Welcome everyone to UMC's 2023 first quarter earnings conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a Q&A session. Please follow the instructions given at the time if you would like to ask the question. For your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within two hours after the conference is finished. Please visit our website www.umc.com under the investor relations, investors event section. Now I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, please begin. Thank you. Welcome to UMC's conference call for the first 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 first quarter financial result, followed by our President's key message to address UMC's focus and second quarter 2023 guidance. Once our President and CFO complete their remarks, there will be a Q&A section. UMC's quarterly financial reports are available at our website www.umc.com under the investors financial section. During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risk that may be beyond the company's control. For a more detailed description of this risk and uncertainties, please refer to our recent and subsequently 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. Now, I would like to introduce UMC's CFO, Mr. Chi-Tung Liu, to discuss UMC's first quarter 2023 financial result. Thank you, Michael. I would like to go through the first quarter 2023 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, the first quarter of 2023, consolidated revenue was TWD 54.2 billion, with gross margin at 35.5%. The net income attributed to the stockholder of the parent was TWD 16.2 billion, and earnings per ordinary shares were TWD 1.31. Wafer shipment in this quarter come at 1,826 thousand 8-inch equivalent wafers, which was a decline of 17.5% quarter-over-quarter, which also fall in the better end of our previous guidance of 17%-19% decline for the first quarter. Utilization rate in first quarter is as we guided around 70%. On page five, the sequential comparison, revenue declined 20.1% to TWD 54.2 billion. Other than the 17.5% wafer shipment decline, there's also a negative impact of 3.1, 3%+ impact from the forex due to NT dollar appreciation. Gross margin rate was 35.5%, which is a 34% decline to TWD 19.2 billion. Operating expenses was lower than the level of Q4 last year at TWD 5.78 billion. This is a typical first quarter seasonal factor, so we do expect this number to increase in the second quarter of 2023. Operating income in total reached TWD 4.64 billion, which is quite a significant improvement from the fourth quarter of last year, mainly due to the recovery in the stock market, which is we mark-to-market for our holdings in those portfolios. Net income is TWD 15.38 billion. Net income attributable to the shareholders of the parent is TWD 15.1 billion with a net income margin of 29.9%. EPS is TWD 1.31 for the first quarter of 2023. On a year-over-year comparison, page six, revenue declined 14.5%, and net income declined by 18.33%. The first quarter of 2022 was 1.61 in EPS, and this quarter is, as mentioned, 1.31 for the first quarter of 2023. On page seven, cash remained nearly unchanged, around TWD 171 billion. Due to the continuous CapEx, we have seen our total asset increase to TWD 549.6 billion. On page eight, our blended ASP for each wafer equivalent has inched up in Q1 2023. For page nine, our geographic breakdown for revenue, Asia show a bigger decline from 54% in the previous quarter to 50% in the first quarter. Every other region has increased sequentially. For page 10, IDM has shown a stronger growth in the first quarter. The percentage of revenue reached 23% when fabless represent about 77% of our total revenue. In terms of segment breakdown on page 11, there's quite a meaningful growth in the other segment, which is mainly driven by the auto segment. Computer and consumer and also communication all are showing some decline in percentage of revenue. On page 12, our revenue for 14 nm technology and below represent around 41% of our total revenue. 28 nm and 22 nm still somewhat remain unchanged at around 26%. 14 nm show about 2% decline from 17%-15%. On page 13, Q1 2023 was the lowest point in terms of available capacity, mainly due to the annual maintenance schedule for our selected sites. Quarter two, you will go back to the normal and also on top of that will be P6. Our Tainan Fab expansion will start to kick in, and we can see the capacity increase for Fab 12A. Overall, we will see a low single digit increase in our available capacity from Quarter two 2023. On page 14, our annual budget for CapEx remain unchanged, around $3 billion. It's going to be a little bit front-end loaded in the first half. 90% will be related to 12-inch expansion, and 10% is more related to our 8-inch capacity. The above is a summary of UMC results for first quarter of 2023. More details are available in the report, which has been posted on our website. I will now turn the call over to President of UMC, Jason Wang. Thank you, Chi-Tung. Good evening, everyone. Here, I would like to share UMC's first quarter results. In the first quarter of 2023, our business was impacted by sluggish wafer demand as the customer continued to digest elevated inventory levels. In line with the guidance previously provided, wafer shipments fell 17.5% quarter-over-quarter, and utilization rate dropped to 70%, while average selling prices stayed firm during the quarter. In a less favorable foreign exchange rate, revenue in the first quarter fell 20.1% quarter-over-quarter. Despite lower utilization, gross margin remained firm at 35.5%, reflecting improved structural profitability and optimized product mix. Although demand weakened across major end markets, our Automotive and Industrial segments post-growth during the quarter. Automotive sales, in particular, accounted for 17% of overall first quarter revenue. While this partially reflects decline in other segments, we expect automotive to remain a significant revenue contributor and growth, key growth driver for UMC going forward. As the IC content in car continue to increase, driven by electrification and autonomous driving. Entering the second quarter of 2023, we expect customers' inventory correction to linger, giving the softness in overall end market demand. As a result, our wafer shipment will be flat this quarter. Meanwhile, the company continues to implement strict cost control measures to ensure our profitability remains intact through near-term cyclicality. Going forward, we believe our strategy of focusing on the development of a differentiated solution across numerous larger and specialty technology platforms such as eHV, RFSOI, BCD, will help us secure future business and expand our presence in the IC industry. While positioning for the future business growth, UMC is also committed to maintain a high dividend payout ratio. In Q1, the board of directors proposed to distribute a cash dividend of approximately TWD 3.60 per share, subject to shareholders' approval. Let's move on to the second quarter 2023 guidance. Our wafer shipment will remain flat. ASP in U.S. dollar will remain flat. Gross profit margin will be in the mid 30% range. Capacity utilization rate will be in the low 70% range. Our 2023 cash-based CapEx will be budgeted at $3 billion. That concludes my comments. Thank you all for your attention. We are ready for questions. Thank you, President Wang. Ladies and gentlemen, we will now begin our Q&A session. If you have a question for any of today's speakers, please press star one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star two to cancel the question. Thank you. Now, please press star one to ask the question. Thank you. Our first question is coming from Randy Abrams, Credit Suisse. Go ahead, please, Randy. Okay. Yes, thank you. I wanted to ask the first question. It looks like on your guidance, second quarter, is stabilizing. Could you actually give a view, an initial view into second half, how you see where you cite the slow demand and it's keeping the inventory digestion a bit slower. Do you expect those factors to spill into second half? If you could give an initial view on second half. In that context, if you have an update to. I think last quarter you had foundry down mid-single digits and your own TAM down low teens. If you have an update on that full year view, factoring how you're seeing the second half at this stage. Sure, Randy. Looking into the second half, while we foresee the firmness in 22 nm and 28 nm demand, we have not yet seen sign of a strong recovery in the end market yet. Okay. Given the weaker than anticipated end market environment, we have seen the pace of inventory digestion moving slower than expected. We have not seen any sign of a strong recovery for the second half yet. For the outlook, 2023, we estimated semi forecast will further decline from low single-digit to a mid-single-digit year-over-year. For the foundry, we anticipate it will worse than previous quarter estimates of a mid-single-digit. Now we're changing to a decline of a high single-digit year-over-year. Okay. Do you have an estimate for, I think I have that your TAM last quarter was low teens. I don't know if you have an update on. I think that excludes the advanced products that you don't address. Right. I mean, given the UMC's end market weakness, we still hope to minimize the UMC exposure to be in line with our addressable node while preserving structural profitability. With you know, the worse outlook than we predicted from last quarter, we do think that number will actually probably enlarge a bit. Yeah. Okay. For the applications, the relative strength was the auto probably alongside the IDM. Do you see that remaining strong area continuing into second half? How do you see the inventory build up after that strength, and how do you see the sustainability of shipments to that channel? Well, first of all, like I said, we haven't seen any strong recovery. All segment will remain flat from Q2. For the automotive, the replenishment in automotive segment may have peaked in Q1 2023 after the strong growth in the past two quarters. Longer term, we expect automotive business will continue to grow on an annual basis. Okay. Hey, implying has peaked, is that implying the business has peaked? There is content growth, so the restocking replenishment peaked. Do you think that's also kind of a comment on that segment, at least, for the near term may have also peaked? Yes. Yes. Okay. Okay. Yeah. If we look at the auto outlooks, While we anticipate automotive business will continue in a strong momentum and outpace the CAGR for the worldwide automotive semi industry projection, and as a, as a goal, we'll probably reach a mid-teens as a% of the revenue for this year. Okay. We still think it's gonna be a growth driver for us. If you look at the near-term replenishment momentum, it probably peaked in the Q1. Yeah. Yeah, 'cause it sounds like it was 17%, so 15%, I guess that implies a bit, a bit lower percent of sales. The last area I wanted to ask, just the 28 nm, it looks like declined a bit more than corporate average in first quarter, a little bit over the 20%. Could you discuss the view just on that note? Because I think in the remarks you mentioned, it seems like it'll be relatively tighter. How, how do you see 28 relatively faring? If I could ask you just competitive landscape for, like you've done very well on the high voltage and the OLED drivers, how you see from, like, your Taiwan and China rivals, competition there. Let me see. There's a few Two parts. Yeah, sorry, two parts. First of all, we don't think the 28 nm decline rate is higher than corporate average. It's probably in line. Maybe we can provide you with a detailed calculation later on. Our outlook for 20 nm actually is one of the better segments. Maybe Jason will comment further on that. Yeah. For the 28 loading, Well, first of all, like Chi-Tung said, we probably can provide you more detail on that data. On our view, the loading will gradually improve over the next few months and will soon exceed about 90% for the loadings. The 28 nm application includes the OLED driver, DTV, Wi-Fi 6 and 6E. We actually foresee a furnace in 22 nm and 28 nm demands, which will be fulfilled with additional capacity come online as well. We actually feel fairly confident about that. You also mentioned about the competitive landscape as well, right? Yeah, that was more on, like, the OLED driver part, if, like your Taiwan and China rivals are making inroads there. Well, I mean, for the 20 nm in general, we actually remain very confident with our 20 nm and 22 nm business. You target about the OLED particularly and for our OLED drivers, we believe we, you know, deliver much more superior power consumption, performance and area advantage compared to any industry peers. Our leading position of 22 nm and 20 nm technology will be reflected in our market share in that driver space. This will actually continue. Yeah. Great. No, thanks. Good to see that area holding up well. Thanks a lot. Sure. Thank you. Next question is from Brett Simpson, Arete Research. Go ahead, please. Yeah. Thanks very much. I wanted to ask about your recent extended LTA with Infineon. I think you announced this back in March. It was 40 nm. It looks quite a sizable agreement. Can you maybe talk more about this agreement and when it maybe starts to ramp up? How should we think about the size of this deal? Thank you. Well, I mean, we typically don't comment specific on customers, but they are, you know, part of our auto market focus, and we will continue working with the key automotive semi supplier like Infineon and through the JDP and capacity expansion. This recently announced a long-term agreement with the customer on the 40 nm non-volatile memory MCU is serving the auto market. The we are actually very excited for such engagement and we're looking forward to the growth of that. The LTA specifically, LTA is actually a tool. It's also become a more of a common practice in the semi industry now because the industry is starting to recognize this the semiconductor supply is essential. To plan and future, mutual growth, the strategic customer are willing to do this long-term agreement with us to secure the capacity. For this particular relationship is covered such arrangement. Yeah. Can you maybe just confirm how your LTA pipeline looks? I think you've talked about TWD 18 billion previously. Can you give us an update on what that number looks like today? They still in a similar range. They didn't have much changes. Most of our LTA agreement remain intact. We see slightly increase and we also see some adjustments. They still stay in a relative same range. Yeah. Okay. I just have two-part question on China, if you don't mind. One, can you give us an update on the China JV? I think you've signaled your intent to buy out the remaining ownership. Have you had approval from this, from the Chinese government? Is that still on track? Then the second part of the question is we saw the U.S. government introduce the a new National Defense Act late last year, which is likely to trigger U.S. and maybe also European fabless companies moving away from using Chinese foundries. Are you seeing any benefit from this? Have you or are you anticipating any boost from migrations perhaps to use UMC? Thank you. Yeah. For the first question regarding UMC buyback, we have retained all the necessary approval already, and we are going through the previously agreed contract. I think it's moving along smoothly. We do expect to close the deal in a short range of time. It should be happening this year. For your second question about the current geopolitical dynamics. First of all, we think this, all this dynamic affecting the customer's supply chain resilience planning. All customer need to looking into this and start evaluating their supply chain resilience. UMC is definitely part of that consideration. While we have a very diversified capacity, you know, between China, Taiwan, Singapore and Japan, that does give us a much better option to work with our customer. In that context, we do see actually two ways. One is we're seeing some customer is moving product, you know, the to other location outside of China. At the same time, we also see some of the customer adding the gap, you know, to taking advantage of the China gap that creates. So, we giving our diversified basis now across the Asia and the with the comprehensive technology offering, net-net, our product mix will be balanced between all our fabs. Okay. Thank you. Thank you. Next question, Bruce Lu of Goldman Sachs. Go ahead, please. Yeah, thank you for taking my question. The first question is regarding to your ASP. Can you help me to understand that your first quarter, the 20 nm and 40 nm revenue contribution is lower, but your ASP is one notch up. When you guided for second quarter, which is ASP flattish, but you do increase your, you know, 28 nm capacity in the second quarter, which supposedly the blended base ASP should go up. Can you help me to understand the ASP trend, especially when we have a lot of noise that, you know, someone's cutting the price, or you try to offer a lot of, like, price discount to your customer, but it didn't show up on your results. Well, I mean, like you said, the blended ASP is a result of the product mix and the. The, you know, any mix change will probably affecting the result of the blended ASP. As of now, giving our current projected product mix and the note mix, we believe our blended ASP will be firm quarter-over-quarter. It will probably be flat. As far as the pricing strategy, our pricing strategy is to closely working with our customers to uphold their competitiveness and relevance in their respective market space and secure their market share. You know, based on that strategy, our Q2 ASP outlook will remain firm. You know, in our consideration in pricing is not just based on the pricing only. You also have to base on the value proposition, supply chain relevance, and so the EO technology offering and so on. All that is part of the ASP consideration, the pricing consideration. With all that included, our current ASP outlook will remain firm. I see. That means that, as a like-to-like basis or a company average blended ASP for second quarter. Well, I mean. First of all, for the second quarter, the newly added 12A P6 capacity is quite minimum. It actually cannot change the equation for Q2 ASP yet. It's still in a very small volume. I see. Understand. Okay. I want to switch gear a little bit for 8-inch. I'm actually pretty surprised to see around like 5% capacity expansion for your 8-inch. You know, I believe 8-inch, the capacity expansion is one of the, is at the lower end, or even lower than your corporation with your capacity expansion. What kind of like product or what kind of new product we are looking at to do, you know, boost up the 8-inch capacity expansion throughout the year or, you know, can we expect some like, you know, a new product in the 8-inch? Well, I mean, the capacity result now is actually came from some of the effort we have spent in the past. It's actually coming out two portion of that. One is the, we have done some maintenance on the previous I mean, in Q1. Once those will probably affect the Q1 output, and so in Q2, without the maintenance, the number actually gone up. Secondly is, you know, we continue with our streamline process and productivity improvement, so that will also reflect. Those efforts, you know, is accumulated from the in the past, and it just, you know, started kicking in in the Q2. It does not representing the overall demands. For the 8-inch outlook, we have, first of all, like, you know, in overall 2023 outlooks, we have not seen any sign of 8-inch recovery in the foreseeable future. We're definitely not immune from the market down cycle for the 8-inch, so we are impacted by that. We have observed the 8-inch business recovery will primarily depends on incentives given that the competitive landscape in certain market segments and which are highly sensitive on pricing. In short term, our pricing policy will remain firm while UMC will continue to differentiate the solution and maintaining our customers' competitiveness to secure or protect their market share. In the longer term, we continue working straight to optimize our product mix and the customer portfolios. There are some tactics near term and, but in the longer term, we still focus on the product mix improvement. Right. Understand. Thank you. Sure. Thank you. Next question, Sunny Lin, UBS. Go ahead, please. Good afternoon. Thank you for taking my questions. My first question is on 20 nm. Just want to quickly confirm, earlier, did you mention that the utilization will be able to improve toward 90% or higher by end of this year? Well, yes. Yes. Got it. I wonder, for your P6 expansions, could you remind us, your latest schedule, for capacity expansion by end of this year? What's the current LT coverage for this expansion? The P6 start ramping. The starting point is the Q3 this year in a small volume, we'll reach 12,000 by end of the year, the December timeframe. All our pieces covered by the customer's commitment and all those commitment and business momentum is on track. I see. I think, before, you did tell us, that for the new expansions, given the higher cost, and so the pricing, will also be higher. So should we assume, for your volume ASP, as P6 start to ramp, into, later this year, would that be going up? Well, I mean, we will provide our ASP guidance, the outlook one quarter at a time, given the current market dynamics. I will prefer probably provide that information one quarter at a time. Yeah. Sure. No problem. Second question on... Also on China, but it's about the competition. I think, recently a couple of equipment makers, like ASML, like Lam Research, mentioned very meaningful pickup for China orders. I wonder if you would be concerned at all about the increasing China competition for mature foundry? I mean, we always have faced fierce competition. You know, the foundry business is a capital intensive, so, you know, some of the capital investment in terms of putting capacity in, it's not the only factor for a foundry to success. It is easier to enter a foundry space and putting a tool in. However, it requires a lot more to become a successful foundry players. We believe that UMC is well-positioned as a foundry player with our comprehensive and competitive offering. Got it. Sorry, maybe one last question on pricing. As of now or despite the easing supply constraint, I think everyone was surprised that the mature foundry pricing has been holding up better than feared. I wonder what do you think you and your peers are doing differently in the current down cycle versus before? Do you think these changes will be sustainable going forward? I mean, I don't know how to comment our peers, but in terms our pricing strategy, I kinda mentioned earlier, is to closely working with our customers to uphold their competitiveness and in their respective markets to protect their market share. We were working with our customers to strengthen that. However, in order to be competitive is not just pricing. You also have to look at your technology, your improvement, your capacity support and the in net to how to strengthen our customers' competitive is a more of a holistic view. we are strive to do that with our customer, we definitely will working with them, you know, and to make sure that, you know, we gave them the best support that we can. Meanwhile, also sharing our view about our pricing consideration in terms how to provide them with the value proposition. Yeah. Got it. Thank you very much. Thank you. Next question, Charlie Chan of Morgan Stanley. Go ahead, please, Charlie. Thank you. Hi, Jason, Chi-Tung. Good afternoon. Just want to clarify, did you say that your addressable market forecast is now down high teens? Is that right? Well, I mean, Charlie, to be honest with you, we actually tracking this market outlooks and just like we mentioned earlier, quarter-over-quarter, we actually see that it's further declining. The market is being very dynamic right now. The 2023 will be a challenging year. We, you know, we continue collecting the market data and we, you know, and try to tracking as close as we can. You know, we just see the market is actually going to be much slower than we anticipated. The recovery is going to be much slower than we anticipated. We more focused on now is to minimize our exposure and hopefully we're going to be in line with our addressable market notes. We do know it's gonna get worse than last quarter, but I, you know, I can't really give you a clear guidance on how much is that yet. Okay. You said that you hope to grow in line with The addressable market, that's something you want to ensure. I'm probably not gonna use the word growth, but I will try to addressable market. Okay. Decline, decline as the addressable market. Just kidding. Yeah, in that case, are you still confident that the first half will be trough of your fab utilization, or you think that third quarter could be the trough? Well, I mean, for the Q1, we have observed that revenue is consolidating at the bottom now. We do not expect the business environment to get worse for UMC. However, we have not seen the sign of a strong recovery in the next few months. Mm. I think that's sort of the visibility that we have today. Yeah, the time horizon is just next few months. Yeah. Anything beyond that is unclear for now. Got it. Thanks, Jason, Chi-Tung. Yeah, in terms of the end markets, right? First of all, any bright side or green shoots, you know, we noticed that there are some kind of restocking for PC, TV semis. Are you seeing any similar trends like that? I mean, we see some short-term momentum. Mm-hmm. For Q2, the computer segment will remain flat. The consumer will remain flat. Communication will remain flat. As well as automotive remain flat. Compared to the Q1, communication, consumer computing is all declining, right? We see some of the very light and the, you know, momentum on those segments. The same time, we see the automotive, since peak in the Q1 now. Mm. It's... We haven't really seen a strong recovery, but we see some bottoming. Again, this is giving our current visibility. The visibility for second half's still vague. Yeah. Okay. Thanks. I'm not sure if the company has any exposure to AI or, you know, generative AI type of products. If you do, can you share some trends there? We have not. Even there is, it's not gonna be any significance. Mm. I'm probably not in the best position to comment that. Yeah. Okay. Okay, that's fair enough. Lastly, the pricing strategy, right? Let me try a kind of different way. You said that you work together to help your customers to protect your market share. If unfortunately, if the lower price is the only way to prevent them to losing market share to their competitors, would you support them in terms of waiver pricing? I know, technology development, capacity support kind of an ongoing process, right? Pricing support could be more immediate. What would you say about that situation? Customers really needs your pricing support. Well, you asked it differently. The simple way to put it is, we also, we always will hear what our customers' voice and the, and we will work with them closely and. Mm. To find way to protect their market positions. you know, another way to look at this is we actually. It's more of a balance set, and we look at the overall blended mix, and we look at overall the portfolio. Our also, you know, try to maintaining our profitable stability. Hopefully to gear up with the goal of a blended ASP with a flattish direction. I think there is lots of dynamics, a lot of discussion that we need to have with our customer, and we will work with them closely. Yeah. Just in general, right? Not only specific to your company. Which process nodes or type of process that you see commoditization, meaning, pricing could be the only differentiation? Hmm. Which is segments? Yeah. For example, 0.13 micron driver IC. I, I, I- Yeah. I think the most obvious one is the eight-inch business. In the eight-inch business there are certain segments that are more sensitive to the pricing and there are certain market segments within the eight-inch. Mm-hmm. Are sensitive to the pricing. Yeah. Okay. Yeah. I mean, you know, we ask a lot, lots of this, but at least to me, right, I mean, gross margin sustainability is most important, right? If you compromise a little bit, but your quantity, right, your fab utilization can go up, that could be okay for margin. Very last one to Chi-Tung. I think company has been holding margin very well. At mid 30% gross margin. Do you think that that is a sustainable trend into second half? You know, I cannot comment on that. We do everything we can to bring down the break-even point and also a very disciplined CapEx. All the effort is really to have a resilient structure possibility. I think we are seeing some of the results. Mm-hmm. We worked for the over the past few years. Semiconductor is extremely cyclical, so we have our effort put in, but there's also the whole big cycle, cyclical impact. All I can say is that if this is the top possibility, certainly we have seen the improvement already, and we will continue to work on that. As for the number, the range, I cannot really give you a number. As I just mentioned, the cyclical impact is outweighing sometimes our effort. Overall, I mean, it's already an improvement from the previous down cycle. All right. Thanks. Thanks, gentlemen. Very good works. Thank you. I may. Sure. Yep. I think that Chi-Tung's well said. But in addition, you know, we do actually foresee challenges of business condition, like you said. Not only that, in addition, there are rising costs and unfavorable forex consideration as well. You know, we, like Chi-Tung said, we will strive to offset those headwinds as best we can with our effort on the product mix optimization, cost reduction activity and streamline our process flow. We will do everything we could to continue this. Yeah. Understood. Thanks, Jason. Thank you. Next question, Gokul Hariharan, JP Morgan. Go ahead, please. Yeah, hi. Thanks for taking my questions. First of all, maybe I focus on 28 nm capacity expansion. Your larger peer kind of stepped back on some of their 28 nm capacity expansion recently. UMC clearly has demand for the 12A P6 expansion. Any thoughts on how you think about 28 nm expansion over the medium term, especially as we think about the expansion in Singapore? Any change in terms of plans, in terms of 28 nm demand supply that you see at this point in time? Well, first of all, with our CapEx strategy, we try to be as disciplined as possible with the follow our ROI guidelines. As far as for the 28 nm business, we remain confident of our 28 nm and 22 nm business, mainly from our differentiated and customized technologies. In addition, our 22 nm and 28 nm manufacturing capabilities, such as yield, cycle time quality, provides a compelling value for our customer. Together, like I mentioned earlier with the geographical diversified capacity offering, now that we can offer them in Singapore or Taiwan and the customers, you know, and the customers alignment, and this actually will support our long-term mutual commitments and for all across the diversified market segments. Last is the, not least, the 28 nm and 22 nm is a sweet spot for many applications where the demand will continue to grow. With our, you know, strong product pipeline, the overall demand and supply dynamics will not change our long-term relevance in 22 nm and 28 nm. Okay. Got it. Thanks. Thanks very much, Jason. In terms of the CapEx, $3 billion, and it looks like you already spent about 33% or 30% of that in Q1. Could we get a little bit more granularity in terms of the $3 billion CapEx spend, especially for the 12-inch portion? Is it mostly going to be for P6 or is there also some spend for Singapore coming in this year? It's all included in our calculation and assumption. Of course, we dynamically adjust our CapEx need and sometimes we reprioritize the different projects. For the time being, as I mentioned, it's going to be first half heavy in terms of quarterly CapEx spending, so it will be lightening up in the second half of this year. $3 billion is our current projection. Okay. Thanks, Chi-Tung. What is the composition? Is it mostly for 12A P6 or is there some Singapore related spending also built into that $3 billion budget? largely reflects the 12A P6 expansion in 2024 and some portion of 12i P3 investment. Got it. Yeah. Thank you very much. Maybe if I move to automotive, Jason, could you give us a little bit more detail in terms of your automotive exposure today? I think 17% of revenue is probably one of the highest among the foundry space. Is it mostly, like by node, is it mostly 1965? By product, is it mainly MCU or is it a little bit more broad-based into some of the IGBT and power applications? Could you give us a little bit more detail in terms of what your automotive comprises of today? It's a combination of the 8-inch and 12-inch. There's not much of IGBT. Mainly is on the BCD and the MCU space. Got it. On the near term in automotive, I think you did say that Q1 is likely the peak in terms of inventory replenishment. Are you seeing customers toning down the auto expectations now? Is it just that there may be change in plans, but the momentum is just kind of peaking out in Q1? Well, I mean, we start seeing the momentum from automotive space from second half last year. They start picking up peak at the Q1. It's been a three-quarter now. We see they, you know, some of the product already situated at a healthy inventory level. That's why we see some of the slowdown on that momentum. From year-over-year point of view, we still see a significant growth on the automotive space. The automotive space will remain to be a one of the growth driver for us from a year-over-year standpoint. Got it. That's very clear. Give me one last question on depreciation, Chi-Tung. How should we think about depreciation through this year? I think your guidance was for slightly down this year. When do we start to see some of the new CapEx hitting the depreciation? Is it more in second half this year, or we should expect more in 2024 rather? In this year, we still expect to see a low single-digit decline compared to that of last year. quarterly, probably Q1 will or Q2 will be the lowest point. but the difference is very minimum, so it's going to be quite flat for the quarterly distribution. Okay. Got it. Yeah. Thank you very much. Thanks, gentlemen. Thank you. Thank you. Thank you. Next question, Szeho Ng of China Renaissance. Go ahead, please. Hi. Good afternoon, gentlemen. I have a quick question on your 22 nm and 28 nm portfolio. Roughly speaking, what's the split between the two now, from the revenue contribution standpoint, let's say from now and also three, five years down the road, when we have the phase and also the Singapore fab expansion completed? Well, we start seeing the initial round of 22 nm this year. They still representing a smaller portion of the 22 nm and 28 nm business. We do see the 22 nm will be a, you know, the right node that grows very quickly starting from 2024. In terms of the ratio of the two, it was subject to a different product mix. I do think the 22 nm will also be a minimal run rate for us. I see. Got you. Fair to assume that it will be more than half, right? When we have all the capacity ramp up. Well, I mean, our capacity can support both. Mm-hmm. In terms of the ratio of that, we're subject to the end markets. You know, from a capability standpoint, yes. Yeah. I see. All right. Thank you. Next question maybe for Chi-Tung. What should we expect for the dividend policy going forward? Should we assume it based on the payout ratio perspective or from an absolute dollar perspective? It's more likely to be a hybrid consideration. We did mention that it has to be over 50% of our earnings will need to be paid out in cash. That, that's in our stated dividend policy. In absolute dollars terms, we will also consider that as well. It's more like a hybrid. Consistency and stable dividend payout will be our summary for dividend policy. Okay. All right. Fair enough. Okay. Thank you very much, gentlemen. Thank you. Next question, Niklas Baratte from Macquarie. Go ahead, please. Yes, hello. Given the, you know, higher CapEx in 2022 and 2023, what kind of capacity increase do you think, you have in 2023, 2024? Yeah. Each year we are budgeting around 5%, 6% or so of capacity increase. As we mentioned earlier, our CapEx number, we dynamically adjust that and reprioritize certain projects, so according to the market conditions. I think 5% also is the numbers for the next... This year and next year. Thank you. That's all for me. Thank you. Next question, Frank Lee of HSBC. Go ahead, please. All right. Thank you. Just wanted to ask a question a little bit in terms of, you know, the overall guidance that you guys have talked about and the overall tone. You know, it seems like from what you're saying, you know, with units and shipments, 2 Q should be basically flattish or bottoming. Overall, I guess tone that we're seeing is that demand recovery hasn't been very clear, and auto has potentially peaked. Also looking at. You know, your utilization rate is actually going to go up, but your capacity increasing, but unit shipments are flat. Just trying to get a sense of maybe, you know, the overall tone versus the guidance. Are there any company-specific issues that's enabling you guys to continue to grow more share or anything that we're missing? Just the base capacity was lower in Q1 because of the annual maintenance. Quarter two, of course, the base went back to normal, and on top of that, we have some traditional capacity increase. It's always a wafer ship, wafer out, time delayed in a very minimum way. Overall, it's a flattish outlook for second quarter. Yet, we do see some bright spots like our 28 nm demand is firming up. The 8-inch outlook is seems getting a little bit deteriorated. There's a mixed factors out there. On top of that, the rising raw material costs and the unfavorable foreign exchange. It all kind of mix up and lead to our current flattish quarter two guidance. We are confident for what we have done, company specifically, but for the recovery or the market consensus, we just want to point out that we haven't really seen a very clear signs for a strong recovery as previously the market was hoping. Okay. Thank you. Can I just ask a follow-up on, you know, you've mentioned the auto business, as peaked in Q1, but your IDM business has continued to ramp up quite nicely. Is there, is there a mix of auto that's part of this IDM, and, you know, with auto slowing, is there a potential impact on IDMs maybe slowing down or not growing as fast as we've seen in the last couple of quarters? I mean, the IDM includes the auto and also the non-auto business. In general, we do see our IDM portion of business actually increase, not 100% coming from the auto market. Yeah. Okay. All right. Thank you. Thank you. Next one, Laura Chen of Citi. Go ahead, please. Yes. Hi. Thank you for taking my question. Good afternoon, gentlemen. Just a very quick follow-up also on the IDM business as we see quite solid momentum in Q1. Just wondering in what kind of a technology node and also application, you just kind of sort of talk about the automotive exposure in the IDM space, but just wondering that what's your order visibilities of the IDM outsourcing in the second half or also like what's the percentage of the IDM business in like consumer and communication application? Thanks. Well, I mean, in addition to the auto segments in the IDM space, which is provide some growth for the quarter, we also continue seeing our momentum in the 22 nm, I mean, sorry, the 28 nm and the high voltage space, as well as the larger in ISP area, and which associate with the mobile space. Yeah. Okay. At the same time, you are also saying that the overall, the demand recovery seems to be quite remote into the second half. The IDM business specifically, you still see the solid order visibility at the moment. Am I correct? Yes. We do see that space is actually very stable for us. Yes. Okay. Clear. Very clear. Thank you. Thank you. Next one, Rick Hsu of Daiwa. Go ahead, please. Yeah. Hi, Jason and Shih-Dong. Good evening. Just one question from me regarding your 28 nm. Could you guys give us more color about your percentage of revenue contribution ramp up into second half? Will that be possible, exceeding 30% in second half? The base is actually unpredictable either. We are saying the 28 nm utilization rate is going to exceed 90% in second half. It's difficult to give you a pinpoint percentage of revenue given that we are not 100% sure about our revenue base yet for the second half. Certainly will improve gradually. Yeah, fair enough. That's pretty helpful about this over 90% utilization rate for second half. Just a quick follow-up regarding your pricing. Do you expect any price elasticity to kick in second half? The reason why I'm asking is because I know recently talked to you some of your key customers, and they told me they believe that in second half, if the demand recover and they are able to give you guys more volumes, then you'll probably be happy to give some price discount to these guys with a volume increase. Or what do you think? I mean, we'd be happy to discuss that when that happens. Right now, the elasticity of the demands is still not clear to us. The, you know, if we start seeing strong sign of a recovery and then we definitely we're looking into that. Again, you know, the. We have a many different consideration for the pricing, right? So I have said multiple times earlier already, and we definitely will work with them closely to make sure that, you know, we well communicated and all consideration being explored, and hopefully we can reach the mutual benefits. Yeah. Okay, great. Yeah. Thank you so much. Yeah. That's all I have. Thank you. Thank you. Thank you. Ladies and gentlemen, we are running out of time, and we're going to take the last question. The last one is Bruce Lu, Goldman Sachs. Go ahead, please. Thank you. Thank you to, you know, give it the second chance. I want to ask about like, you know, your fab capacity expansion plan. I think you are one of the only one who doesn't really cut the CapEx for this year. I mean, do you consider to renegotiate the LTA with your customers for a further delay for your 28 nm because the capacity expansion or the oversupply situation, the end demand is definitely not as good as a couple of years than two years ago. Do you have any customer, you know, trying to push out a schedule by a quarter or two or anything like that? Well, I mean, when we observe the weakness of the market change from last year, end of last year, many discussions already took place. We have realigned with the customer, we have re-examined the demands outlooks. Some of the conversations already been discussed, and we have already realigned it. Currently to plan the mutual growth going forward, and we continue tracking those engagement, and we continue reviewing on a regular basis. At this point, our P6 ramp still on track. If there is any changes, we will update you. You know, there's no change, you know, at this point. If there's no change, which means that your CapEx will remain at a elevated level even for 2024. Well, I mean, for now, like we said, you know, our CapEx $3 billion has not changed, but we always have a contingency plan in place to adjust the CapEx if needed. Changing our CapEx will depends on the macro condition, you know, industrial mega trends, you know, and customer long-term business alignment. Like I said, alignment started end of last year and on a continued basis. Mm. If there is any changes, we have to kick in the contingency plan. At this point, I mean, we at least at this quarter and our CapEx budget still remains the same. Yeah. All right. Okay, one last one is for Kwee Tong. The government subsidy is down by like 30% in first quarter. Is that the new level in coming quarters? When is the subsidy going to end? The majority of the subsidy link to the depreciation schedule of our Fab 12X in Xiamen. The depreciation for Xiamen has nearly come to an end. That also reflect. Basically, we got money first in our pocket, and the recognition will go along with the depreciation schedule. The depreciation now is coming to an end, so the number will gradually to come down. we have to model like, you know, gradually come down in coming quarters. Yes. It is coming down along with the declining depreciation expenses for our Fab 12X. On one hand, the depreciation expenses will come down. On the other hand, the subsidy we recognize on book will also decline. I see. Okay. Thank you. Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I'll turn it over to UMC Head of IR for closing remarks. 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. Thank you. Ladies and gentlemen, that concludes our conference for first quarter 2023. Thank you for your participation in UMC's conference. There will be a webcast replay within two hours. Please visit www.umc.com under the Investors Events section. You may now disconnect. Good day.