聯華電子 (UMC) 2014 Q3 法說會逐字稿

Welcome, everyone, to UMC's 2014 third-quarter earnings conference call. (Operator Instructions). For your information, this conference call is now being broadcasted live over the Internet. And now, I would like to introduce Mr. Bowen Huang, Head of Investor Relations at UMC. Mr. Huang, you may begin.

歡迎大家參加聯華電子 2014 年第三季財報電話會議。 （操作員說明）。供您參考，本次電話會議現透過網路進行現場直播。現在，我想介紹一下聯華電子投資者關係主管黃博文先生。黃先生，您可以開始了。

Thank you, and welcome to UMC's conference call for the third quarter of 2014. I am joined by Mr. Po Wen Yen, the CEO of UMC, and Mr. Chitung Liu, the CFO of UMC.

謝謝大家，歡迎參加聯電 2014 年第三季電話會議。聯電執行長鮑文彥先生和聯電首席財務長劉啟東先生也出席了會議。

In a moment, we will see our CFO present the third-quarter financial results, followed by our CEO's key message to address UMC's main focus and UMC's fourth-quarter guidance. Once our CEO and 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.

稍後，我們將看到我們的財務長介紹第三季度的財務業績，然後是我們的執行長提出的關鍵訊息，以解決聯電的主要關注點和聯電的第四季度指導。一旦我們的執行長和財務長完成發言，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 US and the ROC securities 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因素的影響，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。有關這些風險，請參閱聯華電子向美國 SEC 及中華民國證券監管機構提交的文件。

I would now like to introduce UMC's CFO, Mr. Chitung Liu, to discuss our third-quarter 2014 business results.

現在我想介紹聯華電子的財務長劉啟東先生來討論我們2014年第三季的表現。

Thank you, Bowen.

謝謝你，鮑文。

I would like to go through the third-quarter 2014 investor conference presentation material which now can be downloaded from our website. So let us start from page 3.

我想瀏覽一下 2014 年第三季投資者會議的簡報資料，現在可以從我們的網站下載資料。那麼讓我們從第 3 頁開始。

The third quarter of 2014, revenue was TWD35.21b, with gross margin around 21.5% and operating margin 4.8%. The net income attributable to the stockholder of the parent was TWD2.92b and earnings per ordinary shares were TWD0.23.

2014年第三季營收為TWD35.21b，毛利率約21.5%，營業利益率為4.8%。歸屬於母公司股東的淨利為新台幣2.92b，每股普通股收益為新台幣0.23。

On page 4, you can see the comprehensive income statement. Revenue was down 1.8% quarter over quarter, but it's mainly due to the decline in solar related new business. Foundry alone actually posted 2.9% quarter-over-quarter sequential growth.

在第4頁，您可以看到綜合損益表。營收季減1.8%，但這主要是由於太陽能相關新業務的下降。僅晶圓代工廠就實現了 2.9% 的環比增長。

Gross profit on a consolidated basis is TWD7.55b, or 21.5% of gross margin. And operating income after around TWD600m asset impairment loss from one of our solar subsidiaries, NexPower, around TWD600m, is now around TWD1.68b for our operating income in the third quarter of 2014. And the third quarter is always the peak season for our dividend income, and therefore we do have TWD1.3b of non-operating income in the same quarter. So, total net income in third quarter was TWD2.57b, or an EPS of 0.23.

綜合毛利為新台幣7.55b，即毛利率的21.5%。而我們的太陽能子公司NexPower 約新台幣6 億的資產減損損失後的營業收入約為新台幣6 億，目前我們2014 年第三季的營業收入約為新台幣1.68b。而第三季始終是我們股息的旺季收入，因此同一季度我們確實有 TWD1.3b 的營業外收入。因此，第三季總淨利為新台幣2.57b，即EPS為0.23。

On page 5, you can see the cumulative performance for the first three quarters on a consolidated basis. Revenues show around 10% year-over-year growth over the same period of last year, and the gross margin also improved from 19.3% to 21.1% in this year. And the operating income grows by almost 44% (sic - see slide 5 "44.5%") to TWD5.5b, compared to TWD3.8b in the same period of last year.

在第5頁，您可以看到前三個季度的累積業績總結。營收年增約10%，今年毛利率也從19.3%提高至21.1%。與去年同期的 TWD3.8b 相比，營業收入成長了近 44%（原文如此 - 參見投影片 5「44.5%」）至 TWD5.5b。

Last year, we did recognize a so-called bargain purchase gain around TWD6.2b from the purchase of Heijan shares, but this year, without that, we see quite a big decline in the non-operating part. But net/net, we still have around TWD7b in net income with a 6.8% net income margin. EPS for the first three quarters was TWD0.61 per share.

去年，我們確實透過購買 Heijan 股票獲得了大約 TWD6.2b 的所謂討價還價購買收益，但今年，如果沒有這種收益，我們會看到非經營部分出現相當大的下降。但淨收入/淨收入仍約為新台幣 7 億新台幣，淨利潤率為 6.8%。前三季EPS為每股0.61新台幣。

On page 6, which is a summary of our balance sheet, we still remain a strong cash position around TWD42.7b, with total assets of around TWD300b.

在第 6 頁，即我們的資產負債表摘要中，我們仍然保持著大約 TWD42.7b 的強勁現金狀況，總資產約為 TWD300b。

And on page 7, you can see a further detailed breakdown between our foundry business and solar related new business. As I mentioned earlier, we actually post 2.9% sequential growth in foundry related revenue in the third quarter, and the gross margin for foundry operation in the third quarter was around 24%.

在第 7 頁，您可以看到我們的代工業務和太陽能相關新業務之間的進一步詳細細分。正如我之前提到的，我們第三季代工相關收入實際上環比增長了 2.9%，第三季代工業務的毛利率約為 24%。

And on next page, ASP in the third quarter stayed relatively flat compared to second quarter of 2014.

下一頁，第三季的平均售價與 2014 年第二季相比保持相對穩定。

On further revenue breakdown starting from page 9, we can see the Asia revenue declined to about 44% from 46% in the previous quarter, but the US margin actually grew to 45% from 43% in the previous quarter.

從第9頁開始進一步細分收入，我們可以看到亞洲收入從上一季的46%下降到約44%，但美國利潤率實際上從上一季的43%增長到45%。

On next page, IDM still represents around 9% of our total pie. And on page 11, you can see the revenue breakdown by application. Communication posted the strongest growth in the third quarter, while computer actually showed somewhat weakness. The percentage of revenue declined to 15% in third quarter from 18% in the previous quarter.

在下一頁，IDM 仍占我們總份額的 9% 左右。在第 11 頁，您可以查看按應用程式劃分的收入細分。通訊在第三季度出現了最強勁的增長，而電腦實際上表現出了一定的疲軟。第三季營收佔比從上一季的18%下降至15%。

On page 12, we are happy to see our 28 nanometer continue to grow strongly. In the third quarter, now, it is actually 3% compared to 1% in the second quarter, and 40 nanometer also grew to 24% of our total revenue. And 65 nanometer, due to some upgrading of capacity and also slower demand, right now the percentage of revenue has come down to 26% in third quarter from 31% in the previous quarter.

在第 12 頁，我們很高興看到 28 奈米繼續強勁成長。現在第三季度，實際上是 3%，而第二季度是 1%，40 奈米也成長到了我們總收入的 24%。而65奈米，由於產能升級以及需求放緩，目前第三季營收佔比已從上一季的31%下降至26%。

On page 13, we provide a quarterly capacity table here. One thing worth mentioning is our 12i in Singapore continued to do a technology migration from 65 to actually 40 nanometers, so the available capacity in Q4 of this year will show a mild decline. And at the same time, we continue to add more 28 nanometer capacity in our 12A in Tainan site, and that will mainly be the 28 nanometer had come out of the capacity.

在第 13 頁，我們提供了季度容量表。值得一提的是，我們新加坡的12i持續進行從65奈米到實際40奈米的技術遷移，因此今年第四季的可用產能將出現輕微下降。同時，我們在台南12A廠區持續增加更多28奈米產能，主要是已經出來的28奈米產能。

So, page 14, our estimated capital expenditure for 2014 still stays around somewhat similar to TWD1.3b, but the actual number in terms of cash payment will vary depending on the cut-off date by the end of this year.

因此，第14頁，我們預計2014年的資本支出仍然與TWD1.3b有些相似，但現金支付的實際數字將根據今年年底的截止日期而有所不同。

So that pretty much is a quick summary of UMC's results for the third quarter of 2014, and more details are available in the report which has been posted on our website.

以上就是聯華電子 2014 年第三季業績的快速總結，更多詳細資訊請參閱我們網站上發布的報告。

I will now turn the call over to Mr. Yen, CEO of UMC.

我現在將電話轉給聯華電子執行長顏先生。

Thank you, Chitung. Hello, everyone. I would like to update to everyone UMC's third-quarter operating results.

謝謝你，吉東。大家好。我想向大家更新聯電第三季的經營業績。

In the third quarter, our foundry revenue grew 2.9% sequentially to TWD33.51b. Foundry operating margin was 8.8%. The overall capacity utilization reached 93%, led by increasing demand from communication products such as handsets and tablet devices, bringing wafer shipments to 1.462m 8 inch equivalent wafers. Moreover, 24% of our revenue came from 40 nanometer, while 28 nanometer contribution rose from 1% to 3% quarter over quarter, demonstrating the sustained traction of UMC's leading edge geometries.

第三季度，我們的代工營收季增 2.9%，達到 TWD33.51b。代工廠營業利益率為8.8%。受手機、平板設備等通訊產品需求成長帶動，整體產能利用率達93%，晶圓出貨量達146.2萬片8吋當量晶圓。此外，我們的收入中有 24% 來自 40 奈米，而 28 奈米的貢獻則從 1% 環比上升到 3%，這表明聯華電子領先的幾何形狀具有持續的吸引力。

Our 28 nanometer yield progress for poly-SiON and gate-last High-K/Metal Gate products has continued to improve, which will drive significant production ramp during the fourth quarter. This progress will help attract multiple waves of new customers and products to strengthen UMC's 28 nanometer growth and further diversify our customer base in advanced nodes.

我們的多晶矽和後閘極高 K/金屬閘極產品的 28 奈米良率進展持續改善，這將推動第四季的產量大幅成長。這項進展將有助於吸引多波新客戶和新產品，以加強聯華電子的 28 奈米成長，並進一步使我們在先進節點的客戶群更加多元化。

UMC has collaborated with Asia regional partners for capacity deployment plans, with the intention to expand our operating scale, strengthen efficiency and capture additional market share. This cooperative model will establish regional manufacturing centers that will build economy of scale to increase productivity and serve local markets, while helping UMC's global customers mitigate geographical risks in the supply chain.

聯華電子已與亞洲區域合作夥伴合作制定產能部署計劃，旨在擴大營運規模、提高效率並佔領更多市場份額。這種合作模式將建立區域製造中心，建立規模經濟，提高生產力並服務當地市場，同時幫助聯華電子的全球客戶減輕供應鏈中的地理風險。

UMC's recent announcement with Fujitsu Semiconductor and our joint venture in Xiamen illustrates these collaborative efforts. Our foundry alliance with Fujitsu includes a 40 nanometer licensing agreement which will enable UMC to better serve the Japanese local market, including automotive, industrial, consumer electronics and other related sectors.

聯華電子最近宣布與富士通半導體以及我們在廈門的合資公司合作，說明了這些合作努力。我們與富士通的代工聯盟包括一項 40 奈米許可協議，這將使聯電能夠更好地服務日本本土市場，包括汽車、工業、消費電子和其他相關領域。

Recently, we also announced an investment venture with Xiamen Municipal People's Government and FuJian Electronics and Information Group to establish a 12 inch fab in China for 40 nanometer and 55 nanometer foundry services, subject to approval by Taiwan government authorities. Meanwhile, UMC's dedicated engineering team continues to work on 10 nanometer and 14 nanometer advanced technologies in our Taiwan headquarters to ensure the Company's next stage of growth.

最近，我們也宣布與廈門市人民政府和福建電子資訊集團投資合資，在中國建立 12 吋晶圓廠，提供 40 奈米和 55 奈米代工服務，尚待台灣政府當局批准。同時，聯華電子的專業工程團隊繼續在台灣總部致力於10奈米和14奈米先進技術的研究，以確保公司下一階段的發展。

Our differentiated approach via global expansion, combined with the leadership in advanced manufacturing technologies, will serve as the engine that drives UMC's growth to enhance corporate profitability and provide long-term returns for our shareholders.

我們透過全球擴張的差異化方法，結合先進製造技術的領先地位，將成為推動聯華電子成長的引擎，提高企業獲利能力，為股東提供長期回報。

Now, allow me some time to summarize the recent highlights in Chinese.

現在，請容許我用中文總結一下最近的亮點。

(Spoken in Mandarin).

（以國語發言）。

I've finished my remarks, and now let me go over the fourth-quarter 2014 guidance.

我的發言已經結束，現在讓我回顧 2014 年第四季的指導。

The foundry segment wafer shipments will show a decrease of approximately 3%. Foundry segment ASP in US dollars will increase by approximately 1%. UMC foundry segment gross profit margin will be in mid-20 percentage range. Capacity utilization rate for foundry segment will be approximately 90%.

代工領域晶圓出貨量將出現約3%的下降。以美元計算的代工業務平均售價將成長約 1%。聯華電子代工業務毛利率將在 20% 左右。代工板塊產能利用率約90%。

Expect to recognize approximately $50m from Fujitsu for 40 nanometer licensing fee. Guidance for new business segment's revenue will be approximately TWD2.5b, and the net loss attributable to UMC parent company to be approximately TWD400m.

預計將從富士通獲得約 5,000 萬美元的 40 奈米許可費。新業務部門營收指引約為新台幣2.5b，歸屬於聯華電子母公司的淨虧損約為新台幣4億。

That concludes my comments. We are now ready for questions. Operator, please open the lines up. Thanks.

我的評論到此結束。我們現在準備好提問了。接線員，請打開線路。謝謝。

(Operator Instructions). Randy Abrams, Credit Suisse.

（操作員說明）。蘭迪·艾布拉姆斯，瑞士信貸。

Okay. Thank you. Good afternoon. The first question, I wanted to ask about the China JV fab that you are entering, and it is a few parts to the question but I wanted to understand the -- how the economics would work, so whether you would share profit proportional to ownership or receive management fees. So that is the first part.

好的。謝謝。午安.第一個問題，我想問您正在進入的中國合資晶圓廠，這是問題的幾個部分，但我想了解 - 經濟如何運作，因此您是否會按照所有權比例分享利潤或收取管理費。這是第一部分。

And then, second part, if you could talk about timetable to ramp it up.

然後，第二部分，您是否可以談談加快進度的時間表。

And the final part is how you prioritize ramping that fab versus your Taiwan fab, and also the customers, between your Taiwan operations versus the customers you target for the China operations.

最後一部分是，您如何優先考慮擴大晶圓廠與您的台灣晶圓廠，以及您的台灣業務與您的中國業務目標客戶之間的客戶。

Randy, for the Xiamen JV, the plan is we are going to start with one-third of the ownership, and so we'll book profit and loss accordingly in the beginning. And our intention is to raise our holdings up to two-third of the JV sometime around 2019, 2020, and eventually we hope we can acquire 100% of the operation, subject to the Taiwan government's approval.

Randy，對於廈門合資企業，計劃是我們將從三分之一的所有權開始，所以我們一開始就會相應地記入損益。我們的目標是在2019 年、2020 年左右的某個時候將我們的持股比例提高到合資公司的三分之二，最終我們希望能夠獲得該合資公司100% 的營運權，但需要得到台灣政府的批准。

And the operation in Xiamen will start with 55 and 40 nanometer, aiming for domestic market in China, especially for the somewhat customized or local required spec products such as bank card or SIM card, etc., etc. So we hope it will be an enhancement and enlarge our addressable market by having a local production capability or capacity to attack or penetrate the Chinese kind of local requirement market.

而廈門的營運將從55奈米和40奈米開始，針對中國國內市場，特別是一些客製化或本地化要求的規格產品，例如銀行卡或SIM卡等。所以我們希望這將是一個透過擁有本地生產能力或攻擊或滲透中國本地需求市場的能力來增強和擴大我們的目標市場。

And as for the priority, that's really equally important from UMC point of view. However, from a technology point of view, the Xiamen one will start from late 2016, at the earliest, with 55 and 40 nanometer, and the Taiwan site will continue to focus on 28 nanometer with R&D focus on 14 and 10. So it is quite clear divided in terms of effort.

至於優先級，從聯華電子的角度來看，這確實同樣重要。但從技術角度來看，廈門廠最早要從2016年底開始，55奈米和40奈米，而台灣廠則繼續以28奈米為主，研發重點是14奈米和10奈米。就努力而言，劃分非常明確。

And from a financial point of view, the beauty of the JV is the financial requirement or the financial burden initially will be mostly carried by our partners in Xiamen. And UMC will gradually increase our holdings by a further injection of the capital starting from 2017, and hopefully that will balance our overall tech requirement as a group.

從財務角度來看，合資企業的優點在於財務要求或最初的財務負擔主要由我們在廈門的合作夥伴承擔。而聯華電子將從2017年開始進一步注資，逐步增持，希望這能平衡我們作為一個整體的整體技術需求。

Okay. And maybe one last follow up on that point. For the Taiwan government, in your initial discussions, does it look like any hold back on the approvals or how you expect the approval process to go through with Taiwan?

好的。也許是對這一點的最後一次跟進。對於台灣政府來說，在您最初的討論中，審批過程中是否有任何阻礙，或者您期望與台灣的審批程序如何進行？

I cannot speculate the Taiwan government's decision process. However, the whole JV, the design and structure wise, all follows Taiwan requirement legally.

我無法推測台灣政府的決策過程。然而，整個合資企業的設計和結構都合法地遵循台灣的要求。

Okay. Great.

好的。偉大的。

And the second question on -- recently, IBM was purchased by Global Foundries. Is there any impact on the FinFET? I think you had the agreement and already paid for a lot of the license on the 14 and wanted to extend it to 10, but if you could talk about how that -- if there will be any changes in the technology now.

第二個問題是──最近，IBM 被 Global Foundries 收購。對FinFET有影響嗎？我認為您已經達成協議，並且已經支付了 14 號許可證的大量費用，並希望將其擴展到 10 號，但是您是否可以談談如何做到這一點 - 現在技術是否會有任何變化。

Yes. There is no impact at all on UMC/IBM's 10 nanometer JDP program. And UMC's 14 FinFET technologies is quite on track, so our R&D in the next three to five years will still focus on 14 and 10 nanometer technology development.

是的。對UMC/IB​​M的10奈米JDP計畫完全沒有影響。而聯華電子的14 FinFET技術已步入正軌，因此我們未來三到五年的研發仍將集中在14和10奈米技術開發。

Okay. Great. And one final question. If I could ask on the CapEx, last conference you mentioned plans to do about 8,000 28 nanometer and 11,000 8 inch. Could you give an update on your plans and what it may imply for a rough range for CapEx for next year at this point?

好的。偉大的。最後一個問題。如果我可以問資本支出，您在上次會議上提到計劃生產約 8,000 個 28 奈米和 11,000 個 8 英寸。您能否介紹一下您的計劃的最新情況以及這對明年資本支出的大致範圍意味著什麼？

We are working on our 2015 budget right now. It largely depends on the market outlook and customer demand. We don't have the numbers for CapEx in 2015 yet. It will be available at the next earnings conference call.

我們現在正在製定 2015 年預算。這很大程度取決於市場前景和客戶需求。我們還沒有 2015 年資本支出的數據。它將在下一次收益電話會議上發布。

Okay. Are you roughly thinking about similar amounts of capacity for 28 and then also continuing to expand that Heijan for the China 8 inch fab?

好的。您是否粗略地考慮過類似的 28 吋產能，然後繼續為中國 8 吋晶圓廠擴大 Heijan？

Heijan is expanding to reach their full capacity, or even a little bit beyond their full capacity of 60,000 8 inch wafer per month. However, the CapEx amount needed is quite minimal compared to 12 inch.

Heijan 正在擴大產能，以達到其滿載生產能力，甚至略高於其每月 60,000 片 8 吋晶圓的滿載生產能力。然而，與 12 英吋相比，所需的資本支出相當少。

And 12A wise, for 28, yes, we still plan to increase to 20,500 12 inch wafers per month for 28 nanometer sometime by mid of 2015. And beyond that, as I mentioned, we will follow the customer demand and our overall addressable market. So, again, the number will be available next quarter.

就12A 而言，對於28 來說，是的，我們仍然計劃在2015 年中期的某個時候將28 奈米12 英寸晶圓增加到每月20,500 個。除此之外，正如我所提到的，我們將遵循客戶需求和我們的整體潛在市場。因此，該號碼將在下個季度再次提供。

Okay. Thank you.

好的。謝謝。

Thanks.

謝謝。

Bill Lu, Morgan Stanley

比爾‧盧，摩根士丹利

Yes. Hi. Good afternoon. Just first of all, on 28 nanometers, should I assume that you are sticking with the 5% target for revenues in the fourth quarter? I'm hoping you can also update us on what your outlook is beyond the fourth quarter, as far as revenue contributions, and at what point that node could hit the corporate average gross margin.

是的。你好。午安.首先，在 28 奈米技術上，我是否應該假設你們堅持第四季 5% 的營收目標？我希望您也能向我們介紹您對第四季度之後的展望、收入貢獻以及該節點在什麼時候可以達到公司平均毛利率的最新情況。

Okay. Our 28 nanometer revenue contribution in the fourth quarter will be more than double to the third quarter, and we expect there will be a sequential increase quarter over quarter on the 28 nanometer revenue.

好的。我們第四季28奈米的營收貢獻將是第三季的兩倍以上，我們預計28奈米營收將季增。

Sorry. So the doubling is -- the more than doubling is from 3Q to 4Q, the sequential increase is beyond the fourth quarter; do I read that right?

對不起。所以翻倍是－翻倍以上是從第三季到第四季，季增超過了第四季；我讀得對嗎？

Yes, correct.

是，對的。

Okay. Do you have a target for full year 2015?

好的。您有2015年全年的目標嗎？

Bill, it probably won't be that meaningful. We are probably talking about a 3% range for the whole year 2014. But, again (multiple speakers).

比爾，這可能沒那麼有意義。我們可能談論的是 2014 年全年的 3% 範圍。但是，再說一次（多位發言者）。

I meant 2015.

我說的是2015年。

2015, we don't have a target.

2015年，我們沒有目標。

Yes, we expect the 28 sales in 2015 will -- should be much higher compared to 2014.

是的，我們預計 2015 年 28 輛汽車的銷量將會比 2014 年高出許多。

Thank you. And how about in terms of gross margin?

謝謝。毛利率方面又如何呢？

It is not available for the moment.

暫時無法使用。

Okay.

好的。

Yes, we still maintain our previous statements on 28 nanometer margin improvement. So by the -- as Chitung just mentioned, by the second quarter 2015, our 28 nanometer margin will be close to 12 inch corporate average.

是的，我們仍然維持先前關於 28 奈米利潤率改善的說法。因此，正如 Chitung 剛才提到的，到 2015 年第二季度，我們的 28 奈米利潤率將接近 12 吋企業平均值。

Great. Thank you. Following Randy's question on the IBM alliance, I just want to make sure that I understood the answer. So you have worked on 14 with IBM. You are part of the alliance for 10 nanometers. So are you saying that when that changes ownership, Global Foundries cannot terminate that alliance, or how does that work exactly? Was there a certain timeframe?

偉大的。謝謝。在蘭迪提出有關 IBM 聯盟的問題之後，我只想確保我了解答案。您已經在 IBM 工作過 14。您是 10 奈米聯盟的一員。那麼您是說，當所有權發生變化時，Global Foundries 無法終止該聯盟，或者俱體是如何運作的？有一定的時間範圍嗎？

The IBM JDP program is operated independently, so you are not affected by the Global Foundries acquire IBM's microelectronics business.

IBM JDP計畫是獨立運作的，因此不會受到Global Foundries收購IBM微電子業務的影響。

I see. So, going forward, the technology development will still be done on the IBM side?

我懂了。那麼，今後技術開發還是會由IBM這邊來做嗎？

Still by IBM and JV.

仍然是 IBM 和合資公司。

Actually, the JDP expense will be completed by the end of this year, so the whole project in terms of JDP is completed by the end of this year.

實際上，JDP費用將在今年年底完成，因此整個JDP計畫將在今年年底完成。

Okay. Got it. Sorry. Lastly, just kind of a housekeeping question. I remember, last call, you talked about 55 nanometers as a potential growth driver in the future. When that starts ramping, are you going to classify that under 40 or under 65?

好的。知道了。對不起。最後，只是一個家政問題。我記得，上次通話時，您談到 55 奈米是未來潛在的成長動力。當這個數字開始增加時，你會把它歸類為 40 歲以下還是 65 歲以下嗎？

It will take a longer time to recover that 55 demand, and so we expect --

恢復 55 的需求需要更長的時間，因此我們預期—

55 will be in the category of 65, rather than 40 is different. So 55 and 65 will be in the same category.

55將屬於65的類別，而不是40是不同的。所以55和65將屬於同一類。

Okay. That makes sense. So I guess I'm a little bit confused, because you are doing conversion from 65 down to 40 and --

好的。這就說得通了。所以我想我有點困惑，因為你正在從 65 轉換到 40 並且 -

In Singapore, in Singapore.

在新加坡，在新加坡。

Yes. And 65 as a percentage of total dropped by 5% this quarter. Is that mostly temporary because of the conversion, or how should I think about that going forward?

是的。本季 65 所佔總數的百分比下降了 5%。這主要是因為轉換而暫時發生的，還是我該如何考慮未來的情況？

It is a conversion from our 65 to 40 is -- complies to our business engagement with customers. And we have enough capacity in Singapore site on the 65.

這是從 65 到 40 的轉換，符合我們與客戶的業務互動。我們在新加坡站點 65 上有足夠的容量。

Got it. And just one last question. The fab in Xiamen, I know it is for 40 and 55, but are those -- is the equipment going to be 28 capable?

知道了。還有最後一個問題。廈門的晶圓廠，我知道它適用於 40 和 55，但這些設備是否能夠支援 28？

Well, so far, Taiwan government still doesn't allow UMC to engage 28 yet.

那麼到現在為止,台灣政府還不允許聯電搞28.

Yes, I just wasn't sure if the definition is you can't make 28 nanometer chips or you can't have any tools that is capable of doing 28 or --

是的，我只是不確定定義是否是你無法製造 28 奈米晶片，或者你無法擁有任何能夠製造 28 奈米晶片的工具，或者——

You'll probably have to ask them.

你可能得問他們。

Okay. Thank you.

好的。謝謝。

We will keep our options open.

我們將保留我們的選擇餘地。

Got it.

知道了。

Daniel Heyler, Bank of America Merrill Lynch

丹尼爾海勒，美國銀行美林

Thanks for taking my questions, guys. Just a few quick ones. So on the 28 nanometer situation, coming back to that, I'm wondering to what extent are you anticipating some pricing action. TSMC talked about a cost down version of that node to obviously preempt competition from new players. Are you anticipating a pretty aggressive pricing environment response to your most recent ramp up?

謝謝你們回答我的問題，夥伴們。就幾個快速的。因此，在 28 奈米的情況下，回到這個問題，我想知道您在多大程度上預計會出現一些定價行動。台積電談到了該節點的成本降低版本，顯然是為了搶佔新玩家的競爭。您是否預計定價環境會對您最近的成長做出相當激進的反應？

Yes, I can only comment that our engagement with 28 nanometer customers. So our higher 28 nanometer yields is increasing wafer demand, has given us more confidence to expand our 28 nanometer capacity. And we believe that 28 nanometer is a strong node that will deliver the best cost to performance solution to our customers.

是的，我只能評論我們與 28 奈米客戶的合作。因此，我們更高的28奈米良率正在增加晶圓需求，讓我們更有信心擴大28奈米產能。我們相信 28 奈米是一個強大的節點，將為我們的客戶提供最佳性價比解決方案。

Okay. So, for the time being, you -- your customers, you think, are pretty sticky at this point? You have relatively good visibility into this ramp, I imagine. I guess what I'm getting at is to what extent do you think that there is a risk to this business and your ramp rate in hitting your mid-year target next year? If, in fact, your pricing were to fall, do you think you can hold onto this business because you're serving as a second source, or are there other factors that you think this is a pretty sticky business?

好的。那麼，目前您認為您的客戶在這一點上相當黏性？我想你對這個坡道的視野相對較好。我想我的意思是，您認為這項業務以及明年實現年中目標的爬坡率存在多大程度的風險？事實上，如果您的定價下降，您是否認為您可以保留這項業務，因為您是第二來源，或者是否有其他因素使您認為這是一項相當黏性的業務？

Yes, our near-term outlook on 28 nanometer business looks very solid. And as I mentioned, our -- still our yield improvements are gaining more traction. So the demand is pretty solid on 28 nanometer.

是的，我們對 28 奈米業務的近期前景看起來非常穩健。正如我所提到的，我們的產量改進正在獲得更多關注。所以28奈米的需求是相當強勁的。

Great. So, given that, I think since you've turned a corner here, I guess, in volumes, should we anticipate contribution to revenue to follow a pretty typical path? So, say, within four quarters this should be 20% of revenues? Is that a fair assumption at this point?

偉大的。因此，考慮到這一點，我認為既然你已經在這裡拐彎了，我想，在數量上，我們是否應該預期對收入的貢獻遵循一個非常典型的路徑？那麼，四個季度內這應該會達到收入的 20%？目前這是一個合理的假設嗎？

I think it's too early to give that kind of commitment. But our CEO just mentioned he does expect to see sequential growth starting from this quarter and next quarter. So I think that could be a target we are working to.

我認為現在做出這樣的承諾還為時過早。但我們的執行長剛剛提到，他確實預計從本季和下季開始將持續成長。所以我認為這可能是我們正在努力實現的目標。

Okay, but not out of the ordinary. Okay. And then I wanted, Chitung, to talk about some comments you made last time. You said that the 8 inch capacity was pretty constrained and you're fully loaded and you were unable to deliver upside. I'm wondering what you're seeing right now in terms of your 8 inch loading going into the fourth quarter. It sounds like the rest of the business is declining more than single digit since your 8 inch -- sorry, since your 28 nanometer seems to be doubling to, I imagine, over 6%, 7% of revenue. So what's happening in the non-28 nanometer and specifically 8 inch?

好吧，但並不異常。好的。然後，Chitung，我想談談您上次發表的一些評論。你說8吋的容量非常有限，你已經滿載了，你無法提供上升空間。我想知道您現在對進入第四季度的 8 英寸負載有何看法。聽起來自從您的 8 英寸以來，其餘業務的下降幅度超過個位數 - 抱歉，因為您的 28 納米似乎翻了一番，我想，佔收入的 6%、7% 以上。那麼非 28 奈米，特別是 8 英寸發生了什麼？

8 inch wise is still in a similar position, rather constrained. And that's why we push [foundry] in China over the limit, to have more capacity than their design capacity. So most of the weakness in quarter four probably coming from the mature 12 inch -- or, say, 90 or 0.11; even a little bit of 65.

8吋方面仍然處於類似的位置，相當受到限制。這就是為什麼我們推動中國的[代工廠]突破極限，使其產能超過其設計產能。因此，第四季度的大部分弱點可能來自成熟的 12 英寸——或者說，90 或 0.11；甚至65一點點。

Yes, I wanted to focus more and get a better understanding of this 65 and 90 situation, because that seems to be where there's going to be the most excess capacity, and how you can go about filling that capacity as -- particularly as you have customers going for the 28. But what's your strategy to keep that part of the operation full?

是的，我想更多地關注並更好地了解 65 和 90 的情況，因為這似乎是產能過剩最多的地方，以及如何填補該產能——特別是當你有客戶選擇28 號。但是，您的策略是什麼來維持這部分業務的滿員呢？

Yes, for the 12 inch mature node, we see there will be more and more application, frankly, from legacy nodes to a 2 inch, 65, 55 and 40 nanometers. So, yes, we do see a lot of application coming on these nodes, 55 and 40, regarding the connectivity and the smart card, SIM card in the China market and also the -- and high voltage drivers -- LCD drivers. So lots of applications, we are expecting they will migrate to these nodes. So we are looking for the second half of 2015 will have a better improved utilization on those nodes.

是的，對於12吋成熟節點，我們看到將會有越來越多的應用，坦白說，從傳統節點到2吋、65、55和40奈米。所以，是的，我們確實看到這些節點（55 和 40）上有很多應用，涉及連接和智慧卡、中國市場的 SIM 卡以及高壓驅動器 LCD 驅動器。如此多的應用程序，我們預計它們將遷移到這些節點。因此，我們預計 2015 年下半年這些節點的使用率將會有更好的提升。

Okay. Sounds like it's China driven. And then finally, a quick one on the housekeeping side, Chitung. This impairment charge, it was TWD792m last quarter, TWD580m in the September quarter. Can you give us some guidance or modeling reference for the next couple of quarters and how big this is going to continue?

好的。聽起來像是中國主導的。最後，是家政方面的一個快速的，Chitung。這項減損支出，上季為新台幣 7.92 億，9 月季為新台幣 5.8 億。您能給我們一些未來幾季的指導或建模參考嗎？這種情況會持續到什麼程度？

Hopefully, it will be done in the near future, and this is highly related to the economic cycle of our solar business. We are experiencing a slowdown due to the regulation change in the third quarter that triggered solar related as an impairment loss in the third quarter. But again, I cannot forecast that. This is really enforced by all the regular quarterly impairment tests we have to conduct every quarter.

希望在不久的將來能夠實現，這與我們太陽能業務的經濟週期密切相關。由於第三季的監管變化引發了與太陽能相關的減損損失，我們正在經歷放緩。但同樣，我無法預測這一點。這實際上是透過我們每個季度必須進行的所有定期季度減損測試來強制執行的。

So could you elaborate? This is specifically driven by pricing of your assets, or walk us through the calculation on the impairment charge?

那你能詳細說明一下嗎？這具體是由您的資產定價所驅動的，還是引導我們完成減損費用的計算？

It's coming from our solar subsidiary NexPower. The outlook or the cash flow forecast has been dampened due to the change in the overall macro environment of solar market, and largely due to the regulation change.

它來自我們的太陽能子公司 NexPower。由於太陽能市場整體宏觀環境的變化，尤其是監管變化，前景或現金流預測受到抑制。

Regulation change meaning, what, tariffs or what?

法規變化意味著什麼，關稅還是什麼？

Meaning anti-dumping imposed by US market, and the dumping tax.

意思是美國市場徵收的反傾銷，以及傾銷稅。

So this isn't really impairment; this is loss -- a net loss in the business?

所以這並不是真正的損傷；而是損傷。這是損失──企業的淨損失？

Yes, but that will trigger the whole five years cash flow rolling forecast to have a parallel shift.

是的，但這將引發整個五年現金流量滾動預測發生平行移動。

Okay. I'll ask the questions offline. Thanks.

好的。我會離線提問。謝謝。

Andrew Lu, Barclays Capital.

安德魯·盧，巴克萊資本。

Thank you, Yen [Zhong] and Chitung. A couple of questions from my side. I think, on Q4, the guidance on 28 pretty much probably sticks to 7%, that kind of number. Do you have a breakdown on High-K/Metal Gate or poly-SiON?

謝謝顏[鐘]和吉東。我這邊有幾個問題。我認為，在第四季度，28 的指導很可能會堅持 7%，這樣的數字。您對高 K/金屬柵或多晶矽有詳細了解嗎？

Yes, we do. The High-K/Metal Gate ratio will greater than 50% of the 28 totals.

是的，我們願意。 High-K/Metal Gate 比率將大於 28 個總數的 50%。

Is High-K a higher margin compared to poly-SiON?

與多晶矽相比，高 K 的利潤是否更高？

Yes.

是的。

Thank you. The second question, on the Q4 guidance, 3% down on the shipment -- wafer shipment, can you elaborate which application products are weaker than average, which ones are stronger than average?

謝謝。第二個問題，在Q4指導上，出貨量－晶圓出貨量下降了3%，您能具體說明哪些應用產品弱於平均水平，哪些強於平均水平嗎？

Yes. For the consumer is the weakest one, quarter over quarter, especially on CMOS image sensor and GPS. And communication is about almost flat and computer is almost flat.

是的。對於消費者來說，季度環比是最弱的，特別是在 CMOS 影像感測器和 GPS 方面。通訊幾乎是平坦的，電腦也幾乎是平坦的。

Computer flat. So CMOS image sensor is the one fall the most. Okay. Can you talk about the 14 nanometer FinFET? Based on our check, UMC is looking for a two-tier version. One is TSMC-like; one is IBM-like. So have you decided which one you go direct, like a [politician] 90 or 78 nanometer?

電腦平。所以CMOS影像感測器是跌幅最大的一個。好的。您能談談 14 奈米 FinFET 嗎？根據我們的檢查，UMC 正在尋找兩層版本。一種是類似台積電的；一種是類似IBM的。那麼，您是否已決定直接使用哪一種，例如 [政治家] 90 奈米或 78 奈米？

Yes. Our 14 FinFET, we combine the pressuring process with layer again, integrated with IBM's 10 nanometer fundamental learnings attained from JDP. And yes, our -- the process and schedule is on track, yes. We are ready for -- we plan to be available for customers' take off in the first half of 2015.

是的。我們的14 FinFET，我們再次將壓合製程與Layer結合起來，結合了IBM從JDP獲得的10奈米基礎知識。是的，我們的流程和時間表都步入正軌，是的。我們已做好準備－我們計劃在 2015 年上半年為客戶提供起飛服務。

Thank you. In terms of guidance for Q4, we can see the mid-20% margins are much better than 21% margin in Q3, and apart from the losses reduction from solar business which you guided (that's about TWD900m. So Fujitsu license I think also contributes some. I just wonder whether this Fujitsu license (inaudible) will continue into Q1 next year or next year.

謝謝。就第四季度的指導而言，我們可以看到20% 中期的利潤率遠好於第三季度21% 的利潤率，而且除了您指導的太陽能業務的損失減少（大約9 億新台幣）之外。所以我認為富士通許可也有貢獻我只是想知道富士通的許可（聽不清楚）是否會持續到明年第一季或明年。

Andrew, I need to make a clarification on that. For foundry operation in Q3, the gross margin was 24%. For foundry operation in Q4, we guided mid-20% gross margin. Excluding --

安德魯，我需要對此做出澄清。第三季代工業務的毛利率為24%。對於第四季的代工業務，我們指導毛利率在 20% 左右。不包括——

Oh, that's for foundry?

哦，那是鑄造廠的嗎？

Yes, excluding the Fujitsu license fee. So Fujitsu license fee is excluded from the mid-20 gross margin guidance.

是的，不包括富士通許可費。因此，富士通許可費不包括在 20 年中期毛利率指引中。

Oh, that would be --

哦，那就是——

That would be only in Q4 of 2014; nothing in Q1.

這只是 2014 年第四季的情況； Q1 中什麼都沒有。

Thank you. Thank you. Yen-Zhong earlier mentioned migration to 12 inch, 90, 65, 55, 40 from legacy. Are you referring legacy from 8 inch or like a 0.11 to a 90? Are you referring the customers are migrating to 65, 55, 40 from 8 inch, or you are talking about legacy part of the 12 inch?

謝謝。謝謝。 Yen-Zhong 先前提到從舊版遷移到 12 吋、90、65、55、40。您指的是從 8 吋或 0.11 到 90 吋的舊款嗎？您是指客戶正在從 8 英寸遷移到 65、55、40，還是您正在談論 12 英寸的遺留部分？

It's partly coming from the migrations from 130 or 111 nanometer, and mainly it's actually we have some new business engagements.

部分原因是來自 130 或 111 奈米的遷移，主要是我們實際上有一些新的業務活動。

Yes. So do you see this possibility for 8 inch legacy to migrate to 12 inch on foreseeable future? Is there any technology difficulty to do that, or cost advantage or cost disadvantage of not -- is now going to the 12 inch?

是的。那麼您認為在可預見的未來，8 吋傳統設備有可能遷移到 12 吋嗎？做到這一點是否有任何技術難度，或者成本優勢或成本劣勢——現在要轉向 12 英寸嗎？

From my perspective, there are only a small portion of those products looking for better performance or higher demand. So there's some migration from those products.

在我看來，這些產品中只有一小部分尋求更好的性能或更高的需求。所以這些產品有一些遷移。

So big volume one and want performance, they want to go to 12 inch. If it's small quantity, small volume and they don't care the performance, they will stay at 8 inch. Is that correct?

體積這麼大，又想要性能，他們想要 12 英吋。如果數量少，體積小，不關心性能的話，就會停留在8吋。那是對的嗎？

Yes.

是的。

Thank you.

謝謝。

You're welcome.

不客氣。

Roland Shu, Citigroup.

羅蘭舒，花旗集團。

Good afternoon. First question is for the CapEx spending this year is TWD1.3b. However, the overall capacity grows only about 2% to 3%. I know this year you're doing a lot of the conversion. So can you give us some color, how many capacity of the wafers you have been doing for this conversion and how many new capacity you buy or you're putting in this year? Thank you.

午安.第一個問題是今年的資本支出是 TWD1.3b。然而，整體產能僅成長約2%至3%。我知道今年你們做了很多轉變。那麼您能否給我們一些訊息，您為這次轉換生產了多少晶圓產能，以及您今年購買或投入了多少新產能？謝謝。

Yes. I think that the conversion only take a very small portion. Most of our CapEx is actually increase our capacity.

是的。我認為轉換只佔很小的一部分。我們的大部分資本支出實際上是為了增加我們的產能。

Yes, but do you retire some old or legacy capacity? Because if I look at the overall capacity, it only grow about 2% to 3%. And with this and your TWD1.3b CapEx spend, I think this actually -- the capacity growth looks just -- looks too small.

是的，但是您會淘汰一些舊的或遺留的容量嗎？因為如果我看一下整體產能，它只成長了大約2%到3%。考慮到這一點以及您的 TWD1.3b 資本支出，我認為這實際上 - 容量增長看起來 - 看起來太小了。

Our number capacity we increased 4% year over year.

我們的號碼容量年增了 4%。

Yes, 4%, and with this TWD1.3b CapEx spending?

是的，4%，那麼 TWD1.3b 的資本支出支出呢？

Yes. And 12 inch, we actually increased 6% from 2013 and 2% on 8 inch.

是的。而 12 英寸，我們實際上比 2013 年增長了 6%，8 英寸增長了 2%。

Okay. Thank you. Okay. Second question, for the 28 nanometer gross margin. Correct me if I'm wrong. You said in second half next year, 28 nanometer gross margin is able to bring up to 12 inch corporate average, right?

好的。謝謝。好的。第二個問題，對於28奈米的毛利率。如我錯了請糾正我。您說明年下半年28奈米毛利率能夠達到12吋企業平均是吧？

Yes.

是的。

And so the question is, is your 12 inch gross margin higher or lower than the corporate average?

那麼問題來了，你們的12吋毛利率是高於還是低於企業平均？

It's a few percentage points lower than corporate average.

這比企業平均低幾個百分點。

Okay, so 28 nanometer gross margin in second half next year will be still a few percentages lower than corporate average, right?

好吧，那麼明年下半年28納米的毛利率仍然會比企業平均低幾個百分點，對嗎？

Yes.

是的。

Okay. Thank you very much. Thank you.

好的。非常感謝。謝謝。

Steven Pelayo, HSBC.

史蒂文‧佩拉約，匯豐銀行。

Thank you. I know you don't have a specific number for next year's capital spending, but you do have some targets here. You want to add about 8K of 28 nanometer; you want to add 11K of 200 millimeter. You have some investments, I guess, in China and Fujitsu to make as well. I guess I'm just trying to figure out what's a baseline number to work with?

謝謝。我知道你們沒有明年資本支出的具體數字，但你們確實有一些目標。你要加28奈米8K左右；您想要添加 200 毫米的 11K。我想，你們還需要在中國和富士通進行一些投資。我想我只是想弄清楚要使用的基線數字是多少？

One would think that just adding an extra 8K, and maybe it's a little bit more, 28 nanometer, we may get to that TWD1b alone there. So can you just help us walk through like how much would it cost just to add the 8K, the 11K, whatever small portion you're starting with in China and then this (inaudible) portion?

人們可能會認為，只要增加一個額外的 8K，也許再多一點，28 奈米，我們就可以單獨達到 TWD1b。那麼您能否幫我們介紹一下，只添加 8K、11K 以及您在中國開始的任何一小部分，然後再添加這個（聽不清楚）部分需要花費多少錢？

Again, China is a JV so we will put in paid-in capital instead of CapEx. CapEx will be paid by that particular JV. And for the baseline numbers, it's always a good reference to use our free cash flow, roughly $1.5b, $1.6b per annum.

同樣，中國是一家合資企業，因此我們將投入實收資本而不是資本支出。資本支出將由該特定合資企業支付。對於基準數字，使用我們的自由現金流始終是一個很好的參考，每年約 1.5 億美元、1.6 億美元。

Okay. All right. That matches what I was thinking. Let's see, what was the last thing I wanted to ask you? Oh, you had talked before, I don't know if it was last quarter or it was the quarter before, about wanting to ramp 28 nanometer to a certain scale level, as being required to get to this corporate average margin. So if by mid-next year you're at this over 20,000 wafers, is that the kind of scale that you can do, mid-20s and above type gross margins at 28 nanometer? Or do you need it to be even bigger? Do you need to exit the year at 30K of capacity?

好的。好的。這符合我的想法。讓我們想想，我最後想問你的是什麼？哦，您之前曾說過，我不知道是上個季度還是前一個季度，關於想要將 28 奈米提升到一定規模水平，這是達到公司平均利潤率所必需的。那麼，如果到明年年中，您的晶圓數量將超過 20,000 片，那麼您能做到這樣的規模嗎？28 奈米技術的毛利率達到 20 年代中期及以上？或者您需要它更大嗎？您是否需要以 30K 的產能結束這一年？

Well, the more the merrier, of course. But the 20K is a minimum magic number in terms of economy of scale. But again, that will help us to definitely hit the 12 inch average gross margins. But how to improve the overall 12 inch gross margins compared to the corporate average, that's another level of enhancement.

嗯，當然是越多越好。但就規模經濟而言，20K 是一個最低的神奇數字。但同樣，這將幫助我們肯定達到 12 英寸的平均毛利率。但與企業平均相比，如何提高12吋整體毛利率，那就是另一個層面的提升了。

All right. And my last question is just on that free cash flow. I think it's been negative for a couple of quarters here. I assume with the big CapEx that's still left to pay for this year, it's going to be negative again in the fourth quarter. Yet you talked about next year's CapEx target being related to that free cash flow ability. So can you --?

好的。我的最後一個問題是關於自由現金流。我認為這幾個季度以來一直是負面的。我認為今年仍有大量資本支出需要支付，第四季將再次出現負值。然而，您談到明年的資本支出目標與自由現金流能力有關。那你可以——嗎？

Yes. (Multiple speakers) from operation, so cash inflow from operation.

是的。 （多個發言者）來自運營，因此來自運營的現金流入。

Okay, but what about -- I'm curious when you think about --

好吧，但是——我很好奇，當你想到——

(Multiple speakers).

（多個發言者）。

On a free cash flow basis for next year, do you think you're going to be negative free cash flow again?

以明年的自由現金流為基礎，您認為自由現金流會再次出現負值嗎？

I cannot forecast on that, but if I need to rephrase, that will be our cash inflow from operation as the benchmark.

我無法對此進行預測，但如果我需要重新表述的話，那就是以我們的經營現金流入為基準。

Understood. Okay. Thank you.

明白了。好的。謝謝。

Thanks.

謝謝。

Lingling Hu, Goldman Sachs.

胡玲玲，高盛。

Hi. This is Donald on Lingling's line here. My first question is just to clarify Andrew's question. In Q4, your gross margin guidance for foundry business is mid-20%, and then I think Mr. Yen commented. Does that include the $50m from Fujitsu, or not?

你好。我是玲玲電話裡的唐納德。我的第一個問題只是為了澄清安德魯的問題。第四季度，你們對代工業務的毛利率指引是20%左右，然後我想顏先生發表了評論。這是否包括富士通的 5000 萬美元？

Not. It doesn't include.

不是。它不包括。

Doesn't include. So basically your gross profit margin is somewhat flat in Q3 and Q4?

不包括。那麼基本上你們的毛利率在第三季和第四季有些持平？

That's correct.

這是正確的。

Okay. Good. And the second question is also to clarify. You said the 28 nanometer gross profit margin when you have 20K capacity could potentially reach the corporate average. Is that the 12 inch corporate average or the overall foundry corporate average?

好的。好的。第二個問題也需要澄清。您說當您擁有20K產能時，28奈米的毛利率可能會達到企業平均值。這是 12 吋企業平均還是整體代工企業平均？

12 inch corporate average. 12 inch corporate average.

12 吋企業平均。 12 吋企業平均。

12 inch.

12吋。

Yes.

是的。

Okay. Great. Another question is for your -- first, congratulations for the 28 nanometer High-K/Metal Gate ramp. It's not an easy thing. How many customers are right now doing this process with you in Q4, in terms of volume production?

好的。偉大的。另一個問題是要問您的—首先，恭喜 28 奈米高 K/金屬閘極斜坡。這不是一件容易的事。在大量生產方面，目前有多少客戶在第四季度與您一起進行此流程？

We have -- right now, we have more than 20 customers engaged on UMC's 28 nanometer technology and we have more than 50 charter take-offs, and five of the charters are in production now.

目前，我們有 20 多家客戶採用 UMC 的 28 奈米技術，我們有 50 多個包機起飛，其中 5 個包機現已投入生產。

This is for High-K/Metal Gate or for the entire 28?

這是針對 High-K/Metal Gate 還是針對整個 28？

They are both together, poly-SiON and High-K/Metal Gate.

它們都在一起，即多晶矽和高 K/金屬閘極。

I see. And for High-K/Metal Gate, are you expecting more than one customer, let's say, in the next quarter or two?

我懂了。對於 High-K/Metal Gate，您是否預計在接下來的一兩個季度內會有多個客戶？

Certainly, yes.

當然，是的。

Okay. Great. Another question is more for the JV in Xiamen. You said over the long term you want 60% of that $6b -- potentially $6b JV. And where would be the cash coming from? Are you going to raise money through that offering or issuing new shares?

好的。偉大的。另一個問題更多的是關於廈門的合資企業。您說過，從長遠來看，您想要 60 億美元的合資企業中的 60%——可能是 60 億美元。現金從哪裡來？您打算透過發行或發行新股來籌集資金嗎？

That's a very long-term plan. As I mentioned earlier, we will start from one-third of the ownership with minimum contribution for paid-in capital. And eventually, we will grow up to two-thirds of the holdings and ultimately we hope to hold 100%. And once we reach cash flow breakeven, hopefully it will be able to generate enough cash to fund the whole investment. So it won't cost whole $6b for the whole project. A large portion of the investment amount will be self-financed by that particular project.

這是一個非常長期的計劃。正如我之前提到的，我們將從三分之一的所有權開始，以最低的實收資本出資。最終，我們的持股比例將增加至三分之二，最終我們希望持股100%。一旦我們達到現金流收支平衡，希望它能產生足夠的現金來為整個投資提供資金。所以整個專案不會花費 6b 美元。很大一部分投資金額將由該特定項目自籌資金。

Okay. And then the local governments will -- you will buy out the stake of local governments?

好的。然後地方政府會──你會買斷地方政府的股份嗎？

Yes.

是的。

Okay. Great. My final question is on your -- last quarter, you announced a 55 nanometer embedded flash process. I think that's good for smart card, etc. Have you got any customers tape out or doing really any new real product with that process?

好的。偉大的。我的最後一個問題是關於上個季度，你們宣布了 55 奈米嵌入式快閃記憶體製程。我認為這對智慧卡等有好處。您是否有任何客戶使用該流程流片或製作任何新的實際產品？

Yes, we do. We have, yes.

是的，我們願意。我們有，是的。

You have. Okay. Is this a Chinese customer?

你有。好的。這是中國顧客嗎？

Yes.

是的。

Okay. Great. Thank you.

好的。偉大的。謝謝。

Szeho Ng, BNP.

吳思豪，BNP。

Hi. Good evening, gentlemen. I just want to ask how you are going to account for the Fujitsu JV investment. Is it on cost accounting?

你好。晚上好，先生們。我只是想問一下你們將如何核算富士通合資公司的投資。是按成本計算嗎？

No, because we will have the control in the Board, so it will be 100% consolidated into our books.

不會，因為我們將在董事會中擁有控制權，所以它將 100% 合併到我們的帳簿中。

Okay. All right. Then, is it possible to give us some color on how to model the revenue and also the contribution -- earning contribution, etc.?

好的。好的。那麼，是否可以給我們一些關於如何對收入和貢獻（收入貢獻等）進行建模的資訊？

The initial start production won't start until the end of 2016.

最初的生產要到 2016 年底才會開始。

Okay. All right. So near term should be no impact at all, apart from those [allotments] that you're going to incur?

好的。好的。那麼，除了您將要承擔的那些[撥款]之外，短期內應該不會產生任何影響？

Yes.

是的。

Okay. All right. And then secondly, for the solar business, after the impairment charge in Q3, should we expect the cost structure to be a lot more competitive? And if that's the case, what will be the breakeven revenue for that operation?

好的。好的。其次，對於太陽能業務來說，在第三季提列減損之後，我們是否應該預期成本結構更具競爭力？如果是這樣的話，該業務的損益平衡收入是多少？

Unfortunately not. So the impairment won't help the cost structure too much, or it won't have big impact on the P&L. Instead, still the outlook of the demand and supply for the solar market will have a bigger weighting in terms of the new business performance.

不幸的是沒有。因此，減損不會對成本結構有太大幫助，或不會對損益造成太大影響。相反，太陽能市場的供需前景仍將對新業務業績產生更大的影響。

All right. Okay. Last question, is it possible to share with us the operating margin for the foundry business, and also for the -- yes, back in Q3?

好的。好的。最後一個問題，是否可以與我們分享代工業務的營業利潤率，以及──是的，第三季的營業利潤率？

Q3 was 24%.

第三季為 24%。

That's gross margin.

這就是毛利率。

Oh, that's the gross margin, yes. However, we did never really disclose the numbers, but you can do a rough estimate.

哦，這就是毛利率，是的。不過，我們從未真正透露過具體數字，但你可以做一個粗略的估計。

Okay. All right. Okay, will do. Okay. Thanks.

好的。好的。好的，會做的。好的。謝謝。

Thanks.

謝謝。

Eric Chen, UBS.

埃里克·陳，瑞銀。

Hello and good afternoon. And probably two quick questions, and the first on the 28 nanometer process. And we talked about that we may have the 20,000 wafer capacity. And, Chitung, could you give us the breakdown in terms of the High-K/Metal Gate and the poly-SiON percentage? And we know right now over 50% go for High-K/Metal Gate. So once we have 20,000 wafer and for the 28 nanometer the capacity, percentage in between High-K/Metal Gate and the poly-SiON, and what will it be? Thank you.

你好，下午好。可能還有兩個簡單的問題，第一個是關於 28 奈米製程的。我們談到我們可能有20,000片晶圓產能。 Chitung，您能給我們詳細介紹一下高 K/金屬閘極和多晶矽百分比嗎？我們知道現在超過 50% 的人選擇 High-K/Metal Gate。那麼，一旦我們擁有 20,000 片晶圓，對於 28 奈米來說，高 K/金屬柵和多晶矽之間的產能百分比是多少？謝謝。

We actually can give you the more detailed numbers. For our 28 nanometer capacity in the 2Q 2015 is -- the High-K/Metal gate version will take 12,500 and the 8,000 is for poly-SiON.

我們實際上可以給您更詳細的數字。對於我們 2015 年第二季的 28 奈米產能來說，高 K/金屬閘極版本將需要 12,500 個，而 8,000 個用於多晶矽。

Okay. Thank you. And the other one is regarding to the JV. So Chitung just mentioned we -- eventually, for this JV and the total investment probably the $6b are wrong, and what kind of capacity we're talking about investing?

好的。謝謝。另一個是關於合資企業的。所以 Chitung 剛才提到我們——最終，對於這個合資企業和總投資來說，60 億美元可能是錯的，我們正在談論投資什麼樣的產能？

50,000 design capacity.

設計產能5萬輛。

50,000 design capacity. And based on 50,000, the wafer capacity, that probably won't cost so much money, right? Less than a 10,000 wafer probably costs. Like $120m, $130m, right?

設計產能5萬輛。而以5萬片晶圓產能來看，大概不會花那麼多錢吧？一塊晶圓的成本可能低於 10,000 個。例如 1.2 億美元、1.3 億美元，對吧？

Well, this is a 10 years or plus plan, and based upon future potential upgrade, etc., we come out with this number. But it has no obligation whatsoever we have to invest this amount of number if we can generate good returns. So this is a good number to follow, but right now I would say there is still some variables in there.

嗯，這是一個10年或更長時間的計劃，基於未來潛在的升級等，我們得出了這個數字。但如果我們能產生良好的回報，它就沒有義務讓我們必須投資這麼多。所以這是一個值得遵循的數字，但現在我想說其中仍然存在一些變數。

Okay. Thank you. And one very quick clarify. And you talk about the ownership initially one-third. I assume that was probably for the coming two years, and two-third in year 2019 to year 2020. So it's different from what we saw in the newspaper, the 60%, the ownership you are going to have in the midterm, right?

好的。謝謝。還有一個非常快速的澄清。你談到最初的所有權是三分之一。我認為這可能是未來兩年的事，三分之二是 2019 年到 2020 年的事。所以這與我們在報紙上看到的不同，60%，即中期你將擁有的所有權，對嗎？

It should be the same, but I think my version is more accurate.

應該是一樣的，但我認為我的版本更準確。

Okay. Thank you.

好的。謝謝。

Rick Hsu, Daiwa.

瑞克·許，大和。

Yes. Hi. Good evening, Chitung and Yen-Zhong. My first question is about your depreciation for next year. Can you give us some color?

是的。你好。晚上好，Chitung 和 Yen-Zhong。我的第一個問題是關於明年的折舊。你能給我們一些顏色嗎？

Depreciation this quarter will be about 5% or less, about -- I mean 5% more compared to the previous quarter. And for the whole year, it's also about 5% more than the previous year.

本季的折舊率將約為 5% 或更少，我的意思是與上一季相比增加 5%。而全年來看，也比前一年增加了5%左右。

Okay. What about next year? Do you have any idea, roughly?

好的。明年呢？你大概有什麼想法嗎？

Yes, next year is not available yet.

是的，明年還沒有。

Okay. The second question is about your dividend policy. Do you have any plan to pay how much cash dividend for next year?

好的。第二個問題是關於您的股利政策。明年有計劃派發多少現金股利嗎？

I think we have an intention to maintain our consistent dividend payout.

我認為我們有意維持穩定的股息支付。

Consistent dividend payout, is that right?

持續派發股息，對嗎？

Yes, compared to the last few years.

是的，與過去幾年相比。

Okay. All right. Thank you so much. My last question is, if we talk about your 28 nanometer revenue contribution, at what level your 28 nanometer will reach your corporate average margin? You talk about 20K wafers per month before, when you reach your corporate average. But when I -- if I translate that into revenue contribution, would that be 15% or 20%?

好的。好的。太感謝了。我的最後一個問題是，如果我們談論你們的28奈米收入貢獻，你們的28奈米將在什麼水準上達到你們公司的平均利潤率？當您達到公司平均水平時，您之前談到每月 20K 晶圓。但是，如果我將其轉化為收入貢獻，會是 15% 還是 20%？

Well, again, depends on the overall revenue for UMC. So it's not only the parameters of 28 nanometer alone. Overall revenue supply need to be taken into consideration as well. So we don't really have a breakdown for now.

好吧，這又取決於聯華電子的整體收入。所以不只是28奈米的參數。還需要考慮整體收入供應。所以我們現在還沒有真正的細分。

Okay. I can fairly assume that -- because you're talking about your 28 to reach corporate average by some time mid-2015, so I can assume by mid-2015 your wafer shipment per month will be roughly 20K for 28 nanometer, right?

好的。我可以合理地假設——因為您正在談論到2015 年中期某個時候您的28 顆晶圓將達到公司平均水平，所以我可以假設到2015 年中期您的28 奈米晶圓出貨量每月將約20K，對吧？

Corporate average in 12 inch operation by mid of 2015.

截至 2015 年中期，企業平均採用 12 吋設備。

All right. Got you. Thank you so much.

好的。明白你了。太感謝了。

Andrew Lu, Barclays Capital.

安德魯·盧，巴克萊資本。

Yes. Thank you again. A follow-up question, very quick. First one is, regarding the Fujitsu $50m royalty, are we going to put in the revenue line or non-operating side?

是的。再次感謝你。後續問題，很快。第一個是，關於富士通的 5000 萬美元特許權使用費，我們是要計入收入線還是非經營性部分？

It will be from -- starting from top line, all the way down. So both top line and gross margin will be roughly $50m. On the operating expense level, there will be some portion goes to provision of earnings, employee bonus.

它將從——從頂線開始，一直向下。因此，營收和毛利率都約為 5,000 萬美元。在營業費用水準上，會有一部分用於撥備收入、員工獎金。

Sorry. I don't understand.

對不起。我不明白。

Okay. Basically (multiple speakers).

好的。基本上（多個發言者）。

Do we mean the $50m will be --?

我們的意思是 5000 萬美元將是——？

(Multiple speakers) as revenue, as well as operating income, except some of that will be budgeted -- some percentage of the $50m will be budgeted as an incremental employee bonus.

（多位發言者）作為收入，以及營業收入，除了其中一些將被列入預算之外——5000 萬美元的一部分將被列入預算作為增量員工獎金。

Understood. Understood. And second question is, please remind me, for Q4 this year, the 28 nanometer will be how much capacity? Is it 12K?

明白了。明白了。第二個問題是，請提醒我，今年第四季，28奈米的產能是多少？是12K嗎？

Yes, it's 12K.

是的，是12K。

It's 12K?

是12K嗎？

Yes.

是的。

No change. Thank you.

不用找了。謝謝。

No change. Thank you.

不用找了。謝謝。

Thank you for all your questions. That concludes today's Q&A session. I will turn things over to UMC Head of Investor Relations for closing remarks.

感謝您提出的所有問題。今天的問答環節到此結束。我將把事情交給聯華電子投資人關係主管做總結發言。

Thank you, everyone, for joining us 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. Bye-bye.

謝謝大家今天加入我們。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。再見。

Thank you, ladies and gentlemen. That concludes our conference for third quarter 2014. 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 investor relations, investor events section. You may now disconnect. Goodbye.

謝謝你們，女士們、先生們。 2014 年第三季的會議到此結束。感謝您參加 UMC 的會議。一小時內將進行網路廣播重播。請造訪 www.umc.com，投資者關係、投資者活動部分。您現在可以斷開連線。再見。