聯華電子 (UMC) 2016 Q2 法說會逐字稿

Welcome, everyone, to UMC's 2016 second-quarter earnings conference call. (Operator Instructions).

歡迎大家參加聯華電子 2016 年第二季財報電話會議。 （操作員說明）。

For your information, this conference call is now being broadcast live over the Internet. Webcast replay will be available within an hour after the conference is finished. And please visit our website, www.umc.com under the investor relations investors' events section.

供您參考，本次電話會議現透過網路進行現場直播。會議結束後一小時內將提供網路直播重播。請造訪我們的網站 www.umc.com 的投資者關係投資者活動部分。

And now, I would like to introduce Mr. Bowen Huang, Head of Investor Relations at UMC. Mr. Huang, you may begin.

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 second quarter of 2016. I am joined by Mr. Po Wen Yen, the CEO of UMC; and Mr. Chitung Liu, the CFO of UMC. In a moment, we will hear our CFO present the second-quarter financial results, followed by our CEO's key message to address UMC's focus and the third-quarter guidance.

謝謝大家，歡迎參加聯華電子 2016 年第二季電話會議。我有聯華電子執行長鮑文彥先生參加；以及聯華電子財務長劉啟東先生。稍後，我們將聽到我們的財務長介紹第二季的財務業績，然後是我們的執行長關於解決聯電重點和第三季指引的關鍵訊息。

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

一旦我們的執行長和財務長完成發言，就會有問答環節。聯華電子的季度財務報告可在我們的網站 www.umc.com 的投資者財務部分查閱。

During this conference, we may make forward-looking statements based on management's current expectation 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 UMC's second-quarter 2016 business results.

現在我想介紹聯華電子的財務長劉啟東先生，來討論聯華電子2016年第二季的表現。

Thank you, Bowen. I would like to go through the 2Q 2016 investor conference presentation material which can be downloaded from our website.

謝謝你，鮑文。我想瀏覽一下 2016 年第二季度投資者會議演示材料，該材料可以從我們的網站下載。

Starting on page 3, the second quarter of 2016, consolidated revenue was nearly TWD37 billion, with gross margins at 22.4%. Net income attributable to the stockholders of the parent was TWD2.58 billion, and the earnings ordinary shares were TWD0.21.

從2016年第二季第3頁開始，合併營收近370億新台幣，毛利率為22.4%。歸屬母公司股東淨利為新台幣25.8億元，普通股獲利為新台幣0.21元。

On page 4, our revenue quarter over quarter shows 7.5% increase to nearly TWD37 billion. Gross margin was 22.4% or TWD8.2 billion. Operating expenses because of our starting costs in our 12X or Xiamen fab has increased about 15.7% quarter over quarter to TWD5.8 billion in the second quarter. So the operating income or percentage is 6.6%, or TWD2.44 billion. EPS is TWD0.21 per share.

在第 4 頁上，我們的營收季增 7.5%，達到近 370 億新台幣。毛利率為 22.4%，即 82 億新台幣。由於我們 12X 或廈門晶圓廠的起始成本，第二季的營運費用較上季成長約 15.7%，達到 58 億新台幣。因此營業收入或百分比為 6.6%，即新台幣 24.4 億元。 EPS為每股TWD0.21。

For the first six months of the year, revenue showed 5.6% decline to TWD71.4 billion, partially due to lower utilization rate and partially due to the less consolidating entities compared to the same period of last year.

今年前六個月，營收下降 5.6% 至 714 億新台幣，部分原因是利用率較低，部分原因是與去年同期相比，合併實體較少。

And gross margin dropped to 18.7%, or TWD13.3 billion, mainly due to lower utilization rate. And operating income is 3.4% or TWD2.4 billion in the first six months of 2016. EPS for the whole six months is TWD0.23 per share. Cash around TWD50 billion, and stockholder equity is TWD219.5 billion.

毛利率下降至18.7%，即133億元新台幣，主要是因為利用率下降。 2016 年前六個月營業收入為 3.4%，即新台幣 24 億元。整個六個月 EPS 為每股新台幣 0.23 元。現金約500億新台幣，股東權益約2,195億新台幣。

In terms of operating segment breakdown, most of the profit of TWD1,579 million was generated by our wafer fabrication or foundry business, which was around TWD1,641 million. Our new business, when the revenue had come down to a minimum scale, still accounts for about TWD278 million loss in the second quarter of 2016.

從經營分部來看，15.79 億元新台幣的利潤大部分來自晶圓製造或代工業務，約新台幣 16.41 億元。我們的新業務在營收降到最低規模的情況下，2016年第二季仍虧損約2.78億元新台幣。

ASP mainly due to the ramp of 28 nanometers show a meaningful growth in the second quarter of 2016. In terms of revenue breakdown, we see some weakness in our Japanese clientele which dropped the Japanese business to around 2%. And US and Asia stay relatively similar to the breakdown in the first quarter of 2016. IDM, due to similar reasons, came down to about 7% in second quarter.

平均售價主要是由於 28 奈米的成長在 2016 年第二季顯示出顯著的成長。就營收細分而言，我們看到日本客戶出現一些疲軟，導致日本業務下降至 2% 左右。美國和亞洲與2016年第一季的細分情況相對相似。IDM由於類似的原因，第二季下降至7%左右。

And in terms of application breakdown, we see strong growth, especially in the communication segment, which accounts for about 55% of our total revenue breakdown; and consumer is about 27%.

在應用細分方面，我們看到了強勁的成長，尤其是在通訊領域，該領域約占我們總收入細分的 55%；而消費者則約為27%。

The strong communication demand has continued to drive our leading edge revenue growth. 28 nanometer in second quarter now is account for 17% of our total revenue, significantly grows compared the 8% numbers in the first quarter. Total revenue below 40 nanometer is now 43% of our total sales.

強勁的通訊需求持續推動我們領先的營收成長。第二季28奈米現在占我們總營收的17%，比第一季的8%有顯著成長。 40 奈米以下的總收入目前占我們總銷售額的 43%。

Capacity, we will continue to see some minor growth in third quarter mainly coming from 12A, our leading edge wafer fab in Tainan, and most of the capacity expansion is 28 nanometer [base].

產能方面，第三季我們將繼續看到一些小幅成長，主要來自我們位於台南的領先晶圓廠 12A，而大部分產能擴張是 28 奈米 [基礎]。

And for the time being, our CapEx number still remain around $2.2 billion. Although, given the stronger demand in 28 nanometer, there may be some speed up in terms of 28 nanometer capacity installation. But the CapEx number-wise for the time being stays at around $2.2 billion.

目前，我們的資本支出仍維持在 22 億美元左右。不過，鑑於28奈米的需求更加強勁，28奈米產能裝置可能會有所加快。但資本支出目前維持在 22 億美元左右。

So that's pretty much the second-quarter financial report. More details are available in the report which can be downloaded from our website.

這幾乎就是第二季的財務報告。報告中提供了更多詳細信息，可以從我們的網站下載該報告。

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

現在我將把電話轉給我們的執行長顏先生。

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

謝謝你，吉東。大家好。我想向大家通報聯電第二季的經營業績。

In the second quarter of 2016, our foundry revenue increased 7.5% sequentially to TWD36.87 billion. We achieved foundry operating margin of 7.1%. The overall capacity utilization was 89% bringing, wafer shipments to TWD1.51 million 8-inch equivalent wafers.

2016年第二季度，代工營收較上季成長7.5%至新台幣368.7億元。我們的代工營業利益率為 7.1%。整體產能利用率為89%，晶圓出貨量達到151萬新台幣8吋等效晶圓。

As the latest semiconductor inventory cycle came to the end of the year, the 2Q 2016 reflected a return to semiconductor seasonality as chip demand improved. As a result, UMC experienced a surge in 28 nanometer business, especially from communication customers.

隨著最新的半導體庫存週期來到年底，2016 年第二季反映出半導體季節性隨著晶片需求的改善而回歸。結果，聯電經歷了28奈米業務的激增，尤其是來自通訊客戶的業務。

Many of the chips found in the newly released smartphone models have adopted UMC's 28 nanometer solutions which helped trigger our 28 nanometer revenue growth that began in 2Q 2016.

新發布的智慧型手機型號中的許多晶片都採用了聯華電子的 28 奈米解決方案，這有助於引發我們自 2016 年第二季度開始的 28 奈米收入成長。

For the consumer segment, UMC has also delivered other 28 nanometer volume production ICs in areas such as DTV and set-top box to help further boost 28 nanometer utilization.

在消費領域，聯華電子也為數位電視和機上盒等領域提供了其他28奈米量產IC，以幫助進一步提高28奈米利用率。

The widespread adoption of our 28 nanometer process technologies underscores the technology readiness and value that UMC provides to the IC industry.

我們的 28 奈米製程技術的廣泛採用凸顯了 UMC 為 IC 產業提供的技​​術準備和價值。

Looking to the next quarter, we anticipate a slight increase to our overall foundry revenue with 28 nanometer revenue contribution expected to reach 20% or more. Our 40 nanometer demand is also expected to remain stable.

展望下個季度，我們預計整體代工收入將略有成長，其中 28 奈米收入貢獻預計將達到 20% 或更多。我們的40奈米需求預計也將保持穩定。

As our advanced node performance remains on track, we do anticipate a decline in 8-inch demand due to the changes in customer mix and market dynamics.

由於我們的先進節點效能仍處於正軌，我們預計由於客戶結構和市場動態的變化，8 吋需求將會下降。

While we continue to expand additional 28 nanometer capacity at Fab 12A in Tainan, Taiwan, UMC's 12-inch Xiamen operation in China, 12X, is set to begin pilot production. As such, UMC will accrue higher quarterly depreciation and operating expenses.

在我們繼續擴大台灣台南 Fab 12A 的 28 奈米產能的同時，聯華電子在中國廈門的 12 吋工廠 12X 也將開始試生產。因此，聯電將產生更高的季度折舊和營運費用。

However, we expect our high 28 nanometer utilization rate and the revenue recognition when 12X enters production at the year's end to somewhat offset a portion of the accrued depreciation and operating expense.

不過，我們預計 28 奈米的高利用率以及年底 12X 投產時的收入確認將在一定程度上抵消部分應計折舊和營運費用。

We foresee 12X to aggressively capitalize on the fast-growing Chinese semiconductor market and provide our customers with a viable solution for local foundry services in China. We believe 12X will play a key role as a critical manufacturing base as it ramps to economy of scale.

我們預計 12X 將積極利用快速成長的中國半導體市場，並為我們的客戶提供中國本地代工服務的可行解決方案。我們相信，隨著 12X 逐步實現規模經濟，它將作為重要的製造基地發揮關鍵作用。

Now please 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 Chinese)

(用中文說)

I have finished my remarks, and now we may go over the third-quarter 2016 guidance.

我的發言已經結束，現在我們可以回顧 2016 年第三季的指導。

Our wafer shipments in third quarter will show an increase of 2% to 3%. The ASP in NT dollar will remain flat. Our gross margin will be approximately 20%. The capacity utilization rate will be approximately mid 80% range. Our foundry CapEx for 2016 remains as $2.2 billion.

我們第三季的晶圓出貨量將會出現2%到3%的成長。新台幣平均售價將維持穩定。我們的毛利率約為20%。產能利用率將約為 80% 左右。 2016 年我們的代工廠資本支出仍為 22 億美元。

That concludes my remarks. We are now ready for questions.

我的發言到此結束。我們現在準備好提問了。

Operator, please open the lines up. Thanks.

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。

The first question, I wanted to ask about the portion of the outlook that is a little bit slower, the mature 12-inch and the 8-inch nodes. If you could talk a bit more about the mix and market dynamics that is affecting your business, as some of the China foundries are still pretty tight on 8-inch, so maybe some of the weakness that you're seeing there.

第一個問題，我想問outlook慢一點的部分，成熟的12吋和8吋節點。如果您能多談談影響您業務的組合和市場動態，因為一些中國代工廠在 8 英寸方面仍然非常緊張，所以也許您看到了一些弱點。

And looking forward, if you expect this to sustain for a few quarters, or if there's some new projects, you could talk about new products that may boost the 8-inch and mature 12-inch.

展望未來，如果你預計這種情況會持續幾個季度，或者有一些新項目，你可以談論可能推動 8 英寸和成熟的 12 英寸的新產品。

Our 8-inch [loading] in the third quarter will not be as high as expected during the peak season. And, yes, our 8-inch business reflects the changes in customer mix and market dynamics. So we did not realize 8-inch revenue due to customer mix and market shifts.

我們第三季的8吋[裝貨量]不會像旺季預期的那麼高。是的，我們的 8 吋業務反映了客戶結構和市場動態的變化。因此，由於客戶組合和市場變化，我們沒有實現 8 英吋的收入。

However, we are taking lots of efforts and actions with respect to our 8-inch business to recover by the first half 2017. UMC has a strong market leadership in many areas, including embedded high voltage, bipolar/CMOS/DMOS technology and RF SOI, and the manufacturing experience in MEMS microphone.

然而，我們正在為 8 吋業務採取大量努力和行動，以期在 2017 年上半年恢復。聯華電子在許多領域擁有強大的市場領導地位，包括嵌入式高壓、雙極/CMOS/DMOS 技術和 RF SOI ，以及MEMS麥克風的製造經驗。

So we will leverage our fundamental knowhow as well in the CMOS image sensor and fingerprint sensors to broaden our market share and diversify our customer and product mix to minimize the impact of market dynamics.

因此，我們將利用我們在 CMOS 影像感測器和指紋感測器方面的基礎知識來擴大我們的市場份額，並使我們的客戶和產品組合多樣化，從而最大限度地減少市場動態的影響。

Okay. And could you talk about the areas of 8-inch that are seeing the weakness now, if it's display driver or some other applications; or if it's a market share, it's a temporary market share shift that might be happening.

好的。您能否談談 8 英寸目前存在的弱點，如果是顯示驅動程式或其他一些應用程式？或者，如果是市場份額，則可能是暫時的市場份額變化。

In our case, our weakness is in the demand in the consumer part. We have some, especially the IP cam, and some in communications, the driver IC, especially the LDDI, large panel display driver.

就我們而言，我們的弱點在於消費者部分的需求。我們有一些，特別是IP cam，還有一些通訊方面的驅動IC，特別是LDDI、大面板顯示驅動器。

Okay. And the second question, I wanted to ask about the Xiamen startup, and two parts to this.

好的。第二個問題，我想問廈門新創公司的狀況，分成兩個部分。

The first part is how we should offset the -- you mentioned the cost, like some OpEx and also depreciation, but then also some benefit from loading. And if there's a way to net out, I guess, relative to current levels, how much impact to gross margin or OpEx from the new fab?

第一部分是我們應該如何抵消——你提到了成本，例如一些營運支出和折舊，但也有一些來自裝載的好處。我想，如果有辦法消除相對於當前水準的新晶圓廠對毛利率或營運支出的影響有多大？

And the second part is the non-controlling line. This quarter, it absorbed about TWD1 billion, so how we should think about how much you'll get back on non-controlling.

第二部分是非控制線。這個季度吸收了大概10億新台幣，那我們應該怎麼想，如果你不控股的話，你能得到多少回報。

The non-controlling part is always around 2 to 3 percentage points. So at the net level we always add back about 2% to 3% of profit because of the loss-making status of the current Xiamen startup.

非控制部分始終在2到3個百分點左右。因此，由於目前廈門新創公司處於虧損狀態，因此在淨利層面上，我們總是會增加約2%至3%的利潤。

And the started production date for Xiamen is early December, so we will start to see revenue contribution starting from December of 2015.

而廈門的投產日期是12月初，所以我們將從2015年12月開始看到收入貢獻。

Okay. And I guess the costs, should we model any OpEx into second half? Any change before we do startup or after the fab? And any incremental change on gross margin as the fab ramps up?

好的。我猜成本，我們是否應該將任何營運支出建模到下半年？在我們啟動之前或工廠之後有什麼變化嗎？隨著晶圓廠的擴建，毛利率會發生什麼增量變化？

After we approach December of 2016 when the fab starts volume production, all the cost items will transfer to each appropriate accounting items. So some of the cost of goods sold will go under gross margin and some of the real OpEx will stay as operating expenses.

接近2016年12月晶圓廠開始量產後，所有成本項目將轉入對應的會計項目。因此，部分銷售商品成本將計入毛利率，而部分實際營運支出將保留為營運費用。

For the time being before the mass production, all the Xiamen-related expenses is under operating expenses only.

量產前暫時所有廈門相關費用僅計入營運費用。

Okay. Would that be a meaningful growth though in OpEx the next couple of quarters? Or you already have most of that expense already coming in?

好的。未來幾季營運支出會出現有意義的成長嗎？還是您已經支付了大部分費用？

Third quarter will be even higher, and I think that will be the peak.

第三季會更高，我認為那將是頂峰。

Okay. The last question, the memory project. Now that there's a partner, how much --? Is there a way to think of a rough --? Could you see any meaningful [NRE]? Like it would come in as a revenue or royalty income? Or if there's a way to think about the benefit that you'll get from the memory project.

好的。最後一個問題，記憶項目。現在有了合作夥伴，多少錢──？有沒有辦法思考一個粗略的──？你能看到任何有意義的[NRE]嗎？就像它會作為收入或特許權使用費收入一樣？或者是否有一種方法可以考慮您將從記憶項目中獲得的好處。

And then is there a longer-term structure where you'll receive royalties or ongoing development? Or if you can go through the economics for UMC just during R&D and then the production phase.

那麼是否有一個長期結構可以讓您獲得版稅或持續開發？或者，您是否可以在研發階段和生產階段了解聯華電子的經濟狀況。

Well, NRE is definitely, according to our own calculation, it will be more than enough to cover any of our incurred costs. And on top of that, there will be a [consigned] machine, leading-edge scanner if you will, to help to develop this project. And the same time, UMC will be able to share the machine if there's any spare utilization for that particular DRAM project.

嗯，NRE 肯定是，根據我們自己的計算，它足以支付我們所產生的任何費用。最重要的是，如果你願意的話，將會有一台[委託]機器，先進的掃描儀，來幫助開發這個專案。同時，如果該特定 DRAM 專案有任何空閒利用率，聯華電子將能夠共享該機器。

For longer term, we do try to integrate the DRAM knowhow into our SOC foundry solutions, and there will be also ongoing royalty involved if there is any success on that.

從長遠來看，我們確實嘗試將 DRAM 專業知識整合到我們的 SOC 代工解決方案中，如果取得成功，也將涉及持續的特許權使用費。

We will also leverage both parties' procurement power to lower our tool purchase cost in the future.

未來我們也將利用雙方的採購力量來降低我們的工具採購成本。

Okay. So it sounds like in DRAM production, if it's profitable, where just subject to their ability to ramp, you'll starting receiving a percentage royalty off of their production?

好的。所以聽起來在 DRAM 生產中，如果它是有利可圖的，只要他們的能力提升，你就會開始從他們的生產中獲得一定比例的特許權使用費？

We are not involved in any investment so it will be only NRE for the time being and ongoing royalty.

我們沒有參與任何投資，因此暫時只是 NRE 和持續的特許權使用費。

Okay. Ongoing -- can you clarify ongoing royalty for --? But is that for a production based royalty, the ongoing royalty? Like what would that be tied to?

好的。正在進行的——你能澄清一下正在進行的版稅——嗎？但這是基於生產的版稅、持續的版稅嗎？就像那會與什麼連結在一起？

It would be tied to the after mass production.

這將與後期的量產掛鉤。

Okay. So you will have production royalty. Okay. Thanks a lot for the answers. I appreciate that.

好的。所以你將擁有生產版稅。好的。非常感謝您的回答。我很感激。

Thanks.

謝謝。

Steven Pelayo, HSBC.

史蒂文‧佩拉約，匯豐銀行。

My questions are actually the same as Randy's. I'm just looking for a little bit more details than that. There's a lot of moving parts going on with these startup costs and different lines are moving from OpEx to COGS.

我的問題其實和蘭迪的一樣。我只是在尋找比這更多的細節。這些啟動成本涉及許多移動部分，不同的產品線正在從營運支出轉向銷貨成本。

I wonder if you can just be a little bit more specific in the third quarter; then what happens in the fourth quarter; maybe even looking out to even next year for some lines like OpEx, depreciation within COGS in the third quarter. And then maybe even talking about what that non-controlling interest line could maybe do even next year. I don't think it will stay at 2% to 3% of net profit forever.

我想知道你能否在第三季說得更具體一些；那麼第四季會發生什麼事？甚至可能會期待明年一些業務，如營運成本、第三季銷貨成本的折舊。然後甚至可能會談論非控股利益線明年可能會做什麼。我不認為它會永遠保持在淨利潤的2%到3%。

So can you be a little bit more specific in the near term as well as the medium term, on these 12X impacts?

那麼能否更具體地介紹一下這些 12 倍的近期和中期影響？

For near term, all the costs related to Xiamen fab will continue to rise given the scale, and probably continue to increase. So third quarter, for the expenses coming from Xiamen fab will continue to increase, and it will all be categorized under the operating expenses item from a UMC point of view.

短期來看，考慮到廈門晶圓廠的規模，所有相關成本將持續上升，並且可能會繼續增加。所以第三季度，來自廈門晶圓廠的費用將會持續增加，從聯電的角度來看，都會歸入營業費用項目。

In the December of 2015 when the fabs start operating and generating revenues, it will be on a full consolidated basis. All cost items will be allocated to where it belongs. So again, cost of goods sold goes to cost of goods of UMC's, and OpEx will go under OpEx of UMC's. So it will be 100% consolidated basis.

2015 年 12 月，當晶圓廠開始運作並產生收入時，它將處於完全合併的基礎上。所有的成本項目都會被分配到它所屬的地方。再次強調，銷售成本歸入 UMC 的商品成本，而營運支出將歸入 UMC 的營運支出。所以這將是100%合併的基礎。

However, given that we only own about one-third of the operation, two-thirds of the loss, or most likely loss in 2016 at least, will go to minority shareholders at the net level. So we will in return gain back some of the profit at the net loss --net earnings level. According to our calculation right now, it's about 2 to 3 percentage points of profit.

然而，鑑於我們只擁有約三分之一的業務，三分之二的虧損，或至少 2016 年最有可能的虧損，將在淨額上歸小股東所有。因此，作為回報，我們將在淨虧損（淨利潤水準）上收回部分利潤。根據我們現在的計算，大約是2到3個百分點的利潤。

I understand the accounting mechanics of it all. Just trying to get more specific on the actual dollar impact in the third and fourth quarter. You're saying OpEx goes higher. What's the magnitude? How much higher? In the fourth quarter, as it shifts to cost of goods sold, how much shifts over there? Can you be a little bit more specific on the dollar magnitude of these impacts?

我了解這一切的會計機制。只是想更具體地了解第三季和第四季美元的實際影響。你是說營運支出更高。規模有多大？高多少？在第四季度，當它轉移到銷售成本時，那裡發生了多少變化？您能否更具體地說明這些影響的美元規模？

Yes. We don't have that number for now. I think what we can talk about is gross margin will be likely around 20% range for the third quarter, and operating expenses mostly because of Xiamen will continue to be higher. The magnitude is 3 percentage points of margins.

是的。我們暫時沒有這個號碼。我認為我們可以談論的是，第三季的毛利率可能會在20%左右，而營運費用主要是因為廈門將繼續走高。幅度為利潤率的 3 個百分點。

Okay. Maybe just one more question then on 200 millimeter. You talk about mix and market dynamics. I guess I still didn't understand. Is some of this potential market share shifts, as companies like SMIC really don't have much 28 nanometer but are fully loaded on 200 millimeter, trying to buy more capacity.

好的。也許還有一個關於 200 毫米的問題。您談到了組合和市場動態。我想我還是沒明白。這種潛在的市場份額是否會發生變化，因為像中芯國際這樣的公司確實沒有太多28奈米，但在200毫米上滿載，試圖購買更多產能。

So could you talk a little bit more? What do you mean by mix and market dynamics impacting 200 millimeter?

那你能再多說一點嗎？影響 200 毫米的混合和市場動態是什麼意思？

Yes. In some mature node technologies, some segments, we are -- UMC is kind of weak in that area; for example, the fingerprint sensor and the CMOS image sensor. And so UMC [did not have] a strong position in that area. And that is even that -- the business coming up and that is [a portion] we did not catch the business opportunity.

是的。在一些成熟的節點技術、一些細分領域，我們──聯電在這方面有點薄弱；例如，指紋感應器和CMOS影像感測器。因此聯華電子在該領域[沒有]佔據強勢地位。甚至就是這樣——業務即將到來，這是我們沒有抓住商機的[一部分]。

Okay. If I understand your guidance correctly, you're talking about 4X remaining stable and 28 nanometer going to over 20% of revenues. I guess that's roughly 45% of the Company probably -- it looks like maybe if I'm doing the arithmetic right, up about 10% or so, and then the other 55% or so down roughly 5% or so. Does that seem to match with your -- what you're guiding here?

好的。如果我正確理解您的指導，您所說的是 4X 保持穩定，28 奈米將佔收入的 20% 以上。我猜這大概是公司 45% 的股份——看起來如果我計算正確的話，可能會上漲 10% 左右，然後其他 55% 左右的股份會下降大約 5% 左右。這似乎與您在這裡的指導相符嗎？

It's about that what we are talking about.

我們正在談論的就是這個。

Okay. And so 55% of revenues are declining, and most of that is going to be the 200 millimeter. I'm just curious. What are the margin implications from that? We know margins are being pressured from 28 nanometer higher depreciation. I'm wondering how much margins are being pressured from lower utilization rates at 200 millimeter and more mature 300 millimeter nodes.

好的。因此，55% 的收入正在下降，其中大部分將來自 200 毫米。我只是好奇。這對利潤率有何影響？我們知道利潤率正受到 28 奈米更高折舊的壓力。我想知道 200 毫米和更成熟的 300 毫米節點利用率較低，對利潤率造成多大壓力。

They all factor in. That comes down to our gross margin 20% guidance, and operating expenses in the third quarter because of Xiamen will be a few percentage higher as well.

它們都被考慮在內。這取決於我們 20% 的毛利率指導，而且由於廈門的影響，第三季的營運費用也會高出幾個百分點。

Okay, guys. That's it from me. Thank you.

好吧，夥計們。這就是我說的。謝謝。

Donald Lu, Goldman Sachs.

唐納德·盧，高盛。

First is, Chitung, I just want to verify. You just said OpEx will be up by a few percentage points. Is that relative a few percentage of your revenue, or is that a sequential increase by a few percentage points?

首先，Chitung，我只是想確認一下。您剛才說營運支出將增加幾個百分點。這是相對於您收入的幾個百分比，還是連續成長幾個百分點？

Percentage of revenue.

收入的百分比。

Okay. Thank you. And what is the capacity plan for your own 28 nanometer by the end of this year and potentially next year, given the demand is so strong; and also, the capacity plan for Xiamen for this year and next year?

好的。謝謝。鑑於需求如此強勁，到今年年底以及明年可能您自己的 28 奈米產能計劃是什麼？還有，廈門今明兩年的產能規劃？

For the 28 nanometer capacity plan, we will reach the [29,500 combined] capacity by the end of this year. That is in our Tainan fab. And we will have [10,000] to [15,000] more wafer capacity expansion [for the year] 2017. And that portion will be (technical difficulty) Xiamen fab.

對於28奈米產能計劃，我們將在今年底達到[29,500個合計]產能。那是在我們台南工廠。 2017 年，我們將增加 [10,000] 到 [15,000] 片晶圓產能。這部分將是（技術難度）廈門晶圓廠。

You mean to add 28 nanometer capacity in Xiamen fab next year?

您的意思是明年廈門晶圓廠增加28奈米產能？

That's according to the plan, but I think the [country] plan is we're going to ramp from 30,000 to around 39,000 and eventually to 45,000 in Taiwan.

這是按照計劃的，但我認為[國家]計劃是我們將從 30,000 人增加到 39,000 人左右，最終在台灣增加到 45,000 人。

So in Taiwan, 28 nanometer capacity will go up to 40,000 to 45,000 next year?

那麼明年台灣28奈米產能會達到4萬到4.5萬片嗎？

Yes.

是的。

And also the Xiamen fab will go up to 10,000 to 15,000 next year?

明年廈門晶圓廠數量會增加到1萬到15,000個嗎？

Xiamen, by the end of this year, the initial capacity is around 3,000 to 6,000 in 40 nanometers, and the ultimate goal is to have around 10,000 40 nanometer first, and we'll see how it goes.

廈門今年底初步產能是40奈米3000到6000片左右，最終目標是先有1萬片40奈米左右，看進展如何。

Okay. Got it. Thank you.

好的。知道了。謝謝。

Rick Hsu, Daiwa Securities.

Rick Hsu，大和證券。

Just one question from me. Could you elaborate a little bit more about the breakdown, utilization rate breakdown for Q3 in between 12-inch and 8-inch? Or maybe in Xiamen, how much increase 12-inch is versus how much decline the 8-inch?

我只想問一個問題。您能否詳細說明一下第三季 12 吋和 8 吋之間的細分、利用率細分？或者說在廈門，12吋增加了多少，8吋減少了多少？

Yes. Our Q3 utilization rate will be around -- as I guided it just now is mid 20 percentage range, and -- mid 80. And for 8-inch will be mid 80 as well, and 12-inch will be a mid to high 80 range.

是的。我們的第三季利用率將約為——正如我剛才所指導的那樣，是20% 的中位數範圍，以及——80 中位數。8 吋也將是80 中位數，12 吋將是80 中值到高值範圍。

Okay. What about the gross margin breakdown between 8-inch and 12-inch?

好的。 8吋和12吋毛利率細分情況如何？

We don't have that numbers. Basically, company-wise, it's about 20%, and 8-inch certainly is higher than 12-inch.

我們沒有那個數字。基本上，就公司而言，大約是20%左右，而且8英寸肯定高於12英寸。

All right. Yes. That's all I have. Thank you so much.

好的。是的。這就是我的全部。太感謝了。

Roland Shu, Citi.

羅蘭舒，花旗銀行。

First question is on the depreciation. You've said depreciation in 3Q will be higher due to the startup costs of this Xiamen project. So question is how high it will be in 3Q. And also, the whole year depreciation increased by 20% year on year. Is that number still hold?

第一個問題是關於折舊。您說過，由於廈門專案的啟動成本，第三季的折舊會更高。所以問題是第三季會多高。而且，全年折舊年增20%。這個數字還保留著嗎？

Thank you.

謝謝。

Yes. Whole year is still 20% increase in depreciation, and the third quarter actually only increased slightly.

是的。全年折舊仍有20%的增幅，而第三季實際上僅略有成長。

Okay. So 20% still holds. Okay.

好的。所以20%仍然成立。好的。

Second question is for your 40 nanometer. Previously, you expect to start mass production from second half next year. Is this status still hold, or are you going to pull in or push up this 40 nanometer production?

第二個問題是關於你的40奈米的。此前，預計從明年下半年開始量產。這個狀態是否仍然保持，或者你會拉動還是推高這個40奈米的產量？

The figures still hold. Yes. Our 40 nanometer development is still on track and we expect to receive customers [tape-outs] in the end of this year, Q4 range, and we're targeting to have initial production in the first half 2017.

這些數字仍然有效。是的。我們的 40 奈米開發仍在正軌上，我們預計將在今年第四季末收到客戶[流片]，我們的目標是在 2017 年上半年進行初步生產。

Okay. So in order to do the production for 40 nanometer, how big capacity you are going to build for 40 nanometer next year?

好的。那麼為了進行40奈米的生產，明年你們準備建造多大的40奈米產能呢？

We will not -- very minimum for capacity (inaudible).

我們不會——容量非常小（聽不清楚）。

Yes. But still you need to at least have a pilot ready for 40 nanometer. Right?

是的。但你仍然需要至少為 40 奈米做好準備。正確的？

Sure. We have a 2,000 capacity for 40 nanometer pilot, 2,000 wafer production.

當然。我們擁有 2,000 片 40 奈米中試產能、2,000 片晶圓生產能力。

Okay. So -- but I bet in second half next year, if you are going to mass production, I think that your capacity definitely need to be much higher than this 2,000. Am I right?

好的。所以——但我打賭明年下半年，如果你要量產，我認為你的產能肯定需要比這2000輛高很多。我對嗎？

Yes. That's correct.

是的。這是正確的。

Okay. So then my follow-up question is it looks like next year will be a very busy year to you. I think that you have intensive new projects. You need to start injecting CapEx to Xiamen fab. And also, you are going to ramp up 40 nanometer. I think that you also have this DRAM project ongoing. And also, you continue expand 20 nanometer capacity.

好的。那麼我的後續問題是，明年對您來說將會是非常忙碌的一年。我認為你們有密集的新項目。您需要開始向廈門晶圓廠注入資本支出。而且，您還將升級至 40 奈米。我認為您也正在進行這個 DRAM 專案。而且，你們還在持續擴大 20 奈米產能。

So question is, how do you think next year capacity will be? Because you have -- there's many new projects ongoing simultaneously.

那麼問題是，您認為明年的產能如何？因為有許多新項目同時進行。

Thank you.

謝謝。

For DRAM project, we don't involve any production, so it's only R&D effort. So there will be no CapEx from UMC side.

對於DRAM項目，我們不涉及任何生產，所以只是研發工作。因此聯華電子方面不會有任何資本支出。

And for Xiamen it's a joint venture, although we have the controlling power. But in terms of real cash flow, it's still mainly supplied by the Xiamen JV [itself]. And UMC up to now actually hasn't really putting any capital into the Xiamen JV yet from UMC Taiwan.

對廈門來說，它是一家合資企業，儘管我們擁有控股權。但就實際現金流而言，仍主要由廈門合資公司提供。而聯華電子至今尚未真正從台灣聯電向廈門合資公司注入任何資金。

But for next year it will be, right?

但明年就會是這樣，對吧？

Yes. But the amount is actually quite minimum. The main focus still will be the CapEx in Taiwan. So as you mentioned, our 28 nanometer, most of the spending will happen this year and the rest will be -- some we're extending to 2017, and the rest depends on how much we want to ramp our 40 nanometer capacity.

是的。但實際上這個金額是很小的。主要焦點仍是台灣的資本支出。正如您所提到的，我們的 28 奈米，大部分支出將在今年進行，其餘部分將延長至 2017 年，其餘部分取決於我們希望提高 40 奈米產能的程度。

Okay. So can we say, can we expect next year CapEx will be higher than this year, or -- that would be at the most probably of flat as this year?

好的。那麼我們是否可以說，我們是否可以預期明年的資本支出將高於今年，或者——最有可能與今年持平？

We don't have the figure for now. Again, there are several variables, 40 nanometer capacity, as well as the schedule for our Xiamen installation.

我們暫時沒有這個數字。同樣，有幾個變量，40奈米產能，以及我們廈門安裝的時間表。

Okay. Thank you. That's all my questions. Thank you.

好的。謝謝。這就是我的所有問題。謝謝。

Charlie Chan, Morgan Stanley.

陳查理，摩根士丹利。

First question is when will you migrate to 28 nanometer for the Xiamen fab?

第一個問題是，廈門晶圓廠什麼時候遷移到28奈米？

Thanks.

謝謝。

Xiamen fab we do have plans, but everything has to go according to our regulations on both sides. And I think we will have to generate either 20 nanometer revenue or 40 nanometer revenue first for our Tainan fab before talk about 28 nanometer in Xiamen.

廈門晶圓廠我們確實有計劃，但是一切都要按照我們雙方的規定進行。我認為，在談論廈門的 28 奈米之前，我們必須先為台南工廠創造 20 奈米收入或 40 奈米收入。

Right. So what is the progress of the next generation R&D?

正確的。那麼下一代研發進度如何？

We already talked about [40 nanometer] by our CEO just now that we do expect to see some initial pilot production of 40 nanometer in Q1 2017.

剛才我們的執行長已經談到了 [40 奈米]，我們確實預計在 2017 年第一季會看到一些 40 奈米的初步試生產。

Okay. And regarding your [memory] project, what would be the [DRAM] technology source?

好的。關於您的[記憶體]項目，[DRAM]技術來源是什麼？

We are the source. We have the -- and also, we have the previous DRAM source and we're also recruiting new teams to develop new DRAM technology.

我們是源頭。我們有——而且，我們有以前的 DRAM 來源，我們還在招募新團隊來開發新的 DRAM 技術。

Okay. So will it be more from a previous [Opida] or [Kimonda], or any camps for this DRAM technology?

好的。那麼，它會更多地來自先前的 [Opida] 或 [Kimonda]，還是該 DRAM 技術的任何陣營？

It would a UMC proprietary technology, but we do recruiting -- we do recruit some -- all the developer talent out there.

這將是聯華電子的專有技術，但我們確實在招募——我們確實招募了一些——所有的開發人才。

Okay. So for your memory project again, so can you disclose what kind of [geometry] and application you target for?

好的。那麼，對於您的記憶體項目，您能透露一下您的目標是哪種[幾何]和應用程式嗎？

Well, initially it will be 32 nanometer; as I said, specialty technology.

嗯，最初是 32 奈米；正如我所說，專業技術。

Okay. Got it. Okay. Thanks.

好的。知道了。好的。謝謝。

Sebastian Hou, CASA.

塞巴斯蒂安·侯，CASA。

My first one is on your guidance for third quarter on the blend on ASP in dollar terms will be flat. But looking at your guidance at the 28 nanometers, if my calculation is right, for 17% to 20% revenue contribution, that means about 20% increase of the revenue in 28 nanometers. In 40 nanometers [stable], but 8-inch wafer revenue are going to decline. So supposedly, this kind of product mix should translate into a blended ASP increase. So I just wondered what do I miss here.

我的第一個建議是關於第三季的指導，以美元計算的平均售價將持平。但看看你們對 28 奈米的指導，如果我的計算正確的話，對於 17% 到 20% 的收入貢獻，這意味著 28 奈米的收入增加了大約 20%。 40奈米[穩定]，但8吋晶圓收入將會下降。因此，照理說，這種產品組合應該會轉化為平均售價的混合成長。所以我只是想知道我在這裡想念什麼。

Partially, it's because this NT dollar appreciation projection. So our guidance is ASP in NT dollar to remain flat. But in US dollar terms, it probably will go up a little bit.

部分原因是因為新台幣升值預測。因此，我們的指導是新台幣平均售價保持持平。但以美元計算，它可能會上漲一點。

And second reason is there will be some product shift in our client bases, even though they are the same geometry, but there will be some weaker pricing, especially in the 40 nanometers in the second -- in the third quarters.

第二個原因是我們的客戶群中將會出現一些產品轉移，即使它們具有相同的幾何形狀，但定價將會減弱，特別是在第二季和第三季的 40 奈米領域。

Okay. Is there any -- do you feel any pricing pressure on [you outlook] for comparison perspective?

好的。從比較的角度來看，您是否感到[您的前景]有任何定價壓力？

No. Of course, our available inch capacity we will try and be aggressive. But for 20 and 40 nanometers, which is running at nearly 100% loading, that pricing pressure is very, very minimum.

不。當然，我們會嘗試並積極進取，以我們可用的英寸產能。但對於以接近 100% 負載運行的 20 和 40 奈米，定價壓力非常非常小。

Okay. Great. And my second question is on the -- based on page 13, your quarterly capacity at this stage, from second quarter to third quarter, your capacity is going to increase 3%. Your wafer shipment guidance also about 2% to 3%, but your overall utilization rate guidance for third quarter will be mid 80s, but your second quarter was 89%. So I just wonder what do I miss again here.

好的。偉大的。我的第二個問題是－根據第13頁，您現階段的季度產能，從第二季到第三季度，您的產能將增加3%。你們的晶圓出貨量指引也約為 2% 至 3%，但第三季的總體利用率指引將是 80 年代中期，但第二季為 89%。所以我只是想知道我在這裡又想念什麼了。

Again, there's always the old reason. Sometimes wafers produced and wafer shipped are not always the same, and mid 80s is also a range.

再說一次，總是有舊的原因。有時生產的晶圓和出貨的晶圓並不總是相同，80 年代中期也是一個範圍。

Okay. And I want to follow on the 28 nanometers. What's your 28 nanometer utilization rate in second quarter and third quarter?

好的。我想繼續關注 28 奈米。你們第二季和第三季的28奈米利用率是多少？

In the second quarter, our 28 nanometer utilization is around high 70% range. In the third quarter, it's in the over 95%. Actually, our 28 nanometer utilization for the rest quarter of the year will be over 95%.

第二季度，我們的 28 奈米利用率約為 70%。第三季度，這一比例超過了95%。事實上，今年剩餘季度我們的28奈米利用率將超過95%。

I'm sorry. I see you mentioned about second quarter your UTR was 70%?

對不起。我看到你提到第二季你的 UTR 是 70%？

Yes. 28 nanometer in the second quarter is high 70%.

是的。 28奈米第二季高70%。

High 70%.

高70%。

80% range.

80%範圍。

Okay. And my follow-up question is on the -- if you do some calculation, your third-quarter gross margin will come down to 20%, and today earlier mentioned about the OpEx to sales will go up by a few percentage points. So do you still expect your operating margin to stay at positive territory in the third quarter?

好的。我的後續問題是——如果你進行一些計算，你的第三季毛利率將降至 20%，而今天早些時候提到的銷售營運支出將上升幾個百分點。那麼您仍預期第三季的營業利潤率將維持正值嗎？

Yes, definitely. Not only will it stay positive, and also, we want to remind that 100% of the OpEx will come in at the OpEx level. And the minority share [will share] two-thirds of the operating expenses at the net level.

當然是。它不僅會保持積極的狀態，而且我們要提醒的是，100% 的營運支出將來自營運支出層面。少數股東[將分享]淨營運費用的三分之二。

Okay. Great. The last question is on the depreciation. So for the third quarter and fourth quarter, we are likely to expect the depreciation expense to go up sequentially, I think.

好的。偉大的。最後一個問題是關於折舊的。因此，我認為，對於第三和第四季度，我們可能會預期折舊費用將依次上升。

Slightly, yes.

稍微，是的。

Slightly. Okay. So when you say slightly, it's about like less than 10% per quarter?

輕微地。好的。那麼當你說「輕微」時，大約是每季不到 10%？

Well, less than 1%.

嗯，不到1%。

Less than 1% per quarter?

每季低於1%？

I mean increase, yes.

我的意思是增加，是的。

Okay. Thank you. That's all I have.

好的。謝謝。這就是我的全部。

Gokul Hariharan, JPMorgan.

戈庫爾·哈里哈蘭，摩根大通。

First of all, on the 20-nanometer plan, could you talk a little bit about beyond this year when you reach [29,500] capacity, any thoughts about how much you would want to expand? And what kind of tape-outs are you already getting to indicate that the capacity could be higher than what you end up with at the end of this year?

首先，關於20奈米計劃，你能談談今年以後當你達到[29,500]產能時，你想擴大多少嗎？您已經獲得什麼樣的流片表明產能可能會高於今年年底的最終產能？

I'll answer the tape-outs first. We expect we will have 15 tape-outs in the second half of this year which are in the communication, AP and [baseband] and connectivity and networking.

我將首先回答磁帶輸出。我們預計今年下半年將有 15 個流片，涉及通訊、AP 和[基頻]以及連接和網路領域。

And regarding the capacity, again, our plan on 28 nanometer expansion is based on our customer collaboration and engagement. We projected it to be around 45,000 to 50,000 per month capacity.

關於產能，我們的 28 奈米擴展計畫同樣基於我們的客戶協作和參與。我們預計每月產能約 45,000 至 50,000 個。

And with our competitive technology offering and stable yield, and they're coming more and more in tape-outs. The tape-outs also are including a very diversified customer base and applications. So we are confident to achieve around 50,000 wafers per month capacity range.

憑藉我們具有競爭力的技術產品和穩定的產量，它們越來越多地流片。流片還包括非常多樣化的客戶群和應用。因此，我們有信心實現每月約 50,000 片晶圓的產能範圍。

Thank you very much for that. Any timeline for that? Is it like end of next year plan, or is it like a two-year?

非常感謝你。有什麼時間表嗎？是像明年年底的計劃，還是像兩年的計劃？

In 2017, as we just explained, we're targeting to increase 10,000 wafers to 15,000 wafers, [10] nanometer capacity.

正如我們剛才所解釋的，2017 年我們的目標是將 10,000 片晶圓增加到 15,000 片晶圓，[10] 奈米產能。

Okay. Thank you. For the 12X in Xiamen, could you talk a little bit about how the ramp up --? What is the speed of the ramp up? What is the speed of the customer qualifications? And are you transferring any customers from Taiwan to China, or are these all fresh products or fresh customers coming in the China fab?

好的。謝謝。對於廈門的 12X，您能否談談如何提升——？上升速度是多少？客戶資質辦理速度如何？你們是否將任何客戶從台灣轉移到中國，或者這些都是來自中國晶圓廠的新鮮產品或新客戶？

The initial pilot is certainly is on 40 nanometer communication application, and this is the initial pilot results; very, very successful, very promising. The yields demonstrated in these new facilities are comparable with our Tainan 12A fab.

最初的試點肯定是在40奈米通訊應用上，這是初步的試點結果；非常非常成功，非常有前途。這些新設施所展示的產量與我們的台南 12A 晶圓廠相當。

So it's very promising and so we are looking for the -- up to finish the customer core, we are expecting to have some revenue contribution by the end of this year.

所以它非常有前途，所以我們正在尋找——直到完成客戶核心，我們預計到今年年底會有一些收入貢獻。

And this is primarily one customer? Is that right?

這主要是一位客戶？是對的嗎？

Many diversified customers, including many on the China customers.

許多多元化的客戶，其中包括許多中國客戶。

Okay. And last question from me, one of your competitors did talk about potential inventory correction in Q4. Any thoughts on what you think about how the landscape could look like, both at the [28] nanometer where you definitely had new tape-outs and for the other amounts going into the end of the year?

好的。我的最後一個問題，你們的一位競爭對手確實談到了第四季度潛在的庫存調整。對於你認為的景觀會是什麼樣子有什麼想法，無論是在 [28] 納米，你肯定有新的流片，還是在年底的其他數量？

I'm not quite catch up your question.

我不太明白你的問題。

I think for 28 and 40 nanometer, we do see there -- at least current forecast suggests a very high production rate throughout the end of this year. And for Q4 overall, we have very limited visibility as well. So we do believe there could be some kind of uncertainty so we won't be able to comment on Q4 yet.

我認為對於 28 奈米和 40 奈米，我們確實看到了這一點——至少目前的預測表明今年年底的生產率非常高。對於第四季整體而言，我們的能見度也非常有限。因此，我們確實認為可能存在某種不確定性，因此我們尚無法對第四季度發表評論。

Okay. Got it. Thanks. Thank you very much.

好的。知道了。謝謝。非常感謝。

Ladies and gentlemen, we are running out of time, so that concludes today's Q&A session. I'll turn things over to UMC Head of Investor Relations for closing remarks.

女士們、先生們，我們的時間不多了，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.

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。

Thank you, ladies and gentlemen. That concludes our conference for second quarter 2016. We thank you for your participation in UMC's conference. There will be a webcast replay within an hour. Please visit www.umc.com, under the investor relations investors' events section.

謝謝你們，女士們、先生們。我們 2016 年第二季的會議到此結束。我們感謝您參加 UMC 的會議。一小時內將進行網路廣播重播。請造訪 www.umc.com 的投資者關係投資者活動部分。

You may now disconnect. Goodbye.

您現在可以斷開連線。再見。