Good afternoon, everyone, and welcome to TSMC's Fourth Quarter 2025 Earnings Conference and Conference Call. My name is Jeff Su, TSMC's Director of Investor Relations and your host for today. Today's event is being webcast live through TSMC'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 fourth quarter 2025, followed by our guidance for the first quarter 2026. 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 both the floor and the line for the 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 would cause actual results to differ materially from those contained in the forward looking statements. Please refer to the safe harbor notice that appears in our press release. And now I would like to turn the microphone over to TSMC 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 financial highlights for the fourth quarter of 2025 and a recap of full year 2025 after that. I will provide the guidance for the first quarter of 2026. Fourth quarter revenue increased 5.7% sequentially in NT$ supported by strong demand for our leading-edge process technologies. In U.S. dollar terms, revenue increased 1.9% sequentially to $33.7 billion, slightly ahead of our fourth quarter guidance. Gross margin increased by 2.8 percentage points sequentially to 62.3%, primarily due to cost improvement efforts, favorable foreign exchange rate, and the high capacity utilization rate. The operating expenses accounted for 8.4% of net revenue compared to 8.9% in third quarter of 2025 due to operating leverage. Thus, operating margin increased sequentially by 3.4 percentage points to 54% overall. Our fourth quarter EPS was TWD 19.5 and ROE was 38.8%. Now let's move on to revenue by technology. 3 nm process technology contributed 28% of wafer revenue in the fourth quarter while 5 nm and 7 nm accounted for 35% and 14% respectively. Advanced technologies defined as 7 nm and below accounted for 77% of wafer revenue on a full year basis. 3 nm revenue contribution came in at 24% of 2025 wafer revenue, 5 nm 36% and 7 nm 14%. Advanced technologies accounted for 74% of total wafer revenue up from 69% in 2024. Moving on to revenue contribution by platform, HPC increased 4% quarter over quarter to account for 55% of our fourth quarter revenue. Smartphone increased 11% to account for 32%, IoT increased 3% to account for 5%, Automotive decreased 1% to account for 5% while DCE decreased 22% to account for 1% on a full year basis. HPC increased 48% year over year. Smartphone, IoT, and Automotive increased by 11%, 15%, and 34% respectively in 2025 while DCE remains flat. Overall, HPC accounted for 58% of our 2025 revenue, Smartphone accounted for 29%, IoT accounted for 5%, Automotive accounted for 5%, and DCE accounted for 1%. Moving on to the balance sheet, we ended the fourth quarter with cash and marketable securities of TWD 3.1 trillion or $98 billion. On the liabilities side, current liabilities increased by TWD 182 billion quarter over quarter mainly due to the increase of TWD 95 billion in accrued liabilities and others and the increase of TWD 61 billion from the reclassification of bonds payable to current portion. In terms of financial ratios, accounts receivable days increased by one day to 26 days. Inventory days remain steady at 74 days. Regarding cash flow and CapEx, during the fourth quarter we generated about TWD 726 billion in cash from operations, spent TWD 357 billion in CapEx and distributed TWD 130 billion for first quarter 2025 cash dividend. Overall, our cash balance increased TWD 297 billion to TWD 2.8 trillion at the end of the quarter. In U.S. dollar terms, our fourth quarter capital expenditures total $11.5 billion. Now let's look at the recap of our performance in 2025. Thanks to the strong demand for our leading edge process technologies, we continue to outperform the foundry industry. In 2025 our revenue increased 35.9% in U.S. dollar terms to $122 billion or increased 31.6% in NT dollar terms to TWD 3.8 trillion. Gross margin increased 3.8 percentage points to 59.9% mainly reflecting a higher capacity utilization rate and cost improvement efforts partially offset by an unfavorable foreign exchange rate and margin dilution from our overseas fabs. With operating leverage, our operating margin increased 5.1 percentage point to 50.8%. Overall full year EPS increased 46.4% to TWD 66.25 and ROE increased 5.1 percentage point to 35.4%. In 2025 we generated TWD 2.3 trillion in operating cash flow, spent TWD 1.3 trillion or $40.9 billion on capital expenditures. As a result, free cash flow amounted to TWD 1 trillion, up 15.2% from 2024. Meanwhile, we paid TWD 467 billion in cash dividends in 2025, up 28.6% year over year as we continue to increase our cash dividend per share. TSMC shareholders receive a total of TWD 18 cash dividend per share in 2025 up from TWD 14 in 2024 and they will receive at least TWD 23 per share in 2026. I have finished my financial summary. Now let's turn to our current quarter guidance. We expect our business to be supported by continued strong demand for our leading edge process technologies. Based on the current business outlook, we expect our first quarter revenue to be between $34.6 billion and $35.8 billion which represents a 4% sequential increase or a 38% year-over-year increase. At the midpoint. Based on the exchange rate assumption of $1 to TWD 31.6, gross margin is expected to be between 63% and 65%. Operating margin between 54% and 56%. Lastly, our effective tax rate was 16% in 2025. For 2026 we expect our effective tax rate to be between 17% and 18%. This concludes my financial presentation. Now let me turn to our key messages. I will start by talking about our fourth quarter 2025 and first quarter 2026 profitability. Compared to third quarter, our fourth quarter gross margin increased by 280 basis points sequentially to 62.3% primarily due to cost improvement efforts, a more favorable foreign exchange rate and a higher overall capacity utilization rate. Compared to our fourth quarter guidance, our actual gross margin exceeded the high end of the range provided three months ago by 130 basis points mainly as we delivered better than expected cost improvement efforts. In addition, the actual fourth quarter exchange rate was $1 to TWD 31.01 as compared to our guidance of $1 to TWD 30.6. We have just guided our first quarter gross margin to increase by 170 basis points to 64% at the midpoint primarily driven by continued cost improvement effort including productivity gains and a higher overall capacity utilization rate partially offset by continued dilution from our overseas fabs. Looking at full year 2026, given the six factors, there are a few puts and takes I would like to share. On the one hand, we expect our overall utilization rate to moderately increase in 2026. N3 gross margin is expected to cross over to the corporate average sometime in 2026 and we continue to work hard to earn our value. In addition, we are leveraging our manufacturing excellence to drive greater productivity in our fabs to generate more wafer output. We are also increasing across node capacity optimization which includes flexible capacity support among N7, N5 and N3 nodes to support our profitability. On the other hand, as the scale of our overseas expansion grows, we continue to forecast the gross margin dilution from the ramp up of overseas fabs in the next several years to be between 2%-3% in the early stages and widen to 3%-4% in the latter stages. Furthermore, the initial ramp up of our 2 nanometer technology will start to dilute our gross margin in the second half of the year and we expect between 2%-3% dilution for the full year of 2026. Finally, we have no control over the foreign exchange rate, but that may be another factor in 2026. Next, let me talk about our 2026 capital budget and depreciation at TSMC. A higher level of capital expenditures is always correlated to the high growth opportunities in the following years. With our strong technology, leadership and differentiation, we are well positioned to capture the multi year structure demand from the industry megatrends of 5G, AI and HPC. In 2025 we spent $40.9 billion as compared to $29.8 billion in 2024 as we began to raise our level of capital spending in anticipation of the growth that will follow in the future years. In 2026 we expect our capital budget to be between $52 billion-$56 billion as we continue to invest to support our customers growth. About 70%-80% of the 2026 capital budget will be allocated to advanced process technologies, about 10% will be spent for specialty technologies and about 10%-20% will be spent for advanced packaging, testing, mask making and others. Our depreciation expense is expected to increase by high-teens percentage year over year in 2026 mainly as we ramp our 2 nanometer technologies. Even as we invest in the future growth with this level of CapEx spending in 2026, we remain committed to delivering profitable growth to our shareholders. Finally, let me talk about TSMC's long-term profitability outlook. As a foundry, our biggest responsibility is to support our customers' growth and we always view them as partners. Having said that, we are in a very capital-intensive business. In the last five years alone our CapEx totaled $167 billion. Our R&D investments totaled $30 billion. Therefore, it is important for TSMC to earn a sustainable and healthy return as we continue to invest in leading-edge specialty and advanced packaging technologies to support our customers' growth. Today we face increasing manufacturing cost challenges due to the rising cost of leading nodes. For example, the cost of tools are becoming more expensive and process complexity is increasing. As a result, the CapEx dollar required to build 1K wafers per month capacity of N2 is substantially higher than 1,000 wafers per month capacity. For N3, the CapEx per 1,000 cost for A14 will be even higher. We also face additional cost challenges from expansion of our global manufacturing footprint, new investments in specialty technologies and inflationary costs. These all lead to a higher level of CapEx spending. As a result, in the last three years our CapEx dollars amounted to $101 billion but is expected to be significantly higher in the next three years. Having said that, we continue to work closely with our customers to plan our capacity while sticking to our disciplines to ensure a healthy overall capacity utilization rate through the cycle. Our pricing will remain strategic, not opportunistic. To earn our value, we will work diligently with our suppliers to drive greater cost improvements. We will also leverage our manufacturing excellence to generate more wafer output and drive greater across node capacity optimization in our FAB operations to support our profitability. By taking such actions, we believe a long term gross margins of 56% and higher through the cycle is achievable and we can earn an ROE of high 20%s through the cycle by earning a sustainable and healthy return. Even as we shoulder a greater burden of CapEx investment for our customers, we can continue to invest in technology and capacity to support their growth while delivering long-term profitable growth to our shareholders. We also remain committed to a sustainable and steadily increasing cash dividends per share on both an annual and quarterly basis. Now let me turn the microphone over to C.C. Wei. Thank you, Wendell. Good afternoon everybody. First let me start with our 2026 outlook. In 2025 we observed robust AI related demand throughout the whole year while non AI end market segment bottomed out and saw a mild recovery. Concluding 2025, the Foundry 2.0 industry which we define as all logic, wafer manufacturing, packaging, testing, mask making and others increased 16% year over year supported by our strong technology differentiation and broader customer base. TSMC's revenue increased 35.9% year over year in U.S. dollar terms outperforming the Foundry 2.0 industry growth entering 2026. We understand there are uncertainties and risk from the potential impact of tariff policies and rising component prices, especially in consumer related and price sensitive other bucket segment. As such, we will be prudent in our business planning while focusing on the fundamentals of our business to further strengthen our competitive position. We forecast the Foundry 2.0 industry to grow 14% year-over-year in 2026 supported by robust AI-related demand underpinned by strong demand for our leading-edge specialty and advanced packaging technologies. We are confident we can continue to outperform the industry growth. We expect 2026 to be another strong growth year for TSMC and forecast our full-year revenue to increase by close to 30% in U.S. dollar terms. Next, let me talk about AI demand and TSMC's long-term growth outlook. Recent development in the AI market continue to be very positive. Revenue from AI accelerator accounted for high-teens percentage of our total revenue in 2025. Looking ahead, we observe increasing AI model adoption across consumer enterprise and sovereign AI segment. This is driving need for more and more computation which supports the robust demand for leading-edge silicon. Our customers continue to provide us with their positive outlook. In addition, our customers, and many of the cloud service providers, are also providing strong signals and reaching out directly to request the capacity to support their business. Thus, our conviction in the multi-year AI megatrend remains strong, and we believe the demand for semiconductors will continue to be very fundamental. As a foundry, our first responsibility is to fully support our customers with the most advanced technology and necessary capacity to unleash the AI innovations to address the structural increase in the long-term market demand profile. TSMC works closely with our customers to plan our capacity. This process is continuous and ongoing. In addition, as process technology complexity increases, the engagement time with customers is now at least two to three years in advance. Internally, as we have said before, TSMC employs a disciplined capacity planning system to assess the market demand from both a top down and bottom up approaches. We focus on the overall addressable megatrend to determine the appropriate capacity to build. Based on our assessment, we are preparing to increase our capacity and stepping up our CapEx investment to support our customers' future growth. We are also putting forward existing fab schedule to the extent possible both in Taiwan and in Arizona. We are also leveraging our manufacturing excellence to drive greater productivity in our fabs to generate more output, convert N5 capacity to support N3 wherever necessary and focus on capacity optimization across nodes to maximize the support to our customers. Based on our planning framework, we raise our forecast for the revenue growth from AI accelerator to approach a mid to high 50%s CAGR for the five years period from 2024 to 2029. Underpinned by our technology differentiation and broader customer base, we now expect our overall long-term revenue growth to approach 25% CAGR in U.S. dollar terms for the five year period starting from 2024. While we expect AI Accelerators to be the largest contributor in terms of our incremental revenue growth, our overall revenue growth will be fueled by all four of our growth platforms which are smartphone, HPC, IoT and automotive in the next several years. As the world's most reliable and effective capacity provider, we will continue to work closely with our customers to invest in leading-edge specialty and advanced packaging technologies to support their growth. We will also remain disciplined in our capacity planning approach to ensure we deliver profitable growth for our shareholders. Now let me talk about TSMC's global manufacturing footprint update. All our overseas decisions are based on our customers' needs as they value some geographic flexibility and a necessary level of government support. This is also to maximize the value for our shareholders. With a strong collaboration and support from our leading U.S. customers and the U.S. federal, state and city government, we are speeding up our capacity expansion in Arizona and executing well to our plan. Our first fab has already successfully entered high volume production in 4Q 2024. Construction of our second fab is already complete and tool moving and installation is planned in 2026. Due to the strong demand from our customers, we are also pulling forward the production schedule and now expect to enter high volume manufacturing in the second half of 2027. Construction of our third fab has already started and we are in the process of applying for permits to begin the construction of our fourth fab and fourth advanced packaging fab. Furthermore, we have just completed the purchase of a second large piece of land nearby to support our current expansion plan and provide more flexibility in response to the very strong multi-year AI-related demand. Our plan will enable TSMC to scale up an independent GIGAFAB cluster in Arizona to support the needs of our leading edge customers in smartphone, AI and HPC applications. Next in Japan, thanks to the strong support from the Japanese central government and the local government, our first specialty fab in Kumamoto has already started volume production in late 2024 with very good yield. The construction of our second fab has started and the technologies and ramp schedule will be based on our customers need and market conditions in Europe. We have received strong commitment from the European Commission and the German federal, state and city government. Construction of our specialty fab in Dresden, Germany is progressing in our plan. The ramp schedule will be based on our customers need and market conditions in Taiwan. With support from Taiwan government, we are preparing multiple phases of 2 nm fabs in both Hsinchu and Kaohsiung Science Park. We will continue to invest in leading edge and advanced packaging facilities in Taiwan over the next few years. By expanding our global footprint while continuing to invest in Taiwan, TSMC can continue to be better to be the trusted technology and capacity provider of the global large industry for years to come. Last, let me talk about N2 and A16 status. Our 2 nanometer and A16 technologies lead the industry in addressing the insatiable demand for energy efficient computing. Yet almost all the innovators are working with TSMC. N2 successfully enter high volume manufacturing in 4Q 2025 at both our Hsinchu and Kaohsiung site with good yield. We are seeing strong demand from smartphone and HPC AI applications and expect a fast ramp in 2026. With our strategy of continuous enhancement, we also introduced N2P as an extension of N2 family. N2P features further performance and power benefit on top of N2, and volume production is scheduled for the second half of this year. We also introduced A16 featuring our best in class Super Power Rail or SPR. A16 is best suitable for specific HPC products with complex signal route and the dense power delivery network. Volume production is on track for second half 2026. We believe N2, N2P, A16 and its derivatives will prepare our N2 family to be another large and long lasting node for TSMC while further extending our technology leadership position well into the future. This concludes our key message, and thank you for your attention. Thank you, Wendell. Thank you, C.C. This does conclude our prepared statements, so before we begin the Q&A session, I would like to remind everybody to please limit your question to two at a time to allow all the participants an opportunity to ask their questions. Questions will be taken both from the floor and from the call. Should you wish to raise your question in Chinese, I will translate it to English before our management answers your question. For those of you on the call, if you'd like to ask a question, please press the star then one on your telephone keypad. Now questions will be taken in the order they were received. If at any time you'd like to remove yourself from the questioning queue, please press star two. So now let's begin the question and answer session. I think we'll take the first few questions from the floor here. So why don't we start over here with Gokul Hariharan from J.P. Morgan. Thank you. Thank you and Happy New Year. So, C.C., it definitely feels like you've heard what your customers have said to you over the last three, four months. Could you give us a little bit more color on what you're hearing from your customers, customers on demand? Because this is a very big step up in the capacity commitment. There is definitely a lot of concern in the financial market, especially about whether we are in a bit of a bubble. And obviously you are the one who is putting up all the capital in this industry, so you've definitely considered this very carefully as well. So give us a little bit more detail in terms of what you're hearing from the customers and your views on this cycle. Given if we think about typical semiconductor cycle, we've already probably lasted a little bit longer than usual cycles, but this definitely doesn't feel like a typical semiconductor cycle. Okay, Gokul, let me summarize your question for the benefit of those online and those in person. So again, Gokul's question is really he would like to hear CC's views about the overall AI related demand and the semiconductor cycle. So again he Gokul notes that as Wendell and Wei said, we are substantially stepping up our CapEx to support the customers. But he does say, you know, there is concerns about an AI bubble and risk. So part of Gokul's question is how, what is the feedback? Any color we can share about what type of discussions and feedback we're getting from both customers and the customers customers that CC mentioned and how long do we think this cycle can last? Okay, Gokul, you essentially try to ask whether the AI demand is real or not. I'm also very nervous about it. You bet. Because we have to invest about $52 billion-$56 billion for the CapEx, right? If we didn't do it carefully and that would be a big disaster to TSMC for sure. So of course I spend a lot of time in the last three or four months talking to my customer and then customers. Customer. I want to make sure that my customers demand are real. I talk to those cloud service providers, all of them. Their answer is. I'm quite satisfied with their answer. Actually they show me the evidence that the AI really help their business. So they grow their business successfully and he or she in their financial return. So I also double check their financial status. They are very rich. That sounds much better than TSMC. No doubt. I also asked specifically that what's the application? Right? I mean that's for one of the hyperscaler. They told me that that helped their social media software and so the customer continue to increase. I believe that and with our own experience in the AI application, we also help to our own fab to improve the productivity. As I mentioned one time say that 1% or 2% productivity improvement that is free to TSMC. That's why also our gross margin is a little bit satisfied, you know, even in this very high cost period of time. All in all, I believe in my point of view the AI is real. Not only real, is starting to grow into our daily life. We believe that is kind of. We call it AI Megatrend. We certainly would believe that. So another question is, can the semiconductor industry to be good for three, four, five years in a row? I'll tell you the truth, I don't know. But I look at the AI looks like it is going to be like endless. I mean that's for many years to come. No matter what. TSMC stick on the fundamental technology, leadership, manufacturing excellence. And we work with customers to get their trust. And I think that fundamental thing why position TSMC to be very good future growth? Let me say that 25% CAGR as we projected. And we used to be conservative, you know that. Thanks. Thanks, C.C. My second question is on the U.S. expansion. You're pulling in some of the capacity in response to customers. You're already starting plans for the phase four. There's a lot of media reports about TSMC. You might have to build more fabs in the U.S. How should we think about U.S. expansion in principle over the next few years? I think previously you had talked about reaching 20% or even 30% of 2 nanometer capacity in the U.S. eventually the total capacity could be in the U.S. Could you give us a little bit more detail about how that is progressing and when could we get there in terms of the 30% or even 20% capacity? Okay, so Gokul's second question is about our overseas expansion, particularly in the U.S. He notes that C.C. said we are pulling in the schedule for the Fab 2 earlier. You know, we're starting the application for the fourth Fab. And so his question is partly around recent reports that we intend to build more fabs in Arizona. So his question is how should we or how is TSMC thinking about the future expansion in Arizona? And we have said in the past that, you know, around 30% of our nanometer and more advanced capacity would be based in Arizona once we complete scaling out to this independent GIGAFAB cluster. So what is the time frame or timetable for that? How quickly can we get there? That's a long question. We build a fab in Arizona and we work hard. So today everything, even the yield or defect density is almost equal to Taiwan. And due to the strong demand, as I just answered from the AI stronger, that's a megatrend. All my AI customers are in the U.S. So they ask a lot of support from the U.S. So because of that we have to speed up our fab expansion in Arizona in Taiwan also. Actually we increase most of the capacity in Taiwan. No doubt about it, because this is most advanced one. We can progress very well in the U.S. We try to speed it up and progress is very good. We got the help from the government. Still we have to meet all the requirements for the permits or for those kind of things. Both in Taiwan and in Arizona we speeded up our capacity expansion to meet the AI demand. I can always say one word, the capacity is very tight. We work very hard to narrow the gap so far probably this year, next year we have to work extremely hard to narrow the gap. We just bought a second land in Arizona. Let's give you a hint. That's what we plan to do because we need it. We are going to expand many fabs over there and this GIGAFAB cluster can help us to improve the productivity, to drive down the cost and to serve our customer in the U.S. better. Okay. Okay, thank you Gokul. Let's move over here next to Laura Chen from Citibank please. Thank you. Thank you CC and Wendell for very comprehensive outlook briefing and also congratulate for the great result. Of course we see that the AI semiconductor growth has seen very strong growth and I believe all of your customer and customers customers very desperate to ask more capacity support from TSMC. But I'm just wondering how does TSMC evaluate the potential power electricity supply for data center? So other than that the chips we can discuss with our customers. I think for the overall infrastructure buildup for data center a lot of factor also very important. Just want to understand more how does TSMC evaluate those key factors for the AI infrastructure buildup? And my first question. Okay, so Laura's. First question is around the AI demand. She notes again, as we said, AI megatrend and the growth is very strong and customers and ourselves are strong believers. But when we do our planning, how do we balance this against the other considerations? Do we look at things. For example, I think Laura's question is power electricity grid availability to basically assess is this part of our included as part of our planning process. Do we factor such things in? Laura, let me tell you first I worry about the electricity in Taiwan first. I need to have a lot of enough electricity so I can start to expand the capacity without any limitation. But talking about build a lot of AI data center all over the world, I use one of my customers. I answer because I asked the same question. They told me that they planned this one five, six years ago already. So as I said, those cloud service provider are smart, very smart. If I knew that I would anyway. So they say that they work on the power supply five, six years ago. So today their message to me is silicon from TSMC is a bottleneck and asked me not to pay attention to all others because they have to solve the silicon bottleneck first. But indeed we look at the power supply, you know, all over the world, especially in the U.S. Not only that, we also look at who support those kind of power supply like a turbine, like nuclear power plant, the plant, all those kind of things. We also look at the supply of the rack. We also look at the supply of the cooling system. Everything so far so good. So we have to work hard to narrow the gap between the demand and supply from TSMC. Did that answer your question? That's great to know that it would not be the constraints for the further AI developments. Yeah, thank you. And my second question is on the leading edge advanced packaging, when can you remind us that what would be the revenue contribution last year for the advanced packaging overall? First of all, we see that I recall that in the past the CapEx for leading edge advanced packaging, roughly about 10%. Yeah. But now it could be up to like a 20%. So I'm just wondering that for the expansion, can you give us more detail about what kind of the plans you are looking for? Will you focus more on like 3D IC, SoIC or you also start to work on more advanced like a panel-based in the longer term? I also think before we talk about that, we'll work more closely with OSATs partner on the leading edge advanced packaging. So just wondering what kind of the process will be the key expansion plan in the space. Thank you. Okay, so Laura's second question is more related to advanced packaging. What was the revenue contribution of what we call the back end, which is advanced packaging testing as a whole in 2025? And then she notes the CapEx, actually this year I believe window, we guided 10%-20% of CapEx, which is the same as last year. But anyways, she wants to know what is the focus of this CapEx? Is, is it on 3D IC, is it on SoIC Packaging Solutions on panel level? Sort of. What is the key areas we're focusing on relative to the CapEx? Okay, Laura, the revenue contribution last year from advanced packaging is close to 10%. It's about 8% for this year. We expect it to be slightly over 10%. We expect it to grow in the next five years higher or faster than the corporate and the CapEx. Yes, you're right. In the past is about 10% lower than 10%. Now we're saying advanced packaging together with mask making and others accounted for between 10% to 20%. So you can see that the investment amount is higher and we're investing in areas in advanced packaging where our customers need. So the areas that you mentioned, basically we continue to invest. Thank you, Wendell. Okay, let's move on to Charlie Chan from Morgan Stanley here. Thanks Jeff. Happy New Year, C.C. and Wendell. So first of all, amazing results and guidance. Congratulations to the management team. So my first question is about outside of AI, what do you see for those end markets? Right? You talk about the memory cost, etc. So can you give us some kind of your underlying assumption for PC shipments, smartphone shipments, etc. And also in your HPC there are some other pieces like networking and general servers. Can you comment about the growth potential for those segments? Thank you. Okay, Charlie's first question is very specific. Well, generally he wants to know about how do we see the non AI demand, especially in the context where the, you know, certain component costs, such as memory costs are rising. So he wants to know what do we see the impact on the PC and smartphone markets in terms of shipments. He's also asking very specifically what about networking, what about general server? Each these different segments. Charlie, those also we say is called non AI, but actually that related to AI. You know that, right? Because of networking processor, you still need to have AI data to scale up or scale out. Those are the networking switches, all those kind of things. It still grow very strong. As for PC or the smartphone, to tell the truth, we expect higher memory supplies. So we expect the unit growth would be very minimal. But for TSMC, we did not feel our customers change their behavior and we look at it and then we find out that we supply most of the high end smartphones. The high end smartphone is less sensitive to the memory supplies so the demand is still strong. Using one sentence I'd like to say we still try very hard to narrow the gap. We have to supply a lot of wafers to them also. Thanks, C.C. I think that's very consistent with your five-year CAGR outlook for all the four segments. And my second question is about Intel's foundry competition. I think U.S. President seems to be very happy with Intel's recent progress and even mentioned two of your key customers. Right. NVIDIA Apple may have some partnership with Intel Foundry. Should we be concerned about this so-called competition and what TSMC can really do to mitigate or avoid potential market share loss as those are key U.S. customers not limited to the two customers I just mentioned. Thank you. Okay, so Charlie's second question is on the Foundry competition and, you know, competition from a U.S. IDM. He knows the U.S. President is very happy with the progress. A couple two of our key customers he also was mentioned. So his question is fundamentally, is there a concern or risk going forward of market share loss for TSMC to our Foundry competition? Kind of a simple question, I should say. No, let me explain a little bit because in these days, you know, it's not money to help you to compete, right? I also like whoever you just mentioned to invest on Intel. I like them to invest on TSMC also. But the most fundamental thing is. Let me share with you. Today's technology is so complicated. So once you want to design a v ery complete or advanced technology, it takes two to three years to fully utilize that technology. That's the situation, and so up to two to three years of preparation you can design your product. Once you get your product being approved, it takes another one to two years to ramp it up, so we have a competitor, no doubt about it, that's formidable competitor, but first it takes time. We don't underestimate their progress, but are we afraid of it? For 30-some years we always in a competition with our competitor, so no we have a confidence to keep our business grow as we estimated. Thank you, C.C. All right, let's take the next two questions online in the interest of time. Operator, can we take the first call from the line, please? First question. Arthur Lai, Macquarie, go ahead please. Hi, first, congratulations. Very strong performance. Thank you, C.C. Wei and Jeff Su, for taking my question. My first question is about the global capacity plan. Recently, Taiwan local news report that TSMC could exit the 8-inch business and mature node 12-inch to convert into the advanced packaging, and the investors keen to know if this is true, and the decision is based on what kinds of key factor that is C.C. just mentioned about the power density or if you know power. Thank you. Okay, so Arthur 's first question is about basically mature nodes, our strategy on mature nodes. He knows a lot of local news has been reporting that TSMC is exiting 8-inch and 12-inch basic businesses and converting the capacity to advanced packaging. So he wants to know if this is true and, if so, what are the reasons behind the power constraints, ROI, etc. Good question indeed. We reduce our 8-inch wafers, the capacity and 6-inch but let me assure you that we support all our customers, we discuss with our customers and to do this kind of resources more flexible and more. What is the word we say? Optimize. Optimize the resources to support our customers. But let me assure you also to my customers that we continue to support them. We will not let them down if they have a good business. We continue to support that even in the 8-inch wafers of business. Okay Arthur, do you have a second question? Yes, thank you. My second question is regarding the consumer and demand outlook. So C.C. also mentioned that the NAND price actually inflation and you also pushing up the cost of the consumer electronics. So investors actually are concerned about the further demand softness in this year and next year or particularly next year. So can management comment about what your client or your client's client how to resolve this memory tightness or we call a memory urgency issue. Thank you. Okay, so Arthur's second question is on the impact from the memory price increase and the demand softness. I believe his question really, because C.C. already shared the impact this year. He wants to know what is the impact for 2027. For TSMC? No impact. As I just mentioned, most of my customers now focus on high-end smartphone or PCs, so those kind of demand has less sensitive to the components of price, so they continue to give us a very healthy forecast this year and next year. Okay, thank you, C.C. All right, operator, let's move on to the next participant from the line, please. Brett Simpson, Arete, go ahead please. Yeah, thanks very much. My question is really on AI. I mean TSMC has been supply constrained for your AI customers I think since 2024 and it sounds like 2026 is another year where we're going to see challenges. Do you think the CapEx you've laid out for this year $52 billion -$56 billion could that mean that we start to see supply and demand more in balance in 2027? Any thought there just in terms of how you're thinking about that capacity plan and does it alleviate this supply bottlenecks that we see today? And as part of this from a supply perspective, we hear TSMC is finding it quite challenging to develop enough engineering talent quick enough both in the U.S. and in Taiwan. Can you talk more about this trend and what's the scale of the labor shortage of Foundry engineers at the moment? Thank you. Okay, so Brett's first question is related around AI and our capacity. So he notes the supply looks to continue to be tight in 2026. But with these significant step up in our CapEx to support the customers $52 billion -$56 billion, do we expect the supply demand or the gap so to speak to be more balanced in 2027? And then is engineering resources fab engineers a constraint or a bottleneck for us in making these expansions whether in Taiwan or the U.S.? Okay, let me answer this question first. You know, if you build a new fab, it takes two and three years, two to three years to build a new fab. So even we start to spend $52 billion -$56 billion. The contribution to this year almost none. And to 2027 a little bit. So we actually were looking for 2028, 2029 supply. And we hope it's a time that the gap will be narrow. For 2026 and 2027 we are focused on the short term, more output. Actually our productivity continue to increase. Our people has an incentive because of one of the TSMC's incentive is to satisfy customer. It's not because of our financial result are good, but we want to let customer feel that TSMC is trusted. That whenever they have a good opportunity to grow, we will support it. So, in 2026-2027, for the short term, we focus on the productivity improvement which we've done quite a good result because Wendell just mentioned that we can have a good financial result is because of that. But that's not our incentive. That's our incentive. But that's not our purpose. Our purpose is to support our customer. So, 2026-2027, for the short term, we are looking to improve our productivity. 2028-2029, yes, we start to increase our CapEx significantly and we continue this wave of the AI demand megatrend as we expected. Okay, Brett, thank you, C.C. Brett, do you have a second question? Yeah, I do, and thanks. That was very clear. I guess my second question is about pricing. If I look at 2025, this was the second consecutive year where TSMC's wafer ASPs were up around 20%. As leading edge becomes a bigger portion of the mix and also you feed through price increases. When we factor in the ramp of more expensive overseas fabs, is 20% wafer ASP increases the new normal for TSMC. Typically you have an annual price negotiation about this time of the year. I'm trying to understand how you project ASPs in 2026. Is your March quarter guidance factoring in price increases at leading edge. Thank you. Okay, so Brett's question is on pricing. He notes that you know which he's looking at. The blended wafer price is increasing close to 20% according to his estimates. Of course that's blended both on price and mix but you know, it's a leading edge. And also we have mentioned earning our value. So he wants to know is this the new normal going forward? This is a tough question. I need the CFO to answer. Okay, every new node we have a price, the price will increase, the blended ASP will increase. I think they continue this way in the past and will continue the way in going forward but Brett, I think you're asking about the contribution from pricing to the profitability. Now as we mentioned before, the profitability. There are six factors affecting the profitability and price is just one of them and of course we continue trying to earn our value but in fact in the last few years the pricing benefits to the profitability was just enough to cover the inflation cost from tools, equipment, materials, labor, etc. There are other factors contributing to the higher profitability. The first one will be a high utilization rate as the demand is so high and as our disciplined approach to capacity planning. The utilization rate supports our high profitability. The other one will be our manufacturing excellence. As C.C. said, we continue to drive increasing productivity to generate more wafer output. Also, we continue to drive optimization capacity among nodes, which includes converting part of the N5 to N3. It also involves cross supports from different nodes from the mature nodes to the more advanced nodes. That is a very important advantage of TSMC, so with all these efforts we're able to maintain a good healthy sustainable return profitability so that we can continue to invest to support our customers' growth. Okay, thank you Wendell. In the interest of time, we'll take two more questions from the floor and one more from the line. So we'll go here. Sunny Lin, UBS and then. Thank you. Good afternoon. Very strong results. Congratulations. So number one, if we look at the company very different versus in the past from many angles. But if we look at the ramp from new node now, you can generate actually higher revenue from new node in year four, even year five of mass production versus in the past, you know, like peak revenue in the second or even third year of mass production. And so could you help us understand with this new trend, what's the financial implications? And then what does that imply for you to operate or even compete differently versus in the past? So Sunny's first question I think maybe is related well to our technology differentiation. But she knows that when we ramp a new, you know, in the past, when we have a new node after a few years, sort of, you know, the revenue or you know, comes down a bit. But she notes that nowadays we can still enjoy very high revenue from a node even after, in its fourth or fifth year. So her question is, what are the financial implications from this? And also from a, I believe, competitive dynamics. If I can answer, say we are lucky. Actually if you look at the semiconductors product right now, the trend is you need to have a lower power consumption always and then high speed performance. And for TSMC our technology differentiation become more and more clear. We have both benefit. We have a high speed and we have a low power consumption. And so our leading edge customer, the first wave, the second wave, the third wave continue to come. And so that sustain the demand for a long, long time. That's a difference. Of course this one you need to have technology leadership and which the technology leadership much easier to say. But every year you have to improve. As we said, we have N2 N2P and then you won't be surprised. And the third one will be N2 something and continuously. And so that one give us the benefit and to support our customers' continuous innovation. And so they continue to stay with TSMC and so their product can be very competitive in the market. So that answer the question, say that you know, once we got the peak revenue and did not decrease, it continues because second wave, third wave customer continue to join. Thank you very much, C.C. And then maybe a question on 2-nanometer, which is, C.C., a meaningful revenue coming through in 2026. And so in the past you guide like how much a new node will contribute to sales for the year. And so any expectations on the revenue contribution from 2-nanometer in 2026. And then I recall in terms of process migration, few years ago there were lots of concerns on increasing cost per transistor. And that obviously is not declining from 5-nanometer but then now looking at 2-nanometer I think process migration seems to be re-accelerating even for smartphone and PC and then with larger demand coming from high-performance computing. And so maybe based on your feedback from clients, maybe for smartphone and PC clients, why are they re-accelerating process migration into 2-nanometer? Okay, so Sunny's second question very quickly in two parts, 2 nanometer as we said is a fast ramp in 2026, very strong customer interest and demand, so what do we have any revenue percentage to guide for in 2026? Yeah, Sunny, the 2-nanometer will be a bigger node than 3-nanometer from the start. Okay. But it's less meaningful nowadays to talk about the percentage of revenue contribution when the new node starts because the company as a whole the revenue has become much bigger than before. So yeah, revenue dollar it's a bigger node but percentage wise less meaningful. And then the second part of Sunny's question from a technology perspective, as you know she noted increasing cost per transistor as we said CapEx per 1,000 going higher. So her question very simply, what's the value? What's driving smartphone HPC customers actually to see we're seeing a widening out of the adoption of N2. So what is the value that it's providing that the customers are willing to adopt N2? I already answered the question right because now the whole product is looking for low power consumption and high speed performance and our technology can provide that value. I also say that every year we improve. So every year they adopt the same, even the same name of the same node their product continue to improve. So that provides a value. If you say that the cost per transistor is increased, I saw the cost per transistor, the performance compared that called the CP value is increased, is much better. So that customer stick with the TSMC. Our headache right now, if I can call it headache is a demand and supply gap. We need to work hard to narrow the gap. Very clear, thank you. Thank you. Operator, can we take the last call from the line and we'll take one last one from the floor? Next one. Krish Sankar, TD Cowen. Go ahead, please. Hello? Okay Krish, are you there? I guess not. Then let's just take the last call. Sorry, the last question from Bruce Lu from Goldman Sachs. Thank you. Thank you for joining. Thank you for letting me ask the last question. Hopefully it's not that difficult. So I think one of the key. I understand that TSMC is trying very hard to increase the capacity, you know. AI wafer fab is growing like 15% a year. +15% a year. But token consumption for last few quarters is 15% a quarter. So the gap is still there, right? That's why Elon Musk was talking about the chip shortage. So, C.C., can you share with us that in your assumption when you provide +50% AI revenue growth, what kind of token consumption you can support and how many gigawatts power in terms of the chips you can support in your assumption when you provide this kind of five-year revenue guidance for AI. Okay, so Bruce's first question is on our AI CAGR. Actually to be correct we have guided for the AI CAGR to grow mid- to high 50s CAGR in the five-year period from 2024 to 2029. So that is the official guidance we have provided just today. Bruce's question is in this guidance what is our assumption basically assuming about the token growth behind this type of CAGR, what is our assumption in terms of translating to how much gigawatts of data center can we support? And other specific assumptions behind our guidance? Bruce, you got me. I mean that's, I, I also try to understand what is the tokens growth but my customers their product improvement continue to increase. So from, it's a well known from Hopper to Blackwell to Rubin that almost double triple their performance. So the one they can support the tokens growth or the one they can continue to support the compute power is enormous and so I lost track to be frank with you. For gigawatt I want to see that how much of TSMC can make the money from the gigawatt rather than say that you know how much we can support today. From my point of view still the bottleneck is TSMC's wafer supply, not power consumption. Not yet. We also look at carefully to answer your question, say that TSMC's wafer can support how much of the gigawatt. Still not enough. They still have an abundant power supply in the U.S. Okay, my next question is for the CapEx, right? I want to double-check with what I just heard that C.C. was talking about like 2027. The CapEx will be more for the productivity improvement when 2028-2029 may be meaningfully higher. So I do recall that in 2021 TSMC provided three years for $100 billion CapEx to support our structural growth. Now the demand is even stronger. Based on that, can we do three years? $200 billion for CapEx for next three years. You know the math sounds doable. First, a slight clarification because C.C. was talking about this year we have substantially, you know, stepping up our CapEx investment. But C.C. also mentioned it takes two to three years to build capacity. In terms of Bruce's question, is do we say 2027 significant step up in CapEx? I think we're saying it takes time for that capacity to come out. That is the first part. Yeah, I think Bruce, what C.C. said was the productivity was our main focus in 2026 and 2027 because when we start to invest the fab, the volume production will not come out until 2028 and 2029. So the dollar amount invested today is for two years or even in the future. And CapEx dollar amount, as I said in the last three years, $101 billion in the next three years, significantly higher. I'm not going to share with you the number, but significantly higher. Yeah, so I think Wendell has addressed at least both parts of Bruce's question. Okay, so again, thank you. So again, thank you everyone. This does conclude 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. The transcript will become available 24 hours from now and both are available or will be available throughout TSMC's website at www.tsmc.com. So again, thank you everyone for taking the time to join us today. We certainly would like to wish everyone a Happy New Year. We hope everyone continues to stay well and you will join us again next quarter. Thank you. Goodbye and have a good day.