聯華電子 (UMC) 2021 Q3 法說會逐字稿

Welcome, everyone, to UMC's 2021 Third Quarter Earnings Conference Call. (Operator Instructions) For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit our website, www.umc.com, under the Investor Relations, Investors, Events section.

歡迎大家參加聯華電子 2021 年第三季財報電話會議。 （操作員說明）僅供參考，本次電話會議現透過網路進行現場直播。會議結束後一小時內將提供網路直播重播。請造訪我們的網站 www.umc.com，位於「投資者關係」、「投資者」、「活動」部分。

And now I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, please begin.

現在我想介紹一下聯華電子投資者關係主管 Michael Lin 先生。林先生，請開始。

Thank you, and welcome to the UMC's conference call for the third quarter of 2021. I'm joined by Mr. Jason Wang, the President of UMC; and Mr. Chitung Liu, the CFO of UMC. In a moment, we will hear our CFO present the third quarter financial results, followed by our President's key message to address UMC's focus and the fourth quarter 2021 guidance.

謝謝大家，歡迎參加聯電 2021 年第三季電話會議。以及聯華電子財務長劉啟東先生。稍後，我們將聽到我們的財務長介紹第三季的財務業績，然後是我們的總裁關於解決 UMC 重點和 2021 年第四季度指導的關鍵訊息。

Once our President and the CFO complete their remarks, there will be a Q&A session. UMC's quarterly financial reports are available at our website, www.umc.com, under the Investors, Financial section.

一旦我們的總裁和財務長完成發言，就會有問答環節。 UMC 的季度財務報告可在我們的網站 www.umc.com 的「投資者」、「財務」部分查閱。

During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risks that may be beyond the company's control. For these risks, please refer to UMC's filing with the SEC in the U.S. and the ROC security authorities.

在這次會議期間，我們可能會根據管理層目前的期望和信念做出前瞻性陳述。這些前瞻性陳述受到許多風險和不確定性的影響，可能導致實際結果出現重大差異，包括可能超出公司控制範圍的風險。對於這些風險，請參閱聯華電子向美國 SEC 和中華民國安全機構提交的文件。

Now, I would like to introduce UMC's CFO, Mr. Chitung Liu, to discuss UMC's third quarter 2021 financial results.

現在，我想介紹聯電財務長劉啟東先生，討論聯華電子2021年第三季的財務表現。

Thank you, Michael. I would like to go through the 3Q '21 investor conference presentation material, which can be downloaded from our website. Starting on Page 3. The third quarter of 2021 consolidated revenue was TWD 55.91 billion, with gross margin at 36.8%. The net income attributable to the stockholders of the parent was TWD 17.46 billion and the earnings per ordinary shares were TWD 1.43 and utilization rate in the third quarter of 2021 was a little bit over 100%.

謝謝你，麥可。我想瀏覽一下 21 年第三季投資者會議演示材料，該材料可以從我們的網站下載。從第3頁開始。歸屬於母公司股東的淨利為新台幣174.6億，每股普通股收益為新台幣1.43，2021年第三季的利用率略高於100%。

Please turn to Page 4. So sequential comparison for the income statement. Revenue grew quarter-over-quarter by 9.8% to TWD 55.9 billion. Gross margin rate reached 36.8% or TWD 20.5 billion. And overall operating income is TWD 15.1 billion or 27.1%. Operating profit margin rate grew nearly 5 basis percentage point. For nonoperating income, because of the better performance in the equity market, the overall net nonop is around TWD 4.3 billion, significantly grow compared to the TWD 1.88 billion in the previous quarter. And overall net income attributable to the parent is TWD 17.46 billion or TWD 1.43 EPS and for U.S. ADRs, the earnings per share per ADS is USD 0.257.

請翻到第4頁。營收季增 9.8% 至新台幣 559 億。毛利率達36.8%，即新台幣205億元。整體營業收入為新台幣151億元，即27.1%。營業利益率成長近5個基點。營業外收入方面，由於股市表現較好，整體營業外淨額約為新台幣43億元，較上季的18.8億元大幅成長。歸屬於母公司的整體淨利潤為新台幣 174.6 億，即 EPS 1.43 新台幣，對於美國 ADR，每 ADS 每股收益為 0.257 美元。

For first 3 quarters of the year on Page 5, revenue grew by 17% to TWD 153.9 billion, mainly based on higher wafer shipments, better loadings as well as higher blended ASP. Gross margin rate is about 31.8% or TWD 48.9 billion. Operating income rate is 22.1% or TWD 34 billion. The net income for the first 3 months -- first 3 quarters of the year is TWD 39.8 billion, and the net income rate is 25.9%. Our accumulated EPS for the first 3 quarters has reached TWD 3.26 per share.

今年前 3 季第 5 頁，營收成長 17% 至新台幣 1,539 億，主要得益於晶圓出貨量增加、裝載量增加以及綜合平均售價提高。毛利率約31.8%，即489億新台幣。營業收入率為22.1%，即新台幣340億元。前三個月－今年前三季的淨利為新台幣398億，淨利率為25.9%。前三季累計EPS已達每股3.26台幣。

So Page 6 is our balance sheet. Our current cash on hand is about TWD 113 billion after the cash dividend payout. Total equity is about TWD 257 billion, as we continue to rise on both price increase as well as mix improvement. And the previous quarter, the third quarter ASP increase is nearly 8%.

所以第 6 頁是我們的資產負債表。現金分紅後，我們目前手上現金約為新台幣1,130億元。總股本約為 2,570 億新台幣，我們因價格上漲和產品組合改善而持續成長。與上一季相比，第三季ASP增幅接近8%。

On revenue breakdown, starting from Page 8, Asia represents about 65% of our total revenue and Japan, Europe and U.S. remain relatively decent for the -- compared to the previous quarter. IDM is about 14% and Fabless about 86%. Communication is around 46% of the total revenue, and consumer is about 27%. Computer has stayed about the same at around 17%. And, actually, almost every now is running at nearly full capacity. So the change has been minimal from a quarter-over-quarter basis. 28/22-nanometer consists of 19% of the total revenue and 40-nanometer is about 18%.

在收入細分方面，從第 8 頁開始，亞洲約占我們總收入的 65%，而日本、歐洲和美國與上一季相比仍然相對不錯。 IDM 約為 14%，Fabless 約為 86%。通訊約佔總收入的46%，消費約佔27%。計算機的使用率基本上保持在 17% 左右。事實上，幾乎每一次都幾乎是滿載運行。因此，與上一季相比，變化很小。 28/22奈米佔總收入的19%，40奈米約佔18%。

And we'll continue to see some mild capacity growth coming from both 12X in Xiamen as well as 12M in Japan. And for 8-inch, there's some incremental increase from various sets, especially 8N in Suzhou in China. So for the time being, the CapEx budget for 2021 remains unchanged at USD 2.3 billion. And majority, 85% is going to the capacity of 12-inch related expansion.

我們將繼續看到廈門 12X 和日本 12M 的產能溫和成長。而對於8吋來說，各個系列都有一些增量成長，尤其是中國蘇州的8N。因此，2021 年的資本支出預算暫時維持在 23 億美元不變。其中大部分，85%將用於12吋相關的產能擴張。

So the above is the summary of UMC's results for 3Q 2021. More details are available in the report, which can be -- has been posted on our website. I will now turn the call over to President of UMC, Mr. Jason Wang.

以上是聯華電子 2021 年第三季業績的摘要。我現在將電話轉給聯電總裁王傑森先生。

Thank you, Chitung. Good evening, everyone. Here, I would like to update the third quarter operating result of UMC. In the third quarter, we continued to experience robust chip demand across computing, consumer and communication end segments. Higher 12-inch wafer shipments in the quarter reflect ongoing product mix enhancements and partially contribute to the lift in blended ASP. Overall wafer shipments grew 2.6% quarter-over-quarter to 2.5 million 8-inch equivalents. Revenue from 28-nanometer technologies continue to rise while business engagement in 22-nanometer have led to a growing number of customer tape-outs across wireless, display and IoT markets, further diversifying our product pipeline.

謝謝你，吉東。大家晚上好。在此，我想更新聯華電子第三季的經營業績。第三季度，我們在運算、消費和通訊終端領域持續經歷強勁的晶片需求。本季 12 吋晶圓出貨量的增加反映了產品組合的持續增強，並部分推動了混合平均售價的提升。整體晶圓出貨量較上季成長 2.6%，達到 250 萬片 8 吋晶圓當量。 28 奈米技術的收入持續成長，而 22 奈米的業務參與導致無線、顯示器和物聯網市場上越來越多的客戶流片，進一步豐富了我們的產品線。

Looking into the fourth quarter, we anticipate wafer shipments and ASP trends will remain firm. Capacity utilization across 8-inch and 12-inch facilities will continue to remain fully loaded, as gross margin continue to exhibit upward momentum, thanks to our team's effort in optimizing capacity productivity and product mix. The current business cycle provides an opportune time for UMC to strengthen customer relationships, along with our technology competitiveness and the incremental capacity growth to elevate our market position. Our focus on growing our comprehensive logic and specialty technology portfolio has been welcomed by our customers, and we continue to broaden our product range to fulfill their needs.

展望第四季度，我們預期晶圓出貨量和平均售價趨勢將維持堅挺。由於我們團隊在優化產能生產力和產品組合方面的努力，8吋和12吋工廠的產能利用率將繼續保持滿負荷，毛利率繼續呈現上升勢頭。目前的經濟週期為聯電提供了加強客戶關係、增強技術競爭力和增量產能成長以提升市場地位的良機。我們對發展綜合邏輯和專業技術組合的關注受到了客戶的歡迎，我們不斷擴大我們的產品範圍以滿足他們的需求。

With the P5 and P6 expansion projects underway at our flagship 12A facility in Tainan, given the strong demand from our customers, we are well positioned to grow and capture additional market shares in 2022. In addition, the company continued to make strides towards a greener future. Earlier this month, UMC was honored to receive the Green Chemistry Application and Innovation Award from Taiwan's Environmental Protection Agency. The award recognizes our efforts to introduce chemical substitutes that minimize impact to the environment and the health of our employees. At our Outstanding Supplier Awards this year, UMC also took the opportunity to reiterate our commitment to achieve net zero carbon emissions by 2050 and to invite suppliers to work with us to build a low-carbon supply chain.

隨著我們台南旗艦12A 工廠的P5 和P6 擴建項目正在進行，考慮到客戶的強勁需求，我們已做好準備，在2022 年實現增長並佔領更多市場份額。方向邁進。本月早些時候，聯華電子榮獲台灣環保署頒發的綠色化學應用與創新獎。該獎項表彰了我們在引入化學替代品方面所做的努力，以最大限度地減少對環境和員工健康的影響。在今年傑出的供應商頒獎典禮上，聯華電子也藉此機會重申了2050年實現淨零碳排放的承諾，並邀請供應商與我們共同建構低碳供應鏈。

As a key semiconductor player, UMC understands that we have a responsibility to proactively respond to climate change and to promote sustainable practice in our industry. Together with our upstream and downstream partners, we will continue to work toward our net zero carbon emission targets.

作為主要的半導體廠商，聯電深知我們有責任積極應對氣候變遷並促進產業的永續實踐。我們將與上下游合作夥伴一起，繼續努力實現淨零碳排放目標。

Let's move on to the fourth quarter 2021 guidance. Our wafer shipments will increase by 1% to 2%. ASP in U.S. dollars will increase by 1% to 2%. Gross profit margin will be in the high 30% range. Capacity utilization rate will be at 100%. Our 2021 cash-based CapEx will be budgeted at USD 2.3 billion.

讓我們繼續討論 2021 年第四季的指導。我們的晶圓出貨量將成長1%至2%。以美元計算的平均售價將上漲 1% 至 2%。毛利率將在30%左右。產能利用率將達100%。我們 2021 年以現金為基礎的資本支出預算為 23 億美元。

That concludes my comments. Thank you all for your attention. Now we are ready for questions.

我的評論到此結束。感謝大家的關注。現在我們準備好提問了。

(Operator Instructions) First question is coming from Randy Abrams, Crédit Suisse.

（操作員說明）第一個問題來自瑞士信貸銀行的蘭迪·艾布拉姆斯。

Congratulations on the good results. I wanted to ask the first question on capacity. Just factoring you're running 100% plus. Could you go into timing for the Phase 5 10,000 capacity, which quarter that capacity would be available? And then for Phase 6, where it's a bigger amount, the 27,500, would that all come on at the same time? And would that be beginning of 2023. Just trying to think of timing when the new capacity would come on. And just one follow-up on capacity. There were some talks you may consider further fabs in Singapore or additional capacity. Do you have plans beyond 2023 for additional capacity and see that potential option?

恭喜取得好成績。我想問第一個問題，關於容量。只要考慮到你的運作效率是 100% 以上。您能否介紹一下第 5 階段 10,000 產能的時間安排，該產能將在哪一個季度投入使用？那麼對於第 6 階段，數量更大，達到 27,500 個，這一切會同時進行嗎？那會是 2023 年初嗎？以及關於容量的一項後續行動。有過一些討論，您可能會考慮在新加坡建造更多晶圓廠或增加產能。您是否有 2023 年後增加容量的計劃並看到了潛在的選擇？

Sure. So the first is for the P5 10,000 expansion, the 28-nanometer will become online on Q2 2022. And the P6 will be in year of 2023, but in the later year of 2023. And we'll provide more specific the ramp schedule in a later day, given the current -- the [true] lead time availability update. The question about the news about the Singapore, we are unable to comment on any speculations as we always as we always do that. We don't comment on speculations. But we are always open to exploring new opportunities as long as we can enhance our shareholders benefits and we said that before as well.

當然。因此，第一個是 P5 10,000 擴展，28 奈米將於 2022 年第二季度上線。貨時間可用性更新。關於新加坡新聞的問題，我們無法像往常一樣對任何猜測發表評論。我們不對猜測發表評論。但只要我們能夠提高股東利益，我們總是願意探索新的機會，我們之前也說過。

Our strategy in the disciplined CapEx philosophy from our 2015 has not changed. We always try to drive our sustainable structural profitability based on the disciplined CapEx principle. So we have aligned with our customers as well as the market given our relevance in the marketplace before we're making any CapEx decision. Meanwhile, we continue -- we're consistently cooperating with our customer regarding the long-term development plan. Given our diversified production site, I think UMC has the luxury to evaluate different expansion options beyond P5 and P6. And we will discuss our expansion plan accordingly once we can deliver that.

自 2015 年以來，我們嚴格遵守資本支出理念的策略並未改變。我們始終努力根據嚴格的資本支出原則推動可持續的結構獲利能力。因此，在做出任何資本支出決策之前，考慮到我們在市場中的相關性，我們已經與客戶和市場保持一致。同時，我們將繼續與客戶就長期發展計畫進行持續合作。鑑於我們多元化的生產基地，我認為聯電有能力評估 P5 和 P6 以外的不同擴展選項。一旦我們能夠實現這一目標，我們將相應地討論我們的擴張計劃。

And 2 follow-ups on that. One, you ran a few percent above 100%. But do you think as we go to next year, if demand is there, that would be the level you could operate? Or was there anything specific this quarter that you were able to push out more. So is that a level you could sustain?

對此還有 2 個後續行動。第一，你的成績比 100% 高出幾個百分點。但您認為，到了明年，如果有需求，您能達到這樣的水平嗎？或者本季有什麼具體的事情是你可以推出更多的嗎？那麼這是你可以維持的水平嗎？

And then the other follow-up was since the P6 will be later 2023, besides the 10,000, is there -- how much can you get from debottlenecking or other areas I saw fourth quarter, you have a bit of that. But if you have any other meaningful capacity.

然後另一個後續行動是，由於P6 將於2023 年晚些時候推出，除了10,000 輛之外，還有——你可以從我在第四季度看到的去瓶頸或其他領域獲得多少，你有一些。但如果你有任何其他有意義的能力。

Well, I mean in 2021, we have continued focus on the productivity improvement in addition to the incremental capacity, and we will do so for 2022 as well. And so we do expect that effort will continue. And at the current plan, and I think the -- we are targeting greater than 100%, right? But what we guided, we will guide as a fully loaded at 100%, but the effort will continue.

嗯，我的意思是，在 2021 年，除了產能增量之外，我們還將繼續關註生產力的提高，2022 年我們也會這樣做。因此，我們確實希望這種努力能夠持續下去。按照目前的計劃，我認為——我們的目標是超過 100%，對吧？但我們所指導的，我們將指導為 100% 滿載，但我們將繼續努力。

Yes, in terms of capacity, growth rate for the 2022, we currently estimate about 6% capacity increase versus 3% capacity increase in 2021.

是的，就 2022 年的產能成長率而言，我們目前預期產能增幅約為 6%，而 2021 年產能增幅為 3%。

And on 8-inch, is there any increase? Or is that all pretty much 12-inch?

而在8吋上，有沒有提升呢？或者說都是 12 吋的？

It's pretty much all 12-inch now. The debottlenecking of the product migration will probably continue, but it's still within the same pool. Yes.

現在幾乎都是12吋的了。產品遷移的消除瓶頸可能會持續，但仍在同一個池中。是的。

Okay. Great. And I wanted to ask on pricing. If you could give any look at how you're seeing pricing after this year? It looks like it might be up close to mid-teens for next year. If you see how you're seeing mature node and then also if any chance to reset the 28-nanometer? And if there's a way to think about where gross margins could go?

好的。偉大的。我想問一下定價。能透露一下今年之後的定價狀況嗎？看起來明年的價格可能會接近十幾歲。如果您看到成熟節點的情況，那麼是否有機會重置 28 奈米？是否有辦法思考毛利率的去向？

Okay. Well, first of all, we do foresee that ASP momentum will continue into 2022. However, we are not taking advantage of our customers doing the wafer shortage. So we kind of position our ASP in a more longer-term partnership over the near-term cyclical factors. So we kind of work with the customers to earn their trust and instead of exploiting the short-term opportunistic profit. And we do believe the pricing will reflect our market value and position. So we foresee the ASP momentum will continue into 2022. At this point, for the 2022, we anticipate the capacity will remain full on both 12-inch and 8-inch, and our 2022 outlook will outpace the foundry industry growth. And overall for the growth will come from a capacity increase, productivity improvement, I mentioned earlier as well as the ASP. And as far as for the 2022 full year ASP, we'll be able to provide you some guidance in the Q4 2021 conference call. Yes.

好的。首先，我們確實預計 ASP 勢頭將持續到 2022 年。因此，我們將我們的 ASP 定位為更長期的合作夥伴關係，而不是近期的周期性因素。因此，我們與客戶合作以贏得他們的信任，而不是利用短期機會主義利潤。我們確實相信定價將反映我們的市場價值和地位。因此，我們預計平均售價的動能將持續到 2022 年。總體而言，成長將來自產能的增加、生產力的提高，我之前提到過以及平均售價。至於 2022 年全年 ASP，我們將在 2021 年第四季電話會議中為您提供一些指導。是的。

And just a last question. I'm considering like a downturn protection. If we eventually ultimately go into the next downturn, do you expect new price level? Or do you think the same kind of flexibility where we'd see a reversal? Like if it were to drop back to like 80s utilization for an extended time, like would we go back to kind of reversal? Or do you expect some firmness?

最後一個問題。我正在考慮經濟衰退保護。如果我們最終陷入下一次低迷，您是否預期新的價格水準？或者你認為同樣的彈性我們會看到逆轉嗎？就像如果它的利用率在很長一段時間內回落到 80 年代那樣，我們會回到某種逆轉嗎？或者你期望一些堅定？

Well, I mean, I think the pricing is reflecting our market position, as I mentioned earlier. So as far as for the downturn, we have continued to strengthen the company's competitiveness, right? And that includes many areas. One is we continue to prepare ourselves for the downturn and because it's a cyclical industry. And we're focused on the structural demand in many megatrends, 5G, EV and IoT application. We have aligned with the key players in our first-tier customers through the technology offering that we have, and so UMC has the sole source. And in addition to that, the CapEx approach we deploy, requires some of the risk mitigation with the customer commitments.

嗯，我的意思是，正如我之前提到的，我認為定價反映了我們的市場地位。那麼對於低迷來說，我們是在不斷加強公司的競爭力，對嗎？這包括許多領域。一是我們繼續為經濟低迷做好準備，因為這是一個週期性產業。我們專注於許多大趨勢、5G、電動車和物聯網應用的結構性需求。我們透過我們擁有的技術產品與第一線客戶的主要參與者保持一致，因此聯華電子擁有唯一的來源。除此之外，我們部署的資本支出方法需要透過客戶承諾來緩解一些風險。

In addition, with validated customers' confidence (inaudible) increase in long-term agreements for future capacity expansion arrangement. And giving all those efforts that we have spent in the past years, in addition to what we just mentioned also on financial-wise, we believe the company has become more resilient in the event of the micros uncertainty. Therefore, I think the ASP will probably play a less role under such conditions and environments.

此外，經過驗證的客戶信心（聽不清楚）增加了未來產能擴張安排的長期協議。考慮到我們過去幾年所付出的所有努力，除了我們剛才提到的財務方面的努力之外，我們相信，在微觀不確定性的情況下，公司已經變得更具彈性。因此，我認為在這樣的條件和環境下，ASP的作用可能會減弱。

The next question is from Gokul Hariharan of JPMorgan.

下一個問題來自摩根大通的 Gokul Hariharan。

Congratulations on the good results. My first question is about gross margins, just leading on from what Randy asked. We have seen a pretty strong gross margin expansion for UMC. Looks like we're still going to see further gross margin expansion. Could you talk a little bit about how you think gross margins settle down long term now that you have some visibility into some of the contracts that you have signed for the new capacity? Historically, I think one player has had very high gross margins, and everybody else has been at a much lower gross margin level. How would you characterize this, this year given that you also feel a little bit more comfortable about managing any potential downturn risk as well? So could you talk a little bit about how UMC thinks about gross margins over the next, let's say, 1 or 2 years, not just on a quarter-to-quarter basis? That's my first question.

恭喜取得好成績。我的第一個問題是關於毛利率，這是蘭迪問的問題。我們看到聯電的毛利率成長相當強勁。看來我們仍會看到毛利率進一步擴大。既然您對新產能簽署的一些合約有了一定的了解，您能否談談您認為長期毛利率如何穩定？從歷史上看，我認為一個玩家的毛利率非常高，而其他所有人的毛利率水平都低得多。鑑於您對管理任何潛在的經濟衰退風險也感到更加放心，您如何形容今年的情況？那麼，您能否談談聯華電子如何看待未來（比如說 1 年或 2 年）的毛利率，而不僅僅是每季的毛利率？這是我的第一個問題。

Wow. That's a really -- well, first of all, we -- like you said, from a short-term wise, we do expect the momentum in our business growth and profitability will continue beyond Q2 -- Q4 2021, mainly due to the validation from our customers on the key markets and capture the structural demand. And given the value proposition that UMC provides to our customers, including our solutions, sufficient capacity and the growth path. And I said our goal at this point is we will strike a balance between the profit and long-term growth and -- along with our CapEx, the disciplined CapEx. We believe our approach will reflect our profitability results in the long run.

哇。這確實是——首先，我們——就像你說的那樣，從短期來看，我們確實預計我們的業務增長和盈利能力的勢頭將持續到2021 年第二季度至第四季度之後，這主要是由於驗證從主要市場的客戶那裡獲取結構性需求。並考慮到聯華電子為我們的客戶提供的價值主張，包括我們的解決方案、足夠的產能和成長路徑。我說過，我們目前的目標是，我們將在利潤和長期成長以及我們的資本支出和嚴格的資本支出之間取得平衡。我們相信，從長遠來看，我們的方法將反映我們的獲利結果。

So when you talk about long run, I think that, that requires some of the balance at here, okay? So if we look out in the next couple of years, and while we're announcing the P6 expansion, and so obviously, some of the CapEx will happen in the next couple of years along with the long-term agreement that we have find out with the customer. And we believe we'll be able to manage that balance at a healthy level. But as far as the actual number, we probably won't be able to provide it at this time. But I think we feel fairly comfortable about our business model going forward.

所以當你談論長期時，我認為這需要一些平衡，好嗎？因此，如果我們展望未來幾年，當我們宣布 P6 擴展時，很明顯，隨著我們發現的長期協議，一些資本支出將在未來幾年與客戶發生。我們相信我們將能夠在健康的層面上實現這種平衡。但就實際數量而言，我們目前可能無法提供。但我認為我們對未來的商業模式感到相當滿意。

Yes. Just to add on that, we will provide margin guidance on a quarterly basis. And so for the next quarter conference call, certainly, we will give overall outlook for the 2022.

是的。除此之外，我們將按季度提供保證金指導。因此，在下個季度的電話會議中，我們當然會給出 2022 年的整體展望。

So another question I had is, could you talk a little bit about -- I think over the last few years, you have increased your mix of specialty processes, automotive and other areas for 28, 40 and 55. Could you talk a little bit about what percentage of these process nodes are already specialty where there is a lot more sticky demand compared to what percentage is still like pure digital where there could be potentially more fluctuation in terms of demand?

所以我的另一個問題是，你能談談 - 我認為在過去的幾年裡，你已經增加了 28、40 和 55 歲的專業工藝、汽車和其他領域的組合。節點中有多少百分比已經是專業的，有更多的黏性需求，而有多少百分比仍然是純數字的，其中需求可能存在更大的波動？

I mean, right now for the specialty technology is occupied a little bit over 50% right now, and they are unique and customized to the customer. So it does give you a bit of more stickiness in terms of the customer relationship. In addition to that, there is also a sole-source product that we have engaged in. Combining with the specialty, I think the number will reach up to somewhere at the 70% -- above 70% range and along with the LTA protection. So in terms of overall business model at this point, we have certain confidence that they definitely have increased significantly on the stickiness side.

我的意思是，目前專業技術佔了 50% 以上，而且它們是獨一無二的，是為客戶量身定制的。所以它確實在客戶關係方面給你帶來了更多的黏性。除此之外，還有一個我們從事的獨家產品。因此，就目前的整體商業模式而言，我們有信心它們在黏性方面肯定會顯著增加。

Okay. Just to clarify. So the 50% plus and 70% plus is on the overall capacity, right, for UMC?

好的。只是為了澄清。那麼 50% 以上和 70% 以上是針對聯華電子而言，對吧？

Yes. Yes. Yes.

是的。是的。是的。

And next, we'll have Nick Gaudois of UBS for questions.

接下來，我們將請瑞銀集團的 Nick Gaudois 提問。

Yes. The first one is on your LTA mechanism. If I recall, you mentioned last time that you may start to receive a prepayment from customers in the third quarter for -- in the framework of those LTAs for the capacity coming later. Is that the case? Or should we expect this to come at a later stage? And secondly, am I right to confirm that your ramp-up for the Phase 6 expansion is effectively pushed out by 1 to 2 quarters versus what you said last time? And if so, what is the reason? Is that related to equipment lead times already at this stage? Or is there any other -- are there any other factors influencing you saying what do you not expect to ramp up more in the latter part of '23 versus Q2?

是的。第一個是關於您的 LTA 機制。如果我記得的話，您上次提到，在這些長期協議的框架內，您可能會在第三季開始收到客戶的預付款，以用於以後的容量。是這樣嗎？或者我們應該期望這會在稍後階段發生？其次，我是否可以確認，與您上次所說的相比，您的第六階段擴展實際上推遲了 1 到 2 個季度？如果是這樣，原因是什麼？這與現階段的設備交貨時間有關嗎？或有其他因素影響您說您不希望在 23 年下半年相對於第二季增加更多的因素？

Overall, for P6 currently on schedule, even though the equipment, some of the bottleneck equipment, the lead time may be stretched a bit, but we're still working closely with the equipment vendors. And it fall into the ballpark schedule we have agreed with our P6 partners. And majority, or if not 100%, of the P6 capacity is covered by this so-called long-term agreement. So this is nearly 100% all with LTAs.

整體來說，對於目前如期進行的P6來說，儘管設備方面，一些瓶頸設備，交貨時間可能會拉長一些，但我們仍然在與設備商密切合作。它屬於我們與 P6 合作夥伴商定的大致時間表。大部分（如果不是 100%）P6 產能都包含在這個所謂的長期協議中。所以這幾乎 100% 都是長期協議。

Great. And in that context, how about the prepayments then? Is that too early to see them? Or -- and if so when should we start to see prepayments coming through?

偉大的。在這種情況下，預付款項又如何呢？現在去見他們是不是太早了？或者——如果是這樣，我們什麼時候應該開始看到預付款？

Part of that is -- a little bit of that is in this year's CapEx already for down payment, but it's a very small percentage. Majority of the payment will come along with the delivery of the tool, which will happen later 2022 and also first half of 2023. So the CapEx for 2022 and 2023, we will see the majority -- the bulk of the P6-related CapEx.

其中一部分是今年的資本支出中已經有一小部分用於首付，但比例非常小。大部分付款將隨工具的交付一起支付，這將在2022 年晚些時候和2023 年上半年發生。的資本支出。

Great. And just lastly, a bit of a technicality, but when we actually see that coming through, will it appear in basically payables? Or would you do a netting of CapEx basically?

偉大的。最後，有一點技術性，但是當我們真正看到這一點時，它會出現在基本應付帳款中嗎？或者您會基本上對資本支出進行淨額結算嗎？

Sorry, can you say that again, please?

抱歉，請您再說一次好嗎？

Yes. Just a bit of a technicality, but you'll see that coming through in payables in your balance sheet? Or would you actually just net out CapEx effectively? So when you're going to give us a CapEx guidance that would be -- would that be gross or net of those prepayments?

是的。只是一點技術性，但您會在資產負債表中的應付帳款中看到這一點嗎？或者您實際上會有效地淨掉資本支出嗎？因此，當您要向我們提供資本支出指導時，該指導是預付款總額還是扣除預付款後的淨額？

Our CapEx number is on a cash basis. So it's already -- if we pay it, then it will be included in their CapEx. And there are some payable as well, but it's not -- if it's falling in other years, the following year, it will not be included in this year's CapEx.

我們的資本支出數字是基於現金的。所以它已經 - 如果我們支付它，那麼它將包含在他們的資本支出中。還有一些應付款項，但事實並非如此——如果在其他年份、下一年下降，則不會包含在今年的資本支出中。

And next, we'll have Charlie Chan of Morgan Stanley for questions.

接下來，我們將請摩根士丹利的 Charlie Chan 提問。

So my first question is about what's your observation about the end demand trend because for some specific subsectors like TV, you see panel price drop a lot. And some consumer MCU market seems to see weakness, right? If you look at those spot prices, et cetera. So I know your fab is still full, but you -- can you kind of give us some comments about the demand or customers' inventory?

所以我的第一個問題是你對最終需求趨勢的觀察是什麼，因為對於電視等某些特定子行業，你會看到面板價格下降很多。一些消費級 MCU 市場似乎出現疲軟，對嗎？如果你看看那些現貨價格等等。所以我知道你們的工廠仍然滿員，但是你們能給我們一些關於需求或客戶庫存的評論嗎？

Sure. We did also observe some mild correction from selected market segments caused by some of the demand softness and -- nevertheless, it did not affect UMC overall undersupply situation, just like you said, and which we expect this will continue through 2022. I think we haven't seen a significant concern on the inventory buildup side. And despite that, there are some inventory increase. The -- at this point, we continue to experience strong demand, while some mild correction were immediately placed by some unfulfilled demand during the long queue of the customers.

當然。我們確實也觀察到，由於需求疲軟，某些細分市場出現了一些溫和的調整，儘管如此，這並沒有影響聯電整體供應不足的情況，就像您所說的那樣，我們預計這種情況將持續到2022 年。儘管如此，庫存還是有所增加。在這一點上，我們繼續經歷強勁的需求，而在顧客長隊中一些未滿足的需求立即引起了一些溫和的調整。

Okay. And I think Gokul just raised as a great question, right, about your customers' stickiness, right? So is it right that you said that 70% sticky business, meaning some customization, specialty with LTA, what was that the right number, 70%?

好的。我認為戈庫爾剛剛提出了一個很好的問題，關於你的客戶的粘性，對嗎？那麼，您所說的 70% 黏性業務（意味著一些客製化、LTA 專業）是否正確，正確的數字是多少，70%？

Yes. I think it's above 70%. Yes, above 70%.

是的。我認為是70%以上。是的，70%以上。

Okay. Great. Yes. So my question is that how about the rest 30%. What would be your pricing strategy? By the way, I mean, the company gets a greater credit to identify these -- the price high potential earlier than your industry peers. So I'm curious about your pricing strategy for that rest of 30% business presumably is more commodity and customer has kind of a dual source.

好的。偉大的。是的。所以我的問題是剩下的 30% 怎麼樣？您的定價策略是什麼？順便說一句，我的意思是，該公司比業內同行更早地識別出這些高價格潛力，從而獲得了更大的信譽。所以我很好奇你們的定價策略，其餘 30% 的業務可能更多是商品，而客戶有雙重來源。

We sort of touched that a little earlier. Our current focus is focused on some of the structural demand in the 5G, EV and IoT applications. We believe those demands will continue, and they are here to stay. So some of the vulnerable ones, and we have some protection and some of the mega trends associated with demand. And we believe they are here to stay. So given some of the market focus as well as the -- what we touched on the CapEx recent mitigation approach and along with the LTA, I think we clearly -- we are less vulnerable to this cyclical issue. And so we think the ASP will actually play a less role here. So that's why we actually feel fairly comfortable at this point. And if the market dynamic does change, we'll provide you the update.

我們早些時候就觸及過這一點。我們目前的重點是5G、電動車和物聯網應用中的一些結構性需求。我們相信這些需求將會持續下去，而且會一直存在。因此，對於一些脆弱的國家，我們有一些保護以及一些與需求相關的大趨勢。我們相信他們會留在這裡。因此，考慮到市場的一些關注點以及我們最近談到的資本支出緩解方法以及長期協議，我認為我們顯然不太容易受到這個週期性問題的影響。因此我們認為 ASP 實際上在這裡發揮的作用會較小。這就是為什麼我們現在感覺相當舒服。如果市場動態確實發生變化，我們將為您提供最新資訊。

Okay. That's fair enough. So I guess for some commodity, just to make some example, right? Like driver IC, MCU, meaning you see some potential risks in a downturn. So when you kind of take those orders, you already have some protection mechanism? Is that the right way to interpret your comments?

好的。這很公平。所以我想對於某些商品來說，只是舉個例子，對嗎？像是驅動IC、MCU，這意味著在低迷時期你會看到一些潛在的風險。那麼當你接受這些訂單時，你已經有了一些保護機制嗎？這是解釋您的評論的正確方式嗎？

Yes, that's one way to put it. On the other hand, within the driver IC segment, there is also OLED driver, which is driving our momentum. So it's a combination of those and some of that requires sound risk mitigation mechanism. Some of that actually is more aligned to the growth of the segment. So it's a combination of that, yes.

是的，這是一種表達方式。另一方面，在驅動IC領域，還有OLED驅動器，這正在推動我們的發展動能。因此，這是這些因素的結合，其中一些因素需要健全的風險緩解機制。其中一些實際上更符合該細分市場的成長。所以這是兩者的結合，是的。

Okay. Yes. And one topic that it seems like people care is about the Micron, those issue, right? I mean the -- sorry, I mean the -- you already settled with the U.S. Justice Department, right? But I mean 6 days ago, there was a news report about some ongoing civil lawsuits. Maybe Chitung can give us some updates, whether there's going to be some provision or kind of a legal expense on this case.

好的。是的。人們似乎關心的一個話題是美光，這些問題，對嗎？我的意思是——抱歉，我的意思是——你已經與美國司法部達成和解，對吧？但我的意思是 6 天前，有一篇新聞報導一些正在進行的民事訴訟。也許Chitung可以給我們一些最新消息，是否會對此案提供一些規定或某種法律費用。

Yes. First of all, we don't comment on the news speculation. It's not a complete story, and it's not the full picture. So we don't comment on that. And also by law, we cannot comment on the ongoing litigation. And we didn't have any provision based upon our legal effort. We are still working on this case. So it's still ongoing. So that's always a comment for the time being.

是的。首先，我們對新聞猜測不予評論。這不是一個完整的故事，也不是完整的畫面。所以我們對此不予評論。而且根據法律規定，我們不能對正在進行的訴訟發表評論。我們沒有任何基於我們法律努力的規定。我們仍在處理此案。所以它仍在繼續。所以這始終是暫時的評論。

In other words, is there is no update on any new development. No new development on this case. And if there is any new development, I think we'll certainly disclose that information accordingly.

換句話說，沒有任何新進展的更新。此案暫無新進展。如果有什麼新的進展，我想我們一定會相應地披露這些資訊。

So Jason, so I just think about another question that you're supposed to be very confident that your 2022 will outpace the foundry industry. So is that because you are expanding capacity more aggressively? Or you are going to high the ASP higher than your peers. Why you have such high confidence that you can outpace your foundry peers?

Jason，我想另一個問題，你應該非常有信心你的 2022 年將超過鑄造業。那麼這是因為你們正在更積極地擴大產能嗎？或者你會比你的同齡人提高平均售價。為什麼您如此有信心能夠超越代工廠同行？

Well, given the current outlook of the 2022, we foresee those structural catalysts will continue to drive, including the 5G transformation, the EV and IoT devices. And those megatrends are still representing significant growth on a year-over-year basis. And we do anticipate those structural drivers will continue to fuel our growth including the OLED driver, the ISP, the WiFi-6, RF switch, MCU, PMIC, and so -- and which also lead to a higher silicon content.

嗯，考慮到 2022 年的當前前景，我們預計這些結構性催化劑將繼續推動，包括 5G 轉型、電動車和物聯網設備。這些大趨勢仍然代表著同比的顯著增長。我們確實預期這些結構性驅動因素將繼續推動我們的成長，包括 OLED 驅動器、ISP、WiFi-6、RF 開關、MCU、PMIC 等，這也會導致更高的矽含量。

So we are convinced that most of those demand surge are here to stay largely driven by those structural needs. So given those catalysts, and we have certain confidence. And -- I mean, in addition to that, based on our efforts and market position, that gives us that confidence that the 2022 will be another strong year for UMC to gain market share.

因此，我們相信，大部分需求激增將主要由這些結構性需求所驅動。因此，考慮到這些催化劑，我們有一定的信心。我的意思是，除此之外，基於我們的努力和市場地位，這讓我們有信心 2022 年將是聯華電子獲得市場份額的另一個強勁年份。

Yes. But the consensus for TSMC is like next year to grow 15% to 20%. So do you think you can perform similar or even better than this key foundry peer?

是的。但台積電的共識是明年成長 15% 至 20%。那麼您認為您的表現是否可以與這個主要代工廠同行類似甚至更好？

Our estimate on the foundry industry growth in 2022 at this point is about 12%.

目前我們對2022年代工業成長率的預估約為12%。

12%. I'm sorry. Okay.

12%。對不起。好的。

12%. Yes. And for our business outlook, I think we'll be higher than this current foundry industry projection.

12%。是的。對於我們的業務前景，我認為我們將高於當前鑄造行業的預測。

Okay. And lastly, variable cost. I mean that is a key reason why foundry peers want to hike the price, right? So variable cost no matter percentage or per wafer number. So can Chitung give us some kind of comment about the trend? For example, this year-over-year, what was the growth for the variable cost? And what would be the variable cost growth for the coming 2 years?

好的。最後，變動成本。我的意思是，這就是代工廠同行想要提高價格的關鍵原因，對吧？因此，無論百分比或每個晶圓數量，成本都是可變的。 Chitung能否給我們一些關於這一趨勢的評論？例如，與去年同期相比，變動成本的成長是多少？未來兩年的變動成本成長是多少？

Yes. For the operating expenses, it will be growing along with our enlarged revenue. However, as a percentage of revenue, we hope it will be flat to down, under control. So the revenue growth will outpace the operating expenses. As for raw material like raw wafer and also labors that were also on the rise. But altogether, I think we are commenting that because of our production efficiency improvement, our improved economy of scale, and also with a good outlook for both demand as well as pricing for 2022. I think there's still further upside for our margins -- profit margins.

是的。對於營運費用來說，它會隨著我們收入的擴大而成長。然而，就佔收入的百分比而言，我們希望它能持平或下降，並受到控制。因此，收入成長將超過營運支出。至於原料（例如晶圓）和勞動力也在增加。但總的來說，我認為我們之所以評論這一點，是因為我們的生產效率提高了，規模經濟得到了改善，而且2022 年的需求和定價前景良好。進一步的上升空間－利潤邊距。

The next question is coming from Roland Shu of Citigroup.

下一個問題來自花旗集團的 Roland Shu。

So your Xiamen fab began production from 4Q '15. It was still loss-making last year, and I think it is still loss-making now. So with the better pricing, when do you expect Xiamen fab is going to be turned around? And also how many margin upside or earning upside to UMC once Xiamen fab is breakeven?

所以你們廈門工廠從2015年第4季開始生產。去年還是虧損的，我想現在也是虧損的。那麼隨著定價的提高，您預期廈門晶圓廠什麼時候能夠轉虧為盈？一旦廈門晶圓廠達到損益平衡，聯華電子的利潤率或獲利空間有多少上升空間？

Xiamen should be able to be profitable in 2022. As a matter of fact, they are profitable in single quarters of 2021. So we are very close to breakeven in 2021. And it is expected to be profitable in 2022. However, it will still below corporate average in terms of profit margin in 2022. And there's still room for Xiamen to catch up to the level of UMC's corporate average.

廈門2022年應該就能獲利。於企業平均。

Understood. Yes. Do you have the time frame of when this Xiamen fab gross margin is going to approach corporate average?

明白了。是的。您是否知道廈門晶圓廠的毛利率何時能夠接近企業平均？

No, we don't have a time frame. We -- all we can say is I can give you a rough comparison. Currently, our Singapore fab has higher gross margin than corporate average. And the Japan fab is catching up to almost identical to the UMC corporate average. And the Xiamen is, as I mentioned, coming out of loss-making to nearly breakeven this year. And it will be profitable next year, but still away from the corporate average.

不，我們沒有時間表。我們——我們只能說我可以給你一個粗略的比較。目前，我們的新加坡工廠毛利率高於企業平均。日本晶圓廠正在追趕聯華電子公司的平均水準。正如我所提到的，廈門今年已擺脫虧損，幾乎達到損益兩平。明年將實現盈利，但仍低於企業平均水平。

Okay. Then how about -- housekeeping point of view, how much can we model these subsidy from your partner in Xiamen once in next year it is going to be profitable?

好的。那麼，從管家的角度來看，一旦明年能夠獲利，我們可以從你們在廈門的合作夥伴那裡獲得多少補貼？

Okay. Say that again?

好的。再說一次？

I think we still have this subsidy from our partner in Xiamen because Xiamen fab now is still loss-making. Now about next year, how much is subsidy we can model in our model?

我認為我們仍有廈門合作夥伴的補貼，因為廈門晶圓廠現在仍然有虧損。現在大約明年，我們可以在我們的模型中模擬多少補貼？

It will be similar to this year, except for the interest expense subsidy, which is already expired. And everything else will be about the same for 2022 compared to 2021.

與今年類似，只是利息費用補貼已經到期。與 2021 年相比，2022 年的其他一切都將大致相同。

So we'll be still around 1 billion per quarter.

因此，我們每季的銷售額仍將維持在 10 億左右。

Yes.

是的。

Okay. Okay. And my second question is now including yourself, a lot of the foundry peers announced new capacity expansion plans. So in your view, how soon will the industry are to close the supply and demand gap of 8-inch and match in 12-inch foundry capacity. What are the key bottleneck of this supply-demand imbalance now?

好的。好的。我的第二個問題是，現在包括你在內，許多代工同行都宣布了新的產能擴張計畫。那麼在您看來，該行業多久才能彌合8英寸的供需缺口，並匹配12英寸的代工產能。目前供需失衡的關鍵瓶頸是什麼？

Well, I mean, we can't really comment about our peers, and we don't know what their plans are. We do monitor the market landscape and adjust ourselves. The focus here is about our capacity growth and are those new capacity vulnerable or the existing capacity vulnerable or not. So given our newly deployed capacity will be 28 nanometers, the majority of our 28-nanometer capacity has been reserved by the LTA or single-source customer. Therefore, we believe that capacity will be maintained at high utilization rates for a very long time.

嗯，我的意思是，我們無法真正評論我們的同行，我們也不知道他們的計劃是什麼。我們確實會監控市場格局並進行自我調整。這裡的重點是我們的產能成長，以及那些新產能是否脆弱或現有產能是否脆弱。因此，考慮到我們新部署的產能將是 28 奈米，我們的大部分 28 奈米產能已由 LTA 或單一來源客戶保留。因此，我們認為產能將在很長一段時間內保持較高的利用率。

In addition, our mission to differentiate ourselves with our technology as well as the manufacturing excellence will enhance that stickiness. We kind of touched that earlier as well. So I think we will minimize the 28-nanometer vulnerability given our (inaudible) by the customer portfolio, along with our continuous reduction in the breakeven utilization rate. I think as far as for the UMC relevance, I think we feel comfortable about that. And so as far as the landscape, the market capacity -- worldwide foundry capacity landscape goes, we will continue monitoring that.

此外，我們的使命是透過我們的技術和卓越的製造來脫穎而出，這將增強這種黏性。我們之前也觸及過這一點。因此，我認為，考慮到我們的（聽不清楚）客戶組合，以及我們不斷降低的損益平衡利用率，我們將最大限度地減少 28 奈米的漏洞。我認為就聯華電子的相關性而言，我們對此感到滿意。就格局、市場容量—全球代工產能格局而言，我們將持續監控。

Understood. Okay. My last question is for your growth next year. You said you expect the overall foundry growth to be about 12%. And then you are going to outpace the foundry growth. However, for your overall capacity increase let's say is about 6%. So I think assuming next year you are going to fully load all this capacity. So still, the growth above 12%, I don't know you still need to rely on this ASP increase. So where will you see the ASP increase coming from? Is it mainly coming from this price hike or you still will have some product mix improvement next year?

明白了。好的。我的最後一個問題是關於你明年的成長。您說您預計整體代工成長約為 12%。然後你的成長速度將超過代工廠。然而，對於您的整體容量來說，我們假設大約增加了 6%。因此，我認為假設明年您將滿載所有這些容量。所以，還是12%以上的成長，我不知道你還需要依賴這個ASP的成長嗎？那麼，ASP 的成長來自哪裡呢？主要是來自這次價格上漲還是明年你們還會有一些產品組合的改進？

It will be both. And the -- both the ASP momentum will be a combination of the product mix improvement as well as the pricing momentum, yes, the price increase. Yes.

兩者都會。平均售價的動力將是產品組合改善和定價動力（是的，價格上漲）的結合。是的。

Yes. But since like your 3Q, most of the capacity has been fully loaded. So you really did not have too many product mix improvement according to your technology node, so I think this probably will be still the same next year because you guided on your 8-inch and 12-inch capacity will be fully loaded. Yes. So I expect this product mix improvement probably will be also very limited. So that means that for next year, you probably are still going to see more than 6% ASP improvement purely from this price hike. Is that right?

是的。但就像你們的3Q一樣，大部分產能已經滿載了。所以根據你的技術節點，你確實沒有太多的產品組合改進，所以我認為明年可能還是這樣，因為你指導你的8英寸和12英寸產能將滿載。是的。所以我預計這種產品組合的改進可能也會非常有限。因此，這意味著明年，您可能仍會看到純粹由於這次價格上漲而帶來的平均售價提高了 6% 以上。是這樣嗎？

No. I mean, first of all, the 6% is capacity increase for the year. And that's mainly for the 10,000 booked on P5. And that will kick in the second quarter of '22. So -- and since the P5 is all contribute as 28-nanometers. So from a product mix standpoint, it has a lift to the ASP as well. So the 6% is really coming out from the new capacity. And in addition to the productivity improvement that we have demonstrated in this year, we expect there will be some coming from the factory side for the productivity improvement, along with the blended ASP improvement. And we expect we will outpace the foundry projected growth.

不，我的意思是，首先，6% 是今年的產能成長。這主要針對 P5 上預訂的 10,000 人。這將於 22 年第二季開始。因此，由於 P5 全部採用 28 奈米製程。因此，從產品組合的角度來看，它也提高了平均售價。所以這 6% 確實是來自新產能。除了我們今年展示的生產率提高之外，我們預計工廠方面也會有一些生產率的提高以及混合平均售價的提高。我們預計我們的成長速度將超過代工廠的預期成長。

Next question is from Szeho Ng of China Renaissance.

下一個問題來自華興資本的吳思豪。

My first question is regarding capacity expansion. Based on the current clean room space available in Singapore and Japan, how much more capacity in theory began at in those 2 areas?

我的第一個問題是關於產能擴張的。根據新加坡和日本目前可用的無塵室空間，理論上這兩個地區的產能將增加多少？

Well, we have some footprint available. One is in our Japan fab. And we have some incremental footprint available in our 12A, the P6. And in addition to those 2 locations for our Xiamen facility, we also have a second phase footprint available to us. And meanwhile, we continue to be open to the other new opportunity as well and -- given the current market dynamics. So the future expansion footprint is always on our road map that we'll continue monitoring that.

好吧，我們有一些可用的足跡。其中之一位於我們的日本工廠。我們在 12A P6 中提供了一些增量足跡。除了廈門工廠的這兩個地點外，我們還有第二期設施可供使用。同時，考慮到目前的市場動態，我們也繼續對其他新機會持開放態度。因此，未來的擴張足跡始終在我們的路線圖上，我們將繼續監控這一點。

I see. But outside Taiwan, outside China, let's say, in Singapore, how much more capacity we can add, just based on the current clean room space we have?

我懂了。但在台灣以外、中國以外，比如說在新加坡，僅根據我們目前擁有的無塵室空間，我們還可以增加多少產能？

At this point, Singapore is at 100% full.

此時，新加坡已達到 100% 滿載。

I see. Got you. Yes. And second question maybe for Chitung. Regarding the investment income, actually, the company has benefited quite a lot from the investment income for the last couple of quarters. So for modeling purposes, how should we model that line?

我懂了。明白你了。是的。第二個問題可能是針對吉東的。從投資收益來看，實際上，公司最近幾季的投資收益受益頗多。那麼出於建模目的，我們應該如何對該線進行建模呢？

It's highly correlated to the stock market performance given our funds and investment portfolio. And so I guess it's going to be related to the future performance of the equity market. In the meantime, for the third quarter, we actually received about TWD 770 million of dividends from our investees. So third quarter is always the big season in terms of dividend collection. So that's adding to the numbers for the third quarter.

考慮到我們的基金和投資組合，它與股市表現高度相關。所以我認為這將與股市的未來表現有關。同時，第三季度，我們實際上從投資對象獲得了約7.7億新台幣的股息。因此，第三季始終是派息的旺季。這增加了第三季的數字。

Okay. Got you. When I try to look at the breakdown, there's a lack or gains on financial assets at fair value through profit or loss. Is it also dependent on the equity market performance, right?

好的。明白你了。當我嘗試查看明細時，會發現以公允價值計入損益的金融資產有缺失或收益。這是否也取決於股市表現，對嗎？

That's correct. Yes.

這是正確的。是的。

Congratulation on great results. Yes.

祝賀取得優異成績。是的。

Next question is from Brett Simpson of Arete Research.

下一個問題來自 Arete Research 的 Brett Simpson。

Yes. I had a question on display drivers. UMC has a high market share here. So can you maybe just help us understand what portion of current sales is coming from display drivers at the moment.

是的。我有一個關於顯示驅動程式的問題。聯華電子在這裡擁有很高的市場佔有率。那麼，您能否幫助我們了解當前銷售額的一部分來自顯示驅動器。

I mean, we actually don't do a breakdown by the applications. So -- but for the high-voltage process, if we break down by high-voltage process, which representing majority of the display segment, the high-voltage representing 30% of our specialty portion. Yes.

我的意思是，我們實際上並沒有按應用程式進行細分。所以，但對於高壓工藝，如果我們按高壓工藝（佔顯示部分的大部分）進行細分，那麼高壓就占我們專業部分的 30%。是的。

Okay. Okay. Great. And I know you include some of the customers in display drivers with long-term agreements. But is this the sort of business that can commit to long-term agreements? And we've seen, obviously, some huge price hikes for some of the customers and display drivers and some would say these are unsustainably high. So I'm just keen to get your perspective on how you see driver IC customers delivering on some of your contractual terms, and to what extent you're insulated from volatile swings in display driver fundamentals?

好的。好的。偉大的。我知道您將一些客戶納入了具有長期協議的顯示驅動程式中。但這是一種可以承諾長期協議的業務嗎？顯然，我們已經看到一些客戶和顯示驅動器的價格大幅上漲，有些人會說這些價格高得不可持續。因此，我只是想了解您對驅動 IC 客戶如何履行您的某些合約條款的看法，以及您在多大程度上免受顯示驅動器基本面波動的影響？

Well, I mean that's very good question. And since we have a larger exposure on the high-voltage side, and the -- so we kind of become more selective. So within the high-voltage space, there are also different subcategory. And for those that they have alternative solutions and or more vulnerable to the physical factors, we actually try to minimize those volumes. So we actually more concentrate in the area of the higher growth segment and -- as well as has -- more of an automotive segment has a longer life, higher qualification requirements. So they tend to have a higher stickiness. So we tend to be more selective within our high-voltage space. So that sort of give us the confidence that they'd be able to keep their contractual obligations.

嗯，我的意思是這是一個很好的問題。由於我們在高壓方面有更大的暴露，所以我們變得更有選擇性。因此，在高壓領域內，也有不同的子類別。對於那些有替代解決方案和/或更容易受到物理因素影響的人，我們實際上試圖最大限度地減少這些數量。因此，我們實際上更專注於成長較高的細分市場，而且汽車細分市場的壽命更長、資格要求更高。因此它們往往具有較高的黏性。因此，我們傾向於在高壓領域更具選擇性。因此，這讓我們有信心他們能夠履行合約義務。

Right. That's very helpful. And just on LTAs, can you maybe just help us what specific portion of sales is covered by LTAs at the moment? And how might this change next year? And I guess, can you share with us -- does the LTAs include -- is it wafer capacity guarantees? Or is it more pricing guarantees or both? Under what conditions are you setting LTAs today? And could these be renegotiated by customers at some point in the future?

正確的。這非常有幫助。關於長期協議，您能否幫助我們了解目前長期協議涵蓋了銷售的哪些具體部分？明年這種情況會發生什麼變化？我想，您能否與我們分享一下——長期協議是否包括——是晶圓產能保證嗎？還是更多的定價保證還是兩者兼具？您今天在什麼條件下制定長期協議？客戶是否可以在未來某個時間點重新協商這些內容？

It's actually pretty complicated and I will [whether] not to elaborate in detail. But in general sense, it's really more CapEx related, and then we have a longer-term LTA coverage. And that's nonCapEx related, and we have more of the LTA under such capacity reservation approach. And most of the LTA does have both the pricing and capacity included. And so it's a combination of many. And given the condition of the supply and reservation situation, then we align with our customers for those LTA conditions. Yes.

它實際上相當複雜，我將[是否]不詳細闡述。但從一般意義上來說，這實際上與資本支出更相關，然後我們有更長期的長期協議覆蓋範圍。這與資本支出無關，我們在這種容量預留方法下有更多的長期協議。大多數 LTA 都包含定價和容量。所以它是許多因素的結合。考慮到供應和預訂情況，我們會與客戶就這些長期協議條件進行協調。是的。

Yes. As for the percentage, like I mentioned earlier, nearly 100% of the P6-related capacity are covered by LTA. And the remaining capacity, also we are seeing the increasing trend. The new orders are covered by LTA as well. Unfortunately, we don't disclose the percentage. But Jason did mention that LTAs plus single source consists more than 2/3 of our overall capacity. And it looks like the LTA trend is continuing.

是的。至於比例，就像我前面提到的，LTA 幾乎涵蓋了 P6 相關產能的 100%。而剩餘產能，我們也看到了增加的趨勢。新訂單也受 LTA 保護。不幸的是，我們沒有透露這個百分比。但傑森確實提到，長期協議加上單一來源占我們總產能的 2/3 以上。看起來 LTA 趨勢仍在持續。

Next one is Bruce Lu, Goldman Sachs.

下一位是高盛的盧小龍。

Okay. So I think I remember, Jason, 2 quarters ago, talked about like 8-inch pricing is pretty much fully reflect your value, but you need to work on the 12-inch. So my current assumption is that for 2022, your pricing will fully reflected your value. However, my question is that even with that -- again, that was my assumption that the gross margin is still have some gap with the industry leader, even for the fully depreciated 8-inch. So my question is that either the value is not fully reflected or the productivity gap with the industry leader is still -- there is still some gap. So which one will be? If that has to do with the productivity, when can you narrow the gap and see another level up of the profitability?

好的。所以我想我記得，Jason，兩個季度前，談到 8 英寸的定價幾乎完全反映了你的價值，但你需要在 12 英寸上努力。所以我目前的假設是，到2022年，你的定價將充分反映你的價值。然而，我的問題是，即使如此——這也是我的假設，即使是完全折舊的 8 英寸，毛利率仍然與行業領先者有一定差距。所以我的問題是，要么價值沒有充分體現，要么與行業領先者的生產力差距仍然存在——仍然有一些差距。那麼會是哪一個呢？如果這與生產力有關，那麼什麼時候可以縮小差距並看到獲利能力的另一個提升？

Well, first of all, I don't think we ever gave a breakdown of the 12-inch and 8-inch in terms of 8-inch profitability. We did comment about the 8-inch ASP. But usually, we typically, we don't give a breakdown on profitability of 8-inch. So in our internal data, we actually feel a little bit different. We have a different perspective than what you just commented. So the -- we actually feel fairly comfortable about our 8-inch market position. I think the gap between us as a blended result compared to the peers, I can't comment on our peers, but we believe there is a also a matter of the scale and also the mix of the product.

嗯，首先，我認為我們從未在 8 英寸盈利能力方面對 12 英寸和 8 英寸進行過細分。我們對 8 英寸 ASP 進行了評論。但通常情況下，我們不會給出 8 英吋的獲利能力細目。所以在我們的內部數據中，我們實際上感覺有點不同。我們的觀點與您剛才的評論不同。因此，我們實際上對 8 吋市場地位感到相當滿意。我認為我們與同行相比的混合結果之間的差距，我無法評論我們的同行，但我們相信還有規模和產品組合的問題。

So it does definitely have a difference between different companies. And so we're going to continue improve our solution competitiveness. And along with our manufacturing side, plus the incremental capacity support that we have aligned with our customers, we believe we can continue to enhance our market position by bridging the gap. And I think we are making good progress, and I think there's still some room. And -- but I think we're fairly close, yes.

所以不同公司之間一定是有差別的。因此，我們將繼續提高我們的解決方案競爭力。憑藉我們的製造方面，加上我們與客戶合作的增量產能支持，我們相信我們可以透過縮小差距來繼續增強我們的市場地位。我認為我們正在取得良好進展，而且我認為還有一些空間。而且——但我認為我們已經相當接近了，是的。

I'm sorry, let me clarify it because in the past, when (inaudible) was trying to list in China, the gross margin for the 8-inch fab was disclosed a demo at least for the (inaudible). That was somewhere around like below the industry peer or even below the industry leader. But what Jason just mentioned is that the latest internal data suggested that your 8-inch profitability is actually very competitive. Is that the right understanding?

抱歉，讓我澄清一下，因為過去（聽不清楚）試圖在中國上市時，至少在演示中披露了 8 英寸晶圓廠的毛利率（聽不清楚）。這大約低於行業同行，甚至低於行業領導者。但傑森剛才提到的是，最新的內部數據表明，你們8吋的獲利能力實際上非常有競爭力。這是正確的理解嗎？

Yes. Yes, if you look at our overall 8-inch operation, yes.

是的。是的，如果你看看我們整體的 8 英寸操作，是的。

Understood. Okay. So the next question is regarding to the compound semi. I think UMC has a subsidiary for the compound semi. So recently, we do see some stronger than expected demand for that. So can you comment on your strategy for the compound semi? Are you going to expand it? Or what's the key application? What's the target for your compound semi business?

明白了。好的。所以下一個問題是關於複合半成品的。我認為聯華電子有一家複合半導體子公司。所以最近，我們確實看到了一些比預期更強的需求。那麼您能評論一下您的複合半成品策略嗎？你打算擴大它嗎？或者說關鍵的應用是什麼？您的複合半成品業務的目標是什麼？

Well, I mean, this is definitely an area -- important area for us, and we have devoted to this market. And we have put in our resource and the technology development team on the project. I think the market has significant potential. And at this point, we're still relatively small at the beginning -- at the early stage of the business development, but we remain pretty confident about that. Within the compound space, there are different market segments. And we are -- at this point, we are in the process decided on some of the selected area that we believe we can be relevant. And so -- and once we have concluded that, we actually will be able to share that with you. We're not going to go all out to address the overall compound, but there will be selected areas that we're going to be focused on. And focus on those areas and continue executing our plan to make sure that we will be relevant within those space.

嗯，我的意思是，這絕對是一個領域——對我們來說很重要，我們致力於這個市場。我們已經在這個專案上投入了我們的資源和技術開發團隊。我認為這個市場潛力巨大。目前，我們在業務發展的早期階段仍然相對較小，但我們對此仍然充滿信心。在複合空間內，有不同的細分市場。目前，我們正在決定一些我們認為可以相關的選定領域。因此，一旦我們得出結論，我們實際上就可以與您分享。我們不會全力以赴解決整個大院的問題，但我們將重點放在某些選定的領域。專注於這些領域並繼續執行我們的計劃，以確保我們在這些領域具有相關性。

But will you turn aggressive in terms of expanding your capacity for the compound semi?

但是，您會在擴大複合半成品產能方面變得積極嗎？

I mean given the compound's market outlook, I don't think the capacity is a critical -- at a critical juncture yet. We have a sufficient capacity to support our current activities. And once the demand requires additional capacity, we will definitely aggressively pursue that.

我的意思是，考慮到該化合物的市場前景，我認為產能還不是關鍵——目前還處於關鍵時刻。我們有足夠的能力來支持我們目前的活動。一旦需求需要額外的產能，我們肯定會積極追求。

Next one, Frank Lee, HSBC.

下一位是匯豐銀行的弗蘭克李。

So I just wanted to ask maybe a longer-term question in terms of -- we've seen, I guess, in the industry, some of your peers are now talking about expanding and even expanding in other countries. And we see a lot of discussions about other -- geopolitically about countries wanting to reestablish the semiconductor supply chain. Is this something that UMC would consider as well in terms of expanding in other regions outside of Asia?

所以我只是想問一個可能是長期的問題——我想，在這個行業中，我們已經看到，你們的一些同行現在正在談論擴張，甚至在其他國家擴張。我們看到很多關於其他地緣政治方面想要重建半導體供應鏈的國家的討論。聯華電子在亞洲以外的其他地區擴張時也會考慮這一點嗎？

Well, we have been very diversified. We have a facility Japan, we have a facility in Singapore and China as well. So we have been very diversified in the past, and we will continue to do that and we'll continue exploring that. Given the recent hype of a semiconductor market, in many countries or many regions talking some of the incentive plan for building a facility in those locations, we're certainly evaluating those. And the key of the building of new -- the greenfield facility is not only the ROI, it is also the customer engagement. So we are open to customer feedbacks. And along with our ROI considerations and we'll definitely make sure that we follow our disciplined CapEx philosophy. So -- and if there is a decision on certain locations, we'll disclose that accordingly.

嗯，我們已經非常多元化了。我們在日本設有工廠，在新加坡和中國也設有工廠。因此，我們過去一直非常多元化，我們將繼續這樣做，我們將繼續探索這一點。鑑於最近半導體市場的炒作，許多國家或地區都在討論在這些地區建造設施的激勵計劃，我們當然正在評估這些計劃。建造新設施的關鍵不僅是投資報酬率，也是客戶參與。因此，我們願意接受客戶的回饋。除了我們對投資報酬率的考量之外，我們一定會確保遵循嚴格的資本支出理念。因此，如果對某些地點做出決定，我們將相應地進行披露。

Okay. And then I have just a follow-up question on, I guess, the CapEx and capital intensity. Based on your CapEx for 2021 of $2.3 billion, it seems to suggest your CapEx to sales is going to rise to about 30% versus 15% last year. As we go forward in the next couple of years, should -- how should we think about this capital intensity business? I know you have an LTA for your P6, but just in general, should we see thinking at 30% as kind of a new norm? Or can you give us any kind of clues or indication on how we should think about this?

好的。然後我想問一個關於資本支出和資本強度的後續問題。根據您 2021 年 23 億美元的資本支出，這似乎表明您的銷售資本支出將上升至 30% 左右，而去年為 15%。當我們在未來幾年前進時，我們應該如何考慮這個資本密集型業務？我知道您的 P6 有一個 LTA，但總的來說，我們是否應該將 30% 的想法視為一種新常態？或者您能給我們任何線索或指示，讓我們知道我們應該如何思考這個問題嗎？

Yes. We don't really do capital intensity. But in a way, we do monitor our profitability structures and our affordability. But more importantly, as Jason mentioned, it is also related to customer engagement and our technology differentiation, et cetera. So we want to be a relevant player and customer can stick with UMC for longer term. So all the CapEx is not really pure capital intensity point of view. It is a combination of various reasons.

是的。我們並不真正關注資本密集度。但在某種程度上，我們確實監控我們的獲利結構和承受能力。但更重要的是，正如傑森所提到的，這也與客戶參與度和我們的技術差異化等有關。因此，我們希望成為相關參與者，並且客戶可以長期堅持使用聯華電子。因此，所有的資本支出並不是真正純粹的資本密集度的觀點。這是多種原因的結合。

Okay. So -- but I guess -- so there's no real target that we should look at in terms of what that capital intensity would look like? Because I think it's quite a big change in the past year. But going forward, there isn't any explicit target we should think about?

好的。所以——但我想——所以我們應該在資本密集度方面考慮什麼真正的目標？因為我覺得去年的改變還蠻大的。但展望未來，我們沒有明確的目標值得考慮嗎？

It is a boundary -- internal boundary. I mean, we don't want to overspend for sure. We don't want to be overly aggressive in terms of affordability. But we don't also -- just for the sake of spending, if we have money and we just spend it, it's not the case. We really have to protect it by the customers' risk mitigation methodology as well as the future longer-term corporate development plan. So even if we can afford it, we may not do it. Depends on the customers' needs and customer engagement.

它是一個邊界－內部邊界。我的意思是，我們肯定不想超支。我們不想在承受能力上過於激進。但我們也不是——只是為了花錢，如果我們有錢，我們就花錢，事實並非如此。我們確實必須透過客戶的風險緩解方法以及未來更長期的企業發展計劃來保護它。所以即使我們負擔得起，我們也可能不會這樣做。取決於客戶的需求和客戶參與度。

Yes. So may I add? The capital intensity is more of the active fab measurements, right? I mean, the condition that we measure on really if we invested at the right time at the right place with right know and with the right customers. So if we believe it's within the UMC affordability level and meeting all the conditions that we set out to do and follow our CapEx discipline philosophy, and then we'll release the CapEx. And we'll present and approve that CapEx and release it. So after that, definitely we'll be able to come back and measure that intensity issue, but the intensity wasn't the first level of consideration.

是的。那我可以補充一下嗎？資本密集度更多的是對活躍晶圓廠的衡量，對嗎？我的意思是，如果我們在正確的時間、正確的地點、以正確的知識和正確的客戶進行投資，我們真正衡量的條件。因此，如果我們相信它在 UMC 的承受能力範圍內，並且滿足我們設定的所有條件並遵循我們的資本支出紀律理念，那麼我們將發布資本支出。我們將提出並批准該資本支出並發布它。因此，在那之後，我們肯定能夠回來衡量該強度問題，但強度並不是首要考慮的因素。

And we are taking the last question, the last one, Gokul Hariharan of JPMorgan.

我們正在回答最後一個問題，最後一個問題，摩根大通的 Gokul Hariharan。

I just wanted to delve into some of the demand-related dynamics given there is a lot of concerns about cycle ending among investors. How does the -- how does UMC management look at and -- look and assess demand book? And how do you get comfort about continued growth into next year, especially, I think you're modeling foundry industry to grow double digit and UMC to grow even faster than that? Could you share with us some of those, like how you kind of develop comfort around that fact? And is there some kind of book-to-bill or a nonsupported demand kind of expectation that you monitor, which you can share to give some comfort to the market also?

鑑於投資者對週期結束有很多擔憂，我只是想深入研究一些與需求相關的動態。 UMC 管理階層如何看待和評估需求書？您如何看待明年的持續成長，特別是，我認為您正在建模代工行業以兩位數的速度成長，而聯華電子的成長速度甚至更快？您能否與我們分享其中的一些內容，例如您如何對此事實感到舒適？您是否可以監控某種訂單到帳單或不受支援的需求類型的預期，您可以分享這些預期，以給市場帶來一些安慰？

Well, we did observe some of the softness, as we mentioned earlier. The -- but in 2022, despite a lower contribution in wafer demand associated with the work from home and home learning, we still expect some of the demand will continue, and we call it structural demand, 5G, EV, IoT. And those demand remains strong. And we still have a significant unfulfilled demand within those segments. And while we're estimating the growth of the market is at 12%, along with our current alignment with the customer, we think we'd be able to outgrow that.

嗯，正如我們之前提到的，我們確實觀察到了一些柔軟性。但到 2022 年，儘管與家庭工作和家庭學習相關的晶圓需求貢獻較低，但我們仍預期部分需求將持續下去，我們稱之為結構性需求、5G、電動車、物聯網。這些需求仍然強勁。我們在這些細分市場中仍有大量未滿足的需求。雖然我們預計市場成長率為 12%，但考慮到我們目前與客戶的一致性，我們認為我們能夠超越這一成長。

And so -- and also, we have tracking the overall inventory situation. We see some rise of inventory, but we also see some of the shortage components. There is some of the longer life, shorter life, and we have some triangulate that, along with the end customer and the direct dialogues that give us the confidence that we're still on the shorter side of the supply side. And so while we are still under the catch-up mode. And it has further validated that some of the softness being fulfilled with unfulfilled demand immediately. And so we still -- at this point, we still feel confident about the 2022 outlook.

因此，我們也追蹤整體庫存情況。我們看到庫存上升，但我們也看到一些零件短缺。有的壽命較長，有的壽命較短，我們與最終客戶和直接對話進行了一些三角測量，這讓我們相信我們仍然處於供應方面的較短一邊。因此，儘管我們仍處於追趕模式。這進一步證實了一些軟性是透過未滿足的需求立即得到滿足的。因此，目前我們仍然對 2022 年的前景充滿信心。

Thank you. And ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I will turn it over to UMC Head of IR for closing remarks.

謝謝。女士們、先生們，我們感謝你們提出的所有問題。今天的問答環節到此結束。我會轉交給 UMC IR 主管進行總結發言。

Thank you, everyone, for attending this conference today. We appreciate your questions. As always, if you have any additional follow-up questions, please feel free to contact UMC at ir@umc.com. Have a good day.

謝謝大家參加今天的這個會議。我們感謝您的提問。與往常一樣，如果您有任何其他後續問題，請隨時透過 ir@umc.com 聯絡 UMC。祝你有美好的一天。

Thank you. And ladies and gentlemen, that concludes our conference for third quarter 2021. We thank you for your participation in UMC's conference. There will be a webcast replay within an hour. Please visit www.umc.com, under the Investors, Events section. You may now disconnect. Goodbye.

謝謝。女士們、先生們，2021 年第三季的會議到此結束。一小時內將進行網路廣播重播。請造訪 www.umc.com 的「投資者」、「活動」部分。您現在可以斷開連線。再見。