聯華電子 (UMC) 2023 Q3 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 年第二季財報電話會議。 （操作員說明）僅供參考，本次電話會議現透過網路進行現場直播。會議結束後一小時內將提供網路直播重播。請造訪我們的網站 www.umc.com，位於投資者關係的投資者/活動部分。

And 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 third quarter of 2023. I'm joined by Mr. Jason Wang, the President of UMC and Mr. Chi-Tung Liu, CFO of UMC. In a moment, we will hear our CFO present the third quarter financial result, followed by our President's key message to address UMC's focus and fourth quarter 2023 guidance.

謝謝大家，歡迎參加聯華電子 2023 年第三季電話會議。聯華電子總裁 Jason Wang 先生和聯華電子財務長劉志東先生也出席了會議。稍後，我們將聽到我們的財務長介紹第三季的財務業績，然後是我們的總裁關於解決 UMC 的重點和 2023 年第四季度指導的關鍵信息。

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.

一旦我們的總裁和財務長完成發言，就會有問答環節。 UMC 的季度財務報告可在我們的網站 www.umc.com 的投資者/財務部分取得。

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

在這次會議期間，我們可能會根據管理層目前的期望和信念做出前瞻性陳述。這些前瞻性陳述受到許多風險和不確定性的影響，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。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透過網路現場直播的財務簡報資料。

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

現在，我想介紹聯華電子財務長劉志東先生，討論聯華電子2023年第三季的財務表現。

Thank you, Michael. I'd like to go through the third quarter 2023 Investor Conference presentation material, which can be downloaded or viewed in real time from our website.

謝謝你，麥可。我想瀏覽 2023 年第三季投資者大會簡報資料，這些資料可以從我們的網站下載或即時查看。

Starting on Page 4, the third quarter of 2023, consolidated revenue was TWD 57.1 billion, with gross margin at 35.9%. Net income attributable to the shareholder of the parent was TWD 16 billion, and the earnings per ordinary shares were TWD 1.29, which is slightly better than the previous quarter of TWD 1.27. And our shipment in the third quarter declined sequentially about 2%, and capacity utilization rate in the third quarter was 67%.

從第4頁開始，2023年第三季度，合併收入為新台幣571億，毛利率為35.9%。歸屬於母公司股東的淨利為新台幣160億，每股普通股收益為新台幣1.29，略優於上一季的新台幣1.27。我們第三季的出貨量較上月下降了約2%，第三季的產能利用率為67%。

Page 5 is the income statement for the third quarter, and revenue grew 1.4% sequentially to TWD 57 billion, due to better mix and also better blended ASP, as well as helped by the favorable exchange rate.

第5頁是第三季的損益表，由於更好的組合和更好的混合平均售價，以及有利的匯率的幫助，收入環比增長1.4%，達到570億新台幣。

Gross margin remained somewhat similar to the previous quarter, at 35.9%, or TWD 20.4 billion. Operating income reached about TWD 15.96 billion, which is equivalent to TWD 1.29 EPS in the third quarter of 2023.

毛利率與上一季持平，為 35.9%，即 204 億新台幣。營業收入達到約159.6億新台幣，相當於2023年第三季每股收益1.29新台幣。

On Page 6, is the first 9-months performance. Because of the downturn of the cycle, we witnessed around 20.5% year-over-year decline in our top line, which was TWD 167.5 billion. Gross margin rate dropped from 45.8% in the previous year to the first 3 quarters of the year of 2023 of 35.8%. And EPS for the first 3 quarters of the year reached TWD 3.87 per share.

第 6 頁是前 9 個月的表現。由於週期下行，我們的營收年減約 20.5%，為新台幣 1,675 億。毛利率從上年的45.8%下降至2023年前3季的35.8%。前三季每股獲利達新台幣3.87元。

On Page 7, the cash on hand is still around TWD 140 billion, with the total asset is more than TWD 547 billion.

第七頁，手上現金仍在1,400億新台幣左右，總資產超過5,470億新台幣。

On Page 8, our blended ASP, as I mentioned earlier, due to the better mix and also the difference in between 12-inch and 8-inch wafer capacity utilization rate, our blended ASP in the third quarter continued to edge up in the third quarter of 2023.

在第8頁，我們的混合ASP，正如我之前提到的，由於更好的組合以及12英寸和8英寸晶圓產能利用率之間的差異，我們第三季度的混合ASP在第三季度繼續小幅上升2023 年第四季。

For revenue breakdown on Page 9, Asia remained the biggest segment of the pie around 58%, which grew about 2 percentage points from the previous quarter. And Europe and North America remained unchanged when Japan declined by about 2 percentage points in terms of revenue breakdown.

對於第 9 頁的營收細分，亞洲仍然是最大的部分，約佔 58%，比上一季成長約 2 個百分點。當日本的收入細分下降約2個百分點時，歐洲和北美保持不變。

IDM versus Fabless on Page 10 remained unchanged quarter-over-quarter. On Page 11, we see a small increase in communication, which is 46% in the third quarter. And consumer dropped from 26% in the second quarter to 23% in the third quarter of 2023.

第 10 頁的 IDM 與 Fabless 環比保持不變。在第 11 頁，我們看到溝通量略有增加，第三季增加了 46%。消費者佔比從第二季的 26% 下降至 2023 年第三季的 23%。

On Page 12, along with our increased capacity coming out of P6 in 22/28 nanometer, our revenue also grew accordingly, now reached 32% in the third quarter of 2023. For total revenue for 49 nanometer and below in the third quarter, reached 45%, which compared to 41% in the previous quarter.

在第12頁，隨著我們22/28奈米P6產能的增加，我們的收入也相應增長，目前在2023年第三季度達到32%。對於49奈米及以下的第三季度總收入，達到45% ，而上一季為41%。

For capacity breakdown on a quarterly basis on Page 13, as P6 continued to have new capacity come on stream, we see about more than 1% capacity increase in the third quarter. And the following quarter in Q4, we expect to see more than 2% sequential capacity growth, also mainly due to the capacity increase in our Tainan P6 facility.

第13頁的季度產能分佈，隨著P6持續有新產能投產，我們預期第三季產能增幅將超過1%。接下來的第四季度，我們預計產能季增將超過 2%，這也主要得益於我們台南 P6 廠的產能成長。

On the last page of my presentation is on Foundry CapEx, which currently running on track, and its budget to be remained unchanged around USD 3 billion for year 2023.

我演講的最後一頁是關於 Foundry 資本支出的，目前該專案運作正常，2023 年預算將保持在 30 億美元左右不變。

So the above is the summary of UMC results for third quarter of 2023. More details are available in the report, which has been posted on our website.

以上是聯華電子 2023 年第三季業績摘要。更多詳細資訊請參閱我們網站上發布的報告。

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

我現在將電話轉給聯電總裁王傑森先生。

Thank you, Chi-Tung. Good evening, everyone. Here, I would like to share UMC third quarter results. During the third quarter, despite a 2.3% decrease in wafer shipments, quarterly revenue and gross margin remained firm quarter-over-quarter, which is primarily attributed to the demand strength in computing and communication segment, continuous product mix enhancement, as well as a favorable currency movement.

謝謝你，志東。各位晚上好。在這裡，我想分享一下聯電第三季的業績。第三季度，儘管晶圓出貨量下降2.3%，但季度收入和毛利率環比保持堅挺，這主要得益於計算和通信領域的需求強勁、產品組合的持續增強以及有利的貨幣走勢。

From end market perspective, strength in computing application was propelled by LCD controllers, Wi-Fi, codec, and touch IC controllers, while shipments in communication segment increased due to demand for RF front-end IC and networking chips.

從終端市場來看，運算應用的成長主要得益於LCD控制器、Wi-Fi、編解碼器和觸控IC控制器的推動，而通訊領域的出貨量則因射頻前端IC和網路晶片的需求而增長。

Looking back at 2023, although foundry industry experienced a significant decline in market demand, UMC maintained solid structural profitability, supported by firmness in blended ASP due to continuous product mix optimization efforts and the increased contribution from specialty technologies.

回顧2023年，儘管代工行業經歷了市場需求的大幅下降，但由於持續優化產品組合以及專業技術貢獻增加，混合平均售價保持堅挺，聯電保持了穩健的結構性盈利能力。

As UMC continues to introduce new specialty technology to solidify our differentiation, we will strengthen the competitiveness of our customers and enhance their respective market position.

隨著聯華電子不斷推出新的專業技術來鞏固我們的差異化優勢，我們將增強客戶的競爭力並提升他們各自的市場地位。

For the fourth quarter, with the recent rush order from PC and smartphones, we expect demand has gradually stabilized. However, customers still employ a cautious and conservative approach in maintaining a lean inventory level, while automotive business conditions appear challenging.

第四季度，隨著近期PC和智慧型手機的搶單，我們預期需求已逐漸穩定。然而，客戶仍然採取謹慎和保守的態度來維持精益庫存水平，而汽車業務狀況似乎充滿挑戰。

For 2024, we anticipate the production ramp of our 12A P6 fab will further enhance revenue contribution from 22/28 nanometer, continuing the robust business traction for UMC. In addition, through our technology leadership, we will ramp up our offering on 22 nanometer derivative products, which will further our specialty technology product pipeline.

2024 年，我們預計 12A P6 晶圓廠的產量提升將進一步提高 22/28 奈米的收入貢獻，持續為聯華電子帶來強勁的業務牽引力。此外，透過我們的技術領先地位，我們將增加 22 奈米衍生產品的供應，這將進一步推進我們的專業技術產品線。

Now, let's move on the fourth quarter 2023 guidance. Our wafer shipment will decline by approximately 5%. ASP in U.S. dollars will remain flat. Gross margin will be in the low 30% range. Capacity utilization rate will be in the low 60% range. Our 2023 cash-based CapEx will be budgeted at USD 3 billion.

現在，讓我們繼續討論 2023 年第四季的指導。我們的晶圓出貨量將下降約5%。以美元計算的平均售價將維持不變。毛利率將在 30% 左右。產能利用率將在60%左右。我們 2023 年以現金為基礎的資本支出預算為 30 億美元。

That concludes 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. And ladies and gentlemen, we will now begin our question and answer session. (Operator Instructions) And our first question is from Sunny Lin, UBS.

謝謝王校長。女士們、先生們，我們現在開始問答環節。 （操作員說明）我們的第一個問題來自瑞銀集團的 Sunny Lin。

So, my first question is on gross margin. Q1 -- I mean, Q3 gross margin was actually better than guidance, but even with that Q4 gross margin, it's got to drop towards low 30%. And so, what's the key factors affecting gross margin into Q4?

所以，我的第一個問題是毛利率。第 1 季——我的意思是，第 3 季的毛利率實際上好於指導值，但即使考慮到第 4 季的毛利率，它也必須下降到 30% 的低水平。那麼，影響第四季毛利率的關鍵因素是什麼？

Well, first of all, for Q4 gross margin, guidance will be at a low 30% range, mainly due to a decline in utilization rate. As we expected, there will be probably a 5% decline in shipment.

首先，對於第四季度的毛利率，指引將處於 30% 的低水平，這主要是由於利用率的下降。正如我們預期的那樣，出貨量可能會下降 5%。

Got it. Then on the overall pricing environment, are you seeing any differences, i.e. intensifying competition because of the slower demand recovery for the coming few quarters?

知道了。那麼在整體定價環境上，您是否看到任何差異，即由於未來幾季需求復甦較慢而導致競爭加劇？

Well, I mean, we're very much aware of the market situation and we respect the foundry market and pricing trend. We're aware of the market dynamic and competitive landscape, so we will close monitoring the market aligned with our customer pricing position to ensure our customers' competitiveness. And along with securing their market share, that will be our objective.

嗯，我的意思是，我們非常了解市場形勢，我們尊重代工市場和定價趨勢。我們了解市場動態和競爭格局，因此我們將根據客戶的定價地位密切監控市場，以確保客戶的競爭力。除了確保他們的市場份額之外，這將是我們的目標。

UMC maintains our pricing strategy. In addition, we do believe our value-added technology, manufacturing quality, and capacity alignment that support our customers to enhance their market position.

聯電維持我們的定價策略。此外，我們確實相信我們的增值技術、製造品質和產能調整能夠支持我們的客戶增強其市場地位。

However, we observed that 8-inch market landscape has intensified, like you said. But we may have to adjust some pricing or some market segment to align with the market dynamics. For the 12-inch business, we will remember our pricing position, which will reflect our value.

然而，正如您所說，我們觀察到8吋市場格局已經加劇。但我們可能必須調整一些定價或一些細分市場以適應市場動態。對於12英寸業務，我們會記住我們的定價定位，這將反映我們的價值。

So my second question is on 28-nanometer. UMC has built a fairly strong presence in some of the products, like OLED driver, Wi-Fi, ISP, et cetera, but I believe some of your competitors are also trying to ramp up capacities and capabilities, especially for OLED driver and Wi-Fi. And so going forward, looking into next 2 or 3 years, how should we think about the overall competitive landscape for 28-nanometer? And what are some of the new product opportunities that you will look to ramp in the coming few years?

我的第二個問題是關於 28 奈米的。聯華電子在某些產品上已經建立了相當強大的影響力，例如OLED 驅動器、Wi-Fi、ISP 等，但我相信一些競爭對手也在努力提高產能和能力，特別是在OLED 驅動器和Wi- Fi 方面。菲。那麼展望未來兩三年，我們該如何看待28奈米的整體競爭格局？未來幾年您將尋求哪些新產品機會？

Well, I mean, there's a couple of questions. One is our current 28-nanometer outlook, right? For the 22 and the 28-nanometer loading, we have remained resilient amid near-term market volatility. Well, thanks to our customers' stickiness, our diversified product portfolio and technology differentiation. And we will continue to expand our 22 and 28-nanometer market share with the application like OLED driver, ISP, Wi-Fi, SoC processors, while we are working with the leading companies to bring up more application on 22 and 28-nanometer platform.

嗯，我的意思是，有幾個問題。一是我們目前對28奈米的展望，對嗎？對於 22 奈米和 28 奈米負載，我們在近期市場波動中保持彈性。嗯，這要歸功於我們客戶的黏性、我們多樣化的產品組合和技術差異化。我們將繼續透過OLED驅動、ISP、Wi-Fi、SoC處理器等應用擴大我們的22和28奈米市場份額，同時我們正在與領先公司合作，在22和28奈米平台上推出更多應用。

As far as the competition, we do believe, there's always a competition there, and we will try to compete with that, particularly in the 28 high-voltage space. You mentioned, well, we believe -- first of all, we believe the OLED market will continue to grow, and we will continue to maintain our leadership technology position and the market share position, even though we are cooperating with multiple leading customers in those key markets.

就競爭而言，我們確實相信，競爭總是存在的，我們將努力與之競爭，特別是在 28 高壓領域。你提到，嗯，我們相信——首先，我們相信OLED市場將繼續成長，我們將繼續保持我們的領先技術地位和市場份額地位，儘管我們正在與這些領域的多個領先客戶合作。關鍵市場。

Next question, Nicolas Baratte, Macquarie.

下一個問題，Nicolas Baratte，麥格理。

When you guide for a 4Q wafer shipment to decline 5% Q-on-Q, is there any segment specifically that we can attribute this to? And what I mean in particular is, you mentioned better demand from computer and communication in 3Q. Is it still the case in 4Q? Or what is changing into 4Q that you could talk about?

當您預期第四季晶圓出貨量將較上季下降 5% 時，我們是否可以將其具體歸因於任何細分市場？我特別想說的是，您提到第三季電腦和通訊的需求有所改善。 4Q還是這樣嗎？或者您可以談談 4Q 發生了什麼變化？

Sure. For the Q4 outlook, and currently we see the PC and the Chinese smartphone segment will remain in line with the Q3. However, for the automotive market, given that the customer have been accumulating backlog from early, last year till probably Q1 this year, we expect higher than expected inventory build up already.

當然。對於第四季的前景，目前我們認為個人電腦和中國智慧型手機市場將與第三季保持一致。然而，對於汽車市場，鑑於客戶從去年年初一直到今年第一季都在累積積壓訂單，我們預期庫存累積已經高於預期。

As a result, our auto business is projected to decline in Q4. But 4 years, automotive contribution will still count for mid-teens as a percentage of our wafer revenue.

因此，我們的汽車業務預計第四季將出現下滑。但四年後，汽車貢獻仍將占我們晶圓收入的百分之十左右。

I don't think you report your revenue exposure to the Industrial segment, but do you see similar trend in industrial?

我認為您沒有報告工業領域的收入，但您是否看到工業領域有類似的趨勢？

It's similar, but it's actually better than automotive right now. Both automotive and industrial is covered under the others, but the major decline is coming mostly from automotive space.

它很相似，但它實際上比現在的汽車更好。汽車和工業都包含在其他領域中，但主要下降主要來自汽車領域。

Maybe for Chi-Tung, any updated view on depreciation this year compared to last year?

也許對於Chi-Tung來說，與去年相比，今年對折舊的看法有什麼更新嗎？

This year, it's like...

今年，就像...

Still declining a little bit.

還是有一點點下降。

Yes. In terms of absolute depreciation expenses, this year, 2023 is likely to be the bottom of recent years. We probably will witness the lowest point in terms of absolute depreciation expenses in 2023.

是的。從絕對折舊費用來看，今年2023年很可能是近年來的底層。 2023 年我們可能會看到絕對折舊費用的最低點。

Going to 2024, because of our P6 expansion in Tainan coupled with the shell construction in Singapore, the overall depreciation will start to rebound, and the increase rate in 2024 will be more than double digit, which will provide a more precise number -- precise range in the next quarter's conference call.

到2024年，因為我們在台南的P6擴建，加上新加坡的殼建，整體貶值會開始反彈，2024年的增幅將超過兩位數，這將提供一個更精確的數字——精確範圍在下一季度的電話會議中。

I understand next quarter, Chi-Tung, but my mechanical model, very mechanical projection, percentage of PP&E tells me next year, depreciation could go up 25%. Does that sound vaguely possible?

我知道下個季度，Chi-Tung，但是我的機械模型，非常機械的預測，PP&E 的百分比告訴我明年，折舊可能會上升 25%。這聽起來有點可能嗎？

Well, again, this year, we will see a 5% to 10% decline first. So it's a really recent low in terms of annual numbers. But next year, 2024, yes, your number is in the ballpark.

嗯，今年，我們首先會看到 5% 到 10% 的下降。因此，就年度數字而言，這是最近的低點。但明年，也就是 2024 年，是的，你的數字就在大概範圍內。

Next one, Gokul Hariharan, JPMorgan.

下一位是摩根大通的 Gokul Hariharan。

First of all, Jason, could you talk a little bit about all this capacity that's been announced and coming online in so many places, but especially in China. We start to hear a lot from your customers also about pretty aggressive price code from Chinese foundries and some of your customers starting to consider some of the capacity as well.

首先，傑森，您能否談談已在許多地方（尤其是在中國）宣布並上線的所有這些功能。我們開始從你們的客戶那裡聽到很多關於中國鑄造廠相當激進的價格代碼，你們的一些客戶也開始考慮一些產能。

So my question is like a little bit longer-term. How do you think about pricing, given that the foundry industry has seen a pretty nice price increase through the last 2, 3 years, the pandemic years especially. And what kind of a price premium can UMC maintain in like 28, 40, 65-nanometer kind of nodes who are some of the more aggressive competitors that are coming up? And also, could you kind of refresh our memory on what is your current LTA coverage, given that you have some of the new capacity that has come online with pretty high LTA coverage?

所以我的問題有點長期。鑑於鑄造業在過去兩三年（尤其是疫情期間）的價格上漲相當不錯，您如何看待定價？聯華電子在 28、40、65 奈米等節點（即將出現的更具侵略性的競爭對手）中可以維持什麼樣的溢價？另外，考慮到你們已經上線的一些新容量具有相當高的 LTA 覆蓋率，您能否讓我們回憶一下你們目前的 LTA 覆蓋率是多少？

Well, okay. Yes, sure. Well, I mean, the competition is always going to be there. As you said, there's many new capacity announced, particularly coming out from the China. And from UMC, we have always tried to maintain our competitiveness through a few area. One is a continuous technology innovation.

哦，那好吧。是的，當然。嗯，我的意思是，競爭永遠存在。正如您所說，宣布了許多新產能，尤其是來自中國的產能。而從聯華電子來說，我們一直試圖透過幾個領域來維持我們的競爭力。一是持續的技術創新。

Second is diversify the production side with a sizable capacity offering, and which is actually become increasingly important. Third is the manufacturing excellence. We all know both cycle time quality as well as the yield is so important to customers and for them to be competitive. And the fourth is with a broader customer base and a product portfolio.

其次是透過提供相當大的產能來實現生產多元化，這實際上變得越來越重要。三是卓越製造。我們都知道周期時間品質和產量對於客戶和他們的競爭力都非常重要。第四是擁有更廣泛的客戶群和產品組合。

With this compelling differentiation, we believe we can continue to provide a reliable and dependable path to secure future growth for our customers. So that's pretty much on a higher level.

憑藉這種引人注目的差異化優勢，我們相信我們可以繼續提供可靠且值得信賴的途徑，以確保客戶未來的成長。所以這幾乎是一個更高的水平。

Your question relate to in terms of the pricing. Like I mentioned earlier, we respect the market dynamics and we will stay competitive and supporting our customer to be competitive. And right now, we have discussed and continue aligning with our customer, usually on an annual basis, so one-off pricing alignments. And we'll continue with that practice and with the understanding of the market outlook.

您的問題涉及定價方面。正如我之前提到的，我們尊重市場動態，我們將保持競爭力並支持我們的客戶保持競爭力。現在，我們已經討論並繼續與客戶保持一致，通常每年一次，因此一次性定價一致。我們將繼續這種做法並了解市場前景。

And for that, and that will be a different pricing position in terms of different technology nodes, like you said. For 28, and we are remaining resilient and amid the near-term market volatility as well as the forward-looking product pipeline. And so we feel rather comfortable about the confidence about our 28 nanometers.

為此，正如您所說，就不同的技術節點而言，這將是不同的定價定位。 28 年來，我們在近期市場波動以及前瞻性產品管道中保持彈性。因此，我們對 28 奈米技術充滿信心。

For the mature 12-inch outlook, we will transition into more specialty technology for our mature 12-inch nodes and where we foresee promising new opportunities, which coming into notebook and tablet space, such as RF SOI, non-volatile memory, and high voltage. And we anticipate a 55 and a 40 nanometer will be a mainstream for RF SOI and MCU

對於成熟的12 吋前景，我們將向成熟的12 吋節點過渡到更專業的技術，我們預見到筆記型電腦和平板電腦領域將出現有希望的新機會，例如射頻SOI、非揮發性記憶體和高性能記憶體。電壓。我們預計 55 和 40 奈米將成為 RF SOI 和 MCU 的主流

for a broader range of the market, including the wireless, automotive, and industrial application. So again, we will stay competitive and then we will align with the market dynamics and to support our customer in terms of the commercial needs.

適用於更廣泛的市場，包括無線、汽車和工業應用。因此，我們將再次保持競爭力，然後我們將與市場動態保持一致，並在商業需求方面支持我們的客戶。

Could you also refresh your memory on roughly what is your LTA coverage now? I think it used to be about 30 to 40%, but it looks like that's gone up given the new capacity that's coming.

您能否回想一下您目前的 LTA 承保範圍大致是多少？我認為過去約為 30% 至 40%，但考慮到即將到來的新產能，這一比例似乎有所上升。

If you're talking about NTA or LTA?

如果你說的是 NTA 還是 LTA？

LTA.

陸路交通管理局。

LTA, sorry, LTA.

陸航，對不起，陸航。

The LTA has been, stays fairly flat. It's about 25% to 30% coverage. And we've been reporting many times in the past, the LTA still is a mechanism to support both customer and UMC on the longer-term perspective. And particularly given the recent market dynamics, and we both are examining our current LTA quality as well as the status on the LTAs. And because our customers continue wanting to make sure their supply resilience and align with our interest of protecting our investment. So many LTAs have been reviewed and we actually believe those LTA has mutual commitment as a -- to them. So the 25% and 30% remains fairly resilient at this time, yes.

長期協議一直保持相當平穩。覆蓋率約為 25% 至 30%。我們過去曾多次報道過，LTA 仍然是一個從長遠角度支援客戶和聯華電子的機制。特別是考慮到最近的市場動態，我們都在審查目前的長期協議品質以及長期協議的狀態。因為我們的客戶仍然希望確保他們的供應彈性並符合我們保護投資的利益。如此多的長期協議已經過審查，我們實際上相信這些長期協議對它們有共同的承諾。所以 25% 和 30% 目前仍然相當有彈性，是的。

Okay. One follow-up on the LTAs. Are you seeing any price downward negotiations on any of the LTAs given that you mentioned that you're seeing some of the reviews on the LTAs right now?

好的。長期協議的一項後續行動。鑑於您提到您現在看到了一些關於長期協議的評論，您是否看到任何長期協議有價格下調的談判？

Well, during the downturn cycle, we definitely work with our customer and look at the market situation and giving a change in the demand of supply dynamics. And we -- between the UMC and our customer remain confident in the long-term objective, but in the short-term, we do have some tactics and flexibility to make the customer and UMC collective to navigate through this market fluctuation. So yes, there are some flexibility in terms of that. With the long-term contractual obligation commitment that they are still intact.

嗯，在經濟低迷週期期間，我們肯定會與客戶合作，研究市場狀況並改變對供應動態的需求。我們－聯華電子和我們的客戶對長期目標仍然充滿信心，但在短期內，我們確實有一些策略和靈活性，可以讓客戶和聯華電子共同度過這一市場波動。所以，是的，這方面有一定的彈性。長期合約義務承諾它們仍然完好無損。

Understood. One last question from me. How do you think about capacity expansion given the downturn seems to be lasting a little bit longer than expected and you're running at 60% or low 60s utilization except during the year? Do you have any thinking about pushing out some capacity expansion further, especially for some of the new capacity in Singapore? Importantly though, because the depreciation burden is also rising quite a bit going into next year?

明白了。我的最後一個問題。鑑於經濟低迷的持續時間似乎比預期要長一些，而且除了年內以外，你們的利用率都在 60% 或 60 年代的低水平，您如何看待產能擴張？您是否考慮進一步推動產能擴張，尤其是新加坡的一些新產能？但重要的是，因為明年的折舊負擔也會大幅上升？

Absolutely. For the P6, we're already in the process of ramping up. So it's harder to making adjustment on those. So we anticipate our 12A P6 monthly capacity will still reach to 12K per month by end of 2023. And it will reach its design capacity of 31.5K per month by September 2024. And that's still there.

絕對地。對於 P6，我們已經開始進行升級。因此，對這些進行調整更加困難。因此，我們預計到 2023 年底，我們的 12A P6 月產能仍將達到每月 12K。到 2024 年 9 月，它將達到每月 31.5K 的設計產能。而且這個數字仍然存在。

And for the P3 Singapore, we have deployed a clean room construction. So the clean room will still be ready by the first half of 2024. And, but however, we expect the P3 capacity ramp starting time at April 2025 without change. And because we have alignment with some of the customer already, however, the ramp profile will be moderated based on the market dynamics, which that has some adjustment to the ramp profile.

對於 P3 新加坡，我們部署了無塵室建設。因此，無塵室仍將在 2024 年上半年準備就緒。但是，我們預計 P3 產能提升的開始時間為 2025 年 4 月，不會有任何變化。然而，由於我們已經與一些客戶達成了一致，因此斜坡曲線將根據市場動態進行調整，這將對斜坡曲線進行一些調整。

Next one, Bruce Lu of Goldman Sachs.

下一位是高盛的布魯斯·盧。

I want to ask you about the outlook for 2024. I mean, based on my mechanical mathematics, it seems to be very comfortable for your P6 expansion with LTA remain on track. So which P6 will give you 30,000 wafer per month capacity for next year. Each wafer should be $3,000 to $3,500. If you multiply by that, you can easily get like 15% plus revenue growth. In addition, you should have some inventory restocking commitment for that. So that can easily give you like 15 plus percent revenue growth for 2024. So is that sounds right? I mean, at least you can get the revenue growth on your LTA contribution from P6.

我想問你關於 2024 年的展望。我的意思是，根據我的機械數學，在 LTA 保持正軌的情況下，你的 P6 擴張似乎非常舒服。那麼明年 P6 將為您提供每月 30,000 片晶圓的產能。每個晶圓的價格應為 3,000 至 3,500 美元。如果乘以這個數字，您可以輕鬆獲得 15% 以上的收入成長。此外，您應該為此做出一些庫存補貨承諾。因此，到 2024 年，您可以輕鬆實現 15% 以上的收入成長。聽起來對嗎？我的意思是，至少你可以從 P6 的 LTA 貢獻中獲得收入成長。

I mean, yes, I mean, of course the revenue growth for the 2024 is a composition between the volume and the ASP. So for the 2024, our early view for the next year, we will expect our loading and wafer shipment will increase year-over-year. And so that's it. However, we have to look at quarterly outlook by quarterly, given we're saying the current customers behavior are more cautious and conservative. So we will provide quarterly outlook on quarterly basis.

我的意思是，是的，我的意思是，2024 年的收入成長當然是銷量和平均售價之間的組合。因此，對於 2024 年，我們對明年的初步預測，我們預計我們的裝載量和晶圓出貨量將比去年同期增加。就是這樣。然而，我們必須逐季度審視季度前景，因為我們認為當前客戶的行為更加謹慎和保守。因此，我們將按季度提供季度展望。

And so in terms of actual, what will be the growth for the next year? We probably will probably give you a bit of a more clarity in the upcoming calls.

那麼從實際來看，明年的成長是多少？我們可能會在接下來的電話會議中向您提供更清晰的資訊。

But at least for the LTA pricing and environment is for sure, right?

但至少對於LTA定價和環境來說是肯定的，對吧？

I mean, yes. I mean, LTA right now is still intact. And so for that portion, it is, but that's still some base that have to align with the market dynamics. And also on the same time, we did talk about for the LTA, there are some flexibility in terms of adjustment, but the longer-term perspective on LTA did not change, but the short-term LTA, it has some flexibility that we are trying to align with our customer with. So they also account for the next year's projection, yes.

我的意思是，是的。我的意思是，LTA 現在仍然完好無損。對於這一部分來說，確實如此，但這仍然是一些必須與市場動態保持一致的基礎。而且同時，我們確實談到了對於LTA，在調整方面有一定的靈活性，但是LTA的長期角度沒有改變，但是短期的LTA，它有一些靈活性，我們是試圖與我們的客戶保持一致。所以他們也考慮了明年的預測，是的。

I see. I understand because the reason I asked is that LTA alone is 1-5, 15% plus for the world unless you have a lot of push out or additional ASP erosion. Otherwise that should be the base case.

我懂了。我理解，因為我問的原因是，僅 LTA 就佔全球 1-5、15% 以上，除非您有大量推出或額外的 ASP 侵蝕。否則這應該是基本情況。

Well, theoretically that's correct assumption, but you have to look at the mix, right, yes?

嗯，理論上這是正確的假設，但你必須看看組合，對吧？

I understand that. The second thing is that I tried to ask a bit different question is that, if you look at your customer profile, Asia customer contribute a lot more than most of your peers. The communication also consume a lot, a major portion of it, which result in a much bigger fluctuation in terms of revenue, order visibility, longevity. Do you see any possibility to see meaningful changes in terms of your customer profile and application profile in the coming year?

我明白那個。第二件事是，我試著問一個有點不同的問題，如果你看看你的客戶資料，亞洲客戶的貢獻比大多數同行多得多。通訊也消耗大量，其中很大一部分，這導致收入、訂單可見度、壽命方面出現更大的波動。您認為來年您的客戶概況和應用概況是否有可能發生有意義的變化？

I mean -- we'll continue enhance our product mix, right? I mean, not only from the broader customer mix point of view also look at from the product mix point of view. So I think that's the clear focus, right?

我的意思是——我們將繼續增強我們的產品組合，對吧？我的意思是，不僅從更廣泛的客戶組合的角度來看，還從產品組合的角度來看。所以我認為這是明確的焦點，對嗎？

However, whether the addressable, we have to also address align to our addressable market and whether the addressable market is representing higher percentage of the communications and computing throughout the consumer and which is highly aligned with the Asia market. We may not be able to immune from that, but we definitely want to continue to increase the quality of that mix. And that will be our objective here, not typically from the geographical standpoint.

然而，無論是可尋址的，我們還必須解決與我們的可尋址市場一致的問題，以及可尋址市場是否在整個消費者的通訊和計算中佔較高比例，並且與亞洲市場高度一致。我們可能無法倖免，但我們絕對希望繼續提高這種組合的品質。這將是我們在這裡的目標，通常不是從地理角度來看。

So can we foresee a narrower range for the pick and drop market moving forward? Because the margin volatility is still very, very big. It's still a lot of investors don't feel comfortable, right?

那麼，我們能否預見未來選配市場的範圍會縮小？因為保證金波動還是非常非常大的。仍然有很多投資者感到不舒服，對嗎？

Right. So like we said, the technology innovation, differentiation, giving the diversified capacity located in a different region, and giving the specialty offering, we think that will help us to defend that to a certain extent.

正確的。正如我們所說，技術創新、差異化、賦予位於不同地區的多元化能力以及提供專業產品，我們認為這將有助於我們在一定程度上捍衛這一點。

The other approach is, we are committed to continue developing the FinTech technology that will actually enlarge the differentiation offering as well. And we will continue with that development and in terms of the -- and we see some of the progress on our FinTech development as well.

另一種方法是，我們致力於繼續開發金融科技技術，這實際上也將擴大差異化產品。我們將繼續這項發展，並且我們也看到了金融科技發展的一些進展。

Having successfully entering into the mass production of our 22-nanometer business, and we have witnessed some steady rise of the revenue from 22 and then which we can build upon our 22. Low-power logic expanding into the specialty now, at the same time, we, based on that customer base, continue migrating to the FinTech. We think that will also help us in terms of differentiation.

我們的22奈米業務成功進入量產，我們見證了22奈米業務的收入穩定成長，然後我們可以在22奈米的基礎上繼續發展。低功耗邏輯現在正在擴展到專業領域，同時，我們基於這個客戶群，繼續遷移到金融科技。我們認為這也將有助於我們實現差異化。

Next question, Charlie Chan, Morgan Stanley.

下一個問題，查理陳，摩根士丹利。

And first of all, congratulations for great results. The gross margin sustained at a very, very good level. So my first question is really a follow-up on your 12-nanometer. So I do agree that it's the key approach for UMC to differentiate yourself, especially compared to China competitors. So since you mentioned that there are some kind of demand from certain customers, can you elaborate a little bit, first of all, when are you going to spend CapEx for data FinFET capacity?

首先，祝賀取得了優異的成績。毛利率維持在非常非常好的水準。所以我的第一個問題實際上是關於 12 奈米的後續問題。因此，我確實同意，這是聯華電子實現差異化的關鍵方法，尤其是與中國競爭對手相比。既然您提到某些客戶有某種需求，您能否詳細說明一下，首先，您打算什麼時候在資料 FinFET 容量上花費資本支出？

And secondly, you mentioned about low-power logic. Can you give us some hints of what kind of application or product for those 12-nanometer FinFETs?

其次，您提到了低功耗邏輯。您能給我們一些關於這些 12 奈米 FinFET 的應用或產品類型的提示嗎？

Sure. Well, first of all, FinFET does give you a power leakage benefit.

當然。首先，FinFET 確實具有漏電優勢。

So there is continuing with the low power benefit on the FinFET. Well, our plan is to fully exploit the DUV capability, which, we can continue migrating to FinFET for that reason.

因此，FinFET 仍具有低功耗優勢。嗯，我們的計劃是充分利用 DUV 功能，因此我們可以繼續遷移到 FinFET。

So we're actively progressing with the development of specialty FinFET based on the 14 FinFETs that we have. And also the 12 FinFETs based upon the current FinFET technology. We are currently engaging with customer on product spec performance criteria to fulfill their needs. And as far as for the capacity expansion, the future FinFET expansion consideration, all business was still subject to our ROI justification to ensure the proper return on investment.

因此，我們正在積極推動基於我們擁有的 14 個 FinFET 的特種 FinFET 的開發。還有 12 個基於目前 FinFET 技術的 FinFET。我們目前正在與客戶就產品規格性能標準進行接觸，以滿足他們的需求。至於產能擴張，未來FinFET擴張的考慮，所有業務仍受到我們投資報酬率的合理性的影響，以確保適當的投資回報。

For the capacity preparation, the method that we approach, the approach that we have is we will employ a cost effective approach using the existing 22 and 28-nanometer capacity pool to transition into the FinFET based on a high 2 conversion rate.

對於容量準備，我們採用的方法是，我們將採用一種具有成本效益的方法，利用現有的 22 和 28 奈米容量池，在高 2 轉換率的基礎上過渡到 FinFET。

So that will help us to achieve our ROI driven criteria. And meanwhile, we will give you more update on our FinFET technology development when it's more appropriate.

這將幫助我們實現投資報酬率驅動的標準。同時，我們將在適當的時候為您提供有關 FinFET 技術開發的更多最新資訊。

Got it. So Jason, so yes, so just roughly, roughly since you have a great idea about the end demand event, some smart and efficient way, right, to converge capacity from 28-nanometer for that demand. So can we get a sense when you're going to see a first development contribution from a 12-nanometer?

知道了。所以傑森，所以是的，所以只是粗略地，粗略地因為你對最終需求事件有一個很好的想法，一些聰明而有效的方法，正確的，來聚合 28 奈米的容量以滿足該需求。那麼，我們能否了解一下您何時會看到 12 奈米技術的首次開發貢獻？

For the 12 nanometers, the process will be free in early 2025. So I think that probably there will be time after that. Well, so when the time comes, we'll probably better that we give you more precise projection, because the process will be free by probably Q1, 2025.

對於 12 奈米，該工藝將在 2025 年初免費。所以我認為在那之後可能會有時間。好吧，到時候，我們可能會更好地為您提供更精確的預測，因為該過程可能會在 2025 年第一季免費。

And then coming back to more kind of short-term questions. So you mentioned about some rush orders, but you also said that customers want to keep the inventory buffer very, very lean. So my question is, first of all, do you expect those rush orders keep coming in the coming quarter? And compared to the traditional system, do you think your first quarter, the revenue or fab utilization that will be better than historical system energy?

然後回到更多短期問題。所以你提到了一些緊急訂單，但你也說客戶希望保持庫存緩衝非常非常精簡。所以我的問題是，首先，您預計這些緊急訂單會在下個季度繼續出現嗎？與傳統系統相比，您認為第一季的營收或晶圓廠利用率會比歷史系統能源更好嗎？

Well, I mean, we certainly hope that the rush orders will come in. Well, as far as for the Q1 outlook, we will provide that in the upcoming January call. The -- on the inventory, I mean, the fundamentally is we believe, given the rush order coming up on the PC and the smartphone space, and we believe there's a sign that indicates, there's going to be an early sign of it asset in the inventory correction for this segment. And however, there are other market segment that still having inventory build out that could lingering into 2024.

嗯，我的意思是，我們當然希望緊急訂單能夠到來。嗯，就第一季的前景而言，我們將在即將到來的一月份電話會議中提供這一點。關於庫存，我的意思是，從根本上說，我們相信，考慮到個人電腦和智慧型手機領域出現的緊急訂單，我們相信有一個跡象表明，它的資產將出現早期跡象。該分部的庫存修正。然而，還有其他細分市場的庫存仍在增加，這種情況可能會持續到 2024 年。

So we just have to -- we have -- we are optimistic, but we have to be cautious about that.

所以我們必須——我們已經——我們很樂觀，但我們必須對此保持謹慎。

So we will continue monitoring the rush order situation as well as the DOI situation on those segment. Hopefully we can validate that some of the segment is for sure out of the inventory correction cycle, but we do know the outflow will probably lingering into 2024.

因此，我們將繼續監控這些細分市場的緊急訂單情況以及 DOI 情況。希望我們能夠驗證部分細分市場肯定已經脫離了庫存修正週期，但我們確實知道資金外流可能會持續到 2024 年。

Got it. And my next 2 questions for Chi-Tung, if that's okay. So it seems like you have a ballpark depreciation increase for next year. And Jason, can you share some confidence about the pricing trend, especially for 12-inch. So I'm wondering whether for year 2024, you can maintain course margin at above 30% because based on the third quarter trend and the fourth quarter guidance, I feel like there is a kind of achievable target, but I really want to get some comments or confirmation from management.

知道了。接下來我要問 Chi-Tung 兩個問題，如果可以的話。因此，明年的折舊似乎會增加。 Jason，您能否分享一下對定價趨勢的信心，尤其是 12 吋的定價趨勢。所以我想知道 2024 年是否可以將課程利潤率維持在 30% 以上，因為根據第三季度的趨勢和第四季度的指導，我覺得有一個可實現的目標，但我真的想得到一些管理層的意見或確認。

Yes, we cannot commit on the numbers, but we do foresee headwinds from micro uncertainty such as utility, the green power associated carbon cost and increasing depreciation in 2024. So -- but we will strive our best to maintain our profitability structure. So we will continue with our cost reduction effort. Hopefully can offset the impact from those headwinds I just mentioned. But in terms of number is still will be on a quarterly basis and we will provide that next quarter.

是的，我們無法對數字做出承諾，但我們確實預見到來自微觀不確定性的阻力，例如公用事業、綠色電力相關的碳成本以及2024 年不斷增加的折舊。因此，我們將盡最大努力維持我們的獲利結構。因此，我們將繼續努力降低成本。希望能夠抵銷我剛才提到的那些不利因素的影響。但就數量而言，仍然按季度計算，我們將在下個季度提供。

And Charlie, if I may add, our perspective now is that amid an inventory correction cycle, we have dramatically improved our structural profitability compared to the pre-pandemic period and have strengthened by the stable ASP cost reduction -- conducting many cost reduction activities, and continuous product mix optimization, and increasing contribution from specialty technology.

查理，如果我可以補充一下，我們現在的觀點是，在庫存調整週期中，與大流行前相比，我們的結構性盈利能力得到了顯著提高，並且通過穩定的平均售價成本降低而得到加強－進行了許多成本降低活動，產品結構不斷優化，專業技術貢獻不斷增加。

All this activity will work-off to offset the headwinds, such as rising cost and depreciation. We do expect when the demand returns, our profitability will also return to a healthier level. We can't really guide you a number right now, but we also understand and humble enough to understand that we will be -- we will foresee some of the cost increase headwinds and we will continue to manage that cautiously as we have done in those few years.

所有這些活動都將有效抵消成本和折舊上升等不利因素。我們確實預計，當需求恢復時，我們的獲利能力也將恢復到更健康的水平。我們現在無法真正為您提供一個數字，但我們也理解並且足夠謙虛地理解我們將會 - 我們將預見到一些成本增加的阻力，我們將繼續謹慎管理，就像我們在這些方面所做的那樣幾年。

Got it. And Jason, sorry, I -- I come up with a follow-up question to your previous 12 nanometer comment. So, I am a little bit surprised that you plan to convert some 28/22 nanometer for the FinFETs. Is that because you have some conservatism for your long-term 28 nanometer demand or why don't you try to buy new equipment for the FinFET capacity extension?

知道了。 Jason，抱歉，我對您之前的 12 奈米評論提出了一個後續問題。因此，我對你們計劃將一些 28/22 奈米轉換為 FinFET 感到有點驚訝。是因為你們對28奈米的長期需求有些保守，還是為什麼不嘗試購買新設備來擴展FinFET產能？

I mean, clearly, I mean, we have for the past few years, we have driven, we do have an ROI-driven principle that we have obeyed by. So the converting a 22/28 nanometer capacity is a one of a possibility, but that's the only possibility. So we will look at overall ROI and also the company's financials and to determine what would be the best approach. Yes.

我的意思是，顯然，我的意思是，在過去的幾年裡，我們一直在推動，我們確實有一個我們一直遵守的投資回報率驅動的原則。因此，轉換為 22/28 奈米容量是一種可能性，但這是唯一的可能性。因此，我們將關注整體投資回報率以及公司的財務狀況，並確定最佳方法。是的。

Okay. So I don't need to interpret it that as kind of some constant about the 28 nanometer over capacity on the long-term.

好的。因此，我不需要將其解釋為關於 28 奈米長期產能過剩的某種常數。

Right, like I said, the earlier, once this is more clear, and we will report that at the appropriate time.

是的，就像我說的，越早越好，一旦這一點更加明確，我們將在適當的時候報告這一點。

Okay. And sorry, the last question to Chi-Tung is really about, sorry, actually 2 questions. So first of all, for your third quarter gross margin, how much of that is coming from the currency depreciation help? And second, small question is about the China government subsidy contribution to your OpEx. And would that totally go away in 2024?

好的。抱歉，向 Chi-Tung 提出的最後一個問題實際上是關於，抱歉，實際上是兩個問題。首先，對於第三季的毛利率來說，其中有多少來自貨幣貶值的幫助？第二個小問題是關於中國政府對營運支出的補貼貢獻。這種情況會在 2024 年完全消失嗎？

So every 1 percentage point change in currency, it will cost around 0.4% -- percentage point change in our gross margin. So that answers your first question. And secondly, for the subsidy for our Xiamen fab, that numbers goes along with our depreciation curve for our Xiamen facility, which has come to an end of, majority of that has come to an end by end of this year. So going forward, we will still have some small portion of subsidy coming in, but it will not go back to the previous level.

因此，貨幣每變動 1 個百分點，我們的毛利率就會增加 0.4% 左右的成本。這回答了你的第一個問題。其次，對於我們廈門工廠的補貼，這個數字與我們廈門工廠的折舊曲線一致，該曲線已經結束，其中大部分已在今年年底結束。所以未來我們還會有一小部分補貼進來，但不會回到以前的水準。

So may we know a rough difference between this year and the next year in terms of the total amount of the subsidy from China government? That's a rough idea.

那我們可以知道今年和明年中國政府補貼的總額有一個大概的差異嗎？這是一個粗略的想法。

Yes, on average, it will be slightly -- slowly decline from the third quarter level, which is a little bit over TWD 500 million.

是的，平均而言，會比第三季略高於 5 億新台幣的水平略有下降。

Okay. So TWD 500 million in third quarter, and we'll gradually phase out to like USD 100 million by the end of next year, the quarter?

好的。那麼第三季是 5 億新台幣，到明年季末我們將逐步淘汰到 1 億美元左右？

It will gradually decline, but we will continue to apply for merit-based incentives, not only in China, but in many other production sites as well. So there will still be some, yes.

它會逐漸下降，但我們將繼續申請基於績效的激勵措施，不僅在中國，而且在許多其他生產基地也是如此。所以還是會有一些，是的。

Next one, Szeho Ng, China Renaissance.

下一位，Szeho Ng，華興資本。

My first question regarding second interposer. For the capacity we put in, will it be dedicated for interposer production only, or will it be fungible between interposer and silicon wafer fabrication?

我的第一個問題是關於第二個中介層的。對於我們投入的產能，它是專門用於中介層生產，還是可以在中介層和矽晶圓製造之間互換？

Well, I mean, the silicon interposer is a part of the capacity. For the dedicated to silicon interposer it cannot be converted back to the other use, but there are common tools that can be used. So -- I don't know if that qualifies as a fungibility, but yes. On a dedicated to standpoint, no, it's not. But that's a relatively small portion, yes.

嗯，我的意思是，矽中介層是能力的一部分。對於專用於矽中介層的情況，它無法轉換回其他用途，但有一些常用工具可以使用。所以——我不知道這是否符合可替代性的條件，但是的。從專注的角度來看，不，不是。但這只是相對較小的一部分，是的。

All right, got you, got you. And the other question regarding the automotive inventory adjustment. You mentioned that Q4 we start to see some adjustment, but how long would it last, in your opinion?

好吧，明白你了，明白你了。還有一個關於汽車庫存調整的問題。您提到第四季我們開始看到一些調整，但您認為這種調整會持續多久？

Well, I mean, they started adjust after the Q2 this year. And so we have facing the automotive inventory, I mean, demand adjustment happening starting from Q3 already. And we do believe this will probably lingering into 2024.

嗯，我的意思是，他們在今年第二季後開始調整。因此，我們面臨著汽車庫存，我的意思是，從第三季開始就已經發生了需求調整。我們確實相信這種情況可能會持續到 2024 年。

2024, the entire year or the first half of next year?

2024年，全年還是明年上半年？

Well, I mean, it is also subject to the end market consumptions, right? We hope the correction will be ended in the first part or first half, but also subject to the end market and macro environment. So we'll continue monitoring that. Right now, we for sure, there's inventory buildup for automotive space. And we do believe that will linger into 2024.

嗯，我的意思是，它也受到終端市場消費的影響，對吧？我們希望回檔能在上半年或上半年結束，但還要受終端市場和宏觀環境的影響。所以我們將繼續監控這一情況。目前，我們可以肯定的是，汽車領域的庫存正在增加。我們確實相信這種情況將持續到 2024 年。

In terms of whether they will be depleted by early or mid or later, we will continue to update that on a quarterly basis. And it is our hope that they can deplete as early as possible, yes.

至於是早、中還是晚會耗盡，我們會繼續每季更新。是的，我們希望它們能夠儘早耗盡。

I see, I see. Based on the initial selling, do you think the adjustment will be more severe in Q1 compared to Q4? I mean, for the automotive vertical?

我明白了，我明白了。從最初的拋售來看，您認為第一季的調整會比第四季更劇烈嗎？我的意思是，對於汽車垂直領域？

Well, I mean, we already see quite a bit of adjustment in Q3 already, and we continue to adjust in Q4. And so, and we do believe that will linger into Q1. In terms of magnitude, again, we're subject to the macro situation. So we just have to, we have to see it. We also kind of updated earlier saying, because giving the customer current behavior, this behavior is more of a cautious and conservative. So the visibility is much shorter. And so we'll probably better that, if we give you more precise view on the quarterly basis. Right now, our view is that inventory will linger into 2024.

嗯，我的意思是，我們已經在第三季度看到了相當多的調整，我們在第四季度繼續調整。因此，我們確實相信這種情況將持續到第一季。就規模而言，我們再次受到宏觀情勢的影響。所以我們必須這麼做，我們必須看到它。我們也更新了先前的說法，因為給予客戶當前的行為，這種行為更多的是謹慎和保守。所以能見度短很多。因此，如果我們每季為您提供更準確的視圖，我們可能會做得更好。目前，我們的觀點是庫存將持續到 2024 年。

I see. All right, fair enough.

我懂了。好吧，很公平。

Next question, Brad Lin of Bank of America.

下一個問題是美國銀行的 Brad Lin。

Jason and Chi-Tung, congrats on the strong third quarter results. And I have 2 questions. So basically one on the generative AI, and another is on the wafer-to-wafer technology of UMC. So firstly, have the firm seen business opportunities also rising from the end device AI application? And if any, what are the key specs of those chips? And what time do we expect it to take-off?

Jason 和 Chi-Tung，恭喜第三季的強勁業績。我有兩個問題。所以基本上一個是關於生成式人工智慧，另一個是關於聯華電子的晶圓到晶圓技術。首先，該公司是否看到終端設備人工智慧應用也帶來了商機？如果有的話，這些晶片的關鍵規格是什麼？我們預計它什麼時候起飛？

I mean, for sure. Of course, the end of quarter for sure, but before that, your question about AI. AI is a mega trend. And it has rapidly emerged as we see. And there will be a strong demand on related chips on various functionality such as sensing, MTU connectivity. And so that's within our addressable market. And so UMC is proactively preparing those solutions for this market. And that includes the interposer solution as well. And we hope that having those solutions prepared, that we can enable our customers to capture those market share in the AI applications.

我的意思是，當然。當然，肯定是在季度末，但在此之前，你問的是關於人工智慧的問題。人工智慧是一個大趨勢。正如我們所看到的，它已經迅速出現。並且對感測、MTU連接等各種功能的相關晶片會有強烈的需求。所以這在我們的目標市場之內。因此聯華電子正在積極為這個市場準備這些解決方案。這也包括中介層解決方案。我們希望，準備好這些解決方案後，我們能夠幫助我們的客戶在人工智慧應用中佔領這些市場份額。

So many of the products that we're engaging today, we do see there's a high possibility they will start adding the AI function into it. And so we just have to align with the product specification, make sure we can enable and support them with that.

我們今天參與的許多產品，我們確實看到他們很有可能開始添加人工智慧功能。因此，我們只需與產品規格保持一致，確保我們能夠啟用並支援它們。

As far as the near-term, very specifically on the interposers, we're already in interposer production. Currently, UMC interposer capacity plan will be doubled to reach 6K per month by Q1, 2024. At this point, any additional capacity for interposer expansion will depend on customer demand outlook as well. So, meanwhile, we're continue developing the active interposer, which is support the DTC, the deep trench capacitor, and for the active interposer, so on. So the roadmap is also aligning with the customer for the future growth in the interposer space.

就近期而言，特別是在中介層方面，我們已經開始生產中介層。目前，聯電中介層產能計畫將翻倍，到 2024 年第一季達到每月 6K。此時，中介層擴展的任何額外產能也將取決於客戶需求前景。因此，同時，我們正在繼續開發主動中介層，它支援 DTC、深溝槽電容器以及主動中介層等。因此，此路線圖也與客戶保持一致，以實現中介層領域的未來成長。

Got it. So for the interposer expansion, we believe it definitely depends on, very much depends on the client demand. So compared to our last earnings call, do we see the demand is getting stronger or it's just, well, flattish in terms of availability?

知道了。因此，對於中介層的擴展，我們認為這絕對取決於，這很大程度取決於客戶的需求。那麼，與我們上次的財報電話會議相比，我們是否看到需求正在變得更強，或者在可用性方面只是持平？

We already increased double to 6K, and beyond that 6K, we have not have any alignment for increase that beyond the 6K. Right now, the focus is more on the pipeline of continuity for the interposer solution. So in terms of technology development, that's already aligned for the next generation. But in terms of capacity, there's no number beyond the 6K yet. Once there's any number increase, we can also report that.

我們已經增加了一倍到 6K，超過 6K，我們沒有任何調整來增加超過 6K。目前，焦點更集中在中介層解決方案的連續性管道上。因此，就技術開發而言，這已經為下一代做好了準備。但就容量而言，還沒有超過6K的數字。一旦數量增加，我們也可以報告。

Got it. So the second question is on the wafer-to-wafer technology. So we have learned UMC has been investing in this technology for many years. And what time do we expect the contribution to rise? And what are the key application that we expect to adopt this kind of the technology?

知道了。所以第二個問題是關於晶圓到晶圓技術。據我們了解，聯華電子多年來一直在這項技術上進行投資。我們預計捐款什麼時候會增加？我們期望採用這種技術的關鍵應用是什麼？

Yes. The first product by using the hybrid bunk will be in the RF front-end module. So -- and that's already, the development's already underway. And so we do believe that will provide many benefits. So we have some expectation on that. So, but the program is under development and the product application will be for the RF front-end.

是的。第一個使用混合床位的產品將是射頻前端模組。所以——開發已經在進行中。因此，我們確實相信這會帶來很多好處。所以我們對此有一些期望。所以，但該程式正在開發中，產品應用將針對射頻前端。

Got it. And then, may I know the potential margin profile for this kind of the product?

知道了。那麼，我可以知道這種產品的潛在利潤率嗎？

I mean, as we said, we continue to enhance our product portfolio and the product mix. And for those specialty technology, it will continue helping us to achieve that target. So from the mix standpoint, it will be benefit from it, yes.

我的意思是，正如我們所說，我們繼續增強我們的產品組合和產品組合。對於那些專業技術，它將繼續幫助我們實現這一目標。因此，從混合的角度來看，它將從中受益，是的。

Got it. That's a very clear.

知道了。這是非常清楚的。

Ladies and gentlemen, we're running out of time. So we're taking the last one. And the last question, Gokul Hariharan, JPMorgan.

女士們先生們，我們的時間不多了。所以我們選擇最後一個。最後一個問題是摩根大通的 Gokul Hariharan。

Yes. I just have one question. Given this comment about the depreciation of fees next year, could you talk a little bit about what are our medium-term gross margin targets? Like, do we expect to still remain within the 35% to 40% kind of gross margin range? And especially, I think you're also thinking about potentially developing some FinFET nodes, especially the 12 nanometer nodes in 2025 and beyond, which are likely to be a little bit more expensive. Just wanted to understand what is the rough gross margin kind of range that management is comfortable operating in over the next couple of years?

是的。我只有一個問題。鑑於明年費用折舊的評論，您能否談談我們的中期毛利率目標是多少？例如，我們預期毛利率仍會維持在 35% 至 40% 的範圍內嗎？特別是，我認為你們也在考慮開發一些 FinFET 節點，特別是 2025 年及以後的 12 奈米節點，這些節點可能會更貴一些。只是想了解管理層在未來幾年內可以舒適運營的粗略毛利率範圍是多少？

Yes, of course. When Charlie asked about our margin and the outlooks, I kind of added a comment about it's our belief that our structural probability is become much resilient and healthier. And so it's also our belief once the loadings return and the probability will also return to a healthier level. When we talk about healthier level, we believe it's going to be in the high 30%, 40% range for in a very high-loading situation. So we continue marching to that direction and we have confidence that that's fairly achievable. But given the past few years, we've just gone through the super cycle and now we're going through the down cycle and we want to test that situation and hopefully that we can report to you more clearly in a later date.

是的當然。當查理詢問我們的利潤率和前景時，我補充了一條評論，說我們相信我們的結構機率變得更有彈性和更健康。因此，我們也相信，一旦負荷恢復，機率也將恢復到更健康的水平。當我們談論更健康的水平時，我們相信在非常高負荷的情況下，它會處於 30%、40% 的高範圍內。因此，我們繼續朝著這個方向前進，我們相信這是可以實現的。但考慮到過去幾年，我們剛剛經歷了超級週期，現在我們正在經歷下行週期，我們想測試這種情況，並希望我們能夠在以後更清楚地向您報告。

But while we have a mapping now and model it, we think we have a roadmap to achieve that. And in turn, when can we achieve that? We'll giving -- let's give that test and then we'll report that on the tiny bit, yes.

但是，雖然我們現在有了映射並對其進行了建模，但我們認為我們已經有了實現這一目標的路線圖。反過來，我們什麼時候才能實現這個目標？我們將進行測試，然後我們將報告這一點，是的。

Yeas, as for 12 FinFET capacity buildup, as Jason mentioned, it has to be ROI justified. So we will do it with the precondition that it won't damage to our overall corporate average structure margin. So we mentioned that it could be coming from some of the conversion of 20 to 28 capacity which will result in a better margin compared to Greenfield FinFET capacity. But we are also working on other solution too. So it will be a few years out in terms of massive FinFET capacity. So we still will have a few more options coming in the pipeline.

是的，正如 Jason 所提到的，至於 12 FinFET 產能建設，它必須具有投資回報率。所以我們這樣做的前提是不會損害我們整體公司平均結構利潤率。因此我們提到，這可能來自於將 20 個產能轉換為 28 個產能，而與新建 FinFET 產能相比，這將帶來更好的利潤。但我們也在研究其他解決方案。因此，就 FinFET 的大規模產能而言，還需要幾年的時間。因此，我們仍然會推出更多選擇。

So we'll definitely keep that discipline as you can see for the past few years, we have been keeping that discipline, yes.

因此，我們肯定會遵守這一紀律，正如您在過去幾年中看到的那樣，我們一直在遵守這一紀律，是的。

Definitely. One last question is on the 8-inch side. It seems like in this downturn, 8-inch is facing a lot more pressure. Many staple products on 8-inch have already migrated to mature 12-inch, whether it's 65, 55 nanometer or even 40 nanometer. So, how do you see the 8-inch evolution in the next couple of years? Do you feel that 8-inch, at least some of the capacity will start becoming a little bit obsolete in the industry, given many applications, especially high volume applications that are migrating to mature 12-inch, this and that?

確實。最後一個問題是關於 8 英寸一側的。看來在這個低迷時期，8吋面臨更大的壓力。許多8英寸的主流產品已經遷移到成熟的12英寸，無論是65奈米、55奈米甚至40奈米。那麼，您如何看待未來幾年 8 英寸的演變？鑑於許多應用，尤其是正在遷移到成熟的 12 英寸的大容量應用，您是否認為 8 英寸（至少部分容量）將開始在行業中變得有點過時？

Sure, I mean, the reason 8-inch loading has declined as a result of the immense softness across communication, consumer and computing segments. We still believe that 8-inch is the mainstream node for PMIC, high voltage application. So we expect that 8-inch loading will improve when the market rebounds. Meanwhile, we do see some intensified competition in the 8-inch landscape, like you said, such as a 12-inch supplier, participating in the 8-inch business, even with some of the questions earlier, the Chinese local manufacturer fulfilled the demands for the domestic demand and the pricing pressure as well.

當然，我的意思是，8 英寸負載下降的原因是通訊、消費和計算領域的巨大疲軟。我們仍然認為8吋是PMIC、高壓應用的主流節點。因此我們預計，當市場反彈時，8吋負載將會有所改善。同時，我們確實看到8吋領域的競爭加劇，就像你說的，例如12吋供應商參與8吋業務，即使之前有一些問題，中國本土製造商也滿足了要求國內需求和價格壓力。

So UMC will continue to strengthen our technology, competitiveness, enhance our product and customer portfolio to adjust and also adjust our pricing strategy to address the 8-inch competition.

所以聯華電子會持續加強我們的技術、競爭力，增強我們的產品和客戶組合，調整我們的定價策略，以應對8吋的競爭。

Now, as far as the loading recovery, in the short term, I think the pricing will mitigate some of the 8-inch business when the demand recovers. For the longer-term, we're giving the time and the resource required to enhance the fundamental position for the competitive solution, where the pricing is not only alternative. And we probably have to do with all above mentioned effort and focus. And however, we do expect 8-inch loading and product composition will improve to a healthier level. And for the recovery mode, we'll probably undertake for at least 12 months, yes.

現在，就負載恢復而言，短期內，我認為當需求恢復時，定價將減輕部分8英寸業務的壓力。從長遠來看，我們將投入所需的時間和資源來增強競爭解決方案的基本地位，其中定價不僅僅是替代方案。我們可能需要付出上述所有努力和關注。不過，我們確實預計 8 英寸負載和產品組成將改善到更健康的水平。對於恢復模式，我們可能會持續至少 12 個月，是的。

Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session.

謝謝。女士們先生們，我們感謝你們提出的所有問題。今天的問答環節到此結束。

And I'll turn it over to UMC Head of IR for closing remarks.

我會轉交給 UMC IR 主管進行總結發言。

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。一如既往，如果您有任何其他後續問題，請隨時透過 ir.umc.com 聯繫 UMC。祝你有美好的一天。

Thank you. Ladies and gentlemen, that concludes our conference for 3Q '23. 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，我們 23 年第三季的會議到此結束。感謝您參加聯華電子的會議。 2小時內將進行網路直播重播。請造訪 www.umc.com 的「投資者活動」部分。您現在可以斷開連線。再見。