聯華電子 (UMC) 2022 Q4 法說會逐字稿

Welcome everyone to UMC's 2022 Fourth 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, Investor Events session.

歡迎大家參加聯華電子 2022 年第四季度財報電話會議。 （操作員說明）供您參考，此電話會議現在正在互聯網上直播。會議結束後一小時內將提供網絡直播重播。請訪問我們的網站 www.umc.com，在“投資者關係”、“投資者活動”部分下。

I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, you may begin.

我想介紹一下聯華電子投資者關係主管Michael Lin先生。林先生，您可以開始了。

Thank you, and welcome to UMC's conference call for the fourth quarter of 2022. I'm joined by Mr. Jason Wang, the President of UMC; and Mr. Chi-Tung Liu, the CFO of UMC. In a moment, we will hear our CFO present the fourth quarter financial results, followed by our President's key message to address UMC's focus and first quarter of 2023 guidance. Once our President 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. 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 result to differ materially, including the risks that may be beyond the company's control. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC security authorities. During this conference, you may view our financial presentation materials, which is being broadcast live through the Internet.

謝謝大家，歡迎來到聯電 2022 年第四季度電話會議。聯電總裁 Jason Wang 先生也加入了我的行列；以及聯電首席財務官劉志東先生。稍後，我們將聽到我們的首席財務官介紹第四季度的財務業績，然後是我們的總裁關於解決 UMC 的重點和 2023 年第一季度指導的關鍵信息。我們的總裁和首席財務官完成發言後，將進行問答環節。 UMC 的季度財務報告可在我們的網站 www.umc.com 的“投資者財務”部分獲取。在這次會議期間，我們可能會根據管理層當前的預期和信念做出前瞻性陳述。這些前瞻性陳述受許多風險和不確定因素的影響，這些風險和不確定因素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。有關這些風險和不確定性的更詳細描述，請參閱我們最近和隨後向美國證券交易委員會和中華民國安全當局提交的文件。在本次會議期間，您可以觀看我們的財務演示材料，這些材料正在通過互聯網進行現場直播。

Now I would like to introduce UMC's CFO, Mr. Chi-Tung Liu, to discuss UMC's fourth quarter 2022 financial results.

現在我想介紹聯電的首席財務官劉志東先生，討論聯電2022年第四季度的財務業績。

Thank you, and happy New Year to everyone. Thank you for joining on our call. I would like to go through the 4Q '22 investor conference presentation material, which can be downloaded or viewed in real-time from our website. Starting on Page 4, the fourth quarter of 2022. Consolidated revenue was TWD 67.84 billion, with gross margin rate at 42.9%. Net income attributable to the stockholder of the parent was TWD 19 billion and earnings per ordinary shares for TWD 1.54. Utilization rate came down to 90% in 4Q from 100% in the previous quarter.

謝謝大家，祝大家新年快樂。感謝您加入我們的電話會議。我想瀏覽一下 22 年第四季度投資者會議的演示材料，可以從我們的網站上實時下載或查看這些材料。從第4頁開始，2022年第四季度。合併收入為新台幣678.4億元，毛利率為42.9%。歸屬於母公司股東的淨收入為新台幣 190 億元，每股普通股收益為新台幣 1.54 元。第四季度的利用率從上一季度的 100% 下降至 90%。

And on Page 5, this is the quarterly results. Revenue declined by 10% sequentially to TWD 67.8 billion. Gross margin rate was 42.9% or TWD 29.1 billion. We kept the operating expenses at nearly the same level quarter-over-quarter, which is around TWD 6.79 billion, and total operating income declined by roughly 20% to TWD 23.6 billion, and net income attributable to the shareholder of the parent is $19 billion or $1.54 EPS in the 4Q of '22. Our next page is the full year result of 2022. Total revenue grew by 31% to TWD 278.7 billion. And operating income is more than doubled to TWD 104 billion, and the growth rate was 101% year-over-year. And EPS grew to TWD 7.09 in 2022 compared to TWD 4.57 in the previous year.

在第 5 頁，這是季度業績。收入環比下降 10% 至 678 億新台幣。毛利率為 42.9% 或新台幣 291 億元。營業費用環比基本持平，約為新台幣67.9億元，總營業收入下降約20%至新台幣236億元，歸屬於母公司股東的淨利潤為190億元或 22 年第四季度每股盈利 1.54 美元。我們的下一頁是 2022 年的全年業績。總收入增長 31% 至新台幣 2,787 億元。而營業收入更是翻了一番多，達到1040億新台幣，同比增幅達101%。與去年的 4.57 新台幣相比，2022 年每股收益增長到 7.09 新台幣。

So on Page 7, our cash on hand currently stands at TWD 173.8 billion, with our total equity now is over USD 10 billion mark to TWD 335.4 billion. And ASP on Page 8, in Q4, continued to edge up slightly in the fourth quarter of 2022. On Page 9, for revenue breakdown, the change was most significant in the North American market, which represents about 30% of our total revenue compared to 23% in the previous quarter. Asia probably showed the biggest decline from 52% of revenue to 54%.

所以在第 7 頁，我們手頭的現金目前為 1738 億新台幣，我們的總股本現在超過 100 億美元大關，達到 3354 億新台幣。第 8 頁的平均售價在 2022 年第四季度繼續小幅上漲。在第 9 頁，對於收入細分，北美市場的變化最為顯著，與我們相比，北美市場約占我們總收入的 30%上一季度為 23%。亞洲的收入下降幅度可能最大，從 52% 降至 54%。

On Page 10, that's the full year breakdown and the change is less significant compared to the quarterly results. Asia represents 61% of the total pie and U.S. represent about 24% in the full year of 2022. On Page 11, the quarterly breakdown of IDM versus fabless, stands at 19% IDM and 81% fabless. For full year, on the next page, remain almost unchanged with IDM represent about 15% for the full year revenue. On Page 13, communication, computer and consumer didn't change much on a quarterly sequential comparison with communication still remain the biggest of -- 45% of the total revenue. Other segments, which include auto has continued to grow at a faster pace compared to the rest of the segment is now 18% of our total revenue. For the full year, communication remain around 45% when consumer is about 26%.

在第 10 頁上，這是全年的細目分類，與季度結果相比變化不大。到 2022 年全年，亞洲佔總餡餅的 61%，美國約佔 24%。在第 11 頁上，IDM 與無晶圓廠的季度細分分別為 19% IDM 和 81% 無晶圓廠。對於全年，在下一頁上，IDM 幾乎保持不變，佔全年收入的 15% 左右。在第 13 頁，通信、計算機和消費者在季度連續比較中沒有太大變化，通信仍然是最大的——佔總收入的 45%。與其他細分市場相比，包括汽車在內的其他細分市場繼續以更快的速度增長，目前占我們總收入的 18%。全年來看，當消費者約為 26% 時，通信仍保持在 45% 左右。

On Page 15, the quarterly technologies breakdown. Now we can see 22/28-nanometer represent 28% of the biggest pie of the chart for the Q4 revenue; 40-nanometer is about 17%; the legacy 8-inch or 0.25 and above declined the most in the 4Q '22. For the full year, 22/28-nanometer represents about 24%, also the biggest pie of the chart for the full year of 2022. On Page 17, the quarterly capacity breakdown, we have some annual maintenance in Taiwan and also China for Q1 '23. So there's some minor decline in available capacity, which will gradually back to normal in Q2 of 2023. And there will be also some new capacity come on stream in the third quarter for our P5 and P6 in Tainan. Our next page is our current full year cash-based budget for CapEx right now is about USD 3 billion with 90% of the USD 3 billion contributed to around all the 12-inch related expansion.

在第 15 頁，季度技術細分。現在我們可以看到 22/28 納米佔第四季度收入圖表中最大餅圖的 28%； 40納米約佔17%；傳統的 8 英寸或 0.25 英寸及以上在 22 年第四季度下降最多。對於全年，22/28 納米約佔 24%，也是 2022 年全年圖表中最大的餅圖。在第 17 頁，季度產能細分，我們在台灣和中國大陸進行了一些年度維護，第一季度'23。因此，可用產能略有下降，將在 2023 年第二季度逐漸恢復正常。第三季度，台南的 P5 和 P6 也將有一些新產能投產。我們的下一頁是我們目前全年基於現金的資本支出預算，目前約為 30 億美元，其中 30 億美元中的 90% 用於所有 12 英寸相關的擴展。

So the above is a summary of UMC's results for Q4 2022. More details are available in the report, which has been posted on our website.

以上是聯華電子 2022 年第 4 季度的業績摘要。更多詳情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.

我現在將把電話轉給聯華電子總裁 Jason Wang 先生。

Thank you, Chi-Tung Liu. Good evening, everyone. Here, I would like to share UMC's fourth quarter and 2022 highlights. In the fourth quarter, due to a significant slowdown across most of our end markets and inventory correction in the semiconductor industry, our wafer shipments fell 14.8% quarter-over-quarter, while overall fab utilization rate dropped to 90%. Average selling price increased slightly during the quarter as a result of our ongoing product mix optimization efforts, moderating the decline in revenue. For the fourth -- full year 2022, UMC's revenue hit the record high of TWD 279 billion, while operating income exceed TWD 100 billion. Gross margin reached 45%, driven by a more favorable foreign exchange rate, expanding 22/28-nanometer portfolio and newly added capacity. We have taken advantage of the industry upturn over the past 2 years to enhance our differentiation in specialty technology offering, improve profitability and deepen relationship with our key customers. Revenue from 22/28-nanometer technology increased more than 56% year-over-year, driven by our industry-leading 28-nanometer process for OLED display drivers and image signal processors. Our automotive segment also delivered impressive growth in 2022, increasing 82% year-over-year to account for approximately 9% of total sales. We expect this segment will continue to be a key growth catalyst in 2023 and beyond, driven by the long-term trend of vehicle electrification and automation, UMC is well positioned to serve the market with our comprehensive portfolio of auto-grade process technologies and facilities certified according to rigorous quality standards, while we continue to build strong partnerships

謝謝你，劉志東。各位晚上好。在這裡，我想分享一下聯電第四季度和2022年的亮點。第四季度，由於我們大部分終端市場的顯著放緩和半導體行業的庫存調整，我們的晶圓出貨量環比下降14.8%，而整體晶圓廠利用率下降至90%。由於我們正在進行的產品組合優化工作，本季度平均售價略有上升，從而緩和了收入的下降。 2022年全年，聯華電子營收創下2790億新台幣的歷史新高，營業收入突破1000億新台幣。受更有利的匯率、擴大 22/28 納米產品組合和新增產能的推動，毛利率達到 45%。我們利用過去 2 年的行業好轉來增強我們在專業技術產品方面的差異化，提高盈利能力並加深與主要客戶的關係。在我們行業領先的 OLED 顯示驅動器和圖像信號處理器 28 納米工藝的推動下，22/28 納米技術的收入同比增長超過 56%。我們的汽車業務在 2022 年也實現了令人矚目的增長，同比增長 82%，約佔總銷售額的 9%。我們預計該細分市場將在 2023 年及以後繼續成為關鍵的增長催化劑，在汽車電氣化和自動化的長期趨勢的推動下，UMC 已做好充分準備，以我們全面的汽車級工藝技術和設施組合服務於市場根據嚴格的質量標准進行認證，同時我們繼續建立牢固的合作夥伴關係

with world-class automotive leaders.

與世界級的汽車領導者。

Given the soft global economic outlook for 2023, we expect the current challenging environment to persist through the first quarter as customers' days of inventory are still higher than normal while order visibility remains low. To manage this period of weakness, the company is implementing strict cost control measures and deferring certain capital expenditures where possible. In the longer term, we remain positive that UMC's differentiated specialty technology leadership, geographically diversified capacity offering, and quality and operational excellence will enable the company to capture demand fueled by continuous digital

鑑於 2023 年全球經濟前景疲軟，我們預計當前充滿挑戰的環境將持續到第一季度，因為客戶的庫存天數仍高於正常水平，而訂單能見度仍然很低。為了應對這段疲軟時期，公司正在實施嚴格的成本控制措施，並儘可能推遲某些資本支出。從長遠來看，我們仍然樂觀地認為聯華電子差異化的專業技術領導地位、地域多元化的產能供應以及卓越的質量和運營能力將使該公司能夠捕捉到持續數字化推動的需求

transformation across industries and be the foundry of choice for leading customers.

跨行業轉型，成為領先客戶的首選鑄造廠。

Now let's move on to the first quarter 2023 guidance. Our wafer shipment will decline by high teens percentage range. ASP in U.S. dollar will remain flat. Please note that we expect a 3% to 4% adverse impact on foreign change on revenue. Gross profit margin will be in the mid-30% range. Capacity utilization rate will be approximately 70%. Our 2023 cash-based CapEx will be budgeted at USD 3 billion.

現在讓我們繼續討論 2023 年第一季度的指導方針。我們的晶圓出貨量將下降十幾%。以美元計價的平均售價將保持平穩。請注意，我們預計國外收入變化將產生 3% 至 4% 的不利影響。毛利率將在30%左右。產能利用率約為70%。我們 2023 年基於現金的資本支出預算為 30 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。謝謝大家的關注。現在我們準備好提問了。

(Operator Instructions) And our first question comes from Randy Abrams with Credit Suisse.

（操作員說明）我們的第一個問題來自瑞士信貸的 Randy Abrams。

Okay. My first question, if you could just discuss your view on the slope of this business cycle. With the high teens decline in the first quarter, do you expect it to mark the low or do you see or expect given demand and inventory, further correction into second quarter? And then if you could give a view just on the end markets, do you see any areas getting closer to stabilization or inventory levels already getting down? And then from the stronger like auto/other, are you seeing any weakness start to come in?

好的。我的第一個問題是，您能否談談您對這個商業周期斜率的看法。隨著第一季度高位下降，您是否預計它會創下低點，或者您是否看到或預計鑑於需求和庫存，第二季度會進一步調整？然後，如果您可以僅對終端市場發表看法，您是否看到任何領域正在接近穩定或庫存水平已經下降？然後從像汽車/其他這樣的強者那裡，你看到任何弱點開始出現了嗎？

Well, currently, we are still in the midst of the inventory correction, like I mentioned earlier. However, we did see strong inventory improvement in some segments such as TDDI or high-voltage devices in mobile space. And so, we are working closely with our strategic customers to proactively address those inventory burdens in addition to the TDDI, and we expect those inventory situation will improve gradually and with high visibility second half 2023. And so, we think that the inventory situation is improving, but probably not going to have -- not going to become better until the second half of 2023.

嗯，目前，我們仍處於庫存調整之中，就像我之前提到的那樣。然而，我們確實看到某些細分市場的庫存大幅改善，例如 TDDI 或移動領域的高壓設備。因此，我們正在與我們的戰略客戶密切合作，以積極解決除 TDDI 之外的這些庫存負擔，我們預計這些庫存情況將在 2023 年下半年逐漸改善並具有很高的知名度。因此，我們認為庫存情況是正在改善，但可能不會——要到 2023 年下半年才會變得更好。

For the 2023 outlook, well, I mean given the cyclical nature of the semi industry, no one is immune from the end market downturns. While we were able to mitigate our loading in the second half of 2022 (inaudible) to a downturn, thanks to the growth in our auto business, sustain our business momentum and which I also touched at about 82% year-over-year. But for the first half of 2023, we do foresee a continued softened demand in the smartphone, PC, consumer market that will continue and for the inventory digestion reason. And meanwhile, the inventory digestion will continue to be our first priority. Nevertheless, we expect the first half, if not, the Q1, will be the (inaudible).

對於 2023 年的前景，嗯，我的意思是考慮到半導體行業的周期性，沒有人能免受終端市場低迷的影響。雖然我們能夠將 2022 年下半年（聽不清）的負荷減輕到經濟低迷，但由於我們汽車業務的增長，維持了我們的業務勢頭，我也觸及了約 82% 的同比增長。但對於 2023 年上半年，我們確實預見到智能手機、個人電腦、消費市場的需求將持續疲軟，並且出於庫存消化的原因。同時，消化庫存仍將是我們的首要任務。儘管如此，我們預計上半年（如果不是）將是（聽不清）。

Okay. So it sounds like first half, if not Q1, so it's still too early to call for sure, but pretty close, it sounds like based on what you see, if that's correct. And then I wanted to ask your breakeven utilization is much lower now, like at 70%, you have a mid-30s gross margin still. So is that influencing or if you could discuss your feel on pricing, given some cycles you might be close to loss-making. But how is your view on your baseline pricing and also just pressure coming from customers needing help out. If you could discuss a view how well kind of -- could continue to hold? And if you could discuss the latest on how the LTAs on the 28 new capacity are holding up?

好的。所以這聽起來像是上半年，如果不是 Q1，所以現在確定還為時過早，但非常接近，如果這是正確的話，這聽起來像是基於你所看到的。然後我想問你現在的盈虧平衡利用率要低得多，比如 70%，你的毛利率仍然在 30 多歲左右。鑑於某些週期，您可能會接近虧損，這是否會產生影響，或者您是否可以討論您對定價的看法。但是您對基准定價的看法如何，以及來自需要幫助的客戶的壓力。如果你能討論一種觀點——可以繼續持有嗎？如果你能討論一下關於 28 個新容量的 LTA 如何維持的最新情況？

Okay. First, given the continuous end demand weakness in the PC, smartphone and consumer segment, we are experiencing the prolonged inventory correction cycle. And we believe the pricing adjustment at this point will still produce very limited effect in demand creation under the circumstances. And for the UMC's pricing consideration it's still based on mainly upon the value proposition and supply chain relevance. We expect ASP outlook to remain firm in 2023. While the ASP is not the only consideration in customer management, the yield improvement, technology offering, capacity support, also key factors to strengthen our customers' competitiveness, which we will continue to support in that. Meanwhile, we will continue working with our customers to make sure they remain competitive and relevant in their respective market. So for the outlook of the ASP today, we will still remain firm in 2023. Now for the 28-nanometer ASP situation, we continue with our cost reduction and productivity improvement efforts to remain competitive even in light of the higher inflationary costs throughout the entire supply chain. And we will cooperate with our customers to navigate through (inaudible) in conjunction with our internal cost reduction effort. But we still feel we have pretty solid position on 28. And if there is any cost related, and we will closely working with our customers on that.

好的。首先，鑑於個人電腦、智能手機和消費領域的終端需求持續疲軟，我們正在經歷延長的庫存修正週期。而且我們認為此時的價格調整在這種情況下對創造需求的影響仍然非常有限。對於聯電的定價考慮，它仍然主要基於價值主張和供應鏈相關性。我們預計 2023 年 ASP 前景將保持堅挺。雖然 ASP 不是客戶管理的唯一考慮因素，但良率提升、技術提供、產能支持也是增強客戶競爭力的關鍵因素，我們將繼續支持這一點.同時，我們將繼續與客戶合作，確保他們在各自的市場中保持競爭力和相關性。因此，對於今天的 ASP 前景，我們在 2023 年仍將保持堅定。現在對於 28 納米 ASP 的情況，我們繼續降低成本和提高生產率，即使在整個過程中通貨膨脹成本較高的情況下也能保持競爭力。供應鏈。我們將與我們的客戶合作，結合我們的內部成本削減努力，通過（聽不清）導航。但我們仍然覺得我們在 28 日的立場非常穩固。如果有任何成本相關，我們將就此與客戶密切合作。

And I think there's also a question about LTA?

我認為還有一個關於 LTA 的問題？

Yes, that's right. How the -- like if you had customers need to change negotiation and how well -- most of them, I think, are tied to the new capacity, how those are holding in?

恩，那就對了。如何 - 如果你有客戶需要改變談判以及 - 他們中的大多數人，我認為，如何與新能力聯繫在一起，他們是如何堅持的？

Well, I mean, while the LTA is becoming more of a common practice in our -- I mean, for us in the semi industry because the industry is starting to recognize the semiconductor is essential. To plan the future mutual growth, strategic customers are willing to sign LTA to secure additional capacity. And our strong customer engagement and product pipeline have also demonstrated to us and as well as the customers' key objectives. So right now, we think the ASP situation is less relevant in those LTA situation. And even with some of the loading consideration, maybe some penalty occur, but the penalty is not our key objective for those LTA. And at this point, it's still insignificant as a percentage of revenue.

好吧，我的意思是，雖然 LTA 在我們中變得越來越普遍——我的意思是，對於我們半導體行業來說，因為該行業開始認識到半導體是必不可少的。為了規劃未來的共同增長，戰略客戶願意簽署LTA以獲得額外的產能。我們強大的客戶參與度和產品線也向我們以及客戶展示了主要目標。所以現在，我們認為 ASP 情況與那些 LTA 情況不太相關。即使有一些負載考慮，也可能會發生一些懲罰，但懲罰不是我們對那些 LTA 的主要目標。在這一點上，它佔收入的百分比仍然微不足道。

Okay. And if I just fit one last one on your tax rate, maybe Chi-Tung can address. I think fourth quarter looks like it went up some, so if there was a factor. And then just netting out credits going away, but also the new program, if you could give a view on the tax into the coming year?

好的。如果我只在你的稅率上加上最後一個，也許 Chi-Tung 可以解決。我認為第四季度看起來有所上升，所以如果有一個因素的話。然後只是扣除抵免額，還有新計劃，如果你能對來年的稅收發表看法？

Q4 was like a one-off, our overseas subsidiaries with annual remittance policy about the profit, where we took a provision for this potential remittance of the overseas profit. It was mostly on paper, it's not really happening yet. But just a onetime tax provision at the year-end.

Q4就像是一次性的，我們的海外子公司對利潤有年度匯出政策，我們為這筆可能匯出的海外利潤計提了準備金。它主要是在紙上，它還沒有真正發生。但只是年底的一次性稅收撥備。

Okay. And then maybe the forward look is 15% still the right number?

好的。那麼也許前瞻性的 15% 仍然是正確的數字？

15% still the right number.

15% 仍然是正確的數字。

Our next question comes from Gokul Hariharan with JPMorgan.

我們的下一個問題來自摩根大通的 Gokul Hariharan。

Could you talk a little bit about what is -- what you're expecting now for 2023? Any early reads in terms of the outlook? Your bigger competitor talked about foundry industry being down 3% or so this year. Just wanted to hear UMC's view. And secondly, in terms of Q1, could you talk a little bit about 28-nanometer utilizations. I think overall utilization, you didn't mention it will go down to 70%. Could we talk a little bit about how 28-nanometer is holding up? Is it holding up better than the overall company utilization?

你能談談你現在對 2023 年的期望嗎？任何關於前景的早期閱讀？你更大的競爭對手談到代工行業今年下降了 3% 左右。只是想听聽UMC的看法。其次，就第一季度而言，您能否談談 28 納米的利用率。我認為整體利用率，你沒有提到它會下降到 70%。我們能談談 28 納米的情況嗎？它是否比公司的整體利用率更好？

Sure. For the 2023 outlook, the 2023 will be a (inaudible) year for both semi and the foundry industry due to the deterioration of the global economics, ongoing inventory correction and weaken the consumer demand. So we project the semi industry is going to forecast a decline by the low single digit and while the foundry industry to shrink by mid-single digit. And the question about the loading on the 28 nanometer in Q1, in July, in general, the 8-inch loading will be lighter than 12-inch to 30. And we expect 8-inch will operate below the corporate average while the 12-inch will be higher than the corporate average. For the 28-nanometer --

當然。對於 2023 年的展望，由於全球經濟惡化、持續的庫存調整和消費者需求減弱，2023 年對於半導體和代工行業來說將是（聽不清）的一年。因此，我們預計半導體行業將預測低個位數下降，而代工行業將收縮中個位數。還有關於Q1 28納米出貨的問題，7月份總體來說，8英寸出貨會比12英寸要輕30。我們預計8英寸將低於公司平均水平，而12-英寸將高於企業平均水平。對於 28 納米——

It should be slightly better than the 12-inch.

應該比12寸的稍微好一點。

Even slightly better than the 12-inch.

甚至比12寸的還要好一點。

Yes. Okay. Understood. My second question is on the CapEx. The USD 3 billion number, given that we are running it into a downturn, could you talk a little bit about what is the primary -- I think it's mostly 28-nanometer and some Singapore-related expansion. But could you give us a little bit more color on what the USD 3 billion CapEx comprises of this year? And any qualitative thoughts on -- do you think about any adjustment in the CapEx, given we are entering the year with utilization at a lower level and the inventory correction?

是的。好的。明白了。我的第二個問題是關於資本支出的。 30 億美元的數字，考慮到我們正在陷入低迷，你能談談什麼是主要的——我認為它主要是 28 納米和一些與新加坡相關的擴張。但是你能否給我們更多關於今年 30 億美元資本支出的內容的顏色？以及任何定性的想法 - 你是否考慮過資本支出的任何調整，因為我們進入了較低水平的利用率和庫存調整？

Sure. The majority of the 2023 CapEx will be budgeted for new capacity expansion for the 12A P6 and 12i, the P3 facilities, which are endorsed by the customer as well deposit for that too. A portion of the 28 -- I mean the portion of the 2023 CapEx budget are also geared toward to a product mix upgrade. And the remaining budget will be reserved for the clean room maintenance and general budget. So basic is the P6 and the P3 facility as the major portion of that. As far as the CapEx adjustments, we have a plan to dynamically adjust the CapEx spend, depends on the macro conditions and market demand. And we will -- we do have the flexibility to adjust our CapEx expansion and the general maintenance budget if it comes to a need.

當然。 2023 年資本支出的大部分預算將用於 12A P6 和 12i（P3 設施）的新產能擴張，這些設施也得到了客戶的認可，並為此投入了資金。 28 的一部分——我的意思是 2023 年資本支出預算的一部分也用於產品組合升級。其餘預算將用於潔淨室維護和一般預算。 P6 和 P3 設施是其中的主要部分，因此非常基本。至於資本支出調整，我們有計劃動態調整資本支出支出，這取決於宏觀條件和市場需求。我們將 - 如果需要，我們確實可以靈活地調整我們的資本支出擴張和一般維護預算。

Got it. Just wanted to follow up on the first half bottoming. As things stand right now, do you feel the inventory in the supply chain will reach a normal or a low enough level by end of Q1? Or you think that there are several areas where it still needs another quarter of inventory clearance to kind of get over that?

知道了。只是想跟進上半年的觸底情況。從目前的情況來看，您認為到一季度末，供應鏈中的庫存是否會達到正常水平或足夠低的水平？或者你認為有幾個領域仍然需要另外四分之一的庫存清理來克服這個問題？

I think, like I said earlier, some areas are improved and some are still high. I think by the end of the Q1, I think will be better than the Q4. I think by Q2, is in the -- we expect inventory will improve significantly to more than normal level. So we're expecting the inventory will gradually improve. And the second half of 2023, we have a much -- we have certain confidence that will come back, yes.

我認為，正如我之前所說，有些領域有所改善，有些領域仍然很高。我認為到第一季度末，我認為會比第四季度好。我認為到第二季度，我們預計庫存將顯著改善，超過正常水平。因此，我們預計庫存將逐漸改善。到 2023 年下半年，我們有很多 - 我們有一定的信心會回來，是的。

Is that confidence driven by any specific projects that you have or you are basically thinking about overall inventory restocking in the industry happening in second half?

這種信心是由您擁有的任何特定項目驅動的，還是您基本上在考慮下半年發生的行業整體庫存補貨？

Actually, multiple. One is the DOI check with the customer. And the other is the engagement projects and also the end market outlook, the alignment that we have with the customers. So there are multiple factors. And however, we are cautiously optimistic about second half, we just have to continue monitoring the progress of the DOI situation.

實際上，多個。一種是與客戶進行 DOI 檢查。另一個是參與項目以及最終市場前景，即我們與客戶的一致性。所以有多種因素。然而，我們對下半年持謹慎樂觀態度，我們只需要繼續監測 DOI 情況的進展。

Our next question comes from Charlie Chan with Morgan Stanley.

我們的下一個問題來自摩根士丹利的陳查理。

Jason, Chi-Tung and Michael, first of all, congratulations to a very strong first quarter result and a happy Chinese New Year ahead. So Jason, my first question is really about your industry assumption. I think you shared with us and also investors about your methodology, right, to forecast the industry revenue. So when I think about the foundry industry, I feel like the revenue should be much lower than semi customers because there is at least 1 month or even more than 1 month's chip inventory at the customer side. So that means the foundry revenue should be at least at 5% or even 10% lower than your customers in 2023 because customers need to pay off those inventory before they reorder. So can you explain why your industry assumption is that semi now high single digit, but foundry will be down only mid-single digit? Can you start with that question?

Jason、Chi-Tung 和 Michael，首先，祝賀第一季度的業績非常強勁，祝大家農曆新年快樂。所以傑森，我的第一個問題是關於你的行業假設。我認為您與我們以及投資者分享了您預測行業收入的方法。所以一想到晶圓代工行業，我覺得收入應該比半客戶低很多，因為客戶端至少有1個月甚至1個月以上的芯片庫存。因此，這意味著代工收入在 2023 年應該至少比您的客戶低 5% 甚至 10%，因為客戶需要在重新訂購之前清償這些庫存。那麼你能解釋一下為什麼你的行業假設是半現在高個位數，但代工只會下降中個位數嗎？你能從這個問題開始嗎？

Well, I mean, it is -- like you said, we do have a methodology that calculating that. It is maybe a really complicated answer. (inaudible) The semi is better right now, it's low single digit, but we are -- the foundries about mid-single digit. But even within the foundry, there are different technology nodes and some nodes are better than the others. So -- and then, for instance, even we report that the foundry industry will shrink by mid-single digits, but UMC addressable may be a little bit different. And then if you look at the end market exposure and every foundry will probably be different. But -- so -- and so we do look at the multilayers of the data. And at this point, we think the foundry will be about mid-single-digit decline, yes.

好吧，我的意思是，就像你說的，我們確實有一種計算方法。這可能是一個非常複雜的答案。 （聽不清）半成品現在更好，它是低個位數，但我們是 - 鑄造廠大約是中個位數。但即使在代工廠內部，也存在不同的技術節點，有些節點優於其他節點。所以 - 然後，例如，即使我們報告代工行業將縮減中個位數，但 UMC 可尋址可能會有所不同。然後，如果您查看終端市場風險，每個代工廠可能會有所不同。但是——所以——所以我們確實查看了數據的多層。在這一點上，我們認為代工廠將出現大約中個位數的下滑，是的。

Low single-digit decline.

低個位數跌幅。

I'm sorry about that. Yes. So just a quick follow-up, right? First of all, with the UMC addressed low market is better or worse than the industry average? And second question you said, do you consider some major foundries, the wafer price hike in your foundry industry assumption?

對此我感到很抱歉。是的。所以只是快速跟進，對吧？首先，用聯電解決低端市場是好於還是差於業界平均水平？你說的第二個問題，你是否考慮過一些主要的代工廠，你的代工行業假設中的晶圓價格上漲？

I mean there are some, but not to the full extent. But going back to the question about the UMC addressable, no. Currently, we anticipate the decline will be in the low teens percentage range.

我的意思是有一些，但不是全部。但是回到關於 UMC 可尋址的問題，不。目前，我們預計下降幅度將在十幾歲的低百分比範圍內。

Low teens?

低青少年？

Yes.

是的。

Okay. Got it. Okay. And -- you just said that 1Q could be bottom cycle. Do you mean that your second quarter foundry utilization will flat to up? Is that a right interpretation?

好的。知道了。好的。而且 - 你剛才說 1Q 可能是底部周期。您的意思是您的第二季度代工利用率將持平上升嗎？這是正確的解釋嗎？

I mean, we'll give you the guidance.

我的意思是，我們會給你指導。

Just as I was saying the first half will be trough, it's not Q1. So some time in first quarter, we hope to be the trough. Hopefully, this change to be Q1.

正如我所說的上半年將是低谷，這不是第一季度。所以在第一季度的某個時候，我們希望成為低谷。希望這一變化成為第一季度。

And let me switch gears to the pricing, right? I appreciate company strategy that has cut doesn't translate into better demand, et cetera, right? But some of your competitors are cutting plans. Would you foresee some market share lows in some mature nodes, if you want to be firm up on your pricing?

讓我換檔定價，對嗎？我很欣賞已經削減的公司戰略並沒有轉化為更好的需求，等等，對吧？但是您的一些競爭對手正在削減計劃。如果您想堅定定價，您會預見到一些成熟節點的市場份額會下降嗎？

I mean our objective is clear. We will support our customers and to make sure that they remain competitive and also with their respective market shares. Now the -- for UMC consider the AC business loading trade-off, the way we see it is there is a considerable progress was made in pricing reposition for UMC. And the cost reduction, the productivity improvement in the past 2 years actually help us with that. We intend to preserve the win-win structure profitability between the foundry and customers. And under the recent market condition in our product portfolio, we believe the trade-off between the loading and the price will end up with limited benefit in demand creation because the weakness of the PC and the smartphone and consumer sales group. However, we will continue to work with our customers to make sure they secure their market share in their respective markets.

我的意思是我們的目標很明確。我們將支持我們的客戶並確保他們保持競爭力以及各自的市場份額。現在 - 對於 UMC 考慮 AC 業務加載權衡，我們看到它的方式是 UMC 在定價重新定位方面取得了相當大的進展。過去 2 年的成本降低和生產力提高實際上幫助了我們。我們打算保持代工廠和客戶之間的雙贏結構盈利能力。在我們產品組合的近期市場狀況下，我們認為負載和價格之間的權衡最終對創造需求的好處有限，因為 PC 和智能手機以及消費者銷售團隊的疲軟。然而，我們將繼續與我們的客戶合作，以確保他們在各自的市場中獲得市場份額。

Okay. So could you be nimble on pricing if customers come back to say, hey, is demand, if you cut price -- I'm just wondering how firm are you on the pricing?

好的。那麼，如果客戶回來說，嘿，是需求，如果你降價——我只是想知道你對定價有多堅定？

I mean we (inaudible) in terms of our guidance right now for 2023 and we also in -- I mean, it's our intent to preserve that structured vehicle structure the profitability and protecting the pricing position in terms of AC management, and we'll continue to manage that with our customer closely.

我的意思是我們（聽不清）就我們現在 2023 年的指導而言，我們也在 - 我的意思是，我們的目的是保持結構化車輛結構的盈利能力並保護 AC 管理方面的定價地位，我們將繼續與我們的客戶密切合作。

Okay. And my last question is probably for Chi-Tung. So based on above discussion, assumptions, et cetera. Can you give us a kind of full year gross margin guidance? And do you have like a minimal gross margin target based on your depreciation assumption, pricing assumption, et cetera?

好的。我的最後一個問題可能是給 Chi-Tung 的。因此，基於上述討論、假設等。你能給我們一個全年的毛利率指導嗎？您是否有基於折舊假設、定價假設等的最低毛利率目標？

Yes. We don't give out the full year gross margin outlook. But we do have the depreciation assumption for 2023, which right now after the cost in CapEx will be a low single-digit decline compared to year 2022.

是的。我們不給出全年毛利率展望。但我們確實有 2023 年的折舊假設，現在與 2022 年相比，資本支出成本將出現較低的個位數下降。

So does that mean -- okay, okay. So does that mean that first half is also the bottom of the gross margin?

那麼這是否意味著——好吧，好吧。那麼是不是意味著上半年也是毛利率的底部呢？

Overall, as Jason just mentioned, from a business standpoint of view, we hope the trough will be first half, sometime first half of this year, it's not first quarter. So margin should reflect to the business momentum, but maybe 1 or 2 quarter differences, there could be some time lag how you reflect the cost versus the revenue improvement. But overall, we certainly hope the trough will be some time in first half.

總的來說，正如傑森剛才提到的，從業務的角度來看，我們希望低谷出現在上半年，有時是今年上半年，而不是第一季度。因此，利潤率應該反映業務勢頭，但可能有 1 或 2 個季度的差異，您反映成本與收入改善的方式可能會有一些時間滯後。但總的來說，我們當然希望低谷會出現在上半年的某個時候。

I see, I see. So Jason, I come up with 1 question. I think some investors are concerned about your -- 1 of your IDM customers because they also have some challenges about their own fab utilization, right? So they may receive back some 40-nanometer or 70-nanometer or 22-nanometer project back to their own fab in 2024. How do you address that -- their concern? I think the end market should be -- end products should be like a smartphone ISP or AMOLED driver IC.

我明白了，我明白了。傑森，我提出了 1 個問題。我認為一些投資者擔心您的 - 1 個 IDM 客戶，因為他們在自己的晶圓廠利用率方面也面臨一些挑戰，對嗎？因此，他們可能會在 2024 年將一些 40 納米、70 納米或 22 納米的項目收回到他們自己的晶圓廠。你如何解決這個問題——他們的擔憂？我認為終端市場應該是——終端產品應該像智能手機 ISP 或 AMOLED 驅動器 IC。

Well, I mean, there's always a cyclical nature of this industry, right? So we are no stranger to that. So we have to just deal with all business circumstance. The way we see it is we believe the product mix optimization is to continue to pursue for us to enhance the long-term fundamentals. And we'll continue our business development out of the mega trends, not just limited 1 customer, but there is diversified market focus as well as the customer base and continue to strengthen our specialty technology offering, quality operations. So then we can continue to be the best foundry and for those products to be produced in UMC. And now, we do have -- we do believe and we have a strong engagement product pipeline to support that long-term fundamentals. So any short-term volatility, we will continue to work with the customer to make sure that we both remain very competitive and relevant to this market.

嗯，我的意思是，這個行業總是有周期性的，對吧？所以我們對此並不陌生。因此，我們必須處理所有業務情況。我們的看法是，我們認為產品組合優化是為我們繼續追求以增強長期基本面。我們將在大趨勢中繼續我們的業務發展，不僅限於 1 個客戶，而是有多元化的市場焦點和客戶群，並繼續加強我們的專業技術產品和質量運營。這樣我們就可以繼續成為最好的代工廠，讓聯電生產這些產品。現在，我們確實有 - 我們確實相信並且我們有強大的參與產品管道來支持長期基本面。因此，任何短期波動，我們將繼續與客戶合作，以確保我們雙方都保持非常有競爭力並與這個市場相關。

But you should have to make a decision about your 70-nanometer capacity, right? So do you have any visibility right now for 70-nanometer capacity expansion?

但是你應該對你的 70 納米容量做出決定，對吧？那麼，您現在對 70 納米產能擴張有任何了解嗎？

Yes. I mean the -- that's more of a question about the technology migration, right? So in our view, the technology migration will continue. And once we are aligned with our customers, then we will also put adequate capacity to support that migration. And at this point, we -- I mean I'm not commenting about the customer specific or product detail, but the question is about 70-nanometer the driver and the ISP, we expect the next mainstream note for that is after 28-nanometer will be 22 nanometer. The 22-nanometer is a mature technology and with the manufacturing feasibility is already proven. And we believe the 22/28 is a long-lasting node, the 70-nanometer solution will be a subsegment of the total OLED driver and ISP solution. And before 2024, the volume production for 70-nanometer will be bare minimum. And right now, we're seeing the 28-nanometer still the most competitive offering in the marketplace. And when considering the overall factors, performance, cost, capacity availability and the system acceptance, so -- our outcome in the 22-nanometer solution have already been adopted, okay, by the leading partners with their design. And so, therefore, our confidence with the 22-nanometer will continue to have a business sustainability well into the next wave. And from a technology migration point of view, we are also working with our customer and partners to find the future roadmap, and we will not be absent from that market anyway.

是的。我的意思是——這更多是關於技術遷移的問題，對吧？所以在我們看來，技術遷移將繼續下去。一旦我們與客戶保持一致，我們也會投入足夠的能力來支持這種遷移。在這一點上，我們——我的意思是我不是在評論客戶特定或產品細節，而是關於 70 納米驅動器和 ISP 的問題，我們預計下一個主流說明是在 28 納米之後將是22納米。 22納米是一項成熟的技術，其製造可行性已經得到證實。我們相信 22/28 是一個持久的節點，70 納米解決方案將成為整個 OLED 驅動器和 ISP 解決方案的一個子部分。而在 2024 年之前，70 納米的量產將是最低限度的。現在，我們看到 28 納米仍然是市場上最具競爭力的產品。在考慮整體因素、性能、成本、容量可用性和系統驗收時，我們在 22 納米解決方案中的成果已經被領先合作夥伴的設計採用了。因此，我們對 22 納米的信心將在下一波浪潮中繼續保持業務可持續性。而且從技術遷移的角度來看，我們也在和我們的客戶和合作夥伴一起尋找未來的路線圖，無論如何我們都不會缺席那個市場。

And our next question comes from Szeho Ng with China Renaissance.

我們的下一個問題來自 China Renaissance 的 Szeho Ng。

I have 2 questions on 28 nano. Given the fact that we are still building up 28 nanometer capacity in multiple locations in Taiwan, China and maybe later on in Singapore, right? So will we be offering a comprehensive portfolio of technologies in each of the fab locations or we will be more selective in offering the technology platforms?

我有 2 個關於 28 nano 的問題。考慮到我們仍在中國台灣和新加坡的多個地點建設 28 納米產能，對吧？那麼我們會在每個晶圓廠地點提供全面的技術組合，還是我們會更有選擇性地提供技術平台？

Well, I mean, the product mix on different sides is very dynamic. We are aligning to the outlook and the idea is we want to be creating as much as the flexibility, but without the sacrifice to scale. So many of that is ongoing discussions. So I don't have a specific or fixed mix for you as a reference. But the message is -- I mean, the update is that we have an option to dynamically adjust that, subject to the outlook and alignment with the customer.

好吧，我的意思是，不同方面的產品組合非常動態。我們正在與前景保持一致，我們的想法是我們希望創造盡可能多的靈活性，但又不犧牲規模。其中有很多正在進行的討論。所以我沒有一個特定的或固定的組合供你參考。但信息是——我的意思是，更新是我們可以根據前景和與客戶的一致性來動態調整它。

Yes. More importantly, if I may, we actually offer more choices for customers in terms of the production sites. So if customer placed 22/28 nanometers orders to UMC, they have option to be produced either in Taiwan, China, Singapore. So we are one of the very few foundries that can offer multiple site choices amid the current geopolitical attention.

是的。更重要的是，如果可以的話，我們實際上在生產地點方面為客戶提供了更多選擇。因此，如果客戶向聯電下達 22/28 納米訂單，他們可以選擇在台灣、中國或新加坡生產。因此，在當前的地緣政治關注下，我們是為數不多的能夠提供多種選址選擇的鑄造廠之一。

Okay. Sounds great. And the second one on the 28 nano. How do you see upgrading the capacity to the next-generation (inaudible) 40-nano (inaudible)

好的。聽起來不錯。第二個是 28 納米。您如何看待將容量升級到下一代（聽不清）40 納米（聽不清）

I mean there is an option to do so and nothing's easy. The next major wave, it will probably be upgrading from migrating the 28-nanometer to 22-nanometer. And after that, there will be a 14. So there will probably be a couple of layers before we get into the (inaudible) But they are a good percentage of the 2 that actually can convert between those node. So I think we are in a good position to cover all the way to 14 given the 2 mix.

我的意思是有一個選項可以這樣做，而且沒有什麼是容易的。下一波大浪潮，很可能是從 28 納米升級到 22 納米。在那之後，會有一個 14。所以在我們進入（聽不清）之前可能會有幾層，但它們佔 2 層的很大一部分，實際上可以在這些節點之間轉換。所以我認為我們處於一個很好的位置，可以覆蓋到 14 給定的 2 組合。

And our next question comes from Sunny Lin with UBS.

我們的下一個問題來自瑞銀集團的 Sunny Lin。

So my first question is on geopolitical development. So I wonder if in recent quarters, have you started to see some new order opportunities from clients evaluating the supply chain diversification. And if yes, what kind of products do you see more imminent upside? That's my first question.

所以我的第一個問題是地緣政治發展。所以我想知道最近幾個季度，您是否開始從評估供應鏈多元化的客戶那裡看到一些新的訂單機會。如果是，您認為什麼樣的產品更具有迫在眉睫的優勢？這是我的第一個問題。

Well, I mean, we do see trends like that, and we believe we are in position to be benefited from that trend. However, given the current inventory correction, we expect the progress in engagement and the (inaudible) will be more obvious beyond 2023. We will not comment on specific product or customer on this, but we are aware of the geopolitical supply chain concerns for many of the customers and the potential implication on our global customers. So -- and some of it is already in discussion with us to fulfill their sourcing plan. And probably not a good idea at this point to be giving anything specific, yes.

好吧，我的意思是，我們確實看到了這樣的趨勢，並且我們相信我們能夠從這種趨勢中受益。然而，鑑於目前的庫存調整，我們預計參與的進展和（聽不清）將在 2023 年之後更加明顯。我們不會就此對具體產品或客戶發表評論，但我們意識到許多供應鏈的地緣政治擔憂的客戶以及對我們全球客戶的潛在影響。所以 - 其中一些已經在與我們討論以實現他們的採購計劃。是的，目前提供任何具體內容可能不是一個好主意。

No problem. Just to quickly follow up. I understand some of the engagements are still in early stage, but any way we could try to quantify the upside for the coming years?

沒問題。只是為了快速跟進。我知道有些合作仍處於早期階段，但我們有什麼辦法可以嘗試量化未來幾年的上升空間？

Quantify, that is -- it's still too early right now because given the current inventory correction, I think many of this is under the discussion in terms of volume and the product and also the process. And so, I think it's still kind of early again. I think the -- many of this will probably take a year to see them realize it. So I assume we can probably another -- once we have a clear visibility, we'll be able to update you on that.

量化，也就是說——現在還為時過早，因為考慮到當前的庫存調整，我認為其中很多都在數量、產品和流程方面進行討論。所以，我認為現在還為時過早。我認為 - 其中許多可能需要一年時間才能看到他們意識到這一點。所以我想我們可能會再做一次——一旦我們有了清晰的可見性，我們就能向您通報最新情況。

Got it. My second question is real quick on capacity increase. So based on your current CapEx target, what kind of capacity increase you target to increase for this year? And specifically on P6 for 28-nanometer, and so your Singapore expansion for 28, are you still targeting for late 2024?

知道了。我的第二個問題是容量增加真的很快。那麼根據您當前的資本支出目標，您今年的目標是增加什麼樣的產能？特別是在 28 納米的 P6 上，所以你們在新加坡的擴張為 28 納米，你們的目標仍然是 2024 年底嗎？

For 2023, capacity will increase by 4.9% year-over-year and mainly for the 12A P6 profile. The 12A P6 will start on by mid-2023, and it will reach about 12,000 a month by Q4 '23. The P3, the Singapore P3 is targeted to the first half of 2025.

到 2023 年，產能將同比增長 4.9%，主要用於 12A P6 型材。 12A P6 將於 2023 年年中開始生產，到 23 年第四季度將達到每月約 12,000 個。 P3，新加坡P3的目標是2025年上半年。

And our next question comes from Laura Chen with Citigroup.

我們的下一個問題來自花旗集團的 Laura Chen。

Happy New Year. My question is also on the 28-nanometer. While we see the demand is still quite resilient, even we see a lot of inventory correction, but we know that many of them still are PC or smartphone related. So just wondering, do you think that the resilience will continue even during the first half inventory correction at the client side? In that case, how would that impact the overall gross margin as we know that 28-nanometer probably also one of the key catalysts to drive better pricing and also better product mix? That's my first question.

新年快樂。我的問題也是關於 28 納米的。雖然我們看到需求仍然相當有彈性，但我們看到很多庫存調整，但我們知道其中許多仍然與 PC 或智能手機相關。所以只是想知道，您認為即使在上半年客戶端庫存調整期間，彈性也會持續嗎？在那種情況下，這將如何影響整體毛利率，因為我們知道 28 納米可能也是推動更好定價和更好產品組合的關鍵催化劑之一？這是我的第一個問題。

Sure. And first, happy New Year to you, too. And for the 28-nanometer loading, I mean, we remain confident with our 28- and 22-nanometer business. Given that it's a long lasting node driven by many applications, such like ISP, WiFi6, OLED driver. So we expect this 28, 22-nanometer will be partially impacted by -- partially impacted by the inventory correction in communications segment during the first half of 2023, and we do anticipate a full rebound in our 28- and 22-nanometer business starting from second half 2023. So given the current visibility, we have some confidence that they will come back in the second half of '23. For the ASP, we're going to do our part. I mean, we will continue to do our cost reduction, productivity improvement effort to make sure that our customer can remain competitive. And we will cooperate with our customers indicate headwind -- the market headwinds, the cost headwind in conjunction with our cost efforts, and we want to make sure that they will stay competitive with respective to their market share position as well.

當然。首先，祝你新年快樂。對於 28 納米負載，我的意思是，我們對我們的 28 和 22 納米業務仍然充滿信心。鑑於它是一個由許多應用程序驅動的持久節點，例如 ISP、WiFi6、OLED 驅動程序。因此，我們預計這 28、22 納米將部分受到 - 部分受到 2023 年上半年通信部門庫存調整的影響，我們確實預計我們的 28 和 22 納米業務將從2023 年下半年。因此，鑑於目前的能見度，我們有信心他們會在 23 年下半年回歸。對於 ASP，我們將儘自己的一份力量。我的意思是，我們將繼續努力降低成本、提高生產力，以確保我們的客戶能夠保持競爭力。我們將與我們的客戶合作，指出逆風——市場逆風、成本逆風以及我們的成本努力，我們希望確保他們在各自的市場份額地位方面也能保持競爭力。

Okay. That's very clear. And also on the IDM business, you note that throughout the last year, the growth are quite solid and quite substantial. I'm just wondering that on what nodes we see the most growth and also, what kind of application? And given, again, the cyclical downturn across the board, do you think that the IDM outsourcing will continue, particularly in some like MCU or automotive related?

好的。這很清楚。在 IDM 業務方面，您注意到在過去的一年中，增長非常穩固且相當可觀。我只是想知道我們在哪些節點上看到了最多的增長，以及什麼樣的應用程序？再次考慮到全面的周期性低迷，您認為 IDM 外包是否會繼續，特別是在 MCU 或汽車相關領域？

Well, I mean the -- yes, I mean, particularly for the 12-inch and across all different technology node from 28, 22 to extent of the 55 and the 40 automotive space, we do see there is a continuous opportunity for us to engage. It's also aligned to our megatrend and that we have been talking about it. We believe our addressable model will continue to grow, okay? And given our upcoming capacity planning, the 28 and 22 will actually continue enhancing our position in that context. And we are excited to many of the new opportunity that brings to us to increase our relevance to those bundles application. We touched that already, the ISP, the WiFi OLED as well as automotive. And we -- because not just IDM which is what we focus to align with the industry megatrends.

好吧，我的意思是 - 是的，我的意思是，特別是對於 12 英寸以及從 28、22 到 55 和 40 汽車領域的所有不同技術節點，我們確實看到我們有一個持續的機會從事。它也符合我們的大趨勢，我們一直在談論它。我們相信我們的可尋址模型將繼續增長，好嗎？考慮到我們即將進行的容量規劃，28 和 22 實際上將繼續加強我們在這方面的地位。我們很高興有許多新機會給我們帶來了增加我們與這些捆綁應用程序的相關性。我們已經觸及了 ISP、WiFi OLED 以及汽車。而我們——因為不僅僅是 IDM，我們關注的是與行業大趨勢保持一致。

Okay. Great. Because for 1 of the IDM customers probably also see some weakness on the automotive or the industrial. So I'm just wondering since some of the IDM also ramping up their own 12-inch capacity. So whether that will be slightly impact our short-term business, like the megatrend in the longer term is still quite solid. So just wondering, will you also see that kind of MCU automotive business to come down after maybe later in second half or -- later in the first half into second half?

好的。偉大的。因為其中一位 IDM 客戶可能也看到了汽車或工業領域的一些弱點。所以我只是想知道，因為一些 IDM 也在增加他們自己的 12 英寸容量。因此，這是否會對我們的短期業務產生輕微影響，就像長期的大趨勢一樣，仍然相當穩固。所以只是想知道，您是否還會看到這種 MCU 汽車業務可能會在下半年晚些時候或 - 在上半年晚些時候進入下半年？

Not really. I mean we -- it's not -- well, I mean, given the alignment that we have with our customer and we're closely working with them, the capacity growth even within the IDM is actually incorporated to our sourcing strategy with us. So we are part of their sourcing strategy. And so, I do not -- we do not expect the IDMs -- in-house capacity expansion will become a threat to us. And I think given our long-term alignment with the customer and while the customer also recognized the semiconductor supply chain is essential now and I think they've been sharing the data with us in a much better way, and it's more transparent, high-visibility, so -- no, I mean, at this point, we don't anticipate any impact on that.

並不真地。我的意思是我們 - 它不是 - 好吧，我的意思是，鑑於我們與客戶的一致性並且我們正在與他們密切合作，即使在 IDM 內部的產能增長實際上也已納入我們與我們的採購戰略。所以我們是他們採購戰略的一部分。因此，我不會 - 我們不希望 IDM - 內部產能擴張將成為對我們的威脅。而且我認為鑑於我們與客戶的長期合作，同時客戶也認識到半導體供應鏈現在是必不可少的，我認為他們一直在以更好的方式與我們共享數據，而且更加透明，高-可見性，所以 - 不，我的意思是，在這一點上，我們預計不會對此產生任何影響。

Our next question comes from Bruce Lu with Goldman Sachs.

我們的下一個問題來自高盛的 Bruce Lu。

This is Bruce. Can you hear me?

這是布魯斯。你能聽到我嗎？

Yes.

是的。

Okay. Happy New Year.

好的。新年快樂。

Happy New Year to you.

祝你新年快樂。

I think I still need to go back to the pricing. I mean I'm surprised that to talk about our full year pricing will be firm. I want to know the basic assumption for this pricing. This is assuming like healthy recovery in the second half. Does that take into consideration that your new fab will be LTA protected will be like price premium versus marketplace or you're talking about like-to-like basis, the pricing remain firm for the full year?

我想我仍然需要回到定價。我的意思是我很驚訝談論我們的全年定價將是堅定的。我想知道這個定價的基本假設。這是假設下半年健康復蘇。這是否考慮到您的新晶圓廠將受到 LTA 保護，就像相對於市場的價格溢價，或者您在談論類似的基礎，全年定價保持堅挺？

Well, I mean the pricing has a mix, right? I mean the way I have to look at it is there's a mix of pricing and our ASP basically reflects the product mix as well as the pricing adjustment, okay? And so, for the blended ASP guidance that we're taking into account, there's a short-term variation of 12-inch product mix and also the adjustment and also the new P6 ramp. So they are multiple facets that we have blended together so that what we provided to you is more of a blended ASP guidance. So you're right. So this is not like to like, yes.

嗯，我的意思是定價有混合，對吧？我的意思是我必須看待它的方式是混合定價，我們的 ASP 基本上反映了產品組合以及定價調整，好嗎？因此，對於我們正在考慮的混合 ASP 指導，12 英寸產品組合有短期變化，還有調整和新的 P6 斜坡。因此，它們是我們混合在一起的多個方面，因此我們為您提供的更多是混合的 ASP 指南。所以你是對的。所以這不是喜歡，是的。

Okay. So what about the like-to-like base pricing for the -- well, let's say, for the second half of this year? If you take all the --

好的。那麼，今年下半年的基本定價怎麼樣？如果你把所有的——

Well we won't be able to comment on that, as this kind of information, first of all, it's very difficult to predict. Secondly, we can only give you a blended ASP guidance as we always have. So the like-to-like overall conceptually, we can talk about it on a quarterly basis.

好吧，我們無法對此發表評論，因為這種信息首先很難預測。其次，我們只能一如既往地為您提供混合 ASP 指導。所以從概念上來說，整體的點贊率，我們可以按季度來討論。

I see. I understand that. I understand that. So the second thing -- got a quick question for the R&D expenses for the whole year. Your competitor was talking about like a big jump in terms of R&D for 2023. What about operating expenses for UMC for the whole year?

我懂了。我明白那個。我明白那個。所以第二件事——有一個關於全年研發費用的快速問題。您的競爭對手正在談論 2023 年研發方面的巨大飛躍。那麼 UMC 全年的運營費用呢？

Yes, we intend to somehow keep the absolute numbers in terms of operating expenses. Of course, the employee-related compensation will be affected by the full year profit sharing program. And other than that, such as R&D and some other projects, expenses will be somewhat flattish. On top of that, because of the short-term volatility, we are implementing a pretty stringent cost control for other areas, but not on the R&D program.

是的，我們打算以某種方式保持運營費用的絕對數字。當然，與員工相關的薪酬將受到全年利潤分享計劃的影響。除此之外，例如研發和其他一些項目，費用會有些持平。最重要的是，由於短期波動，我們正在對其他領域實施相當嚴格的成本控制，但不包括研發計劃。

Okay. Lastly is you have a lot of fab in different regions. Do you consider to like price in the different -- with a different pricing with different geographical location? TSMC was talking about flexibility in terms of different multiple locations has a value, which means they want to sell those kind of -- do you consider to do that kind of pricing strategy as well?

好的。最後是你們在不同地區有很多晶圓廠。您是否考慮過不同的價格——不同的地理位置有不同的價格？台積電在談論不同地點的靈活性具有價值，這意味著他們想要出售那種——你是否也考慮採用那種定價策略？

Well, I mean, like you said earlier, the P6 and P3, the 12A and the 12i, definitely have a different pricing scheme. And because the production ramp for the P6 and P3 will indeed incur some of the higher depreciation costs for us. So for us, the new build capacity is under the LTA base and with the building the wafer price. Our customers do recognize our value as well as believe our total solution is competitive for both of us to capture the market growth and they agreed to that. So those fab investments are also based on such alignment and to drive our CapEx and ROI decision. And so yes, from those new field capacity, they are different pricing scheme but not for the rest of us.

嗯，我的意思是，就像你之前說的，P6 和 P3，12A 和 12i，肯定有不同的定價方案。而且因為 P6 和 P3 的生產坡道確實會給我們帶來一些更高的折舊成本。所以對我們來說，新的建設能力是在 LTA 基礎下，並隨著晶圓價格的提高而增加。我們的客戶確實認可我們的價值，並相信我們的整體解決方案對我們雙方都具有競爭力，可以抓住市場增長，他們也同意這一點。因此，這些晶圓廠投資也是基於這種一致性，並推動我們的資本支出和投資回報率決策。所以是的，從那些新的現場容量來看，它們是不同的定價方案，但對我們其他人來說卻不是。

So only for the newly added capacity in -- other than Taiwan, with a different pricing strategy? Okay.

因此，僅針對台灣以外的新增產能採用不同的定價策略？好的。

Even in Taiwan because P6 is in Tainan and --

甚至在台灣，因為 P6 在台南而且 --

And our last question today comes from Gokul Hariharan of JPMorgan.

我們今天的最後一個問題來自摩根大通的 Gokul Hariharan。

First of all, could you talk a little bit about time line for your 70-nanometer FinFET? And what kind of demand you're getting from customers? Is this happening in the next couple of years itself or is it something that will happen beyond the next couple of years, you focus on 22-nanometer migration? And lastly, also, I wanted to check whether the 70-nanometer is something that you have committed to customers as part of some of your LTA arrangements, whether it is for fab 12A P6 or for the Singapore new fab that is coming up?

首先，您能談談 70 納米 FinFET 的時間表嗎？您從客戶那裡得到什麼樣的需求？這會在未來幾年內發生，還是會在未來幾年內發生，您專注於 22 納米遷移？最後，我還想檢查 70 納米是否是您作為 LTA 安排的一部分向客戶承諾的東西，無論是用於晶圓廠 12A P6 還是用於即將到來的新加坡新晶圓廠？

I mean, first of all, it's our understanding that before 2024, the volume production for 70-nanometer will be very minimum, if any, because the 70-nanometer production is still under the exploratory stage. And the current discussion that we have is many (inaudible) the trade-off between the power consumption, transistor performance cost and the capacity plan, so it's still in a very early stage even to predict when we'll start the production, yes.

我的意思是，首先，我們的理解是，在 2024 年之前，如果有的話，70 納米的量產將是非常低的，因為 70 納米的生產仍處於探索階段。我們目前的討論有很多（聽不清）功耗、晶體管性能成本和容量計劃之間的權衡，所以即使預測我們何時開始生產仍處於非常早期的階段，是的。

Okay. And is it covered in any of your LTAs or that will be separate agreements that you sign, if and when you decide to go ahead with it?

好的。它是否包含在您的任何 LTA 中，或者如果您決定繼續執行它，將是您簽署的單獨協議？

No. It's not covered on the current NDA -- the LTA now.

不。當前的 NDA（現在是 LTA）中沒有涵蓋它。

Okay. Understood. Just one quick question, Jason, on your overall view on 28-nanometer industry demand because we are now hearing TSMC also building a lot of 28-nanometer capacity in Japan, Nanjing as well as potentially considering Europe. You guys are considering Taiwan as well as Singapore. There's a lot of announcements from some of your competitors as well. When we look at all this together, it looks like 28-nanometer capacity will be 50% to 60% higher than any of the prior nodes in terms of installed capacity. Do you agree with that? And do you think that the demand is that big that we can kind of fulfill all this capacity, especially as we are also heading into a bit of a downturn?

好的。明白了。 Jason，請問您對 28 納米行業需求的總體看法，因為我們現在聽說台積電也在日本、南京以及可能考慮在歐洲建設大量 28 納米產能。你們正在考慮台灣和新加坡。您的一些競爭對手也發布了很多公告。當我們綜合考慮所有這些時，就裝機容量而言，28 納米容量似乎將比之前的任何節點高出 50% 至 60%。你同意嗎？您是否認為需求如此之大，以至於我們可以滿足所有這些產能，尤其是在我們也即將陷入低迷的情況下？

Yes. Well, I mean, we definitely don't look at this from the utility point of view. We look at from a long-term standpoint, we remain very confident in the 28 and 22. And I can't really comment -- I won't be able to comment on our competitors' situation, but we are confident with our own business, mainly from our highly differentiated and customized technology solution. And together with what Chi-Tung mentioned earlier, we have a geographical diversified capacity offering. And we -- with the current customer alignment and mutually committed to the -- some of the new capacity build that we see in the 28 and 22 is a sweet spot for many of our customer and their applications, which we believe those demands continue to grow. With the strong product pipeline in 28, the short-term market turbulence will not change our long-term view and the relevance on the 28 and 22 based on the alignment we have with our customer.

是的。好吧，我的意思是，我們絕對不會從效用的角度來看這個問題。從長遠的角度來看，我們對 28 和 22 仍然非常有信心。我不能真正發表評論——我無法評論我們競爭對手的情況，但我們對自己的情況充滿信心業務，主要來自我們高度差異化和定制化的技術解決方案。再加上 Chi-Tung 之前提到的，我們提供了地域多元化的能力。我們 - 與當前的客戶保持一致並相互承諾 - 我們在 28 和 22 中看到的一些新能力建設是我們許多客戶及其應用程序的最佳選擇，我們相信這些需求將繼續生長。憑藉 28 強大的產品線，短期市場動盪不會改變我們的長期觀點以及基於我們與客戶的一致性而對 28 和 22 的相關性。

Thank you. That concludes today's Q&A session. I will turn thanks over to UMC, Head of Relations for closing remarks.

謝謝你。今天的問答環節到此結束。我將感謝關係主管 UMC 的閉幕詞。

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 us ir@umc.com. Have a good day. Thank you.

謝謝大家今天參加這個會議。感謝您提出問題。與往常一樣，如果您有任何其他後續問題，請隨時聯繫我們 ir@umc.com。祝你有美好的一天。謝謝你。

Thank you. Ladies and gentlemen, that concludes our conference for fourth quarter '22. Thank you for your participation in UMC's conference. There will be a webcast replay within 2 hours. Please visit www.umc.com, under the Investors Events session. You may now disconnect. Goodbye.

謝謝你。女士們，先生們，我們 22 年第四季度的會議到此結束。感謝您參加 UMC 的會議。將在 2 小時內進行網絡廣播重播。請訪問 www.umc.com，在投資者活動部分下。您現在可以斷開連接。再見。