從今年下半年開始，先進行小批量生產，然後明年進行量產。這就是為什麼今年我們看到不包括加密貨幣的 HPC 業務僅略有成長。

And my second follow-up has to do with the 5-nanometer ramp. And I'm trying to better understand your visibility and tapeout engagement. Should we expect a 5-nanometer ramp in 2020 to look more like a 7 or is that going to be a steeper? Any color would be appreciated.

我的第二個後續問題與 5 奈米坡道有關。我正在嘗試更好地了解您的知名度和流片參與度。我們是否應該預期 2020 年 5 奈米的坡道看起來更像 7 奈米，還是會更陡峭？任何顏色都會受到歡迎。

Well, let me comment on that. 5-nanometer are ramping in 2020. I would expect that product portfolio is expanding more as compared with the 7-nanometer in 2018. How much of a steeper of that one, it will be similar or probably we're a little bit conservative. But today, we saw the better product portfolio, better customer portfolio. But steeper ramp probably will be similar.

好吧，讓我對此發表評論。5奈米技術將在 2020 年加速發展。我預計與 2018 年的 7 奈米相比，產品組合將進一步擴大。這個有多陡峭，它會相似，或者可能我們有點保守。但今天，我們看到了更好的產品組合、更好的客戶組合。但更陡的斜坡可能會類似。

Sure. Should we assume that 5 would become bigger than 7 in 2021? Is that when the true benefits of 5 and the customer diversification that will materialize?

當然。我們是否應該假設 2021 年 5 會大於 7？那時 5 的真正優勢和客戶多樣化才會真正實現嗎？

From today's situation and customers we engage with, yes, 2021 5-nanometer will be bigger than the 7-nanometer's same period of time.

從目前的情況和我們接觸的客戶來看，是的，2021 年 5 奈米將比同期的 7 奈米更大。

All right. Let's come back to the floor.

好的。讓我們回到正題。

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。

So my first question is about smartphone semi-demand for this year because the management attribute the weakness in 1Q to a seasonality. But do you see any structural issues? For example, the lengthier replacement cycle (inaudible) issue of the smartphone semi-demand? And also I can because high-end smartphone, even it's a higher content it should be contributing more for your revenue. But you're assuming this segment will decline and units will decline, right? So why can you get a number that a full year mobile revenue can still grow slightly?

所以我的第一個問題是關於今年的智慧型手機半需求，因為管理層將第一季的疲軟歸因於季節性因素。但您是否發現任何結構性問題？例如，智慧型手機半需求的更換週期更長（聽不清楚）問題？而且我也可以，因為高階智慧型手機，即使它的內容更高，也應該為您的收入做出更多貢獻。但您認為這個細分市場將會衰退，而且數量也會減少，對嗎？那麼為什麼可以得出全年行動收入還能小幅成長的數字呢？

Good question. Actually, high-end smartphone this year at least for the first half still have some kind of inventory issue. But in the second half, we expect that new model coming out. It's ramping up starting from the second quarter and all the way to the end of this year with a new model coming out. However, the total units as we expected or we forecasted that what we drop slightly. The content will increase more than the unit drop in the percentage-wise. So TSMC still grow slightly on the mobile business. That's why. And your question is...

好問題。實際上，今年高階智慧型手機至少上半年仍存在某種庫存問題。但我們預計下半年新車型將會上市。從第二季開始，這一趨勢一直持續到今年年底，屆時將有一款新車型上市。然而，正如我們預期或預測的那樣，總銷量略有下降。從百分比上看，含量的增加將超過單位的下降。因此台積電在行動業務上仍略有成長。這就是原因。你的問題是...

So I just want to get a confidence why you think second half that recovery could happen, right? Because it's possible that a new product may disappoint again. And also, yes, if I can get more color, do you think it's kind of a specific brand issue or is that across different brands for the high-end smartphone demand issue?

所以我只是想知道為什麼您認為下半年可能會出現復甦，對嗎？因為新產品有可能再次令人失望。而且，是的，如果我可以獲得更多顏色，您認為這是一個特定的品牌問題，還是不同品牌對高階智慧型手機的需求問題？

All right. Second half, that's a good question also. Second half, why we still expect a recovery, because we have a better customer portfolio. That's all I can say.

好的。後半部分，這也是一個好問題。下半年，我們仍然預期會出現復甦，因為我們有更好的客戶組合。我只能說這麼多。

Okay, fair enough. So market share again there. And also I want to follow-up the previous question regarding HPC, right? So because compared to your previous target to grow 20% year-on-year every year for HPC, I feel like except for crypto there's also some demand issue, right? For example, I'm not sure what you will see the demand in AI cloud and those telecommunication, right? Because that will be some demand issue to get only kind of slightly growth for HPC versus your targets of 20%. Can you comment on the demand?

好吧，夠公平。因此市場佔有率再次出現。另外我想跟進一下有關 HPC 的先前的問題，對嗎？因此，與您之前設定的 HPC 每年同比增長 20% 的目標相比，我覺得除了加密貨幣之外，還存在一些需求問題，對嗎？例如，我不確定您會看到人工智慧雲端和電信方面的需求是什麼，對嗎？因為這將是一些需求問題，與 20% 的目標相比，HPC 只能實現略微的成長。您能評論一下這個需求嗎？

Okay, let me comment on that. We used to be very optimistic. We're still very optimistic because of the AI and 5G. But AI and 5G -- AI is picking up. 5G will start from this second half. Start to install some of the base station, the infrastructure will start to build out. So we did not expect the 5G smartphone will be a big number this year. It will be a big number next year. And all the smartphone we expect that the AI will be included inside with some kind of a content that we did not get the full picture yet but we know is increasing. And you are talking about HPC. We used to say the 20% CAGR. Did we say that?

好的，讓我對此發表評論。我們曾經非常樂觀。由於人工智慧和5G，我們仍然非常樂觀。但人工智慧和 5G——人工智慧正在興起。5G將從今年下半年開始。開始安裝一些基地台，基礎設施將開始建造。因此，我們並沒有預期今年 5G 智慧型手機的數量會很大。明年這個數字將會很大。我們預計所有智慧型手機都將包含某種人工智慧功能，我們目前還沒有完全了解，但我們知道這種功能正在不斷增加。您正在談論 HPC。我們過去常說複合年增長率為 20%。我們說過那句話嗎？

Last year and the year before.

去年和前年。

Oh no. The last year compared with a year before because there is a 1 uncertain -- not 1 uncertain, 1 surprise that's called cryptocurrency mining. It suddenly increased dramatically. And TSMC because of the technology offering, so we have to say that we are the -- we get most of the benefit of the cryptocurrency's mining business. Now we saw volatility drop. However, without the cryptocurrency, we still see strong momentum on the high-performance computing: one, because we have very competitive or actually I want to say the industry leading technology which fits the requirement of HPC business; second, again, I would have to say we have a stronger customer portfolio.

哦不。去年與前年相比，因為存在一個不確定性——不是 1 個不確定性，而是 1 個驚喜，那就是所謂的加密貨幣挖礦。它突然急劇增加。而台積電由於其技術供應，所以我們不得不說，我們從加密貨幣挖礦業務中獲得了大部分利益。現在我們看到波動性下降。然而，即使沒有加密貨幣，我們仍然看到高效能運算的強勁勢頭：一是因為我們擁有非常有競爭力的技術，或者實際上我想說的是業界領先的技術，符合 HPC 業務的要求；第二，我再次強調，我們擁有更強大的客戶組合。

Let's look beyond 2019, right. So for 2 or 3 very high growth profile segment, HPC, IoT and auto, which I was very surprised that your company is only flat year-on-year. So for coming in maybe 2 or 3 years, what do you think should be the right CAGR for HPC, IoT and auto?

讓我們展望 2019 年以後。因此，對於 2 或 3 個成長非常快的領域，即 HPC、IoT 和汽車，我很驚訝貴公司同比僅持平。那麼，您認為未來 2 到 3 年內 HPC、IoT 和汽車的正確複合年增長率應該是多少？

I think the strongest growth is high-performance computing. The second strong growth in terms of the dollar increase is still smartphone, yes. So that's a dollar increase.

我認為成長最強勁的是高效能運算。從美元成長來看，第二大強勁成長點仍然是智慧型手機。因此美元數量增加。

But auto includes those kind of EV -- I'm not sure how you classify the autonomous driving, right? But auto I think it used to be kind of a segment the company expects strong growth. Why this year we don't...

但是汽車包括那些類型的電動車——我不確定你如何對自動駕駛進行分類，對嗎？但我認為汽車曾經是公司預期強勁成長的一個領域。為什麼今年我們不...

Yes. Auto if you look at the past 2 years, it's a very strong growth, 27%. But as you know, since last year, suddenly the automotive markets almost stopped growing. Many of our customers say the same thing. Very consistently. And some of them has attributed to the steel and aluminum tariffs. And that is I think is the structure of the automotive. In terms of the long-term, we still see the innovation of automotive will come out of this.

是的。如果你回顧過去兩年，你會發現汽車產業的成長非常強勁，達到了 27%。但正如你們所知，自去年以來，汽車市場突然幾乎停止了成長。我們的許多客戶都說了同樣的話。非常一致。其中一些將此歸咎於鋼鐵和鋁關稅。我認為這就是汽車的結構。從長遠來看，我們仍然認為汽車產業的創新將由此產生。

So yes, I guess 1 question from a lot of investors it's about dividend payout expectation right, because comment was steady growth every year. But you have had some over the past 2 years EPS growth of around 3% per year and this year, I'm not sure, right. It will be flat, right? So does the company think this year you want to increase the dividend dollars again?

是的，我想很多投資者都會問的一個問題是關於股息支付預期，因為評論是每年穩定成長。但過去兩年，每股盈餘成長率約為每年 3%，而今年，我不確定，對嗎？它會是平的，對嗎？那麼公司是否認為今年您想再次增加股利？

Despite the short-term market weakness, if we look at free cash flow that we can generate remain very strong. So we plan to further increase dividend in 2019. We will get the board approval in February. So will make announcement after that.

儘管短期市場疲軟，但如果我們看一下，我們產生的自由現金流仍然非常強勁。因此我們計劃在2019年進一步增加股利。我們將在二月獲得董事會批准。因此之後會發佈公告。

All right. Next question will be coming from JPMorgan's Gokul.

好的。下一個問題來自摩根大通的 Gokul。

My first question, could you talk a little bit about any recalibration in the China expansion given what we have seen with cryptocurrency and some the China demand as well? Could you talk about the plans on China expansion? The last time, you mentioned maybe go up to 20k in phase 1 and then potentially expand beyond that. Was there any timeline difference on the Nanjing fab?

我的第一個問題是，鑑於我們看到的加密貨幣和中國的一些需求，您能否談談中國擴張的任何重新調整？能談談中國擴張計畫嗎？上次，您提到可能在第一階段增加到 20,000，然後可能會進一步擴大。南京工廠的時間表是否有差異？

The plan did not change, because this is so short-term different kind of market softening. No, it did not change our strategy. The plan continues.

該計劃沒有改變，因為這是短期內不同類型的市場疲軟。不，它沒有改變我們的策略。計劃仍在繼續。

Is there any timing differential in terms of when you get to phase 2 given (inaudible)

考慮到何時進入第二階段，是否存在時間差異（聽不清楚）

It will depend on the business situation, definitely. But 20,000 wafer per month is a plan, continue to be executed.

這肯定取決於業務情況。但每月2萬片晶圓是一個計劃，繼續執行。

Okay. Next question I had was on N5. Just building on some of the questions as well. It is for many customers it's going to be the first node with significant EUV insertion. So could you help us understand what is the feedback you're getting from customers. Are customers planning to stay on at N7 longer even N7 has been successfully proven node and as you mentioned a lot more customers are coming through there or do we expect to see the same number of tapeouts like 50 tapeouts that you had by the end of 2017? Are we going to be at similar kind of levels as we get into end of this year? Can you give us some idea about how that progress from our breadth of customer base is progressing in N5?

好的。我的下一個問題是關於 N5 的。也只是針對一些問題進行建構。對於許多客戶來說，這將是第一個具有重要 EUV 插入的節點。那麼，您能否幫助我們了解您從客戶那裡得到的回饋？即使 N7 已經成功驗證了節點，客戶是否計劃繼續使用 N7 更長時間，並且正如您所提到的，越來越多的客戶正在通過那裡，或者我們是否預計會看到與 2017 年底相同數量的流片，例如 50 個流片？到今年年底，我們的業績還會維持類似的水準嗎？您能否向我們介紹一下我們在 N5 領域客戶群的廣泛進展？

Okay. On the N5 progress, I just reported that our progress is on track and we work with the customers. And you say that whether our customers have worry or concern on EUV's readiness or stability and those kind of things, no, they are happy with us. We worked with supplier, we worked with the customer on both side and our progress is so far, so good. Now whether that they want to move into N5 or stay in the 7, all I say is all the customer who are working with us on N7 are engaging with us at N5. The product, when they want to introduce into the market that is our customer's judgment. Because N5 did offer very good performance per se as compared with N7. So some of the high-speed computing, some of the high-end smartphone, they still need to go into N5. So you would expect those customer will adopt the N5 immediately that when it is available, okay. So number of the tapeouts, I cannot tell you right now. But I already told you that all the customers are engaging with us.

好的。關於N5的進展，我剛剛報告說我們的進展一切順利，我們正在與客戶合作。您說，無論我們的客戶是否擔心或擔憂 EUV 的準備或穩定性等問題，他們都對我們感到滿意。我們與供應商合作，與客戶合作，到目前為止，我們的進展非常好。現在，無論他們是想進入 N5 還是留在 7，我要說的是，所有與我們在 N7 上合作的客戶都在 N5 上與我們合作。當他們想要將產品引入市場時，這取決於我們的客戶的判斷。因為N5本身與N7相比確實提供了非常好的性能。因此一些高速運算、一些高階智慧型手機仍然需要進入 N5。所以你會期望那些客戶在 N5 上市時立即採用它，好的。所以現在我無法告訴你流片的數量。但我已經告訴過你，所有客戶都在與我們互動。

Next question will be coming from Crédit Suisse with Randy Abrams.

下一個問題來自瑞士信貸的蘭迪·艾布拉姆斯 (Randy Abrams)。

I wanted to follow-up on your guidance for 2019. Last year, you gave a guidance at the beginning of the year for first half year-over-year growth and also the second half year-over-year. So if you could give a view or maybe split how you see in first half versus second half?

我想跟進您對 2019 年的指導。去年，您在年初就給出了上半年同比增長的預測，也給出了下半年同比增長的預測。那麼，您能否給出一個觀點，或者說您對上半年和下半年的看法是什麼？

Lora, can you give the number?

洛拉，你能提供電話號碼嗎？

Second half definitely is better than first half, okay?

下半場一定比上半場好，好嗎？

That's good, much better.

很好，好多了。

First quarter of '19 is quite weak, and we think it's going to take another quarter to recover. So from what I have seen now for this year, if you compare year-over-year, our first half may not be higher, maybe worse than last year. But second half definitely will be better.

2019 年第一季相當疲軟，我們認為還需要一個季度才能恢復。因此，從我目前看到的情況來看，如果與去年同期相比，我們的上半年可能不會更好，甚至可能比去年更差。但下半場肯定會更好。

A follow-up on the application and inventory issue, could you talk how broad? Because you did flag smartphone as inventory, but could you flag how broad you think that inventory issue is? Will cross applications in the guidance per product had industrial up significantly, consumer up slightly. If you could talk a bit about that factoring in the inventory comments, what's driving those increases.

關於申請和庫存問題的後續問題，您能談談範圍有多廣嗎？因為您確實將智慧型手機標記為庫存，但您能否標明您認為庫存問題有多廣泛？指導各產品的交叉應用均出現工業級大幅上漲，消費級小漲。如果您可以談談庫存評論中的因素，那麼推動這些成長的原因是什麼？

You mean supply chains inventory?

你是指供應鏈庫存嗎？

Yes, because you mentioned it's a broad inventory or you have an inventory issue. How do see it across the other applications and what's driving the segments.

是的，因為您提到這是一個廣泛的庫存或您有一個庫存問題。如何看待它在其他應用程式中的表現以及推動其發展的因素是什麼。

Exiting 2018, I think the inventory increase is broad range, because of the macroeconomic uncertainty in this trade tension. Pretty much put people really on hold very careful. So there's used to be across the board.

2018年即將過去，我認為庫存將大幅增加，因為貿易緊張局勢帶來了宏觀經濟的不確定性。幾乎讓人們非常小心地等待。所以這曾經是全面的。

Okay. Then I guess, the rationale then for industrial up significantly and consumer up slightly.

好的。那我猜，這就是工業大幅上漲、消費略有上漲的原因。

Well, I think that the industrial...

嗯，我認為工業...

Randy, your question is industrial segment is down in first quarter.

蘭迪，你的問題是第一季工業部門下滑。

No, I think you said industrial was up significantly and consumer up slightly (inaudible)

不，我認為您說的是工業品大幅上漲，消費品略有上漲（聽不清楚）

No, no, I said industrial down significantly. Only consumer up slightly. The other sector all down, okay?

不不不，我說的是工業大幅下降。僅消費略有上漲。其它部門全部倒下，好嗎？

And if I could squeeze 1 more in the backend, it's still another significant CapEx. Could you talk maybe a snapshot what you expect for the backend business this year and what you're seeing for InFO and CoWoS expansion this year?

如果我可以在後端再擠 1 個，那它仍然是另一個重要的資本支出。您能否簡要談談您對今年後端業務的期望以及您對今年 InFO 和 CoWoS 擴展的展望？

The backend business is this year it will grow double-digit. Still a very good business because of we offer the solution to the customers so that they can get the higher performance and better cost structure that they can find in other piece?

今年後端業務將實現兩位數成長。這仍然是一項非常好的業務，因為我們為客戶提供解決方案，以便他們可以獲得在其他產品中可以找到的更高的性能和更好的成本結構？

The back-end last year is about 2.5 billion. And going forward, currently, we see the double-digit growth at least year-over-year. To clarify, backend business still is in initial stage because as you remember initially, our backend was adopted by the smartphone. But now more and more, we see the high-performance computing customer in the 5-nanometer. Almost all of them adopt -- wants to adopt what we call advanced packaging. So we see the advanced packaging business is coming to support our high-performance computing products across the leading edge customers. Just to make the record, from now on, we call -- we don't call backend. We call that advanced packaging because we realize that packaging is very different than the OSAT business we used to know.

去年後端大概是25億左右。展望未來，目前，我們預計至少會實現同比兩位數的成長。需要澄清的是，後端業務仍處於初始階段，因為正如您最初記得的那樣，我們的後端是由智慧型手機採用的。但現在我們越來越多地看到 5 奈米的高效能運算客戶。他們幾乎都採用——想要採用我們所說的先進封裝。因此，我們看到先進封裝業務正在為前沿客戶的高效能運算產品提供支援。只是為了記錄一下，從現在開始，我們不再呼叫後端。我們稱之為先進封裝，因為我們意識到封裝與我們過去所了解的 OSAT 業務有很大不同。

Follow-up question from CL Securities, Sebastian Hou.

CL Securities 的 Sebastian Hou 提出了後續問題。

First follow-up is can you provide us some update on the tapeout numbers that you have received on 5-nanometers now or your expectation by the end of this year?

首先的問題是，您能否向我們提供一些關於目前已收到的 5 奈米流片數量的更新信息，或者您對今年年底的預期？

Well, I just say that I cannot give you the numbers today. But I repeat it again, all the 7-nanometer customers are working with us right now on their designed.

好吧，我只能說我今天無法給你這些數字。但我再次重申，所有 7 奈米客戶現在都在與我們合作進行他們的設計。

Okay. And the 7-nanometer tapeout number still on track to exceed 100 by the end of this year?

好的。今年底，7 奈米流片數量是否仍有望超過 100 個？

It's still.

還是那樣。

Or it could be earlier?

或者可能更早？

Well, it will depend on how quickly that our customer can adopt our N7, N7+. But still, the numbers still meet our expectations on the HPC probably even more higher, yes.

嗯，這取決於我們的客戶能多快接受我們的 N7、N7+。但是，這些數字仍然符合我們對 HPC 的預期，甚至可能更高，是的。

And given the current macro uncertainty, have you noticed any of your customers which are during the tapeout on 7 right now, become more hesitant or cautious in terms of the production schedule?

鑑於目前的宏觀不確定性，您是否注意到目前處於 7 號流片階段的客戶在生產計劃方面變得更加猶豫或謹慎？

No, they are being very aggressive because of 7-nanometer has very good performance. So they can sell them to gain the market -- to their product going to the market. So it's not slowing down. It's actually accelerating a little bit.

不，他們非常積極，因為 7 奈米的性能非常好。因此他們可以透過銷售產品來贏得市場——將他們的產品推向市場。所以它並沒有放慢速度。它實際上正在加速一點點。

Okay. So I think last year and this year, I think probably only not a big portion of these 7-nanometer tapeout with customers are reaching production. Is that a fair assumption? Just...

好的。所以我認為去年和今年，可能只有很小一部分 7 奈米製程能夠投入生產。這是一個合理的假設嗎？只是...

Yes.

是的。

Just one of the big customers account for big wafer volume but the tapeout number is small. Which means do you expect more of this smaller volume type customers but to get account of the big numbers of the tapeout will reach production in 2020.

只有一個大客戶佔晶圓量很大，但流片數量很少。這意味著您是否期望會有更多這種小批量類型的客戶，但請考慮到大量的流片將在 2020 年投入生產。

Well, I just mentioned yes, some of the second wave or third wave of product design get into the 7, 7+ will start to ramp probably second half or the fourth quarter of this year. Mass production will be expected in 2020.

嗯，我剛才提到了，是的，第二波或第三波產品設計進入 7、7+ 階段，可能會在今年下半年或第四季開始加速。預計2020年實現量產。

Okay. So it sounds like you don't notice or feel any bubbling in terms of the tapeout booming.

好的。因此聽起來您沒有註意到或感覺到流片熱潮中的任何波動。

No we did not see that.

不，我們沒有看到。

Okay, it's great. My next question is -- sorry, I won't have another question.

好的，非常好。我的下一個問題是——抱歉，我沒有其他問題。

Okay. The right, follow-up questions from Citi's Roland Shu.

好的。正確的是，花旗銀行的 Roland Shu 提出了後續問題。

Last year, the raw wafer negatively impacted gross margin. How about this year? Are we going to still see the same change or we happen to see will be reversed maybe a benefit for this raw wafer price on margin?

去年，原始晶圓對毛利率產生了負面影響。今年怎麼樣？我們是否仍會看到同樣的變化，或者我們碰巧看到的是逆轉，也許對原始晶圓價格的利潤有利？

We have signed a long-term contract with our suppliers in 2017 and '18. So lock in the long-term supply and also lock in the price. So we do not see any further price deterioration for us, yes.

我們在2017年和2018年與供應商簽訂了長期合約。因此鎖定長期供應並鎖定價格。是的，我們認為價格不會進一步下跌。

Okay, yes but given now that demand is declining and are we going to renegotiate these longer contracts with the wafer suppliers?

好的，是的，但是考慮到現在需求正在下降，我們是否要與晶圓供應商重新協商這些長期合約？

Yes.

是的。

So this is for 2019 and 2020 or going forward?

那麼這是針對 2019 年和 2020 年還是未來呢？

Going forward. Going forward, we hope we achieve some cost saving.

繼續前進。展望未來，我們希望能夠節省一些成本。

Second question is by when you will see your CPU revenue to reach 1% of your total revenue and also by when you will see the CPU foundry also coming from multiple customers?

第二個問題是，什麼時候您的 CPU 收入會達到總收入的 1%？什麼時候您的 CPU 代工收入也會來自多個客戶？

That's some very specific 1% but just say that we started working with the CPU customers and starting from 7, 7+ and all the way to 5, okay? And when time's up I'll report it here, say what is percentage that we got from the CPU, okay.

這是非常具體的 1%，但我們只是說我們開始與 CPU 客戶合作，從 7、7+ 開始一直到 5，好嗎？時間到了，我會在這裡報告，說一下我們從 CPU 獲得的百分比是多少，好的。

I think you can calculate from our customers' financial.

我想你可以根據我們客戶的財務狀況來計算。

Okay. Just to clarify, C.C, you said that you start to work with a CPU customer or customers.

好的。只是為了澄清一下，C.C，您說您開始與一個或多個 CPU 客戶合作。

Customers.

顧客。

All right. Next question will be coming from UBS is Bill Lu.

好的。下一個提問者是來自瑞銀的 Bill Lu。

A couple of questions on the trade tension in tariffs. With tariffs becoming, I guess more prevalent, does that change your outlook on where to place the fabs? And secondly, you've got more competition at the trailing edge if you look at the Chinese fabs. Are you seeing an opportunity to for it to take share with the trade tension?

關於關稅貿易緊張局勢的幾個問題。我想，隨著關稅變得越來越普遍，這是否會改變您對晶圓廠選址的看法？其次，如果你看看中國的晶圓廠，你會發現後緣的競爭更加激烈。您是否看到了它利用貿易緊張局勢分一杯羹的機會？

Okay. You talked about fab location, right? It is -- as you know, we have -- when we build fab, nowadays we only build the leading edge fabs. That is we're doing 5-nanometer fabs, preparation and we're building 3-nanometer. And the decision was made to build in Tainan, okay? And of course, with across-the-board support from the local and administration here. Upon the trade tension, I think it appears that we will, at this point, it seems that there are much -- it is good to build a fab in Taiwan. But actually, we have almost none request from our customers to change the plan we have. We -- but however we do constantly assessing and deliberation about what's the pros and cons of that plan and whether there are other options. But so far, we haven't changed our plan. The prime reason is this: When we ramp the leading edge fabs, as you know those are really for the high-performance computing or smartphone launch, the ramp is very tight. Time-to-market is critical. And to have a leading edge fab ramp not only this fab has to be closely coupled with an R&D fab, which is in Hsinchu, the 2 teams also work as 1 team, also this fab has to collaborate with other fabs in TSMC. As our founder mentioned, there are thousands of engineers, transport from fab to fab to cope with this sudden ramp of those resources needed. So those are the background of those leading edge fabs. When we open book with our customers, this is the best sure way to ensure their product announcement and product launch and the request conversation will take them back. But we're constantly watching this on bigger geopolitical change. Of course, at this present time, we do not have plan to change that.

好的。您談到了工廠位置，對嗎？如你所知，當我們建造晶圓廠時，現在我們只建造尖端晶圓廠。也就是說，我們正在建造 5 奈米晶圓廠，進行準備工作，並且正在建造 3 奈米晶圓廠。而且決定在台南建，好嗎？當然，這也得到了地方政府和政府的全力支持。鑑於貿易緊張局勢，我認為目前看來，在台灣建立工廠是件好事。但實際上，幾乎沒有客戶要求我們更改現有計劃。但是我們確實不斷評估和考慮該計劃的利弊以及是否還有其他選擇。但到目前為止，我們還沒有改變計畫。主要原因是：當我們增加尖端晶圓廠的產能時，如你所知，這些晶圓廠實際上是為了高效能運算或智慧型手機的推出，因此產能增加的速度非常快。上市時間至關重要。為了擁有領先的晶圓廠產能，不僅該晶圓廠必須與位於新竹的研發晶圓廠緊密結合，兩個團隊也作為一個團隊工作，而且該晶圓廠還必須與台積電的其他晶圓廠合作。正如我們的創辦人所提到的，為了應對所需資源的突然增加，數以千計的工程師需要從一個工廠運送到另一個工廠。這些就是那些前緣晶圓廠的背景。當我們與客戶開誠佈公時，這是確保他們的產品公告和產品發布以及請求對話將帶他們回來的最佳可靠方法。但我們一直在關注更大的地緣政治變化。當然，目前我們還沒有改變這一點的計畫。

The second part of the question is are you seeing an opportunity to take share, for example? A few of our customers don't want to use Chinese fabs?

問題的第二部分是，您是否看到了擴大市場份額的機會？我們的一些客戶不想使用中國晶圓廠？

The question is say that again?

問題是再說一次？

Is there an opportunity at the trailing edge 28-nanometer, 8 inch to take market share?

後緣28奈米8吋是否有機會奪取市佔率？

From Chinese Fab?

來自中國 Fab？

(inaudible)

（聽不清楚）

Well, most of the U.S. customer -- currently, the Chinese Fab is still not used by the local customers, when you put it this way. Intention of the other U.S. customer, we didn't encounter those comments.

嗯，大多數美國客戶——目前，中國晶圓廠仍然沒有被當地客戶使用，如果你這麼說的話。對於其他美國客戶的意圖，我們沒有遇到這些評論。

All right. Follow-up questions coming from Morgan Stanley's Charlie -- Charlie Chan.

好的。後續問題來自摩根士丹利的 Charlie Chan。

Yes. So I want to follow up a little bit about the trade tension issue because another topic is Huawei's 5G and information security issue. So how does the company kind of evaluate this kind of business risk? I mean exposure to Huawei's supply chain and have you got any concern from governments or U.S. governments on this topic.

是的。因此我想稍微跟進一下貿易緊張問題，因為另一個話題是華為的5G和資安問題。那麼公司該如何評估這種經營風險呢？我的意思是，了解華為的供應鏈，您是否對政府或美國政府在這個問題上有任何擔憂。

No, and we are everybody's foundry. And we did not see any kind of instruction or information from the government so business as usual.

不，我們是每個人的代工廠。我們沒有看到政府的任何指示或訊息，所以一切照常。

And also, another question is regarding your specialty semiconductor strategy. As you mentioned, you want to build up a new 8" fab in Tainan. I would guess is for lots of niche demand. But how do you deal with this kind of outsourcing or partnership with your subsidiary Vanguard going forward in the 8-inch business?

另外，另一個問題是關於您的專業半導體策略。正如您所說，您想在台南建立一個新的8吋晶圓廠。我猜是因為有很多利基需求。但是，在 8 吋業務方面，您如何處理這種外包或與子公司 Vanguard 的合作？

Well, if you look at the market, 8 inch as a business that is actually some time the capacity is in shortage. But regardless of Vanguard or not, TSMC did not increase the capacity. We increased the specialties capability and also our service to the customer. So we built the new building to give more room to put the specialty tool inside to support our customer.

嗯，如果你看一下市場，8英寸作為一個業務，實際上有時產能是短缺的。但無論有沒有先鋒，台積電都沒有增加產能。我們提高了專業能力並改善了為客戶提供的服務。因此，我們建造了新大樓，以便提供更多空間來放置專用工具，從而為我們的客戶提供支援。

Okay, okay. And that's the -- I guess, this year could be tough, right, could be the first downturn that 2 gentlemen become the new management, right? So is there any initiative that you want to take the company, get through this potential downturn? Any new initiatives in the company?

好的，好的。這就是——我想，今年可能會很艱難，對吧，可能是兩位先生成為新管理層的第一次低迷，對吧？那麼，您希望採取什麼措施幫助公司度過這次潛在的衰退嗎？公司有什麼新措施嗎？

Why do you say this is a new management? We have been here for more than 20 years at least. The new measure -- I mean, that's -- we follow a very good guidance from the previous chairman. And so far, so good. The strategy continues, the management style continues. So new management, hard to say.

為什麼說這是一個新的管理？我們在這裡至少已經二十多年了。新的措施——我的意思是——我們遵循了前任主席的良好指導。到目前為止，一切都很好。策略繼續，管理風格繼續。所以新的管理很難說。

Sorry for the phrasing, sorry.

抱歉，措詞不當，抱歉。

Let me comment. This is -- we, over the years, I mean, right now, probably is the -- in terms of technology portfolio TSMC has built, both leading edge and specialty, I think this is the strongest position at present time. Do you agree? And also about the customer engagement or customer portfolio, this time, it's about the widest customer portfolio we ever have. And C.C. is talking about getting into high-performance computing even the CPUs, including data center CPU, accelerators and the client CPUs. It's probably the widest addressable market we ever have. So we're going to continue these 3 thrusts. We're going to invest further on the R&D and we're going to continue to engage with our customers' design, closely building the team. Actually we sent people to our customers to build the design of 5-nanometer some of the 3-nanometer discussion. And also, we just want the high-performance computing can adopt our technology development features more tightly. So we think this is a -- although we're facing some headwinds on the macroeconomy and just another uncertainty is not our control. It's the trade dispute tension, we just hope the 2 country can come to a win-win or at least not lose-lose solution. I think we're on the road to the -- to climb our next peak, yes.

讓我評論一下。這是我們多年來，我的意思是，現在，可能是——就台積電建立的技術組合而言，無論是前沿技術還是專業技術，我認為這是目前最強的地位。你同意？還有關於客戶參與度或客戶組合，這一次，是我們擁有的最廣泛的客戶組合。還有 C.C.正在談論進入高效能運算甚至 CPU，包括資料中心 CPU、加速器和客戶端 CPU。這可能是我們迄今為止擁有的最廣闊的目標市場。因此我們將繼續這三個重點。我們將進一步投資研發，並將繼續參與客戶的設計，緊密組建團隊。實際上，我們派人去客戶那裡建造 5 奈米設計並進行一些 3 奈米討論。而且，我們只是希望高效能運算能夠更緊密地採用我們的技術開發特點。因此我們認為，儘管我們在宏觀經濟方面面臨一些阻力，但另一個不確定性是我們無法控制的。這是貿易爭端的緊張局勢，我們只是希望兩國能夠達成雙贏或至少不是雙輸的解決方案。是的，我認為我們正在攀登下一個高峰。

With TSMC's business under the steady stable hands and the expanding addressable market, we will conclude today's conference.

隨著台積電業務穩步發展，目標市場不斷擴大，今天的發表會就此結束。

So please be advised that the replay of the conference will be accessible within 4 hours from now. The transcript will become available 24 hours from now, both of which will be available through our website at www.tsmc.com.

因此請注意，會議重播將在 4 小時後開放。會議記錄將於 24 小時後發布，可透過我們的網站 www.tsmc.com 取得。

Thank you for joining us today. We hope you will join us again next quarter. Goodbye, and have a good day.

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。

Thank you. Thank you very much.

謝謝。非常感謝。