聯華電子 (UMC) 2020 Q2 法說會逐字稿

Welcome everyone to UMC's 2020 Second 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2020年第二季財報電話會議。（操作員指示）供您參考，本次電話會議現已透過網路現場直播。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 的「投資者關係」、「投資者」、「活動」部分。

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

現在我想介紹聯華電子關係部主管 Michael Lin 先生。請林先生開始。

Thank you, and welcome to the UMC Conference Call for the Second Quarter of 2020. I'm joined by Mr. Jason Wang, the President of UMC; and Mr. Qi Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the second quarter financial results, followed by our President's key message to address UMC's focus and the third quarter 2020 guidance.

謝謝您，歡迎參加 2020 年第二季 UMC 電話會議。和我一起參加的是 UMC 總裁 Jason Wang 先生；以及聯華電子財務長劉啟東先生。稍後，我們將聽取財務長介紹第二季的財務業績，然後聽取總裁關於 UMC 重點關注事項和 2020 年第三季指引的重要演講。

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

我們的總裁和財務長結束演講後，將進入問答環節。聯華電子的季度財務報告可在我們的網站 www.umc.com 的「投資者」和「財務」部分中找到。

During this conference, we may make forward-looking statements based on the 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的陳述。這些前瞻性陳述受到多種風險和不確定因素的影響，可能導致實際結果大不相同，其中包括可能超出公司控制範圍的風險。有關該等風險，請參閱聯華電子向美國證券交易委員會及中華民國證券當局所提交的文件。

Now I would like to introduce UMC's CFO, Mr. Qi Dong Liu, to discuss UMC's second quarter 2020 financial results.

現在我想介紹聯華電子的財務長劉啟東先生，討論聯華電子 2020 年第二季的財務表現。

Thank you, Michael. I would like to go through the 2Q '20 investor conference presentation material, which can be downloaded from our website.

謝謝你，麥可。我想瀏覽一下 20 年第二季投資者會議簡報資料，可以從我們的網站下載。

Starting on Page 3, the second quarter of 2Q '20, consolidated revenue was TWD 44.39 billion, with gross margin at 23.1%. The net income attributable to the stockholder of the parent was TWD 6.68 billion and earnings per ordinary shares were TWD 0.55. Utilization rate in the second quarter improved to 98% from 93% in the previous quarter.

從第3頁開始，2020年第二季第二季合併營收為443.9億新台幣，毛利率為23.1%。歸屬於母公司股東的當期淨利為66.8億元新台幣，每股收益為0.55元新台幣。第二季的利用率從上一季的 93% 提高到 98%。

On the next page, Page 4, on the quarter-over-quarter comparison, revenue grew 5% to TWD 44.3 billion due to the combination of ASP increase as well as the wafer shipment increase. Gross margin as a result climbed to 23.1% or TWD 10.25 billion, up 26% sequentially. All the operating expenses are under control, and therefore, we see OpEx decline slightly by 0.8% quarter-over-quarter. As a result, operating income jumped 71% quarter-over-quarter to TWD 5.8 billion, with the reverse of our nonoperating items from the revaluation of our investments.

下一頁，第 4 頁，與上一季相比，由於平均售價上漲以及晶圓出貨量增加，營收成長 5%，達到 443 億新台幣。毛利率因此攀升至23.1%或102.5億新台幣，較上一季成長26%。所有營運費用均受到控制，因此，我們看到營運支出環比小幅下降 0.8%。因此，營業利潤較上一季成長 71% 至 58 億新台幣，而我們因投資重估而產生的非營業項目則有所回落。

Our net income attributable to the stockholder of the parent in quarter 2 reached TWD 6.68 billion or 15.1% net income margin. EPS was TWD 0.55 in quarter 2 compared to TWD 0.19 in first quarter of 2020.

第二季歸屬於母公司股東的淨利達66.8億新台幣，淨利率15.1%。第二季每股收益為 0.55 新台幣，而 2020 年第一季每股收益為 0.19 新台幣。

On Page 5, the first 6 months comparison. Revenue increased 26% to TWD 86.6 billion, partially due to the combination of USJC, which contributed around 10% of the earning -- the revenue topline. And gross margin was 21.2% or TWD 18.38 billion. And net income attributable to the stockholder of the parent was TWD 8.888 million in first half -- first 6 months of 2020, and EPS is TWD 0.74 for the first 2 quarters of the year.

第 5 頁為前 6 個月的比較。營收成長 26% 至 866 億新台幣，部分原因是 USJC 的合併，其貢獻了約 10% 的收益，即收入總額。毛利率為21.2%，即183.8億新台幣。而2020年上半年歸屬母公司股東淨利為888.8萬元，前2季每股收益為0.74元。

On the next page, Page 6, our cash has reached almost TWD 100 billion. And for the total equity in the first half of 2020 was TWD 209 billion.

下一頁，也就是第6頁，我們的現金已經接近1000億新台幣了。2020年上半年總股本為2,090億新台幣。

On Page 7, ASP increased by a low single-digit percentage, mainly due to the surge in our 28 revenue shipments.

第 7 頁，ASP 成長了低個位數百分比，這主要歸功於我們 28 種收入出貨量的激增。

On Page 8, the revenue breakdown. Asia stayed around 55%, and Japan also remained around 9%.

第 8 頁為收入明細。亞洲維持在55%左右，日本也維持在9%左右。

For Page 9, IDM and fabless remain unchanged, at 12% and 88%, respectively.

第 9 頁，IDM 和無晶圓廠保持不變，分別為 12% 和 88%。

On Page 10, communication declined 3 percentage points to 51% and made up by computer and other segments.

在第 10 頁，通訊下降了 3 個百分點，至 51％，由電腦和其他部分組成。

And on Page 11, as I mentioned, ASP increased by low single-digit percentage point mainly due to the surge in our 28-nanometer shipment, which now reached 13% of the total revenue in the second quarter compared to 9% in the previous quarter. And capacity still remain a minor increase quarter-over-quarter and CapEx remained at $1 billion for the whole 2020.

正如我在第 11 頁提到的，ASP 成長了低個位數百分點，這主要歸因於我們 28 奈米出貨量的激增，目前佔第二季總收入的 13%，而上一季為 9%。產能仍比上一季略有增加，2020 年全年資本支出仍維持在 10 億美元。

So the above is the summary of UMC's results for second quarter of 2020. More details are available in the report, which has been posted on our website.

以上就是聯華電子 2020 年第二季業績摘要。更多詳細資訊請參閱已發佈在我們網站上的報告。

I will now turn the call over to President of UMC, Mr. Jason Wang.

現在我將電話轉給聯華電子總裁 Jason Wang 先生。

Thank you, Qi Dong. Good evening, everyone. Here, I would like to update the second quarter operating results of UMC. During the second quarter, consolidated operating margin reached 13.2%, while utilization rate increased to 98%. Lifting wafer shipments to 2.22 million 8-inch equivalent wafer. The increase in wafer shipments mainly reflect the computing segment demand for connectivity, display driver and flash controller as well as the inventory replenishment in the computing market. As we continue to strive to supply worldwide foundry services, our efforts have been appreciated by our customers. In Q2, Texas Instruments a customer, recognize UMC with the 2019 Supplier Excellence Award for the demonstrating excellent performance in the area of cost, environmental and social responsibility, technology, responsiveness, assurance of a supply and quality.

謝謝你，齊東。大家晚上好。在這裡，我想更新聯華電子第二季的營運表現。第二季度，綜合營業利益率達13.2%，利用率上升至98%。晶圓出貨量提升至222萬片8吋當量晶圓。晶圓出貨量的成長主要反映了運算領域對連接性、顯示驅動器和快閃記憶體控制器的需求以及計算市場的庫存補充。隨著我們不斷努力提供全球範圍內的代工服務，我們的努力得到了客戶的讚賞。第二季度，客戶德州儀器授予聯華電子 2019 年度供應商卓越獎，以表彰其在成本、環境和社會責任、技術、響應能力、供應保證和品質方面的出色表現。

In addition to serving customers to the best of our ability, UMC also increased 2019 cash dividend distribution to approximately TWD 0.8 per share, reflecting the recent company buyback of the treasury shares.

聯華電子除了竭盡所能服務客戶外，亦提升2019年度現金股利分配至約每股0.8新台幣，以反映公司近期對庫存股的回購。

Looking into the third quarter, our market demand remains strong. We have experienced a search in 28-nanometer tape-outs during the first half of 2020 compared to the year-ago. And expect additional 28-nanometer and 22-nanometer product tape-outs in the third quarter. We are also moving new 28-nanometer products into volume production for wireless applications such as 4G and 5G smartphones, which will enhance our business traction and diversify UMC's customer exposure across different 28-nanometer market segment.

展望第三季度，我們的市場需求依然強勁。與去年同期相比，我們在 2020 年上半年經歷了 28 奈米流片的搜尋。預計第三季還會有更多 28 奈米和 22 奈米產品流片。我們也將把新的 28 奈米產品投入大量生產，用於 4G 和 5G 智慧型手機等無線應用，這將增強我們的業務吸引力，並使聯華電子的客戶覆蓋面多樣化到不同的 28 奈米領域。

Moreover, we have observed efforts minimize supply chain disruptions, amid uncertainty during the COVID-19 pandemic, while inventory replenishment is continuing across multiple market segments with the efforts continuing to push customer adoption of UMC Specialty Technologies, our ROI-driven corporate strategy remains unchanged. As UMC secure new business we will closely examine returns on invested capital to optimize the company's capital deployment and further enhance our financial performance.

此外，我們觀察到，在 COVID-19 大流行的不確定性中，我們努力將供應鏈中斷降至最低，同時多個細分市場的庫存補充仍在繼續，我們繼續努力推動客戶採用 UMC 特殊技術，但我們以投資回報率為導向的企業策略保持不變。隨著聯華電子獲得新業務，我們將密切審查投資資本的回報率，以優化公司的資本配置並進一步提高我們的財務表現。

Let's move on to the third quarter 2020 guidance. Our wafer shipment will remain flat. ASP in U.S. dollar is expected to remain flat. However, the accounting result will reflect the adverse effect in the NT dollar appreciation.

讓我們繼續討論 2020 年第三季的指引。我們的晶圓出貨量將保持穩定。預計美元平均售價將保持穩定。但會計結果將反映新台幣升值的不利影響。

Gross profit margin will be approximately 20%. Capacity utilization rate will be in the mid-90% range. Our 2020 CapEx budget will be USD 1 billion.

毛利率約20%。產能利用率將達95%左右。我們的2020年資本支出預算為10億美元。

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。現在我們可以回答問題了。

(Operator Instructions) And the first question is coming from Randy Abrams, Crédit Suisse.

(操作員指示) 第一題來自瑞士信貸的蘭迪‧艾布拉姆斯 (Randy Abrams)。

Good result. I wanted to ask the first question where, Jason, when you were going through the prepared remarks, you discussed the business remaining pretty strong. And it does sound like 28s ramping. So I was curious the guidance where shipments and ASPs are guided flat.

好結果。我想問第一個問題，傑森，當你在發表準備好的發言時，你討論了業務保持強勁的情況。聽起來確實像是 28s 在上升。因此，我很好奇出貨量和 ASP 是否持平的指導意見。

So if you could discuss a bit on if any areas of softness to offset that or trends you're seeing on application to drive the flat guidance?

所以，您是否可以稍微討論一下是否有任何疲軟領域可以抵消這種影響，或者您在應用程式上看到的趨勢可以推動平穩的指導？

Sure. Let me capture the field your questions. One is you mentioned based on the remarks, we foresee this the demand remains strong. And however, the -- we guided the shipments and the ASP is flat. Is that correct?

當然。讓我記錄下你的疑問。一是您提到，根據您的評論，我們預計需求將保持強勁。但是，我們指導了出貨量，並且 ASP 持平。那正確嗎？

Yes, that's correct. Also with 28, presumably ramping to have flat -- and yes, so kind of factors for it soft. And also, maybe to add to it, if any, capacity constraints, where there might be certain demands you just can't fill right now?

是的，正確。此外，對於 28 來說，大概會逐漸平穩 — — 是的，所以有一些因素導致它變得柔軟。此外，也許還會有容量限制，也就是是否存在某些您現在無法滿足的需求？

Okay. Let me see how to address that. First, in Q3, we do foresee change in the 28-nanometer product mix, okay, which will have a mild lift of ASP. So the 28-nanometer demand increase will actually help us with the ASP lift. However, the blended ASP still depends on multiple factors, such as, the product mix of other nodes and shift in capacity utilization rate across the different nodes. So therefore, there are -- therefore, the profit impact on the 28 is not as significant in Q3 at this time. Does that answer your question?

好的。讓我看看如何解決這個問題。首先，在第三季度，我們確實預見到 28 奈米產品組合的變化，這將略微提升 ASP。因此，28奈米需求的增加實際上將有助於我們提高ASP。然而，混合 ASP 仍然取決於多種因素，例如其他節點的產品組合以及不同節點之間的產能利用率變化。因此，目前對 28 的利潤影響在第三季並不那麼顯著。這回答了你的問題嗎？

Yes, that does partially. I guess then just for overall business, if you could maybe say by application or nodes, like if 28 is improving, maybe which areas might be coming down a bit, either by application or technology area?

是的，部分如此。我想，就整體業務而言，如果您可以透過應用程式或節點來表示，例如如果 28 正在改善，那麼哪些領域可能會有所下降，無論是按應用程式還是技術領域？

Okay. So for the Q3, if I look at -- by the applications, we see strong -- strongest rebound is coming from the consumer segment and followed by the computer and the communications, okay. But all segments are increased, okay? We see an increase of all segments. And some the reason is we're seeing we're gaining market share results on the founding, the higher penetration in a smartphone, okay, and as well as from the those from a new customers, also from the existing customers, they're getting market share from a communication area. The computer segment is really a result of working from home and home schooling, that, first, the continuous demand in both consumer and computer segment. So that's really where we're coming from the application point of view. On the ASP, flatness is really a mix that I described earlier, even the 28 help, given the product mix, we actually didn't see as a significant.

好的。因此對於第三季度，如果我從應用角度來看，我們會看到強勁的反彈來自消費領域，其次是電腦和通訊領域。但是所有部分都增加了，好嗎？我們看到所有細分市場都在成長。部分原因是我們看到我們在創立之初就獲得了市場份額，智慧型手機的滲透率更高，而且，無論是來自新客戶，還是現有客戶，他們都在通訊領域獲得了市場份額。電腦領域實際上是在家工作和在家上學的結果，首先，是消費者和電腦領域的持續需求。這就是我們從應用角度真正得出的結論。在 ASP 上，平坦度實際上是我之前描述的混合，即使 28 有幫助，考慮到產品組合，我們實際上並沒有看到顯著的效果。

Okay. And if you could clarify, you mentioned all segments up. Is it the other category that's coming -- I mean, just to be flat overall first shipments? Is it then from that area that's offsetting the others?

好的。如果您可以澄清一下的話，您提到了所有部分。這是即將出現的其他類別嗎？那麼是不是那個區域抵銷了其他區域的影響呢？

Besides those 3 others -- there are other segments that we continue to see weakness. And so yes, they compensate some of the growth from those 3 areas. Yes.

除了上述三個領域之外，我們還發現其他領域依然表現疲軟。是的，它們彌補了這三個領域的部分成長。是的。

Okay. One note, I noticed has come off the last couple of quarters. 80-nanometer, probably maybe one of the other sits a bit underutilized, but came down from 18% to 13% over the last 2 quarters. Is there applications moving off that, that you could backfill or could you upgrade that capacity to serve some of the 40 or 28 demand?

好的。我注意到，最近幾季出現了一條這樣的訊息。80奈米，可能另一個工藝的利用率有點未充分利用，但在過去兩個季度中從 18% 下降到了 13%。是否有應用程式從中轉移，您可以填補，或者您可以升級該容量以滿足 40 或 28 的需求？

We can really moving 80 and 90 to serving the 40 and 28, but we are migrating that to, for example, 55 or 65 area. So in Q2, our 80 and 90 node that should continue to upgrade at 100% loading. And the contribution lower is really just -- we're shuffling around the different node support.

我們確實可以將 80 和 90 轉移到為 40 和 28 提供服務，但我們正在將其遷移到例如 55 或 65 區域。因此在第二季度，我們的 80 和 90 節點應該繼續以 100% 的負載升級。而較低的貢獻實際上只是——我們正在對不同的節點支援進行調整。

Okay. And if I could ask just one final question on the CapEx, well that's couple of years, you maintained TWD 1 billion, but then underspent as we went through the year. And it's -- it looks that way through first half. But I guess maybe for, Chitung, but how do you see the capacity? I know you had some 28 were Xiamen capacity set to ramp up. So do you still see reaching that or could come in a bit light? And then maybe as a medium term, with utilization this year getting up to mid- to high-90s, do you need to start ramping up a bit more on the Capex, just to satisfy the demand and continue to maintain some of the growth?

好的。如果我可以就資本支出問最後一個問題，那麼在過去幾年中，你們一直維持 10 億新台幣的支出，但是到了年底卻支出不足了。而且 — — 上半場看起來就是這樣。但是我猜也許對於 Chitung 來說，您如何看待其容量？我知道廈門有 28 個產能將會增加。那麼您是否仍認為可以達到這一目標，或者說可以稍微輕鬆一些？然後也許從中期來看，今年的利用率將達到 90% 左右，您是否需要開始增加一些資本支出，以滿足需求並繼續保持一定的成長？

The answer is yes. And the capacity expansion at our 12X, which is Xiamen is actually on track and is expected to reach TWD 25,000 per month in the mid-2021. So that's part of our CapEx already. The -- given the growing 22- and 28-nanometer customer demand, we actually examining the option to utilize available floor space at our Tainan facility, which are 12A to fulfill additional business opportunity in advanced technology. Which was still subject to our ROI justification we didn't mentioned many quarters, okay? We will continue to evaluate our CapEx based on what we described, a stringent ROI-driven strategy to enhance our return to shareholder employees. So that will not change. That's also in our remarks that we'll continue that without any change of that. But the next phase that we're looking at is more in our Taiwan, Tainan facility.

答案是肯定的。我們位於廈門的12X產能擴張實際上正在按計劃進行，預計在2021年中期達到每月25,000新台幣。所以這已經是我們資本支出的一部分了。鑑於 22 奈米和 28 奈米客戶需求的不斷增長，我們實際上正在研究利用台南工廠可用建築空間（12A）的方案，以滿足先進技術領域的額外商機。這仍然取決於我們的投資報酬率論證，我們沒有提到很多季度，好嗎？我們將繼續根據我們所描述的情況評估我們的資本支出，即嚴格的投資回報率驅動策略，以提高我們對股東員工的回報。所以這不會改變。我們的評論中也提到，我們將繼續這項做法，不做任何改變。但我們考慮的下一階段更多的是在台灣台南工廠。

If you get back to growth, do you think TWD 1 billion is still the level because you had the underutilization on 28. But now with that full, is it a bit higher level now if you start to evaluate the growth out of Taiwan?

如果恢復成長，您是否認為 10 億新台幣仍然是這個水平，因為 28 日的利用率不足？但現在有了這麼多，如果您開始評估台灣的成長，是不是水平更高了一點？

Yes. I mean, I -- we are examining that option right now. So it's too premature to giving the guidance of the CapEx numbers. But for the 2020, the TWD 1 billion will remain. Yes.

是的。我的意思是，我——我們現在正在研究這個選擇。因此，現在給出資本支出數字指導還為時過早。但2020年仍維持10億新台幣。是的。

I can't really the NT dollar amount that determines CapEx numbers. Really the return requirement and also the customer demand, are multiple factors will lead to our CapEx decisions.

我真的不知道決定資本支出數字的新台幣金額是多少。確實，回報要求和客戶需求等多種因素都會影響我們的資本支出決策。

Randy, I will also mention, in addition to the CapEx spending, we look at our top line growth we see the market applications such as the 5G handsets. The increase of silicon content in the 4G phone, those demand will continue driving that. So that's why we seriously examine the option of a future capacity expansion. Meanwhile, we also focus on productivity improvements, okay? And that will actually help us well in addition to that. And besides the growth of a top line we foresee more room for improving our structure profitability, which we were trying to enhance our earnings. So we continue managing the balance of those.

蘭迪，我還要提一下，除了資本支出外，我們還會關注我們的營收成長，我們看到 5G 手機等市場應用。4G手機中矽含量的增加，這些需求將持續推動這一趨勢。因此，我們認真研究未來產能擴張的選擇。同時，我們也注重提高生產力，好嗎？除此之外，這實際上也會對我們有很大幫助。除了營業收入的成長之外，我們預計還有更多的空間來提高我們的結構獲利能力，我們正努力提高我們的獲利能力。因此我們將繼續管理這些的平衡。

Yes. Okay. No, that makes sense. I guess, a good problem to have the demand to go invest for.

是的。好的。不，這很有道理。我認為，有投資需求的問題是個好問題。

It's-- we're happy to sustain that.

我們很高興能夠維持這一點。

It means we'll have Gokul Hariharan from JPMorgan for questions.

這意味著我們將邀請摩根大通的 Gokul Hariharan 來回答問題。

Congratulations for the good result. First question I had, could you talk a little bit about -- I think gross margin in Q2 was clearly quite surprising, the jump in gross margin. Could you talk a little bit about -- I think we saw that the depreciation did drop off by about TWD 500 million, but even with some currency appreciation. Can you talk about what was the reason for the gross margin improvement? Is it all primarily to do with better utilization and better product mix? Or are there any specific factors related to, let's say, Fujitsu, the fab or anything specific that we should be looking at?

恭喜你取得好成績。我的第一個問題是，您能否稍微談談——我認為第二季的毛利率顯然相當令人驚訝，毛利率的成長。您能否稍微談談——我認為我們看到貶值確實下降了約 5 億新台幣，但即使貨幣有所升值。您能談談毛利率提高的原因是什麼嗎？這主要是為了提高利用率和改善產品組合嗎？或者是否存在與富士通、晶圓廠或任何具體因素相關的特定因素，我們應該關注嗎？

Well, I mean, yes, first of all, thank you and secondly, in terms of the better gross margin. In Q2, we show an increased gross margin profit primarily due to the product mix improvement, which lifts the ASP that help. And secondly, the -- given the lower unit cost per wafer from the higher loading at a 98%, that's also a benefit factor. The third is we have -- we do have ongoing cost reduction activities. So combining all 3 as a result, we led to a growth of the Q2 gross profit.

嗯，是的，首先謝謝你，其次，就更好的毛利率而言。在第二季度，我們顯示毛利率增加，這主要得益於產品結構的改善，從而提高了平均售價。其次，由於 98% 的負載率導致每片晶圓的單位成本較低，這也是一個有利因素。第三，我們確實正在進行削減成本的活動。因此，將這三者結合起來，我們實現了第二季毛利的成長。

Okay. So just a quick question. Could we talk a little bit about 28-nanometer and May fab in Japan? Are they now fairly -- where are they in terms of gross margin compared to the corporate average? Are they still a big drag or the drag is much smaller now?

好的。這只是一個簡單的問題。我們可以談談日本的 28 奈米和 5 月工廠嗎？他們現在的毛利率是否公平——與企業平均值相比，他們的毛利率處於什麼水平？它們仍然是一個很大的阻力，還是阻力現在小了很多？

So after a few quarters of synergy improvement, our 12M profitability has improved every quarter since becoming part of UMC. We have implemented integration effort in fab operations incorporated fast know-how sharing and streamlined procurement, et cetera. So all of these efforts have improved the cost structure of 12M the SUSJC in Japan. So UMC's integration efforts are resulting in positive synergy in line with our expectations. So this acquisition has financially contributed to our topline as well as our bottom line. So we think going forward, our profitability of 12M or USJC will be largely dependent on its own demand supply dynamics.

因此，經過幾季的協同效應改善，自成為聯華電子的一部分以來，我們的 12 個月獲利能力每季都在提高。我們在晶圓廠營運中實施了整合工作，包括快速的技術共享和精簡的採購等。所以所有這些努力都改善了日本12M SUSJC的成本結構。因此，聯華電子的整合努力產生了正面的協同效應，符合我們的預期。因此，此次收購在財務上為我們的營業收入和淨利潤都做出了貢獻。因此我們認為，展望未來，12M 或 USJC 的獲利能力將在很大程度上取決於其自身的供需動態。

Okay. Any thoughts on 28-nanometer, given the capacity is now filling up with a strong traction from some of the new takeouts? How much of a drag is 28-nanometer is still? Or are we kind of -- do we have line of sight in terms of 28 gross margins improving closer to the corporate average levels?

好的。鑑於目前產能已因一些新產品的強勁拉動而填滿，您對 28 奈米有何看法？28奈米的阻力仍然有多大？或者我們是不是有點——我們是否有預見到 28 個毛利率會提高到更接近企業平均值？

Well, I mean, we actually don't look at the final basis on the margin drag. Our expectation on the 28-nanometer is based on the progress of our 28 product pipeline as strong as what we've seen today with the business traction continuing into the second half of 2020, we foresee our 28-nanometer utilization will grow. And so we actually feel pretty confident about our 28-nanometer contribution to the company overall. With the product mix improvement and we believe that will help us with the ASP list in terms of generating much better profitability for the company as a whole.

嗯，我的意思是，我們實際上並不考慮利潤拖累的最終基礎。我們對 28 奈米的預期是基於我們 28 個產品線的進展，正如我們今天看到的一樣強勁，隨著業務成長持續到 2020 年下半年，我們預計 28 奈米的利用率將會成長。因此，我們對於 28 奈米對公司整體的貢獻非常有信心。隨著產品結構的改善，我們相信這將有助於我們提高 ASP 清單，從而為整個公司創造更好的獲利能力。

Okay. And one last question from me. Qi Dong, could you talk a little bit about any updated view on how we should think about depreciation? Do we have a little bit more color in terms of how we see the depreciation roiling over, over the next couple of years? Like we were expecting a bigger drop-off in 2022. If you want to get into a little bit more of a capacity expansion mode, should we think about a slightly different schedule for the depreciation coming down?

好的。我還有最後一個問題。董奇，您能否談談我們對折舊的看法有什麼新的看法？我們對於未來幾年貶值趨勢的預測是否更加清晰？就像我們預計 2022 年會出現更大幅度的下降一樣。如果您想進入更多的產能擴張模式，我們是否應該考慮稍微不同的折舊時間表？

It's pretty much what we said in the past. We are seeing some low single-digit decline in overall depreciation expenses in 2020 as far as 2021. But in 2022, we are seeing more than double-digit decline in our overall depreciation expenses. So the major trends still remain unchanged.

這和我們過去所說的差不多。我們預計 2020 年至 2021 年的整體折舊費用將出現一些低個位數的下降。但在 2022 年，我們的整體折舊費用將下降兩位數以上。因此主要趨勢仍然沒有改變。

And the next question is coming from Szeho Ng of China Renaissance.

下一個問題來自華興資本的 Szeho Ng。

My question is regarding 28-nano. It seems like that you're still sticking to having 25,000 capacity ready middle of next year, right, at the Xiamen fab? So I wonder what would be the next expansion. Would that happened in Taiwan? Or would continue to be in Xiamen?

我的問題是關於 28 奈米的。看起來你們仍然堅持明年年中在廈門工廠準備好 25,000 的產能，對嗎？所以我想知道下一次擴展會是什麼。那在台灣會發生這種事嗎？還是繼續在廈門？

We actually mentioned this earlier, after the 25,000 in Xiamen, the next phase of growth or capacity expansion will happen in our Taiwan, Tainan facility. That's what we're referring to a 12A facility. And given the available floor space and that will be the best ideal location for us to do the next expansion.

我們之前實際上提到過，繼廈門的25,000個產能之後，下一階段的成長或產能擴張將發生在我們台灣的台南工廠。這就是我們所指的 12A 設施。考慮到可用的建築空間，這將是我們進行下一次擴建的最佳理想位置。

Okay. And what would be the size of the expansion in Taiwan?

好的。台灣的擴張規模有多大？

Well, we're still at the stage of examining that right now. So it could be based on different ranges, the size of the investment. Given that we have not concluded and still in the third quarter, we prefer not to comment at this point. And we think by end of this year, we'll have a better clarity on that.

嗯，我們現在還處於審查階段。所以它可以基於不同的範圍、投資規模。鑑於我們尚未得出結論且仍處於第三季度，我們目前不願發表評論。我們認為到今年年底，我們將對此有更清晰的認識。

Okay. That's useful. And my second question, is it possible to give an update on the operation status for the Japan fab?

好的。這很有用。我的第二個問題是，您能否介紹一下日本工廠的運作狀況？

The operating profit impact in the 2019 was a negative of high single-digit percentage point. This year, because of the strong demand coming from 28-nanometer and also enlarging economy of scales, the -- now has significantly reduced. And now the impact is around mid-single-digit percentage point. And certainly, we see further improvement once we reach 25,000 in 2021.

2019年的營業利潤影響為負數高個位數百分點。今年，由於 28 奈米需求強勁以及規模經濟不斷擴大，產量已大幅下降。現在影響約為個位數百分點左右。當然，一旦 2021 年達到 25,000，我們會看到進一步的改善。

Okay. Congratulations on great results.

好的。恭喜您取得優異的成績。

And the next one is coming from Roland Shu of Citigroup.

下一位提問者是花旗集團的 Roland Shu。

First, for your 28-nanometer utilization. So you said in second quarter, actually, your overall utilization that was about 98%, and you still expect 28-nanometer utilization to -- will increase in 3Q. So I just want to ask you. What kind of the magnitude of this utilization will increase for 28-nanometer? And after the utilization increase, what of the percentage point are the revenue contribution for 28-nanometer will be in second half? This is my first question.

首先，針對您的28奈米利用率。所以你說在第二季度，實際上，你們的整體利用率約為 98%，並且你仍然預計 28 奈米的利用率將在第三季度增加。所以我只是想問你。對於 28 奈米來說，這個利用率將增加到什麼樣的程度？利用率提升後，下半年28奈米營收貢獻會達到多少個百分點？這是我的第一個問題。

Well, the overall company's utilization rate will be a 95%.

嗯，整個公司的利用率將達到 95%。

Mid-90s.

90年代中期。

Okay, mid-90s as we guided. And we -- on a blended basis, the 8-inch, we're running at full, and 12-inch, we're running at 90%, okay? So that will give us approximately the mid-90s utilization guidance for the -- across older notes of the company. And we continue to seeing this a room for the 28-nanometer to increase. And so we think that 28-nanometer utilization rate will continue to increase on a quarter-to-quarter basis at this time.

好的，正如我們所指導的，90 年代中期。並且，在混合基礎上，8 吋的產能達到最大，而 12 吋的產能達到 90%，好嗎？因此，這將為我們提供大約 90 年代中期該公司舊票據的使用指引。我們繼續看到 28 奈米的成長空間。因此我們認為 28 奈米的利用率目前將繼續逐季度增加。

Yes. Understood. But second quarter, your overall corporate average utilization was 98%. So what's the 28-nanometer utilization in second quarter?

是的。明白了。但第二季度，你們公司的整體平均利用率為 98%。那麼第二季28奈米的利用率是多少呢？

So again, our overall capacity in the third quarter were increased by approximately 1%, addition of 1%. And also in the second quarter, as Jason mentioned, 8-inch are full, around 100%. And 12-inch is 90-ish. And so 28 is, I think, a little bit less than the 12-inch average.

因此，我們第三季的整體產能增加了約 1%，增加了 1%。而且在第二季度，正如 Jason 所提到的，8 英寸已經滿了，大約 100%。12 英吋是 90 左右。所以我認為 28 比 12 英寸的平均值略小一點。

Okay. So you probably in 3Q, we are going to see this maybe single-digit percentage point utilization increase for 28-nanometer? Or more than that?

好的。那麼，可能在第三季度，我們會看到 28 奈米的利用率出現個位數百分點的成長？或更多？

Yes. We don't give the numbers on single node utilization, right? So we can give you a relative ideas about how we compare to our corporate average.

是的。我們沒有給出單節點利用率的數字，對嗎？因此，我們可以為您提供有關我們與公司平均值相比的相對看法。

Okay. So how about the -- in second half, the revenue contribution from 28-nanometer. In second quarter, it was 13%, and how about in second half?

好的。那麼下半年 28 奈米的收入貢獻如何？第二季是13%，下半年怎麼樣？

It should gradually trend up quarter-over-quarter.

它應該會逐漸逐漸上升。

We see a slightly increase on the 28-nanometer in the next quarter.

我們預計下個季度 28 奈米將會略有成長。

A slightly increase in 3Q, right?

第三季略有增加，對嗎？

Right. Yes. Well, I mean we have been talking about our 28-nanometer business for multiple quarters. I think most of you know about that, right? And the -- now in the Q2, in our view, this is truly start seeing a meaningful 28-nanometer growth quarter-over-quarter. This is very much in line to our expectation and it's reflecting the materialization of our long-term game plan. So I just kind of want to add that. I understand we've been talking about this for a really long time. And I -- we finally will start seeing that, and meaningful growth coming in now.

正確的。是的。嗯，我的意思是我們已經談論我們的 28 奈米業務好幾個季度了。我想大多數人都知道這一點，對吧？現在，我們認為，在第二季度，28 奈米確實開始出現有意義的環比成長。這非常符合我們的預期，也反映了我們長期計劃的實現。所以我只是想補充一下。我知道我們已經討論這個問題很久了。而我 — — 我們終於將開始看到這一點，並且有意義的成長即將到來。

Yes. Okay. My second question is on your -- for the 14-nanometer. I just looked at your annual report. You have continued investing in 14-nanometer finFET technology. And your 14-nanometer FFC is met potash from second half this year. But for you, you only have a very limited 14-nanometer capacity. So question is, are you considering to further expand your 14-nanometer capacity anytime soon? And if you want to do that, how much CapEx it is -- will be by this case? So this is my second question.

是的。好的。我的第二個問題是關於 14 奈米的。我剛剛看了你的年度報告。您一直在投資 14 奈米 finFET 技術。而你的 14 奈米 FFC 是從今年下半年開始遇到鉀肥的。但對你來說，你只有非常有限的14奈米容量。那麼問題是，您是否考慮近期進一步擴大 14 奈米產能？如果您想這樣做，那麼在這種情況下需要多少資本支出？這是我的第二個問題。

Sure. I mean, we also have been talking about this for a long time. We will closely examine all the return on capital expenditure and optimize our capital deployment to elevate our financial performance. So every time when we start talking about CapEx, and we have to go back to that, we have to have -- make sure that we have justified the CapEx decisions. And for 14, from a technology development point of view, it's important to us. So we have been continually investing and want to make sure that we develop the technology as well as other technology, the area that we are focused on is right now in the specialty area. We want to make sure that we -- from a technology development standpoint, we are relevant to the focus area. And beyond that point, as far as the CapEx decision and then we go -- we'll go ahead the extent based on an ROI basis. So I'm never going to rule out the chance of putting the new capacity on a 14, but at this point, it's not on our plan yet.

當然。我的意思是我們也已經談論這個問題很久了。我們將仔細審視所有資本支出的回報，並優化我們的資本配置，以提高我們的財務表現。因此，每次當我們開始談論資本支出時，我們都必須回到這個問題，我們必須確保我們已經證明了資本支出決策的合理性。對 14 來說，從科技發展的角度來看，這對我們來說很重要。因此，我們一直在不斷投資，並希望確保我們開發該技術以及其他技術，我們目前關注的領域是專業領域。我們希望確保——從技術開發的角度來看，我們與重點領域相關。除此之外，就資本支出決策而言，我們將在投資報酬率的基礎上繼續推進。因此，我永遠不會排除將新容量放在 14 上的可能性，但目前，這還不在我們的計劃中。

Yes. So by what kind of criteria or what kind of consideration, you are going to expand or raise the capacity for 14-nanometer? I think actually every year, you spend big money on R&D for this 14 finFET technology. But if you don't have a big -- have the capacity, I think how are you going to monetize the investment on these finFET technology development?

是的。那你們基於什麼樣的標準或考慮，要擴大或提高14奈米的產能呢？我認為實際上每年你都會花費大量資金用於這 14 種 finFET 技術的研發。但是如果你沒有大規模的產能，我想你如何將這些 finFET 技術開發的投資貨幣化呢？

Well, that's really a good question. And if you look at the investment perspective, between the R&D investment and the capacity investment, the R&D is actually relatively small. It's a much smaller investment. And so -- but if you look at the addressable market, at this point, we're considering anything 14 above are our addressable market. So we always have to examine our addressable market and whether the demand is valid. And then we come back and look at the application if that makes sense for us to invest into capacity. Meanwhile, we do have about 2000 to 3000 capacity in place. And -- so we're not going to completely waste in terms of our R&D investment. So we think this is more prudent for all stakeholders. So we're going to continue to follow that strategy.

嗯，這確實是個好問題。如果從投資角度來看，在研發投資和產能投資之間，研發投資其實相對較小。這是一筆小得多的投資。所以 — — 但如果你看一下可目標市場，此時，我們正在考慮上述 14 個市場都是我們的可目標市場。因此，我們必須始終檢查我們的目標市場以及需求是否有效。然後我們回過頭來查看申請是否對我們投資產能有意義。同時，我們確實有大約 2,000 到 3,000 個容量。因此，我們的研發投資不會完全浪費。因此我們認為這對所有利害關係人來說都是更加謹慎的。因此我們將繼續遵循這項策略。

Understood, you said a 2,000 to 3,000 capacity for 14-nanometer, right? It's not additional 2,000 to 3,000, total 2,000 to 3,000.

明白了，您說的是 14 奈米的產能為 2,000 到 3,000，對嗎？不是另外的2000到3000，而是總共2000到3000。

No. This is what we have right now.

不。這就是我們現在所擁有的。

And the next one is coming from Aaron Jeng of Nomura Securities.

下一位提問者是野村證券的 Aaron Jeng。

I guess a question about competition landscape at 28-nanometer and also the other mature 12-inch node. I think particularly 28-nanometer, I think this question has been asked a few times. When Jason, you said, it's an oversupply to be of the supply for 28-nanometer for foundry industry, but you are able to manage your 28-nanometer to do better and better every quarter. So I want to know your view on the competition landscape at 28-nanometer and also the other mature 12-inch nodes.

我猜這個問題是關於 28 奈米以及其他成熟的 12 吋節點的競爭格局。我認為特別是28奈米，我認為這個問題已經被問過幾次了。傑森，您說對於代工行業來說，28 奈米的供應是過剩的，但您能夠管理 28 奈米，使它每個季度都做得越來越好。所以我想知道您對 28 奈米以及其他成熟的 12 吋節點的競爭格局的看法。

Sure. So let me start off with the 28-nanometers. First of all, we're unable to comment on our peers. And we don't know much about them internally. So I understand what they said, but we shouldn't be commenting about that. But let's look at UMC. We do believe our 28- and 22-nanometer solution have finally provided competitive advantage for our customers. Like I said earlier, the progress of our 28-nanometer product pipeline remains very strong. The search of the 28 and a 22 tape-outs also shows that, and will continue to increase our exposure to a more diversified 28 customer base and product portfolio. So we are expecting our 28-nanometer revenue contribution in Q3 will continue and to increase. And given why I also mentioned earlier, driven by the higher penetration rate in the smartphone and continued demand in the computing segment. So we expect this 28 -- now that this business momentum will benefit by those, okay?

當然。因此，讓我從 28 奈米開始。首先，我們無法對我們的同行發表評論。我們對他們的內部情況了解不多。所以我理解他們所說的話，但我們不應該對此發表評論。但讓我們看看 UMC。我們確實相信我們的 28 奈米和 22 奈米解決方案最終為我們的客戶提供了競爭優勢。正如我之前所說，我們的 28 奈米產品線進展仍然非常強勁。對 28 個和 22 個流片的搜尋也表明了這一點，並將繼續增加我們對更多樣化的 28 個客戶群和產品組合的曝光度。因此，我們預計第三季 28 奈米的收入貢獻將持續並增加。鑑於我之前提到過的原因，這得益於智慧型手機普及率的提高和運算領域的持續需求。因此，我們預期這 28—現在這個業務動能將會受益於這些，好嗎？

If you look at the other 12-inch mature nodes for the 40-nanometers, we foresee a positive demand in the second half as well. And due to an increase of the customers' 40-nanometer adoption in a larger device, driven by the wireless applications. So there are other applications coming into the 40-nanometer as well. And looking beyond the 2020, we are considering to migrate portion of the 40-nanometer capacity to support our unfulfilled 28-nanometer demand to enhance our ASP and profitability. So in the longer term, I think there will be a demand-supply balance on the 40-nanometer. So we are considering to migrating some of our 40s to 28, okay. Then if we're coming down to 55 and 65, our 55 and 65 business for the second half of this year, we are very confident that our demand will remain strong, mainly coming out from the smartphone segment, again, associated with the 5G RF switch and the TDDI, which will be driven by the higher adoption of the 120-hertz display panels. So we think most applications moving into the 55, and we start seeing a very, very strong momentum on 55 and 65. And we think in the foundry landscape, the 55 and 65 will have a very strong demand over the supply. And of course, we talked about 80 and 90 earlier. Right now, we're running up rates 100% loading for Q2. The -- for the second half, we do see some demand within the 80 and 90 applications are stronger than the others, some stronger, some weaker, but the overall 80 and 90 demand outlook is still in line with our 12-inch corporate average. So I think that will give you a flavor of our view on the -- on those nodes that we're serving today.

如果您看看 40 奈米的其他 12 吋成熟節點，我們預計下半年的需求也會呈現正面趨勢。由於無線應用的推動，客戶在更大設備中採用 40 奈米技術的情況增加。還有其他應用也進入了 40 奈米技術。展望2020年後，我們正在考慮遷移部分40奈米產能，以支援我們未滿足的28奈米需求，從而提高我們的平均售價和獲利能力。因此從長遠來看，我認為 40 奈米的供需將會達到平衡。所以我們正在考慮將一些 40 多歲的人遷移到 28 歲，好的。然後，如果我們將今年下半年的 55 和 65 業務降至 55 和 65，我們非常有信心我們的需求將保持強勁，主要來自智慧型手機領域，同樣與 5G RF 交換機和 TDDI 相關，這將受到 120 赫茲顯示面板的更高採用率的推動。因此，我們認為大多數申請都會進入 55，我們開始看到 55 和 65 的勢頭非常強勁。我們認為，在代工領域，55 和 65 的需求將遠超過供應。當然，我們之前討論過 80 和 90。目前，我們正在為第二季提高 100% 的利率。對於下半年，我們確實看到 80 和 90 應用中的一些需求比其他應用更強勁，有的更強，有的更弱，但整體 80 和 90 需求前景仍然與我們的 12 英寸企業平均水平一致。所以我認為這會讓你了解我們對今天所服務的那些節點的看法。

That's super clear. Perhaps a second question, which probably, I don't know if we can have your answer. It's about a lawsuit and I think a few -- maybe a few months ago, we saw an article saying that General Counsel at UMC commented that the lawsuit will not be concluded in 2, 3 years' time frame. So I just want to know how should we think about the time frame. And I don't know, any update on this topic?

這非常清楚。也許還有第二個問題，可能我不知道我們是否可以得到您的答案。這是關於一場訴訟的，我想可能是幾個月前，我們看到一篇文章說，聯華電子的總法律顧問評論說這場訴訟不會在 2 到 3 年內結束。所以我只是想知道我們應該如何考慮時間框架。我不知道，關於這個主題還有什麼更新嗎？

Well, I mean, the -- right now, the lawsuit is in the legal proceedings. And so it's really not in our control in terms of the timeline of the process. But we do follow that the -- wherever that court require us, okay? We remain -- we restate our believing in ourselves. And so we don't believe there's any false wrongdoing in terms of UMC. And so we stay believing that, and we just have to trust that the court system will eventually give us a fair result. The -- so since it's in the legal proceeding, it's truly not in our position to comment that at this time.

嗯，我的意思是，目前，訴訟正在法律程序中。因此，就流程的時間表而言，我們實際上無法控制。但我們確實會遵守——無論法院要求我們做什麼，好嗎？我們依然－我們重申對自己的信念。因此，我們不認為 UMC 存在任何虛假不當行為。所以我們仍然相信這一點，我們只需要相信司法系統最終會給我們一個公正的結果。因為此事還在法律程序中，所以我們現在確實不方便發表評論。

And the next to ask a question is from Sebastian Hou, CLSA.

下一個提問的是里昂證券的 Sebastian Hou。

My questions will probably for -- just focus on the 8-inch side. So I think the company has been running a very high utilization rate for many quarters already. So I wonder what's your strategy here that in terms of expansion and also your -- whether you have more priority or selective on the product you do going forward?

我的問題可能只集中在 8 英寸方面。所以我認為該公司已經連續多個季度保持了非常高的利用率。所以我想知道您在擴張方面的策略是什麼，以及您是否對未來的產品更有優先權或選擇性？

I mean, you're right. And we do see the 8-inch has been continuing for many quarters. And it's our belief will remain full and throughout the second half of 2020. And so we are constantly looking into options to further expanding our 8-inch capacity. But given the ASP situation, any organic growth in the 8-inch will be very limited. We -- we'll continue looking for those options, and which we did in the past years, we actually increased our 8-inch capacity organically as well. So by continue migrating some of our fabs to support our customer in the advanced 8-inch area, particularly. So we're going to continue doing that. And sometimes inorganically, it has to be -- it had to come by those opportunity, we have to go out search for it. So -- and we'll continue as well. And so -- and meanwhile, in terms of the tightness of the 8-inch situation, it does affect some of the prioritization, as you mentioned about allocation. So our focus in 8-inch is also on the area of the product mix improvement. So we'll continue migrating some of our legacy to the advance and continue migrating some of the better product mix to help us enhance our ASP as well as profitability of the 8-inch, and that is an ongoing basis.

我的意思是，你是對的。我們確實看到 8 英寸的趨勢已經持續了多個季度。我們堅信這項信念將持續至 2020 年下半年。因此，我們一直在尋找進一步擴大 8 吋產能的方案。但考慮到平均售價的情況，8 英寸的任何有機增長都將非常有限。我們將繼續尋找這些選擇，正如我們在過去幾年所做的那樣，我們實際上也有機地增加了 8 英寸的產能。因此，我們繼續遷移一些晶圓廠，以支援我們在先進的8英寸領域的客戶。因此我們將繼續這樣做。有時，它必須是無機的——它必須透過這些機會而來，我們必須出去尋找它。所以——我們也會繼續。所以 — — 同時，就 8 英寸情況的緊張程度而言，它確實會影響一些優先級，正如您所提到的分配。因此，我們在8吋的重點也是在產品組合改進領域。因此，我們將繼續將一些傳統產品轉移到先進產品上，並繼續轉移一些更好的產品組合，以幫助我們提高 ASP 以及 8 英寸的盈利能力，這是一個持續的基礎。

The -- given that we foresee a strong demand and continue leading to the supply tightness, okay, not only -- or by the way, not only to the 8-inch, but also on some of the specific 12-inch, I talked about earlier, we were actually -- we think there's going to be -- the market pricing situation will probably become more in favor of the foundry from now. That will probably help us well.

鑑於我們預見到強勁的需求並繼續導致供應緊張，順便說一下，不僅是 8 英寸，還有我之前談到的一些特定的 12 英寸，我們實際上——我們認為——從現在起，市場定價情況可能會變得更加有利於代工廠。這也許對我們有很大幫助。

Got it. Just a follow-up on -- given that we are -- we have a privilege or more flexibility about the -- doing things that is more earnings accretive to us. So how do you see it about the overall pricing outlook for the 8-inch going forward?

知道了。只是想問一下——鑑於我們——我們有特權或更多的靈活性——做一些能為我們帶來更多收益的事情。那麼您如何看待未來 8 吋的整體定價前景？

I'm sorry, I didn't catch the question again. Can you repeat...

抱歉，我又沒聽清楚問題。你能重複一遍嗎…

The question is that given that you can be more selective and prioritize the business, the product application that more favorable to our profitability. Then how do you see that reflected on the 8-inch foundry price?

問題是，如果你可以更有選擇性並優先考慮業務，那麼產品應用會更有利於我們的獲利能力。那麼您認為這如何反映在8吋晶圓代工價格上呢？

Well, I mean, the pricing discussions are ongoing. Right now -- well, first of all, do value our long-term customer partnerships. So we need to -- seeking for a win-win cooperation with them. So we need to continue to align with our customers. For the year 2021, we already have an ongoing discussion on this alignment, okay? And so the pricing will be a result of those alignments. And I would not give you a specific at this time, but I -- again, I will probably say at this point, given the demand supply situation, I think the pricing situation outlook is more in favor of the foundry right now.

嗯，我的意思是，定價討論仍在進行中。現在 - 首先，請重視我們與客戶的長期合作關係。所以我們需要與他們尋求雙贏的合作。所以我們需要繼續與客戶保持一致。對於 2021 年，我們已經就這項調整進行了持續討論，好嗎？因此定價將取決於這些調整。我現在還不能給你具體數字，但我—我可能會再說一遍，考慮到供需情況，我認為目前的定價前景更有利於代工廠。

Got it. Got it. Just a last follow-up on this. I remember the last time we -- the range foundry price has -- we are able and including our peers are able to raise the price that was back in, I think 2018. And also coincidently, there are also the cost increase from the rail wafer. So we have a very good reason to want to negotiate with our clients that we can pass the cost to the customers. So it justify our reasoning for raising or adjusting the price higher. How about this time? I mean it looks like the wafer allover price may -- we haven't heard there will be some adjustment yet. I'm not sure it's going to happen next year. But given that we don't have that kind of the cost justification, but when you negotiate this with customers, the customers still pretty acceptive about this price negotiation?

知道了。知道了。這只是對此的最後一次跟進。我記得上一次我們——代工價格範圍——能夠，包括我們的同行也能夠提高價格，我想那是在 2018 年。而巧合的是，軌道晶片也帶來了成本的增加。因此，我們有充分的理由與客戶協商，將成本轉嫁給客戶。這證明我們提高或調整價格的理由是合理的。這次怎麼樣？我的意思是看起來晶圓的整體價格可能——我們還沒有聽說會有一些調整。我不確定明年是否還會發生這種情況。但考慮到我們沒有那種成本理由，但是當你與客戶談判時，客戶仍然會接受這種價格談判嗎？

First of all, you have a very good memory. Yes, you're right. Last time, the price increase is mainly driven by the raw material cost increases. And so we pass down to the customer. This time is a difference. This time is mainly because the demand and supply alignment situation. We do see a very strong demand in the 8-inch advanced nodes area. So given the tightness of the situation, we have to prioritize our resources and along with our partnership relationship. So we are managing the balance of that. But again, I think customers appreciate that and understand it. So those discussion is ongoing at this time.

首先，你的記憶力很好。是的，你說得對。上次漲價主要是受原物料成本上漲帶動。因此我們將其傳遞給客戶。這次有所不同。這次主要是因為需求和供應的協調。我們確實看到8英寸先進節點領域的需求非常強勁。因此，考慮到緊張的形勢，我們必須優先考慮我們的資源並加強我們的合作夥伴關係。因此，我們正在管理這方面的平衡。但我再次認為客戶對此表示讚賞和理解。因此這些討論目前仍在進行中。

And the next question is coming from Bruce of Goldman Sachs.

下一個問題來自高盛的布魯斯。

Very, very good result. I have a question again to the 28-nanometer profitability. I'm actually very surprised to see the management did not take each node profitability. Because company management also mentioned that your new investment is based on a better return, which means that when you try to increase your 28-nanometer capacity, you believe that incremental capacity can give you a better return? So can -- so my question is that when do we expect that 28-nanometer should be the corporate average profitability and margin? And is that the reason why we want to increase the -- repeat the 28-nanometer capacity?

非常非常好的結果。我再次對28奈米的獲利能力提出疑問。我實際上非常驚訝地看到管理層沒有考慮每個節點的獲利能力。因為公司管理階層也提到，你們新的投資是基於更好的回報，這意味著當你試圖增加28奈米產能時，你相信增量產能可以為你帶來更好的回報？那麼我的問題是，我們什麼時候可以預期 28 奈米應該成為企業的平均獲利能力和利潤率？這就是我們想要增加──重複一下28奈米容量的原因嗎？

So for increasing incremental 28-nanometer capacity, sometimes it helps the overall bigger pictures. So if we don't have adequate capacity or economy of scales, it's difficult to reach our long-term goal in terms of profitability. So we just cannot look at the incremental per se. It's really the overall result in a longer-term time spend is what we are really considering. So yes, if we are considering to expand our 28-nanometer is going to fulfill our requirement for a longer term picture.

因此，對於增加 28 奈米的增量容量，有時它有助於整體的全局。因此，如果我們沒有足夠的產能或規模經濟，我們就很難實現獲利的長期目標。因此我們不能只看增量本身。我們真正考慮的是長期花費的整體結果。所以是的，如果我們考慮擴展，我們的 28 奈米將滿足我們長期的需求。

But I thought that maybe we can somehow raise the ASP first to improve the margin or profitability, then we do the capacity expansion or any other ways to boost for the margin?

但我認為，也許我們可以先以某種方式提高平均售價，以提高利潤率或獲利能力，然後再擴大產能或採取其他任何方式來提高利潤率？

Well, certainly, we follow your view as well, but sometimes it just in reality, it doesn't come in the preferred sequence. So for our -- for example, our 8-inch today, as our President just mentioned, the pricing environment is really in the favor of foundry. And hopefully, we believe with our competitiveness and also the readiness of our technology, somehow the pricing -- bargaining power will return to the foundry side as well. So yes, we certainly follow your thought and well we wish that to happen as well. But the more important is really to fulfill the meeting parts and to reach the economy of scale and to have a adequate capacity for our key customers.

嗯，當然，我們也同意你的觀點，但有時在現實中，事情並不按照你希望的順序出現。因此對於我們今天的 8 英寸來說，正如我們的總裁剛才提到的，定價環境確實有利於代工廠。而我們希望，憑藉我們的競爭力和技術的成熟度，定價——議價能力也將以某種方式回到代工廠一方。所以是的，我們當然遵循您的想法，我們也希望這樣發生。但更重要的是真正完成會議部分，達到規模經濟，並為我們的關鍵客戶提供足夠的產能。

Understand. Just a little bit follow-up on the -- for the 28. So moving into the second half, our 28-nanometer utilization is slightly below the 12-inch average, which means that incrementally iteration rate might not be a big moving factor for your 28-nanometer profitability. So can we expect that -- how can we see a better profitability for 28 in the second half? Maybe we use the tool for the 28 alone or we -- any other ways we can see that -- or how should we see the profitability improvement in the second half for 28?

理解。只是對 28 日的情況做一點後續跟進。因此進入下半年，我們的 28 奈米利用率略低於 12 英吋平均值，這意味著增量迭代率可能不會成為影響 28 奈米獲利能力的重大因素。那麼，我們可以預期——我們如何才能看到 28 在下半年實現更好的獲利能力？也許我們單獨使用 28 的工具，或者我們 - 我們可以透過任何其他方式看到 - 或者我們應該如何看待 28 在下半年的獲利能力改善？

I think for -- as a finance person -- maybe Jason can jump in later on. As a finance person, the depreciation curve need to come down. So that's exactly the situation for our Xiamen fab, and it may take another couple of years to see the curve to peak to decline to help our overall 28 profitability. And our 12A in Thailand has pretty much reached the inflection point. So by year 2022, overall company, we will see a significant decline in depreciation expenses, which is largely related to our 12A 28 expansion we did back in a few years ago. So depreciation will come down. And hopefully, our product mix amortize -- I mean, our product mix enhancement will also help our overall blended ASP for 28-nanometers.

我認為，作為一名財務人士，傑森也許可以稍後加入。身為財務人員，折舊曲線需要下降。這正是我們廈門工廠的情況，可能還需要幾年時間才能看到曲線從高峰下降，以幫助提高我們的整體獲利能力。我們泰國的12A基本上已經到達了轉折點。因此，到 2022 年，整個公司將看到折舊費用大幅下降，這在很大程度上與我們幾年前進行的 12A 28 擴張有關。因此折舊率將會下降。並且希望我們的產品組合能夠攤銷——我的意思是，我們產品組合的增強也將有助於我們 28 奈米的整體混合 ASP。

Okay. I've got one last question for the 8-inch. Management mentioned that the pricing environment is better, but the third quarter guidance for the ASP is still remain flattish. So when can we expect some like improvement in terms of 8-inch blended ASP?

好的。關於 8 英寸，我還有最後一個問題。管理階層提到定價環境較好，但第三季的平均銷售價格指引仍持平。那麼，我們什麼時候可以期待 8 吋混合 ASP 方面有所改善呢？

The -- I mentioned the -- many of the discussion about that is for the year 2021. So that alignment is ongoing. And all our 2020s demands the supply -- the support is being aligned previously. And so -- and we -- considering the long-term partnership that we have, and that will be only a selective area with the upside with a better pricing. But in general, we did not move the pricing in 2020. Now for 2021, given the demand supply situation change and it's more of the discussion today is for 2021. Meanwhile, for 2020, all the pricing adjustment is given on the upside support area.

我提到過，關於這一點的許多討論都是針對 2021 年的。因此這種協調正在進行中。我們所有的 2020 年代需求供應——支援都已經提前調整好了。因此 — — 考慮到我們之間的長期合作關係，這將只是一個具有更好定價優勢的選擇性領域。但整體來說，2020 年我們沒有調整定價。現在對於 2021 年，考慮到供需情況的變化，今天更多的討論是針對 2021 年的。同時，對於 2020 年來說，所有價格調整均在上行支撐區域進行。

I see. Understand. So we can expect like much better ASP trend in 2021 at least for 8-inch.

我懂了。理解。因此，我們可以預期，至少對於 2021 年而言，8 吋的 ASP 趨勢會更好。

By then, we actually will give you a much better...

到那時，我們實際上會給你更好的…

I understand that. I just can't wait.

我明白。我實在等不及了。

I definitely share the sense of. But there's -- when the time come, we will give you a really clear guidance on that.

我確實有同樣的感受。但是，時機成熟時，我們會為您提供真正明確的指導。

The next question is coming from Charlie Chan of Morgan Stanley.

下一個問題來自摩根士丹利的陳查理（Charlie Chan）。

And congratulations for very good results. So I also have a follow-up question on gross margin. And it seems like you're guiding third quarter margin to decline from second quarter. Is that all due to the ramp of 28-nanometer mix? And I'm not really sure because suppose the higher iterations should mean a better margin, why the margins would decline in third quarter?

恭喜您取得非常好的成績。因此，我還有一個關於毛利率的後續問題。您似乎預計第三季的利潤率將較第二季有所下降。這一切都是因為28奈米混合技術的進步嗎？我不太確定，因為假設更高的迭代次數意味著更好的利潤率，為什麼第三季的利潤率會下降？

Okay. For the Q3, the next quarter gross margin guidance, we are expecting it will be -- the margin will be challenged by the foreign exchange market. Thus the stronger dollar, NT dollar will dilute our profitability that's one of the reasons. In addition, we are entering into the summer section. So every year, annually, that will lead to higher utility costs during the time. So we are factoring those into the calculation as well. Yes.

好的。對於第三季度，即下一季的毛利率指引，我們預期利潤率將受到外匯市場的挑戰。因此，美元走強、新台幣升值將削弱我們的獲利能力，這是原因之一。此外，我們正在進入夏季階段。因此每年，這都會導致這段時間內公用事業費用增加。因此我們也將這些因素考慮進計算中。是的。

Okay. And next is about your top line. I mean 28-nanometer goes up. And you mentioned that across segments demand remains to be very strong. Is that the case, why the revenue is only flat for one quarter?

好的。接下來是關於您的頂線。我的意思是 28 奈米上升了。您提到各個領域的需求仍然非常強勁。那麼，為何只有一個季度的營收持平呢？

Well, again, the -- given the product mix that we are projecting today and we do think there will be some help, but there's going to be some the other node that compensated with the upside of the 28. So that will give us the flattish outlook at this point. From the utilization rate point of view, for the Q3, there will be an overall capacity increase about what over a little bit over 1%. And besides giving the mid-90, which, let's say, mid-90 utilization rate guidance, we consider that's very high already. So we feel this is probably a reasonable guidance at this time, yes.

嗯，再說一次，考慮到我們今天預測的產品組合，我們確實認為會有一些幫助，但是其他節點也會透過 28 的上行進行補償。因此，目前來看前景比較平淡。從利用率來看，第三季整體產能將增加1%多一點。除了給出 90 年代中期的利用率指導之外，我們認為這已經非常高了。因此我們認為這目前可能是一個合理的指導，是的。

And the next is about your litigation risk. So May conference, you did expect that lawsuit wouldn't conclude in the coming 2 to 3 years. Is that really what your official comments? And actually, my -- by our opinion, you said maybe there is still an overhang. And your business fundamental is quite strong. Why not management or company consider to do a settlement with the U.S. or Micron earlier, even there will be some potential compensation?

接下來是關於您的訴訟風險。所以在五月會議上，你確實預計訴訟不會在未來 2 到 3 年內結束。這確實是你的官方評論嗎？實際上，根據我們的觀點，您說可能仍然存在懸而未決的問題。而且你們的業務基礎相當強勁。為什麼管理階層或公司不早點考慮與美國或美光達成和解，即使會有一些潛在的賠償？

Again, this in the legal proceeding. We -- it's not appropriate for us to comment on our legal thinking throughout the strategies. So yes, we'll report accordingly and by the regulator towards this policy. So -- and on a tiny basis. But we would prefer not to comment during the call right now.

再次，這是法律程序。我們不適合對整個戰略中的法律思想發表評論。所以是的，我們將根據這項政策向監管機構進行相應報告。所以——而且是在很小的基礎上。但我們現在不想在通話中發表評論。

I see. So from the financial perspective, I'm not sure if this will need to book some contingent lawsuit. I remember when I was in college and some contingency expense. Not sure if maybe this question is to Qi Dong whether we need to prove some contingency expense on that litigation issue?

我懂了。因此，從財務角度來看，我不確定這是否需要提起一些或有訴訟。我記得我上大學的時候有一些應急費用。不確定這個問題是不是問齊東的，我們是否需要證明訴訟問題上的一些應急費用？

Well, UMC did not violate the Trade Secrets Act, which we are already have appeal to the appeal court in Taiwan. So it's a non-duty appeal. So there's no reason for us to do the contingency estimate. And however, our accounting book has always closed some small percentage of revenue as legal-related expenses. So those 2 things are not linked to each other, but we do have our own legal reserve, if you will, for all sort of general legal-related expenses.

嗯，聯華電子沒有違反《商業機密法》，我們已經向台灣上訴法院提出上訴。因此，這是一次非職責訴求。所以我們沒有理由做應急估計。然而，我們的會計帳簿上總是會將一小部分收入作為法律相關費用結清。因此，這兩件事彼此之間沒有聯繫，但如果你願意的話，我們確實有自己的法律儲備，用於支付各種與一般法律相關的費用。

Got it. And my last one.

知道了。這是我的最後一個。

I would also like to add, the UMC, we have appointed a finance legal counsel and while legal team respond to this -- both litigation in U.S. and Taiwan. And so -- and at the same time, we will make every effort to enhance our profitability and preserve the better interest for our shareholders. So in case -- to mitigate potential risk. But as far as the assessment for the risk, we truly not -- would not like to respond because at this point, it's related more of a speculation and hypothetical. So that's why it's a bit difficult for us to comment right now, yes.

我還想補充一點，我們已經為聯華電子任命了一位財務法律顧問，而法律團隊正在對此作出回應——美國和台灣的訴訟。因此，同時，我們將竭盡全力提高獲利能力並維護股東的利益。因此，為了減輕潛在的風險。但就風險評估而言，我們確實不想回應，因為目前這更多的是一種猜測和假設。所以這就是為什麼我們現在發表評論有點困難，是的。

Yes. That is reasonable. And last one, maybe either Jason or Dong Liu can help me. You said a company or the foundry overall seems to be still very healthy into second half. How do you reconcile the kind of pandemic or health care crisis with consumer demand versus your decent or good second half outlook?

是的。這是合理的。最後一個問題，也許 Jason 或 Dong Liu 可以幫助我。您說一家公司或整個代工廠在下半年看起來仍然非常健康。您如何協調這種流行病或醫療保健危機與消費者需求以及您對下半年不錯或良好的期望？

This is -- it's definitely a very interesting time right now. Previously, if you remember, we actually talked about the inventory correction, potentially impacting demand during the beginning of the COVID-19 pandemic. However, now we actually have seen the inventory level increased a semiconductor vendor and OEMs have kept prebuilding in order to avoid supply chain disruption. So -- and also business have to carry buffer inventory to accommodate a rebound of opportunity arising from the opening of economic -- economy. So we do see people view this a little bit different. It could be a new norm, okay? So we have a much better clarity now. And given that and our view on the overall demand outlook, we are not seeing a significant order cut at this time, and we will be cautiously optimistic in the second half. Okay. We expect more opportunity will be driven by the 5G handset and the PC. Noble demand will pick out associated with the work-from-home and home schooling trend. Despite the smartphone shipment actually declined this year, overall smartphone, but we expecting capture higher smartphone market share driven by the 5G handset launch. This year, we see about 200 million units or 20 million units from 2019. And the silicon content of 5G phone will also increase such as PMIC and RF switch. Well, this will actually position us to take advantage of that margin trend. Besides the significant 5G phone shipments, our customer also exciting to gain smartphone market share this year. So this will more than offset the decline of the smartphone units that we see. So that's why we actually have a higher competency in the second half outlook here.

這——現在絕對是一個非常有趣的時刻。如果您還記得的話，之前我們實際上討論過庫存調整，這可能會影響新冠疫情開始時的需求。然而，現在我們實際上已經看到庫存水準增加，半導體供應商和 OEM 廠商一直在提前建設，以避免供應鏈中斷。因此，企業也必須持有緩衝庫存，以適應經濟開放所帶來的反彈機會。所以我們確實看到人們對此有一點不同的看法。這可能是個新常態，好嗎？所以現在我們的認識更清晰了。鑑於這一點以及我們對整體需求前景的看法，我們目前沒有看到訂單大幅減少，我們對下半年將保持謹慎樂觀的態度。好的。我們預計5G手機和個人電腦將帶來更多機會。高價值需求將隨著在家工作和在家教育的趨勢而顯現。儘管今年智慧型手機出貨量實際上有所下降，但整體而言，我們預計在 5G 手機發布的推動下，智慧型手機市場份額將有所提高。今年預計將有 2 億台，2019 年預計將有 2,000 萬台。而且5G手機的矽含量也會增加，例如PMIC和RF開關。嗯，這實際上使我們能夠利用這種利潤趨勢。除了5G手機出貨量大幅成長外，我們的客戶今年的智慧型手機市佔率也大幅增加。因此，這將遠遠抵消我們所看到的智慧型手機銷量的下滑。這就是為什麼我們對下半年的前景有更高的信心。

And the next question is coming from Julie Tsai of UBS.

下一個問題來自瑞銀的 Julie Tsai。

There's a lot of discussion about 28 just now. Looking at your Q2 product breakdown, it is not very clear where the 28 application is coming from. Could you give us a bit more detail on that?

剛才有很多關於 28 的討論。查看您第二季的產品細目，不太清楚這 28 個應用程式來自哪裡。您能否向我們詳細介紹一下這一點？

You're talking about in Q2. The increase in the 28-nanometer demand in Q2 is attributed to a communication and consumer, inter connectivity, AV baseband and in a 5G phone and as well as the work-from-home applications. That's where the mix of the 28-nanometers in Q2.

您談論的是第二季的情況。第二季 28 奈米需求的成長歸因於通訊和消費者、互聯互通、 AV 基帶、 5G 手機以及在家辦公應用。這就是第二季 28 奈米的混合體。

I see. And then also, you did mention that Q3 gross margin could be adversely impacted because of the NT dollar appreciation. But we're already seeing that happen in Q2. But are you also foreseeing that again to be adversely impacted in Q3, though?

我懂了。而且您也提到，新台幣升值可能會對第三季的毛利率產生不利影響。但我們已經在第二季看到這種情況發生。但是您是否也預見到這會在第三季再次受到不利影響？

Yes. The magnitude of $20 appreciation is actually more in third quarter than that in second quarter. So yes, we do foresee that to have some a negative impact for both our top line and bottom line.

是的。第三季升值20美元的幅度其實比第二季更大。所以是的，我們確實預見到這會對我們的營收和利潤產生一些負面影響。

The last question is coming from Randy Abrams, Crédit Suisse.

最後一個問題來自瑞士信貸的蘭迪·艾布拉姆斯（Randy Abrams）。

Maybe just a follow-up to that last question on the 28. If you could give maybe a forward view -- you mentioned another surge of tape-outs. Just talk a bit more about the new applications that you have coming on to that node over the next few quarters?

也許只是對 28 日最後一個問題的後續回答。如果您可以給出一個前瞻性的觀點—您提到了另一波流片熱潮。您能再多談談未來幾季內您將在該節點上推出的新應用程式嗎？

Well, I mean, it's very similar to the Q2. We see the Q3 was driven by the -- I mentioned many times earlier, the smartphone and the continued demand in the computer segment. And so the 28 were mainly driven by those 2 segments and not much change on a -- from a Q2. It's very similar, yes.

嗯，我的意思是，它與 Q2 非常相似。我們看到第三季的成長是由智慧型手機和電腦領域的持續需求所推動的——我之前多次提到。因此，28 主要是由這兩個部門推動的，與第二季度相比沒有太大變化。是的，非常相似。

Okay. The second question I wanted to ask is maybe the direction. You talked about actually fairly good strength. So I'm curious, fourth quarter, just an early look at it sometimes has a bit of seasonal decline, but just factoring your comments. If it looks like this year, based on your demand and customers wanting to carry inventory, if it looks like it's holding firm as we go toward year-end. And I'm curious, the other products, which I presume it's auto industrial, which is the weaker area, if you're seeing any signs of stabilization bottom out or recovery in that area?

好的。我想問的第二個問題可能是方向。您說的其實是相當不錯的實力。所以我很好奇，第四季度，只是初步看一下，有時會出現一點季節性下降，但只是考慮到您的評論。如果今年看起來，根據您的需求和客戶想要持有庫存，如果看起來它在接近年底時會保持堅挺。我很好奇，其他產品，我猜測是汽車工業，哪個是比較薄弱的領域，您是否看到該領域出現穩定觸底或復甦的跡象？

Well, I mean, the -- instead of talking about Q4, let's look at the past couple of quarters and this outlook in Q3. In those other areas, beside the communication, consumer and computing, we did to the other areas being up and down throughout the year so far. And we see a slowdown, we see a rebound and then we see a slowdown again. So I think given the discussion with the customer, we do see the market starting to stabilizing and starting to see the sign of recovery. But given the past history of this year up -- being down and up and down, we just have to cautiously look at it. And I think if you're talking about Q4, we'll give you a much better clarity in the next conference call.

嗯，我的意思是，我們不談論第四季度，而是看看過去幾季和第三季的展望。在其他領域，除了通訊、消費者和計算之外，到目前為止，我們對其他領域的表現全年都是有起有落的。我們看到經濟放緩，看到反彈，然後我們再次看到經濟放緩。因此我認為，根據與客戶的討論，我們確實看到市場開始穩定並開始看到復甦的跡象。但考慮到今年以來的漲跌歷史，我們必須謹慎看待這個問題。我認為，如果您談論的是第四季度，我們將在下次電話會議中為您提供更清晰的說明。

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

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。我將把議題交給 UMC IR 主管做最後發言。

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.

感謝大家參加今天的會議。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, this concludes our conference for second quarter 2020. 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，2020 年第二季的會議到此結束。感謝您參加 UMC 的會議。一小時內將會有網路直播重播。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。