Good afternoon, everyone, and welcome to TSMC's Third Quarter, 2024 Earnings Conference Call. This is Jeff Su, TSMC's Director of Investor Relations, and your host for today. TSMC is hosting our earnings conference call via live audio webcast through the company's website at www.tsmc.com, where you can also download the earnings release materials. If you are joining us through the conference call, your dial-in lines are in listen-only mode. The format for today's event will be as follows: First, TSMC's Senior Vice President and CFO, Mr. Wendell Huang, will summarize our operations in the third quarter, 2024, followed by our guidance for the fourth quarter, 2024. Afterwards, Mr. Huang and TSMC's Chairman and CEO, Dr. C.C. Wei, will jointly provide the company's key messages. Then, we will open the line for a question- and- answer session. As usual, I would like to remind everybody that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please do refer to the Safe Harbor notice that appears in our press release. And now, I would like to turn the call over to TSMC's CFO, Mr. Wendell Huang, for the summary of operations and the current quarter guidance. Thank you, Jeff. Good afternoon, everyone. Thank you for joining us today. My presentation will start with the financial highlights for the third quarter of 2024. After that, I will provide the guidance for the fourth quarter of 2024. Third quarter revenue increased 12.8% sequentially in NT, as our business was supported by strong smartphone and AI-related demand for our industry-leading three-nanometer and five-nanometer technologies. Gross margin increased by 4.6 percentage points sequentially to 57.8%, mainly reflecting a higher capacity utilization rate and cost improvement efforts. Due to operating leverage, total operating expenses accounted for 10.4% of net revenue. Thus, operating margin increased by 5 percentage points sequentially to 47.5%. Overall, our third quarter EPS was NTD 12.54, and ROE was 33.4%. Now, let's move on to revenue by technology. three-nanometer process technology contributed 20% of wafer revenue in the third quarter, while five-nanometer and seven-nanometer accounted for 32% and 17% respectively. Advanced technologies, defined as seven-nanometer and below, accounted for 69% of wafer revenue. Moving on to revenue contribution by platform. HPC increased 11% quarter- over- quarter to account for 51% of our third quarter revenue. Smartphone increased 16% to account for 34%. IoT increased 35% to account for 7%. Automotive increased 6% to account for 5%. DCE decreased 19% to account for 1%. Moving on to the balance sheet. We ended the third quarter with cash and marketable securities of NTD 2.2 trillion, or $69 billion. On the liability side, current liabilities increased by NTD 31 billion, while long-term interest-bearing debt decreased by NTD 38 billion. This change was primarily driven by the reclassification of NTD 42 billion in bonds payable from non-current to current liabilities. In terms of financial ratios, accounts receivable turnover days remain steady at 28 days. Inventory days increased by four days to 87 days, primarily due to the pre-build of N3 and N5 wafers. Regarding cash flow and CapEx, during the third quarter, we generated about NTD 392 billion in cash from operations, spent NTD 207 billion in CapEx, and distributed NTD 91 billion for fourth quarter 2023 cash dividend. Overall, our cash balance increased NTD 88 billion to 1.9 trillion at the end of the quarter. In U.S. dollar terms, our third quarter capital expenditures totaled $6.4 billion. I have finished my financial summary. Now, let's turn to our current quarter guidance. Based on the current business outlook, we expect our fourth quarter revenue to be between $26.1 billion and $26.9 billion, which represents a 13% sequential increase or a 35% year-over-year increase at the midpoint. Based on exchange rate assumption of one U.S. dollar to 32 NT, gross margin is expected to be between 57% and 59%, operating margin between 46.5% and 48.5%. This concludes my financial presentation. Now, let me turn to our key messages. I will start by talking about our third quarter 2024 and fourth quarter 2024 profitability. Compared to second quarter, our third quarter gross margin increased by 460 basis points sequentially to 57.8%, primarily due to a higher capacity utilization rate and better cost improvement efforts, including productivity gains. Compared to our third quarter guidance, our actual gross margin exceeded the high end of the range provided three months ago by 230 basis points, mainly due to a higher-than-expected overall capacity utilization rate. We have just guided our fourth quarter gross margin to increase by 20 basis points to 58% at the midpoint. This is primarily due to a higher overall capacity utilization rate in the fourth quarter, partially offset by continued dilution from N3 ramp-up, higher electricity prices in Taiwan, and N5 to N3 tool conversion cost. Next, let me talk about our 2024 CapEx. Every year, our CapEx is spent in anticipation of the growth that will follow the future years, and our CapEx and capacity planning is always based on the long-term market demand profile. As the strong structural AI-related demand continues, we continue to invest to support our customers' growth. We now expect our 2024 CapEx to be slightly higher than $30 billion. Between 70% and 80% of the capital budget will be allocated for advanced process technologies. About 10%- 20% will be spent for specialty technologies, and about 10% will be spent for advanced packaging, testing, mask making, and others. At TSMC, a higher level of capital expenditures is always correlated with higher growth opportunities in the following years, and as long as our growth outlook remains strong, we will continue to invest. Now, let me turn the microphone over to C.C. Thank you, Wendell. Good afternoon, everyone. First, let me start with our near-term demand outlook. We concluded our third quarter with revenue of $23.5 billion, above our guidance in U.S. dollar terms. Our business in the third quarter was supported by strong smartphone and AI-related demand for our industry-leading three-nanometer and five-nanometer technologies. Moving into first quarter, we expect our business to continue to be supported by strong demand for our leading-edge process technologies. We continue to observe extremely robust AI-related demand from our customers throughout the second half of 2024, leading to increasing overall capacity utilization rate for our leading-edge three-nanometer and five-nanometer process technologies. At TSMC, we define server AI processor as GPUs, AI accelerators, and CPUs performing training and inference functions and do not include networking, edge, or on-device AI. We now forecast the revenue contribution from server AI processors to more than triple this year and account for mid-teens percentage of our total revenue in 2024. Supported by our technology leadership and broader customer base, we are well-positioned to capture the industry's growth opportunities. We now forecast our full year revenue to increase by close to 30% in U.S. dollar terms. Next, let me talk about our global manufacturing footprint update. TSMC's mission is to be the trusted technology and capacity provider of the global logic IC industry for years to come. All of our overseas decisions are based on our customers' need. They value some geographic flexibility and necessary level of government support. This is also to maximize the value of our shareholders. In Arizona, we have received a strong commitment and support from our U.S. customers and the U.S. federal, state, and city governments, and have made significant progress in the past several months. Our plan to build three fabs will help create greater economies of scale, as each of our fab in Arizona will have a clean room area that is approximately double the size of a typical logic fab. Our first fab entered engineering wafer production in April with four-nanometer process technology, and the result is highly satisfactory with a very good yield. This is an important operational milestone for TSMC and our customers, demonstrating TSMC's strong manufacturing capability and execution. We now expect volume production of our first fab to start in the beginning of 2025, and are confident to deliver same level of manufacturing quality and reliability from our fab in Arizona as from our fabs in Taiwan. Our second and third fabs will utilize more advanced technologies based on our customers' need. The second fab is scheduled to begin volume production in 2028, and our third fab will begin production by the end of the decade. Thus, TSMC will continue to play a critical and integral role in enabling our customers' success, while remaining a key partner and enabler of the U.S. semiconductor industry. Next, in Japan, thanks to the strong support from the Japanese central, prefectural, and local governments, our progress is also very successful. Our fourth specialty technology fab has completed all process qualification. Volume production will start this quarter, and we are confident to deliver the same level of manufacturing quality and reliability from our fab in Kumamoto as from our fabs in Taiwan. The land preparation for our second specialty technology fab in Kumamoto has already begun, and construction will begin in fourth quarter next year. This second fab will support our strategic customers for consumer, automotive, industrial, and HPC-related applications, and volume production is targeted by the end of 2027. In Europe, we have received strong commitment from European Commission and the German federal, state, and city governments. Together with our JV partners, we held a groundbreaking ceremony in August for our specialty technology fab in Dresden, Germany. This fab will focus on automotive and industrial applications, utilizing 12, 16 FinFET and 28 process technologies. Volume production is scheduled to begin by the end of 2027. Under today's fragmented globalization environment, overseas fab costs are higher for everyone, including TSMC and all other semiconductor manufacturers. Having said that, we will leverage our fundamental competitive advantage of manufacturing technology leadership and large-scale manufacturing base. Thus, TSMC will be the most efficient and cost-effective manufacturer in the regions that we operate, while continuing to provide our customer with the most advanced technology and scale to support their growth. This concludes our key message, and thank you for your attention. Okay. Thank you, C.C. This does conclude our prepared statements. Before we begin the Q&A session, I would like to remind everybody to please limit your questions to two at a time, to allow all the participants an opportunity to ask their questions. Should you wish to raise your question in Chinese, I will translate it into English before our management answers your question. For those of you on the call, if you would like to ask a question, please press the star, then one on your telephone keypad now. If at any time you would like to remove yourself from the questioning queue, please press star two. Now, let's begin the Q&A session. Operator, sorry, can we proceed with the first participant on the line, please? The first one to ask questions, Gokul Hariharan from J.P. Morgan. Go ahead, please. Yeah, thank you. Good afternoon, C.C., Wendell, and Jeff. My first question is on the AI investments and the growth that you see. Recently, obviously, there's been a lot of questions about ROI of Gen AI investments, whether this could end up being a bubble... How does TSMC view this trend as you're making your capacity plans, given you are enabling pretty much the processing capacity for pretty much everybody? And what gives you the confidence that this is going to be a more longer run growth cycle? And relative to this, could C.C. also talk a little bit about what do you think about the duration of this current semiconductor upcycle? Do you think it will continue into the next couple of years, or are we getting closer to the peak of this cycle? That's my first question. Okay, thank you, Gokul. Please allow me to summarize your first question. Gokul's first question has two parts. The first part, I believe, is more focused on the AI-related demand, the ROI and sustainability of this. He notes recently there's been a lot of questions about the return or ROI from generative AI investments, and therefore, how do we view this trend? Is there a worry that this demand sustainability or may be a bubble? And very importantly, certainly, what gives us the confidence that this could be a more long-run, sustainable demand cycle for AI? Okay, Gokul, let me answer your question. Simply, whether this AI demand is real or not, okay? My judgment is real. We have talked to our customer all the time, including our hyperscaler customers, who are building their own chips. Almost every AI innovators is working with TSMC, and so we probably get the deepest and widest look of anyone in this industry. Why I say it's real, because we have our real experience. We have using the AI and machine learning in our fab in R&D operations. By using AI, we are able to create more value by driving greater productivity, efficiency, speed, qualities. Think about it, let me use, you know, 1% productivity gain, that were almost equal to about one billion to TSMC. This is a tangible ROI benefit. And I believe we cannot be the only one company that have benefited from this AI's application. So I believe a lot of company right now are using AI and for their own improving productivity, efficiency, and everything. So I think it's real. Did I answer your question? Gokul? Yeah, that's clear. Maybe... Yeah, could you also talk a little bit about how this feeds into your view of this current semiconductor cycle also, C.C.? So, Gokul, the second part is, we have, we believe the AI demand is real, but how do we view the overall semiconductor demand and cycle? Do we? I think, Gokul, you're saying, do we think it's reached peak, peaked out already? Oh, okay. I forgot to answer this one. The demand is real, and I believe it's just a beginning of this demand. All right? So one of my key customers said, "The demand right now is insane." You know, that's it's just the beginning. It's a form of Sci-Fi to reality engineering, okay? And it will continue for many years. And then the overall semiconductor demand, I think. Overall semiconductor demand, except the AI, I think is everything stabilized and start to improve. Okay, Gokul? Understood. Yeah. That's clear. Thanks, C.C. My second question is more to do with CapEx. I think usually, if you look at the past cycles of strong demand uptick, TSMC's CapEx also starts to move up quite a bit. This time around, 2023 and 2024, your CapEx has been reasonably stable. It's still a large number, but not really growing a lot in the $30 billion-$31 billion range. How should we think about when we look forward into the next couple of years, what are you doing? What are you planning for CapEx growth? Is there any reservations that TSMC has about the pace of growth that the CapEx is still a little bit lower? Or should we expect that the CapEx also should start accelerating, given you're growing at 30% this year and looks like you're preparing for pretty strong growth the next couple of years as well? Okay, so Gokul's second question is related to CapEx and looking out the next few years. So he notes that in past cycles, when demand is very strong, our CapEx starts to move up. But however, this time, even with what C.C. described as very real and the beginning of a strong AI demand, these last two years, we've kept our CapEx, it's not really been growing much. So his question is: Is that because we have any concerns or reservations around the demand sustainability? Or what will the CapEx start to look like the next several years? Will we have to, you know, we'll begin to stand it back up. Is that roughly what you're asking, Gokul? Yeah, that's right. Thanks, Jeff. Okay, Gokul, we do not have a number for 2025 CapEx today to share with you. However, we always use a disciplined and thorough system to determine the appropriate capacity- ... to build. And we always review our CapEx plans on an ongoing basis. For TSMC, a higher level of capital expenditures is always going to be related with higher growth opportunities in the coming years, and as long as our growth outlook remains strong, we will continue to invest. Now, as C.C. said, next year looks to be a healthy year, so it is very likely that our CapEx next year will be higher than this year. And we will provide you more updates in January conference. Okay, that's very clear. Thanks. Thanks, Wendell. Thank you. I'll go back to the queue. Okay, thank you, Gokul. Operator, can we move on to the next participant, please? Yes, Sunny Lin from UBS, the line is open to you now. Thank you very much for taking my question. Good afternoon. Very strong executions on margin, and so my first question is to follow up on the growth margin outlook. How should we think about into 2025? Last quarter, management quantified overseas expansion to dilution about 2%-3% margin. But besides that, could you help us understand some of the other puts and takes? How should we think about the depreciation growth into 2025? Okay, Sunny, thank you for your question. So Sunny's question first is on the gross margin outlook into 2025. She notes last time, Wendell had already shared that overseas fab would dilute our gross margin probably by 2%-3%. She wants to know, besides that, what other factors should we consider, and also in terms of depreciation growth? Okay. Sunny, it's too early to talk about 2025 in detail, but there are a few things I can share with you, the puts and takes for 2025. Indeed, we expect the dilution from N3 ramp to gradually reduce next year. We continue to sell our value, so these things will help. Plus, next year will be a healthy growth year, so utilization is also a positive. On the other hand, as we said, there will be 2-3 percentage point dilution from the overseas fabs when we begin to ramp them. At the same time, we are also converting some of our N5 capacity to N3 to meet the strong demand for N3. Also, don't forget, we're ramping the N2 in 2026. There will also be some preparation costs for ramping N2. As we migrate every leading nodes, more and more advanced, this preparation cost will become bigger and bigger. Now, you also know that the electricity cost has also risen very recently, and second time in the year. 14% higher for TSMC in October. This is after 15% increase in 2022, 17% increase in 2023, and 25% increase in 2024. Basically, the price has doubled in the last few years. So next year, we think that electricity price for us in Taiwan will be the highest, in all the regions that we operate. The higher electricity price, plus other inflationary costs, is expected to impact our gross margin by at least 1%. Finally, of course, we do not have any control or cannot forecast foreign exchange rate movement. 1% foreign exchange rate movement, NT dollar, will have an impact of 40 basis points to our gross margin. Thank you, Wendell. So, Go ahead. Sunny, does that sort of give you a better understanding of the puts and takes for next year? Yeah, that's very helpful. Thank you very much, Wendell. So quick follow-up on if any view on depreciation increase into 2025, should we expect similar magnitude as this year, which grew about 25%? And also a quick follow-up on the 2%- 3% gross margin dilution for overseas. If I calculate correctly, that imply your overseas fabs in the U.S. and Japan could be running at close to zero percent or very low gross margin to start with. Would that be a conservative assumption that you are assuming at this point? Yeah. Okay, well, that's two follow-ups, so I might take that as the second question, but the first one is, again, Sunny had asked about depreciation next year. So... Yeah, Sunny, let us give you more depreciation guidance in the January conference, okay? Yeah. And then the second question really is about our overseas fabs, as we ramp up Arizona and Japan. Sunny, I believe your question is, with that ramp and dilution of 2%-3%, does that imply the overseas fabs profitability is more closer to breakeven or something like that? Correct, Sunny? Right. Right. Thank you, Jeff. Yeah, Sunny, the overseas fabs have basically a lower profitability than the fabs in Taiwan, mainly because of the smaller scale, and of next year will be initial ramp and higher costs. ... So, it will have a lower profitability, but it will gradually improve over the years. Now, don't forget, in Arizona and in Kumamoto, we are ramping more than one phase, one fabs. So when Fab one begin to improve its profitability, the second phase comes in. And Arizona, when Fab two improves, the third phase comes in. Similar situation in Kumamoto, and that's the reason why we're saying that in the next three or five years, we expect 2-3 percentage point dilution every year. Got it. Thank you very much. Okay, thank you, Sunny. Operator, can we move on to the next participant, please? Next one, we have Charlie Chan from Morgan Stanley. Go ahead now. Thanks, Jeff, and C.C. Wei, good afternoon. First of all, also, congrats for your very, very strong results and the guidance. So my first question is really about your future bargaining power to your customers and vendors, and what would that mean to your long-term gross margin targets? Because right now, even without the price adjustment next year, your gross margin is already blow up, right? It's already 57%-58% higher than most of your customers. So with that, do you think you'll be a little bit too aggressive to further hike price to your customers? And I'm also wondering, for those kind of mature nodes, what's your pricing strategy here? So all I want to ask are the implication to number one your long-term gross margin level, and secondly, how are you going to handle the potential antitrust risk given your monopoly... near monopoly, and also prepare to do some price adjustments? Thanks. Okay. So, I think Charlie's question is sort of we always say that, we, you know, value selling, and it's a continuous and ongoing thing. So he wants to know, what does this status or look like, with both customers and vendors? And then, what is the implication to our long-term gross margin target? You know, and are we concerned about sort of monopoly or things like that? Let me start. That, I think, is the first part, and then the mature part, I'll summarize later. Okay, Charlie, this is C.C. Wei. Let me answer your question. You know, sharing our value actually is a continuous and ongoing process for TSMC. We view all our customers as a partner, and the progress of this effort on sharing our value is so far so good. Also, you are talking about we have more bargaining power with our equipment supplier. Again, we view them as our partner, so I don't using the bargaining power. We always work with them, and to move to the next step. And so, you know, both TSMC, and suppliers, and customers are all working together, and with the purpose of that we can have a TSMC's customer to be successful in their market. Okay? That's my goal. If our customer doing well, we can be good also. Okay, and you mentioned one thing that I have a little bit concerned. You say that TSMC's gross margin now is higher than my customer. It's not true. You know, look at one of the biggest AI supplier. They have a gross margin that I probably never be able to reach in my life. But anyway, we are very happy to see them be successful, and we are in a different kind of business. We are capital-intensive business, so we need a very high gross margin to survive and to have a sustainable and healthy growth. That's why we set up our pricing strategy. Yeah. And then a quick one, I think part of Charlie's question, the second part. Charlie, if I heard you right, is sort of the outlook for mature node, in terms of pricing? What- No, I think, Okay. ... Charlie, you're talking about the way the antitrust concern or something like that. Did I hear you right? Yeah. I'm a little bit concerned, same as other investors as well. So yeah. Yeah ... his concern- Okay. The antitrust, that meaning that TSMC has a very high market share and with some of unnecessary competitions methodology. Let me assure you that, the last time we proposed a new version of the Foundry 2.0, which including the wafer manufacturing and packaging and testing, mask making, and all others. All these kind of thing become more important, growing importance, like packaging, testing, mask making. Right now, probably is a little bit higher than 10% of TSMC's total revenue. That's one. And all my competitor they are IDMs in particular. They also have their packaging, testing, and mask making. And so I think Foundry 2.0 is a better reflects TSMC's addressable market. And our share is. It's probably around 30%, so not a dominant yet. We are big, yes, because we perform very well. But no, it's not a kind of antitrust concern yet. It's not in our picture, actually. Charlie, did I answer your question? Yeah, yeah, thanks. Yeah, so, just hitting a little bit. I guess you won't stop your margin improvement until 75%. But anyway, I'll leave that kind of long-term margin target or guidance to the next caller or your next January guidance. But I do have a second question. Is that okay, Jeff? I can ask a second one? Quickly, yes. Okay. Yeah, the second one is about your IDM outsourcing opportunity, right? Also part of your Foundry 2.0. Because one of the major IDM opportunities is Intel, and recently announced they want to spin off their Foundry segments, right? So, number one, TSMC, do you expect more outsourcing from Intel, given this change? And even, would TSMC consider to acquire part of Intel's fabs in the long term? So I think that's that. And also, quickly comment on news reporting about Samsung's IDM outsourcing opportunity. That's my second part of question. Okay. So, Charlie's second part is on IDM outsourcing. He wants to know, with the, I guess, U.S. IDM and Foundry 2.0, how do we-- do we expect more outsourcing from this U.S. IDM? And, you know, how do we plan for the capacity? Would we consider, I think, to acquire part of this IDM's fabs or manufacturing? And then how do we see outsourcing from Samsung? Well, that's a lot of questions. Let me answer one of the easiest one. Are we interested in acquiring one of the IDMs' fabs so far? The answer is no. Okay, no, not at all. Now let's talk about the business part. It's always the customer's decision for their outsourcing strategy. But I look at the business of the IDMs, one of the IDMs in California, which has been a very good customer to TSMC. And we continue to receive a sizable business from them, to be frank with you. Yeah, so your question is whether we continue to increase? That is too specific, so let's wait for the next few quarters to answer your question. Okay. Okay. Thank you. All right. Thank you, Charlie. Operator, can we move on to the next person, caller, please? Yes. Next one, Bruce Lu from Goldman Sachs. Go ahead, please. Okay. Thank you for taking my question. My question is going back to the longer term growth outlook. I think TSMC has been guiding for 15%-20% revenue CAGR from 2021 to 2026. On the back of the insane AI demand, you know, do we have an updated outlook for, you know, for the revenue guidance beyond 2026? In addition, when TSMC guided in 2021, TSMC achieved, like, 25% growth almost every year, except for 2023. So what kind of, like, you know, revenue growth outlook or the growth pattern in the next five years? Do we expect to be a more stable growth every year, or do we expect to be a stronger growth for most of the years and one year weakness? Okay. So, thank you, Bruce. So Bruce's first question is about our long-term growth outlook. He notes, yes, we did provide a long-term revenue growth CAGR of between 15%- 20% CAGR in U.S. dollar terms from 2021 to 2026. So he wants to know what is the updated revenue guidance, the outlook beyond 2026, and he also notes that, when we provided this, you know, guidance in 2022, we basically were able to grow greater than 25% every year except for 2023. So he wants to know, the next five years, will the growth be, you know, a similar level every year, or will it be like, strong years followed by, you know, a down year, sort of the pattern of the growth? ... Okay, Bruce. That's a big question. You ask us whether the next five years will be as good as the past five years, from 2021 to 2024 right now. Except the 2023, we have a very good growth. As you said, it's always 20%-30%. Next five years, it's, it will be very healthy also to TSMC, but I don't have a long-term CAGR number to update you, but they will be very healthy also. That's so far I can assure you. So a quick follow-up: Does that insane AI demand start to help you to grow slightly faster than before? Bruce wants to know, with the very robust AI-related demand, can we grow faster than before? I hope so. But, as I said, today, we don't have a long-term CAGR number to share with you. Okay. Okay. Let me switch gear to two nanometers and A16. So I think that, you know, the HPC demand and, you know, for the data center is very strong. We do see more customer engagement for two nanometers. But at the same time, we also see more chiplet design in two nanometers, which might effectively lower the two-nanometer wafer area requirement. So how should we think about your two-nanometer capacity build versus the three, five, and seven in the past? And how do we see the A16 migration beyond two- nanometer? Okay, so Bruce's second question, as he said, is on two- nanometer and A16. He notes certainly with HPC and AI related, more and more engagement at two nanometer. But he also notes or his observation with chiplets that could reduce the demand for two- nanometer. So he really wants to know sort of what is the capacity build or capacity outlook for two nanometer that we are looking at. And also, how do we see the migration from two nanometer to A16? Is that correct, Bruce? Yeah. Okay, let me answer this question. Yes, the chiplets have become kind of, you know, our HPC, especially our HPC customers', strategy. Is it going to reduce capacity for two- nanometer because they become chiplets? The answer is no. Actually, we have many, many customer are interested in the two- nanometer. And today, with their activity with TSMC, we are actually see more demand than we ever dream about it as compared with the N3. So we had to prepare more capacity in N2 than in N3, and following by A16. Again, A16 is very, very attractive for the AI servers chips. And so, actually the demand is also very high, and so we are working very hard to prepare both two nanometer A16's capacity. Okay, Bruce, did I answer your question? Yes, perfect. Thank you. All right, thank you. Operator, can we move on to the next participant, please? Now, Brett Simpson from Arete, line is open to you now. Yeah, thanks very much. My question was on the long-term planning around AI. Keen to understand how TSMC gets comfortable with customer demand for AI beyond 2025. And I ask this because it takes, you know, a couple years before you can build a fab. So you need to be taking an early view on, you know, what does AI look like in 2026, 2027. So how are you specifically cooperating on long-term plans for capacity with these AI customers? What commitments are these customers giving you? And I guess historically, we've seen hyperscaler CapEx go through digestion periods. So how do you de-risk the capacity plans here for AI as we go through this, you know, really heavy demand period? Thank you. Okay. So Brett's first question, again, is on the long-term planning around AI demand. His question is really, for beyond 2025, given the lead times, how do we plan our capacity for the long term? How do we get comfortable around the customer demand related to AI beyond 2025? I think that is your gist of your question, Brett? Well, okay, Brett. That's it, yeah. Thank you. Yeah. Let me say again that we did talk to a lot of customer. Almost every AI innovator are working with us, and that including the hyperscalers. So if you look at the long-term market, long-term structural market demand profile, I think we have some picture in our mind, and we make some judgment, of course, and we work with them on a rolling basis. So how we prepared our capacity? Actually, just like Wendell said, we have a disciplined and a rough system to plan the appropriate level of capacity, and that to support our customers' need also to maximize our shareholders' value. That's what we always keep in our mind. Okay? Okay. My follow-up. Yeah, that's great. Thanks, C.C. I guess my follow-up question: We've read a lot about Taiwan having energy challenges, and this comes at a time when TSMC is preparing for a big node with two nanometer. So my question is, are there any power challenges to overcome when you're building out your N2 fabs, especially in Hsinchu and Kaohsiung? And does it make sense for TSMC to plan for nuclear power? I mean, we see a lot of hyperscalers are planning for nuclear power in the US to build out gigawatt facilities. How do you think about nuclear power in future for TSMC fabs? Thank you. Okay. Thank you, Brett. So Brett's second question, he notes that Taiwan electricity and energy there are a lot of challenges with this. So how do we plan for this, especially when we're bringing on new nodes? What are the power challenges to overcome, given the state of Taiwan's energy? And then, would we consider even nuclear power for ourselves to help support? Okay, Brett. You know, yes, we are building many fabs in Taiwan, and that require electricity, water, and the land. We continues to work with the government. Actually, we have a very close communication with government, and to tell them that our requirement, our plan, and we got assurance from the government saying that they will support TSMC's growth, and we, we believe that. And so whether how they prepare for the electricity from the nuclear power plant or from just some kind of you know other sources like green energy, something, we are not ready to share with you yet. But we got the assurance that we're going to get enough electricity support, including the water and the land. Okay. That's clear. Thank you very much. Okay. Thank you, Brett. Can we move on to the next participant, please? Next one to ask question, Krish Sankar from TD Cowen. Yeah. Hi, thanks for taking my question. The first one I had was, I'm kind of curious on the non-AI demand. How do you look at your wafer demand for PC and mobile into calendar 2025? And have you seen any meaningful revision upwards or downwards on that? And then I had a follow-up. Okay. So Krish's first question is really focused on PC and mobile demand. How do we see this demand going into 2025? Have we seen it improve or revision up or downward, and how would we look at it going into next year? Okay, Krish. The unit growth of PC and smartphone is still in a low single digit, but the more important is the content. The content now, we put more AI into that, their chip, and so, the silicon area increased faster than the unit growth. So again, I would like to say that for this, PC and smartphone business, not only is gradually increased, and we expect it to be healthy in the next few years because of AI's related applications. Got it. Got it. Very helpful. And then my quick follow-up is, I'm kind of curious, you know, on your packaging side, advanced packaging. Today, it's part of the non-wafer revenues. Obviously, you're investing in CoWoS and other technologies. How to think about that advanced packaging revenue growth over the next few years? And do you think at some point in the next couple of years, advanced packaging can reach corporate-level gross margins, or would it always be below that? Thank you very much. Okay. Thank you, Krish. So Krish's second question is on advanced packaging. So, we have been putting a lot of effort. So his question is, what is the revenue growth outlook for advanced packaging in the next few years? And also, when or do we think it can reach the corporate average gross margin as well? So maybe Wendell can, Right ... address. Yeah, Krish, advanced packaging in the next several years, let's say five years, will be growing faster than the corporate average. This year, it accounts for about high single digit of our revenue. In terms of margins, yes, it is also improving. However, it's still, it's approaching corporate, but not there yet. Thank you very much. Okay, Krish. Operator, in the interest of time, we'll take questions from the last two participants, please. Yes. Now the line is open to Laura Chen from Citi. ... Hi. Hi, thank you for taking my question, gentlemen, and also congratulations on the strong performance. I'm just wondering that with the decent free cash flow increase in the recent quarter, and I believe that next year will be a different year for TSMC to grow. So, is there any opportunity for TSMC to consider increase the cash dividends in the near future? And how do you view the balance sheet, the capital allocation between shareholder returns and also the continued investment in the advanced technology like a two and three nanometer? That's my first question. Okay. Thank you, Laura. So Laura's first question is related around. Her question really is looking at our free cash flow generation, noting that it has continues to increase, and then with next year being a healthy, good year, it should continue to grow. So her question is, is there room or how do we see the cash dividend as related to free cash flow? And also, I think Laura, really, her question was also a balance sheet ramification. How do we balance the shareholder return interest set against what C.C. said, our capital-intensive industry and CapEx? So two parts to it, first on the cash dividend and then sort of on the balance sheet management. Right, Laura, Yeah. Certainly, dividends, our dividend policy, as we said before, is sustainable and steadily increasing, and steadily increasing when we are harvesting the investment that is made in the past. And as the free cash flow increase, that means we are harvesting the investment in the past, so it's gonna be steadily increasing. That's for the dividends. Balance sheet, we are the primary objective of our using our balance sheet or our cash resources is organic growth, so that will bring our shareholders the biggest return. And then, whatever the free cash flow is left, then we will return part of those to our shareholders. That's always our policy. Okay, yeah, that, that's very consistent. But I think, given our, like, rich cash flows generating capabilities and also, yeah, I mean, we can probably be able to harvest. So I think investors are kind of expecting the dividends increase gradually. Yeah. And also, my second question is about our Foundry 2.0 model. That has been discussed since last time, but could you share more details on how the Foundry 2.0 is being implemented and from different aspects like the traditional logic foundry business and advanced packaging, and also maybe the IDM's customers? Can you give us kind of an idea what will be the, like, a growth outlook for different kind of segmentation in that new definition? Okay, so Laura, your second question is on Foundry 2.0. So I think her question is looking at the different components of this. She's asking if we can provide a growth outlook for the different components, such as the logic, wafer manufacturing, advanced packaging segment, IDM segment, et cetera, et cetera, the growth outlooks for each specific one. Yeah. Right, I appreciate it. Thank you. Well, Laura, I think, you know, again, in this Foundry 2.0, among the content inside, the leading process nodes, advanced packaging, will have much stronger growth. And, on those are mature nodes and conventional packaging, that's not so rosy as advanced packaging and leading process node. Did that answer your question? Okay, got it. Thank you. Okay. Thank you, Laura. Operator, can we move on to the last part, last participant, please? Yes, the last one to ask question, Rick Hsu from Daiwa. Yeah, hi, thank you for taking my questions. So my, a very quick one from me. The first one, can you update your, the forecast for this year's global semiconductor revenue ex- memory? I remember you were talking about 10%, around 10% growth, so, can you give us a new update and also, share with us a preliminary outlook for next year? So Rick's question is really, can we, you know, provide an update to our forecast for semiconductor, excluding memory industry growth, or and Foundry 2.0 for 2024 first? Yeah. Our forecast stays the same, very similar to what we said the last time. Of course, TSMC's growth is a little bit better than the last time we estimate. But overall, the whole industry is almost the same as we said in last quarter. Yeah. And then the second part of Rick's question, then what about next year? Well, we continue to say that it's too early to make a comment on 2025's growth outlook, but we are gonna share with you in the next quarter's earnings release. Okay? All right. Thank you so much. Just a little question as a follow-up, the second one. Can you share with us your CoWoS capacity build-up for this year and next year? I know you guys seem to have revised it up several times, so can you share us the latest one? Okay. Yeah, so, so Rick's second question then is to an update on our CoWoS capacity plan for both 2024 and 2025, to the extent that we can share. Okay, Rick. In fact, we are putting a lot of effort to increase the capacity of the CoWoS. Roughly, let me share with you, today's situation is, our customers' demand far exceed our ability to supply. So even we work very hard, and increase the capacity by about more than twice, more than two times, as this year compared with last year, and probably double again, but still, not enough. But anyway, we are working very hard to meet the customers' requirement. All right. Thank you so much. Okay, thank you, Rick. Thank you, everyone. This concludes our Q&A session. Before we conclude today's conference, please be advised that the replay of the conference will be accessible within 30 minutes from now, and the transcript will become available 24 hours from now, both of which you can find and are available through our TSMC's website at www.tsmc.com. So thank you, everyone, for joining us today. We hope everyone continues to be well, and we hope to see you again, and you will join us again next quarter. Goodbye, and have a good day.