台積電 ADR (TSM) 2019 Q2 法說會逐字稿

(foreign language) Welcome to TSMC's Second Quarter 2019 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. If you are joining us through the conference call, your dialing 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.

(外語)歡迎參加台積電2019年第二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。如果您透過電話會議加入我們，您的撥接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 second quarter 2019 followed by our guidance for the third quarter. Afterwards, Ms. Ho and TSMC's CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then TSMC's Chairman, Dr. Mark Liu, will host the Q&A session where all our executives on stage including TSMC's Deputy CFO, Mr. Wendell Huang, will entertain 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麗女士將總結我們 2019 年第二季的營運情況，隨後介紹我們對第三季的指導。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，台積電董事長劉德華博士將主持問答環節，台積電副財務長黃溫德爾先生等所有在台高層將解答大家的疑問。

For those participants on the call, if you do not yet have a copy of today's 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 conference presentation.

對於電話會議的參與者，如果您還沒有今天的新聞稿副本，您可以從台積電的網站 www.tsmc.com 下載。請下載與今天的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, which are subject to significant risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears on our press release.

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

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

現在，我想把麥克風交給台積電財務長何麗拉女士，請她總結一下營運狀況和本季的指導。

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

謝謝你，伊麗莎白。大家下午好，感謝大家今天下午加入我們。我的演講將從第二季的財務亮點開始，然後是第三季的指導。

Our second quarter revenue increased 10.2% quarter-over-quarter as we already passed the bottom of the cycle of our business and began to see demand increases. Gross margin increased by 1.7 percentage points sequentially to 43% mainly due to the absence of photoresist defect material incident and a slightly more favorable foreign exchange rate. Total operating expenses represented 11.2% of net revenue, lower than 11.9% in the first quarter. Operating margin increased by 2.3 percentage points sequentially to 31.7%. Overall, our second quarter's EPS was $2.57, and ROE was 16.2%.

我們第二季的營收季增了 10.2%，因為我們已經度過了業務週期的底部，並開始看到需求成長。毛利率季增1.7個百分點至43%，主要得益於沒有發生光阻缺陷材料事件以及略微有利的外匯匯率。總營運費用佔淨收入的11.2%，低於第一季的11.9%。營業利益率較上季成長2.3個百分點，達到31.7%。總體而言，我們第二季的每股收益為 2.57 美元，淨資產收益率為 16.2%。

Now let's take a look at revenue by technology. 7-nanometer process technology accounted for 21% of wafer revenue in the second quarter, 10-nanometer was 3%, and 16-nanometer was 23%. Advanced technologies, which are defined as 16-nanometer and below, accounted for 47% of wafer revenue, up from 42% in the first quarter.

現在讓我們來看看按技術劃分的收入。7奈米製程技術佔第二季晶圓收入的21%，10奈米為3%，16奈米為23%。先進技術（定義為 16 奈米及以下）佔晶圓收入的 47%，高於第一季的 42%。

Now let's talk about the revenue contribution by platform. Smartphone increased 5% quarter-over-quarter to accounting for 45% of our second quarter revenue. HPC increased 23% to accounting for 32%. IoT increased 15% to accounting for 8%. Automotive increased 3% to accounting for 5%. Digital consumer electronics and others went down slightly, accounting for [6%] and 4% (corrected by company after the call) of our wafer revenue.

現在我們來談談平台的收入貢獻。智慧型手機季增 5%，占我們第二季營收的 45%。HPC成長23%，佔比達32%。物聯網成長15%，佔比達8%。汽車產業成長3%，佔比達5%。數位消費電子及其他略有下降，占我們晶圓收入的[6%]和4%（電話會議後公司已更正）。

Moving on to the balance sheet. We ended the second quarter with cash and marketable securities of TWD 765 billion, an increase of TWD 4 billion from the last quarter. On the liability side, current liabilities increased by 220 -- TWD 244 billion as we accrued about TWD 259 billion for 2018 and for first quarter 2019. 2018 cash dividend of TWD 8 per share will be paid today. And the first quarter 2019 dividend of TWD 2 per share will be paid out in October.

繼續討論資產負債表。截至第二季末，我們的現金及有價證券總額為 7,650 億新台幣，較上一季增加 40 億新台幣。負債方面，流動負債增加2,200億至2,440億新台幣，2018年及2019年第一季度累計約2,590億新台幣。2018年度每股現金股利8元今日發放。並計劃於10月派發2019年第一季度每股2元股利。

On financial ratios, accounts receivables turnover days decreased 7 days to 42 days. Days of inventory decreased 3 days to 76 days primarily due to lower days in work-in-progress inventory and finished goods, both of which resulting from higher shipments out of inventories built in first quarter '19.

財務比率方面，應收帳款週轉天數減少7天至42天。庫存天數減少 3 天至 76 天，主要原因是製品庫存和成品天數減少，這兩者都是由於 2019 年第一季庫存出貨量增加所致。

Now let me make a few comments on cash flow and CapEx. During the second quarter, we generated about TWD 118 billion cash from operations and spent TWD 116 million in capital expenditure. As a result, we generated free cash flow of TWD 1.4 billion, and our overall cash balance increased TWD 4 billion to TWD 650 billion at the end of the quarter. In U.S. dollar terms, our second quarter capital expenditure was USD 3.75 billion.

現在，讓我對現金流和資本支出發表一些評論。第二季度，我們從營運中產生了約 1,180 億新台幣的現金，並花費了 1.16 億新台幣的資本支出。結果，我們產生了14億新台幣的自由現金流，並且我們的整體現金餘額在本季度末增加了40億新台幣，達到6500億新台幣。以美元計算，我們第二季的資本支出為37.5億美元。

I have finished my financial summary. Now let's turn to third quarter guidance. Based on the current business outlook, we expect third quarter revenue to be between USD 9.1 billion and USD 9.2 billion, which is an 18% sequential increase at the midpoint. Based on exchange rate assumption of USD 1 to TWD 31.0, gross margin is expected to be between 46% and 48%. Operating margin is expected to be between 35% and 37%.

我已經完成了財務總結。現在讓我們來看看第三季的指導。根據目前的業務前景，我們預計第三季營收將在 91 億美元至 92 億美元之間，以中位數計算將季增 18%。以1美元兌31.0新台幣的匯率假設計算，毛利率預計在46%至48%之間。預計營業利益率在35%至37%之間。

This concludes my financial presentation. Let me follow by making a few comments about profitability, CapEx and the cash dividend.

我的財務報告到此結束。接下來，我想就獲利能力、資本支出和現金股利發表一些評論。

First, about profitability. Let me make some comments on our second quarter and third quarter and our overall profitability outlook. Our second quarter '19 gross margin improved by 1.7 percentage points sequentially mainly due to the absence of the photoresist material incident from first quarter and a slightly more favorable foreign exchange rate. The reason second quarter revenue is slightly above the high end of our guidance but gross margin is at the low end is because the pace of cost improvement at N7 did not meet our plan in second quarter. But we expect costs to gradually improve towards the plan starting from the third quarter. We have just guided third quarter '19 gross margin to improve by 4 percentage points sequentially at the midpoint mainly as we expect a higher level of overall capacity utilization.

首先，關於獲利能力。讓我對我們的第二季和第三季以及我們的整體獲利前景發表一些評論。我們 2019 年第二季的毛利率環比提高了 1.7 個百分點，這主要是由於第一季沒有發生光阻材料事件，而且外匯匯率略有改善。第二季營收略高於我們預期的高端但毛利率處於低端的原因是 N7 的成本改善速度在第二季沒有達到我們的計劃。但我們預計從第三季開始成本將逐步改善並朝著計劃邁進。我們剛剛預測 2019 年第三季的毛利率將比中位數將較上季提高 4 個百分點，主要是因為我們預期整體產能利用率會更高。

Our gross margin in first half '19 was primarily impacted by a low capacity utilization rate. But as our business and utilization rate improves in the second half of this year, we believe about 50% is still a good target for our gross margin going forward.

2019 年上半年我們的毛利率主要受到產能利用率低的影響。但隨著今年下半年業務和利用率的提高，我們相信50%左右仍然是我們未來毛利率的良好目標。

Now regarding 2019 CapEx planning. At the end -- at the beginning of this year, we have guided our 2019 CapEx budget to be between USD 10 billion and USD 11 billion. However, over the last 3 months, we have seen an acceleration in the worldwide 5G development. We believe this will lead to an increase in demand for our 5-nanometer and 7-nanometer technologies beyond the level we forecasted 3 months ago. We are, therefore, working closely with our customers on the most effective capacity planning for our N5 and N7. We expect our 2019 CapEx is likely to exceed the high end of our guidance range. We are currently evaluating our 2019 CapEx plan and expect to provide you a more detailed update during our October earnings conference.

現在討論 2019 年資本支出計畫。今年年初，我們已將 2019 年資本支出預算控制在 100 億美元至 110 億美元之間。然而，在過去的三個月裡，我們看到全球5G發展的加速。我們相信這將導致對我們的 5 奈米和 7 奈米技術的需求增加，超越我們 3 個月前的預測水準。因此，我們正在與客戶密切合作，為我們的 N5 和 N7 制定最有效的容量規劃。我們預計 2019 年的資本支出可能會超過我們的指導範圍的高端。我們目前正在評估我們的 2019 年資本支出計劃，並希望在 10 月的收益會議上為您提供更詳細的更新。

The last comment is about the cash dividend distribution. We have communicated our dividend policy earlier this year. We will have sustainable cash dividend per share on both an annual and a quarterly basis. In addition, as our free cash flow increases, we will distribute about 70% of our free cash flow as cash dividend. TSMC's AGM in June approved the Board's approval of TWD 8 cash dividend per share and full year -- for full year 2018 and the revision of the Article of Incorporation to adapt quarterly dividends. The Board then approved TWD 2 per share dividend for the first quarter 2019 which will be distributed in October 2019. Therefore, TSMC's shareholder will receive a total of TWD 10 cash dividend per share this year. That also means shareholder will receive at least TWD 10 per share cash dividend for 2020. Going forward, TSMC has set the payment months for the quarterly dividend as January, April, July and October of each year.

最後一條評論是關於現金紅利分配的。我們在今年稍早已經傳達了我們的股利政策。我們將在年度和季度基礎上實現可持續的每股現金股利。此外，隨著我們的自由現金流的增加，我們將把約70%的自由現金流作為現金紅利分配。台積電 6 月的股東大會通過了董事會批准 2018 年全年每股派發 8 新台幣現金股息以及修改公司章程以適應季度股息。董事會隨後批准派發 2019 年第一季每股 2 新台幣的股息，並將於 2019 年 10 月發放。因此，台積電股東今年將獲得每股10元現金股利。這也意味著股東2020年將獲得每股至少10元台幣的現金股利。展望未來，台積電將季度股息的發放月份設定為每年的1月、4月、7月和10月。

This concludes my remarks. Now I would like to turn to C.C. Wei for his comments.

我的發言到此結束。現在我想請 C.C. 發言。魏先生的評論。

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 the near-term demand and inventory. We conclude our second quarter with revenue of TWD 241 billion or USD 7.75 billion, slightly above our guidance due to a higher demand from HPC and IoT applications as compared to the time when we gave guidance. Although our business continues to be impacted by the softer overall global economic condition, customer inventory management and high-end mobile product seasonality, we have also passed the bottom of the cycle of our business and began to see demand increases.

我先從近期需求和庫存開始。我們第二季的營收為 2,410 億新台幣或 77.5 億美元，略高於我們的預期，因為與我們給予預期相比，高效能運算和物聯網應用的需求更高。儘管我們的業務繼續受到全球整體經濟狀況疲軟、客戶庫存管理和高端行動產品季節性的影響，但我們也已經度過了業務週期的底部，並開始看到需求成長。

Moving into third quarter this year. TSMC's business will be driven by new product launches of premium smartphones, the acceleration of 5G development and the increasing adoption of our industry-leading 7-nanometer node by high-performance computing applications.

今年已進入第三季。台積電的業務將受到高階智慧型手機新產品發布、5G發展的加速以及我們業界領先的7奈米節點在高效能運算應用方面的日益普及的推動。

Now let's talk about the inventory. Our fabless customers' overall inventory is being gradually digested throughout second quarter. We expect it to reduce to several days above seasonal level exiting the second quarter, leading to an improved inventory environment for the second half of this year. Although a soft global economic condition and trade uncertainties remain, we expect our business to be much stronger in the second half as compared with the first half of this year due to the strong demand for our industry-leading 7-nanometer technology solutions.

現在我們來談談庫存。我們的無晶圓廠客戶的整體庫存正在第二季逐漸消化。我們預計，第二季結束後庫存量將減少到比季節性高出幾天，從而改善今年下半年的庫存環境。儘管全球經濟狀況疲軟且貿易不確定性依然存在，但由於我們業界領先的 7 奈米技術解決方案的需求強勁，我們預計下半年的業務將比上半年更加強勁。

The progress of our advanced technologies is well on track, and we are very confident in our technology leadership. Over the last 3 months, we have seen an acceleration in the worldwide 5G development. This would speed up the introduction and deployment of 5G network and smartphones in several major markets around the world. We expect this to lead to an increase in demand for our 5-nanometer and 7-nanometer technologies. And we are working closely with our customers to carefully plan out capacity to meet their demand, as our CFO just said.

我們的先進技術進展順利，我們對我們的技術領先地位非常有信心。過去三個月，我們看到全球5G發展加速。這將加速全球幾個主要市場引入和部署5G網路和智慧型手機。我們預計這將導致對我們的 5 奈米和 7 奈米技術的需求增加。正如我們的財務長剛才所說，我們正在與客戶密切合作，精心規劃產能以滿足他們的需求。

Now I will talk about the N5 status and N3 development. Our N5 technology has already entered risk production in first quarter. Customer takeout activity are underway, and volume production is scheduled in first half of year 2020 with 80% logic density gain, 8-0 percent, and 15% speed compared with the 7-nanometer, we believe our N5 technology is the most advanced in the foundry industry with the best density, performance, power and transistor technology. Our 5-nanometer technology solution will be the foundry industry's most advanced solution until our 3-nanometer arrives. We are confident that our 5-nanometer will have a strong ramp and be a large and long-lasting node for TSMC.

現在我來談談N5現況和N3發展。我們的N5技術在第一季已經進入風險生產。客戶外送活動正在進行中，計劃於 2020 年上半年實現量產，與 7 奈米相比，邏輯密度增益 80%，性能提升 8%，速度提高 15%，我們相信我們的 N5 技術是代工行業最先進的，具有最佳的密度、性能、功率和晶體管技術。在我們的 3 奈米技術到來之前，我們的 5 奈米技術解決方案將是代工產業最先進的解決方案。我們有信心，我們的 5 奈米將有一個強勁的成長勢頭，並成為台積電一個龐大且持久的節點。

On N3, the technology development progress is going well, and we are already engaging with the early customers on the technology definition. We expect our 3-nanometer technology to further extend our leadership position well into the future.

在N3上，技術開發進展順利，我們已經開始與早期客戶就技術定義進行接觸。我們期望我們的 3 奈米技術能夠在未來進一步鞏固我們的領先地位。

Now I will talk about the ramp-up of N7, N7+ and the progress of N6. We have seen very strong demand at N7 across a wide spectrum of products from mobile, HPC and IoT applications. Meanwhile, our N7+, which adapts EUV for a few critical layers, has already entered volume production. We expect our customers' end products using N7+ will be in the market in high volume this quarter. We expect strong demand to continue into next year.

現在我將討論 N7、N7+ 的加速以及 N6 的進展。我們看到 N7 在行動、HPC 和物聯網應用等廣泛產品領域的需求非常強勁。同時，我們的N7+在幾個關鍵層採用了EUV技術，已經實現量產。我們預計本季客戶採用 N7+ 的最終產品將大量上市。我們預計強勁的需求將持續到明年。

N6 provide a clear migration path for second-wave N7 products as its design rules are 100% compatible with N7 while providing 18% logic density gain and performance-to-cost advantage. N6 will use more EUV layer than N7+. N6 risk production is scheduled to begin in first quarter year 2020 with customer product tapeouts in second half 2020. The volume production starts before the end of year 2020.

N6 為第二波 N7 產品提供了清晰的遷移路徑，因為其設計規則與 N7 100% 相容，同時提供 18% 的邏輯密度增益和效能成本優勢。N6 將比 N7+ 使用更多的 EUV 層。N6 風險生產計劃於 2020 年第一季開始，客戶產品將於 2020 年下半年流片。將於2020年底前開始量產。

We reaffirm N7, N7+ will contribute more than 25% of our wafer revenue in this year. And we expect even higher percentage in next year on N7, N7+ and N6 because development of 5G accelerates and demand from HPC, mobile and other applications continue to grow.

我們重申N7、N7+將在今年貢獻我們晶圓收入的25%以上。我們預計明年 N7、N7+ 和 N6 的比例會更高，因為 5G 的發展加速，而且 HPC、行動和其他應用的需求持續成長。

Now let me talk about TSMC's competitiveness. The foundry business model has proven to be the most efficient model in the semiconductor industry. As a pure-play dedicated foundry, we collaborate and work closely together with our customers to unleash their innovation to the market and enable their success. We do not have any internal products, and we do not compete with customers.

現在我來談談台積電的競爭力。代工商業模式已被證明是半導體產業最有效的模式。作為一家純粹的專用代工廠，我們與客戶緊密合作，將他們的創新推向市場並幫助他們的成功。我們沒有任何內部產品，也不與客戶競爭。

Within foundry, TSMC competes on technology leadership, manufacturing excellence and customers' trust. Our trinity of strengths enables us to be everyone's foundry. We have the most useful and robust technology offering across both advanced and specialty technologies. We work diligently to protect our customers' technology, extend our leadership and accelerate our technology differentiation. We are the world's largest and trusted provider of logic capacity with an excellent manufacturing track record. We will continue to unleash innovations for all our customers for years to come.

在代工領域，台積電在技術領先地位、製造卓越性和客戶信任方面展開競爭。我們的三位一體優勢使我們成為每個人的鑄造廠。我們擁有最實用、最強大的先進技術和專業技術。我們努力保護客戶的技術，擴大我們的領導地位並加速我們的技術差異化。我們是全球最大、最值得信賴的邏輯容量提供商，擁有出色的製造業績記錄。在未來的幾年裡，我們將繼續為所有客戶提供創新。

Finally, I'll talk about our CFO transition. After serving very well as TSMC's CFO for the past 16 years, Lora Ho will take on new challenges ahead of Europe and Asian sales. Subject to the Board of Directors' approval, Wendell Huang will become TSMC's new CFO effective September 1. Wendell has been with TSMC for 20 years and has served as TSMC's Deputy CFO and Head of Finance Division. He brings a wealth of experience and knowledge of TSMC, and I am confident he will continue the strong tradition of TSMC's finance organization. I'm excited about both appointments and look forward to continue to work closely with both Lora and Wendell in their new roles.

最後，我想談談我們的財務長的過渡。在擔任台積電財務長 16 年並取得優異成績後，Lora Ho 將在歐洲和亞洲銷售方面迎接新的挑戰。經董事會批准，黃文德將於 9 月 1 日起出任台積電新任財務長。黃文德在台積電工作了 20 年，曾擔任台積電副財務長和財務部負責人。他帶來了台積電的豐富經驗和知識，我相信他將延續台積電財務組織的優良傳統。我對這兩項任命都感到非常興奮，並期待在新的職位上繼續與 Lora 和 Wendell 密切合作。

Thank you for your attention.

感謝您的關注。

This concludes our prepared statements. Before we begin the Q&A session, I would like to remind everybody to limit your questions to 2 at a time so that all the participants have an opportunity to ask their questions. 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. For those of you on the call, if you would like to ask some questions, (Operator Instructions).

我們的準備聲明到此結束。在我們開始問答環節之前，我想提醒大家每次提問的數量限制為 2 個，以便所有參與者都有機會提問。問題將從現場和電話中回答。如果您想用中文提出問題，我會將其翻譯成英文，然後我們的管理層才會回答您的問題。對於通話中的各位，如果您想問一些問題，（操作員指示）。

We'll start the questions first from Crédit Suisse's Randy Abrams.

我們首先從瑞士信貸的蘭迪·艾布拉姆斯 (Randy Abrams) 開始提問。

Maybe since it's Lora's last time and we also have 2 CFOs, so I'll start with the financial questions. On the gross margin, if you can elaborate just a bit more on what were the triggers for the slower progress on gross margin, as it seems uncharacteristic for TSMC at least recently to have a bit of impact on process ramp-up. And then looking forward on the 50%, if you still expect that target toward the end of this year and if looking into next year, as you ramp up 5 and normally have a 2- to 3-point impact, if you still expect 50% reasonable for next year?

也許是因為這是 Lora 最後一次，而且我們也有 2 位財務官，所以我將從財務問題開始。關於毛利率，您是否可以更詳細地說明導致毛利率成長放緩的原因，因為台積電至少在最近對製程提升產生了一些影響，這似乎並不常見。然後展望 50%，如果您仍然預計今年年底將實現這一目標，並且展望明年，隨著您增加 5 個點並通常會產生 2 到 3 個百分點的影響，您是否仍然預計明年 50% 是合理的？

When we ramp up any new technologies, we have a series of productivity, cost improvement activities on the plan. 7-nanometer is the same. 7-nanometer now is very, very busy. There's a lot of new tape-out. So in second quarter, we have set a goal, but we did not achieve the goal. That is why, as I've explained earlier, the margin fall into the low end of the guidance. As I said earlier, we have -- back on track to gradually improve productivity and with the volume continue to come in third and fourth quarter. And we are still confident we can achieve our cost reduction and productivity target. As to the 50% gross margin, I think for the whole year, I think the main reason is the lower utilization particularly in the first half of the year. As I've said, if we can maintain the high utilizations, which we believe we can, the 50% is still a good target going forward.

當我們採用任何新技術時，我們都會規劃一系列提高生產力和成本的活動。7奈米也是一樣。7奈米現在非常非常繁忙。有很多新的流片。所以在第二季度，我們設定了一個目標，但我們並沒有實現這個目標。這就是為什麼利潤率會跌至指導值的低端，正如我之前解釋的那樣。正如我之前所說，我們已經回到逐步提高生產力的軌道上，產量在第三季和第四季將繼續成長。我們仍然有信心能夠實現降低成本和提高生產力的目標。至於 50% 的毛利率，我認為就全年而言，主要原因是利用率較低，尤其是上半年。正如我所說，如果我們能夠保持高利用率（我們相信我們可以），那麼 50% 仍然是一個很好的目標。

Okay. And that implies also fourth quarter, fourth quarter of this year?

好的。這也意味著今年第四季嗎？

That is certainly my hope.

這當然是我的希望。

Okay. Great. Okay. Second question, I actually wanted to ask a bit more on the sales growth outlook you've put out. And maybe the first starting point is you originally guided the full year would be growing back in April, and so I was wondering if you can update that expectation. And then to dig into the growth, if you could talk a bit about -- in that guidance for high-teens growth for the different segments, the HPC, auto, IoT, smartphones, how you're seeing each of those segments for second -- for third quarter and second half and if you're also seeing cryptocurrency come back.

好的。偉大的。好的。第二個問題，我其實想進一步詢問您所提出的銷售成長前景。也許第一個起點是您最初在四月預測全年將會成長，所以我想知道您是否可以更新該預期。然後深入探討成長情況，如果您可以談談 - 在針對不同領域（高效能運算、汽車、物聯網、智慧型手機）的高雙位數成長的指導中，您如何看待這些領域在第二​​季度、第三季度和下半年的表現，以及您是否也看到加密貨幣的回升。

Well, for the first part, I think C.C. can answer, yes.

嗯，對於第一部分，我認為是 C.C.可以回答，是的。

Okay. What is the first part?

好的。第一部分是什麼？

Wrong question. First part was if you still think you can grow for this year?

錯誤的問題。第一部分是您是否仍然認為今年可以成長？

For the whole year?

全年？

For the whole year.

全年。

Let me give you some kind of a taste. Right now, the uncertainties really become in these days really hard to stay, so I cannot give you kind of, again, a very firm number of what kind of a growth we are going to get, but I can assure you that the fourth quarter would be better than the third quarter. That's all I can say. Okay. How much, I don't know yet, so you can calculate for that.

讓我給你嚐嚐味道。現在，不確定性在這些天裡真的變得很難持續，所以我無法給你一個非常確切的數字來表明我們將獲得什麼樣的增長，但我可以向你保證，第四季度會比第三季度更好。我只能說這麼多。好的。我還不知道有多少，所以你可以計算一下。

So the key is fourth quarter we think will be better than third quarter. So I think the second part maybe, Lora, can you answer?

因此，關鍵是我們認為第四季會比第三季更好。所以我認為也許是第二部分，洛拉，你能回答嗎？

Randy, did you ask about the by-platform growth for third quarter?

蘭迪，你問過第三季各平台的成長嗎？

Yes. If -- actually, if you can just -- the third quarter and then an update on the full year for the platforms?

是的。如果——實際上，如果您可以——發布第三季度以及全年平台的最新情況？

Okay. Third quarter, as I just guided, there's a sequential 18% growth, we are seeing very strong growth on smartphone. And also, actually, all platforms are going to grow in third quarter across the board with smartphone growing the most. And also, HPC is still growing very nicely. IoT is very strong although it's very small as a basis. And we also see automotive coming up to grow. It was kind of low in the first half of the year, okay? In terms of the whole year, we expect smartphone will grow single digit year-over-year. HPC, if exclude cryptocurrency, we will also see single-digit growth. But with the cryptocurrency, it's a declining number. IoT will grow more than double digit, very nicely. Automotive will be a down platform for the year, okay? So that is the segment analysis.

好的。第三季度，正如我剛才預測的那樣，環比成長 18%，我們看到智慧型手機的成長非常強勁。而且實際上，所有平台在第三季都將全面成長，其中以智慧型手機的成長最為顯著。此外，HPC 仍在保持良好的成長勢頭。儘管物聯網作為基礎很小，但它非常強大。我們也看到汽車產業正在蓬勃發展。上半年的情況有點低，好嗎？從全年來看，我們預計智慧型手機的年成長將達到個位數。HPC，如果不包括加密貨幣，我們也會看到個位數的成長。但隨著加密貨幣的出現，這個數字正在下降。物聯網將以兩位數以上的速度成長，非常好。今年汽車業將會是個下滑的平台，懂嗎？這就是細分分析。

Just the final clarification. For cryptocurrency, if you're seeing -- like how much of that activity is coming back? And do you expect to target that and then if you have the new capacity on 7 tied to that?

只是最後的澄清。對於加密貨幣，如果你看到——有多少活動正在回歸？您是否希望實現這一目標，然後將 7 的新容量與之掛鉤？

On that one, C.C., will you answer that, yes?

關於這個問題，C.C.，你能回答嗎？

Yes. The cryptocurrency, recently, the pricing is up, and so we start to see the demand improving. We support the cryptocurrency by available capacities.

是的。最近，加密貨幣的價格上漲，因此我們開始看到需求改善。我們透過可用容量支援加密貨幣。

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

下一個問題也來自摩根士丹利的 Charlie Chan。

My first question is about your full year outlook. I think there's the uncertainty about the U.S.-China tension. Huawei's still in the entity list, right? So when you plan the full year or even fourth quarter, do you discount that risk? How much do you discount that risk from Huawei? And also, I think that there's a given intuition. I mean the biggest impact to the industry could be the 5G infrastructure from the U.S.-China tension. But you have seen that infrastructure demand is accelerating, right? So can you give us some sense of what you see differently about the infrastructure markets?

我的第一個問題是關於您對全年的展望。我認為中美緊張局勢存在不確定性。華為還在實體名單上吧？那麼，當您規劃全年甚至第四季時，您會考慮降低這種風險嗎？您認為華為的風險有多少折扣？而且，我認為這是一種既定的直覺。我的意思是，對這個行業影響最大的可能是中美緊張局勢對 5G 基礎設施的影響。但您已經看到基礎設施需求正在加速成長，對嗎？那麼，您能否向我們介紹一下您對基礎設施市場有何不同的看法？

All right. The effect of Huawei being the entity list and impact to TSMC, we do see some impact but not direct business between Huawei and TSMC -- actually HiSilicon and TSMC because we are -- we already announced that we continue our shipping practice. Because we follow the law, so we continue to ship. The infrastructure -- actually, the 5G's development actually accelerate, and we see a very strong demand from that. And as I said in my statement, in many countries, that they speed up the 5G deployment, and we see the increase of the demand at our leading-edge 7-nanometer.

好的。華為被列入實體名單對台積電的影響，我們確實看到了一些影響，但不是華為和台積電之間的直接業務——實際上是海思和台積電，因為我們——我們已經宣布我們將繼續我們的運輸業務。因為我們遵守法律，所以我們繼續發貨。基礎設施－實際上，5G的發展正在加速，我們看到了非常強勁的需求。正如我在聲明中所說，許多國家都在加快 5G 部署，我們看到對我們領先的 7 奈米製程的需求不斷增長。

Yes. So yes, it seems that, for example, being in the entity list, Huawei still has some restriction to update, for example, Google's mobile service. And that has impact their overseas smartphone demand. And according to your breakdown, the smartphone business still can see single-digit Y-o-Y growth, right? So I'm wondering, have you discount the potential downside risk if that entity list issue is going to last longer.

是的。所以是的，看起來，例如，在實體名單中，華為仍然受到一些更新限制，例如Google的行動服務。這影響了他們的海外智慧型手機需求。根據您的分析，智慧型手機業務仍然能夠實現個位數的年增長，對嗎？所以我想知道，如果實體名單問題持續更長時間，您是否會忽略潛在的下行風險。

Actually, I don't want to specifically pinpoint one customer only. All I can say is the second half, the new smartphone launches, especially the premium grade, has been the seasonality phenomena for us, always the second half. And the acceleration of the 5G actually enhance this kind of increase. That's all I can say.

實際上，我並不想只專門針對一個客戶。我只能說，下半年，新款智慧型手機的推出，尤其是高階智慧型手機的推出，對我們來說一直是季節性現象，總是下半年。而5G的加速實際上增強了這種成長。我只能說這麼多。

Let me add a little bit, too. Of course, the second half, there are still a lot of uncertainties, right, the geopolitical part, trade policy changes still go with the time. But I think the second half, the biggest growth momentum comes from the new smartphone launches. On Huawei's factors, yes, we think we did the discount. But Huawei -- since Huawei's been, many things happens, too. The downside is generally the smartphone market becoming uncertain in addition to Huawei themselves. So the whole Huawei -- whole smartphone market is suppressed, I think. And secondly is the trade barrier. Trade uncertainties still prevail in all sectors. So from all sectors, particularly the industrial and the consumer, I think that we will still see the momentum still coming -- not coming back. And -- but of course, the 5G momentum picking up, that is also new for the world globally, in U.S., in China, in Korea, in Japan and so forth. So those all factors combined, we think we try to make the best judgment and think that's the conclusion C.C. just delivered.

我也補充一點。當然下半年還是有很多不確定因素的，對，地緣政治部分，貿易政策的改變還是會隨著時間而改變的。但我認為下半年最大的成長動力來自於新款智慧型手機的推出。關於華為的因素，是的，我們認為我們確實給予了折扣。但自從華為成立以來，也發生了很多事。不利的一面是，除了華為本身之外，智慧型手機市場也變得不確定。因此我認為整個華為——整個智慧型手機市場都受到了抑制。其次是貿易壁壘。貿易不確定性仍然存在於各個領域。因此，從各個領域，特別是工業和消費領域來看，我認為我們仍將看到這種勢頭繼續成長，而不是回升。當然，5G 發展勢頭的增強對全球而言也是新鮮事，包括美國、中國、韓國、日本等。因此，綜合考慮所有因素，我們認為我們會做出最佳判斷，並認為這就是結論 C.C.剛剛送貨。

Okay. That's very helpful. And my next question is to Lora. It's going to be a tough question before you transfer to another role. So a follow-up in this -- Randy's question, right? So compare your third quarter revenue scale versus the revenue scale in the first quarter 2018, that quarter you made 50% gross margin, right? So that means you have a higher scale, but the gross margin, I think, is 2 percentage point or 4 percentage points than that quarter, right? So I'm asking you whether there's any structural issue. And also, more specifically, your 7-nanometer is in the second year, right? So supposedly, it shouldn't cause the -- any margin dilution anymore, especially you are saying that 7-nanometer fab is quite busy, right? so can you explain why revenue scale is higher, fab is busy second year of the new nodes, but gross margin's low a few quarters ago.

好的。這非常有幫助。我的下一個問題是問 Lora 的。在調任其他職位之前，這將是一個棘手的問題。那麼這是蘭迪的後續問題，對嗎？那麼，將你們第三季的營收規模與2018年第一季的營收規模進行比較，那個季度你們的毛利率是50%，對嗎？這意味著你們的規模更大，但我認為毛利率比那個季度高出 2 個百分點或 4 個百分點，對嗎？所以我問你是否有任何結構性問題。而且更具體地說，你們的 7 奈米是在第二年，對嗎？因此，據說它不應該再導致任何利潤率稀釋，尤其是您說 7 奈米工廠相當繁忙，對嗎？那你能解釋為什麼營收規模更高，晶圓廠在新節點的第二年很忙，但幾季前的毛利率很低嗎？

Actually, utilization is still the main factor if you'll compare on year-over-year basis. Of course, there is still some dilution for N7, but this dilution will start to diminish as we have much strong demand in the second half, okay? Another thing is there's a little bit of a product mix issue. You do have -- we have portfolio of product mix. We have talked about this. There's certain technology is not -- surprisingly, is low. For example, 28-nanometer, that has some impact on our overall corporate margin. So those are the things I can think of that related to the margin changes, okay?

實際上，如果以同比來比較，利用率仍然是主要因素。當然，N7 仍然存在一些稀釋，但隨著下半年需求強勁，這種稀釋將開始減弱，好嗎？另一件事是存在一些產品組合問題。您確實有—我們有產品組合。我們已經討論過這個問題了。某些技術並不——令人驚訝的是，水平很低。例如，28奈米對我們整體的公司利潤率有一定影響。這些就是我能想到的與保證金變化相關的事情，好嗎？

All right. We will go to the line now. Operator, please have the first caller on the line.

好的。我們現在就去生產線。接線員，請讓第一位來電者接通電話。

The first question comes from the line of Gokul Hariharan from JPMorgan.

第一個問題來自摩根大通的 Gokul Hariharan。

First question, there's been a lot of discussion recently about more competitions from one of your foundry competitors. Could you, C.C., talk a little bit about a roadmap on 5-nanometer and especially your 3-nanometer? One of your competitors is looking to introduce a new transistor structure like gate-all-around. Is this going to stick with the FinFET and 3-nanometer as well? Or if it's also likely to move to a nanosheet or gate-all-around structure? That's my first question.

第一個問題，最近有很多關於你們的一家代工競爭對手將帶來更多競爭的討論。C.C.，您能否談談 5 奈米，特別是 3 奈米的路線圖？您的一個競爭對手正在尋求引入一種新的電晶體結構，例如環柵電晶體。這也會堅持使用 FinFET 和 3 奈米嗎？或者它是否也可能轉向奈米片或環繞閘極結構？這是我的第一個問題。

Secondly, could we talk a little bit about what is the activity level TSMC is seeing at 5-nanometer capacity? I think previously, you've mentioned that 5-nano is seeing -- you're building lesser 5-nanometer capacity for next year. And could we also talk a little bit about how our customers are thinking in terms of choosing for 6-nanometer versus 5-nanometer especially the customers who are on 7-nanometer today?

其次，我們能否談談台積電在 5 奈米產能的活動量如何？我認為之前您曾提到過 5 奈米正在看到——您正在為明年建立較低的 5​​ 奈米產能。我們能否談談我們的客戶在選擇 6 奈米還是 5 奈米方面的想法，尤其是目前使用 7 奈米的客戶？

All right. Gokul, it seems -- I guess because you have a flu, so we didn't -- we can't really hear you quite well. But let me try to see if I understand your questions. First, your question is with regard to the competition within foundry. You asked whether we can compare our technology road map of 5-nanometer and 3-nanometer versus that of the competitors. And your second question is with respect to 5-nanometer where you asked that we seemed to be a little bit more conservative about 5-nanometer capacity build plan some time ago, and now we are a bit more aggressive. And so you are asking us if we have seen any difference we see in customers' demand for 5-nanometer.

好的。Gokul，看起來──我猜是因為你得了流感，所以我們沒──我們聽不太清楚你說什麼。但請讓我嘗試看看我是否理解了您的問題。首先，您的問題是關於代工廠內部的競爭。您問我們是否可以將我們的 5 奈米和 3 奈米技術路線圖與競爭對手的技術路線圖進行比較。您的第二個問題是關於5奈米的，您問到我們前段時間對5奈米產能建設計劃似乎比較保守，但現在我們比較積極。所以您問我們是否看到客戶對 5 奈米的需求有任何差異。

C.C., would you answer the first question?

C.C.，你能回答第一個問題嗎？

Yes, yes, yes. The first question? First question is 5-nanometer and 3-nanometer. We think our 5-nanometer is very competitive and the first one in the industry in that geometry. And what is the risk production right now and the volume production in the first half in the next year, these continue to be the same situation. And about the 3-nanometer, let me clarify a little bit. We have evaluated all the possible options and come with a very good solution for our customer. We continue to work with our customer to define the spec, to define the approaches and to meet their requirement and I'll update you about our choices next time.

是的，是的，是的。第一個問題？第一個問題是5奈米和3奈米。我們認為我們的 5 奈米非常具有競爭力，並且是業界首個此類幾何形狀的。而現在的風險生產情況，以及明年上半年的量產情況，這些還是同樣的情況。關於 3 奈米，讓我稍微澄清一下。我們評估了所有可能的選擇，並為客戶提供了一個非常好的解決方案。我們將繼續與客戶合作，定義規格、定義方法並滿足他們的要求，下次我會向您通報我們的選擇。

Let me add that, actually, our 5-nanometer is a full-node stride from our 7-nanometer. And our 3-nanometer is another full node stride from our 5-nanometer. This is very different than our competitors' road map. So if you compare their numerical, 3 is probably closer to the 5. Secondly, on the 5-nanometer capacity build -- the second question is 5-nanometer capacity.

讓我補充一點，實際上，我們的 5 奈米與 7 奈米相比有一個完整的節點的進步。我們的 3 奈米是 5 奈米基礎上的另一個完整節點的跨越。這與我們的競爭對手的路線圖非常不同。因此，如果比較它們的數字，3 可能會更接近 5。其次，關於 5 奈米產能建設－第二個問題是 5 奈米產能。

Yes, what type do we see in customer demand.

是的，我們看到客戶需求是什麼類型。

Okay, it's C.C. now.

好的，我是 C.C.現在。

Okay. The 5-nanometer, in the last quarter when we communicated with you, we said that we are going to be a little bit conservative and to work with customer to plan the capacity that's necessary to support them. Now in these 3 months, because of a speed-up of 5G's development, we are working with the customer again. We have to up our -- probably we change our conservative attitude to become a little bit more aggressive and so to meet our customer's demand. Right now, this is a new development all because of 5G AI's progress.

好的。對於 5 奈米，在上個季度我們與您溝通時，我們說過我們會稍微保守一些，並與客戶合作規劃以支持他們所需的產能。現在這三個月，由於5G發展的加速，我們又和客戶合作了。我們必須改變我們的保守態度，變得更加積極主動，以滿足客戶的需求。目前，這是一個新的發展，這一切都歸功於 5G AI 的進步。

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

好的。讓我們回到正題。下一個問題來自高盛的 Bruce Lu。

So the last couple of months has been pretty exciting in terms of the macro environment. So I think there are some changes in terms of customer behavior. Typically, we somehow synchronize their production together with their sales. So if they have some problem in terms of the sales through, they somehow change their production plan. There may be some time lag. But the last couple of months, we saw that customer is willing to be piling up more inventory, is willing to -- there are some disruption in terms of their sale through plan. But in terms of production plan, you don't really see a lot of meaningful changes at least for TSMC. So how do we forecast this kind of thing moving forward? It seems to me that the macro environment seems so dynamic, but we have -- as analyst, we have a lot of difficulties, right? We can't just follow the tweets. So can you help us how to do the -- how do you predict that kind of customer behavior in terms of the production planning moving forward?

因此，從宏觀環境來看，過去幾個月的情況相當令人興奮。所以我認為客戶行為方面已經發生了一些變化。通常，我們會以某種方式將他們的生產與銷售同步起來。因此，如果他們在銷售方面遇到問題，他們就會以某種方式改變生產計劃。可能會有一些時間延遲。但過去幾個月，我們發現客戶願意囤積更多庫存，願意—他們的銷售計畫出現一些中斷。但就生產計畫而言，至少對於台積電來說，你不會看到太多有意義的變化。那我們該如何預測這類事情的未來發展呢？在我看來，宏觀環境似乎如此充滿活力，但身為分析師，我們面臨許多困難，對嗎？我們不能只關注推文。那麼，您能否幫助我們如何做—如何在未來的生產計劃中預測這種客戶行為？

That's an interesting question. You ask us how we estimate or forecast the customers' inventory or how they plan out their component. Let me tell you that TSMC only receive the PO we put into production. Okay? And we did not see that strange customer's behavior and see that they are piling up of the product in expectation of something happen. Now we did not see that. That in our -- in our daily life, again, let me stress one point. We receive the PO, we do the production, and we did not see a very strange kind of phenomena.

這是一個有趣的問題。您詢問我們如何估計或預測客戶的庫存或他們如何規劃他們的組件。我告訴你們，台積電只收我們投產的PO。好的？而我們並沒有看到那個奇怪的顧客的行為，看到他們正在堆積產品以防發生什麼事情。現在我們沒有看到這一點。在我們的日常生活中，讓我再次強調一點。我們收到採購訂單，我們進行生產，我們並沒有看到一個非常奇怪的現象。

So don't follow the tweet. As the fabless inventory, I think Lora just reported is coming down.

所以不要關注這條推文。至於無晶圓廠庫存，我認為 Lora 剛剛報告的庫存正在下降。

But one of the important customer, they don't provide the public information.

但對於重要的客戶之一，他們不提供公開資訊。

That's right.

這是正確的。

That becomes a biggest swing factor, right?

這成為最大的搖擺因素，對嗎？

Most system companies, we have the inside look. But the company you mentioned, yes indeed, we do not know their inventories. But from their orders stream, we don't see any abnormal flow.

對於大多數系統公司，我們都有內部觀察。但是您提到的公司，是的，我們確實不知道他們的庫存。但從他們的訂單流來看，我們沒有看到任何異常流量。

I see. The second thing is the management kept on mentioning about our 5G's acceleration. Can you give us some like granularity of like what kind of revenue contribution coming from 5G in second half 2019 or 2020, either from smartphone side or from infrastructure side? What is the revenue exposure to TSMC at this moment?

我懂了。第二件事是管理階層不斷提到我們的5G加速。您能否向我們詳細介紹 2019 年下半年或 2020 年 5G 將為智慧型手機或基礎架構帶來哪些收入貢獻？目前台積電的收入狀況如何？

Lora, do we have 5G specific pointed out?

Lora，我們有具體指出 5G 嗎？

We don't. It's difficult to kind of differentiate how much demand is coming from 5G. We track the demand on node basis, also on platform basis. 5G may be related to HPC, some of the smartphone as well. We do see those 2 segment are growing very strongly, if any.

我們沒有。很難區分有多少需求來自 5G。我們以節點為基礎追蹤需求，也以平台為基礎追蹤需求。5G可能與HPC有關，一些智慧型手機也是如此。我們確實看到這兩個部分正在非常強勁地成長。

Yes. Let me add some color to it. Actually, the networking processor, FPGA product, even some CPUs and also base stations, smartphone, that all are in 5G. And we see a very, very strong demand in the second half of this year.

是的。讓我給它添加一些顏色。實際上，網路處理器、FPGA產品，甚至一些CPU以及基地台、智慧型手機，都屬於5G。我們看到今年下半年的需求非常強勁。

I think the question you're asking about, the exposure of 5G, can you elaborate what that means?

我認為您問的問題是5G的曝光，您能詳細解釋一下這代表什麼嗎？

Well, basically, it's now -- that is the strongest demand as management just mentioned, right? So basically, we try to get some granularity or we try to quantify how much growth we can expect moving forward, right? So yes, as I said, it can be any kind of product. So -- but the bigger revenue contribution still comes from the base station and the smartphone side, right? So that's the key area we are we are trying to focus on.

嗯，基本上，現在——正如管理層剛才提到的，這是最強烈的需求，對嗎？所以基本上，我們試圖獲得一些粒度或我們試圖量化我們可以預期未來有多少成長，對嗎？是的，正如我所說，它可以是任何類型的產品。那麼——但更大的收入貢獻仍然來自基地台和智慧型手機方面，對嗎？這就是我們正在努力關注的關鍵領域。

Yes. And the smartphone adopt -- implementation of 5G on the smartphone, we see actually stronger than when we were at 4G's ramp-up, okay? That's the information you get. And that is the opportunity for us as we consider here.

是的。我們看到，智慧型手機採用 5G 技術的速度實際上比 4G 發展時期還要快，好嗎？這就是您獲得的資訊。這正是我們在這裡考慮的機會。

Lastly, can I squeeze in, like can we still maintain that 5 years revenue CAGR's guidance?

最後，我能插一句嗎，例如我們還能維持 5 年收入複合年增長率的指導嗎？

Sure.

當然。

Okay. So that's the confirmation. Next question will be coming from Citigroup's Roland Shu.

好的。這就是確認。下一個問題來自花旗集團的 Roland Shu。

With the 7-nanometer reach 25% of total revenue this year, and 7-nanometer will be the biggest node ever in revenue to TSMC this year. And next year, C.C., you expect 7-nanometer will be growing even more than 25% of total revenue next year? So it means that 7-nanometer will be even bigger. And then, C.C., you also said 5-nanometer going forward will be a big and long-lasting node and also will be growing bigger than 7-nanometer. So are you still maintaining this view with -- that the 7-nanometer is going to be very big next year?

今年7奈米營收佔比將達25%，7奈米將成為台積電今年營收的最大節點。C.C.，您預計明年 7 奈米製程的營收成長率將超過總收入的 25% 嗎？所以這意味著 7 奈米將會更大。然後，C.C.，您還說過，5 奈米未來將是一個巨大且持久的節點，並且會比 7 奈米更大。那麼您是否仍然堅持這種觀點——7 奈米明年將會非常流行？

First, let me say again. It will be very big next year, all right? Why we are so upbeat on the 5-nanometer because we see that -- we forecast the ramp-up will be faster than, in terms of the revenue, faster than 7-nanometer. And we expect that our 5-nanometer as a solution to all the customers is very competitive. And the 5G AI, again, that will be a benefit to the 5-nanometers, of course, and the 7-nanometer.

首先我再說一次。明年一定會非常盛大，好嗎？我們之所以對 5 奈米如此樂觀，是因為我們看到——我們預測其成長速度將比 7 奈米更快（就收入而言）。我們預計，我們的 5 奈米解決方案對所有客戶來說都極具競爭力。當然，5G AI 也會對 5 奈米和 7 奈米有利。

Yes. So for next year, first, you are going to ramp 5-nanometer very fastly. And then you still have a very a big 7-nanometer. So for next year, so what is the overall growth outlook for you for next year?

是的。因此，對於明年來說，首先，你們將非常快速地推進 5 奈米技術。然後你仍然有一個非常大的 7 奈米。那麼對於明年，您對明年的整體成長前景如何？

Let's wait for next year, then I'll give you the answer. But all your statements are true.

等明年吧，到時候我會給你答案。但您的所有陳述都是正確的。

Okay. Second question actually is also related to this 7-nanometer and the 5-nanometer. So now your 7+ is entering mass production, so how is the EUV availability and the productivity for your 7+ so far? Has it reached the mass production need now?

好的。第二個問題其實也跟這個7奈米和5奈米有關。現在你們的 7+ 正在進入量產階段，那麼到目前為止，EUV 的可用性和 7+ 的生產力如何？現在已經達到量產需求了嗎？

The EUV, we don't see any problem in production. So it's growing very well, on schedule, and we are very happy about it.

對於 EUV，我們在生產中沒有發現任何問題。所以它進展非常順利，按照計劃進行，我們對此感到非常高興。

How does the EUV productivity or availability compare to immersion in the same stage?

EUV 生產率或可用性與同一階段的浸沒式相比如何？

Same stage.

同一階段。

Same stage, that's a long time ago. So far, it's -- on our schedule, everything's according to the plan. So that's all I can say.

同一階段，那是很久以前的事了。到目前為止，按照我們的計劃，一切都按計劃進行。這就是我所能說的。

Okay. So just on outlook, do you -- so for next year, with your very fast 7-nanometer and the 5-nanometer ramp. So is this EUV going to be a big dilution to the gross margin next year?

好的。那麼，僅從展望來看，對於明年，隨著 7 奈米和 5 奈米技術的快速發展，您有何看法？那麼 EUV 是否會大幅降低明年的毛利率？

Oh, that's a tough question. All I can say is that EUV will perform as we scheduled, all right? And EUV will be important in our cost-reduction path.

噢，這是一個很難回答的問題。我只能說 EUV 將按照我們的計劃執行，好嗎？在我們降低成本的過程中，EUV 將發揮重要作用。

All right. Let's go back to the line. Operator, please have the next caller on the line.

好的。讓我們回到正題。接線員，請接聽下一位來電。

Next question comes from Mehdi Hosseini from SIG.

下一個問題來自 SIG 的 Mehdi Hosseini。

A couple of follow-ups. On the CapEx item, how should I think about the higher-than-expected CapEx in 2019? Is that more of the pull-in for 2020? Or your capital intensity is going to remain at a higher level looking forward?

一些後續行動。關於資本支出項目，我該如何看待 2019 年高於預期的資本支出？這是否更能吸引 2020 年的關注？或者您的資本密集度未來會維持在高水準？

We are still working on the CapEx number. We're going to report to you next quarter. I think in terms of the rushing, we are seeing more CapEx requirement both for 7-nanometer, also for 5-nanometer. For 5-nanometer, we need to pull in the tools to meet customers' request, okay? So in terms of capital intensity, you'll probably see a -- in a short-term period, it will go higher than what I have guided, the 30% level. But in the longer term, we still believe the 30% level is still the right level of CapEx intensity.

我們仍在研究資本支出數字。我們將於下個季度向您報告。我認為，就急速發展而言，我們看到 7 奈米和 5 奈米的資本支出需求都在增加。對於 5 奈米，我們需要引入工具來滿足客戶的要求，好嗎？因此，就資本密集度而言，你可能會看到——在短期內，它將高於我所指導的 30% 的水平。但從長遠來看，我們仍然認為 30% 的水平仍然是合適的資本支出強度水準。

And just a quick follow-up on your view on Q4. I get a sense that there are still uncertain environment. What is the one end market that is the most variable when you think about the trend into Q4?

我只是想快速跟進一下您對第四季度的看法。我感覺環境仍然存在不確定性。當您考慮第四季度的趨勢時，變化最大的終端市場是什麼？

Could you please repeat the question?

您能重複一下這個問題嗎？

Mehdi, you are asking what is the one end market that is most vulnerable or valuable? I didn't...

邁赫迪，您問的是哪個終端市場最脆弱或最有價值？我沒有...

If that makes it more challenging to you to forecasting Q4?

這是否會使您對第四季的預測變得更具挑戰性？

Most challenging, okay, for Q4.

對於第四季來說，最具挑戰性的是。

Yes.

是的。

Well, I think the most recent Japan and Korea dispute probably is the most uncertain one for the fourth quarter here.

嗯，我認為最近的日韓爭端可能是第四季最不確定的爭端。

Sure. Sure. So how should I think about its impact by a specific end market? Is that more of a broad-based unknown factor? Is the unknown more of the broad-based macroeconomic trends? Or is that specific to one particular end market?

當然。當然。那我該如何看待它對特定終端市場的影響呢？這是否是一個更廣泛的未知因素？未知的是否是更廣泛的宏觀經濟趨勢？或者這只針對某個特定的終端市場？

It is so uncertain that we don't -- cannot pin down specific products that are being impacted. People talk about smartphone itself could be impacted. But it's breaking down many supply chains. So it is including display or other electronic components. So that is difficult part for us to make estimation.

由於不確定性太高，我們無法確定哪些具體產品受到了影響。人們談論智慧型手機本身可能會受到影響。但它正在破壞許多供應鏈。因此它包括顯示器或其他電子元件。所以這對我們來說是一個很難估計的部分。

Okay. Great. May I ask you one more question?

好的。偉大的。我可以再問你一個問題嗎？

Okay. All right.

好的。好的。

Sure. Sure. I'll make it quick. I'll make it quick. But we -- I think there is no doubt that 5G opportunities are enormous. And -- but I just want to better understand how TSMC is planning. Carriers refer to a commercial end market or commercial after the 5G as more meaningful than consumer and handset. On the other hand, your customers semiconductor companies highlight the opportunities in the smartphone. So as you plan for your capacity -- leading-edge capacity plans, it's a very long lead time. How do you think about 5G and its impact on consumer, which is more of a handset or smartphone versus a commercial aspect, which could have an impact on your HPC or other segment?

當然。當然。我會盡快完成。我會盡快完成。但我們——我認為毫無疑問 5G 機會是巨大的。而且——但我只是想更了解台積電的計劃。業者認為商業終端市場或5G之後的商業比消費者和手機更有意義。另一方面，您的客戶半導體公司強調了智慧型手機領域的機會。因此，當您規劃您的產能—前沿產能計畫時，這需要很長的準備時間。您如何看待 5G 及其對消費者的影響？消費者更多的是手機或智慧型手機，而不是商業方面，這可能會對您的 HPC 或其他領域產生影響？

Well, actually, let me answer the question. Because 5G, what we expect is not only on the consumer products like a smartphone, per se, I do see the 5G will affect every area in our platform. For example, without 5G, the autonomous driving will not be possible. So it's very important for automotive also. It's very important for the high-performance computing also because that's one of the networking processor where everything is connected.

嗯，實際上，讓我來回答這個問題。因為 5G，我們所期待的不僅僅是智慧型手機這樣的消費產品，就其本身而言，我確實看到 5G 將影響我們平台的每個領域。例如，沒有5G，自動駕駛就不可能實現。所以這對汽車來說也非常重要。這對於高效能運算也非常重要，因為它是連接一切的網路處理器之一。

It's also important for the IoT because that's where you connect all the data. And with the 5G's a multichannel with a very small latency with very high-speed and with the -- and all the data collection need to be analyzed. So I think in terms of 5G, the effect on the business and also on TSMC's capacity plan, it's enormous. So we are -- what TSMC is doing is right now working with all the customers to plan for their businesses and plan our own capacity. That's all I can say.

這對物聯網也很重要，因為物聯網是連接所有資料的地方。5G 具有多通道、延遲非常小、速度非常高的特點，所有收集到的資料都需要分析。因此，我認為就 5G 而言，它對業務以及台積電產能計劃的影響是巨大的。因此，台積電目前正在做的是與所有客戶合作，為他們的業務進行規劃，並規劃我們自己的產能。我只能說這麼多。

Let me add some color for this. 5G, I think the -- if you look at next year, the biggest business influencer should be in the smartphone. And secondly, it will be the high-performance computing, which composed of the networking and other infrastructures. As far as the automotive and the IoT consumer, we have a high expectation for that. But I think it will take some time before the usage model get implemented in the market. That will come back -- come to us later.

讓我為此添加一些顏色。5G，我認為－－如果你展望明年，最大的商業影響因素應該是智慧型手機。其次是高效能運算，由網路和其他基礎設施組成。就汽車和物聯網消費者而言，我們對此抱有很高的期望。但我認為這種使用模式在市場上實施還需要一些時間。那將會回來——稍後再來找我們。

Your next question comes from the line of Bill Lu from UBS.

您的下一個問題來自瑞銀的 Bill Lu。

First of all, I just want to say thank you to Lora for all the help over the years and patience in answering all of the questions. So thanks a lot and the best of luck.

首先，我只想對 Lora 多年來的幫助和耐心回答所有問題表示感謝。非常感謝，祝你好運。

My first question is again on 7-nanometers. If I go back and look at TSMC for 28-nanometers, that was TSMC's most successful node of all time, and that coincided with the big smartphone ramp. If I now look at 7, you've got the move from 4G to 5G, but you're also adding HPC. How do I think about the -- yes, if I look at capacity for 7, is it reasonable to assume that it could be bigger than 28?

我的第一個問題再次是關於 7 奈米的。如果我回頭看看台積電的 28 奈米工藝，那是台積電有史以來最成功的節點，並且與智慧型手機的大規模普及相吻合。如果我現在看 7，你已經從 4G 轉向 5G，但你也加入了 HPC。我該如何考慮——是的，如果我查看 7 的容量，那麼假設它可能大於 28 是否合理？

7, at this same stage, is it bigger than 28? Are we...

7.在這個同一階段，它是否大於28？我們是...

Yes.

是的。

Okay. So my members say yes, but I think I don't think so.

好的。我的成員說是的，但我認為我不這麼認為。

I think revenue-wise, 7-nanometer would definitely be much bigger than 28-nanometer but not necessarily the capacity.

我認為從收入角度來看，7 奈米肯定比 28 奈米大得多，但產能不一定如此。

Yes. Not the capacity.

是的。不是容量。

Okay. Can you give me a sense for ultimately how big 7 capacity could be relative to 28?

好的。您能否告訴我，相對於 28，7 的容量最終有多大？

It's not more but it's close at the same stage.

雖然不算多，但已經接近同一階段了。

Okay. Great. Maybe I could ask that a different way. Well, just if you look at 7-nanometer demand, let's say, a year from now, what do you think is the split between HPC, smartphones and maybe the other platforms?

好的。偉大的。也許我可以用不同的方式問這個問題。好吧，如果您看一下 7 奈米的需求，比如說，一年後，您認為 HPC、智慧型手機和其他平台之間的差距會有多大？

Bill is asking, a year from today, if we look back and look at the 7-nanometer revenue, what will be the split between HPC, smartphone and other platforms.

比爾問道，一年後，如果我們回顧一下 7 奈米的收入，HPC、智慧型手機和其他平台之間的分配將會如何。

We don't have the specific number. But if you look at today's HPC and smartphone percentage ratio, I think it will be probably similar, although a fraction of the smartphone may not be the leading-edge. But for those 2 sectors, most of -- both sectors are closer to the leading-edge. So both of the factors -- both of those segments will go to 7-nanometer. So probably, smartphone will still be bigger than HPC. It's similar ratio, I think. That's the business we have today.

我們沒有具體的數字。但如果你看看今天的 HPC 和智慧型手機的百分比，我認為它可能會相似，儘管一小部分智慧型手機可能不是領先的。但對於這兩個領域來說，大多數領域都更接近前沿。因此，這兩個因素——這兩個部分都將轉向 7 奈米。因此，智慧型手機可能仍將比 HPC 更大。我認為，比例相似。這就是我們今天的業務。

Great. My second question is on 5-nanometers. So a quarter ago, I asked Dr. Wei about the cost per transistor at 5-nanometers. And I heard some of the feedback from customers is that maybe it's not coming down as fast as expected. And I think Dr. Wei's answer was that TSMC is working at it -- is working on it. I'm just wondering, can you give me an update on that? Whether costs have seen improvement? Or what's the status there?

偉大的。我的第二個問題是關於 5 奈米的。因此一個季度前，我向魏博士詢問了 5 奈米每個電晶體的成本。我聽到一些客戶的回饋說，它可能不會像預期的那樣快速下降。我認為魏博士的回答是台積電正在努力解決這個問題。我只是想知道，您能告訴我有關該事件的最新消息嗎？成本是否有所改善？或是那裡的情況怎麼樣？

Excuse me, you're asking the device improvement? Or is it demand improvement?

請問您問的是設備改進嗎？還是需求改善？

No, sorry. I think if you look at cost per transistor for 5-nanometers, it's not coming down as fast as previous nodes. I'm wondering if you have an update there.

不，抱歉。我認為，如果你看一下 5 奈米的每個電晶體的成本，它下降的速度不會像以前的節點那麼快。我想知道您是否有更新資訊。

No, I don't have any update except that right now we see a much more stronger demand.

不，我沒有任何最新消息，只是現在我們看到了更強勁的需求。

Thank you, Bill. Let's come back to the floor. Next question will be coming from Daiwa's Rick Hsu.

謝謝你，比爾。讓我們回到正題。下一個問題來自 Daiwa 的 Rick Hsu。

Just one question from me. I think, Lora, just talking about your -- this year's revenue growth by different platforms. So like smartphone, up a single digit; high performance, single digit up; and IoT, up double digit. So if I recall my memory, this set of guidance looks the same as that you've provided early this year. So can I fairly assume by your total revenue that you guys still keep the same guidance of the revenue for the whole year? Will be up slightly year-on-year?

我只想問一個問題。我認為，Lora，只是談論一下今年不同平台的收入成長。例如智慧型手機，成長了一位數；高效能，個位數成長；和物聯網，成長兩位數。所以如果我沒記錯的話，這套指導看起來與您今年年初提供的指導相同。那麼，根據你們的總收入，我能否公平地推斷，你們對全年收入的預期仍然保持不變？同比會略有漲嗎？

There is still uncertainty on fourth quarter. What I can say now is fourth quarter revenue will be higher than third quarter.

第四季仍存在不確定性。我現在可以說的是第四季的營收將高於第三季。

Okay. Fair enough. Just one quick follow-up. Can also you update us this year's Global Semi outlook and also global foundry's?

好的。很公平。只需快速跟進一次。您能否向我們介紹今年全球半導體和全球代工的展望？

Next -- you mean 2020?

接下來——你是指 2020 年嗎？

No, no, no, this year. Yes.

不不不，是今年。是的。

This year.

今年。

This year's. This year, our foundry actually is a little bit negative.

今年的。今年我們的代工廠其實有點不景氣。

Semi, excluding memory, negative 3%. Foundry, negative 1% this year.

半數（不含內存）為負 3%。晶圓代工，今年負1%。

So we have been implicitly answered your question. All right. Next question will be coming from Crédit Suisse's Randy.

這樣我們就已經隱含地回答了你的問題。好的。下一個問題來自瑞士信貸的蘭迪。

I just wanted to -- there's been a lot of press and maybe it's noise about customers evaluating other foundries. So you all came out of strong in 5G, HPC. Are you -- I'm just curious if you're factoring in any offsets. Like in the past, you've had couple major customers like go back and forth between foundries. So as you look at the next couple of years, do you see that much -- like how do you see your market share? And do you see any offsets to that strength over the next couple of years?

我只是想──有很多媒體報道，也許是顧客評價其他代工廠的言論。所以你們在 5G、HPC 領域表現都很出色。我只是好奇您是否考慮了任何抵消因素。就像過去一樣，您有幾個主要客戶在不同的代工廠之間來回奔波。那麼展望未來幾年，您是否看到了這麼多——例如您如何看待自己的市場份額？您認為未來幾年這種優勢會受到什麼抵銷嗎？

Well, we did see the strong competition. But let me assure you that our technologies and leadership and also that our manufacturing excellent. With our customer's trust, I believe we are going to maintain our market share and increase the market share. Did I answer your question?

嗯，我們確實看到了激烈的競爭。但我向你們保證，我們的技術和領導力以及製造流程都非常出色。憑藉客戶的信任，我相信我們能夠保持我們的市場份額並增加市場份額。我回答你的問題了嗎？

Yes. Well, within that because we know about some projects like customers like AMD that have shut down or switched from GLOBALFOUNDRIES. So it's more of if you also see any offsetting drags that we should factor in just so we don't get too far ahead of ourselves, if there's anything that we saw a few years ago. We had a mobile customer shift foundries. Like if you see any offsets -- or from a market share, it still looks like -- I think in the past you've said you have pretty much all the customers. But if you still view that on the [present]?

是的。嗯，因為我們知道一些項目，例如像 AMD 這樣的客戶已經關閉或從 GLOBALFOUNDRIES 轉換。因此，更重要的是，如果你也看到任何抵銷阻力，我們就應該將其考慮在內，這樣我們就不會走得太遠，如果幾年前我們看到了什麼的話。我們有一個行動客戶轉移鑄造廠。例如，如果你看到任何抵消——或者從市場份額來看，它仍然看起來像——我想過去你說過你幾乎擁有所有的客戶。但如果你現在仍然這樣看待這個問題呢？

Yes. We factor what the possible competitors' sales approach. We factor it in, yes.

是的。我們考慮可能的競爭對手的銷售方式。是的，我們將其考慮在內。

Okay. And then if I could ask on the nodes. Actually, 2 of them. One on -- as the 7 matures over the next couple of years, how you now see the variation of 7+ and 6 because I think in the past, you saw that as becoming mainstream. If you still think that 7 evolves that way or most of the customers move to the EUV version, 7+ or 6. And then for 5, for next year, how concentrated do you see that both in terms of customers? And then also if it's concentrated smartphone or you see a lot of HPC.

好的。然後我是否可以詢問節點。實際上，有 2 個。一方面——隨著 7 在未來幾年逐漸成熟，您現在如何看待 7+ 和 6 的變化，因為我認為在過去，您認為這會成為主流。如果您仍然認為 7 會以這種方式發展，或者大多數客戶會轉向 EUV 版本、7+ 或 6。那麼對於 5，對於明年，從客戶的角度來看，您認為兩者的集中度如何？然後，如果它是集中式智慧型手機或你看到很多 HPC。

Let me answer that. I believe you asked about the 7+ or 6, right, will the 2 continue the 7-nanometers node. Actually, we would believe that most of the customers, especially the second wave customer, will to adopt 6, okay? Because it's 100% compatible with the 7, that reduce their burden of redesign or the IPs. So the 6 will be a very sweet spot for them to continue with the 7 route. That's one, okay. 7+, this year actually is -- we provide a better performance and better density for some of the customers that have been adopted. And it will continue to grow. The majority, as I said, will be going to 6. As for 5, 5 would be adopted by a lot of platform, that's including the smartphone, the mobile, including the high performance computing. And let me see, what else? IoT, no, no. We do not see IoT yet. At the beginning, it will be mobile and HPC.

讓我來回答這個問題。我相信您問的是 7+ 或 6，對，2 會延續 7 奈米節點嗎。實際上，我們相信大多數客戶，特別是第二波客戶，都會採用 6，好嗎？因為它與 7 100% 相容，從而減輕了他們重新設計或 IP 的負擔。因此，6 對他們來說將是一個非常好的點，可以繼續執行 7 號路線。那是一個，好的。7+，今年實際上是——我們為一些已經採用的客戶提供了更好的性能和更好的密度。並且它也將繼續增長。正如我所說，大多數人都會使用 6。至於 5，5 將被許多平台採用，包括智慧型手機、行動設備，包括高效能運算。讓我看看，還有什麼？物聯網，不，不。我們還沒看到物聯網。一開始會是移動和HPC。

Next question will be coming from CL Securities' Sebastian Hou.

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

My first question is a little bit of follow-up on Randy's questions. So if you narrow down Randy's questions to a very leading-edge technology, the market share. Let's say, sub 10-nanometers market share in the next 3 years. What's TSMC's expectation on that? Are we going to maintain or further increase market share here?

我的第一個問題是對蘭迪的問題做一些後續回答。因此，如果你將蘭迪的問題縮小到一項非常前沿的技術，那就是市場份額。假設未來 3 年內 10 奈米以下的市佔率。台積電對此有何預期？我們會維持或進一步增加這裡的市佔率嗎？

I'll believe we'll maintain well. We have a very high market share. Very high.

我相信我們會保持得很好。我們的市佔率非常高。非常高。

So the -- but in terms of the very high, like, 95 is high. 90 is high. So from 95 to 90, there are...

所以 — — 但就非常高而言，例如 95 就很高了。90很高。所以從 95 到 90，有...

You want to nail down the number?

你想確定這個數字嗎？

I want to know the direction.

我想知道方向。

I think direction, probably, our 16 is higher than our 28. And our 7 will be higher than our 16 and on, yes.

我認為方向可能是我們的 16 高於我們的 28。是的，我們的 7 將高於 16 及以上。

All right. And then what's your expectation of 5 versus 7?

好的。那麼你對 5 比 7 的預期是多少呢？

5, it's too early to say. But we target to be higher than 7.

5.現在說還太早。但我們的目標是高於 7。

Okay. My second question is can TSMC talk about the possibility of building the fab or acquiring a fab company in the United States? And would this is -- would this be out of the pure geopolitical concerns? Or any other consideration?

好的。我的第二個問題是台積電能否談談在美國建立晶圓廠或收購晶圓廠公司的可能性？這是否是出於純粹的地緣政治考量？或有其他考慮嗎？

Of course, geopolitical concern is everybody's concerns. However, if you want to answer how can we solve the concern, it's not that simple. It's not building a fab outside Taiwan or any other country can solve that problem. However, we are always open to build a fab in overseas, provided we can provide the same cost structure to our customers and to our investors. So far, in the U.S, we have talked to the industry and to see whether that is a viable approach, is a good approach to our customers, given the cost differences and if given by the -- in addition to the local subsidies. But still, it's -- current supply from Taiwan is still the best solution for our customers. So we are open to that, but we are not in a hurry to make a decision. Of course, we also see some unproductive facility overseas. We don't want to increase the excess capacity for the industry. Therefore, the possible -- in addition, the approach of building a greenfield fab, acquisition is probably better for the industry. That's our current consideration. But we don't have a definitive plan today that we are going to have that in the U.S. at this point.

當然，地緣政治問題是每個人都關心的問題。然而，如果你想回答我們如何解決這個問題，那就不是那麼簡單了。在台灣或其他任何國家以外建造晶圓廠都無法解決這個問題。然而，只要我們能為客戶和投資者提供相同的成本結構，我們始終願意在海外建立工廠。到目前為止，在美國，我們已經與業界進行了交談，看看這是否是一種可行的方法，對我們的客戶來說是一種好的方法，考慮到成本差異，以及是否由當地補貼提供。但無論如何，目前來自台灣的供應仍然是我們客戶的最佳解決方案。因此我們對此持開放態度，但我們並不急於做出決定。當然，我們也看到海外有一些不俱生產力的設施。我們不想增加產業的過剩產能。因此，此外，建造綠地晶圓廠和收購的方式可能對該行業更有利。這是我們目前的考慮。但目前我們還沒有在美國實施這項措施的明確計畫。

Great. Can I just conclude that -- so TSMC's preference is to -- if you're going to do this, your option will -- your preferred option will be buy rather than build.

偉大的。我可以得出結論嗎？ ——所以台積電的偏好是——如果你要這樣做，你的選擇將是——你的首選將是購買而不是建造。

At this point, yes.

目前來看，是的。

Okay. I understand. Can I add more -- one more question?

好的。我明白。我可以再補充一個問題嗎？

Follow up later.

稍後再跟進。

Okay. I'll come in later.

好的。我晚點進來。

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

是的。接下來是花旗集團的 Roland Shu。

I would like to switch gears to 8-inch. So you load your 8-inch at the utilization. I think it's probably below corporate average in first half. So how do you see your 8-inch demand or utilization in second half?

我想將齒輪換成8吋的。因此，您可以根據利用率來加載 8 英寸。我認為它可能低於上半年的企業平均值。那麼您如何看待下半年 8 吋的需求或使用率？

The second half will be better. Actually it's because of smartphone's seasonality. So the 8-inch's utilization rate will be much higher than the first half.

下半場會更好。實際上這是因為智慧型手機的季節性。所以8吋的利用率會比上半年高很多。

How do you compare with your corporate average?

與公司平均值相比，您表現如何？

Let me give you some taste that some of the segment actually is fully loaded.

讓我給你一些感受，其中的一些片段實際上是滿載的。

Okay. So this is the demand across the board. So it's not just for certain customers' rush orders.

好的。所以這是全面的需求。所以它不僅適用於某些客戶的緊急訂單。

Oh, it's demand across the board. I'm talking about the product segment.

哦，這是全面的需求。我說的是產品部分。

Okay. And second question, how about your Nanjing fab? So can you give us a color or update for your Nanjing fab?

好的。第二個問題，你們的南京工廠怎麼樣？那麼，您能給我們提供一下南京工廠的相關資訊或更新嗎？

Nanjing fab's progress went well. The loading is very healthy, and we continue our plan. We will build 20,000 wafers per month capacity over there.

南京工廠進展順利。裝載情況非常良好，我們將繼續我們的計劃。我們將在那裡建造每月20,000片晶圓的產能。

Any plan to -- above this 20,000?

有任何計劃超越這 20,000 嗎？

Right now 20,000 is our plan.

目前我們的計劃是 20,000。

Now let's go back to the line. Operator, please have the caller on the line, the next one.

現在讓我們回到正題。接線員，請讓呼叫者繼續通話，下一個。

Next question comes from the line of Xiuxi Zhu from Standard & Poor's.

下一個問題來自標準普爾的朱秀熙。

Just have very 2 brief questions. The first one is about your drop -- year-over-year drop of your net income. Could you please give us the specific reasons for the drop, the 7.6% drop in the net income? And the second question is about your outlook on the mobile sales in year 2. So you said it will be the main driver of your revenue growth. I was wondering will that be overall increase of the shipment of the mobile that you're thinking about? Or is there any other reason such as the technology upgrades over there? That's all.

我只有兩個非常簡短的問題。第一個是關於你的淨收入年減的情況。您能否解釋一下淨收入下降7.6％的具體原因？第二個問題是關於您對第二年行動銷售的展望。您說它將成為您收入成長的主要驅動力。我想知道，您所考慮的手機出貨量整體是否會增加？還是有其他原因，例如那邊技術升級？就這樣。

First question, of course, to explain what the reason behind the year-over-year drop of our net income in this year, I guess, for our second quarter. The second question is the outlook for mobile, the growth that we indicated, was it because it was driven by a quantity increase? Or is it because of technology migration, so leading to a revenue increase?

當然，第一個問題是解釋我們今年第二季淨收入年減的原因。第二個問題是行動領域的前景，我們所指出的成長是否是由於數量增加而推動的？還是因為技術遷移，所以導致收入增加？

Let me answer the first question. On year-over-year basis, if we look at the second quarter this year and the second quarter last year, the margin difference is mainly -- there's about 5 percentage points margin difference mainly from the lower utilization this year. This -- first half of this year has been very weak, including the second quarter. So utilization is the main reason and a little bit of product mix as well, okay?

我來回答第一個問題。與去年同期相比，如果我們看一下今年第二季度和去年第二季度，利潤率差異主要是——利潤率差異約為 5 個百分點，主要是因為今年的利用率較低。今年上半年，包括第二季度，經濟表現非常疲軟。所以利用率是主要原因，產品組合也有一點原因，好嗎？

What is the second question?

第二個問題是什麼？

The second question is smartphone revenue increase.

第二個問題是智慧型手機收入的成長。

Yes. Smartphone revenue increase, whether it's quantity or technology migration.

是的。智慧型手機收入增加，無論是數量還是技術遷移。

;

；

The second half's revenue increase due to the smartphone firstly because of seasonality, of course. So that's -- as compared with the first half, second half the smartphone is much better. Although we say that the whole year in the smartphone unit, we forecast a drop. But TSMC's revenues still grow because of, one, it's because of a silicon content increase. Second one is because we gain the market share through our customer. So we still forecast the whole year, the smartphone will increase in revenue. Especially, the second half would be much stronger than the first half. Did that answer the question?

下半年收入的成長首先當然是由於智慧型手機的季節性。因此，與上半年相比，下半年的智慧型手機要好得多。儘管我們說智慧型手機部門全年的銷售額都會下降，但我們預測今年的銷售額將會下降。但台積電的收入仍然成長，因為第一，這是因為矽含量的增加。第二個原因是我們透過客戶獲得了市場份額。因此我們仍然預測全年智慧型手機的收入將會增加。尤其是下半場，會比上半場強勁很多。這回答了問題嗎？

Yes. Great.

是的。偉大的。

Next question is from Yubao Hua from Tianfeng Securities.

下一個問題來自天風證券的餘寶華。

Hello? can you hear me?

你好？你聽得到我嗎？

Yes. Yes we can.

是的。是的，我們可以。

Hello?

你好？

We can hear you.

我們能聽到你的聲音。

Okay. Can I speak Chinese, please?

好的。請問我可以講中文嗎？

Yes, you can speak Chinese.

是的，你會說中文。

Okay. (foreign language)

好的。（外語）

Let me translate to English first. Yubao had observed our June revenue, which is a strong growth, and he wants us to comment on the second half business outlook.

我先翻譯成英文。餘寶觀察到我們六月的營收成長強勁，他希望我們對下半年的業務前景發表評論。

(foreign language)

（外語）

Lora, can you speak in English too, for the record?

洛拉，順便問一下，你也可以說英語嗎？

All right. I just gave the guidance for the third quarter, where our revenue in third quarter will be USD 9.1 billion to USD 9.2 billion. That is 18% sequential growth. As to the fourth quarter, we have said we believe our fourth quarter revenue will be higher than third quarter although there are still some uncertainties. We did not provide a clear guidance on the fourth quarter yet.

好的。我剛剛給出了第三季的預期，我們第三季的營收將達到 91 億美元至 92 億美元。這意味著連續 18% 的成長。至於第四季度，我們曾表示，儘管仍存在一些不確定性，但我們相信第四季的營收將高於第三季。我們尚未對第四季度提供明確的指導。

Okay. (foreign language)

好的。（外語）

(foreign language)

（外語）

(foreign language)

（外語）

Okay. So your first question is -- he likes to know the breakdown among our smartphones, HPC and IoT among our growth platforms, the revenue breakdown.

好的。所以你的第一個問題是——他想知道我們的成長平台中智慧型手機、高效能運算和物聯網的細分情況，以及收入細分情況。

(foreign language) I will now provide a revenue breakdown by platform for the whole year. But I have just said, our smartphone will grow single digit. It still accounts for the biggest part of our revenue for the whole year followed by HPC. And then the rest of them are much smaller, like IoT, automotive and DCE and others.

（外語）我現在將按平台提供全年收入明細。但我剛才說了，我們的智慧型手機將成長個位數。它仍然占我們全年收入的最大份額，其次是 HPC。其餘的則小得多，例如物聯網、汽車、DCE 等。

We have another question from Mehdi Hosseini from SIG.

我們還有來自 SIG 的 Mehdi Hosseini 的另一個問題。

Just one quick follow-up. But before I just -- I also want to express my gratitude to Lora Ho and wish her the best of luck in her new endeavor.

只需快速跟進一次。但在此之前，我也想向 Lora Ho 表示感謝，並祝福她在新的事業中一切順利。

Going back to a question that came up last earnings conference call. It had to do with the SOI. And I just wanted to revisit the topic and better understand how you're planning for some of the challenges that 5G brings, such as a lower, I think, you said power consumption and whether SOI is going to be included in your road map.

回到上次收益電話會議上提出的問題。這與 SOI 有關。我只是想重新討論這個主題，以更好地了解您如何應對 5G 帶來的一些挑戰，例如更低的功耗，以及 SOI 是否會被納入您的路線圖。

Well, we did develop some of the technology for the RF circuit or RF technology using the SOI wafers. But we don't do the logic technology on FD-SOI. So let me make sure that everybody understands what I'm going to deliver. We don't do FD-SOI for logic -- for conventional logic technology, but we do use SOI wafer to develop RF technologies. For RF Front End, for example, that we are doing. Did I answer the questions?

嗯，我們確實利用 SOI 晶圓開發了一些 RF 電路或 RF 技術。但我們不做FD-SOI上的邏輯技術。因此，請允許我確保每個人都明白我要傳達的訊息。我們不將 FD-SOI 用於邏輯——用於傳統邏輯技術，但我們確實使用 SOI 晶圓來開發 RF 技術。例如，我們正在做的是射頻前端。我回答了這些問題嗎？

Got it. Yes.

知道了。是的。

All right. Let's come back to the floor. Next question will be coming from Morgan Stanley's Charlie Chan.

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

I have 2 follow-up questions, and if I may, I may have my industry cross-checks. So first of all, it's about the smartphone semi content increase. Can you give us some color how much is that for this year? And also when 5G comes next year, because your remark was just very bullish about the 5G smartphone contribution next year. How would the 5G smartphone to help your semi content growth in the smartphones?

我有 2 個後續問題，如果可以的話，我可能會進行行業交叉核對。首先，這是關於智慧型手機半內容的增加。能告訴我們今年的具體數字是多少嗎？還有明年 5G 到來時的情況，因為您的評論對明年 5G 智慧型手機的貢獻非常樂觀。5G智慧型手機將如何幫助您在智慧型手機領域的半導體內容成長？

Okay. That's a good question, but it's very hard to identify what is the percentage of the silicon content increase. But let me give you some color of it, all right? The first one is -- look at your smartphone today. It's 3-camera or 2-camera or even 4-camera. Look at that. And look at the pixel size, right? You might hear some of the pixel is a 48-megapixel. Those kind of things come with silicon with it. So that's the silicon content, the first one. Actually, just some other minor things, so for example, power management IC. Now the power consumption is very important. So now every major component inside need the power management IC to come with it. One is screen driver. You need power management. The application process, you need power management. Just a lot of things.

好的。這是個好問題，但很難確定矽含量增加的百分比是多少。但是讓我告訴你它的細節，好嗎？第一個是——看看你今天的智慧型手機。它是 3 個攝影機或 2 個攝影機甚至 4 個攝影機。看看那個。看看像素大小，對吧？您可能聽過一些像素是4800萬像素。這些東西都含有矽。這是第一個，即矽含量。實際上，只是一些其他小事，例如電源管理 IC。現在功耗非常重要。所以現在裡面的每個主要零件都需要電源管理IC來配合。一個是螢幕驅動程式。您需要電源管理。應用過程中，需要進行電源管理。有很多事。

And furthermore, let me give you in terms of 5G. You have a lot of different channels. So now even the RF transceiver or RF Front End, the die size is bigger. That's why I say -- that's why silicon content is increasing. Did I answer your question?

此外，讓我提供你一下 5G 方面的情況。您有很多不同的管道。因此現在即使是射頻收發器或射頻前端，晶片尺寸也更大。這就是我說的——這就是矽含量增加的原因。我回答你的問題了嗎？

But how many percentage, actually, I cannot identify it.

但具體佔比多少，我卻無法確定。

But how significant for those modern chip or application processor? Because that's related to your businesses the most. Can you give us some percentage of increase? Like 10%, 20% increase?

但這對於現代晶片或應用處理器有多重要？因為這與您的業務最相關。您能告訴我們一些成長百分比嗎？例如增加 10%、20%？

Definitely cannot. I cannot because we are working on it and we know all the minor details. So I cannot give that -- some of the information.

絕對不能。我不能，因為我們正在努力，我們知道所有的細節。所以我無法提供一些資訊。

Okay. That's fine. So next question, switching gears back to the gross margin, right? So we -- so my question is that for your leading-edge investment, do you feel like the payback period of those leading-edge investments are getting longer or shorter, right? Because I still want to find out some explanation why gross margin kind of declined year-over-year. So it could the leading-edge investments getting heavier, or there's a true price competition from your competitors. So I just want to get some thoughts from you on this topic.

好的。沒關係。那麼下一個問題，回到毛利率，對嗎？所以我們——所以我的問題是，對於您的前沿投資，您是否覺得這些前沿投資的回報期變長了還是變短了，對嗎？因為我仍然想找出毛利率年減的原因。因此，前沿技術投資可能會變得越來越大，或者競爭對手之間可能會出現真正的價格競爭。所以我只是想聽聽你對這個主題的一些想法。

Lora, can give an idea on the payback years?

洛拉，可以透露一下回收年限嗎？

Okay. I looked -- actually, personally, I don't a payback year means much. If you look at the various technologies -- actually, I checked this question. They look very much the same. We all know the payback year are very much the same. However, I think the ramp profile is very different and the sensitivity of utilization to margin is different. The more leading-edge is more sensitive to margin. So leading edge needs to have very high utilization to secure the margin. That's the key, and we are working on it, okay?

好的。我看了看——實際上，就我個人而言，我不認為回報年資有多大。如果你看一下各種技術——實際上，我檢查了這個問題。它們看起來非常相似。我們都知道回報年資都是差不多的。然而，我認為坡道輪廓非常不同，利用率對利潤的敏感度也不同。越是前沿，對裕度越敏感。因此，尖端技術需要具有非常高的利用率才能確保利潤。這是關鍵，我們正在努力，好嗎？

Okay. And to -- since I wanted to cross-check, if I may. First of all, you mentioned that you're pulling some 5-nanometer CapEx to this year, right? So next year, do you think the CapEx level would be at the range of your kind of annual guidance? And secondly, about the raw wafer price, do you think you can get a good bargain on the raw wafer price for next year?

好的。並且 — — 因為我想進行交叉核對，如果可以的話。首先，您提到今年將增加一些 5 奈米資本支出，對嗎？那麼明年，您認為資本支出水準會達到您的年度指導範圍嗎？其次，關於原料矽片的價格，您認為明年的原料矽片價格便宜嗎？

I think next year's CapEx will have to depend on a lot of things: depend on overall market conditions, the customers' requirements and so forth. So it's probably too early to say whether it's going back to this old range or target. As we get more clear, we will communicate with you, okay? The raw wafer price, I think we have done a good job to lock in the price, and that is also a continued effort.

我認為明年的資本支出將取決於許多因素：取決於整體市場狀況、客戶要求等等。因此，現在判斷是否會回到原來的範圍或目標可能還為時過早。當我們更清楚之後，我們會與您溝通，好嗎？原始晶圓的價格，我認為我們在鎖定價格方面做得很好，這也是一項持續的努力。

I think to make sure you understand, Lora just mentioned it will exceed the top range, what we gave you today.

我想確保你們理解，洛拉剛才提到它將超出我們今天給你們的最高範圍。

All right. Follow-up question will be coming from CL Securities' Sebastian Hou.

好的。後續問題將來自 CL Securities 的 Sebastian Hou。

I have 2 follow-ups. The first one is, for the past several earnings call, I always felt like TSMC's 5-nanometer tape out activity or interest level from clients isn't as large as 7-nanometer at the same stage, if I -- well, if I'm right. Now you mention stronger 5-nanometer demand. And is it driven -- more driven by the accelerating 5G deployment or also driven by the EUV costs or EUV economy improvements?

我有 2 個後續行動。第一個是，在過去幾次財報的電話會議上，我總是覺得台積電的 5 奈米流片活動或客戶的興趣程度不如同一階段的 7 奈米，如果我——好吧，如果我是對的。現在您提到了更強勁的 5 奈米需求。它是否更多地受到 5G 部署加速的推動，還是也受到 EUV 成本或 EUV 經濟改善的推動？

It's actually driven by the 5G's accelerations.

這實際上是由 5G 的加速所推動的。

Okay. And internally, if I look at 5G acceleration, do you see them more from HPC or smartphone?

好的。從內部來看，如果我看一下 5G 加速，您是否更多地從 HPC 還是智慧型手機看到它們？

Both actually. Because our 5G infrastructure is in the HPC area. On the smartphone, almost all the premium phone is with TSMC.

事實上兩者都有。因為我們的5G基礎設施是在HPC領域。在智慧型手機方面，幾乎所有高階手機都採用台積電。

Okay. If I understand that correctly, I think so far, in most of the infrastructure baseband, 5G baseband is still on 12- or 16-nanometers in mainstream right now. And so you see the accelerated 5-nanometer demand. So basically, we will assume that the next uptick will be 7 and I also see 5?

好的。如果我理解正確的話，我認為到目前為止，在大多數基礎設施基帶中，5G 基帶目前仍以 12 奈米或 16 奈米為主流。因此，您會看到 5 奈米需求的加速成長。所以基本上，我們會假設下一個上漲幅度會是 7，而我還看到 5？

Oh, I see. I see. You are talking about that. Some of the networking processor will probably go into the 5-nanometer, but some of it stay in 7 and some of them -- but basically and actually, both of the base station is now going to the most leading-edge technology.

我懂了。我懂了。你正在談論那件事。一些網路處理器可能會採用 5 奈米工藝，但有些會停留在 7 奈米，還有一些——但基本上，實際上，兩個基地台現在都採用最前沿的技術。

I think it is -- of course, in terms of revenue, smartphone is bigger than the base station, okay? And in the 5-nanometer, the big players get into 5G smartphone very aggressively. And it doesn't take many tape-outs, just a few tape-outs. They demand much bigger capacity than any other products.

我認為是的——當然，就收入而言，智慧型手機比基地台更大，好嗎？在5奈米領域，大公司正積極進軍5G智慧型手機領域。而且不需要多次流片，只需幾次流片即可。它們需要的容量比任何其他產品都要大得多。

Second follow-up is I'd like to hear TSMC's views on the next-generation architecture of transistor. So how do you see the FinFET and the gate-all-around or to compare that to see the pros and cons of these 2 architectures in 5-nanometer and 3-nanometer? Because it seems that one of your competitors is -- promote GAA aggressively.

第二個後續問題是我想聽聽看台積電對下一代電晶體架構的看法。那麼您如何看待 FinFET 和環柵，或透過比較來了解這兩種架構在 5 奈米和 3 奈米中的優缺點？因為看起來你的競爭對手之一正在積極推廣 GAA。

Yes, we noticed that. And actually we also have evaluated all the options, right, just as what I said. And we look at the pros and cons. And we work with our customer, and we choose the most competitive in terms of performance and cost-wise. So we choose the most competitive approaches. So we work with our customers, actually.

是的，我們注意到了。實際上我們也評估了所有的選擇，對吧，正如我所說的。讓我們來看看其利弊。我們與客戶合作，選擇在性能和成本方面最具競爭力的方案。因此我們選擇最具競爭力的方法。所以實際上我們是與客戶合作。

Okay. But would it make sense to assume that -- because so far, on the, say, 16 nanometer to 10, to 7, the industry standard has been FinFET. So customers will be easier to dual-source if they want to or if they can. But going -- if going forward, if there is going to be different routes, one doing GAA, one doing FinFET, would it be -- make customers' dual sourcing more difficult?

好的。但是，這樣的假設是否有意義呢？因為到目前為止，從 16 奈米到 10 奈米再到 7 奈米，行業標準一直是 FinFET。因此，如果客戶願意或能夠的話，他們將更容易實現雙重採購。但是，如果繼續發展，如果有不同的路線，一條做 GAA，一條做 FinFET，這是否會使客戶的雙重採購變得更加困難？

Actually, let me say that even the FinFET structure, it's very hard to switch the foundry. It's very hard because of the design rules, the architecture, the design flow are all different. At the 5-nanometer geometry, TSMC still see the FinFET as the best one, although we have evaluated all other options. But so far, we still -- in 5-nanometer geometry, please notice that, 5-nanometer geometries, FinFET is still the most efficient one, the most competitive one. For the full node transition to the next one, 3-nanometer, we are evaluating everything. We talked with our customer when we define what is the approaches that we are using.

實際上，我要說的是，即使是 FinFET 結構，也很難更換代工廠。這非常困難，因為設計規則、架構、設計流程都不同。在 5 奈米幾何尺寸下，台積電仍然認為 FinFET 是最好的，儘管我們已經評估了所有其他選項。但到目前為止，我們仍然 - 在 5 奈米幾何形狀中，請注意，5 奈米幾何形狀，FinFET 仍然是最有效的，最具競爭力的。為了實現向下一個節點（3 奈米）的完整過渡，我們正在評估一切。當我們確定我們正在使用的方法時，我們與客戶進行了交談。

So I think we can conclude our Q&A session now knowing that we had evaluated all available options and picked the optimal one.

因此我認為我們現在可以結束問答環節，因為我們知道我們已經評估了所有可用的選項並選擇了最佳的選項。

Okay. Before we end today's conference, please be advised that the replay of the conference will be accessible within 4 hours from now. Transcript will be available 24 hours from now. Both of which will be available through our website at www.tsmc.com.

好的。在今天的會議結束之前，請注意，會議的重播將在 4 小時後提供。成績單將於 24 小時後提供。上述兩份文件均可透過我們的網站 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。