Ladies and gentlemen, thank you for standing by, and welcome to Hua Hong Semiconductor second quarter 2021 earnings conference call. Today's call is hosted by Mr. Junjun Tang, President and Executive Director, and Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Please be advised that your dial-ins are in listen-only mode. However, at the conclusion of the management presentation, there will be a question and answer session, at which time you will receive instructions on how to participate. The earnings press release and second quarter 2021 summary slides are available to download at our company's website, www.huahonggrace.com. Without further ado, I would like to introduce you to Mr. Daniel Wang, Executive Vice President and Chief Financial Officer. Thank you. Good afternoon, everyone, and thank you all for joining our second quarter 2021 earnings conference. Today we will first have Mr. Junjun Tang, our Executive Director and President, make some remarks on our second quarter performance. President Tang will address in Chinese, and Cathy Chien, our Deputy Director of Investor Relations, will be the translator. After that, I will discuss our financial results and provide guidance for the next quarter. This will be followed by our question and answer session. I will now turn the call over to Mr. Tang. Good afternoon, everyone. Thank you for joining our earnings call. The second quarter of 2021 was another record-breaking quarter for Hua Hong Semiconductor, with an unprecedented quarterly revenue of $346.1 billion, an increase of 53.6% year-on-year and 13.5% quarter-on-quarter. Both sales volume and unit prices improved significantly, benefiting from growing demand on the domestic market. Market demand for MCU, RF, PMIC, NOR and super-junction is maintaining its strong momentum, which provides a solid foundation for our stable growth. In the second quarter, the combined gross margin of the company's eight-inch business and 12-inch business was 24.8%, a year-on-year decrease of 1.2 percentage points, mainly due to the increase in 12-inch sales revenue share and accompanying substantial depreciation. The gross margin increased by 1.1% from the previous quarter due to the increase in unit prices and a record high in capacity utilization. The company's shipments surged in the second quarter, and its profitability also increased significantly with a net profit of $37.2 million, a year-on-year increase of 2,848.3%, and a quarter-on-quarter increase of 37.7%. This was the best quarter ever for the three eight-inch fabs. Revenue reached a record high of $252 million. Gross margin increased to 31.6% from 27.3% in Q1 2021 due to improved pricing and operating efficiency. Net profit was $51.3 million, representing 19.6% of total revenue. The three eight-inch fabs continue to be a lucrative business. We will continue finding opportunities to extend our advantages and generate higher profits. 有鉴于华虹先进特色工艺的超强市场活力，嵌入式存储、模拟电路以及功率器件等工艺平台，迅速在12英寸生产线上研发成功。客户产品快速导入，支撑了生产线产能的增长，产品结构布局合理，与市场需求高度契合。 Hua Hong Wuxi's 12-inch fab's revenue in the second quarter reached $84.1 million, an increase of 786.8% year-on-year, and an increase of 54% from the previous quarter. EBITDA was $29.9 million, an increase of 208.3% compared to the prior quarter. Our advanced specialty technology has demonstrated its strong market vitality. The smooth and swift rollout of platforms such as embedded flash memory, analog and power devices, and the efficient introduction of customers' products have boosted the growth of capacity. The product mix is reasonable and in line with the market demand. 截止今年5月份，12英寸生产线月产能已达到4.8万片，产能利用率满载。我们加强与供应商密切合作，确保扩产上量计划稳步推进。我们将稳步实现于今年年底达到6.5万片的月生产能力。为了满足旺盛的市场需求，公司还将继续加大投入，进一步扩大产能，不断优化工艺布局，与产业链一起发展壮大。 As of May 2021, the monthly capacity of the 12-inch line reached 48,000 wafers and was fully utilized. We will foster closer cooperation with vendors to secure every step of the ramp-up plan and steadily achieve a monthly capacity of 65,000 wafers by the end of this year. We will continue to invest in manufacturing capacity and optimize technology roadmap planning to meet the strong demand and thrive together with the industrial supply chain. 随着上海三条8英寸生产线的持续优化和12英寸生产线的迅速扩张，华虹半导体的发展已步入稳定有质量的发展新阶段。作为半导体供应链中至关重要的代工生产环节，我们将继续坚定不移地执行8英寸和12英寸齐头并进、协同发力的先进特色IC加power discrete的战略，全力以赴，以最优、最快、最稳的发展节奏支持研发创新，为客户提供全面优质的技术服务，为缓解全球半导体供应短缺做出贡献。 With the continuous optimization of the three 8-inch fabs in Shanghai and the rapid expansion of the 12-inch fab in Wuxi, Hua Hong Semiconductor has entered a new development stage with stability and quality. The company, as a vital link in the supply chain, will continue to unswervingly implement and advance our specialty IC plus power discrete strategy. Both 8-inch and 12-inch fabs will support R&D and innovation at the best, fastest, and most stable expansion pace, provide customers with comprehensive and high-quality technical services, and assist in alleviating the global chip shortage. 接下来请我们的财务长王鼎先生介绍公司的财务情况。 I would like to hand the call over to our CFO, Mr. Daniel Wang, for his comments. Thank you, Mr. Tan, for the inspiring comments. Let me begin with the summary of our financial performance for the second quarter, followed by an outlook on revenue and the margin for the third quarter. Then we will move on to the question and answer session. First, let me summarize financial performance as of the second quarter. Revenue reached at an all-time high of $346.1 million, 53.6% over the prior year and 13.5% above the prior quarter. Cost of sales was $260.4 million, 56.1% above Q2 2020, and 11.9% over Q1 2021, mainly due to increased wafer shipments and depreciation costs. Gross margin was 24.8%, 1.2 percentage points lower than Q2 2020, primarily due to increased depreciation costs, partially offset by improved average selling price and capacity utilization, and 1.1 percentage points above Q1 2021, primarily driven by improved average selling price and capacity utilization. Operating expenses were $45.9 million, 26.6% below Q2 2020, and at 22.9% below Q1 2021, mainly due to increased government grants for research and development. Other income net was $11.9 million, flat compared to Q2 2020. It was 67.1% above Q1 2021, primarily due to a foreign exchange gain versus a foreign exchange loss in the prior period. Income tax expense was $14.5 million, compared to $6.7 million in Q2 2020, primarily due to increased taxable profit, and compare up to an income tax credit of $1.1 million in Q1 2021, mainly due to a reversal of the dividend withholding tax in the prior period. Profit for the period was $37.2 million, versus $1.3 million in Q2 2020, and $20.9 million in Q1 2021. Net profit attributable to shareholders of the parent company was $44.1 million, compared to $17.8 million in Q2 2020, and $33.1 million in Q1 2021. Basic earnings per share was $0.034 versus $0.014 in Q2 2020, and $0.025 in Q1 2021. Annualized ROE was 6.8%, 3.6 percentage points over Q2 2020, and 1.6 percentage points above Q1 2021. I will discuss the operating results for both the Hua Hong 8-inch wafer fabs and the Hua Hong Wuxi 12-inch fab. First, let's have a look at the Hua Hong 8-inch wafer fabs. Revenue reached a record high of $262 million, 21.4% over Q2 2020, and 4.7% above Q1 2021. Gross margin was 31.6%, 3.9 percentage points over Q2 2020, and 4.3 percentage points above Q1 2021, primarily driven by improved average selling price and capacity utilization. Operating expenses were $20.8 million, 20.9% below Q2 2020, and 35.9% below Q1 2021, primarily due to allocation of costs to Hua Hong Wuxi. Profit before tax was $65.8 million, 57.3% over Q2 2020, and 47.6% over Q1 2021. Let's have a look at the performance of the Hua Hong Wuxi wafer fab. Revenue was $84.1 million, versus $9.5 million in Q2 2020, and $54.6 million in Q1 2021. Operating expenses were $25.1 million, 30.7% lower than Q2 2020, and 7.1% lower than Q1 2021, mainly due to increased government grants for research and development, partially offset by increased service expense. EBITDA was $29.9 million, compared to -$18.5 million in Q2 2020, and $9.7 million in Q1 2021. I provide more details on our revenue from Q2 2021. From a geographical perspective, revenue from China was $255.2 million, contributing 73.8% of total revenue, and an increase of 85.5% over Q2 2020, mainly driven by increased demand for nearly all platforms. Revenue from Asia was $38.5 million, an increase of 34.9% over Q2 2020, mainly driven by increased demand for MCU and logic products. Revenue from the U.S. was $29.5 million, a decrease of 12.5% over Q2 2020, chiefly due to decreased shipments for MCU products. Revenue from Europe was $16.3 million, a decrease of 14.5% compared to Q2 2020, mainly due to decreased shipments for smart car ICs. Revenue from Japan was $6.5 million, flat compared to Q2 2020. With respect to technology platforms, revenue from embedded non-volatile memory was $103.6 million, an increase of 34.7% over Q2 2020, mainly driven by increased demand for MCU products. Revenue from a standalone non-volatile memory was $18.3 million, an increase of nearly five times over Q2 2020, primarily driven by increased demand for NOR Flash products. Revenue from discrete was $119.8 million, an increase of 38% over Q2 2020, mainly driven by increased demand for general MOSFET, super-junction, and IGBT products. Revenue from logic and RF was $57 million, an increase of 113.4% over Q2 2020, largely driven by increased demand for CIS and logic products. Revenue from analog and power management IC was $46.9 million, an increase of 48.8% over Q2 2020, mainly driven by increased demand for other power management IC products. Let's now take a look at the cash flow statement. Net cash flows generated from operating activities was $99.1 million, 2.7% lower than Q2 2020, primarily due to increased payments for materials, payroll payables, and decreased receipts of VAT refunds, largely offset by increased receipts from customers as a result of improved customer credit management. Capital expenditures were $136.5 million in Q2 2021, including $119.1 million for the Wuxi fab and $17.4 million for the Hua Hong 8-inch fabs. Other cash flow generated from investing activities was $1.8 million in Q2 2021. Net cash flows generated from financing activities was $40.6 million, including $47.6 million proceeds from bank borrowings and $0.1 million proceeds from share option exercises, partially offset by $4 million of interest expenses for bank borrowings, $2.3 million of repayment of bank borrowings, and $0.8 million of lease payments. Now let's move to the balance sheet. Cash and cash equivalents was $974.5 million on June 30th, 2021, compared to $961.5 million on March 31st, 2021. Inventories increased from $283.8 million on March 31st, 2021 to $355.9 million on June 30th, 2021, primarily due to increased customers' demand. Other current asset increased from $142.5 million on March 31st, 2021 to $175.6 million on June 30th, 2021, primarily due to increased VAT refund receivables. Property, plant, and equipment was $2,710 million on June 30th, 2021 compared to $2,498.5 million on March 31st, 2021. Total assets increased from $4,682.4 million on March 31st, 2021 to $4,991 million on June 30th, 2021. Our total bank borrowings increased to $754.9 million on June 30th, 2021 from $709.2 million on March 31st, 2021. Total liabilities increased to $1,539.4 million on June 30th, 2021 from $1,326.9 million on March 31st, 2021, primarily due to increased payables for capital expenditures and bank borrowings. Debt ratio increased to 30.8% on June 30th, 2021 from 28.3% on March 31st, 2021. Finally, let me give you a high-level outlook for the third quarter 2021. We expect revenue to be approximately $410 million, and our gross margin to be between 25% and 27%. This concludes my financial remarks. We would like to start the question and answer session. Operator, please assist. Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, please press the pound or hash key. Please stand by while we compile the Q&A roster. The first question comes from the line of Leping Huang from Huatai Securities. Please ask a question. Okay. Thank you for taking my question. Leping, thank you very much for your very wonderful question. I think that it's very clear, Wuxi is ramping up very fast. Most of the growth is coming from Wuxi. I think at the same time, we're going to see ASP improvement as well for both Hua Hong Wuxi and as well the three 8-inch fabs. Okay? I'm not going to be commenting on the ASP specifically, but we expect the ASP will continue to improve. I think our gross margin for the three 8-inch fabs will continue to improve over time. I think you're going to see, as I said before, every quarter we're going to have 3%-5% ASP improvement for both 8-inch and 12-inch fabs. This is very important because this will give us hopefully more than 10% growth on ASP over the year, and the volume will continue to increase. As for the volume for the 8-inch fabs, I think we will continue to be able to drive more efficiency throughout the three 8-inch fabs. I think the 3-inch fabs will continue to be able to give us more volume over time because of manufacturing efficiency. Thank you. Okay. Let me ask the second question. The second question is about your mix in the Wuxi fab. Since Wuxi has grown very quickly, what's the current, if possible, share about what's the mix between the power and the logic? And I think you have 40,000 wafer now, and given the very strong demand currently in these mature 12-inch fabs. When you explain to the end of this year and when you plan the new capacity for the next year, what will be the new process or what will be the major products you are bringing to the Wuxi fab? Thanks for your question. Thanks for all the partners' contribution. We have a very fast construction speed, and based on our more than 20 years process experience, we have a very fast R&D process. We established our technology platforms maybe through one and a half years. Thanks for your question. Thanks for all the partners' contribution. We have a very fast construction speed, and based on our more than 20 years process experience, we have a very fast R&D process. We established our technology platforms maybe through one and a half years. As of May, we have completed the construction target as of 48,000 monthly capacity. We first start 48,000 wafers in June, and the product mix is 18,000 power and 30,000 IC. Given the strong market demand, we start the phase one capacity expansion in the end of 2020. We will expand from 48K to 65K. Among the 55K, we keep the power discrete as 18,000 and expand the IC capacity to 47,000. We still have some space in the clean room. We are still actively planning for further capacity expansion. In IC products, mainly CIS, NOR Flash, and our own embedded eFlash. There will mainly be super-junction IGBT and SGT for the power discrete. Customers require more capacity in both IC and power discrete, and it's a very solid foundation for our next step capacity expansion. Along with all the applications, we have a very strong and solid product based off the capacity utilization improvement. 谢谢。 Thank you. 乐平。乐平。 关于这个问题，so when you expand the capacity next year，你在扩产说明年的时候你是怎么规划产能的，现在是不是要考虑明年的产能了？我不知道怎么看。 从现在来讲，我们在年底将达到65,000片的产能。那么明年一季度、两季度，实际上明年整个12寸的产能应该要比今年有一个两位数的增长，因为上半年我们的产能还是处于3万片到4万片左右的阶段。至于扩产的话，因为大家也知道，现在市场上扩产项目也比较多，设备的交期会比较长。那么扩产的进度主要是设备交期的问题，如果设备交期能够短一点的话，那我们的扩产的进度会更快一点。 We will achieve 65K capacity by the end of this year. Year-on-year basis, we will have double-digit growth in the first half next year. For the further expansion, the main point will be the tool delivery. If the tool delivery can be faster, our pace of capacity expansion can be also faster. 另外，我们在今年年底，我们每个月在12寸要投入要达到6万片以上。 By the end of the year, the wafer starts every month will be above 60K per month. 好，谢谢。 Thank you. Thank you. [Foreign language] Thank you. The next question comes from the line of Wu Liu Yen from Everbright Securities. Please ask your question. 好的，龚赫，管理层取得非常亮眼的一个成绩，也是印证了公司各方面的一个成功战略。那我这边的话，主要是就上一个黄老师那边有一个追加提问的问题，就是咱们扩产节奏方面，咱们今年年底要扩到65,000片，那方便请管理层帮我们拆一下三季度和四季度分别的一个扩产节奏吗？ 三季度我们将平均每个月投入在5万片到52,000片左右。整个12月份将投入到6万片。 The average wafer start for the third quarter will be 50k to 52k per month. In December, the wafer start will be around 60k. 这部分的产能的增长主要是IC方面，大概这里面一大半在55纳米的技术，还有一部分在90纳米的技术。 The major capacity expansion will be IC and for 55 nanometers and a little 90 nanometers. 好的，理解。就我们在和投资人交流的时候，大家普遍还是会非常认可华虹的未来的收入端的成长性，但是同时呢，也希望咱们公司能尽快地看到更好的一个利润的释放。所以我这边就专门问一下CapEx和OpEx。OpEx支出方面，就看到今年上半年其实还是有一些不大一样的地方，CapEx支出还有OpEx费用，其实在今年上半年都是花得比较少的。那想问一下，咱们全年的指引是不是有什么变化？下半年CapEx和OpEx支出方面的一个节奏是怎么样的呢？ [Foreign language] Overall our CapEx expenditures for the 3-inch fab will be around $140 million for the year. The first half we spend about $40+ million. I expect we in the second half will probably be spend another $95 million. As far as the Wuxi, the 12-inch fab, we have spent about close to $260 million in the first half. This thing, the speed will actually get picked up. I think, for the second half, we're looking at about $1 billion, because we have to start pay for the equipment that were secured for the first phase, and also the money, the capital expenditure we have to pay for the second phase, which is go from a 40,000 wafer capacity to about 65,000 wafer capacity. In total, I think, the 12-inch fab will be around $1.3 billion. The 8-inch fabs will be around $140 million. 好的，谢谢王院辰。 Thank you. The next question comes from the line of Randy Abrams from Credit Suisse. Please ask your question. Okay. Yeah, thank you, and good result. I wanted to ask a follow-up on the pricing. Daniel, where you mentioned the 3%-5% per quarter, were you referring, is that for second half, where you expect 3%-5%? Curious for 2022, if you've contracted out pricing and also if you're considering any long-term agreement with your customers to lock in pricing further out. Thank you, Randy. It was pretty clear if you look at our past Q1 and the Q2, I think we have a pretty steady growth on ASP. Okay. I always said, I said many times before that what you're going to see on quarterly basis, every quarter, you're going to see hopefully 3%-5% growth on ASP. I think we have done that. We're hoping that we can continue to do that in the next two quarters throughout the second half. I'm very confident, this year we're going to be able to, in terms of pricing, I think that overall we should do pretty well, for both 8-inch and 12-inch. Okay. Have you started, is it too early to talk about 2022, if you still see that direction you're locking in? Maybe the other question is for the gross margin where it's showing improvement in guidance. Do you think the direction, also factoring depreciation coming in, you expect gross margin looks like it's on the track to continue expanding, or how do you see that trending? I think the gross margin, well, as you look at our guidance, I think our guidance show we're pretty confident we're going to be doing better with gross margin. I think we're going to see a very stable growth, in the 8-inch space, I think the gross margin will continue to grow for the 8-inch fabs. As far as for the 12-inch fab, I think we're going to keep the margin. I think the gross margin will be very stable. I think they will, at certain point, once you reach the scale, I think you're going to see a quick sort of pickup on gross margin for the 12-inch fab as well. In general, I think the gross margin will definitely be positive. Now it is in single digit, I think once we're at a certain scale, I think the margin should improve very quickly for the 12-inch fab. Okay. For the OpEx, could you talk about that? In the decline sequentially, how much was the subsidy? Was there a depreciation shift into COGS? How much were those? From here, what's the way to think about how much the right run rate for OpEx? I think for this year, for the three-inch fabs, the operating expense should be very stable. This year, it'd be around, just overall, I think, for the 8-inch fab will be around $140 million. This includes the government grants. Okay? For the 12-inch fab, it is also around $140 million. Okay? That's the OpEx. Okay. Should it go back to about $70, because there's only $46 million. It should go back up toward about $70 million a quarter total, or would there be grants or offset? The quarterly OpEx, is what you're saying? Yeah. No, it just seems like the quarterly OpEx is running below that now. It would come back up. Well, I think for the 3-inch fab should be pretty much in that range. It will be somewhere around $30 million to $40 million each quarter. Okay? That is pretty big number already. Throughout the year, it will be about $140 this year. I think next year, I would expect around $120 million. The OpEx for the Hua Hong Wuxi fab, it will be $140 this year. That is a ballpark number. I think next year it may go up because, some additional R&D activities. Okay. The last question, just on the expansion. It has been aggressive to go to 65. Are there 2 steps beyond that to go to 80K, if you have the timing? Beyond that, would you have another site within Wuxi or another location? It seems like by next year, you will need to start planning if you are expanding beyond next year. Yeah. Good question. 65K is something we will try to achieve by end of this year. We will get to 65K. Equipment for 65K will be installed, be tested by end of this year, so we can definitely have 65K to work on for next year. We still have some space there. I think the plan is to go from 65, then to 90 to 95. That is the plan we are looking at, as Mr. Tan earlier has talked about. This is something we try to do in the next phase. You know that we have a big piece of land there, we can potentially build in total 3 similar fabs there in Wuxi. If the demand continues, sure, we will have plan to build additional fabs. Great. Thanks a lot, Daniel. Thank you. Thank you. The next question comes from the line of Andrew Lu from Sino Link Securities. Please ask your question. 唐总、王总，你们好。我这边问几个问题。第一个就是，我们所得税好像一下子有tax credit，一下又没有，所以我们要抓这个model的时候，要算放什么样的percentage rate会比较合理一点，长期或者短期。 Andrew, [Foreign language]. OK. Basically [Foreign language], for the income tax, it is around 15%, OK, 15% income tax, corporate income tax, [Foreign language]. OK. The reason we had a credit is it was because we also do withholding, each year we try to accrue some dividend. Last year we accrue 30% after the income tax of the net income. With that, we assume 10% withholding tax. It turned out to be that the board basically decided not to issue a dividend last year, so we had to reverse that. The credit was virtually coming from the reversal of the withholding tax, 10%, that happened in Q1. 对，那二季度我看起来那个tax rate是相当于28%。所以我想了解一下，我们以后估model到底是用多少percentage放进去才是一个合理的tax rate。因为像台积电都会提供一个net，把所有东西都mix，有tax credit全部都mix一个长期的，它就给一个net，它的net大概就是11%左右。所以我想了解一下华虹大概是多少。 对，我刚刚讲过，for income tax，你用一个15%。 OK。 On top of that, you assume 30% dividend. 然后在这个30%上面再用10%，所以15%加上这个10%，就是一个可能大概在19%。 了解。好，那我们先用这个抓一下好了。第二个就是，刚刚王总也提到，Daniel提到，我们的无锡厂产能到一个规模的时候，毛利率才有办法回升。我不晓得那个规模，你们心里想的规模是怎么样才能够，举个例子，回升到10%以上？因为它现在占比越来越高，假如说它毛利率还是持续低的，迟早会把八寸拉下来，因为它现在占比还是低。所以想知道什么样的规模我们就可以看到比较好一点的获利，还是要等到我们扩产慢下来，折旧费用不会每个季度这样子抬升那么快的时候，它的毛利率才会出来？我不晓是哪一种？谢谢。 Andrew，我觉得你这个question非常好。我来给你做一个解释。其实目前来讲，我们的折旧费用是非常大的，然后我们还在冲上量期间。所以唐总说我们现在已经是到了，对不对？10,000片，10,000片average。但是开始这段时间，其实折旧费用还是非常非常大的。Once我们到了65,000片，我想我们整个depreciation expense will become very, very stable。I will not be surprised if the shortage will be easy to get into between 10 to 20%，10 to 20% gross margin。但你要知道，gross margin这个东西并不是完全跟折旧有关，gross margin is driven by ASP。折旧at some point is going to be reached the peak，然后基本上会比较稳定，对不对？所以这个里面我们目前还有很多的90纳米的产品，但是我们的目标将来会做更多55 nanometer technology products。然后将来at some point，下一个fab，40 nanometer。等我们这个fab大部分被55 nanometer technology占有率非常高的时候，同时我们的功率半导体mostly真的被IGBT超级结的时候，这个gross margin会很快起来的。其实总的来讲，我们这几个月的revenue的ramp-up，各位可以看到，应该是非常非常的快。那么开始的时候，的确是有很多的折旧要放出来，所以我们目前是保持在一个single digit。但是我们第一步，forget about gross margin，你要先看这个revenue growth，看我们的EBITDA，你看我们的EBITDA上量上得多快，整个起来多快。So gross margin, it's just going to be next thing. This is not something you need to focus right now. Right now it should be cash flow, it should be revenue growth. [Foreign language] 但是EBITDA其实是跟depreciation有关，因为你depreciation很大，所以才拉回去。我看你们平均的depreciation折旧占你的营业成本cost of goods sold将近三成，所以倒算回来的话，12吋一定是接近四成到五成，所以它确实是影响毛利率的一个主要原因。这样子问好了，Daniel，你觉得说大概在明年或者是后年，觉得什么时候会比较有机会，毛利率会回到10%以上？ Andrew，我跟你讲一个我们一个长远的规划，其实这个毛利率，我们刚刚讲到，我们第一步，we're going to get to 65K。And then the next stage is we're going to get to 90、95K。Once you are at the 90、95K，with a moderate ASP，$1,200、$1,300，目前我们基本上就达到$1,100。这个的revenue在12个月来看的话，这个是$13亿到$14亿美金的销售。然后at the peak，折旧大概在$5亿到$5.5亿。你的manufacturing cost大概在$6亿，这个加起来大概在$11亿或者$11.5亿，这样。So potentially once you are at the level，你的net profit就基本上可以达到20%。Andrew。 所以相当于明年年底或者后年能达到。 然后你把折旧再加回去。折旧当然不是全部的折旧，一部分还是研发的，对不对？你把那部分减掉，把折旧加回去。我跟你讲，potentially，折旧在最高的时候，按照这个模型的话，我们可以达到超过30%的毛利率。但如果折旧下来的话，几年之后，五六年之后，这个毛利率基本上可以达到40%。 对，但是还是会一直扩产啊。所以我在想，我们看华虹是不是应该用non-US GAAP的方式去看。因为折旧费用，举个例子，你今天机器明明可以用20年、30年，然后你7年就折旧完了，所以它其实是有一个加速折旧的概念，所以大家都看不到真实的数字。 Right. 好，我下一个问题。 这个东西我们可以内部考虑，但是其实我们如果就用一般的整个model来看的话，其实这个折旧你要先让它很快过去，对不对？这就是没有办法避免的。但是这个折旧is not bad thing。任何新的fab，你必须会面临的就是折旧，对不对？然后我们也非常透明，我们把8英寸的performance和12英寸的performance，我们都分开了再看。这个12英寸从最初开始，在3年之内，我们已经是48,000片产能，产能利用率是100%，然后继续扩，我们的需求还是非常的大。这样的model，中国还可以找得到第二个吗？ 我感觉是说7年之后，你之前的折旧就慢慢的没了，没有折旧了。所以那时候它的折旧费用，即使你再继续扩产，它其实就会停在一个level，就不会增加那么多了。 Right. 好，最后一个问题。 你讲。 Daniel，我最后一个问题，就是说我们大陆客户在二季度环比成长16%，同比增长86%，然后250 nano的逻辑也是成长了很多，51%的环比跟74%同比。能不能了解一下，这两个那么大幅度成长，主要是什么产品带动的？ 我想很简单，我们的CIS其实量产的速度非常快，我们的NOR Flash量产的速度非常快，其实它这个部分对我们的revenue的贡献是非常大的。这些基本上都是一些国内非常top的客户。 那这个客户是因为友商没办法扩产，我们拿过来的，还是说他们也在扩产，但是我们的价格比较低，所以我们拿过来的？你觉得是哪一种状况？ 我认为客户到我们这边来，就像许多客户到我们这边来，因为我们的生产能力和我们在对待客户上面服务一流。 刚才讲了250纳米的logic是什么东西？为什么在二季度有那么大幅的成长？就是0.25 micron。 这个主要是一些MCU。因为我们整个8英寸生产线的产能大家知道基本上满载了，但是从去年的三季度开始，我们对整个生产线的生产效能这方面更加注重了内部的管理。通过管理以后，通过mix的组合，我们一些实际释放的产能有所增长。在这种情况下，我们0.25的产能就释放出来了，而且这部分客户对它的需求也非常之高，主要是这个问题。相对来说，它的产能的增长造成了我们这块业务的增长。 好，谢谢。我最后再加一个，就是我们产能利用率在二季度是110%，我追溯到2015年，我们都没有那么高的产能利用率。所以想了解下这个产能利用率还会继续再拉高吗？ 我想这个不用我们回答，我想应该差不多到顶了。因为整个2015年到现在的产能利用率来讲，一方面它的基础在不断地扩张，我们大概2015年在15万到16万片，现在我们的产能在18、19万，实际上我们通过产能效能的提升，已经接近200万片这么一个水准。所以应该讲，从整个效能的提升来讲，现在已经达到了一个非常高的水平。同时在整个提升的过程当中，实际上我们对8寸，适合我们整个市场的需求来讲，有些工艺更适合，比方说新能源，一些新的领域的应用，甚至一些个别的设备，因为8寸也有一些投资。从这方面来讲，我们提升了以后，相应对整个营收的贡献还是逐步开始显现。 好，谢谢唐总，谢谢王总。 好，谢谢。 Thank you. The next question comes from the line of Sze Ho Ng from China Renaissance. Please ask your question. Hi, good day, gentlemen, very nice result. I have a few questions on the 12-inch operations. The first one, when we get to the 90,950 thousand wafer per month capacity milestone. Will the company immediately start more expansion or we will focus more on optimization of the existing capacity? Sze Ho. Hi. Hey, how you doing? Very good, thanks. Look, we're moving very quickly. 95,000 milestone is the next phase. We are looking at that already. We're working on the funding, we're talking to investors, we're talking to our shareholders. This is something we will be doing very quick. That's something we have to do next year. Okay? As far as going through the next phase, next fab, as I said, we have enough land there to build the second and third fab. Okay? It's something we're thinking about it because demand is very strong and we expect it will continue to be very strong. You won't be surprised that, by the time we start to expand capacity up to 95k, at that stage, we may be even thinking about the next fab already. It all depends on how the market goes. I think the market will continue to be strong. I think for us, we're comfortable and we're confident. We still have limited capacity. Demand requests from our customers still cannot be completely filled. I think it's always something that is very good to think about. Okay, all right. Maybe a hypothetical question. Just assume you hit the 90,000 wafer capacity milestone, and then back to back, you immediately kickstart more expansion. How are you going to fund the expansion? There are many ways to do that. Many different ways. Okay? We can do a deal just like what we did before. Our 12-inch and 8-inch fabs are generating a lot of, you know, cash flow. We can use that as a sort of equity investment. We can invite the local partners, we can invite the big fund. I think the semiconductor big fund is very important for us. I mean, they can take more stake in the deal in our next fab. There are many different options. We can potentially do a listing. These are all different options. Okay, great. All right, last question from me. After 55 nano, we'll have the 40, 45 nano supposedly. When would that be ready in terms of the technology offering? Can you repeat that, please? I think for the 40, 45 nano offering, when would that be available to our customers? You know what? I would pass this on to Mr. Tan. Thanks to some new applications for specialty technologies, we can achieve above 100% utilization in our Hua Hong Wuxi fab. After completion of our 48K investment, we will achieve 65K monthly capacity by the end of this year, for the majority growth will be 55 nanometer technologies. In the communication with customers in the near years, customers have strong demand for the 55 nanometers in their specialty technology application. Our R&D team make a great process along with the capacity expansion. We have some new applications introduced in the 55 nanometer technologies that will make a bigger contribution going forward. If our customers have this requirement or demand on the next generation technology, say 40 nanometers, we can always cooperate. We do 40 nanometer or not, basically will based on the demand on this technology, specialty technology. We take responsibility for our investors. Thank you. Congratulations. Thank you. Thank you. The next question comes from the line of Jane Kwai from Orient Securities. Please ask the question. 各位领导好，恭喜业绩这么好。我这边一方面就想请教一下，关于CIS这块，我们的产品结构现在是什么样的？比如说按照像素来划分之类的。我记得我们之前主要是集中在比较低像素，像这个2 megapixel，或者是8 megapixel这么一个范围。那因为我们也注意到整个市场近期的一个趋势，就是这些低像素的一些需求可能是在逐步地减少，包括通过一些软件的方式来替代这方面的需求，所以我们在高像素这一块，接下来是什么样的一些考虑？ 非常感谢您的提问。确实是我们进行图像传感器的研发，确实是从两mega开始的，但是我相信我们现在已经5 mega、8 mega的产品已经上市了。 明白。 是否有高像素的，我可以跟你讲，我们肯定在研发过程当中，但是我们跟客户之间有些商务上的考虑，商务上的约定，那么一旦研发成功，我们会及时地跟通报市场。 We start the CIS, the R&D from two megabytes, but now we have mass production for five, even eight. If we do higher density, just based on the customer's demands and requirements. 好，谢谢唐总。 谢谢您。 我这边再请教一下，刚才跟Randy和Andrew都讨论比较多的关于毛利率，特别是12寸的毛利率偏长期的一些趋势之类的。可能感觉刚才关于偏长了一点的趋势，可能也没有特别明确的结论吧。如果说我们看的三季度这边，我们12寸这边毛利率，因为整体的毛利率是来提升的，所以我们是不是可以认为12寸这边的毛利率也是在三季度会有一个比较显著的提升？ 这样，12英寸的毛利率基本上今年会保持在一个high，然后继续会improve，但是会在一个比较high single digit，单位数。然后我们的这个三个八英寸厂，我们expect接下来这三个八英寸厂的毛利率会继续能够改善。因为产能利用率，因为我们平均销售单价的一个上升。 好的，谢谢王总。 好，谢谢你。 Thank you. The next questions comes from the line of Yi Yang Luo from Credit Suisse, please ask. 唐总下午好。首先恭喜二季度强劲的业绩，并且给我们一个非常强的营收的指引。有两个问题想请教一下，一个是关于资本开支，包括设备材料的采购。从去年年中开始，中美关系一直在有很大的不确定性，以及像今年开始大家都在扩产，所以上游的设备材料供应其实也都蛮紧的。刚才唐总也有提到，今年现在来看的话，设备交期有变长。想请教一下，我们现在在设备材料的采购上面，有没有受到采购上的一些影响，影响我们的扩产？另外就是看到一些媒体也在报道，说这个二季度像光刻胶，就是日本的一些光刻胶厂商，甚至就是在供应上出现了一些问题，就不知道有没有受到这些影响，长期去看的话，会不会考虑提高这种设备材料采购的国产化的比例，去维持一个长期的扩产的供应安全？谢谢。这是第一个问题。 好，谢谢您的问题。我想在国内，华虹是第一家从事8英寸硅片生产的企业，我们到现在已经运行了将近24年以上。在整个运行过程当中，我们跟所有的供应商都建立了良好的合作关系。 Hua Hong is the first 8-inch fab in China. Up to now we have been operating for more than 24 years. During this long period we have built very good relationship with all the vendors. 正是基于这个良好的合作关系以及长久的合作，供应商对华虹的业务还是给予充分的支持和肯定。我们在一步步扩产的同时，从8寸片我们目前达到20K，完了以后我们12寸逐步上量，现在接近要完成每个月65,000片的这么一个生产能力。从财务报表大家也可以看到，整个生产还是非常稳定地在运行过程当中，而且产能也在持续地增长，这过程当中我们的原物料的供应是非常充足的。 Based on the good relationship and the long-term partnership, all the vendors give us great support. We have around 200k inch capacity, Now we are going to achieve 65k monthly capacity for 12-inch fab. You can see from the financial statement all the operations are very stable. Along with the operations, our capacity is steadily growing. In the process, our raw materials and wafers, it's very stable. No problem at all. 只要对我们符合生产加工的需要，符合工艺的需要，无论是来自于国外的，还是来自于国产的，我们都是一视同仁。而且华虹在国产设备的应用方面，我们也是走在非常前面的。 We treat overseas suppliers and domestic suppliers equally as long as the products meet our requirement. We support our domestic tools and domestic raw materials. 好，谢谢你。 Thank you. 好，谢谢唐总。那我这边第二个问题是关于市场竞争，还有和大客户的一些合作。因为目前来看，我们也统计了一下全球的晶圆代工厂的资本开支，处理营收今年大概能到53%这样的一个比例，就是今年扩得非常快。各家其实不管是国内还是国外都在扩产，这里面可能也包括一些之前没有产能的一些Fabless，一些厂商也在建产能的，包括可能像IDM的像英飞凌，像CIS的像GalaxyCore，都有一些建厂的计划。想了解一个，比如说像未来我们怎么去看待大陆的这么多厂在扩产的竞争，那同时里面还包括可能有一些是我们的重要的客户。那对于这些准备自建产能的客户，公司长期去看的话，怎么保证未来的订单的稳定性？就是他们比如说要自建产能的话，我们会不会降低这种合作程度呢？谢谢。 市场的运用在不断地增长，需求也在不断地提升，那么产能的扩张永远是我们这个行业的一个永恒的课题。 Market applications are growing, the demand are growing, the capacity expansion is always a topic for our industry. 从华虹特色工艺来讲，我们已经有20多年的研发基础，积累了广泛的这方面的经验。从客户跟我们近十几年的合作来讲，整个跟客户的粘性也有很大的提升。那么华虹在无锡建厂，我们的特色工艺的技术从0.18、0.11，现在到90，再到55，给客户有了很好的一个发展或者想象的空间，这方面也促使我们跟客户之间的粘性的提升。 We have more than 20 years R&D base. We have very diversified experience and we have very many long term customers. We have more than 10 years relationship. For the Hua Hong Wuxi fab, we started some customers from 0.18 micron to 0.11 micron to 90 nanometers to 55 nanometers. Customers have good expectations for technologies and we have very good relationships and expectations for the long term cooperation. 从我们来讲，我们把我们的特色工艺做得更符合市场的期盼，我相信我们的产能利用率一定会维持在一个比较高的水平。 From our point of view, we can do our specialty technologies, meet customers demand and market demand, and we believe our capacity utilization we can keep at a very high level. 谢谢你。 Thank you. 好，谢谢唐总，非常清晰。 Thank you. Our last question comes from the line of Ziyuan Wang from CITIC Securities. Please ask your question. Thank you for taking my question。唐总、王总，下午好。那我首先想问一下，关于产能这一块，也恭喜我们整个二季度还有三季度的指引都比较超预期。那看起来现在已经这个4.8万片的产能，到今年6.5的这个计划也很快可以完成，包括明年也上调到了大概9.5万片的计划。那我们现有的这个厂是至9.5万片就已经是到头了，那下一个厂的时间安排是否有规划了？那如果按照行业惯例来讲的话，这个扩产的设备一般是需要在什么时候去做呢？ 好，感谢您的提问。我想我们整个华虹无锡的产能的扩张这个问题已经回答了好几遍了，相信大家都很清楚。就是在今年年底我们将达到每月65000片的产能，其中power在18000片，剩余的四万几千片都是IC，而且IC里面3/4是55纳米的技术，这个对整个公司的营收会带来很大的帮助。 We were achieving 65,000 wafers capacity by the end of this year, among which we have 18K power discrete and 47K IC. Among the ICs will be 3/4 will be 55 nanometers technology and will make great contribution for company's revenue growth. 下一步的规划也很清楚，我们将把整个一期的净化间填满，预计可以到90万片以上。那么这份的投资应该讲会在明年的年底开始设备模影。 We will have clear planning for the next step. We will make full use of the clean room. We expect can be above 90K monthly wafer capacity, and this part of investment will be started by the end of next year. 我相信这份产能一旦形成，产能利用率会很快地就填满。 We believe the capacity utilization will be very fast to be fully utilized. 因此下一条线怎么建，建什么，我们经管层正在抓紧结合客户的需求，抓紧在进行规划当中。我想这个规划不会很远。 If we build another fab and how to build the fab, for which technologies, our management team are study and investigate. I believe the plan will be in the near future. 一旦规划成熟，董事会通过，我们会及时地告知我们的投资人。谢谢你。 If the plan is clear and we have got the board approval, we will make announcement. 补充一下，想问一下现在这个9万多片里面的话，如果给到模拟电源管理类的产能大概能有多少呢？ 9万片赶到什——紫源，您的问题是指这个——您是指什么产能？ 就是九万片里面可以给到模拟芯片、电源管理类芯片的产能。 模拟和电源芯片管理。 模拟跟电源芯片大概在两万片到三万片之间吧。 Well, between 20K-30K for the analog and power management. 好的，第二个问题想问一下，关于价格方面，因为我大概算了一下，12英寸咱现在ASP大概是在$457，然后8英寸大概是$480，就是按照收入跟this go去除一下这样计算的。就是说我想问一下，我们可以看到环比大概个位数，大概五到七个点左右的增长。就是说这里面有多少是来自于产品组合的调整，然后有多少是来自于现在这种缺货的行情下面的这种随行就市。如果未来一个理想的状况下，我们12英寸的ASP理想状况下面可以达到多少？谢谢。 这样，应该是说我讲过，每个季度应该是在ASP的改善上面，我们能够做到3到4个percent一个季度，对不对？这样全年也会达到至少10%左右，对不对？基本上在这几个季度到目前为止，应该真正是ASP的上涨，大部分是ASP的上涨。 好的，谢谢。那如果比如说到了，我们假设到了明年，比如九万片的填满了之后的话，包括考虑到我们一些新的应用，像5纳米上面新的应用做进来，这个ASP可以达到什么样的水平呢？可以超过8英寸的这个水平吗？ 我想我们12英寸的目标一定是效率上面一定要比8英寸做得更好。我们也expect我们12英寸将来的毛利率也会比8英寸更好。 好的，明白。谢谢王总。 好，谢谢你。谢谢。 Ladies and gentlemen, that's all the time we have for questions. I will now hand back to Mr. Daniel Wang for closing remarks. Well, again, I want to thank you all for joining us today and asking all the wonderful questions. We hope you will join us again next quarter. Please continue to stay safe and healthy. Hopefully we'll be able to meet in person in the very near future. [Foreign language] Ladies and gentlemen, thank you for your attendance. You may all now disconnect.