聯華電子 (UMC) 2023 Q2 法說會逐字稿

Welcome, everyone, to UMC's 2023 Second Quarter Earnings Conference Call. (Operator Instructions) For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit our website, www.umc.com, under the Investor Relations' Investors/Events section.

歡迎大家參加聯華電子 2023 年第二季度收益電話會議。 （操作員說明）僅供參考，本次電話會議現通過互聯網進行現場直播。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，位於投資者關係的投資者/活動部分。

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

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

Thank you, and welcome to UMC's conference call for the second quarter of 2023. 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 second quarter financial result, followed by our President's key message to address UMC's focus and third quarter 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.

謝謝大家，歡迎參加聯華電子 2023 年第二季度電話會議。聯華電子總裁 Jason Wang 先生和聯華電子首席財務官劉志東先生也出席了會議。稍後，我們將聽到我們的首席財務官介紹第二季度的財務業績，然後是我們的總裁關於解決 UMC 的重點和 2023 年第三季度指導的關鍵信息。一旦我們的總裁和首席財務官完成發言，就會有問答環節。 UMC 的季度財務報告可在我們的網站 www.umc.com 的投資者/財務部分獲取。

During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risks that may be beyond the company's control.

在這次會議期間，我們可能會根據管理層當前的期望和信念做出前瞻性陳述。這些前瞻性陳述受到許多風險和不確定性的影響，可能導致實際結果出現重大差異，包括可能超出公司控制範圍的風險。

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 material, which is being broadcast live through the Internet.

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 SEC 和中華民國安全機構提交的文件。在本次會議期間，您可以觀看我們正在通過互聯網現場直播的財務演示材料。

Now, I would like to introduce UMC's CFO, Mr. Chi-Tung Liu, to discuss UMC's second quarter 2023 financial results.

現在，我想介紹聯電首席財務官劉志東先生，討論聯華電子2023年第二季度的財務業績。

Thank you, Michael. I'd like to go through the 2Q23 investor conference presentation material, which can be downloaded or viewed in real time from our website.

謝謝你，邁克爾。我想瀏覽一下 2Q23 投資者會議演示材料，該材料可以從我們的網站下載或實時查看。

Starting on Page 4. The second quarter of 2023 consolidated revenue was TWD 56.3 billion, with a gross margin at around 36%. The net income attributable to the stockholder of the parent was TWD 15.6 billion and earnings per ordinary shares were TWD 1.27. In the second quarter of 2023, the utilization rate was 71%, slightly up from 70% in the previous quarter.

從第4頁開始。2023年第二季度合併營收為563億新台幣，毛利率約為36%。歸屬於母公司股東的淨利潤為新台幣156億，每股普通股收益為新台幣1.27元。 2023年第二季度，利用率為71%，略高於上一季度的70%。

On Page 5 is quarterly sequential comparison of income statement. Revenue grew 3.8% quarter-over-quarter to TWD 56.3 billion, mainly due to better product mix lead to a higher ASP. Gross margin rate at 36% is also slightly better than that of quarter 1 and reached TWD 20.25 billion. We have been controlling our operating expenses amid of the current semiconductor downturn. So, the current operating expenses in quarter 2 remained flattish at TWD 5.7 billion compared to TWD 5.78 in the Q1 2023.

第5頁是損益表的季度連續比較。收入環比增長 3.8% 至新台幣 563 億元，主要由於更好的產品組合帶來更高的平均售價。毛利率為36%，也略好於第一季度，達到202.5億元新台幣。在當前半導體低迷時期，我們一直在控制運營支出。因此，與 2023 年第一季度的 5.78 億新台幣相比，第二季度的當前運營費用仍持平，為 57 億新台幣。

Operating income reached TWD 15.6 billion or 27.8% gross margin -- 27.8% operating profit margins. Net non-operating income in the second quarter reached TWD 2.8 billion, mainly coming from expenses, interest gains, as well as some investment income from our affiliate companies. After income tax of TWD 2.588 billion, our net income attributable to the shareholder of the parent is around TWD 15.6 billion or 27.8% -- percentage point. EPS was TWD 1.27 in second quarter.

營業收入達到新台幣156億元，毛利率27.8%——營業利潤率27.8%。第二季度營業外淨收入達到新台幣28億元，主要來自費用、利息收益以及部分關聯公司的投資收益。扣除所得稅25.88億新台幣後，歸屬於母公司股東的淨利潤約為新台幣156億，即27.8%——個百分點。第二季度 EPS 為新台幣 1.27。

On Page 6, is the first 6 months comparison. Revenue declined 18.4% to TWD 110.5 billion, and the gross margin rate was around 35.7% or TWD 39.4 billion. Net income in the first half of 2023 was TWD 32.2 billion, and the net income rate was 29.2%. EPS in the first half of 2023 was TWD 2.58 per share.

第 6 頁是前 6 個月的比較。收入下降18.4%至新台幣1,105億元，毛利率約為35.7%，即新台幣394億元。 2023年上半年淨利潤為新台幣322億，淨利潤率為29.2%。 2023年上半年EPS為每股2.58新台幣。

So on Page 7 is our balance sheet at the end of June 30. Cash on hand is around TWD 163 billion, and total equity for the company is TWD 326.9 billion.

第7頁是我們6月30日末的資產負債表。庫存現金約為1,630億新台幣，公司總股本為3,269億新台幣。

On Page 8, as we mentioned, the blended ASP benefit from a better product mix. In a way, it's also a lower utilization rate in 8-inch wafer capacity. So, ASP in the second quarter inch up a couple of percentage points compared to the previous quarter.

正如我們在第 8 頁提到的，混合 ASP 受益於更好的產品組合。某種程度上來說，也是8英寸晶圓產能利用率較低。因此，第二季度的平均售價比上一季度上漲了幾個百分點。

On Page 9, revenue rebounded for our Asian customers in the second quarter and now reached about 56% of the total pie compared to 50% in the first quarter, and North America declined from 31% in Q1 to 27% in Q2.

在第 9 頁，我們的亞洲客戶收入在第二季度出現反彈，目前已佔總收入的 56% 左右，而第一季度為 50%，而北美則從第一季度的 31% 下降到第二季度的 27%。

On Page 10, IDM declined slightly to 21%, and Fabless account for 79% of the total revenue in the second quarter of '23.

在第10頁，IDM小幅下降至21%，而Fabless佔2023年第二季度總收入的79%。

On Page 11, the revenue breakdown by application didn't change much. Communication remained the same. Computer remained the same. Consumer increased by 2 percentage point to 26%.

在第 11 頁，按應用劃分的收入細分沒有太大變化。通訊保持不變。電腦保持不變。消費者增加了 2 個百分點，達到 26%。

On Page 12, due to our newly ramped capacity becoming available in our P6 in Tainan fab, our 22/28 nanometer revenue continued to rise. Now it's around 29% of the total revenue. 40-nanometer is about 12% decline by 3 percentage point from the previous quarter.

第12頁，由於我們台南P6工廠新增加的產能，我們的22/28納米收入持續增長。現在約佔總收入的29%。 40納米約為12%，環比下降3個百分點。

On Page 13 is our capacity -- quarterly capacity breakdown. We will continue to see some mild increase coming out of our 12A P6 expansion in Q3.

第 13 頁是我們的產能——季度產能細分。我們將繼續看到第三季度 12A P6 擴展帶來的一些溫和增長。

So the last page of my presentation is on Foundry capital expenditure plan for 2023. For the time being, it still remain at USD 3 billion for the 2023 budget. So, the above is a summary of UMC results for second quarter of 2023. More details are available in the report, which has been posted on our website.

所以我演講的最後一頁是2023年Foundry資本支出計劃。目前2023年預算仍然保持在30億美元。以上是聯華電子 2023 年第二季度業績摘要。更多詳細信息請參閱我們網站上發布的報告。

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

我現在將電話轉給聯電總裁王杰森先生。

Thank you, Chi-Tung. Good evening, everyone. Here, I would like to share UMC's second quarter results. For the second quarter, we reported results in line with guidance with wafer shipments remaining flat from the previous quarter and utilization rate of 71%.

謝謝你，志東。各位晚上好。在這裡，我想分享一下聯華電子第二季度的業績。對於第二季度，我們報告的業績符合指引，晶圓出貨量與上一季度持平，利用率為 71%。

Second quarter revenue grew 3.8% quarter-over-quarter, mainly due to improved product mix within our 12-inch portfolio. Revenue from 22/28 nanometer product continued to increase sequentially, representing 29% of second quarter sales, while contribution from specialty technology reached 59%.

第二季度收入環比增長 3.8%，主要得益於我們 12 英寸產品組合中產品組合的改善。 22/28納米產品的收入繼續環比增長，佔第二季度銷售額的29%，而專業技術的貢獻達到59%。

By segments, we saw short-term demand recovery in the consumer space for Wi-Fi, digital TV, and display driver ICs; which demand for computer-related products also moderately rebounded from the previous quarter.

從細分市場來看，Wi-Fi、數字電視和顯示驅動IC等消費領域的需求出現短期復蘇；其中計算機相關產品的需求也較上季度溫和回升。

We are pleased to share that we have completed the transaction to acquire remaining shares in USCXM, our 12-inch fab in Xiamen, China. As one of UMC's 4 12-inch fabs in geographically diverse locations, USCXM will continue to provide high-quality fabrication services to customers and increase its contribution to UMC's financial performance as a wholly-owned subsidiary now.

我們很高興地宣布，我們已經完成了收購 USCXM（我們位於中國廈門的 12 英寸晶圓廠）剩餘股份的交易。作為聯華電子在不同地點的4座12英寸晶圓廠之一，USCXM將繼續為客戶提供高質量的製造服務，並增加其作為全資子公司對聯華電子財務業績的貢獻。

Looking into the third quarter, wafer demand outlook is uncertain given prolonged inventory correction in the supply chain. While we saw spot of a limited recovery in the second quarter, overall end market sentiment remains weak and we expect customers to continue stringent inventory management in the near term. Despite a weaker-than-expected environment going into the second half, we believe our 22/28 nanometer business will remain resilient due to our strong position in leading edge specialty technologies such as embedded high voltage. In addition, we are gearing up to offer a necessary silicon interposer technology and capacity to fulfill emerging AI market demand from customers.

展望第三季度，由於供應鏈庫存調整時間較長，矽片需求前景存在不確定性。雖然我們看到第二季度的複蘇有限，但整體終端市場情緒仍然疲軟，我們預計客戶在短期內將繼續嚴格的庫存管理。儘管進入下半年的環境弱於預期，但我們相信，由於我們在嵌入式高壓等領先專業技術方面的強勢地位，我們的 22/28 納米業務將保持彈性。此外，我們正準備提供必要的矽中介層技術和產能，以滿足客戶新興人工智能市場的需求。

Now, let's move on to third quarter 2023 guidance. Our wafer shipments will decline by approximately 3% to 4%; ASP in U.S. dollars will increase by 2%; Rising costs will erode gross margin by low single-digit percentage point; capacity utilization rate will be in the mid-60% range; our 2023 cash-based CapEx will be budgeted at USD 3 billion.

現在，讓我們繼續討論 2023 年第三季度的指導。我們的晶圓出貨量將下降約3%至4%；美元平均售價將上漲2%；成本上升將侵蝕毛利率低個位數百分點；產能利用率將在60%左右；我們 2023 年基於現金的資本支出預算為 30 億美元。

That conclude my comments. Thank you all for your attention, and now we are ready for questions.

我的評論到此結束。感謝大家的關注，現在我們準備好提問了。

Thank you, President Wang. (Operator Instructions) And our first question is coming from Randy Abrams, Credit Suisse.

謝謝王校長。 （操作員說明）我們的第一個問題來自瑞信的蘭迪·艾布拉姆斯。

Yes. I wanted to ask my first question about the shipment outlook, and wonder if you expect, at this stage, for the decline to persist throughout second half? And then if you could split down by application, how you're seeing the auto industrial and then for the areas that started to pick up Wi-Fi, TV, driver IC and PC, how do you see that pickup sustaining? Or do you see those starting to correct now?

是的。我想問關於出貨量前景的第一個問題，想知道您現階段是否預計下降趨勢將持續到下半年？然後，如果您可以按應用程序進行細分，您如何看待汽車工業，然後對於 Wi-Fi、電視、驅動器 IC 和 PC 開始增長的領域，您如何看待這種增長的持續？或者你看到那些現在開始糾正了嗎？

Well, I mean, Randy, on a higher level, given the overall softer end market demand, while the post lockdown, the recovery in China has been slower than expected and weakened macro conditions, where our customers are cautiously managing their inventory, and we expect the situation will likely lingering into Q4.

嗯，我的意思是，蘭迪，在更高的層面上，考慮到整體終端市場需求疲軟，而封鎖後，中國的複蘇速度慢於預期，宏觀環境疲軟，我們的客戶正在謹慎管理庫存，我們預計這種情況可能會持續到第四季度。

So, mainly it is inventory concerns. So, about inventory, while the end market demand has worsened compared to a quarter ago, across segments in smartphones, PC and server, the inventory will be slowly worked off now. The pace of digestion is slower than we previously expected. Although at auto and industrial segment, the demand of year-over-year projection at this time, we -- our projection shows -- remains unchanged from the previous quarter.

所以，主要是庫存問題。因此，就庫存而言，雖然終端市場需求較上季度有所惡化，但在智能手機、個人電腦和服務器領域，庫存現在將慢慢減少。消化的速度比我們之前預期的要慢。儘管在汽車和工業領域，目前的同比預測需求，我們的預測顯示，與上一季度相比保持不變。

However, the inventory level has picked up in Q2 for this 2 segment now. So, therefore, we kind of cautiously observe the demand and supply situation now and to determine when the semi cycle will start to improve or come back.

然而，目前第二季度的庫存水平有所回升。因此，我們目前正在謹慎觀察供需狀況，並確定半週期何時開始改善或回歸。

That's helpful. So, to clarify, it sounds like you said the pace of inventory digestion because of weaker demand in smartphone, PC and server. I just wanted to clarify, that's what you were trying to say, like weaker demand that's keeping the inventory correction longer?

這很有幫助。因此，澄清一下，聽起來你所說的庫存消化速度是由於智能手機、個人電腦和服務器的需求疲軟所致。我只是想澄清一下，這就是你想說的，比如需求疲軟導致庫存調整時間更長？

That's right, in the segment of the smartphone, PC and server space, yes.

沒錯，在智能手機、個人電腦和服務器領域，是的。

And for 28-nanometer, I think that node has been a bright spot and the ASP guidance seems to imply that's continuing. Could you update on your plan or your goal, I think, to get utilization back up to 90%, 95%, if that's still tracking? And do you see the P6 continuing to get filled up as it comes in?

對於 28 納米，我認為該節點一直是一個亮點，ASP 指南似乎暗示這種情況正在持續。我想，您能否更新一下您的計劃或目標，以便將利用率恢復到 90%、95%（如果仍在跟踪）？您是否看到 P6 上市後繼續被填滿？

Well, first of all, for the P6 expansion, we expect our 28 ramp trajectory is still on track at this point. And we remain confident about the -- 22 and 28 nanometer as it will be a [long last] node or driven by many applications across the 5G, automotive and IoT. And we have been focused on 22/28 offering, including many of the leading specialty and larger technologies, along with our manufacturing quality and capacity offering now.

嗯，首先，對於 P6 擴展，我們預計 28 個坡道軌跡此時仍處於正軌。我們對 22 和 28 納米仍然充滿信心，因為它將成為[最後一個]節點，或由 5G、汽車和物聯網的許多應用驅動。我們一直專注於 22/28 產品，包括許多領先的專業和更大的技術，以及我們現在的製造質量和產能。

So I think the 28 and the 22 right now remains resilient. And it's our projection now that 28-nanometer loading will remain at relatively healthy level and mainly supported by the OLED driver, like I mentioned, for the specialty technology and other larger technology like ISP, Wi-Fi and the SOI processors.

所以我認為 28 和 22 目前仍然具有彈性。現在我們預測 28 納米負載將保持在相對健康的水平，並且主要由 OLED 驅動器支持，就像我提到的，用於專業技術和其他更大的技術，如 ISP、Wi-Fi 和 SOI 處理器。

For the expansion on track, I think the plan was 12K end of this year. And then the rest of the 27.5K, would that -- what is the timing? Would that be available through next year or any slowdown to move in that capacity?

對於按計劃進行的擴展，我認為計劃是在今年年底實現 12K。然後剩下的 27.5K 時間是什麼時候？這種能力會持續到明年嗎？或者這種能力的發展是否會放緩？

No, for the P6, the trajectory is still on track. So there is no slowdown. And they are mainly mutually-committed by both the customer and us. And given the current projection, our forecast shows that 28 loading will remain at a healthy level.

不，對於 P6 來說，軌跡仍然在正軌上。所以沒有放緩。它們主要是由客戶和我們雙方共同承諾的。根據目前的預測，我們的預測顯示 28 的裝載量將保持在健康水平。

The implication then, if you could blend, you have that capacity with LTA on top, I guess, supporting ASP. How do you net out the utilization, looks like now back to mid-60s. So, with the excess capacity, how do you net pricing environment mature node versus the new capacity coming on, if the trend for you to manage too stable or do you expect a bit more price pressure just with the prolonged inventory correction.

那麼這意味著，如果你可以混合，你就有能力在 LTA 之上，我猜，支持 ASP。如何計算利用率，現在看起來像是回到了 60 年代中期。因此，在產能過剩的情況下，您如何應對成熟節點的淨定價環境與即將到來的新產能的關係，如果您管理的趨勢過於穩定，或者您預計隨著長期的庫存調整，價格壓力會更大。

We definitely see the pricing pressures. The -- but the blend is actually more a reflect of our loading between the 12-inch and 8-inch as well. So, if we start off this -- your question with the ASP, then it's our belief when the end demand remains weak, the pricing does not help to stimulate the demand. We are respecting the -- we are respecting the overall foundry market dynamics and the pricing pressure, while the UMC will remain our pricing strategy of maintaining our pricing strategy. But we do work with our customers during the good time in a bad time to uphold their competitiveness and relevance in their respective market to secure their market share.

我們確實看到了定價壓力。但這種混合實際上更多地反映了 12 英寸和 8 英寸之間的負載。因此，如果我們從你對平均售價的問題開始，那麼我們相信，當最終需求仍然疲弱時，定價無助於刺激需求。我們尊重整體代工市場動態和定價壓力，而聯華電子將繼續維持我們的定價策略。但無論順境還是逆境，我們都會與客戶合作，以維護他們在各自市場的競爭力和相關性，以確保他們的市場份額。

In addition, our value-added technology, I mean in fact the quality and capacity alignment will support our customers. They're competitive as well in their market position. So in the pricing space, we respect the market dynamics and the pressure, but -- and we're closely working with our customers on that.

此外，我們的增值技術，我的意思是實際上質量和產能的一致性將為我們的客戶提供支持。他們的市場地位也具有競爭力。因此，在定價領域，我們尊重市場動態和壓力，但是 - 我們正在與客戶密切合作。

In terms of the blended ASP, they are LTA for the P6 on the 28. And there is non-LTA Protected 28 and there are also an 8-inch outlook. So, if we blend it together right now in Q3, the ASP is projected, it's going to be about low single-digit increase. In the forward-looking, we have to give a quarter at a time because that was subject to a different product mix.

就混合ASP而言，28是P6的LTA。還有非LTA Protected 28，還有8英寸的前景。因此，如果我們現在在第三季度將其混合在一起，預計平均售價將只有低個位數的增長。在前瞻性方面，我們必須一次給出一個季度，因為這取決於不同的產品組合。

Next question is from Brett Simpson from Arete.

下一個問題來自 Arete 的 Brett Simpson。

I wanted to just come back to LTAs. And maybe if you can discuss whether customers are generally sticking to these LTAs. And if not, can you maybe just talk about how you're resolving contracts with customers? Are you collecting penalty payments in recent quarters? Could you maybe quantify that? Any thoughts in terms of how you're managing through these LTAs given it's a sizable amount and your utilization is obviously coming down quite significantly from where it was a year ago or so. So, any update there would be very helpful.

我想回到長期協議。也許您可以討論一下客戶是否普遍遵守這些長期協議。如果沒有，您能否談談您如何與客戶解決合同？您最近幾個季度是否在收取罰款？你能量化一下嗎？鑑於這些長期協議數量相當大，而且您的利用率顯然比一年前左右顯著下降，您對如何管理這些長期協議有何想法。因此，任何更新都會非常有幫助。

Sure. I mean LTA is a mechanism to support both customers and us for a longer-term perspective, because we want to make sure -- the customer want to make sure there is supply resilience, and we want to make sure that our investment is also somewhat protected, which is such a commitment. So LTA is a mechanism of that relationship.

當然。我的意思是，LTA 是一種從長遠角度支持客戶和我們的機制，因為我們希望確保——客戶希望確保供應彈性，並且我們希望確保我們的投資也在一定程度上受保護，這就是這樣的承諾。所以 LTA 是這種關係的一種機制。

During the downturn cycle, we both have to look at this and revisit the situation. And -- but under the framework of, we still have strong confidence in our long-term projections. So, there are some modulation or adjustments to be made during -- given the LTA relationship. So, they are resulting in some of the resolution with current LTA agreement. So that results in some of the financial penalty related matter. But at this point, it's still in a smaller fashion. I think with both know customers and us still have confidence in what have we aligned to do in terms of longer term.

在經濟低迷週期中，我們都必須審視這一點並重新審視形勢。而且——但在這個框架下，我們仍然對我們的長期預測充滿信心。因此，鑑於長期協議關係，在此期間需要進行一些調整或調整。因此，他們正在根據當前的長期協議達成一些決議。這導致了一些與經濟處罰相關的問題。但目前來看，它的規模仍然較小。我認為，無論是客戶還是我們，都對我們的長期目標充滿信心。

So, we expect the market dynamics, and we will work with our customers in trying to dealing with those challenges. But again, the LTA is something that we both respect and seriously commit to it.

因此，我們預計市場動態，並將與客戶合作應對這些挑戰。但同樣，長期協議是我們既尊重又認真承諾的內容。

Okay. Maybe just switching gears a little bit on the gross margin situation. And the guide -- obviously, gross margin is coming off a little bit from a resilient level in Q2. Where do you see the trough in gross margins for UMC as we go through this downturn? Do you think it will be -- gross margins are troughing in Q3, do you think it might -- the weakness in gross margin might extend into maybe early next year? Any thoughts in terms of depreciation as well because it seems to be creeping up a little bit.

好的。也許只是在毛利率情況上稍微改變一下。顯然，毛利率較第二季度的彈性水平略有下降。當我們經歷這次低迷時期時，您認為聯華電子毛利率的低谷在哪裡？您認為毛利率在第三季度觸底嗎？您認為毛利率的疲軟可能會延續到明年初嗎？任何關於折舊的想法也是如此，因為它似乎在一點點上升。

Well, I mean that's a multiple level of the consideration. One is the current market pricing pressure. The other is the recent rising costs. For Q3, the rising cost in electricity hike, raw material, labor will impact our profitability, and we will continue focus on actions to mitigate those rising cost headwinds.

嗯，我的意思是這是多層次的考慮。一是當前市場定價壓力。另一個是近期成本上漲。對於第三季度，電力、原材料、勞動力成本的上升將影響我們的盈利能力，我們將繼續採取行動緩解這些成本上升的不利因素。

We have implemented aggressive cost reduction activity to control the power consumption, productivity, manage the material costs and usage and streamline our process flow and labor management via smart manufacturing measures. We'll also focus on technology improvements such as continuous improvement process, CIP, optimize our fab productivity and quality to help mitigate those headwinds.

我們實施了積極的成本削減活動，以控制能耗、生產率、管理材料成本和使用，並通過智能製造措施簡化我們的工藝流程和勞動力管理。我們還將專注於技術改進，例如持續改進流程、CIP、優化我們的晶圓廠生產力和質量，以幫助減輕這些不利因素。

So, we will try to maintain our structural profitability level at a healthy level. But given the market current dynamic, we're probably giving -- will be more appropriate or prudent to giving this margin guidance 1 quarter at a time. And once we're over the downcycle and then we'll probably can share a bit of a longer time perspective.

因此，我們將努力將結構性盈利水平維持在健康水平。但考慮到當前的市場動態，我們可能會更合適或更謹慎地一次給出一個季度的利潤率指導。一旦我們度過了下行週期，我們可能就可以分享一些更長期的觀點。

Yes. So the depreciation numbers for the 2023, we're still looking for a little bit over 5% year-over-year decline. And for 2024, the increase will be more meaningful. But we -- again, we'll offer the numbers when we approach to the year-end

是的。因此，對於 2023 年的折舊數字，我們仍預計同比下降略高於 5%。而到了2024年，這一增長將更加有意義。但我們再次強調，我們將在臨近年底時提供這些數字

Next question, Charlie Chan of Morgan Stanley.

下一個問題是摩根士丹利的陳查理。

So, my first question is actually about your 14-nanometer strategy or progress because one of your defense service partner just mentioned that there will be 14-nanometer AI ASICs demand and production could be in 2 years. So I'm just wondering that whether company is already prepared for the 14-nanometer demand? And any more details about the capacity expansion, production timing, et cetera, will be much appreciated.

所以，我的第一個問題實際上是關於你們的 14 納米戰略或進展，因為你們的一位國防服務合作夥伴剛剛提到，14 納米 AI ASIC 的需求和生產可能會在 2 年內實現。所以我想知道公司是否已經為14納米的需求做好了準備？如果能提供有關產能擴張、生產時間等的更多詳細信息，我們將不勝感激。

Sure. Our goal is always to fully exploit the DoD capability. And as we know, the DoD capability can sustain to the FinFET technology. And having successfully enter into mass production of our 22-nanometer business now, and while we're witnessing the steady rise in revenue contribution, we are actively progressing with development of the 12 FinFET, and specialty FinFET based on the existing 14-nanometer technology node.

當然。我們的目標始終是充分利用國防部的能力。眾所周知，國防部能力可以維持 FinFET 技術。目前我們的22納米業務已成功進入量產，在收入貢獻穩步上升的同時，我們正在積極推進12 FinFET以及基於現有14納米技術的特種FinFET的開發節點。

So, from the technology development, we are actively progressing. However, on the capacity side, we still need to align with our customer for the capacity expansion and subject to our ROI justification principle and which we have adopted for years now. So, once that's more clear, then we will update accordingly.

所以，從技術發展來說，我們正在積極進步。然而，在產能方面，我們仍然需要與客戶就產能擴張保持一致，並遵守我們多年來一直採用的投資回報率合理性原則。因此，一旦更加明確，我們將進行相應更新。

Yes. Just to add on to that. We do have 14 capacity already for years. So, we have been producing some 14-nanometer crypto coin-related product a few years back. So, I think what Jason was referring to is more massive capacity expansion going forward. So currently, we already have some 40-nanometer capacity already.

是的。只是補充一下。多年來我們已經擁有 14 個產能。因此，幾年前我們一直在生產一些 14 納米加密貨幣相關產品。所以，我認為傑森所指的是未來更大規模的產能擴張。目前，我們已經具備了一些 40 納米產能。

Okay. And my next question is about your gross margin erosion in third quarter. I know that -- mentioned about the cost increase from electricity or raw material. But I'm wondering, maybe this question is to Chi-Tung, do you consider the -- any dollar depreciation, I think -- I would think there's a kind of a tailwind to your gross margin in third quarter.

好的。我的下一個問題是關於第三季度毛利率下降的情況。我知道——提到了電力或原材料成本的增加。但我想知道，也許這個問題是問 Chi-Tung 的，你是否考慮過——我認為任何美元貶值——我認為第三季度的毛利率會有某種順風。

And also, I wanted to know what was the kind of impact from the pricing erosion. So, can you give us some more details about; #1, is the currency depreciation, and secondly, the pricing pressure.

而且，我想知道價格侵蝕會產生什麼樣的影響。那麼，您能否給我們提供更多詳細信息；一是貨幣貶值，二是定價壓力。

Yes. For our guidance, we didn't factor in the currency fluctuation as a factor. So they won't be included in the couple of percentage erosions in our third quarter margin guidance, which is not included.

是的。對於我們的指導，我們沒有將貨幣波動作為一個因素。因此，它們不會被包含在我們第三季度利潤率指導中的幾個百分比侵蝕中，而這並不包括在內。

Okay.

好的。

Yes. As for ASP, our blended ASP guidance is up by 2 percentage point. Of course, like-to-like, it may vary according to different notes. And they also got some kind of mathematical help due to the lower 8-inch wafer capacity utilization, right? So, again, it's already reflected into our gross margin guidance.

是的。至於平均售價，我們的混合平均售價指引上調了 2 個百分點。當然，喜好不同，可能會根據不同的音符而有所不同。由於 8 英寸晶圓產能利用率較低，他們還得到了某種數學上的幫助，對嗎？因此，這已經反映在我們的毛利率指導中。

Okay. So Chi-Tung, where there is -- for every 1% difference of the TWD depreciation, what does it mean to your gross margin benefit?

好的。那麼 Chi-Tung，新台幣貶值每 1% 的差異，對您的毛利率效益意味著什麼？

It's about 0.4% at this point.

目前約為0.4%。

Okay. Yes, and next is more focused on this pricing, so they have a (inaudible). So I think your peers more or less, they already mentioned some here pricing pressure instead, I can understand. And I think you should be appreciated by the customers that you want to support them to maintain their market position. But my concern is more about the 28-nanometer, your pricing strategy, because I mentioned that your 28-nanometer utilization is still healthy. You still have those AMOLED ISP demand. So I'm wondering for 28-nanometer, are you also being flexible about pricing because we keep hearing some of your customers talking about 28-nanometer, you may have some compromise as well.

好的。是的，接下來更關注這個定價，所以他們有一個（聽不清）。所以我認為你們的同行或多或少已經提到了這裡的一些定價壓力，我可以理解。我認為您應該受到客戶的讚賞，因為您希望支持他們保持其市場地位。但我更關心的是 28 納米，你們的定價策略，因為我提到你們的 28 納米利用率仍然很健康。您仍然有那些 AMOLED ISP 需求。所以我想知道對於 28 納米，你們在定價方面是否也很靈活，因為我們不斷聽到你們的一些客戶談論 28 納米，你們可能也會有一些妥協。

Well, I mean our pricing position are the same to all nodes, although the different node has a different circumstance or situation, but our position remains the same. We're maintaining our pricing strategy, but we do work with our customers, whether on a node-to-node basis or at the holistic level, and -- even in good time or bad time. I mean the end goal is to try to help them and support them to be competitive and secure their market share. So, it -- that's not separated by different technology nodes.

嗯，我的意思是我們的定價立場對所有節點都是一樣的，雖然不同的節點有不同的情況或情況，但我們的立場是一樣的。我們將維持我們的定價策略，但我們確實與客戶合作，無論是在節點到節點的基礎上還是在整體層面上，而且——即使是在好時機或壞時機。我的意思是，最終目標是努力幫助他們並支持他們提高競爭力並確保他們的市場份額。所以，它並沒有被不同的技術節點分開。

Okay. So it's not just limited to the inch, is that right?

好的。所以它不僅僅限於英寸，對嗎？

No. I mean is it in general principle, our pricing position and strategy, yes.

不，我的意思是一般原則，我們的定價立場和策略，是的。

Yes. Okay, so in that case, can you give us a sense, how much of your business is taking this kind of a flexible pricing? Do you think more than half of your -- knows your business are being flexible about pricing in second half?

是的。好的，那麼在這種情況下，您能否給我們介紹一下，您的業務中有多少採用了這種靈活的定價？您是否認為超過一半的人知道您的企業在下半年的定價方面會保持靈活性？

I mean, it's hard to quantify that. And -- but given the weaker end demand, I don't think any pricing changes will actually stimulate the end demand. It's mainly about the -- within the pie, modulation between different players. And we definitely look at that closely and working with our customers closely as well and to support and make sure that we secure the share for both of us. And so it's -- from a percentage or quantitative point of view, it's hard to give it out at this point.

我的意思是，很難量化這一點。而且——但考慮到終端需求疲軟，我認為任何定價變化都不會真正刺激終端需求。這主要是關於——在餡餅內，不同參與者之間的調製。我們肯定會密切關注這一點，並與我們的客戶密切合作，以支持並確保我們雙方都能獲得份額。因此，從百分比或數量的角度來看，目前很難給出它。

Okay. And lastly, maybe following the Brett's question about the trough of gross margin. I'm wondering your view about the pattern of the fab utilization. So third quarter, you see a sequential decline of UTR, right? Do you think that that is the pattern of the utilization for this cycle?

好的。最後，也許是在布雷特關於毛利率低谷的問題之後。我想知道您對晶圓廠利用率模式的看法。那麼第三季度，您會看到 UTR 連續下降，對嗎？您認為這就是本週期的利用模式嗎？

Yes, it's difficult to predict, and we've also did that. So, what we can say is the current weakness, there are inventory digestion, the slow pace, it's going to linger into Q4. I think that's all we can say for now. And we're certainly happy to give the gross margin guidance for the next quarter at the end of July.

是的，這很難預測，我們也做到了。所以，我們可以說的是，目前的疲軟，有庫存消化，步伐緩慢，它將持續到第四季度。我想這就是我們現在能說的。我們當然很高興在七月底給出下一季度的毛利率指導。

Okay. So, definitely, we want to listen to your opinion, but my observation is that your customers, although their demand is slow, but they are outgrowing foundry sectors, right? So I do think the same inventory will come down. And also don't forget that the channel inventory or downstream inventory is a [present]. So I'm optimistic. But anyway, we look forward to your next update. Thank you.

好的。所以，當然，我們想听聽您的意見，但我的觀察是，您的客戶雖然需求緩慢，但他們的增長超出了代工行業，對嗎？所以我確實認為同樣的庫存將會下降。並且不要忘記渠道庫存或下游庫存是[禮物]。所以我很樂觀。但無論如何，我們期待您的下一次更新。謝謝。

Well, great to hear that.

嗯，很高興聽到這個消息。

Next one, Bruce Lu of Goldman Sachs.

下一位是高盛的布魯斯·盧。

I think, to be honest, and we are still surprised about the CapEx remain unchanged and your run-down schedule for the P6, it may not change. I mean, Jason seems to be -- you mentioned like confidence about where your customer is. I think that's the case between investor and management. Can you help us like what gives you the confidence when you have a lingering fourth quarter and your customer cancelled orders all the time, and you -- do you believe that you can maintain those with high retention rate for 28-nanometer of 0.4% to support the CapEx?

我認為，說實話，我們仍然對資本支出保持不變以及 P6 的精簡時間表感到驚訝，它可能不會改變。我的意思是，傑森似乎——你提到了對客戶所在位置的信心。我認為這就是投資者和管理層之間的情況。您能否幫助我們了解，當您的第四季度持續遲滯且您的客戶一直取消訂單時，是什麼給了您信心，而您 - 您是否相信您可以將 28 納米的保留率保持在 0.4% 到 28 納米支持資本支出？

I mean, first of all, the 28-nanometer is serving some of the important applications. And for the OLED driver, the current penetration in OLED end market and the volume remains healthy. And in the ISP and the Wi-Fi space, we see new application continue coming into the space? So for the 28, given the broader customer base and diverse product line and product pipeline, that gave us the confidence because the outlook remains healthy. And our -- that also equipped with our specialty technology leadership position as well. So, I think that's differentiating us with other 28-nanometer capacity out there.

我的意思是，首先，28 納米正在服務於一些重要的應用。對於OLED驅動器而言，目前OLED終端市場的滲透率和銷量仍然保持健康。在 ISP 和 Wi-Fi 領域，我們看到新的應用程序不斷進入該領域？因此，對於 28 家來說，考慮到更廣泛的客戶群和多樣化的產品線和產品管道，這給了我們信心，因為前景仍然健康。我們的——也配備了我們的專業技術領先地位。因此，我認為這就是我們與其他 28 納米產能的區別所在。

Right now, given the market outlook, we have been very cautiously look at it because the -- across all segment, the sentiment is weak. But what we have received and what we have validated the -- and what we have delivered right now that has demonstrated the current broader customer base and the product pipeline does give us that confidence that this will probably stay in a healthy level for some time.

目前，考慮到市場前景，我們一直非常謹慎地看待它，因為在所有細分市場中，情緒都很疲弱。但我們所收到的和我們已經驗證的，以及我們現在所交付的，證明了當前更廣泛的客戶群和產品管道確實讓我們有信心，這可能會在一段時間內保持在健康水平。

So committing something like your 40-nanometers doesn't going to drop a lot, right? Can we compare some of the 40 to 28 or to save some CapEx or what's the schedule for the Singapore new fab? Can we slow down a bit for that, even though it might not impact our CapEx for this year, but we can have a more conservative CapEx outlook for next year?

因此，像 40 納米這樣的產品不會下降太多，對嗎？我們可以比較 40 到 28 座工廠中的一些，或者節省一些資本支出，或者新加坡新晶圓廠的時間表是什麼？我們是否可以放慢腳步，儘管這可能不會影響我們今年的資本支出，但我們可以對明年的資本支出前景更加保守？

I mean, we definitely look at this. Right now for the P3, we expect it will go into volume production by mid-2025, as planned. So there's still kind of 2 years out. So we will monitor in the overall market and align with our customer for the P3 ramp. Once we have a further update, we will revise accordingly. And since most of the CapEx increase, now the P6 is pretty much done, and it's more associated with the P3. And I think it's [less affect] our 2023 number, but there is a possibility that for 2024 number, we will continue to assess and update.

我的意思是，我們肯定會關注這一點。目前，對於 P3，我們預計它將按計劃在 2025 年中期投入量產。所以還有2年的時間。因此，我們將監控整個市場，並與我們的客戶就 P3 坡道保持一致。一旦有進一步更新，我們將進行相應修改。由於大部分資本支出增加，現在 P6 已經基本完成，並且與 P3 的關聯性更強。我認為這對我們 2023 年的數字影響較小，但對於 2024 年的數字，我們有可能會繼續評估和更新。

So, another thing I want to switch gears to, you mentioned that you will do some interposer business. Can you help us understand your strategy for this interposer business? What kind of capital intensity, what kinds of return is going to be, do we need to expand the capacity for that? Is that be a bottleneck to impact your other business? Can we have more color on that?

所以，我想轉向的另一件事是，你提到你將做一些中介層業務。您能幫助我們了解您的中介層業務策略嗎？資本密集度是多少，回報是多少，我們是否需要擴大產能？這會成為影響您其他業務的瓶頸嗎？我們可以有更多的顏色嗎？

Sure. For the interposer, as part of our advanced packaging space, we have been providing interposer and wafer-to-wafer asset bonding technology for years. So it's not something new. As the increased demand for higher bandwidth and reduced -- a smaller form factor requirement, we have invested in the space, and we will not be absent on those emerging markets.

當然。對於中介層，作為我們先進封裝領域的一部分，我們多年來一直提供中介層和晶圓到晶圓資產鍵合技術。所以這不是什麼新鮮事。隨著對更高帶寬的需求增加以及更小的外形尺寸要求的減少，我們已經在該領域進行了投資，並且我們不會缺席這些新興市場。

At the same time, it's our strategy for this space to work with the OSEP partner and to enable an open ecosystem. So sort of, we are only providing the interposers within the supply chain, and we're working with OSEP for the back-end process.

與此同時，我們在該領域的戰略是與 OSEP 合作夥伴合作並實現開放的生態系統。因此，我們僅在供應鏈內提供中介層，並且我們正在與 OSEP 合作進行後端流程。

And so, that's kind of how we position ourselves within this advanced packaging space. The interposer I mentioned earlier, accelerating is really giving the recent AI coverage. We are just gearing up to offer additional capacity necessary to support the customers the needs. And that capacity is associated with the silicon interposer a lot. And the current capacity size is about 3,000, and it's our goal to double that capacity by mid next year.

因此，這就是我們在這個先進封裝領域的定位。我之前提到的中介層，加速確實是最近人工智能的報導。我們正準備提供必要的額外產能來支持客戶的需求。這種能力與硅中介層有很大關係。目前產能規模約為 3,000 輛，我們的目標是到明年中期將產能增加一倍。

Okay. Just to be clear that you have no plan to invest in chip on wafer or other package matter. It's only for the interposer for this, is that correct?

好的。需要明確的是，您沒有計劃投資晶圓芯片或其他封裝產品。它僅適用於中介層，對嗎？

Right. Chip on wafer means we are providing wafer, the W.

正確的。晶圓上芯片意味著我們提供晶圓，即 W.

Yes. No, you are not going to provide any like bonding or chip -- bonding, de-boding, put on substrate that kind of packaging matter. No, just for the silicon interposer, is that right?

是的。不，你不會提供任何類似的鍵合或芯片——鍵合、去鍵合、放在基板上的那種包裝材料。不，只是針對矽中介層，對嗎？

Yes. But we still do wafer to wafer bonding, hybrid bonding, yes.

是的。但我們仍然進行晶圓間鍵合、混合鍵合，是的。

Yes, our approach, it's an open ecosystem. So, we want to leverage our partners for the downstream and it will be a total solution, but a joined effort by all the ecosystem players.

是的，我們的方法是一個開放的生態系統。因此，我們希望利用我們下游的合作夥伴，這將是一個整體解決方案，但需要所有生態系統參與者的共同努力。

So what's kind of profitability and return profile for this business?

那麼這項業務的盈利能力和回報情況如何？

Rather -- I mean currently, given the size of this capacity and the space, the revenue contribution is still relatively small.

相反，我的意思是，目前，考慮到容量和空間的規模，收入貢獻仍然相對較小。

So, how about the profitability?

那麼，盈利能力如何？

It's aligned with our current corporate average, yes.

是的，它與我們當前的企業平均水平一致。

Okay. So you saw it's inline with the current corporate average in third quarter. You said your corporate average went down a lot.

好的。所以你看到它與第三季度當前的企業平均水平一致。你說你的公司平均水平下降了很多。

Our corporate average in quarter 2 was 36% gross margin, slightly better than Q1.

我們第二季度的企業平均毛利率為 36%，略好於第一季度。

Okay. So basically, that interposer business is around that mid-30% gross margin.

好的。基本上，中介層業務的毛利率約為 30% 左右。

But it will not dilute our current corporate average, no.

但這不會稀釋我們目前的企業平均水平，不會。

Next question, Szeho Ng of China Renaissance.

下一個問題是華興資本的Szeho Ng。

I have 2 questions; #1 regarding the Xiamen fab. Right now is 100% owned by the group. So would there be any strategy change in our China operation or in dealing with local customers there?

我有 2 個問題；廈門晶圓廠排名第一。目前該集團擁有100%股權。那麼我們的中國業務或與當地客戶打交道的策略是否會發生任何變化？

I'm sorry. again, the question?

對不起。再說一遍，問題是？

The Xaimen. I mean, right now the Xaimen fab is fully owned by us.

西門。我的意思是，現在西門工廠完全歸我們所有。

Yes. prior to the buyback, it's actually already dominant or controlled by UMC anyway. And of course, right now, it's 100% owned. So there will be no minority interest once Xiamen continue to make profit. And it's also our goal to see if there's any synergy we can generate between our 2 operations, Hejian in Suzhou and USC in Xiamen to see any more synergy and also competitiveness by these 2 joint efforts. But I think right now, the domestic demand occupy even more percentage of the overall revenues.

是的。無論如何，在回購之前，它實際上已經占主導地位或被聯華電子控制。當然，現在它是 100% 擁有的。因此，一旦廈門持續盈利，就不會再有少數股東權益。我們的目標也是看看我們的兩個業務（蘇州的河間分校和廈門的南加州大學）之間是否可以產生任何協同效應，通過這兩個共同努力看到更多的協同效應和競爭力。但我認為現在，內需在整體收入中所佔的比例甚至更高。

See, whether it's a Xiamen facility or our Japan facility, they are 1 of the our 4 12-inch fab under the UMC Group's global capacity scale. With each one of their unique manufacturing location, China, Japan, that will actually position us to support our broader worldwide customer base and with UMC's overall comprehensive technology offering.

你看，無論是廈門工廠還是我們日本工廠，都是我們聯電集團全球產能規模下的4座12英寸晶圓廠之一。憑藉中國、日本等獨特的製造基地，我們能夠真正為更廣泛的全球客戶群提供支持，並利用 UMC 的整體綜合技術產品。

And at the same time, the UMC's worldwide customer can also access to those local manufacturing site to serve the local supply chain. So we think the geographical locator on those fab actually gave us that benefit as well as our customer to access to the local market. And the 100% acquired or before that, it was the same position that's supporting our deploying customer.

同時，聯華電子的全球客戶也可以訪問那些當地的製造基地來服務當地的供應鏈。因此，我們認為這些晶圓廠的地理位置實際上為我們以及我們的客戶帶來了進入當地市場的好處。 100% 收購或在此之前，支持我們的部署客戶的職位是相同的。

And my second question on the gross margin. So, right now, we are guiding gross margin back to maybe mid-30s level. How easy for us for sort of the company to see the gross margin back to the mid-to-high 40s last year.

我的第二個問題是關於毛利率的。因此，目前我們正在將毛利率引導至 30 多歲左右的水平。對於我們這樣的公司來說，去年的毛利率回到 40 多歲左右是多麼容易的事。

I mean, I think we kind of touched a similar question on a few different ways. I mean this current gross margin guidance was given based on the current outlook, our product mix and the loading and the utilization projection and ASP assumptions. And given the rising cost, there are lots of factors that will affect the long-term gross margin projections.

我的意思是，我認為我們通過幾種不同的方式觸及了類似的問題。我的意思是，當前的毛利率指導是基於當前的前景、我們的產品組合、裝載量和利用率預測以及平均售價假設而給出的。鑑於成本上升，有很多因素會影響長期毛利率預測。

One way to look at this is if we look back, I think compared to the UMC in the past, if we look at a similar loading situation as well as the cost structure, I think we are much more resilient now in terms of our financial gross margin level. And going forward, it remains the same. We're going to take the same approach and continue focus on the [us control] cost down path, productivity improvement, all the necessary measure against this pressure headwind. And hopefully, we can deliver much healthier, stronger balance sheet for the company.

看待這個問題的一種方法是，如果我們回顧過去，我認為與過去的聯電相比，如果我們看看類似的負載情況以及成本結構，我認為我們現在在財務方面更具彈性毛利率水平。展望未來，情況仍然如此。我們將採取相同的方法，繼續關注[美國控制]成本下降路徑、生產率提高以及應對這一壓力逆風的所有必要措施。希望我們能為公司提供更健康、更強大的資產負債表。

Now, since we're going through this down cycle now and it's more appropriate and prudent that we don't give out any long-term projection at this time. And -- but once it's more ready, and we'll definitely will share that with you.

現在，由於我們正在經歷這個下行週期，因此我們此時不給出任何長期預測更為合適和謹慎。而且 - 但一旦準備就緒，我們肯定會與您分享。

Alright. Last one. And just to update the industry outlook for the year, the addressable market that we are serving.

好吧。最後一個。只是為了更新今年的行業前景，即我們所服務的目標市場。

Sure. Well, the semi outlook, we expect the 2023 semiconductor market excludes the memory will decline by mid-single digit year-over-year. For the foundry, we now expect the industry will decline by mid-teens year-over-year. With the weaker macro conditions, we'll need to be very conservative as our customer continue to manage their business and inventory. Now, for our addressable market, I think we'll be higher than the mid-teens, yes. The decline will be [higher].

當然。嗯，半導體展望，我們預計 2023 年排除內存的半導體市場將同比下降中個位數。對於代工廠來說，我們現在預計該行業將同比下降百分之十左右。由於宏觀環境疲軟，我們需要非常保守，因為我們的客戶繼續管理他們的業務和庫存。現在，對於我們的目標市場，我認為我們的市場份額將高於十幾歲左右，是的。下降幅度將會[更高]。

Next one, Gokul Hariharan of JP Morgan.

下一位是摩根大通的戈庫爾·哈里哈蘭。

My first question, I just wanted to ask a little bit more on the pricing strategy and what you're seeing from price pressure. Are we starting to see more price pressure coming through for your China facilities given we hear about a lot of foundry price pressure in China, given that UMC has significant capacity in Xiamen and Hejian. Is there a bigger price pressure that you're seeing for your Chinese capacity? Or is it a price pressure that you are seeing across the board for the company itself?

我的第一個問題，我只是想多問一些有關定價策略以及您從價格壓力中看到的情況。鑑於聯電在廈門和河間擁有大量產能，我們聽說中國的代工價格壓力很大，我們是否開始看到你們的中國工廠面臨更大的價格壓力？您認為中國產能面臨更大的價格壓力嗎？或者您認為公司本身面臨全面的價格壓力？

It's across the board. Given the current market condition, and I think we're seeing pricing pressure across the board, not only from China factory, no.

這是全面的。考慮到當前的市場狀況，我認為我們看到了全面的定價壓力，不僅僅是來自中國工廠，不是。

Got it. And we do hear that many of your existing clients are considering using some of the Chinese foundries at least for a portion of their future products. How do you see the China capacity build, because that seems to be the one area where there doesn't seem to be any pause in capacity build-out. Still seems to be pretty aggressive among all the Chinese foundries for primarily mature 12-inch given they cannot really build leading edge. So Jason, how do you expect this to kind of interact with the -- like price discipline that has existed in the non-China part of the market, including you guys and some of your peers over the next couple of years?

知道了。我們確實聽說，你們的許多現有客戶正在考慮至少在其未來產品的一部分中使用一些中國代工廠。您如何看待中國的產能建設，因為這似乎是產能建設沒有任何暫停的領域。鑑於中國代工廠無法真正建立領先優勢，對於主要成熟的 12 英寸晶圓代工廠來說，他們似乎仍然相當激進。那麼，傑森，您預計這會如何與非中國市場中存在的價格紀律（包括你們和你們的一些同行）在未來幾年內產生互動？

Sure. Well, I mean, first of all, I mean, without commenting about the peers, for UMC, to stay competitive and remain relevant in our industry, we have established several advantage in our view for many years. One is the comprehensive specialty technology offering. Two, the competitive world-class manufacturing quality and our geographically diversified manufacturing sites. In addition, our strong commitment, bringing this company to improve our customer relationship and ESG commitment, we believe will further enhance our position as more of a trusted foundry partner. That's more on a higher level.

當然。嗯，我的意思是，首先，我的意思是，在不評論同行的情況下，對於聯華電子來說，為了保持競爭力並保持在我們行業的相關性，多年來我們認為我們已經建立了一些優勢。一是全面的專業技術產品。第二，具有競爭力的世界級製造質量和我們地理上多元化的製造基地。此外，我們堅定的承諾，讓這家公司改善我們的客戶關係和 ESG 承諾，我們相信將進一步增強我們作為更值得信賴的代工合作夥伴的地位。那是更高層次的事情。

And on the technical level, we look at the major overlap area in the 8-inch. We have been improving our 8-inch customer stickiness by aligning with our customers on their product back, differentiated via specialty technology, including process customization, JDP, the joint development program for products such as analog, power management, IC, MCU and discrete devices.

而在技術層面上，我們看看8英寸的主要重疊區域。我們一直在產品背面與客戶保持一致，通過專業技術實現差異化，包括流程定制、JDP、模擬、電源管理、IC、MCU和分立器件等產品的聯合開發計劃，從而提高8英寸客戶粘性。

And so, we are confident to navigate through this current market condition as well as the competition landscape. I think there's many areas that we need to do, but we do believe that we have several advantage in many areas. And we definitely have deployed those initiatives, and hopefully, we can navigate through this.

因此，我們有信心應對當前的市場狀況和競爭格局。我認為我們還有很多領域需要做，但我們確實相信我們在很多領域都有一些優勢。我們肯定已經部署了這些舉措，希望我們能夠渡過難關。

Okay. Maybe one other question. I think you have consistently mentioned over the last few quarters that cutting price or offering price discount in a downturn doesn't really work. Now, as we think about potentially going into next year, emerging from the downturn, do you think that's when we start to see a little bit more price aggression given a lot of your peers as well as you would be running at lower utilization? Is that when we should start to expect a little bit more price accretion in this industry?

好的。也許還有一個問題。我認為您在過去幾個季度中一直提到，在經濟低迷時期降價或提供價格折扣實際上並不奏效。現在，當我們考慮明年可能走出低迷時，您是否認為我們會開始看到更多的價格侵略，因為您的許多同行以及您的利用率都較低？從那時起我們是否應該開始期待這個行業的價格上漲一點點？

I mean, obviously, we all know, right? I mean, the price pressure is there and our comments really about, the pricing doesn't help to stimulate the end demands. So the -- when the end market is shrinking, the overall expense shrinking, the pricing is mainly for the tactical level of approach and which we will use. We would not ignore that. And we -- like I said, we respect the overall foundry market dynamics and those pricing pressures. So we will work with our customer for those to help uphold their competitiveness and secure their market share.

我的意思是，顯然我們都知道，對吧？我的意思是，價格壓力確實存在，我們的評論實際上是，定價無助於刺激最終需求。因此，當終端市場萎縮、整體費用萎縮時，定價主要是針對我們將使用的戰術層面的方法。我們不會忽視這一點。正如我所說，我們尊重整體代工市場的動態和這些定價壓力。因此，我們將與我們的客戶合作，幫助他們保持競爭力並確保他們的市場份額。

And on a pricing strategy level and we remain clear about how to manage those in a separate level of whether it's a strategic level or a technical level or the short-term or longer-term structure. So we -- those strategy remains, no change. But we will definitely use those if it comes to more of a technical purpose. And so we are not ignoring that, we would just want to managing the pricing prudently.

在定價策略層面上，我們仍然清楚如何在單獨的層面上管理這些策略，無論是戰略層面還是技術層面，還是短期或長期結構。所以我們——這些策略仍然存在，沒有改變。但如果涉及到更多的技術目的，我們肯定會使用它們。因此，我們不會忽視這一點，我們只是想謹慎管理定價。

Understood. Maybe one question on 8-inch. It's been kind of seeing very low utilization across the industry. Do you feel that that's going to turn around sometime soon? Or there is a situation in the market where more and more 8-inch product is getting converted into 12-inch. And as a result, this overcapacity situation could last for a fairly long period of time.

明白了。也許有一個關於8英寸的問題。整個行業的利用率非常低。你覺得這種情況很快就會扭轉嗎？或者市場上存在這樣一種情況，越來越多的8英寸產品正在轉向12英寸。因此，這種產能過剩的局面可能會持續相當長的一段時間。

I mean for the long run, we foresee some 8-inch demand will recover post inventory correction. They will have some. There are also new applications from megatrends such as EV plus increasing IDN outsourcing business, which will help lift the 8-inch loading.

我的意思是，從長遠來看，我們預計 8 英寸的需求將在庫存調整後恢復。他們會有一些。還有來自電動汽車等大趨勢的新應用以及不斷增加的IDN外包業務，這將有助於提升8英寸的負載。

However, like you said, we do anticipate continuous pressure from some of the 12-inch mature nodes that has impacted the 8-inch supply chain. So they will have some recovery and from the overall market once the post inventory correction as well as the new application ramp. But I think what you mentioned about, it also happened there. So that will have some impact as well.

然而，正如您所說，我們確實預計來自一些 12 英寸成熟節點的持續壓力會影響 8 英寸供應鏈。因此，一旦庫存調整後以及新的應用增加，它們將會從整體市場中得到一些復甦。但我認為你提到的事情也發生在那裡。所以這也會產生一些影響。

Next on Sunny Lin of UBS.

接下來是瑞銀 (UBS) 的林陽 (Sunny Lin)。

So my #1 question is on pricing for your long-time agreement, especially for 28-nanometer. So as you said, given the ongoing demand uncertainties, I wonder for your LTAs for P6, and the future Singapore expansion, are you seeing any pressure from clients to renegotiate on the contract pricing?

所以我的第一個問題是關於長期協議的定價，尤其是 28 納米。因此，正如您所說，鑑於持續的需求不確定性，我想知道您的 P6 長期協議以及未來新加坡的擴張，您是否看到客戶有任何壓力要求重新談判合同定價？

And the second part of that question is for your Singapore fab. If we look at the cost, how much higher is it versus the P6 expansion in Taiwan, it will not be reflecting to your pricing for the contract as well?

這個問題的第二部分是針對你們的新加坡晶圓廠的。如果我們看看成本，它比台灣的 P6 擴展高出多少，這不會也反映在你們的合同定價中嗎？

So for the LTA, I answered earlier that we -- our customers, as we view that seriously, and at this point, the changing on those LTA is very minimal, relatively small. And between us and the customers, we do look at that as for more of a long-term perspective, not a short-term tactical mechanism. So, we still feel confident about those LTA going forward.

因此，對於長期協議，我之前回答說，我們——我們的客戶，我們認真地看待這一點，在這一點上，這些長期協議的變化非常小，相對較小。在我們和客戶之間，我們確實更多地從長期角度來看待這一問題，而不是短期的戰術機制。因此，我們對這些長期協議的未來仍然充滿信心。

They are pricing [discussed], but not associated with the LTA. Even with some of the LTA revision, that will be very -- in a very small portion, relatively small. The cost increase in Singapore is definitely much higher, not just because the geographical reason, it is also because the continuous inflationary cost increase. So we -- at this point, we don't foresee that will stop anytime soon. We have to mitigate those headwinds and continue working with our customers to mitigate those, and at the same time, be transparent about the cost increase and to deal with that issue together. At the same time, we have to be realistic about the market price. So it is a balance act, and we'll continue to manage that throughout this whole process.

它們正在定價[已討論]，但與 LTA 無關。即使對長期協議進行了一些修訂，這也將是非常小的一部分，相對較小。新加坡的成本增加肯定要高很多，不僅僅是因為地理原因，也是因為持續的通貨膨脹成本增加。所以我們——在這一點上，我們預計這種情況不會很快停止。我們必須減輕這些不利因素，並繼續與客戶合作以減輕這些不利因素，同時，對成本增加保持透明並共同解決該問題。同時，我們必須對市場價格保持現實的態度。所以這是一種平衡行為，我們將在整個過程中繼續管理這一點。

Got it. And so just to make sure that I interpret it correctly. So, given the cost difference, will it be fair to assume that you could be pressing differently for your 28-nanometer capacity in Taiwan versus Singapore?

知道了。所以只是為了確保我正確地解釋它。那麼，考慮到成本差異，可以公平地假設您對台灣和新加坡的 28 納米產能的壓力可能會有所不同嗎？

For the market price, they will not price differently. The market price reflects the current market situation and it's usually not a cost-based topic. If this is more of a joint investor program, then the cost is more of the factor. But if you're talking about the market price, that's not based on a cost basis.

對於市場價格，他們不會定價不同。市場價格反映了當前的市場狀況，通常不是一個基於成本的話題。如果這更多的是聯合投資者計劃，那麼成本就更重要。但如果你談論的是市場價格，那並不是基於成本。

Got it. That's very helpful. So, my second question is about the structural supply versus demand for growing that foundry. If we look at your historical utilization rate through cycle, that will be between, I think, 85% to 90% through cycle. But apparently, in the last 2 years, the industry capacity had increased quite a bit. And so, just want to get your thoughts on how we should think about the sale cycle utilization rate for you, maybe for next 2 to 3 years.

知道了。這非常有幫助。因此，我的第二個問題是關於增長代工廠的結構性供應與需求。如果我們查看整個週期的歷史利用率，我認為整個週期的利用率將在 85% 到 90% 之間。但顯然，在過去的兩年裡，行業產能已經增加了不少。因此，只是想了解您對我們應該如何考慮您的銷售週期利用率（也許是未來 2 到 3 年）的想法。

Well, I mean, from a business management point of view, we also want to help increase our utilization and help load our fabs. So, I mean, from a financial model standpoint and the company's balance sheet healthiness level and the resilience will probably have to plan out different scenarios. But as a business manager, I probably won't tell our teams to shoot for 80% or 90% utilization as our goal. So, from a financial simulation purpose, we have a different layer of utilization rate assumption and to examine our financial resilience. But in terms of the business objective, it's our goal to fully loading our fab.

嗯，我的意思是，從業務管理的角度來看，我們還希望幫助提高我們的利用率並幫助我們的晶圓廠加載。因此，我的意思是，從財務模型的角度來看，公司的資產負債表健康水平和彈性可能必須規劃不同的情況。但作為一名業務經理，我可能不會告訴我們的團隊以 80% 或 90% 的利用率為目標。因此，從財務模擬的目的來看，我們有不同層次的利用率假設並檢驗我們的財務彈性。但就業務目標而言，我們的目標是工廠滿負荷運轉。

I see. And so, I guess several analysts have asked the demand question from a different angle. But just want to try one more walk here. And so I understand we are still through the cycle trough, visibility is still not high. But as Charlie pointed out, the industry inventory continued to drop. And so will there be good possibility that we could potentially see a more meaningful recovery from first half of next year?

我懂了。因此，我猜幾位分析師已經從不同的角度提出了需求問題。但只是想再嘗試一次在這裡散步。所以我理解我們仍然在經歷週期低谷，能見度仍然不高。但正如查理指出的那樣，行業庫存持續下降。那麼，明年上半年我們是否有可能看到更有意義的複蘇？

I mean, I certainly hope so. And I will also expect that if that's the case. So I was glad to hear what Charlie mentioned. And we will closely monitor the market dynamics. And right now, we do see the inventory correction more lingering into Q4. We haven't seen any meaningful demand recovery yet. Hopefully, a quarter over, and we will have a better view and better comments. But at this point, we do think this inventory situation will linger into the Q4.

我的意思是，我當然希望如此。如果是這樣的話，我也會期待這一點。所以我很高興聽到查理提到的事情。我們將密切關注市場動態。目前，我們確實看到庫存調整將持續到第四季度。我們尚未看到任何有意義的需求復蘇。希望四分之一過去了，我們會有更好的觀點和更好的評論。但目前，我們確實認為這種庫存狀況將持續到第四季度。

Next one is from Brad Lin, Bank of America.

下一篇來自美國銀行的 Brad Lin。

So I have 2 questions. First one is pretty short, it's 65-nanometer. So we saw the 65, actually the mix increased from 19% in 1Q to 23% in 2Q. What was the driver behind and should this trend continue in the second half? That's the first question.

所以我有兩個問題。第一個非常短，是 65 納米。所以我們看到了 65 個，實際上這個組合從第一季度的 19% 增加到第二季度的 23%。背後的驅動因素是什麼？這種趨勢是否應該在下半年繼續下去？這是第一個問題。

I mean, our 12-inch loading is still above our corporate average. And we don't comment about the loading by node. And I can share with you the 65 loading in Q2 is -- increases is mainly coming from the automotive segment.

我的意思是，我們的 12 英寸負載仍然高於公司平均水平。我們不評論節點的加載。我可以與您分享第二季度的 65 輛裝載量——增長主要來自汽車領域。

And then my second question is on the advanced packaging. We would like to learn UMC's strategy and development in advanced packaging. We have learned from Faraday's earnings call yesterday, its collaboration with UMC on advanced packaging on multiple angles. And we also understand interposer and wafer-to-wafer bonding, and the current focus of the firm, how fast do you expect it to grow and do we have any incremental CapEx plans on it? And also, what are the upcoming offers on top of those that can help UMC capture the upside from the advanced packaging?

我的第二個問題是關於先進封裝的。我們想了解聯華電子在先進封裝方面的策略和發展。我們從昨天智原的財報電話中了解到，智原與聯電在先進封裝方面進行了多角度的合作。我們還了解中介層和晶圓到晶圓鍵合，以及公司當前的重點，您預計它的增長速度有多快，我們是否有任何增量資本支出計劃？此外，除了那些可以幫助聯華電子抓住先進封裝優勢的產品之外，即將推出的產品還有哪些？

I do think because -- the higher bandwidth and reduced form factor are the 2 major driver for this advanced packaging needs. But they are for different applications. Usually, the higher bandwidth is more for the AI processors. And the form factor is for some of the integration, wafer-to-wafer integration level to help in the form factor. So there's a different application.

我確實認為是因為——更高的帶寬和更小的外形尺寸是這種先進封裝需求的兩個主要驅動因素。但它們適用於不同的應用。通常，AI 處理器的帶寬越高。而外形尺寸對於一些集成、晶圓到晶圓的集成度來說是有幫助的。所以有一個不同的應用程序。

So it's important that UMC is not absent from those applications. We do see that market demands increasing, and we've seen there's going to be multiple application coming in. So we want to make sure that we have the technology to serving those markets. And so that's why we have been developing this and providing this interposer and wafer-to-wafer bonding technology for years now.

因此，重要的是聯華電子不能缺席這些應用程序。我們確實看到市場需求在增加，並且我們已經看到將會出現多種應用程序。因此，我們希望確保我們擁有服務這些市場的技術。這就是為什麼我們多年來一直在開發這種中介層和晶圓到晶圓鍵合技術。

The strategy, also about the ecosystem. We're working -- closely working with OSEP partners for the back-end process, and we are also working with the design services company about the integration, the wafer level design. So they are considered as a part of the ecosystem. Right now, we think this is in the early stage of the production ramp. Technology has been there for years, but the volume production has really just happened with the recent AI momentum. But that's more on the data side, the high bandwidth data side.

該戰略也與生態系統有關。我們正在與 OSEP 合作夥伴密切合作進行後端流程，我們還與設計服務公司就集成、晶圓級設計進行合作。因此它們被視為生態系統的一部分。目前，我們認為這正處於產量提升的早期階段。技術已經存在多年，但隨著最近人工智能的發展勢頭，批量生產才剛剛發生。但這更多是在數據方面，即高帶寬數據方面。

For the form factor side I think there's other pipeline coming in the next year or so. So we haven't really seen a meaningful or high-volume production yet. The CapEx spending on those space is already planned in our budget. That's not changing our overall CapEx number. It is embedded in that in that number already. So, we think it's not to the level that we need to revise our CapEx to support this.

對於外形尺寸方面，我認為明年左右還會有其他產品線出現。所以我們還沒有真正看到有意義的或大批量的生產。這些空間的資本支出已在我們的預算中計劃。這並沒有改變我們的總體資本支出數字。它已經嵌入到那個數字中了。因此，我們認為這還沒有達到我們需要修改資本支出來支持這一點的程度。

Got it. Just one very quick follow-up is on the so-called open ecosystem. And then obviously, we are seeing a closed system, which currently dominates the market. So, could you please provide some insights into the optimal collaboration model? Additionally, what may be the preferences of their clients in this regard?

知道了。只有一個非常快速的後續行動是關於所謂的開放生態系統。顯然，我們看到的是一個封閉的系統，目前它主導著市場。那麼，您能否提供一些關於最佳協作模式的見解？此外，他們的客戶在這方面可能有什麼偏好？

I think the concept is important to provide what you are relevant with. And advanced packaging, in our view, is considered a silicon -- a wafer level integration technology. And that's where we're going to be focused on. For the back end, because the back-end substrates, there will be partners in that ecosystem providing that. The back-end packaging technology also have a partner to provide that service. We don't add much of a value there.

我認為這個概念對於提供與你相關的內容很重要。在我們看來，先進封裝被認為是矽——一種晶圓級集成技術。這就是我們要關注的地方。對於後端，由於後端基板，該生態系統中會有合作夥伴提供該服務。後端封裝技術也有合作夥伴提供該服務。我們不會在那裡增加太多價值。

So that's why we stick with the wafer level and silicone level integration focus. And so that's how we position ourselves and ensure that we will be in an indispensable position, because the wafer level integration has to be done in a wafer with a fabrication fab. But others, you don't have to. So that's why we had to pick the space that we are more relevant.

這就是我們堅持晶圓級和矽片級集成重點的原因。這就是我們如何定位自己並確保我們處於不可或缺的地位，因為晶圓級集成必須在具有製造工廠的晶圓中完成。但其他人，你不必這樣做。這就是為什麼我們必須選擇與我們更相關的空間。

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

謝謝。女士們先生們，謝謝你們提出的所有問題。今天的問答環節到此結束。我會將其轉交給 UMC IR 主管進行總結髮言。謝謝。

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

感謝您參加今天的這次會議。我們感謝您的提問。與往常一樣，如果您有任何其他後續問題，請隨時通過 ir@umc.com 聯繫 UMC。祝你有美好的一天。

Thank you. Ladies and gentlemen, that concludes our conference for 2Q23. 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 Event section. You may now disconnect. Goodbye.

謝謝。女士們、先生們，2023 年第二季度的會議到此結束。感謝您參加聯華電子的會議。 2小時內將進行網絡直播重播。請訪問 www.umc.com 的“投資者活動”部分。您現在可以斷開連接。再見。