Q4 2020 United Microelectronics Corp Earnings Call

Conference call.

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After the presentation, there will be a question and answer session. Please follow the instructions given at that time, if you would like to ask the question.

For your information. This conference call is now being broken stay life over the Internet webcast replay will be available within an hour. After the conference is finished.

Please visit our website www UMC com under the Investor relations investors events per second.

Now I would like to introduce Mr. Michael Lin head of Investor Relations at UMC. Mr. Lee Please begin.

Thank you and we'll come to the conference call for the fourth.

Fourth quarter off plan here.

I'm joined by Mr. Jason what the President of UMC I missed that you don't do D. C F O UMC.

We will hear our CFO present, the fourth quarter financial results, followed by all persons Kid message to adjusted UMC in Spokane.

First quarter 'twenty 'twenty one guidance.

Once our president and CFO complete their remarks, there will be a Q&A section.

Umc's quarterly financial reports are available at all with sympathize with that UMC dot com under the investors financial section.

During this conference we made.

Forward looking statements based on management's current expectations and beliefs.

These forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially including the risks that may be beyond the company's control.

All these risks.

We refer to Umc's filing with the SEC in the U S and the hours the security authorities.

I would like to introduce UMC Seattle.

So that you don't do to discuss Umc's fourth quarter plenty of 'twenty financial results.

Thank you Michael I'd like to go through the Q4.

Our free time to Investor conference presentation material, which can be downloaded from our website.

C P.

For 2000 and finally.

Consolidated revenue was 45.3 a M P.

Gross margin at 23, 9%.

Net income attributable to the stockholder of the parent was 11 point through M. P.

I think it's obviously not a share well 92 strength.

Got it.

Capacity utilization rate in Q4.

Climbed to 99%.

Compared to <unk> seven per se in the Q3.

If you turn to page four.

Our quarterly comparison, our financial performance.

Revenue from.

The increase about 1%.

After the NT dollar.

Impact.

<unk> 45.3 billion M P.

Margin Chinese food ninth.

9% or 10 points.

N T.

Because of some employees.

Related to compensation and also share base.

Our operating expenses increased true.

True suite, six 3 billion in the fourth quarter of 2000 and appointment.

I'm sorry go operating income.

$5 6 billion.

0.4 per cent.

And because of the strong spot market.

From market valuation has contribute to most cell phone non operating income in Q4 financing.

Which is which was $5 6 billion M T.

So on net income in Q4 last year was $10 9 billion.

And the net income attributable to the cycle jobs per patterns 11.2 billion EPS is not true.

Yeah.

On page five which is down year over year comparison.

Our revenue growth, 19.3% NT dollars to 176 8 billion.

In U S dollars the growth rate was roughly around 96 per cent.

Among the growth around cash.

Cash.

Contribute to try the combination of.

U S RAC in Japan.

And gross margin growth to almost eight percentage point from foundry to a 0.1 per cent or 38.99 billion of N T.

Operating expenses.

It's similar to the revenue.

We also have some combined expenses.

From U S G.

The increase year over year around <unk> 26 per cent.

And operating income.

Jumped from.

Rose.

359%.

Finally, 2 billion N P and of course operating margin rate was 12, 5%.

Net non operating income instead of a $5 9 billion, which produces a similar reason.

Poor result.

And our net income attributable to the stockholder of the parent for the full year.

I was talking 9.2 billion or $15 five per cent.

And for your EPS.

Is 2.42 and $3 per share.

So on page six.

Financial issue.

Yes, you highlight cash should remain around 94 billion N T.

And total equity has increased from 275 billion and $2.

For Q4 2020 on page seven.

Blended <unk> increased a little bit less than two per cent.

Fourth quarter of low.

I'll shoot.

And for revenue breakdown on page eight.

Hmm.

Asia continued to climb to 51 per cent.

And the other region doesn't really change much.

For the full year, it's almost identical.

Our year over year comparison in tenants in terms of geographic breakdown on page nine.

So page 10, and also page 11.

That's when you break down by customer type.

I am continuing to be around 12% to 13% for both Q4 and full year of 2020.

On page 12, our revenue breakdown by segment.

Communication.

A little bit from 49% in the fourth quarter and a computer.

The highest growth.

Segment in your Q4 2020.

Again for the full year.

Segment breakdown on page 13.

Debt.

Rachel didn't really change much from a year over year comparison.

On page 14, our 828 nanometer a percentage of revenue continued to increase in Q4 now is around 18% of our total revenue.

For the previous quarter 28 nanometer revenue was 14 per cent.

And for the full year 28 nanometer and net revenue growth from 11% in 2019% to 14%.

Yeah 2020.

Page 15, you felt capacity breakdown table that effect would be.

First off the shorter working days.

And also a Chinese new year holidays.

In Q1 2021, our available capacity is they're lumpy.

Less than that of Q4.

2020, However, we continue to eat.

All capacity, mainly in a true up a Java ex as well as.

Hi, Jim and also travel and so for the full year capacity, we continue to see quarterly growth starting from.

Q2 of 2021.

Four.

Our annual Capex budgets are current.

Forecast is around one 5 billion in U S dollars.

But in 'twenty one.

And the breakdown is about 85 per cent chopping true related and also mainly focus on the 28 nanometers.

So the above free so summary of Umc's result for Q4 2020.

More details are available in the report which has been posted on our website.

Now I'll turn the call over to President of UMC, Mr. Joseph Wolf.

Thank you because you don't go evening everyone.

Everyone.

Yeah, I would like to update in the fourth quarter operating result of UMC.

Our business traction in Q3 carried over into Q4.

<unk> utilization rate to 99 per se right thing wafer shipments to $2 3 million eight inch equivalent.

The stable capacity utilization was driven by robust market demand.

Consumer and computing related application.

Hi, Fi digital T V microcontroller and power management IC.

For full year 2020, Umc's revenue grew 26 per fan in U S dollars.

Operating income surged to <unk> 22.01 beauty.

Reflecting all of that utilization rate across both eight inch and 12 inch facilities and optimization of our planned as part of our mix in particular are enhancing the 12 inch product mix, primarily resulted from the substantial pick up from 28 nanometer wafers business as well as dollars per.

Pencil integration U S. J C 12 inch operation.

Looking into the first quarter stable.

Stable demand outlook or lead to an incremental increase in weight per shipment and blender ASP in U S dollars.

However.

Due to the continuing unfavorable foreign exchange rate we anticipate.

P station, indeed offset more than half.

<unk> growth for Q1.

For full year 2021, UMC continues to share the country indices constitutes view in wafer demand.

And we will continue to lead the company's disciplined and measured our capex strategy by allocating some of you at $1.5 billion to accommodate strong demand all of the things that advanced technology.

That's the move on to the first quarter 2021 guidance.

Our wafer shipments will increase by approximately two per se.

ASP in U S dollar will increase by two to three per cent.

However.

The surging NT dollar will wipe out more than half of their revenue growth reported earlier.

Now allow me to explain and Chinese as well.

D D zone puzzle of banks with a teens Hilton zone, downgrading wage and tidy things yourself.

Gross profit margin will be in the Mi 20 per ton range.

Passenger utilization rate will be at 100 per se.

Our 2021 cash based Capex will be budgeted at the U S $1 $5 billion.

I kind of cruise my comments. Thank you all for your attention and now we are ready for questions.

Yes. Thank you just the one and ladies and gentlemen, we will now begin now question and answer session. If you have a question for any of todays speakers. Please present zero one on your telephone keypad and you will enter the queue. After you bought or announced please ask your question.

You can finally do question has been answered it before any short term to speak. Please for instance, zero to two cancer with a question.

Police presence they really wanted to ask a question. Thank you.

And our first question is coming from Randy Abrams Credit Suisse. Go ahead. Please okay. Yeah. Thank you good afternoon and a good result.

I wanted to test the first question on the shipment and ASP outlook first on shipments with utilization now at 99% can you discuss how much growth.

Additional shipment growth you can squeeze out I guess your from your capacity. So if you could give us a sense on how much capacity additions through the year, you'll have on 12 inch and eight inch.

Alright.

Yeah.

You can deal with the the Guy is a true one we projected weight per shipment will increase.

Slightly and be a primary due to a high utilization rate driven by the strong demand.

Or are we already at 99 per se, but we project Q1 will be 100 per se.

So.

The the other.

Other.

The a S P I Oh, yeah trading Okay, and maybe just a follow up first on that I guess, that's the flow up through the year since you'll be at 100% could you discuss the capacity additions like because I know you had shopped and coming on to when the additional capacity would be available if you could.

Discuss on 12 inch and then Debottlenecking Mitch.

Mature nodes like how.

How some of the Fabs from Iran, Tad capacity through the year.

Well from a year over year standpoint, the 'twenty and 'twenty, one where the capacity will grow about three per se.

In 2021.

Okay Yeah.

And that was split between eight and 12 range they ate.

Due to the limit of clean room space.

I know, we only doing the optimization and productivity improvement so that will probably be about 1% increase from eight inch and be a 12 per fan about 5% from 12 inch.

Okay actually a follow up and then I'll get payoffs on the eight inch.

There's very limited space and there were there was discussion a few months ago about purchasing eight inch capacity from Japan.

Could you discuss I guess opportunity to acquire capacity or otherwise your view to grow the customer base on eight inch is your plan to eventually find their way to add capacity or is it to transition customers.

12 inch.

Well I mean, that's a well.

Well first of all from a N G Greenfield.

Our existing clean room space, there is a limitation there okay.

And as far as the Oh.

Inorganically, we are unable to comment on.

Any oh.

Yes, it was speculation, but we are always open to exploring new opportunities.

As long as they can enhance our shareholder benefit, though we are open to the gains posting.

Organic approach.

The comment on your question about migrating the are the agencies of all age that is the ongoing effort.

It's subject to a different application and the customer assignments.

That will be ongoing effort for us.

Okay, Great and then I guess now for the the question on pricing.

Could you discuss it for blended ASP, you'll have to move like 28 nanometer ramping.

But also I'm curious for additional pricing action.

How do you expect over the next few quarters.

Ongoing I E. S. P trend if if if you could discuss that.

Well the tier one first of all the Q1 ASP items with a result of increased due to the higher 28 nanometer wafer shipments and some of the pricing of canceling the eight inch as well.

The technology migration into 12 inch business, we migrating from the product into.

The next node.

The deep.

Yeah.

The overall blended ASP will increase up to a discrete per cent quarter over quarter in Q1.

Our guidance.

For the S T a.

We always keep calm and a commitment to our long term customer. So however.

However, we do believe the asp's to reflect lower market that it was based on the technologies competitiveness of flow.

Our manufacturing excellence.

Along with all come in into our customers. So therefore, the asp's more of a result of many different factors.

Yeah.

Given the questions about 2021.

Based on all those factors would be to set.

Meet single digit percentage year over year in ASP increase for US also in 2021 at this point.

Okay, Great. That's helpful and just one final question.

The earnings with some of the nonoperating income at $2 42.

How would that translate because your payout has always been our target to be a high percentage, but the earnings grew quite a bit.

If there's a framework to think about a payout off the higher earnings generated.

Oh, well we of course will continue a high day all.

Dividend policy.

King.

Yeah.

For the cash dividend, we do see that potential.

For the 2021 pay off.

So the likely double from last year.

This is also the subject to.

The bulk of approval.

Okay, great. Thanks for your time Jason.

Sure.

And the next question is coming from Sunny Lin UBS go ahead. Please.

Hi, Thank you for taking my question congrats on debt very quickly.

Oh one.

What are your key packs, it's quite a bit above.

But that's about the level in the last few years, so I wonder.

Although at a 5% expansion for you Paul Bank, what specifically 28 is going to plan for this share.

In 2021, 28 nanometer capacity would increase by 20% year over year.

Got it so.

That's up at a ball from Quad you've got it on a per flight I think previously you were guiding for from.

When he came with a per month to about 52 P. What's up on my motto.

Vishay.

The 28 nanometers total capacity.

Combining the high Tech I'm, calling file we have about $45 six per month.

That's the end of Q4 and 2020.

And we are projecting by end of 'twenty, one Q4 'twenty one.

It will be 59, three cases per month.

Yeah. Some of the new 10 year nanometer capacity also come from the transition of 14 nanometer capacity. So you may not be all greenfield.

Got it so a very quick follow up.

How does the change of the patients are on depreciation.

Depreciation.

This year and next year.

The depreciation curve Stewart will be trending down as we mentioned before of course.

The slightly higher Capex in 2021.

We are of course also did a depreciation per well.

That's true, yes, but not that much so it's great to see.

<unk>, 5% decline year over year depreciation for 2021, and a defined range would be more in 2022, followed by even more significantly in 2023.

Now, let's focus on 'twenty, one 'twenty two phase.

Got it thank you and my second question is.

On the mature 12 inch.

So it looks like mature 12 inch foundry also seeing pretty strong supply demand from the loss share.

Following.

Oh I see.

Some of the price negotiation Oh, Inc. Shall we expect from price hike for 12 inch and following do quota share.

All the earlier quarter ANC projection.

Yeah for the ear is a blender ASP reflects the combination of interest 12 inch price.

A N G equivalent so.

That will that will be a good reference for you to use.

Got it thank you very helpful.

And next we'll have rolling she of Citigroup for questions go ahead. Please.

Hi, good afternoon.

Congrats on a good result first.

First question you all you said your first quarter.

Our capacity is loaded onto 100 per se utilization, though.

This is 100% close the poll.

Yeah.

Oh, Oh Oh My my question, specifically is about 30 day, and 40 nanometer low compared to you. Our average 100 per se in utilization how about the capacity on 20 day and 14 nanometer doing in first quarter.

Well the overall is a is 100% cash.

And both via both the eight inches tall inkjet fall 'twenty.

So the most of those awful.

Yeah, most all four how about the <unk> and the 40.

They both helpful.

Okay. That's helpful. Okay.

Okay Yeah.

Then a second question is that for your gross margin.

Are you a revenue loss of the already achieved a record high I'm Ah I E. All day.

Rule for gross margin to reach our last peak a label are around 30% in <unk> 2010, So how do we expect your margins are in the.

It might be.

One to two years wholesale gross margin go back to 30 per se.

Yeah.

Yeah.

Where are you kind of maybe I can answer.

Uh huh.

Basically every.

Every 1% increase in H D will contribute more than <unk>, 5%.

Gross margin.

It really depends on how much each day.

Please.

So.

$90.

So appreciate you also have some negative impact.

Gross margin. However, you want to set an all time dependent dollar appreciation.

About 24% off low gross margin.

Sure the benefit also economic scale.

Also affected by the mix and cost reduction and more importantly will be outperformance for.

Both of our trough and Japan is a subsidiary as well as dollar Chavez C DS.

10 minutes I'd say, there is still a postop.

Our operating loss given the early stage, a heavy depreciations and but their performance has been a continuing to improve because of the higher loading.

So I come here nanometer.

Production, so that will contribute certain percentage of our gross margin increase.

Understood that's all.

How do you see on the ice tea increase are we able to now have this at 10%.

The increase in the near future.

Well I I come in earlier.

S P a.

As many factor.

They have to become free.

Uh huh.

Along with all of those considerations.

We were expecting our H P.

Our market value.

Our current market position and that's what we're striving for.

Yeah no it does.

Like she Don mentioned earlier.

We continue to improve our corporate earnings is our.

Principal so we.

We continuously moving productivity driving costs down enhancing product mix.

Well, it's moving the A&P to a regional market.

In fact, all the market value and the same time, we are managing our depreciation curve does that mean you know UMC.

I think you're always trying to improve our overall profit.

Okay.

Okay.

Korea, Oh, that's all my questions. Thank you.

Okay.

And the next question is coming from Bruce of Goldman Sachs Go ahead. Please.

Thank you for taking my questions like what are your thoughts on that.

Ask if all the profit for the age of 12, especially the legacy 12 inch Okay. That's removed 28 nanometers ultimate accretion because of depletion depreciation is still on the way. So what is the price gap between the industry leader.

For AEG and legacy 12th each for you for UMC I mean, do we see the reasonable call Scott.

Between you and you just davita. So what is the optimal profitability for the AE and candidly because he talked each.

Well I mean.

That's interesting question.

Yeah.

In general we do believe there is a potential enhance our market price okay.

Okay.

You know again, the ADP result on making different bets as I mentioned earlier total Oh.

You know it.

We have to.

We have to actually first executing our technology manufacturing.

And you know well and depending on what commitment without customer.

And eventually.

You know, we can try to a wing we'd be thoughtful with our customer.

And you wouldn't see so bottom line is we need to be a trustworthy partner for our customer while we are managing our AP to a reasonable level.

I can't really quote you a percentage.

But I do believe there's a potential to get to that.

Let me ask a question a different way I mean, when when the company try to do that this IPO.

IPO in China, you do provided the Yahoo.

Profitability, which is smaller mid thirty's percentage in terms of the growth market. So a comparison to tsmc's per day age, which is around 50 per se. So the property, it's about 15% maybe.

Maybe by reasonably assume that the price gap or some kind of a cough GAAP right.

Given the current situation or given your execution has improved the cost structure has been improved so what is the reason well can we assume that you can achieve 50% sounds like in two three years or that is the way to high bar to achieve.

Well I can tell you it does from an eight inch operation.

We are very close to where our market value.

Okay, and but again, the blender ASP, including our product mix as well.

So.

From the product migration I have to take these debt to reflect that yet.

Yeah.

From those applications, we may already have easily income me, but so that will take some time for them to manage that migration.

So, but if you're talking about from Apple to apples standpoint.

We are eight inches.

Very close to what the market.

Well, how about legacy TV.

The net legacy 12 inch.

Oh, so again.

It is a resolving non current product mix. So that's one of our product mix. It is included.

Including important area for us the accounts.

Uh huh.

Yes, so we.

And we do it.

The Apple to Apple comparison, I do same day on the 12th each potential.

On the 12 inch mature there is some potential there.

Oh I see so for investments perspective, we can reasonably assume debt the profitability for each of where we've been a high level, but we can't expect some cause EBITDA improvements on the legacy 12 inch.

But that will be our Gulf yet thank.

Thank you.

The next question is regarding cash right.

<unk>.

In addition to the 28 nanometer capacity expansion that you guided do you have any plan to expand like legacy publish I mean based on current wafer pricing.

Is it possible or module and acquisitive to increase the capacity for the legacy salvage.

Yeah.

Economics on the day on the legacy 12 inch.

At this 0.8 remain very challenging okay.

So.

How does our 'twenty 'twenty one capex.

So we invest we're including for sound as specialty.

Specialty capability capacity capability.

In the legacy side I think those have a justifiable economics, but you'd be talking about other greenfield.

Logic.

<unk> for the mature 12 inch I think the bar is very high net.

Barry calling it didn't make economic sense there.

Thank you.

I think I'll just squeeze one last question on which is the R&D expenses for.

Well 2000, Tom I didn't expect there's still like 10 five per se. So what is a profit for 2021 and maybe it is only partly true.

The R&D expenses actually went up in 2021 2019.

Total like giving.

After stopping the best R&D.

For the next node.

Can you provide any more color there.

Above that this R&D expenses other.

Other than the higher employee bonus.

Oh, that's a very good question I mean, let me see if I can answer it this way.

It is our belief.

And our goal we want to try to become a leading pure play foundry.

In some particular application.

With one comp.

Comprehensive.

Process solutions Okay.

Manufacturing excellence and sizable capacity offering in both 12 inch eight inch fab.

And along with our strong client portfolio, where you're seeing that with that we can actually help UMC to become important.

An important player in this industry.

The foundry capacity has been tight for some time, that's when we all know the tightness.

In capacity.

He is more pronounced in eight inch from events in the 12 inch mature.

Good day left on those goals.

It doesn't have outpaced the growth in capacity okay.

Please.

And demand imbalance could likely lead to a structural shift in the semi market dynamic.

So Paul you wouldn't see.

There's a lot of technology know that we need to continue focus.

And.

Therefore, you wouldn't see it become more relevant to the market and trustworthy all customer as I said in addition.

We need to come either and we are committed to strategically allocate meaningful amount of R&D into the R&D. So it's the standard technology leadership.

Lucas in particular applications.

Areas, such a like high voltage those are new.

RF Soi P M I C ultra low power embedded flash memory. Those are all important and that requires net income either in the R&D development. So that that will give you. Some idea of why we're looking at debt.

Continued debt.

[laughter].

So I'd say that those investments will be the key for you to improve your legacy talking to profitability.

You can say that not only the probably the oldest older continuous stable high utilization rates.

Oh, Okay. So what is the flow the modeling purposes can you provide us some a pocket for R&D expenses as a percentage of revenue in 2021.

I think for too long from anybody even beyond I'll cover three per kit.

That's a similar percentage.

The last few years and 10 for R&D.

Our revenue growth will provide more resources.

All of the related operating expenses items.

Okay. Thank you.

Okay.

And our next question is coming from Stephen Chin Alicia Capital go ahead. Please.

Hi, good afternoon, and thank you for taking my question a couple of questions. Here first one is actually we still see around 200 millimeter.

I think one of the other foundry supplier to mention about low.

To acquire or to build Oh, two I'm from minimum total capacity pro Greenfield actually read the pulse increased by probably another 50 person in the past two to three years. So I was just wondering and yourself what kind of applying.

Finally from me to meet the ASP will be just a book could justify if we are going to acquire a new fab or to stop on the Greenfield.

Well this is a really hypothetical it's always difficult for us to answer.

Technical questions. So let me answer you in different ways.

No.

We see.

Potentials for bringing value to all current.

Our customers as well as all shareholders if we.

Acquire similar.

Like we did for <unk>.

You're right.

So that's being free value.

To our customers as well to all shareholders. So that that's been a benchmark.

Oh for the future acquisitions, if there's any.

Well pretty much volatile.

Similar targets so.

The question you raised is really from manufacturers.

For us I think they ultimately pay price to see if they can bring value to our shareholders and customers.

Okay Fair enough. Thank you. Another question. So your Q4 your 28 nanometer revenue what's already 18%. So do you have any call or if there is any of that ballpark number in this year that you think we could provide.

As a reference.

Hum.

Well they are in.

Q1, well per week.

We foresee that 28 nanometer contribution will continue to growth.

And.

<unk>.

Well, if you're talking about the target or goal is you know we believe the 25% contributions are achievable after our new 2028 nanometer capacity come on line.

So.

We still like that all current objectives.

Yeah, I think that's very helpful.

The next question from me is back to 200.

So we know that there would be the one.

Cause I had that right now so I'm just wondering if at this moment.

Have the luxury or do you just deal with Liberty. The chair is to continue to optimize Europe auto portfolio, We think 200 millimeter.

If we look at least from the structural basis Nice day.

Two years, how does this thing this will alter your two.

200 millimeter H E S.

The profitability.

Well again.

Again, that's the ongoing effort.

The along with the productivity improvement.

And that makes it.

But I think that that will be a continued.

Continuing effort for us to improve our eight inch.

The result and performance.

Yeah.

The current eight inch.

Capacity.

We're using UMC is mainly due to the limited clean room availability.

So.

That's why we focused on productivity improvement and someday debottlenecking efforts.

And we also talked about earlier that we will always open to explore viable option.

In the eight inch space as well so those will continue seeking those opportunities.

Given the current market strong market demand.

The inorganic approach.

That's a possible. So you know we have to concentrate in July.

A lot of attention to our internal efforts.

And if so thank you very much that's very helpful. A very good result.

Thank you.

And next one is from Z Holton of China Renaissance go ahead. Please.

Oh, Hi, gentlemen, congratulations and my first question has it gone on Digitization now gets their company.

Good day and utilization I, just wonder how much we can coach overdrive.

Capacity, so it won't be there theoretical PQ 20, so you shouldn't we can achieve.

Well, we you know 40 are for 'twenty 'twenty, one that we.

We see a very robust demand outlook in 2021.

Driven by multiple factors.

India smartphone related demand.

Okay.

Continued momentum Dear Wolfgang home trends.

In addition, the hot very hot topic recently, there's a strong pick up in the automotive segment too.

Right.

We believe that the bank.

Remain very strong the strong demand from those applications.

Obviously would lead to a higher utilization rate and so I think we have pretty good confidence that we will maintain being debt yeah.

Hi, Hi, Logan situation, but besides the men, we still need to continue to focus on the power.

And excellence as well as our solutions.

And.

In order to continue managing the pipeline of most interest at eight inch.

And those will help US you know what.

Yeah.

Longtime loading day ability, so and and we.

Silver would be executing according to plan and we're making good progress, but we have said EBIT increased money and we would still remains very high competence in our tiny tiny window.

Oh look.

Okay great.

So does she have capacity expansion.

Yeah, how fast you'll be ramping up the capacity at the quarter.

Yeah.

There will be some increase in the AR side.

Current quarter, and and there will be some increase in the fourth quarter and but in general the overall percentage I'm talking share increase is about five per se.

Year over year.

Oh, Okay, great. Thank you and last one and I.

Well, it's funny, if you don't do that.

How should we model the tax rate for the company. This year because last year is fantastic actually.

So I'm not sure if that's kind of sustainable.

Yeah I think.

Will it be safe to model or about 10% corporate tax rate level.

Yeah.

Okay, great. Okay. Thank you that's not true congratulation.

Thank you.

The next question is coming from Sebastian Ho C. O S. A go ahead. Please.

Thank you for taking my questions. So first question is I think the there's there's a lot of talk recently about it although chip shortage.

Which has affected the global car production and hence also meet our reported many governments have approached Taiwan government and TSMC, specifically mentioned before causing such shortage, but we don't see much mention about UMC, but we know day always you also have some exposure here. So curious about if you came.

Can you elaborate what.

What's the company's exposure to automotive.

And particularly for those poor management microcontroller units chips that are severely in shortage right now and also whether you are seeing a similar situation.

The shortage issues with your major IDM customers here. Thank you.

Well I mean, we we reported last quarter.

We see a recovery of all of them automotive market space and.

So with that being seen.

Also recovery from them.

And the low.

And the momentum has.

Continue.

However, the overall.

<unk> right.

Of the set up very high you know for the past three true.

Three quarters of full force already.

By the fact that UMC.

Operating at 100% utilization rate.

We are aware that the inquiry.

On the auto multi market and starting from Q4 last year and we are aware of our position in all of those supply chain as well.

And our current plans.

That area is where the trial that effort to help the chip shortage within that supply chain and we have been doing that.

Starting from the beginning.

Okay.

Okay.

So so what what would you say it is that you were trying to true allo.

Allocate more capacity or expand capacity to mitigate the shortage impacts for OTO motive customers specifically.

Yeah. It is hard to increase the.

The capacity is more right.

Re parallel.

So prioritizing the alto, although automotive market.

A bit of a bad debt penalty, so and and so hopefully we have some compression.

Okay. So does that imply that in the old tool related applications and customers.

If they have not given you a low and big enough.

Forecast for the following quarters and day.

They're likely to their allocation will likely to be get reduced.

Well.

I want to say that because it sound you are it.

From a capacity inquiries are coming out from a productivity improvement.

So for those pilots that will probably be allocating to automotive.

At current time, and but again automotive.

The motive recovery really came in late.

Oh no.

The man's search so are we.

It's more of a you know optimization approach now.

And hopefully by getting some of the higher power support we can release to market pressure a little bit.

Yeah.

As you know the overloading situation.

Severity.

Uh huh.

And so.

We can only do as much.

So all commitment from all the non auto customer where enough change that at all.

Okay.

Okay, and then given that the company has.

Oh for some colors about eight inch capacity will increase by one percentage also there is challenged to increase legacy 12 inch capacity, which I assume most of the total chips are using.

Using these nose.

It seems like if you are not.

Putting the war lowered in the priority.

The lower than your commitment to day non auto customers I I just cannot imagine.

How to mitigate b, how much more extra capacity, we can allocate to the auto guys.

Yeah.

I just saw that Jeff had mentioned, we will have all one way from managing a top priority.

It's keeping that come from them for other customers. So basically we are doing our best to.

Maybe you get a good situation.

Okay great.

The follow up that is is that given the auto I think we have already.

Or just are.

Wafer pricings and now closer to the market prices.

On the AP side and window or not the auto chip shortage in auto guys had come in later could be a extra catalysts or factor to enable you to be able to come in to the raise.

Price or just price higher not just for the auto gas, but a two day non auto guys.

So.

Yeah.

The upside in the Incrementals, a poll will be limited and so I would say that it's not going to be any significant uptake.

Uptake on that.

Okay great.

Is there any numbers or is there a number you can give to us or the range of of members who could give to us about the your automotive revenue exposure as a company in total.

No right now we don't guide any automotive contribution.

The revenue contribution at this time, and we only carbon free under the tree.

60.

Okay. Okay, that's true.

The last question from me I think the I think she don't probably explained it in the prepared remarks, but our Dalian later, so I didn't so I won't.

Allow me to African so whats the whats driving the non operating investment again.

For the past quarter. Thank you.

So for Q4.

Net investment of $5 7 billion.

Well, it's mainly related to the upward momentum in the equity market, so mostly non cash based mark to market valuation.

Okay, Oh, Oh, there's equity holding you have.

Yeah.

Okay. Thank you.

Right.

Next question is coming from Rick T. Now what Securities go ahead. Please.

Yeah, Hi, good evening guys.

Question for you a strong result, I just got one question for my modeling per person.

Hum.

How much government subsidies for Ya.

Effectively we see throughout the whole year and how much longer.

Yeah.

Sustain them.

Are you ever should be similar to that of 2000 pardon.

Pardon me.

Uh huh.

He knew subsidy recognition share continue all the way through maybe 2000 coming true.

Okay alright. Thank you so much that's it that's all I have.

And next we'll have Charlie Chan from Morgan Stanley for questions go ahead. Please.

It seems sort of taking my question.

Hey, good afternoon gentlemen.

So first of all we do have lots of discussion at all.

Good day Bomag, you try to re prioritize Oh toe.

Chip production.

Can you give us a sense of kind of timeline how soon.

It could be resolved.

And I guess, you know is there any way to judge how how how really says is that demand because students show. These passengers into two double book. So can you give us some insights.

These questions.

Are you referring to the automotive market or just a debt, we probably won't be able to give you also a beckman Oh, we can't give you the overall.

I guess all of Europe.

Yeah.

Oh, Yeah mhm, yeah, so the overall.

The market.

At this time the pace of the demand growth has surpassed the railroad from had to increase as we all know.

However, we do look at the from.

From a human but from an inventory.

So we do see a tiny tiny inventory in the past two quarters.

Mhm portray a healthier inventory level that we.

We think across it.

Sure.

So the demand continued to be strong in.

In both eight and 12 inch Ah we every day.

You have a competency and we company checking accounts at this time.

We believe this is a from the changes taking place in the supply and demand dynamics and.

Again, that's true could lead to a more of a structural shift in the foundry industry.

There may be a possible possibility with that right now.

Okay. Thanks, and then maybe some.

Intelligent is from a supply side right I mean.

P S M C.

Cheap or they can they can.

An additional 20 K O D edge capacity in there.

No the fat price.

They can do so and then you you you cannot and Oh, so you'll have some observation in China right, the Shanghai Fab and Oh, James had so how do you see the Chinese peers.

For the debt.

[laughter] supply increase in that low.

We did a day is going to go.

We saw oversupply.

Well first of all I mean, we.

We're not in a position to comment on our our Oh appears and.

We can only focus on what we do.

Yes.

U N C. A D. We have a very limited space, putting aerospace in share again.

So what we what we're doing now is we deploy we're taking it out of contact and taking a day ventures I'll be available Cleveland faithful are 12, eight and 12 ex that.

But those two facility.

Our objective now is to increase capacity.

To accommodate a growing 28 nanometer wavelength.

Hmm mm.

And that's why you.

You heard.

Are we talking about.

<unk> focus on 28 nanometer from has increased.

In 2021.

And that's what we've done to be putting all capacity yet.

Yeah.

Okay. So is it more like a clean room issue and you want to prioritize 28 nanometer.

These non because you cannot acquire age you couldn't.

Well first of all yes, yes, the casino is right.

Springfield standpoint.

Yeah.

You know it doesn't make sense for us to acquire two if we don't have a place to put them.

Okay.

Yeah, and you mentioned that you tried to come.

Uh huh.

Converse on each product to another.

Our approach to to increase the supply can you can you share with us what kind of semiconductor products youre going to see a massive migration from cash to 12 inch.

Two years.

Well.

They they are different application.

That's spread out in a different segment.

Oh.

For example, we see.

Oh wrong Didnt make solution.

I'll be covering from both eight inch and 12 inch.

We see the RF soi applications.

Migrating from the eight inch to 12 inch so yeah. They are various application day continuing doing that.

Uh huh.

We also see a continued pipeline going into the eight inch as well so that's it.

We just have to continue managing the pipeline the product pipeline from both <unk> Yeah. Yeah. Yeah. Okay. That's very helpful and that's C. Maybe a question to cheat.

Can you give us kind of a full year.

Gross margin guidance, sorry, if I, if I Miss it and also the.

Net loss it was micron I know you already said I wish to.

U S Justice Department, but how about those who was buying from and.

Are you going to say, though with the Hudson It parked. Thank you.

So we don't have a full year guidance for gross margin, we do have one.

First quarter gross margin guidance that you've seen.

Pardon me.

I don't know probably a little.

Tickets on debt.

And also we don't have any comment.

With all of them, we walked to sponsor them accordingly.

I mean 90 day mhm.

And I assume that the gross margin guidance.

Gradually improve from here because the FX.

FX impacts.

I am not sure.

You know about FSC paycheck kind.

Kind of a one quarter.

In pet or you know assuming that the FX rates are the same for <unk> with debt negative impact on gross margin carry into <unk>.

Q and.

And Oh, so it was on the depreciation trend can you kind of comment on the quarterly trend of depreciation FSAM FSC in pet I know so.

The positive impact from the Woodford.

Your wafer pricing. So we can kind of get a sense that the L. D.

Full year gross margin trends. Thank you.

Depreciation will go down quarter over quarter.

Hum.

Yeah, we can factor for your kids mutation declined roughly 5% and net.

A little bit more.

The gross margin guidance again, Unfortunately, I don't have a crystal ball.

So we can only give a.

The current users.

And for the first quarter once you start getting me plenty.

Okay. Okay. Thank you so very low.

Both.

Ladies and gentlemen, we're running out of time. So we're taking the last one the last question is coming from Randy Abrams Credit Suisse. Go ahead. Please okay. Yeah. Thanks for fitting me in at the end and you have a few follow ups first on the Capex, where before you were at $1 billion and under spending and I think part.

At your 28 wasn't full with the move to $1 5 billion should.

Should we expect that our new range like Youre growing mid single digits with about one and a half billion spend so is that the framework to go on or do you even see a scenario.

Did it with a focus on 28, it could even start to push a bit higher.

Yeah.

Well Randy.

First first comment I have is oh.

Data <unk> had that strategy that did not change.

We'll continue following that principle, so decide the neat uptake in customer demand and forecast, even with a 28 nanometers.

Market situation that is not the only count duration factor into our 'twenty 'twenty, one capex budget.

Our plan right.

Right now it is one of them focused on maintaining UMC market relevant.

And increase the customer stickiness and phase out.

No.

From having proposition.

Sure.

Manufacturing and.

And as far as the critical mass volume capacity offering. So so this is a.

That's the strategy and the principal.

You require us to follow a rigorous evaluation profit right. So we will continue doing that okay and and.

So you know.

We have a quite a bit of boundary to do that you know to make sure that we deploy the right amount of the contact at this time is $1 5 billion and.

For the upcoming next year, we'll provide that guidance when we're ready.

Great if I could ask on the SRA fee.

Looks like there were a lot of fears three six months back of restriction of U S tools and now with the latest they.

They may get access to mature tools I'm curious from a market dynamic.

Dynamic did you see any accelerated kind of diversification efforts.

There was that first slow down or reverse.

Well I mean.

First of all prior to the a b any of the export restriction.

The wave of demand with the already very strong.

The demand situation will remain strong.

I've come to last throughout the entire 2021.

Covid by many of the debt.

The momentum so I.

I haven't seen much of a change from that.

And even with a.

But you know the.

The media or any speculation.

The approval in a legacy we can't comment on the competitors or any media speculation but.

The way we see it is we believe if any day now is the plasma supply.

And it.

It is in our view this is not related to any dybala into the export restriction at all.

So I think all the competitiveness, but then he is going to do on our own capability.

And it's not gonna do on any topic.

On the geopolitical trade dynamics.

Okay and one other quick.

I think a quarter ago, there was still some underutilization in the Japan fab and I'll share.

From a little bit lower C. I guess has that loading now picked back up or is there opportunity to get.

Some of the automotive customers, so that fab, if it's not quite full.

Yeah, you got very good memory [laughter], yeah, the our last call, we actually talked about that we.

We stayed at the the 90 nanometer will get from and the business started to recover.

During the first half of the year and we are seeing that.

And the production day on Sunday.

Wireless communication product.

<unk> increased our 90 nanometer contra.

Contribution.

And the ramp will start towards the end of the Q1 and beginning in Q2 is our expectation by.

By Q2.

It will be fully low down.

Okay.

And one last just a couple of housekeeping.

The non controlling interest has been moving around but the expectation on that where it's probably the shaman JV partner and if if you could also clarify on Opex I think to Bruce's question would opex growth with sales for Opex would be kind of stable.

Absolute dollars I, just want to clarify the opex right.

Certainly you want to keep it came from 14% of revenue range.

Okay, and then for the Noncontrolling interest is there a way to think of that that would trend. If you get closer to breakeven that that minority interest would come down.

That's right that's correct.

Great. Okay. Thanks, that's all my questions and good job and good luck this year.

Thanks.

Well. Thank you for all your questions that concludes today's Q&A session I will turn things over to UMC head of IR day for closing remarks.

Thank you everyone thought that in this conference today, we appreciate your questions as always.

Have any additional follow up questions. Please feel free to contact UMC.

At UMC desktop has a good day.

Thank you, Mr. Li and ladies and gentlemen that concludes our comfort range from fourth quarter 2020. Thank you for your participation in Umc's conference there will be a webcast replay within an hour. Please visit www dot UMC com under the investors events section you may now disconnect Goodbye.

Okay.

Okay.

[music].

[music].

Welcome everyone to UMC is 2024th quarter earnings Conference call.

All lines have been placed on mute to prevent background noise. After the presentation. There will be a question and answer session. Please follow the instructions given at that time, if you would like to ask the question.

Your information this conference call is now being broken day life over the Internet webcast replay will be available within an hour. After the conference is finished.

We use it outside www UMC com under the Investor Relations investors events section.

And now I would like to introduce Mr. Michael Lee head of Investor Relations at UMC. Mr. Lin Please begin.

Thank you and won't come to the Umc's conference call for the fourth quarter of plenty plenty.

I'm joined by Mr. Jason Wang the President of UMC I missed that you don't do the free.

All of UMC.

In a moment, we will hear our CFO present, the fourth quarter financial results followed by all persons key message to address UMC is focus.

The first quarter 'twenty 'twenty one guidance.

Once our president and CFO accompany their remarks, there will be a Q&A session.

<unk> quarterly financial reports are available at all with the Bulldogs without UMC dot com under the investors financial section.

During this conference we may make forward looking statements based on management's current expectations and beliefs.

These forward looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risk that may be beyond the company's control.

All these risks please refer to umc's filing with the FCC from the U S.

Our <unk> security authorities.

Now I would like to introduce UMC Seattle means that you don't do to discuss UMC is fourth quarter 'twenty 'twenty financial results.

Thank you Michael I'd like to go through the Q4.

Sunday Times, a day Investor conference presentation material, which can be downloaded from our website.

Starting from Penn Street.

Q4, 2000, and finally come.

Revenue was $45 3 billion of N T.

Gross margin at 23, 9%.

The net income attributable to the stockholder of the parent.

True.

N P.

And earnings per share were 92 cents NT dollar.

Capacity utilization rate in Q4.

Climbed to 99%.

Compared to a 97%.

Q3.

If you turn to page four.

Our quarterly comparison financial performance.

Revenue.

The increase about 1% after the NT dollar.

Impact.

Bridge 45 range 3 billion N T.

Gross margin on these three 9% or 10 points.

N T.

Because of some.

Employee free.

Related compensation and also share based scheme are operating expenses increase.

True suite, six 3 billion in the fourth quarter of 2020.

As a result operating income.

<unk> five 6 billion.

<unk> four per cent.

And because of the strong spot market.

Mark to market valuation has contribute to more cell phone as non operating income in Q4.

Which is which was $5 6 billion empty.

So our net income in Q4 last year was $10 9 billion.

Net income attributable to the cycle jobs per parents 11, 2 billion EPS is not true.

Yeah.

On page five which is that year over year comparison.

Our revenue growth 19, 3% in NT dollars to 176 8 billion.

In U S dollars the growth rate was roughly around 26%.

Among the growth around.

Cash.

Contributes by the combination of.

U S JV in Japan.

And gross margin growth to eight almost eight percentage point to 92, 1% or 38 point 990 again Pete.

Operating expenses.

Similar to the revenue.

We also have some combined expenses from.

U S G fee, an increase year over year around six 6%.

And operating income.

Job growth.

Three.

359%.

202 billion N P.

Operating margin range, plus 12, 5%.

Net non operating income and sat around $5 9 billion, which uses a similar reason starting from Q4 result.

And.

Net income attributable to the stockholder of the parent for the full year.

It was $49 2 billion or 15, 5%.

Full year EPS.

Is two four to $19 per share.

So on page six.

As I mentioned share highlights cash should remain around 19 4 billion empty.

In total equity has increased from 275 billion and $2.

For Q4 2020 on page seven.

Blended <unk> increased a little bit less than 2%.

Fourth quarter of last year.

And for revenue breakdown on page eight.

Asia.

To climb to 51%.

And the other region doesn't really change much for.

For the full year, it's almost identical.

On a year over year comparison intense in terms of geographic breakdown from page nine.

So page 10.

Also page 11.

Revenue breakdown by customer type.

M continuous to be around 12% to 13%.

For both Q4 and full year of 2020.

On page 12, our revenue breakdown by segment.

Communication declined a little bit from 49% in the fourth quarter and a computer.

The highest growth.

Segment in Q4 2020.

Again for the full year segment breakdown on page 13.

Debt.

Creation of <unk> to change much from a year over year comparison.

On page 14, our 828 nanometer percentage of revenue continuing to increase in Q4 dollars around 18% of our total revenue.

And for the previous quarter 28 nanometer revenue was 14%.

And for the full year 28 nanometer and net revenue growth from 11% in 2019% to 41%.

2020.

Hum.

Page 15, you felt capacity.

Breakdown table perfect.

And because of the shorter working days.

And also Chinese new year holidays.

In Q1 2021, our available capacity is they're lumpy.

Less than that of Q4.

2020, however, we continue to retain.

Our capacity, mainly in a trough a java ex as well as.

And also a trough and so for the full year capacity, we continue to see quarterly.

What are the growth starting from.

Q2 of 2021.

Four.

Our annual Capex budget.

And forecast is around $1 5 billion in U S dollars from 2021.

And the breakdown is about 85% chopping true related and also mainly focus on 28 nanometers.

So the above free so that summary of Umc's result for Q4 2020.

More details are available in the report which has been posted on our website.

I'll now turn the call over to President of UMC series could just from work.

Thank you ex U.

Good evening everyone.

I would like to update in the fourth quarter operating result from UMC.

Our business traction in Q3 carried over into Q4 lifting utilization rate to 99% rising wafer shipments to $2 3 million eight inch equivalent.

The stable capacity utilization was driven by robust market demand from consumer and computing related application.

Such as pipeline digital TV microcontroller and power management IC.

For full year 2020, Umc's revenue grew 26% in U S dollars, while operating income surged to <unk> 22.01 theory.

Reflecting all of that utilization rate.

<unk> eight inch and 12 inch facilities and optimization of our blended product mix. In particular are ahead of the 12 inch product mix, primarily resulted from the substantial pickup in 28 nanometer wafers business as well as hours per census integration U S. J C 12 inch.

Operation.

Looking into the first quarter.

Stable demand outlook or lead to an incremental increase in weight per shipment and blended ASP in U S dollars.

However.

Due to the continuing unfavorable foreign exchange rate we anticipate.

Asian of NT dollar offset more than half.

<unk> growth projects flow through.

One.

For full year 2021, UMC continues to share the foundry industry's top view in wafer demand.

And we will continue to lead the company's disciplined and measured our capex strategy by allocating budget of USD, one 5 billion.

To accommodate the strong demand outlook being debt advanced technology.

Let's move on to the first quarter 2021 guidance.

Our wafer shipments will increase by approximately 2%.

ASP in U S dollar will increase by 2% 3%.

However.

The surging NT dollar worldwide volume more than half of the implied revenue growth of three Florida earlier.

Now allow me to explain Chinese as well.

Det that that loan zone puzzle of banks with a teens filtering zone downgrading wage and tidy things ourselves.

Gross profit margin will be in the mid 20% range.

Capacity utilization rate will be 100 per day or 2021 cash based capex will be budgeted at the U S $1 $5 billion.

That concludes my comments. Thank you all for your attention and now we are ready for questions.

Yes. Thank you just the one ladies and gentlemen, we will now begin now question and answer session.

A question for any of todays speakers. Please present zero one on your telephone keypad and you will enter the queue.

After you bought or announced please ask your question.

If you find that your question has been answered it before any short term to speak. Please spreads is zero to two cancer with a question.

Police presence they will want to ask a question. Thank you.

And our first question is coming from Randy Abrams Credit Suisse. Go ahead. Please okay. Yes. Thank you good afternoon and a good result.

I wanted to test the first question on the shipment and ASP outlook first on shipments with utilization now at 99% can you discuss how much growth.

Additional shipment growth you can squeeze out if youre from your capacity. So if you could give us a sense on how much capacity additions through the year, you'll have on 12 inch and eight inch.

Alright.

Yeah.

You can be a would be a the guy average to one we projected wafer shipments will increase.

Slightly and be a primary due to a high utilization rate driven by the strong demand.

Or are we already at 99 per se, but we project Q1 will be at 100 per se.

Hello.

The the other.

The ASP.

Oh, Yeah trading Okay, and maybe just a follow up first on that I guess, that's the thought through the year since you'll be at 100% could you discuss the capacity additions like because I know you had shopped and coming on to when the additional capacity would be available. If you could discuss on 12 inch and then the bar.

Net king.

Sure nodes.

How some of the Fabs from Iran, Tad capacity through the year.

Well from a year over year standpoint, the 'twenty 'twenty, one what level of capacity will grow about free cash.

In 2021.

Okay Yeah.

And that was split between eight and 12 range the eight inch due to the.

Limited clean room space, and we only doing the optimization and productivity improvement until that will probably be about 1% increase on eight inch and.

12% above 5% from 12 inch.

Okay actually a follow up and then I'll get PSP on the eight inch.

There's very limited space and there were there was discussion a few months ago about purchasing eight inch capacity from Japan.

Could you discuss I guess the opportunity to acquire capacity or otherwise your view to grow the customer base on eight inch is your plan to.

Eventually find their way to add capacity or is it to transition customers.

12 inch.

Well I mean debt.

Well first of all from the agency.

Greenfield.

Crinone space, there is a limit from cheap there, okay and as far as the Oh.

Organically.

Unable to comment on.

Any.

Yes, it was speculation, but we are always open to exploring new opportunities.

As long as they can enhance our shareholder benefit, though we are open to the casino.

Posting organic approach.

The comments on your question about when we go to Mike leading the other agents, they're all each that is the ongoing effort.

He is subject to a different application.

And the customer assignments.

That will be ongoing Tampa, Florida.

Okay, Great and then I guess now for the question on pricing.

Could you discuss it for blended ASP, you'll have to move like 28 nanometer ramping.

But also I'm curious for additional pricing action.

How do you expect over the next few quarters.

Ongoing ASP trend.

If if if you could discuss that.

Well the tier one first of all the Q1 <unk> guidance was a result of increased due to a higher 28 nanometer wafer shipments and some of the pricing or canceling the eight inch as well.

From a technology migration in the 12 inch business migrating South Dakota in the different the next node.

The deep.

Uh huh.

The overall blended ASP will increase from two discrete per cent quarter over quarter in Q1.

Our guidance.

E S P.

Always keep common commitment to our long term customer so.

However, we do believe the asp's to reflect lower market that it was based on the technologies competitiveness.

Our manufacturing excellence.

Along with all companies into our customers. So therefore, the ASB more of a result of many different factors.

He is given the questions about 2021.

Although factor would be up to <unk>.

Mid single digit percentage year over year ASP increased a solid zone in 2021 at this point.

Great. That's helpful and just one final question the earnings with some of the nonoperating income at $2 42.

How would that translate because your payout has always been our target to be a high percentage, but the earnings grew quite a bit.

There's a framework to think about a payout off the higher earnings generated.

Oh of course, well continue our heightened al.

Dividend policy.

And thing.

So from a cash dividend, we do see the potential.

For the 2000 and from Ya Lan payout.

It will be likely double from last year.

This is also the subject.

The bulk of approval.

Okay, great. Thanks for your time Jason.

Sure.

And the next question is coming from Sunny Lin UBS go ahead. Please.

Hi, Thank you for taking my question congrats on the very good results.

For one.

For your Capex is quite a bit above.

The price level.

Yes, so I wonder.

Although at a 5% expansion for your call Bank.

Specifically 28 is going to plan for this share.

In 2021, 28 nanometer capacity will increase by 20% year over year.

Got it so that's up at above what you've got at the flight I think previously you work.

<unk> four.

From 40, K wafer per month to about I think 50 to pay with a hallmark of vishay.

The 28 nanometers total capacity company, combining the high tech compelling sound and we have about $45 six per month.

At the end of Q4 and 2020.

And we are projecting by end of 'twenty, one Q4 'twenty one.

We'll be at $59 <unk> per month.

Yeah. Some of the new 28 nanometer capacity also come from the transition of 14 nanometer capacity. So.

B all greenfield.

Got it so a very quick follow up.

How does that change your expectation.

Patients are on.

Depreciation for this year and next year.

The depreciation curve, Steve it will be trending down.

Before of course.

The slightly higher Capex in 2021.

Of course auto debt.

Depreciation curve, whether that's true.

Yes, but not that much. So it's still you expect to see about 5% declining year over year depreciation for 2021, and the five range would be more in 2022, followed by even more significantly in 2023.

Let's focus on 'twenty, one 'twenty two phase.

Got it. Thank you and my second question is on mature 12 inch so it looks like the total 12 inch foundry also seeing pretty strong supply demand from late last year. So.

All right.

Some of the price of.

Negotiation.

And should we also expect from price hike for 12 inch in following quarters.

While the earlier quarter AFC projection.

Yeah for the year is a blended ASP reflects the combination of interest 12 inch price.

In the agency equivalent so that.

That will that will be a good reference for you to use.

Got it thank you very helpful.

And next we'll have rolling she of Citigroup for questions go ahead. Please.

Hi, good afternoon.

Congrats on your first question Al you said your first quarter.

Our capacity is loaded onto 100% utilization.

Is this 100% across the pool.

For.

Oh, Oh, my my coaching specifically, it's about a 20 day and 14000 too low compared to average.

Average, 100% utilization.

The capacity plenty day, and 14 nanometer, but doing it in first quarter.

While the overall is 100 per cent.

And both via both the eight inches tall inkjet fall at 2800 per.

So the multiple node awful.

Yeah, most not all four how about the <unk> and the <unk>.

It goes up Paul.

Okay. That's helpful. Okay.

Okay Yeah.

Second question is that for your gross margin.

So your revenue lost already achieved a record high I bet I've seen all day.

Roll off for growth margin to reach our last peak day low.

Around 30% in <unk> 2010, so how do you expect your margins.

Maybe a net.

One to two years wholesale gross margin go back to 30 per se.

Yeah.

Yeah.

Maybe I can answer.

Uh huh.

Basically.

Every 1% increase in H D will contribute more than five per cent.

Gross margin.

Well it really depends on how much each day.

Great.

So.

$90.

Appreciate it you also have some negative impact.

Gross margin. However, you want to set an all time dependent dollar appreciation.

About 4% off low gross margin.

The benefit of all.

Economic scale.

Also are affected by that makes things cost reduction.

More importantly, the royalty outperformance flow.

Japan is a subsidiary of Chevron's T V's.

Current theory, all shipments on securities feel Postop.

Operating loss, even the Hardy.

Stage.

Heavy depreciations and but their performance.

Its been a continuing to improve because of the higher loading.

Also hire a 10 nanometer.

Production.

So that will contribute with certain percentage of gross margin increase.

Understood Yes.

Uh huh.

The increase.

Are we able to meet that 10%.

The increase in the near future.

Well I I I commented earlier the U S P. A.

As many factor.

Right.

The company does it.

Along with all of those considerations.

We were expecting our H P.

Our market value.

Our current market position and Thats what were continued striving for.

Yeah.

Just like <unk> mentioned earlier.

<unk>.

Continuing to improve our corporate earnings is our principal so three companion, improving productivity and driving costs down and has been part of our mix of wells moving the A&P to a regional market.

Reflecting all of the market value at the same time, we are managing our depreciation curve does that mean you know UMC.

You will have to do all the things that you've pulled out from it.

Okay.

Okay.

It's clear these are all my questions. Thank you. Thank.

Thank you.

And the next question is coming from Bruce of Goldman Sachs Go ahead. Please.

Alright. Thank you for taking my question, Greg you fall below that.

To ask a couple of other possibilities for the ancient Paul.

Especially the legacy 12 inch Okay. That's removed 28 nanometers ultimate equation because of the depletion depreciation is still underway. So what is the price debt between the industry leaders for.

For AEG and legacy 12 inch for you for UMC I mean, do we see the reasonable call Scott.

Between you and you just davita so what is the optimal profitability for each in.

The legacy 12 inch.

Well I mean.

That's interesting question.

Yeah.

In general we do believe there is a potential.

And since our market price.

Okay.

Again, the ADP result from making different bets as I mentioned earlier total Oh.

We have to.

We have to actually first executing our technology and manufacturing.

Well, then depending on what commitment without customer total.

Eventually.

You know, we can try to a wing we'd be thoughtful solar customer.

And UMC. So bottom line is we need to be a trustworthy partner for our customers. While we are managing our AP to a reasonable level.

I can't really quote you a percentage.

But I do believe there's a potential to get to that.

Let me ask a question on does that way I mean.

When the company try to do that.

IPO, China you provided that you encourage your puppy ability, which is smaller mid thirty's percentage in terms of the gross margin fell compared to TSMC for their age which is around 50%. So the property debt 50.

<unk>, but then.

Maybe you can reasonably assume that the price gap or some kind of cost GAAP right I mean.

Given the current situation or given your improve.

To improve the cost structure has been improved.

What is the reasonable can we assume that you can achieve 50% from by two.

Two years of work that'd be the way to high bar to achieve.

Well I can tell you this from the eight inch operation.

Very close to where our market that it is okay.

But again, the blended ASP, including our product mix as well.

So.

The standard product migration to take effect to reflect the GAAP.

And from those applications, we may already have easily income limits, so that would take some time.

To manage that migration.

So, but if you're talking about from Apple to apples standpoint.

Our eight inch is he is very close to what the market that day.

Well, so all of our legacy TV.

Legacy 12 inch.

Also again.

These are resolving non current product mix sold from one of our product mix is income.

Or would it take important area for us.

Continue.

Yeah, so where.

Where do we do it.

The Apple to Apple comparison.

Do same day on the 12th each potential.

On the 12th each from mature there's still some potential there.

Oh I see so for investing with respect to we can reasonably assume debt the profitability for each of where we've been a high level, but we can't expect some EBITDA improve.

From the legacy public.

That will be our Gulf yet.

Thank you. The next question is regarding Capex.

<unk>.

In addition to the 28 nanometer capacity expansion guidance do you have any plan to expand like legacy Pawlowicz.

Current wafer pricing.

Is it possible or marginal acquisitive to increase the capacity for the legacy TV.

Yeah.

Economics on a day on the legacy 12 inch.

At this point.

Remain very challenging okay.

No.

Yes.

How does that work.

'twenty 'twenty one capex.

So.

We invest we're including four cylinders specialty.

Specialty capability capacity capability.

In the legacy side, I think dose has a justifiable economics that you'd be talking a lot of greenfield.

Logic.

Capacity for the mature 12 inch I think the bar is very high net.

Average, calling it didn't make economic sense there.

Thank you.

I think I'll just squeeze one last question on Winchester.

Well it seems that.

We expect there's still like seven 5%.

Is the target for 2021, and maybe this is probably true.

Moving to R&D expenses actually went up in 2014 2019.

After like giving.

So stopping the bad time be all for the best node. So can you provide me more corp.

R&D expenses increased other than to hire a point blood.

That's a very good question I mean, let me see if I can answer it this way.

It is our belief.

And our goal we want to try to become a leading pure play foundry.

In some particular application with one.

Comprehensive.

Profit circumstance, okay, and manufacturing excellence and sizable capacity offering in both 12 inch eight inch fab.

And along with our strong client portfolio, we've seen that with that we can actually help UMC to become important.

An important player in this industry.

The foundry capacity has been typhoon from titles that we all know the tightness.

In capacity.

He is more pronounced in eight inch from events in the 12 inch mature.

Good day left on those notes.

Moving to outpace the growth in capacity okay.

Please.

And demand in balance could likely lead to a structural shift in the semi market dynamic.

Total you wouldn't see.

There's all the technology know that we need to continue focus.

And.

Therefore, you didn't see it become more relevant to the market and trustee withheld customer Factset. In addition.

We need to come meter and we are committed to strategically allocate meaningful amount of R&D into the R&D investments to sustain the technology leadership.

Lucas in particular applications.

Areas, such a like high voltage built on new.

Our Fas Hawaii P M I C ultra low power embedded non flash memory those are all important and that we remain.

Net income EBITDA in the R&D day, all of it so that that will give you. Some idea of why we're looking at debt.

Continued debt.

Yeah.

So I'd say that those investments will be the key for you to improve your legacy talking to profitability.

You can say that not only the probability or filled a continued stable high utilization rates.

So what is the flow of the modeling purposes can you provide us some.

Pocket at all.

<unk> expenses as a percentage of revenue.

Yeah, I think from.

You're right you're going to be.

As three per kit.

That's a similar percentage.

The last few years and central R&D and hopefully our revenue growth will provide more resources.

All of the related operating expenses items.

Okay. Thank you.

Okay.

And the next question is coming from Stephen Chin Alicia Capital go ahead. Please.

Hi, good afternoon, and thank you for taking my question a couple of questions here first.

First one is a true.

200 millimeter I.

I think one of the other foundry supplier to mention about <unk>.

To acquire or to build.

Total capacity from Greenfield actually read the pulse increased by probably another 50% in the past two to three years. So I was just wondering your thoughts what kind of applying.

Good day to meet the ASP.

Just a book could justify if we are going to acquire a new <unk>.

Fab or to stop on the Greenfield.

Well this is a really a hypothetical so it's difficult for us to answer that you have a technical questions. So let me answer your you have different ways.

No.

We see.

Potentials for bringing value to all current.

Customers as well as all shareholders if we.

Acquire similar.

Fast like we did for <unk>.

You're right.

So that's been freedom valu.

Our customers as well to all shareholders. So that's been a benchmark.

For the future acquisitions if any.

Well pretty much thought though.

Similar Tigers.

So.

The question you raised is really from manufacturers.

From Florida.

From a baseline used to see if they can bring value to our shareholders and customers.

Okay Fair enough. Thank you another question.

So in your Q4, your 28 nanometer revenue what's already 18%. So do you have any call or if there is any of that ballpark number in this year.

We could.

Goodbye.

Mr Richards.

Uh huh.

In Q1.

We foresee that 28 nanometer contribution will continue to growth.

And.

Yeah.

Well, if you're talking about the target or goal is you know we believe the 25% contributions are achievable after our new 2028 nanometer capacity come on line.

So.

We still have a line that all cash.

Current objective.

Yes, I think that's very helpful.

And then last question from me back to a 200 good news.

So we know that there would.

Easy.

Competitive right now so I'm just wondering if at this moment.

You'll have the luxury or do you feel liberty the chair to Purdue to optimize Europe auto portfolio, we think 200 millimeter.

If we look at these on the structural basis next day in day, what two years.

What does this thing this will alter the.

200 millimeter H E S.

The profitability.

Well.

Again, that's the ongoing effort.

And along with the productivity improvement.

And it often makes it enhancement hybrid debt that will continue.

Continuing the effort for us to improve our eight inch.

Results and performance.

The current eight inch.

Capacity.

We think UMC is mainly due to the limited kringle availability.

So.

That's why we focus on productivity improvement and someday the bottlenecking effort.

And we also talked about earlier that we will always open to explore viable option.

In the eight inch space as well so those will continue seeking those opportunities.

Given the current market strong market demand.

The inorganic approach.

That's a possible. So you know we have to concentrate.

Draw attention to our internal episodes.

And if so thank you very much that's very helpful. Very good result.

Thank you.

And next one is from Z holding of China Renaissance go ahead. Please.

Oh, Hi, drinking my congratulations and my first question manage accounts on to get taxation now it's their company are running at 100% utilization.

I wanted to ask how much we can hope it dry powder.

So what are your debt theoretical peak. So you should you can achieve.

While we wait for.

<unk> fourth quarter 2021.

We see a very robust demand outlook in 'twenty and 'twenty one are.

Driven by multiple factors.

India smartphone related demand.

And continued.

Momentum Dear Wolfgang home trends and.

In addition, the hot very hot topic recently, there was a strong pickup in the automotive segment too.

So we believe that the bank remain very strong the strong demand from those application.

Obviously will lead to a higher utilization rates and so I think we have pretty good confidence that we will maintain being debt.

The highest high loading situation.

But besides the men, we still need to compete and focus on the power.

Fashion excellence as well as our solution.

And.

To continue managing the pipeline of a boast about that topic.

Interest at eight inch.

And those will help US you know.

Longtime loading day ability.

And we see.

Silver would be executing according to plan and we're making good progress. We had said EBIT increased money and we would feel very high competencies in our 'twenty 'twenty one building.

Outlook.

Okay, Great and force capacity expansion can you share with us how fast you'll be ramping up to capacity at the quarter.

There will be some increase in the second.

Second quarter, and and there will be some increase in the fourth quarter and but in general the overall percentage of talking should increase is about 5% year over year.

Oh, Okay, great. Thank you and last one Pam I D.

Once you do that.

How should we model the tax rate for the company.

Yeah last year is fantastic actually.

So I'm not sure that's kind of sustainable.

Yeah I think.

Probably won't be phase III mazo are about 10% corporate tax rate for.

Honeywell.

Okay, great. Okay. Thank you very much congratulations.

Yes.

The next question is coming from Sebastian Ho C. O S. A go ahead. Please.

Alright. Thank you for taking my questions. So first question is I think the there is theres a lot of talk recently about the chip shortage.

Which has affected the global car production and hence.

Meet are reported net of Gaba moves have approached Taiwan government and TSMC specific we mentioned four causing such shortage, but we don't see much mention about UMC, but we know that UMC also have some exposure here. So curious about if you can elaborate.

What what's the company's exposure to automotive youre, particularly for those power management microcontroller units chips that are severely in shortage right now and also whether you are seeing a similar situation.

Our EBIT shortage issues with your major IDM customers here. Thank you.

Well I mean, we we reported last quarter.

We see a recovery of all of them automotive market space, and so with that being seen in B C. The.

Also recovery from.

And in the last year and the momentum has.

Continue.

However, the overall.

<unk>.

Of the set up very high flow.

The past two three quarters full force already so despite the fact that you're in low teens.

Operating at 100% utilization rate.

We also with the inquiry.

On the automotive market and starting from Q4 last year and we are aware of our position in the auto supply chain as well.

Our current plans.

Area is were trying our best effort to help the chip shortage, we think that supply chain and we have you can do it in debt.

Starting from the beginning of this year.

Okay.

<unk>.

So what would you say it is that you were trying to true.

Allocate more capacity or expand capacity to mitigate the shortage impacts for auto motive customers specifically.

Yeah. It is hard to increase that.

The capacity is more right.

<unk> Ribeiro of price.

So prioritizing the alto, although automotive market with.

A bit of a bad debt penalty, so and and so hopefully we can repeat it sounds depression.

Okay. So does that imply.

Non <unk> related applications and customers.

If they have not given you a loan and big enough.

Forecast for the following quarters.

They are likely to their allocation will likely to be get reduced.

Well I want to say that because it sounds <unk>.

Some of the capacity increases coming out from a productivity improvement.

And so for those pilots will probably be allocating to automotives.

At the current time.

But again automotive recovery really came in late.

As a whole.

The message though.

I believe it's more optimization approach now.

And hopefully by eating some of the higher power support we can release to market price.

No.

As you know the overloading situations.

The other day.

No.

And so do we.

We can only do as much as we can.

So all commitment from all of the non auto customer where enough share in Chicago.

Okay.

Okay, and then given debt.

The company has.

For some colors about eight inch capacity will increase by 1% net also there is challenged to increase legacy 12 inch capacity, which I assume most of the total chips are.

Using these nose.

It seems like if you are not.

Our protein or lowering the priority.

Cutting the lowering your commitment to day non auto customers I just cannot imagine.

How would how to mitigate.

More extra capacity, we could allocate to the auto guys.

Just saw that Jeff had mentioned.

We will have all the way through messaging, we thought priority, while keeping the company moving to other customers. So basically we are doing our best to true.

Do you get the situation.

Okay great.

Follow up debt is is that given the auto.

I think we have already.

Just our wafer pricings and now closer to the market prices.

On the AP side and window or not.

Aldo chip shortage and auto guys had come in later could be a extra catalysts or factor to enable you to be able to come in to the race.

Price or if it's just price higher not just for the auto guys, but to the non auto guys.

So.

Yeah.

The upside in the Incrementals, a poll will be limited and so I would say that it's not going to be any significant.

Uptake on that.

Okay great.

Is there any numbers or is there a number you can give to us what are the range of the numbers you could give to us about the your automotive revenue exposure as a company in total.

And right now we don't guide any automotive its contribution the revenue contribution at this time and we only copies of free under the free.

60.

Okay. Okay, that's true.

The last question from me I think the.

I think that you don't probably explore this in the prepared remarks, but our daily later, so I didn't so I won't.

So allow me to ask again, so whats the whats driving the non operating investment in for the past quarter. Thank you.

So for Q4.

Net investment pipeline 7 billion plus.

Mi correlated through the year.

Upward momentum in the equity market, so mostly non cash based mark to market valuation.

Okay, Oh this equity holding you have.

Yeah.

Okay. Thank you alright.

Great.

The next question is coming from Rick T. Now once Securities go ahead. Please.

Yeah, Hi, good evening guys.

Question for your strong results I just got one question for my model.

Hum.

How much government subsidies for Ya.

You expect to see.

Throughout the whole year and how much longer.

Would that.

Sustain them.

This should be similar.

Is that 2020.

Uh huh.

Uh huh.

I'm kidding you.

Subsidy recognition share continue all the way through maybe 2023.

Okay, alright, thank you so much.

That's all I have.

And next we'll have Charlie Chan from Morgan Stanley for questions go ahead. Please.

Thanks for taking my question Hi, good afternoon gentlemen.

So first of all we do have a lots of discussion.

Their supply could debottleneck, you try to re prioritize OTO.

Chip production.

Can you give us kind of timeline how soon these.

This could be resolved and.

And I guess.

You know is there any way to judge how how really says is that demand because studio shortage.

Into two double book, So can you give us some insights.

These questions.

Are you referring to the automotive market or just the debt, we probably won't be able to give you a also beckman.

But we can't give you the overall.

Yes.

Yeah.

Mhm, yeah, so the overall.

Market.

At this time the pace of the demand growth has surpassed the rail capacity increase as we all know.

However, we do look at those there from.

From an image on the inventory.

So we do see a tiny tiny inventory in the past two quarters.

Portray a healthier inventory level we.

We think across it.

By chance.

So the demand continued to be strong.

In both eight and 12 inch.

We.

We have a competency and we company checking debt at this time.

We believe this is a from the changes taking place in the supply and demand dynamics and again.

It could lead to a more of a structural shift in the foundry industry.

Okay.

There may be a possible possibility at that right now.

Okay, Thanks, and maybe Sam.

In total James from.

Supply side right I mean.

P S M C.

Chip or they can they can.

An additional 20, K Oc and capacity in there.

Now you fast right.

They can do so and then you you cannot and.

So you'll have some observation in China right the Xiamen fab.

So how do you see the Chinese.

Peers painful at the debt.

Supply increase in long term way to a day is going to.

Recently oversupply.

Well first of all I mean, we.

We are not in a position to comment or.

All of our peers.

Uh huh.

And we can only focus on what we do.

For UMC.

We have a very limited space, putting aerospace in share again.

What we what we're doing now is we deploy we're taking in our contact and taking a da Vinci there'll be a day.

Ratable cranial faithful are 12, eight and 12 ex that.

And both of those two facilities are our objective now is to increase capacity.

To accommodate a growing 28 nanometer wavelength the net.

And that's why you.

You heard earlier.

Are we talking about.

Focus on 28 nanometer capacity increase in volume.

Yeah.

2021.

And that's what we've done the day, putting out capacity, yes mhm.

Okay. So it's more like a clean room issue and you want to prioritize 28 nanometer.

Because you cannot acquire H you couldn't.

Well first of all yes.

The casino is looking at Fitbit right from this link.

Springfield standpoint.

Yeah.

You know it doesn't make sense for us to acquire too.

Have a place to put them.

Okay.

Yes and no.

So you mentioned that you tried to come.

Uh huh.

Conversion price.

Product to another.

Our approach to to increase the supply can you can you.

So with those what kind of the semi.

That's our product.

Youre going to see a massive migration from cash to 12 inch coming two years.

Well.

They are different application.

That's spread out in a different segment.

For example, we see.

Oh wrong could make solution.

So the coverage from both eight inch and 12 inch.

We see the RF soi applications.

Migrating founder the eight inch to 12 inch.

Yeah. They are various application day, they continue doing that.

But we also see a continued pipeline going into the eight inch as well so.

We just have to continue managing the pipeline the product pipeline from both 2018, yeah. Yeah. Okay. That's very helpful and lastly, maybe.

A question to <unk>.

Can you give us kind of full year.

Gross margin guidance, sorry, if I missed it and also the.

Net loss it was micron I know you already said, who wish to a day.

U S Justice.

The permit but how about those who was buying from.

Are you going to say, though we see that's in our parks. Thank you.

So we don't have a full year guidance for gross margin, we do have one.

Quarter first quarter gross margin guidance, but youre seeing a range.

Pardon me.

No not really.

A little.

Tickets on debt.

But also we don't have any comments.

Any significant development, we want to staff accordingly.

From a mean 90 day.

And I assume that the gross margin.

Gradually improve from here.

<unk>.

FX impact.

I'm not sure.

About FSC and pace kind.

Kind of a one quarter.

In pet or you know assuming that FX rates, the Sanford <unk> with debt negative impact on gross margin carrying too.

Two Q and.

And.

So also the depreciation trend can you.

Comments on the quarterly trend of depreciation FSC FX in pet I know so.

The positive impact from day one.

The wafer pricing. So we can kind of get a sense about the full year gross margin trends. Thank you.

Depreciation will go down quarter over quarter.

As you already have.

Yeah, We've said before you can vacation time roughly 5%.

A little bit more.

The gross margin guidance again, Unfortunately, I don't have a crystal ball.

Uh-huh currency, so we can't let me take.

The current situation for the first quarter once you start doing any plumbing.

Okay. Okay. Thank you so very low.

Both.

Ladies and gentlemen, we're running out of time. So we're taking the last one last question is coming from Randy Abrams Credit Suisse. Go ahead. Please okay. Yeah. Thanks for fitting me in at the end you have a few follow ups first on the Capex, where before you were at 1 billion and under spending and I think part.

That your 28 wife in full with the move to $1 5 billion.

Should we expect that to a new range like Youre growing mid single digit with about one and a half million spend so is that the framework to go on or do you even see a scenario.

Did it with the focus on 28, it could even start to push a bit higher.

Yeah.

Well Randy.

First comment I have is the poor state.

State of Aro <unk> and have that strategy that did not change.

So we'll continue following that principle, so decide the need the outside in customer demand and forecast, even with a 28 nanometers.

The market situation that is not the only consideration.

Into our 'twenty 'twenty, one capex budget.

Our plan right now is one of them focused on maintaining umc's market relevant.

And increase the customer stickiness.

And phase out.

<unk>.

Adding proposition solution and.

Manufacturing and.

As well as the critical mass from a capacity offering. So so this is a.

This strategy in the principal.

You require us to follow a rigorous evaluation process right. So we will.

We continue doing that okay and and.

So.

We have a quite a bit of a boundary to do that you know to make sure that we deploy the right amount of debt.

At this time is the $1 5 billion.

For the growth.

Coming next year, we'll provide that guidance when we're ready.

Okay great.

If I could ask on the SRA fee.

It looks like there were a lot of fears three six months back of.

Restriction of U S tools now with the latest.

They may get access to mature tools I'm curious from a market.

Dynamic did you see any accelerated diversification efforts.

So it was that first slow down or reverse.

Well I mean.

First of all prior to the any of the export restriction.

Wafer demand was already very strong.

The demand situation will remain strong.

I have come to that throughout the entire 2021 and COVID-19 by many of the.

And that momentum.

<unk>.

I haven't seen much of a change from that.

In.

Either with what.

But.

The media or any speculation in.

The upheaval in the legacy we can't comment on the competitors or any media speculation but.

The way we see it is we believe that any day and now is the plasma supply.

And.

It is in our view this is not related to any development of export restriction at all.

Hum.

So I think our competitive advantage is going to be off our own capability.

Yeah.

It's not going to be on any topic.

The geopolitical or trade dynamics.

Okay and one other question I think a quarter ago, there was still some underutilization in the Japan fab.

From a little bit lower Cif has that loading now picked back up or is there opportunity to get.

Some of the automotive customers, but that fab, if it's not quite full.

You have a very good memory.

Yeah.

Yeah. The from our last call, we actually talked about that we restated the 90 nanometer what gets from and the business will start to recover.

During the first half of this year.

And we are seeing that.

And the production rate from.

Wireless communication product.

Contribution.

And the ramp will start towards the end of the Q1 and beginning of Q2. So it is our expectation.

By Q2.

It will be fully low down personnel.

Okay, and one last just a couple of housekeeping.

The non controlling interest has been moving around but the expectation on that where it's probably the xiamen JV partner.

And if you could also clarify on Opex I think to Bruce's question would opex growth with sales for Opex would be kind of stable.

The dollars I just want to clarify the Opex right now.

Certainly you want low ticket we're seeing.

So going from 14% of revenue range.

Okay, and then for the Noncontrolling interest is there a way to think of that that would trend. If you get closer to breakeven then that minority interest would come down.

That's correct that's correct.

Okay, great. Okay. Thanks, that's all my questions and good job and good luck this year.

Thanks.

Well. Thank you for all your questions that concludes today's Q&A session I will turn things over to UMC head of IR for closing remarks.

Thank you everyone thought that in this conference today, we appreciate your questions as always.

Have any additional follow up questions. Please feel free to contact UMC at your.

Desktop has a good day.

Thank you, Mr. Li and ladies and gentlemen that concludes our comfort range for fourth quarter 2020. Thank you for your participation in Umc's conference there will be a webcast replay within an hour. Please visit www Dot U N C dot com under the investors events section you may now disconnect Goodbye.