Q2 2025 United Microelectronics Corp Earnings Call

July 30, 2025

In a moment, we will hear I'll see a fault because that the second quarter financial results followed by our President's key message to address Umc's focus.

Third quarter 2025 guidance.

Once our president and CFO.

Remarks, there will be a Q&A session.

<unk> quarterly financial reports are available at our website AAA topic without USA com under the investors financial section.

During this conference.

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 all.

Certainties that could cause actual results to differ materially.

And the risks that may be beyond the company's control.

Michael Lin: For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the IOC Security Authorities. During this conference, you may view our financial presentation material, which is being broadcast live through the internet. Now, I would like to introduce United Microelectronics Corporation's CFO, Mr. Chi-Tung Liu, to discuss United Microelectronics Corporation's second quarter 2025 financial result. Thank you, Michael Lin. I would like to go through the Q2 2025 Investor Conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, second quarter of 2025, consolidated revenue was $58.8 billion, with a gross margin at around 28.7%. The net income attributable to the stockholder of the parent was $8.9 billion, and earnings per ordinary shares were $0.71 NT. Wafer shipment in Q2 increased to $967,000, up about 6.3% quarter over quarter.

Michael Lin: For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC security authorities. During this conference, you may view our financial presentation material, which is being broadcast live through the internet. Now, I would like to introduce UMC's CFO, Mr. Chi-Tung Liu, to discuss UMC's Q2 2025 financial result.

For a more detailed description of these risks and uncertainties. Please.

Refer to our recent and subsequent filings with the SEC and the securities authorities.

So India is confidence.

View, our financial presentation materials, which is being broadcast live through the internet.

No.

I'd like to introduce Umc's CFO essentially you don't do to discuss second quarter 225 financial results. Thank you Michael I have to go through the Tokyo <unk> invest.

Chi-Tung Liu: Thank you, Michael. I'd like to go through the 2Q25 Investor Conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, Q2 2025, consolidated revenue was TWD 58.8 billion, with a gross margin at around 28.7%. The net income attributable to the stockholder of the parent was TWD 8.9 billion, earnings per ordinary shares were TWD 0.71. Wafer shipment in Q2 increased to 967,000, up about 6.3% quarter-over-quarter. However, the effective NT dollar exchange rate also appreciated a similar magnitude from 32.89 in Q1 to 30.81 in Q2. Utilization rate increased from 69% in Q1 to 76% in Q2. Revenue as a result increased about 1.6% sequentially to TWD 58.75 billion. Gross margin, as we mentioned earlier, reached 28.7% or TWD 16.8 billion.

Chitung Liu: Thank you, Michael. I'd like to go through the 2Q25 Investor Conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, Q2 2025, consolidated revenue was TWD 58.8 billion, with a gross margin at around 28.7%. The net income attributable to the stockholder of the parent was TWD 8.9 billion, earnings per ordinary shares were TWD 0.71. Wafer shipment in Q2 increased to 967,000, up about 6.3% quarter-over-quarter. However, the effective NT dollar exchange rate also appreciated a similar magnitude from 32.89 in Q1 to 30.81 in Q2. Utilization rate increased from 69% in Q1 to 76% in Q2. Revenue as a result increased about 1.6% sequentially to TWD 58.75 billion. Gross margin, as we mentioned earlier, reached 28.7% or TWD 16.8 billion.

The Investor conference presentation material, which can be downloaded.

Real time.

Our web site.

Starting on page four second quarter of 2025.

Consolidated revenue was 58 point.

Gross margin at around seven.

7%.

Net income attributable to the stockholder off to Paris.

Paul.

Okay.

Shares.

So everywhere.

What if I should mention quota true increase to 957000.

Oh about six 3% quarter over quarter.

Michael Lin: However, the effective NT dollar exchange rate also appreciated a similar magnitude from $32.89 in Q1 to $30.81 in Q2. Utilization rate increased from 69% in Q1 to 76% in Q2. Revenue, as a result, increased about 1.6% sequentially to $58.75 billion NT. Gross margin, as we mentioned earlier, reached 28.7% or $16.8 billion NT. This is already factoring in around 3% of the forex impact, 3 percentage points in Q2. Net income reached $8.8 billion NT or 15.1% net income percentage growth. EPS is $0.71 NT in second quarter compared to $0.62 in the previous quarter. On page six, for first half comparison, revenue increased by 4.7% to $116 billion NT. Gross margin reached 27.7% compared to 33.1% in the same period of 2024. Net income attributable to the shareholder of the parent for the first half of 2025 was NT$16.67 billion or $1.34 in EPS terms.

However, the effective.

The exchange rate.

So appreciate it a similar magnitude.

Hum.

Q1 I'm.

I'm, sorry, 30 to 89 in Q1 to 30.81.

Q2.

And utilization rates increase from 59% in Q1 to 76% in quarter two.

So that's new.

About one 6% sequentially.

Seven 5 billion NT dollars.

Gross margin as we mentioned earlier.

28, 7% or 15 point.

Okay.

Chi-Tung Liu: This is already factoring in around 3% of the forex impact, 3 percentage points in Q2. Net income reached 8.8 billion NT dollar or 15.1% net income percentage rate. EPS is 0.71 NT dollar in Q2 compared to 0.62 NT dollar in the previous quarter. On page 6 for first half comparisons, revenue increased by 4.7% to 116 billion NT dollar. Gross margin reached 27.7% compared to 33.1% in the same period of 2024. Net income attributable to the shareholder of the parent for first half of 2025 was 16.67 billion NT dollar or 1.34 NT dollar in EPS terms. Cash remained over 100 billion NT dollar, reached about 111 billion NT dollar at the end of first half of 2025. Total equity for the company is now around 337.04 billion NT dollar. ASP edged up a little bit in Q2, mainly due to the better product mix.

Chitung Liu: This is already factoring in around 3% of the forex impact, 3 percentage points in Q2. Net income reached 8.8 billion NT dollar or 15.1% net income percentage rate. EPS is TWD 0.71 in Q2 compared to 0.62 NT dollar in the previous quarter. On page 6 for first half comparisons, revenue increased by 4.7% to TWD 116 billion. Gross margin reached 27.7% compared to 33.1% in the same period of 2024. Net income attributable to the shareholder of the parent for first half of 2025 was 16.67 billion NT dollar or 1.34 NT dollar in EPS terms. Cash remained over TWD 100 billion, reached about 111 billion NT dollar at the end of first half of 2025. Total equity for the company is now around 337.04 billion NT dollar. ASP edged up a little bit in Q2, mainly due to the better product mix.

Alright.

Oh wrong, a straight percent after a forex impact of three percentage points.

In quarter two.

Net income reached eight eight.

Oh 15, 1%.

Net.

Okay.

E P S.

Seven five.

0.1.

Second quarter comp.

To a point.

In the previous quarter.

Hum.

Oh first half comparison.

Right.

By four 7% to Hungary.

Gross margin reached 27, 7%.

There too.

How do you see it playing one per se.

2020.

Net income attributable to shareholders for first half of 2000.

Five.

15.

Yeah.

Or one point it's painful.

Uh huh.

Yes men over one.

Michael Lin: Cash remains over NT$100 billion, reached about NT$111 billion at the end of the first half of 2025. Total equity for the company is now around NT$337.04 billion. Case did edge up a little bit in the second quarter, mainly due to the better bottom mix. On page nine, for revenue breakdown, there is literally no change on a sequential comparison basis. Europe increased to 8% and Asia reached about 67%. IDM edged up slightly to 19% compared to 18% in the previous quarter. In terms of application breakdown, the change is also very minor. Consumer went down to 33% by 1% and communication increased by 1% to 41%. Advanced technology revenue continued to increase, and with now revenue below 49-nanometer represents more than half of the total revenue, which is 55% in Q2, when 22-nanometer and 29-nanometer represent 40% of the company total revenue.

Hum.

101.

111.

Hi.

First half 2025.

Also accuracy.

It's now around 370.

35.

Yeah.

Uh huh.

In the second quarter.

Yeah.

Thanks.

Oh, that's nice for a revenue breakdown.

Chi-Tung Liu: On page 9 for revenue breakdown, there's literally no change on a sequential comparison basis. Europe increased to 8%. Asia reached about 67%. IDM edged up slightly to 19% compared to 18% in the previous quarter. In terms of application breakdown, the change is also very minor. Consumer went down to 33% by 1%. Communication increased by 1% to 41%. Advanced technology revenue continued to increase. With now revenue below 40nm representing more than half of the total revenue, reached 55% in Q2, when 22nm and 28nm represent 40% of the company total revenue. On page 13, the capacity breakdown, we will continue to see some minor capacity increase. For Q3, the capacity increase will come from mainly Fab 12X in Xiamen.

Chitung Liu: On page 9 for revenue breakdown, there's literally no change on a sequential comparison basis. Europe increased to 8%. Asia reached about 67%. IDM edged up slightly to 19% compared to 18% in the previous quarter. In terms of application breakdown, the change is also very minor. Consumer went down to 33% by 1%. Communication increased by 1% to 41%. Advanced technology revenue continued to increase. With now revenue below 40nm representing more than half of the total revenue, reached 55% in Q2, when 22nm and 28nm represent 40% of the company total revenue. On page 13, the capacity breakdown, we will continue to see some minor capacity increase. For Q3, the capacity increase will come from mainly Fab 12X in Xiamen.

Uh huh.

No change on that.

The sequential comparison.

Europe increased two 8%.

Uh huh.

Paul.

Okay.

Ideal edge up slightly from 19% in comparison.

In the previous quarter.

Himself.

Cash and breakdown.

Okay.

Uh huh.

Downtown is 33%.

By 1%.

And.

Acacia has increased by 1% from 41.

Okay.

Technology revenue.

Now Hum below.

Below 40 nanometer.

Hi.

Total revenue.

55%.

Quarter two.

Got it.

Now, let me turn back to.

You bet.

40% of company total.

On page 13.

Michael Lin: On page 13, the capacity breakdown, we will continue to see some minor capacity increase. For the third quarter, the capacity increase will come from mainly QLS in China. After the first six months, our CapEx budget for year 2025 remains unchanged at an estimate of $1.8 billion U.S. dollars. The above is the summary of United Microelectronics Corporation results for Q2 2025. More details are available in the report, which has been posted on our website. I will now turn the call over to the President of United Microelectronics Corporation, Mr. Jason Wong.

The capacity breakdown.

Bye now.

I see.

The third quarter.

The increase will come from.

Sure.

Okay.

And after the first six months, our Capex budget for 2025.

Chi-Tung Liu: After the first six months, our CapEx budget for year 2025 remained unchanged at an estimate of $1.8 billion. The above is the summary of UMC results for Q2 2025. More details are available in the report, which has been posted on our website. I will now turn the call over to President of UMC, Mr. Jason Wang.

Chitung Liu: After the first six months, our CapEx budget for year 2025 remained unchanged at an estimate of $1.8 billion. The above is the summary of UMC results for Q2 2025. More details are available in the report, which has been posted on our website. I will now turn the call over to President of UMC, Mr. Jason Wang.

Change.

One 8 billion.

S dollars.

Yeah.

Somebody asked the other theories out full second quarter of 2025.

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

Lifestyle.

Now I'll turn the call over to Pat.

Yes.

Thank you.

Jason Wang: Thank you, Qidong. Good evening, everyone. Here, I would like to share UMC's Q2 results. In Q2, the utilization rate increased to 76%, as wafer shipment grew 6.2% quarter-over-quarter, primarily driven by communications in image signal processors, NAND controllers, Wi-Fi, and LCD controllers. While we experienced an increase in the overall utilization and the growth of our 22 and 28 nanometer portfolio, the unfavorable foreign change movement of the NT dollar kept our gross margin to 28.7% by nearly 3 percentage points. Revenue from our 22 and 28 nanometer portfolio continued to grow sequentially, now accounting for 40% of total sales, a record high in both percentage and absolute dollar terms. Our industry-leading 22 and 28 nanometer solutions continue to win adoption by customers, and we expect to see further market share gain in wireless communications over the coming quarters.

Jason Wang: Thank you, Qidong. Good evening, everyone. Here, I would like to share UMC's Q2 results. In Q2, the utilization rate increased to 76%, as wafer shipment grew 6.2% quarter-over-quarter, primarily driven by communications in image signal processors, NAND controllers, Wi-Fi, and LCD controllers. While we experienced an increase in the overall utilization and the growth of our 22 and 28nm portfolio, the unfavorable foreign change movement of the NT dollar kept our gross margin to 28.7% by nearly 3 percentage points. Revenue from our 22 and 28nm portfolio continued to grow sequentially, now accounting for 40% of total sales, a record high in both percentage and absolute dollar terms. Our industry-leading 22 and 28 nanometer solutions continue to win adoption by customers, and we expect to see further market share gain in wireless communications over the coming quarters.

Jason Wang: Thank you, Chi-Tung Liu. Good evening, everyone. Here, I would like to share United Microelectronics Corporation's Q2 results. In Q2, the utilization rate increased to 76%, but the wafer shipment grew 6.2% quarter over quarter, primarily driven by communications in image signal processors, NAND controllers, Wi-Fi, and LCD controllers. While we experienced an increase in the overall utilization and the growth of our 22-nanometer technology platform and 28-nanometer technology platform portfolio, the unfavorable foreign exchange movement of the NT dollar kept our gross margin to 28.7% by nearly 3 percentage points. Revenue from our 22-nanometer technology platform and 28-nanometer technology platform portfolio continued to grow sequentially, now accounting for 40% of the total sales, a record high in both percentage and absolute dollar terms.

I would like to share.

Second quarter results.

In the second quarter.

<unk>.

Increased 76.

That's a wafer shipment.

One 2% quarter over quarter.

Primarily.

How many patients image.

Processors.

And controllers.

And LTV.

While we experienced it.

Overall utilization in the boroughs.

28 nanometer portfolio.

The favorable foreign exchange movement, the NT dollar kept our gross margin to 28, 7%.

Three percentage points.

Revenue of R 22, and 28 nanometer.

Continued to grow sequentially.

Now accounting for over 40% of the total.

Sales of.

Our record high.

Percentage and absolute dollars.

Our industry, leading 22, and 28 nanometer solutions continue to win adoption by customers.

Jason Wang: Our industry-leading 22-nanometer technology platform and 28-nanometer technology platform solutions continue to win adoption by customers, and we expect to see further market share again in wireless communications over the coming quarters. We have always believed that with the right differentiation, 22-nanometer technology platform and 28-nanometer technology platform is a strong and long-lasting zone with a robust product pipeline. In addition, the new Phase 3 facility at our Singapore Fab 12I is set to start production in 2026, while enabling United Microelectronics Corporation to better serve customers seeking diversified manufacturing for enhanced supply chain resilience. Looking ahead to Q3, we expect a mild increase in wafer shipments. However, adverse foreign exchange movements will lead to a decline in NT dollar revenue. We are closely monitoring the near-term uncertainties and risks as the market anticipates U.S. tariff policies.

We expect to see further market share gains.

Communications.

For the coming quarters.

Jason Wang: We have always believed that with the right differentiation, 22, 28 nanometer is a strong and long-lasting node with a robust product pipeline. In addition, the new phase three facility at our Singapore Fab 12i is set to start production in 2026, while enabling UMC to better serve customers seeking diversified manufacturing for enhanced supply chain resilience. Looking ahead to Q3, we expect a mild increase in wafer shipments. Adverse foreign exchange movement will lead to a decline in NT dollar revenue. We are closely monitoring the near-term uncertainties and risks as the market anticipates US tariff policies. To navigate macro and geopolitical headwinds, including foreign exchange risks, UMC will continue to actively manage our foreign exchange exposure and maintain financial flexibility to enhance our financial structure and business resilience. Now, let's move on to the Q3 2025 guidance.

We have always believed it.

With the right differentiation 'twenty two 'twenty.

Strong.

No.

Robust product pipeline.

Sure.

Yeah.

Our Singapore Fab 12 I E.

Production in 2026.

Well.

To better serve customers seeking to diversify.

Okay.

Yeah.

Looking ahead to the third.

Water.

We expect a mild increase wafer shipments however.

Foreign exchange movement.

<unk> decline.

Yeah.

We are closely monitoring the near term.

Okay.

Market.

Policies.

Jason Wang: To navigate macro and geopolitical headwinds, including foreign exchange risks, United Microelectronics Corporation will continue to actively manage our foreign exchange exposure and maintain financial flexibility to enhance our financial structure and business resilience. Now, let's move on to the Q3 2025 guidance. Our wafer shipment will increase by no single-digit percentage. However, NT dollar denominated revenue is fully exposed to fluctuation in the foreign exchange rate. For instance, a 5% appreciation in the NT dollar will result in a corresponding 5% reduction in reported NT dollar revenue. ASP in the U.S. dollar will remain firm. Q3 gross margin will be approximately Q2 gross margin subject to the foreign exchange effect. Therefore, our Q3 gross margin will be approximately equal to that of Q2 under the assumption the foreign exchange rate is at the current level. Capacity utilization rate will be in the mid 70% range.

Macro.

Okay.

Including foreign exchange risks.

Okay.

Manage our forests.

Oh sure.

And maintain financial flexibility.

Financial structure in the business.

Yeah.

Oh, that's a move on to the third quarter 2020.

Our wafer shipments will increase by low single digit percentage. However.

Jason Wang: Our wafer shipment will increase by low single-digit percentage. However, NT dollar denominated revenue is fully exposed to fluctuation in the foreign exchange rate. For instance, a 5% appreciation in the NT dollar will result in a corresponding 5% reduction in reported NT dollar revenue. ASP in the US dollar will remain firm. Q3 gross margin will be approximately Q2 gross margin subject to the foreign exchange effect. Therefore, our Q3 gross margin will be approximately equal to that of Q2 under the assumption the foreign exchange rate is at the current level. Capacity utilization rate will be in the mid-70% range. Our 2025 cash-based capex budget will remain unchanged at a $1.8 billion. That concludes my comments. Thank you all for your attention. Now, we are ready for questions.

However.

Nominated.

For the East coast.

Two fluctuation.

Right.

I used it.

I appreciate it.

Dollars.

A corresponding 5% reduction.

Right.

In the U S dollar.

Q3 gross margin will be approximately Q2 gross margin.

Alright.

Right.

Therefore, our Q3 call.

Yeah.

To that of Q2.

The fourth change things.

Current level.

Capacity utilization rate will be seven.

70% range.

Jason Wang: Our 2025 cash-based CapEx budget will remain unchanged at a U.S. $1.8 billion. That concludes my comments. Thank you all for your attention. Now we are ready for questions.

Our 2025 cash base Capex budget will remain unchanged at a U S. One.

Yeah.

That concludes my comments. Thank you all for your attention.

Any questions.

Q&A Moderator: Yes, thank you, President Wong. Ladies and gentlemen, we will now begin the question and answer session. If you have a question for any of today's speakers, please press the star key and number one on your telephone keypad, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press the star key and number two to cancel the question. Thank you. Please press star one on your keypad if you would like to ask the question. Thank you. First, we will have Brad Ling, Bank of America, for questions. Go ahead, please.

Operator: Yes. Thank you, President Wang. Ladies and gentlemen, we will now begin the question and answer session. If you have a question for any of today's speakers, please press star key and number one on your telephone keypad, you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star key and number two to cancel the question. Thank you. Please press star one on your keypad if you would like to ask the question. Thank you. First we'll have Brad Lin, Bank of America, for questions. Go ahead, please.

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

A question for any up to date speakers. Please press star key and number one on your telephone keypad and you wait until the Q.

After you are announced please ask your question.

If you find that your question has been answered before it needs so to speak.

Please press star key and number two to cancel the question. Thank you.

Now please press star one on your keypad, if he would like to ask the question. Thank you.

Well first of all have Brent Lane Bank of America for questions go ahead. Please.

Alright. Thank you for taking my question. So I have two questions. The first one will be on the ASP trend. So watched our initial outlook and view on the U S. He turned into tiny tiny sick hockey even to hire as fast and cost. Obviously, we are happy to learn dust 80 S. P in near term, but yeah.

Brad Ling: Hi. Thank you for taking my question. I have two questions. The first one will be on the ASP trend. What is the initial outlook and view on the ASP trend into 2026, given the higher expense and cost? Obviously, we are happy to learn the steady ASP in the near term, but any initial view for 2026? Thank you.

Brad Lin: Hi. Thank you for taking my question. I have two questions. The first one will be on the ASP trend. What's the initial outlook and view on the ASP trend into 2026 given the higher expense and cost? Obviously, we are happy to learn the state of the ASP in the near term, but yeah, any initial view for 2026? Thank you.

Any initial view four to 96, thank you.

Well I mean typically would.

Jason Wang: Typically, we do not guide anything beyond 2025. As you said, we can talk about the near-term of the ASP outlook, but you will be interested in looking into a longer-term ASP projection. Let us share about the ASP strategies. Our goal is to continue to differentiate our technology offering and product mix and to maintain and improve our ASP resilience. We want to further widen the gap in technology offerings while increasing the revenue contribution by those respective nodes. Following our rollout of the 22-nanometer and 28-nanometer technologies, we will continue to provide specialty technology in 40-nanometer and 35-nanometer nodes, where the percentage of our revenue contribution competing with the pricing boundaries will continue to decline. For the near term, our CFO actually mentioned our Q2 ASP, so a low single-digit increase driven by the higher 22-nanometer and 28-nanometer product mix.

Jason Wang: Well, I mean, typically, we don't guide anything beyond that, beyond 2025. As you said, we can talk about the near-term of the ASP outlook, but you'll be interested in looking into a longer-term ASP projection. Let's share about the ASP strategies. We'll continue our goal is to continue to differentiate our technology offering and product mix and to maintain and improve our ASP resilience. We want to further widen the gap in technology offerings while increasing revenue contribution by those respective nodes. Following our rollout of the 22 and 28 nanometer technologies, we'll continue to provide specialty technology in 40 and 55 nanometer nodes, where the percentage of our revenue contribution competing with the pricing boundaries will continue to decline. For the near term, our CFO actually mentioned our Q2 ASP saw a low single-digit increase driven by the higher 22 and 28 product mix.

Jason Wang: Well, I mean, typically, we don't guide anything beyond that, beyond 2025. As you said, we can talk about the near-term of the ASP outlook, but you'll be interested in looking into a longer-term ASP projection. Let's share about the ASP strategies. We'll continue our goal is to continue to differentiate our technology offering and product mix and to maintain and improve our ASP resilience. We want to further widen the gap in technology offerings while increasing revenue contribution by those respective nodes. Following our rollout of the 22 and 28 nanometer technologies, we'll continue to provide specialty technology in 40nm and 55nm nodes, where the percentage of our revenue contribution competing with the pricing boundaries will continue to decline. For the near term, our CFO actually mentioned our Q2 ASP saw a low single-digit increase driven by the higher 22 and 28 product mix.

We don't guide anything beyond that.

Thanks Bye.

So as you said.

We can talk about the near term.

But you would be interested in looking just longer tenor ESP protection and so that is true about the asp's strategies.

We will continue our goal is to continue to differentiate all technology, offering and product mix and to maintain and coupon rate.

Yes.

We want to further widen the technology offering while increasing revenue contribution.

We expected not following all wrote off R 22, and 28 nanometer technologies.

To provide specialty technology.

Yeah.

What is the percentage of our revenue contribution competing.

Yeah, the pricing will continue to decline.

For the near term.

Yeah.

Our CFO actually mentioned in our Q2 ASB sold at low single digit increase driven by the high plenty to in 2008.

Jason Wang: In Q3, we expect the product mix remains unchanged. Therefore, the ASP will remain firm for this year.

Jason Wang: In Q3, we expect the product mix to remain unchanged. Therefore, the ASP will remain firm for this year. Yeah.

In Q3, we expect the product mix.

I'll change therefore the AC.

What are you supposed to.

Yeah.

Got it. Thank you very much and my second question would be well, we have seen well in the presentation 14 nanometers and below making how they fit in the well site.

Brad Lin: Got it. Thank you very much. My second question would be, well, we have seen, well, in the presentation, 40 nanometer and below mix listed in the slides as 0 for a while but still listed in there. Should we expect the number to increase? Will that be from 12 nanometer or potentially also 6 nanometer?

Brad Lin: Got it. Thank you very much. My second question would be, well, we have seen, well, in the presentation, 40nm and below mix listed in the slides as for a while but still listed in there. Should we expect the number to increase? Will that be from 12 nanometer or potentially also 6 nanometer?

Brad Ling: Got it. Thank you very much. My second question would be, we have seen, in the presentation, 14-nanometer and below mix listed in the slide, a zero for a while, but still listed in there. Should we expect the number to increase, and will that be from 12-nanometer or potentially also 6-nanometer?

The ROE for a while but they said, they're so shall we stay at that number to increase and will that be from tariffs nanometer or potentially oh, so six six nanometer.

Yeah.

Oh, well, okay, well I'll call help me just steel.

Jason Wang: Well, okay. Well, 12 nanometer is still a big bar for us. For that particular program, the cooperation with Intel is progressing well and remains on track according to the project milestone. At present, both teams are working on verifying silicon performance for the pilot line. We expect that the earlier PDK will be ready for this first-wave customer in June 2026. We expect customer product payable expected to begin in 2027. We'll probably see some revenue in that time frame. I think that's the 12. We continue marching in that direction. If we're going beyond that, we don't have any concrete plan for anything beyond the 12 nanometer today. Our development effort will continue to focus on that and us to broaden our specialty technology portfolio on both ends. That is definitely on our roadmap.

Jason Wang: Well, 12 nanometers is still a bit far for us. For that particular program, the collaboration with Intel is progressing well and remains on track according to the project milestone. At present, our both teams are working on verifying real-time performance for the pilot line. We expect that the earlier PDK will be ready for this first wave customer in June 2026. We expect customer product tape out to begin in 2027. We will probably see some revenue in that timeframe. I think that is the 12, and we will continue marching in that direction. If we are going beyond that, if we do not have any concrete plan for anything beyond the 12 nanometer today, our effort, our development effort will continue to focus on that and as well to broaden our specialty technology portfolio on both ends. That is definitely on our roadmap.

As far <unk>.

And.

Well that particular program and the cooperation with Intel is progressing well and remain on track.

42 of the project milestones.

Chris.

Our team are working on.

That's helpful.

Well the pilot line and we expect that the.

The PDK will be ready.

Firstly customer in June 2026.

We expect customer policy.

2027, so we'll probably see some revenues.

At that time frame.

So I.

I think that's the 12 b.

And we continue.

Marching that direction.

Going beyond that.

Yes.

We don't have any concrete plan or anything.

Yesterday.

Our effort our development will continue to focus on that and that's what's brought in a specialty technology portfolio.

And so that is definitely on our roadmap.

Jason Wang: Once we have more concrete updates, we will be sharing with you. Currently, the most important task is to deliver the highly competitive solution for the mass production at 12 nanometer through our close collaboration with our partners. For anything beyond that, we would explore the future opportunity through the partnership arrangement, which we believe that would be mutually beneficial.

Jason Wang: Once we have more concrete updates, we will be sharing with you. Currently, the most important task is to deliver the highly competitive solution for mass production at 12 nanometer through our close cooperation with our partners. For anything beyond that, we will explore the future opportunity through the partnership arrangement, which we believe that will be mutually beneficial.

Once we have more concrete.

The update will be shared with you, but I need the most important task is to de lever at a highly compelling solution for the mass production ethical and that'll be good.

I'll close cooperation with our partners and anything beyond that we went to school to future opportunity.

Partnership arrangements, and which we believe that would be mutually beneficial.

Sure sounds great. Thank you very much.

Brad Lin: Sure. Sounds great. Thank you very much.

Brad Ling: Sure. Sounds great. Thank you very much.

Yeah.

Operator: Thank you. Next one, Charlie Chan, Morgan Stanley. Go ahead, please.

Thank you.

Jason Wang: Thank you.

Brad Ling: Next one, John Lee Chun, Morgan Stanley. Go ahead, please.

Makes one Charlie Chan Morgan Stanley go ahead. Please.

Hey, Kevin good.

John Lee Chun: Hi, Jason. Chi-Tung Liu, good afternoon. My first question is about the tariff impacts on your customers' behavior. Do you see kind of pulling in, and what does it impact to your second half sustainability or outlook? Thank you.

Charlie Chan: Hi, Jason. Qidong, good afternoon. My first question is about the tariff impact to your customers' behavior. Do you see kind of pulling in, and what does it impact to your second-half sustainability or outlook? Thank you.

Good afternoon, and my first question is Oh.

The tariff impact.

This behavior do you see a kind of point and what what does it embed two or second half.

Casino D or outlook. Thank you.

Sure Good afternoon, too we do observe.

Jason Wang: Sure. Good afternoon too. We do observe the sound of demand upside in the Q2 and as well as Q3 is partly driven by the inventory buildup in anticipation of a potential US tariff. For UMC's first-half 2025 results, which is in line with our guidance as the Q2 wafer shipment increased to 6.2% to 3% quarter-over-quarter, while the Q3 demand increased on a higher base, we expect the shipment will still grow mildly sequentially. There are some observations about that. Given the 2025 market dynamics, such as adjustment to the US policies and ongoing geopolitical and macro uncertainty, the usual seasonal pattern may be different. We, along with our customers, will closely monitor those end-market signals. Yeah.

Jason Wang: Sure. Good afternoon, too. We do observe the founder demand upside in Q2, and Q3 is partly driven by the inventory buildup in anticipation of a potential U.S. tariffs. For United Microelectronics Corporation's first half 2025 result, which is in line with our guidance of Q2, wafer shipment increased 6.2% to 3% quarter over quarter. While the Q3 demand increased on a higher base, we expect the shipment will still grow mildly sequentially. There are some observations about that. Given the 2025 market dynamics, such as an adjustment to the U.S. policies and ongoing geopolitical and macro uncertainty, the usual seasonal pattern may be different. We, along with our customers, will closely monitor those end market signals.

The Q2, and that's what Q3 is partly driven by the inventory build up.

Anticipating potential terrorists.

And so for Umc's.

First half 'twenty result.

In line with our guidance of secure to wafer shipment increase of six point.

2% to 3% quarter over quarter, while the Q3, you may increase the highest phase we expect the shipment will still grow sequentially.

Sequentially.

And so the observation about that.

Given the 2025 market dynamics, such as the adjustment to the U S policies and ongoing geopolitical and macro uncertainty.

The usual seasonal pattern.

Different.

We along with our customers we're closely monitoring the market signals.

Kathy Thank you.

John Lee Chun: I see. Thank you. Yeah. There is a lot of discussion about the future advanced packaging technology, right? Jason, can you share with us about your business development here? Also, I think you have some inter-postal capacity, right? How are you going to utilize those capacities going forward? Maybe some color about the potential applications.

Charlie Chan: I see. Thank you. Yeah. I think lots of discussion about the future advanced packaging technology, right? Jason, can you share with us about your business development here? Also, I think you have some interposer capacity, right? How are we going to utilize those capacities going forward? Maybe some color about the potential applications.

Yeah, and I think lots of.

A discussion about the future of advanced packaging.

Take all G I, Joe how do you think can you share with us about your.

Is this.

Hello, Mike here, and so I think you have us.

Into opposed to capacity right, how how are we going to utilize those to our capacity going forward and maybe some color about the potential application.

Sure.

Jason Wang: Sure. Well, I mean, we're not missing. We don't want to miss out the advanced packaging opportunity. We are preparing our advanced packaging solution for what we see is for the growing energy consumption of the cloud AI as well as the potential growth in the edge AI market. First, to address the power efficiency requirement for the high-computing processor, UMC is developing the 2.5D interposer with a DTC and discrete DTC, that's going to be the roadmap coming up. Right now, the current interposer is moving on to the next generation, and we're waiting to introduce this and expect to ramp after that. Second, the UMC is leveraging the scalable 3D wafer-to-wafer stacking and TSV to enhance the competitiveness of our specialty technology. We are currently in mass production for the extremely small form factor for the 5G and 6G RFIC.

Jason Wang: Sure. Well, we're not missing. We don't want to miss out the advanced packaging opportunity. We are preparing our advanced packaging solution for what we see is for the growing energy consumption of the cloud AI systems, as well as the potential growth in the edge AI market. First, to address the power efficiency requirement for the high computing processor, United Microelectronics Corporation is developing the 2.5D interposer with DTC and discrete DTC, which is going to be the roadmap coming up. Right now, we are the current interposer is moving on to the next generation. We're waiting to introduce this and expect to ramp after that. Second, United Microelectronics Corporation is leveraging the scalable 3D wafer-to-wafer stacking and TSD to enhance the competitiveness of our specialty technology. We are currently in mass production of it for the extremely small form factors for the 5G and 6G RFIC.

Well I mean, we would not be we don't want them yourself packaging opportunity we are preparing.

Packaging solution.

While we see the growing energy.

Consumption not the call AI as well.

The potential growth in the edge.

So first to address the power efficiency requirements will be.

Hi computing processor.

The $2 five vehicles or at least a BDC.

You can see.

That's gonna be the roadmap, that's coming up right now off the current intervals or Oh, he's moving on to the next generation.

Are you waiting for to waiting for to introduce this and expect to rent after that second the U M season that'd be junior.

Scannable three D wafer to wafer stacking and tier two and enhance the competitiveness of our specialty technology. We are currently in mass production on it 40 extremely small phone factor <unk> RF IC and based on the success of the psyche of the 60.

Jason Wang: Based on the success of the 5G and the 6G RFIC with the wafer-to-wafer stacking, we are also developing memory-to-memory stacking and memory-to-large stacking service for the high bandwidth computation requirements.

Ours I see at least the wafer to wafer second we are also developing memory two memory stacking and memory two largest banking services for the high bandwidth computational requirements.

Okay.

Charlie Chan: Okay. Thank you. My last question, again, is always want to consult you or pick up your points about the semiconductor cycle. I believe this is the third consecutive year we don't see so-called second-half recoveries. What do you think is happening on this semiconductor industry? Why we don't see sustainability or so-called specificality, right? I remember in the past, you have upcycle and shortage over capacity and then correction. We seem to don't see that anymore.

John Lee Chun: Okay. Thank you. My next question, again, is always want to consult you or pick up your points about the semiconductor cycle. I believe this is the third consecutive year we don't see so-called second half recoveries. What do you think is happening on this semiconductor industry? Why we don't see sustainability or so-called sustainability, right? Because I remember in the past, you have like upcycle and shortage over capacity and then correction. We seem to don't see that anymore.

Okay. Thank you and my my last question again is a waste one to come south shore.

About getting kind of a cycle, but I believe he said sitters.

Yeah, we don't see sort of a second half recovery what do you think is happening.

On the semiconductor industry, why we don't see.

So T O. So coat, there's a cyclicality right because I remember.

In the past you have like.

I'm Tycho in shortage.

Overcapacity and then.

Corruption, but.

These things don't don't see that anymore.

I mean, southern either the visibility that you lowered nowadays you're absolutely right.

Jason Wang: I mean, suddenly, the visibility is actually lowered nowadays. You're absolutely right. When we started here in 2025, we actually expected 2025 growth outlook will be slightly better than our addressable market. We've seen our addressable markets going to grow slightly and at a low single digit. We see at this moment, we still expect our 2025 growth outlook will remain unchanged. That stays. Beyond the 2025 or 2026, we have to closely work with our customer and sharing their visibility and as well as the monitoring the DOI situation. As of today, I think the DOI is getting to the healthy level. We've seen that DOI is approaching to the healthy level about a quarter or two quarters ago. Right now, the computer consumer communication segment is still healthy, remains healthy, while the automotive and industrial still remain high.

Jason Wang: I mean, certainly, the visibility is actually lowered nowadays. You are absolutely right. When we started here in 2025, we actually expect the 2025 growth outlook will be slightly better than our addressable market. We think our addressable market is going to grow slightly at a low single digit. We think at this moment, we still expect our 2025 growth outlook will remain unchanged. So that stays. Beyond the 2025 or 2026, we have to closely work with our customer and sharing their visibility as well as monitoring the DOI situation. As of today, I think the DOI is getting to the healthy level. We have seen that DOI approaching to the healthy level about a quarter or two quarters ago. Right now, the computer consumer and communication segment is still healthy, remains healthy. While the automotive and industrial still remain high.

Uh huh.

We've started here in 2025.

I expect that 2025.

All of them.

Will be slightly better than our addressable market and.

We've seen our expense of losses on the growth slightly.

At a low single digit and we seamlessly.

At this moment, we still expect our 25 25.

I would change so that's a and.

Beyond 2025, and 2026, and we have the culture and working with our customer.

And sharing their visibility and and us well see the monitoring the situation as of today I think the deal is getting into the healthy level.

See that.

Approaching to a healthy level of a quarter or two quarters ago and right now.

Computer consumer communication.

It's still healthy remained healthy and while the algo automotive.

So I think my well mountain time.

Jason Wang: I think while monitoring the macroeconomics as well as the DOI, we can only hope that sooner or later we will see the upcycle. Right now, the visibility is pretty low. Yeah.

Jason Wang: I think while monitoring the macroeconomics as well as the DOI, we can only hope that sooner or later we will see the upcycle. But right now, the visibility is pretty low.

Jason Wang: I think while monitoring the macroeconomics as well as the DOI, we can only hope that sooner or later we will see the upcycle. Right now, the visibility is pretty low. Yeah.

The macroeconomics.

Eli.

We can only hope that there's.

Later, we will see the off cycle right now.

He is pretty low.

Okay. Okay. Yeah. So yeah, maybe maybe try to again about a British question about wave of pricing so.

Charlie Chan: Okay. Okay. Yeah. Yeah, maybe try it again about Brad's question about wafer pricing. Yeah, because obviously, FX impacts all the Taiwanese country a lot in terms of gross margin. Would that be a factor you can put on the table to negotiate with your customers for next year's pricing?

John Lee Chun: Okay. Okay. So, maybe try it again about the first question about wafer pricing. Because obviously, FX impacts all the Taiwanese country a lot in terms of gross margin. Would that be a factor you can put on the table to negotiate with your customers for next year's pricing?

Because obviously FX impact Oh, the Taiwan, Taiwanese foundry or logic.

Yes.

Gross margin what would that be a affects or you can put on the table to negotiate with your customer set for next year I set up a pricing.

Jason Wang: I mean, we continue working with our customer in terms of pricing conversation closely. Those are more of a tactical conversation. I think fundamentally, like I reported earlier, I think our key focus is trying to differentiate our technology offering so that we can continue to enhance our product mix to improve the ASP resilience. I think that's where we're marching. We have a very clear roadmap today on many fronts of our technology development. Our goal is going to further widen the gap in technology offering and increase the revenue contribution from those respective notes and technology offering, which we think that we can make sure that our ASP can remain resilient. Yeah.

Jason Wang: We continue working with our customer in terms of pricing conversation closely. Those are more of a technical conversation. I think fundamentally, as I reported earlier, our key focus is trying to differentiate our technology offering so that we can continue to enhance our product mix to improve the ASP resilience. I think that is where we are marching. We have a very clear roadmap today on many fronts of our technology development. Our goal is to further widen the gap in technology offering and increase the revenue contribution from those respective nodes and technology offering, in which we think that we can make sure that our ASP can remain resilient.

We continue working with our customers in terms of pricing conversation hopefully, but those are more of a tactical conversation.

I think fundamentally like that.

Earlier.

The we've seen our key focus is to try to differentiate our technology offering and so.

We can continue to enhance our product mix to improve.

And that's where we.

Marching and you know we have a very clear roadmap today.

Many fronts so of our technology development.

I'll go further.

Further widen the gap and technology offering increases.

The revenue contribution from those affected and.

Technology offering.

That weekend.

Make sure that all our eighth he can be met we see it again.

Great that's very helpful.

Charlie Chan: Great. Thanks, Jason. Very helpful. Thank you. Next one, Gokul Hariharan, J.P. Morgan. Go ahead, please.

Charlie Chan: Great. Thanks, Jason. Very helpful.

John Lee Chun: Great. Thanks, Jason. Very helpful.

Operator: Thank you. Next one, Gokul Hariharan, JMorgan. Go ahead, please.

Thank you.

Brad Ling: Thank you. Next one, Gokul Hariharan, JPMorgan. Go ahead, please.

Swollen Goku Honeywell than Jpmorgan go ahead. Please.

Hi, Jason and thanks for taking my question.

Gokul Hariharan: Hi. Jason and Chi-Tung Liu, thanks for taking my question. First of all, for the Singapore Fab 28-nanometer and 22-nanometer expansion, could you talk a little bit about what is the current base of the ramp-up and the kind of customers that you're ramping up there? Obviously, some of the pricing negotiations that you had back in 2022 and 2023 obviously had some price escalators. Could you talk a little bit about whether those price escalators still exist, given the environment has definitely changed somewhat? So that's on the 28-nanometer part. Yeah.

Gokul Hariharan: Hi, Jason Wang and Chi-Tung Liu. Thanks for taking my question. First of all, for the Singapore fab 28 nanometer and 22 nanometer expansion, could you talk a little bit about what is the current pace of the ramp-up and the kind of customers that you're ramping up there? Obviously, some of the pricing negotiation that you had back in 2022 and 2023 obviously had some price escalators. Could you talk a little bit about whether those price escalators still exist given the environment has definitely changed somewhat? That's on the 28 nanometer part. Yeah.

Mr. Paul <unk> for the.

The board, Bob who need nanometer and can you do that immediate expansion could.

Could you talk a little bit about what does the cut and beat up the ramp up.

And the kind of customer you are ramping up their there'll be at least.

Some of the pricing negotiation that you had back in 'twenty two and.

And do any B b.

We had some price it can be done.

Could you talk a little bit of board, but had those prices still exist given the environment has changed somewhat.

So that's on the 28 nanometer bucket.

Sure well for the 12 I the Singapore facility.

Jason Wang: Sure. Well, for the 12i, the Singapore facility, given the current max market dynamics and customer's alignment, we project the 12i phase 3 production ramp will start in January 2026. It will ramp up with a higher volume starting in the second half of 2026. That's the current ramp plan. Many of this ramp schedule and alignment is based off the customer's close communications. Right now, given the application ramp-up is going to be mainly in the communication with our 22nm high-voltage devices. We still believe our 22nm and 28nm high-voltage solution aren't differentiated from the market. The ASP still remains fairly healthy at this point. Yeah.

Jason Wang: Sure. For the 12I, the Singapore facility, given the current market dynamics and customers' alignment, we project the 12I Phase 3 production ramp will start in January 2026. It will ramp up with a higher volume starting in the second half of 2026. That is the current ramp plan. Much of this ramp schedule and alignment is based on the customer's close communications. Right now, given the application ramp-up is going to be mainly in the communication with our 22-nanometer high-voltage devices, we still believe our 22-nanometer and 28-nanometer high-voltage solution are differentiated on the market. The ASP still remains very healthy at this point.

Max market dynamics and customer alignment we project.

The 12 phase III production ramp will start in January 2026.

And you will wrap up with a higher volume.

In the second half of 2026.

And that's the current ramp plans.

The no many of this rent schedule and alignment is they saw the customer calls.

<unk>.

And right now given the AR applications ramp up is going to speak mainly India communication.

We saw a 22 nanometer high voltage devices, and we still believe our 'twenty 'twenty to 'twenty two at 28 nanometer high E solution.

Differentiated part of the market and so the <unk> still remains very healthy at this point.

Got it.

Gokul Hariharan: Got it. Secondly, on gross margins, we are roughly in the mid-70s utilization, and we are kind of in the mid to high 20s gross margin. I think depreciation definitely started to grow again and looks like it is going to grow into the next couple of years as you bring in 12I. Could you talk a little bit about what is kind of the realistic pathway for us to get back to that mid-30s gross margins or low to mid-30s gross margins that we have talked about? Currency is not something that we control, but maybe talk about some of the other factors. Is that kind of like a realistic goal that you are pursuing? Thinking back to some of the previous questions, can pricing be a realistic tool to kind of get there, or is it more challenging to use price as a tool to get there?

Gokul Hariharan: Got it. Secondly, on gross margins, so we are roughly in the mid-70s utilization, and we're kind of in the mid to high 20s gross margin. I think depreciation definitely started to grow again and looks like it's going to grow into the next couple of years as you bring in 12nm. Could you talk a little bit about what is kind of the realistic pathway for us to get back to that mid-30s gross margins or low to mid-30s gross margins that we have talked about? Currency is not something that we control, but maybe talk about some of the other factors. Is that kind of a realistic goal that you're pursuing? I think back to some of the previous questions, can pricing be a realistic tool to kind of get there, or is it more challenging to use price as a tool together?

Secondly on gross margin.

So we had roughly in the mid seventies utilization.

And we're kind of in the mid to high <unk> gross margin.

I think depreciation definitely started to grow again and it looks like it's going to go into the next couple of years as you bring in Ottawa I. So could you talk a little bit about what are the kind of the realistic badly for us to get back to that.

Mid Thirty's gross margins are low to mid thirties, plus my visit you talked about.

It's not something that we control, but maybe talk about some of the other factor Hum.

Is that kind of like a realistic goal that you're pursuing and again I think back to some of the previous questions can pricing be a realistic to end up getting there or is it more challenging to use price as it goes together.

Well, absolutely I mean, there is definitely a mission to continue to improve.

Jason Wang: Well, absolutely. It is definitely our mission to continue to improve the gross margin back to the reasonable level. Given the current loading, it is fluctuating around the 70%, definitely putting some pressure in terms of the gross margin while the depreciation should increase. The focus is very clear. I kind of answered Charlie earlier that we are focused on technology development, technology offering, even the newer technology offering and the partnership engagement, and with the product mix improve. We think that we have a path going back to the reasonable level. We have for the past, we have been maintaining our foundry shares in our addressable market segment. Based on our current design pipelines, we anticipate more share gains in 2026 as well as going into 2027, particularly in the 22-nanometer technology platform and 28-nanometer technology platform market today.

Jason Wang: Well, absolutely. I mean, it's definitely our mission to continue to improve the gross margin back to the reasonable level. Given the current loading is fluctuating around the 70%, it's definitely putting some pressure in terms of the gross margin while the depreciations increase. The focus is very clear. I kind of answered Charlie earlier that we are focused on technology development, technology offering, given the newer technology offering and the partnership engagement with the product mix improve. We think that we have a path going back to the reasonable level. For the past, we have been maintaining our foundry shares in our addressable market segment. Based on our current design pipelines, we anticipate more share gain in 2026 as well as going into 2027, particularly in the 22 and 28 nanometer socket today.

The gross margin Bachelor.

The reasonable level.

Given the current loading.

Frustrating fluctuating.

Fluctuating around the 70%.

It's definitely putting some pressure in Tennessee.

Well the depreciation increase.

And so the focus is very clear.

I kind of answer Tony earlier that we.

We are focused on technology development.

Offering even the newer technology offering.

And punish it engagement.

We still front I'm mixing pool, and we've seen that.

We have a pass.

Going back to them to a reasonable level.

We have for the past we have been maintaining our funky shares hitting our addressable market segment based on our current design pipeline.

Pipelines, we anticipate once again in 2000 2026, plus wells going into 2027 are particularly in the 'twenty two 'twenty eight meters.

Socket today no.

Jason Wang: Now, while we rolled out the other technology offering, we think this will continue to improve. We'll definitely march into the direction to go back to the right level of the gross margin level. Yeah.

Jason Wang: While we rolled out the other technology offerings, we think this will continue to improve. We will definitely march into the direction to go back to the right level of the gross margin level.

While we rolled out these other technology offering we think this will continue to improve.

That'd be marching to the Tuesday rushing to go back to the right level of the gross margin level.

Michael Lin: Okay. If I may add on to that, our annual depreciation growth is going to pick out. If you recall, in 2023, our depreciation expense increased by more than 20% year over year, and similar magnitude for 2024. Sorry, similar magnitude for this year, for 2025. But for 2026 and 2027, the increased magnitude will be a lot less. It could drop down to a single digit. Hopefully, we will have a better cost structure moving into 2026 and 2027.

Chi-Tung Liu: Yeah. If I may add on to that, our annual depreciation growth is going to pick out. If you recall, in year 2023, our depreciation expense increased by more than 20% year-over-year. Similar magnitude for 2024. Sorry, similar magnitude for this year, for 2025. For 2026 and 2027, the increased magnitude will be a lot less, could drop down to a single digit. Hopefully, we will have better cost structure moving into year 2026 and 2027.

Chitung Liu: Yeah. If I may add on to that, our annual depreciation growth is going to pick out. If you recall, in year 2023, our depreciation expense increased by more than 20% year-over-year. Similar magnitude for 2024. Sorry, similar magnitude for this year, for 2025. For 2026 and 2027, the increased magnitude will be a lot less, could drop down to a single digit. Hopefully, we will have better cost structure moving into year 2026 and 2027.

If I may add ons for that are.

Annual depreciation gross is going to pick out so if you recall in 2023.

Depreciation expense increased by more than 20%.

As of year end.

And similar to 2024.

And.

Sorry, the same similar message here for this year.

75.

For 'twenty six 'twenty seven is the increased maintenance here, whether it be a lot less cooked.

<unk> dropped down through a single feature so hopefully we will have oh.

At their cost structure.

Moving towards.

2026 and 27.

Thanks, and maybe one final question on the high voltage side for 28, and when you do a decent movie have a bot. We are below 22 nanometer for high voltage given there's been some discussion about.

Gokul Hariharan: Thanks, Chi-Tung. Maybe one more question on the high-voltage side for '28 and '22. Jason, do we have a pathway below 22 nanometer for high-voltage given there's been some discussion about some of the driver IC-related products moving below that, be it through some kind of a FinFET node but enabling high-voltage?

Gokul Hariharan: Thanks, Chi-Tung. Maybe one more question on the high-voltage side for 28 and 22. Jason, do we have a pathway below 22 nanometer for high-voltage given there's been some discussion about some of the driver IC-related products moving below that, be it through some kind of a FinFET node but enabling high-voltage?

Gokul Hariharan: Thanks, Chi-Tung Liu. Maybe one more question on the high voltage side for 28-nanometer technology platform and 22-nanometer technology platform. Jason, do we have a pathway below 22-nanometer technology platform for high voltage, given there's been some discussion about some of the driver IC-related products moving below that, be it to some kind of a FinFET node, but enabling high voltage?

Some of the debit isolated products moving below that.

You do some kind of a finfet node.

Enabling high voltage.

But it's definitely on our roadmap today they they are.

Jason Wang: is definitely on our roadmap today. They are. While we still believe that 22-nanometer technology platform high V will be the most compelling and competitive solution today, as well as the next couple of years, the FinFET solution of the high voltage is on our roadmap today.

Jason Wang: It's definitely on our roadmap today. They are. While we still believe that 22 high-voltage will be the most compelling and competitive solution today as well as next couple of years, yes, the FinFET solution of the high-voltage is on our roadmap today. Yes.

While we still believe that 'twenty two a high V will be the most compelling and competitive solutions today, that's what's next.

A couple of years and but yes, it seems that solution of the high voltage is.

Yes.

And any any timeline in terms of menu didn't get the muslin started demanding this.

Gokul Hariharan: Any timeline in terms of when you think customers will start demanding this?

Gokul Hariharan: there any timeline in terms of when you think customers will start demanding this?

Gokul Hariharan: Any timeline in terms of when you think customers will start demanding this?

That was due aligning with our customers.

Jason Wang: That we are still aligning with our customer. Again, it is contemplating between the value proposition of the 22-nanometer technology platform versus the next nodes. We are closely working on that. I do not have a specific timeframe, but I kind of don't want to give a guess right now because I am giving all the data on hand. We are still saying the 22-nanometer technology platform high voltage will have a leg. It will probably be another year to close to two years.

Jason Wang: That we're still aligning with our customer. Again, it's contemplating between the value proposition of the 22 versus the next nodes. We are closely working on that. I don't have a specific timeframe, but I kind of don't want to give a guess right now because given all the data on hand, we're still saying the 22 nanometer high-voltage will have a lag. There will probably be another year, closer to 2 years. Yeah.

And again, it's come to play between the.

The value proposition of the 22 versus the next node and we are currently working on that and I Cindy.

I don't have a Pacific time friends.

Yeah.

I kind of don't want to give a guess right now.

Hey, guys.

Oh, Yeah, we still see India 2022 nanometer high voltage will have a link.

Probably be another here.

To close to two years.

Understood.

Gokul Hariharan: Understood. Maybe 1 last question. Several of the consumer fabless companies are guiding down Q3 quite meaningfully. Your own wafer orders are slightly moving up in Q3. Should we expect that there could be a hiccup in Q4? Every year seems to be a different seasonality, but just wanted to understand how you think about that inventory cycle for many of the Asian consumer fabless companies, which are your key customers as well.

Gokul Hariharan: Understood. Maybe one last question. Several of the consumer fabless companies are guiding down Q3 quite meaningfully. Your own wafer orders are slightly moving up in Q3. Should we expect that there could be a hiccup in Q4? Every year seems to be a different seasonality, but just wanted to understand how you think about that inventory cycle for many of the Asian consumer fabless companies, which are your key customers as well.

Gokul Hariharan: Understood. Maybe one last question. Several of the consumer fabulous companies are guiding down Q3 quite meaningfully. Your own wafer order is slightly moving up in Q3. Should we expect that there could be a hiccup in Q4? Every year seems to be a different seasonality, but just wanted to understand how you think about that inventory cycle for many of the Asian consumer fabulous companies, which are your key customers as well.

Good luck with the several of the consumer to Fabless companies.

I'm not guiding down Q3 quite meaningfully.

On your own.

What are the odd.

Slightly moving up.

In Q3.

Should we expect that there could be a pick up in Q4 every year it seems to be a different seasonality, but just wanted to understand how you think about that.

Inventory cycle.

For many consumer companies.

The month as well.

Sure I mean D C.

Jason Wang: Sure. I mean, the inventory situation actually is quite healthy with a few major segments already. Auto and industrial, I think they're still kind of high. The rest of it is actually quite healthy. At this point, given the visibility, we do not guide the Q4 at this time. Our view for the full year 2025 will remain unchanged. Again, I kind of touched that earlier, that our addressable market will grow by the low single digit, and we will still outgrow the addressable market in 2025. The biggest challenge nowadays is really the visibility. Given the macro uncertainties and the geopolitical concerns, I think the customer is being cautious. It doesn't mean they don't have a demand. The question is they kind of want to play this thing in a different manner. We're working closely with them.

Jason Wang: Sure. The inventory situation actually is quite healthy, with a few major segments already. Auto and industrial, I think they are still kind of high, but the rest of it is actually quite healthy. At this point, given the visibility, we do not guide Q4 at this time. Our view for the full year 2025 will remain unchanged. Again, I touched that earlier, that we expect our addressable market will grow by the low single digit, and we will still outgrow the addressable market in 2025. The bigger challenge nowadays is really the visibility. Given the macro uncertainties and the geopolitical concerns, I think the customer is being cautious. It does not mean they just do not have a demand. The question is, they kind of want to play this thing in a different manner. So we are working closely with them.

Inventory situation actually is quite healthy.

Oh fewer major segment already in the outdoor industrial ICD, they they they still kind of high.

But the rest of is actually quite healthy.

We at this point given the visibility.

Not guide in Q4 at this time, but our view for the full year of 2025 would remain unchanged.

And again.

Kind of touch that earlier that we expect our addressable market will grow low single digits and we won't cut we will still help grow your addressable market.

In 2025.

Yeah.

The bigger challenge is nowadays is really the visibility.

Given the macro uncertainties and the geopolitical concerns.

The customer has to be cautious.

It doesn't mean that you don't have a few minutes. The question is C C.

The the kind of wanted to play this thing.

In a different matter, so we looking cultural loosen and Meanwhile, the queues.

Jason Wang: Meanwhile, Q2 is growing, Q3 is slightly sequentially, and Q4, we just have to clear and see. We will definitely report that next quarter. Meanwhile, we think the overall 2025 projection is still unchanged.

Jason Wang: Meanwhile, Q2 is growing, Q3 slightly, sequentially. Q4, we just have to play and see. We'll definitely report that next quarter. Meanwhile, we think the overall 2025 projection is still unchanged. Yeah.

Q2s growing Q3 slightly.

Sequentially in Q4, we just have to play in C. L would definitely report that next quarter and Meanwhile, we've seen an overall 2025 projection.

Yeah.

Okay.

Gokul Hariharan: Okay. Yeah. Thanks, Jason. Thank you.

Thank you.

Charlie Chan: Thank you. Next question, Sunny Lin, UBS. Go ahead, please.

Jason Wang: Thank you.

Next question Sunny Lin UBS go ahead. Please.

Brad Ling: Next question is from Elaine UBS. Go ahead, please.

Thank you very much for taking my question. So my first question is on 28 nanometer and.

Sunny Lin: Thank you very much for taking my questions. My first question is on 28 nanometer. If we look at Q2, Jason, what's driving the revenue upside? Is it driven by the 22 nanometer migration, or is it through a product mix upgrade? Looking ahead, could you share a bit more on your share again in wireless communications and maybe some of the other products going to 2026?

Elaine: Thank you very much for taking my questions. My first question is on 28-nanometer technology platform. If we look at Q2, Jason, what is driving the revenue upside? Is it driven by the 22-nanometer technology platform migration or is it through a product mix upgrade? Looking ahead, could you share a bit more on your share again in wireless communications and maybe some of the other products going to 2026?

So if we look at Q2, Jason what's driving the revenue upside is it driven by the 22 nanometer.

And then EMEA migration, so product makes up way.

And then looking ahead could you shed a bit more on your share again wireless communications and maybe some of the other products are going to 'twenty 'twenty six.

Okay, well for the near term.

Jason Wang: Well, for the near term, the 22 and 28 revenue contribution increase is mainly coming off from the communication in Q2, computing and communication segment, but mainly on communications in Q2. Going forward, we are highly confident in the continuous growth of 22 and 28 nanometers business in 2025 and beyond, going into 2026. The strong demand outlook is supported by the continuous takeoff momentum on many different applications, thanks to the customers, of course. Again, it's really supported by UMC's differentiated technology and the regional manufacturing footprint as well. This includes our 12i fab in Singapore, which the P3 fab expansion is on track, and we want to on track to ramp in 2026. We'll begin contributing the revenue in the second half of 2026. This will further strengthen our 22 and 28 capacity and support the growth for the growing demand.

Jason Wang: the near term, the 22-nanometer technology platform and 28-nanometer technology platform revenue contribution increase is mainly coming out from the communication in Q2 computing and communication segment, but mainly on communication in Q2. Going forward, we are highly confident in the continuous growth of 22-nanometer technology platform and 28-nanometer technology platform business in 2025 and beyond, going into 2026. The strong demand outlook is supported by the continued tape-out momentum on many different applications, thanks to our customers, of course. It is really supported by United Microelectronics Corporation's differentiated technology and the regional manufacturing footprint as well. This includes our 12I fab in Singapore, which the P3 fab expansion is on track.

Jason Wang: Well, for the near term, the 22 and 28 revenue contribution increase is mainly coming off from the communication in Q2, computing and communication segment, but mainly on communications in Q2. Going forward, we are highly confident in the continuous growth of 22nm and 28nm business in 2025 and beyond, going into 2026. The strong demand outlook is supported by the continuous takeoff momentum on many different applications, thanks to the customers, of course. Again, it's really supported by UMC's differentiated technology and the regional manufacturing footprint as well. This includes our 12i fab in Singapore, which the P3 fab expansion is on track, and we want to on track to ramp in 2026. We'll begin contributing the revenue in the second half of 2026. This will further strengthen our 22 and 28 capacity and support the growth for the growing demand.

The C V 22, and 28 revenue contribution.

Increase is mainly coming out from the commutation.

In Q2 computing and communications that way.

Communications in Q2.

Going for.

Very high.

Heidi how you come with us in the continuous grows all 22 and 28 nanometers business in 2020 by M P up going into 2020.

96.

Hmm.

<unk> met all of this is supported by the.

The computer tasteful momentum many different applications and thanks to all of them.

The customer of course, and but again, it's really supported by differentiated technology and the regional manufacturing footprint.

This concludes our 12 I sat in Singapore, which.

Sweet Tam expansion is on track and we went out and tried to ramp through 2026.

Jason Wang: We want to on track to ramp in 2026. We will begin to contribute in the revenue in the second half of 2026. This will further strengthen our 22-nanometer technology platform and 28-nanometer technology platform capacity and support for the growing demand. The combination of the technology proposition, manufacturing quality, and the well-positioned capacity setup will ensure our 22-nanometer technology platform and 28-nanometer technology platform will remain the core growth engine for 2026.

M D.

We will begin to contributing to revenue in the second half of 2026 and this will further strengthen our R 22, and 28 capacity in support of brokers for the growing demand.

Jason Wang: The combination of the technology proposition, manufacturing quality, and the well-positioned capacity setup will ensure our 22 and 28 will remain the core growth engine for the next year, 2026. Yeah.

A nation of the technology proposition manufacturing quality and are well positioned to capacity set up will ensure R. 22, and 28 will remit the bulk worlds, India for 2021.

For the next year 2016.

Thank you very much so on 12 five.

Sunny Lin: Thank you very much. On 12nm, would you be able to price the wafers a bit higher, give a higher cost structure? When you talk about high-volume production starting from second half of 2026, any type of capacity that we should expect?

Elaine: Thank you very much. On 12I, would you be able to price the wafers a bit higher, give a higher cost structure? When you talk about high-volume production starting from the second half of 2026, any type of capacity that we should expect?

Would you be able to price the wafer is a bit high given a higher cost structure.

And when you talk about high volume production, starting from second half of 2026.

Type of capacity that we should expect.

Well I mean, we.

Jason Wang: Well, I mean, we don't want to quote exactly capacity size, but we are quickly ramping our P3. We look at this 22 and 28 capacity on a total basis between our old facilities. I think the oldest utilization rate across the different facilities on 22 and 28 were above our corporate average. Even today, they are above our corporate average. The question about, I kind of missed your earlier question, the first question.

Jason Wang: We don't want to quote exactly capacity size, but we are quickly ramping our P3. Then we look at this 22-nanometer technology platform and 28-nanometer technology platform capacity on a total basis between our old facilities. I think the older utilization rate across the different facilities on 22-nanometer technology platform and 28-nanometer technology platform were above our corporate average. Even today, they are above our corporate average. The question about, I kind of missed your earlier question, the first question.

Siding capacity sites, but we are quickly ramping our RP suite.

And then we look at this 22 and 28 capacity on a total basis between our old and.

And I think the utilization rate across the different facility plenty to a 20 day well above our corporate average even today they are.

Our corporate average and the.

Uh huh.

No question about that.

Kind of a mixture.

Or to your question the first question.

Pricing for Singapore would you be able to price a bit higher given cost is higher as well.

Elaine: Pricing for Singapore, would you be able to price a bit higher given cost is higher as well?

Sunny Lin: Pricing for Singapore, would you be able to price a bit higher given cost is higher as well?

Jason Wang: No matter. I missed it. It's a sensitive subject. Well, right now, again, our pricing position is based on our technology offering, our value proposition. I think that's the baseline of the ASP. In terms of the diversified location, we have to work with our customer to understand the needs. Right? We want them to stay competitive, and we want them to acknowledge the differentiated offering of our technology and as well as the geolocation benefits. It's a subject that we will talk about with our customer, but mainly on the technology differentiation as well as their competitiveness. Yeah.

Jason Wang: No matter, I missed it. It is a sensitive subject. Right now, again, our pricing position is based on our technology offering, our value proposition. I think that is the baseline of the ASP. In terms of the diversified location, we have to work with our customer to understand the needs. We want them to stay competitive, and we want them to acknowledge the differentiated offering of our technology, as well as the geolocation benefit. It is a subject that we will talk about with our customer, but mainly on the technology differentiation as well as their competitiveness.

No matter I missed it.

Isn't.

It's a sensitive subject.

Well right now again, our pricing for <unk>.

Fishing is.

Based on our technology offerings.

Our value proposition and I said, that's the baseline of the HP.

The E P.

In terms of the type.

Diversify their location.

We have to work with all.

Customers to understand their needs right. So.

We want them to stay competitive.

We want them to acknowledge that differentiate our technology.

In us wealth.

Okay.

The geolocation benefits so are we.

It's a subject that we will talk.

Talk about with all customers, but many of the technology differentiation us well.

Their competitiveness.

Got it. Thank you that's helpful. I have a question on the Intel partnership.

Sunny Lin: Got it. Thank you. That's helpful. I have a question on the Intel partnership. Seems like Intel is becoming less proactive in pursuing the foundry ambitions with the new management. I wonder, how does that affect the business development with UMC? Let's say if Intel want to scale down and they look to maybe sell the capacities, in that case, would UMC be interested in acquiring the capacity, assuming the price is reasonable?

Elaine: Got it. Thank you. That's helpful. I have a question on the Intel partnership. It seems like Intel is becoming less proactive in pursuing the foundry ambitions with the new management. I wonder how that affects the business development with United Microelectronics Corporation. Let's say if Intel wants to scale down and they look to maybe sell the capacities, in that case, will United Microelectronics Corporation be interested in acquiring the capacity, assuming the price is reasonable?

It seems like Intel.

He's becoming less proactive in pursuing the <unk> with a new management.

So I wonder how does that affect the business development with UMC.

And let's say if <unk> want to spell now and then.

Look to maybe sell the capacity is that take you on site would be interested in acquiring the capacity you're assuming on the prices are reasonable.

Well first I think it's hard to comment any speculation.

Jason Wang: At first, I think it is hard to comment any speculation. You know, I do not want to comment about the partners' priorities within the company, but I can only comment about our program. Our current program with them, like I said earlier, the collaboration with Intel is progressing very well, and the milestones remain on track. Most importantly, both parties are very committed to this 22-nanometer technology platform collaboration. I see no change at this point. We still have very high expectations with this program.

Jason Wang: Well, first, I think it's hard to comment any speculation. I don't kind of want to comment about the partner's priorities within their company, but I can only comment about our program. Our current program with them, like I said earlier, the cooperation with Intel is progressing very well. The milestones remain on track, and most importantly, both parties are very committed to this 12 nanometer cooperation. I see no change at this point, and we still have very high expectations with this program.

Yeah.

And I don't kind of don't want to comment about the E.

The pontiff hierarchy, who seem to accompany but I can only comment about our program.

Our current program, we've been like I said earlier.

Cooperation with Intel is progressing very well.

And the milestones we remain on track and most importantly, the both parties are very committed to the to the small millimeter cooperation.

And so I I see no change.

Point.

And we still have very high expectation with.

This program.

Got it thank you very much.

Sunny Lin: Got it. Thank you very much.

Elaine: Got it. Thank you very much.

Jason Wang: Thank you.

Thank you.

Charlie Chan: Thank you. As a reminder, please press star key and 1 on your keypad if you would like to ask the question. Thank you. Next, we'll have Laura Chen from Citi. Go ahead, please. I'm sorry. Laura just dropped her line, and we'll take the next one. Jason Zhang, CLSA. Go ahead, please.

Operator: Thank you. As a reminder, please press star key and one on your keypad if you would like to ask the question. Thank you. Next, we'll have Laura Chen from Citi. Go ahead, please. I'm sorry. Laura just dropped her line, and we'll take the next one. Jason Zhang, CLSA. Go ahead, please.

Jason Wang: Thank you.

Brad Ling: Thank you. As a reminder, please press star key and number one on your keypad if you would like to ask the question. Thank you. Next, we will have Laura Chen from CITY. Go ahead, please. I am sorry. Laura just dropped her line, and we will take the next one. Jason Zhang, CLSA. Go ahead, please.

As a reminder, please prez Starkey and number one on your keypad. If you would like to ask the question. Thank you.

Next we'll have Laura Chen from Citi Go ahead. Please.

I'm, sorry, Laura just Trump, Hawaii, and we'll take the next one.

With Jason Jones C O S. A go ahead please.

Thank you for taking my questions I, just wanted to follow up the impact on them from the FX ratio.

Jason Zhang: Thank you for taking my questions. I just want to follow up the impact from the FX ratio. Can you provide your FX ratios for Q3? Thank you.

John Lee Chun: Thank you for taking my questions. I just want to follow up the impact on the FX ratio. Can you provide your FX ratios for Q3? Thank you.

Can you provide or FX ratios for Q3.

Thank you.

Oh, So first of all every 1% move appreciation.

Michael Lin: First of all, every 1% move appreciation of $20 against U.S. dollars will erode our gross margin about 0.4 to 0.5 percentage points. That is where the 3 percentage point erosion comes from, back on back of the 6% plus $20 appreciation against U.S. dollars. For Q3, we do not do forecasts, but we are using current forex rate, which is nearly 29.8 when we give out our guidance. A reminder for Q2, the weighted average was 30.81.

Michael Lin: First of all, every 1% move appreciation of $20 against US dollars, it will erode our gross margin about 0.4 to 0.5 percentage points. That's where the 3 percentage point erosion comes from on back of the 6% plus $20 appreciation against US dollars. For Q3, we don't do forecasts, but we are using current Forex rate, which is nearly 29.8 when we give out our guidance. A reminder, for Q2, the weighted average was 30.81.

R&D dollars against U S dollars. He will he wrote gross.

Gross margin about four to five percentage points.

That's where those three percentage points erosion coming from back home and.

And back off the 6% plus 10 to a dollar.

Dollar appreciation against U S dollars.

And for Q3 are we don't want to.

Yes.

Using current.

For us right, which is nearly two times you know at any point.

Hey.

When we gave our guidance.

Guidance.

A reminder for quarter two at a weighted average of course, so to your point U K y.

Thank you and my second question is in terms of the competition. It seems like your Chinese competitors now have a badger will hire you attachment rate currently so do we do we see a better markets or or or.

Jason Zhang: Thank you. My second question is in terms of the competition. It seems like your Chinese competitors now have a better or higher utilization rate currently. Do we see a better market or lower competitions in the mature nodes? How can UMC benefit from this lower competition? Thank you.

John Lee Chun: Thank you. My second question is in terms of the competition. It seems like your Chinese competitors now have a better or higher utilization rate currently. Do we see a better market or lower competition in the mature nodes? How can United Microelectronics Corporation benefit from this lower competition? Thank you.

You know lower competitions in the mature nodes.

And how come you wouldn't see benefit from this lower competition. Thank you.

Uh huh.

Jason Wang: At this point, more than half of our revenue comes from specialty technology solutions, which serve our customer demand in differentiated technologies. For instance, our 22-nanometer technology platform AI systems touched earlier is probably the most competitive solution in the high-end smartphone or OLED display market. In addition, our 22-nanometer technology platform ultra-low leakage and low power technology will deliver another 30% to 50% better power savings compared to standard 28-nanometer technology platform. So we position ourselves as a specialty foundry partner focused on low leakage, low power logic, embedded high voltage, BCD, embedded NAND memory, RFSOI solutions. We want to continue to provide specialty technology where the percentage of revenue contribution in this space will increase, and the percentage of the revenue contribution competing with the Chinese foundries will continue to decline. I think that is our focus.

Jason Wang: Well, at this point, more than half of our revenue comes from specialty technology solutions which serve our customer demand in differentiated technologies. For instance, our 2220 AI, I kind of touched on earlier, is probably the most competitive solution in high-end smartphone OLED display market. In addition, our 22nm ultra-low leakage and low-power technology will deliver another 30% to 50% better power saving compared to standard 28nm. We are positioning ourselves as a specialty foundry partner, focused on low leakage, low-power logic, embedded high-voltage BCD, embedded Non-Volatile memory, RFSOI solutions. We want to continue to provide special technology where the percentage of our revenue contribution in this space will increase, and the percentage of the revenue contribution competing with the Chinese foundries will continue to decline. I think that's our focus.

At this point more than half of our revenue.

It's come from specialty technology solutions could you serve a customer would be made differentiated technologies.

He says our 'twenty to 'twenty, you can kind of touch on earlier is probably the most competitive solution at the high end smartphone.

Display market.

In addition, our 20.

22, ultra low leakage in low power technology.

For another 30% to 50% better power saving compared to stand at 28. So we are positioned ourselves as a specialty foundry ponder focus on low leakage no power logic.

High voltage BCD embedded non volatile memory arent art, that's a lie solutions, what we want to continue to provide especially with technology, where the potential revenue contribution in this space will.

It will increase in the percentage of our revenue continued to be competing with the Chinese foundries will continue to decline.

That's our focus.

Jason Wang: I think that we are making quite a bit of progress already. We think there's more room for us to improve on that. Yeah.

And I say that we have making quite a bit of progress already and we feel there's more room for us to improve on that.

Jason Wang: I think that we are making quite a bit of progress already. We think there's more room for us to improve on that. Yeah.

Jason Wang: I think that we have been making quite a bit of progress already, and we think there is more room for us to improve on that.

Got it got it. Thank you I have no more questions. Thank you very much.

John Lee Chun: Got it. Got it. Thank you. I have no more questions. Thank you very much.

Jason Zhang: Got it. Thank you. I have a normal question. Thank you very much.

Thank you.

Charlie Chan: Thank you. Next one, Laura Chen. Citi, go ahead, please.

Operator: Thank you. Next one, Laura Chen. Citi, go ahead, please.

Brad Ling: Thank you. Next one, Laura Chen, UBS. Go ahead, please.

Next one will have a chain Citi go ahead. Please.

Yeah. Thank you very much for having me back just a quick a follow up wanted to understand your view on the long term gross margin outlook, we understand that there's a lot of moving parts are rising depreciation and also currencies, etc, but we do see that recently.

Elaine: Yeah. Thank you very much for having me back. Just a quick follow-up. I want to understand your view on the long-term gross margin outlook. We understand that there is a lot of moving parts, rising depreciation, and also currencies, et cetera. But we do see that recently, the utilization rate is kind of improving back to high 70%. As we are moving into Q3 with the wafer shipment also going up, what is our view on our so-called long-term gross margin target? If you can give us more colors on that. Thank you, Jason.

Sunny Lin: Yeah. Thank you very much for having me back. Just a quick follow-up, want to understand your view on the long-term gross margin outlook. We understand that there's a lot of moving parts, rising depreciation, and also currencies, etc. We do see that recently, the utilization rate is kind of improving back to high 70%. As we're moving into Q3, with the wafer shipment also going up. What's our view on our so-called long-term gross margin target? If you can give us more colors on that. Thank you, Jason.

Laura Chen: Yeah. Thank you very much for having me back. Just a quick follow-up, want to understand your view on the long-term gross margin outlook. We understand that there's a lot of moving parts, rising depreciation, and also currencies, etc. We do see that recently, the utilization rate is kind of improving back to high 70%. As we're moving into Q3, with the wafer shipment also going up. What's our view on our so-called long-term gross margin target? If you can give us more colors on that. Thank you, Jason.

Uh Huh Getcha, Rachael Ray is kind of improving back to the high 70% and suite moving into Q3 of them at least a wafer shipment also going up so.

All of you on our so called eat Oh don't have gross margin target. If you can give us a lot of color or something that thank you Jason.

Well I mean.

Jason Wang: Well, I mean, right now, meet 70% is not great. Obviously, loading will be one of the important focus. To improve the loading, fundamentally, you have to provide competitive solutions to customers. Like I said, we focus on technology differentiation, focus on new technology development, following with the key customer partners' engagements. By doing that, we think the loading will increase, as well as the gross margin will get healthier. The other one is, of course, the cost. For the depreciation increase, and she also touched that earlier, this couple of years, we have a significant depreciation increase. After this 2025, I think the increase percentage will start getting more mild. While we improve the loading and maintain the cost structure, and the next thing is, of course, the ASP management.

Jason Wang: Right now, mid-70% is not great. Obviously, loading will be one of the important focuses. To improve the loading, fundamentally, you have to provide competitive solutions to customers. As I said, we focus on technology differentiation, focus on new technology development, and then following with the key customer partners' engagements. By doing that, we think the loading will increase, as well as the gross margin will get healthier. The other one is, of course, the cost. For the depreciation increase, Chi-Tung Liu also touched that earlier, this couple of years, we have a significant depreciation increase. After 2025, I think the increased percentage will start getting more mild. While we improve the loading and maintaining the cost structure, the next thing is, of course, the ASP management. From the ASP management and with the more compelling solution, you have a more diversified manufacturing size and the manufacturing quality.

No my.

70% is it.

Not great and so.

So obviously loading will be one of the important focus and to improve the loading a fundamentally you have to provide competitive solutions to customer so our like I said.

We focus on them.

Knowledge differentiation and focus on new technology development, and then following with the customer a key customer partners.

Engagement, so by doing that we've seen the loading will increase and and so so as well as the gross margin.

We will get healthier and.

The other one is of course the calls.

And the 40.

Well the depreciation increase she don't also touched that earlier.

A couple of years, we have a significant depreciation increase.

After this 2025 I think the the increase for Tim did you want to start getting more miles and so while we improve the loading and maintaining.

Depreciation is a cost structure and the next thing is of course, the <unk> management on the energy management and waste won't compelling solution and you have a more diversified and manufacturing sites and in manufacturing quality and we since the ASC world.

Jason Wang: From the ASP management and with the more compelling solution, you have a more diversified manufacturing site and the manufacturing quality. We think the ASP will, at least the branded ASP will, remain resilient. Not to mention, we'll continue marching forward with our 12 nanometer development, and hopefully, that we can continue to improve the product mix as well. Giving all those is putting a roadmap for us to improve our market relevance and position as well as our financial performance. For the past, we have already improved our structure profitability in terms of our break-even point. From that front, we already see an effect and benefit. Going forward, there's still work to do. Combining all those, we think we have a roadmap to march into a better result. Yeah.

Jason Wang: From the ASP management and with the more compelling solution, you have a more diversified manufacturing site and the manufacturing quality. We think the ASP will, at least the branded ASP will, remain resilient. Not to mention, we'll continue marching forward with our 12nm development, and hopefully, that we can continue to improve the product mix as well. Giving all those is putting a roadmap for us to improve our market relevance and position as well as our financial performance. For the past, we have already improved our structure profitability in terms of our break-even point. From that front, we already see an effect and benefit. Going forward, there's still work to do. Combining all those, we think we have a roadmap to march into a better result. Yeah.

Jason Wang: We think the ASP, at this advanced ASP, will remain resilient. Not to mention, we will continue marching forward with our 12-nanometer development. Hopefully, we can continue to improve the product mix as well. Given all those, it is putting a roadmap for us to improve our market relevance and position as well as our financial performance. For the past, we have already improved our structure probability in terms of our break-even point. Coming back from, we already see effects and benefits. Going forward, there is still work to do. Combining all those, we think we have a roadmap to march into a better result.

He says when the ASC.

We see it again.

Not to mention Yeah, we'll continue marching forward with our 12 nanometer development and hopefully that we can continue to improve the product mix as well.

Oh does is putting a roadmap for us to improve our market relevance of precision as well.

<unk> financial performance and for the past, we have already improved our structure.

Profitability since I'll.

Breakeven point and continue on that front, we already we already see a effects and benefits going forward, there's still work to do and company.

What we said we have a roadmap to marching to a better result.

Sure. Thank you very much and you don't can you also remind us so what will be the depreciation cost increase for this year or maybe next year.

Elaine: Sure. Thank you very much. Chi-Tung Liu, can you also remind us what will be the depreciation cost increase for this year or maybe next year?

Sunny Lin: Sure. Thank you very much. Chi-Tung, can you also remind us what will be the depreciation cost increase for this year or maybe next year?

Laura Chen: Sure. Thank you very much. Chi-Tung, can you also remind us what will be the depreciation cost increase for this year or maybe next year?

Michael Lin: This year is low 20% year over year. Next year is still a very rough estimate, but as I mentioned, the magnitude of increase will decline significantly, maybe to below 10%.

Michael Lin: This year is low 20% year-over-year. Next year is still a very rough estimate, but as I mentioned, the magnitude of increase will decline significantly, maybe to below 10%.

Chitung Liu: This year is low 20% year-over-year. Next year is still a very rough estimate, but as I mentioned, the magnitude of increase will decline significantly, maybe to below 10%.

No time, 2% year over year, yes, that's still a very rough estimate.

So I'm not going to increase.

To climb significantly maybe to below 10%.

Okay. Thank you very much. My next question is also about our Oh operation in China. So we know we still have fab two fab in China.

Sunny Lin: Okay. Thank you very much. My next question is also about our operation in China. As we know, we still have 2 fabs in China. Even though there's always very fierce competition, do we see any possibility that our IDM customers, if they want to enter in the Chinese market, they can also leverage our capacity there to be kind of differentiation as well? Can you give us more update on your current strategy in China?

Laura Chen: Okay. Thank you very much. My next question is also about our operation in China. As we know, we still have two fabs in China. Even though there's always very fierce competition, do we see any possibility that our IDM customers, if they want to enter in the Chinese market, they can also leverage our capacity there to be kind of differentiation as well? Can you give us more update on your current strategy in China?

Elaine: Okay. Thank you very much. My next question is also about our operation in China. As we know, we still have two fabs in China. Even though there is always very fierce competition, do we see any possibility that our IDM customers, if they want to enter in the Chinese market, they can also leverage our capacity there to be kind of a differentiation as well? Can you give us more update on your current strategy in China?

I know, there's always a very fierce competition do you do we see any possibility that all of IDM customers. If they want to look at entering the Chinese market. They can also leverage our capacity there does that to be kind of a differentiation as well. So can you give us an update on your corn.

<unk> in China.

Oh.

Jason Wang: Well, I mean, first of all, with our diversified manufacturing sites, we definitely will be able to serve different customer needs. If there is a customer need for their product to be produced in our China facility, that's something that we very much welcome. Us just the sensing that we have a customer moving from China to other locations, we very much welcome that. We believe with a diversified manufacturing offering will give us a benefit of supporting customers with their supply chain resilience needs. Right now, for the IDM customer moving into the China facility, there's certainly some signals, I think the signal goes bilateral, multiple different ways. We are working closely with different customers, hopefully, we can fulfill their desired needs. Yeah.

Jason Wang: First of all, with our diversified manufacturing sites, we will definitely be able to serve different customer needs. If there is a customer need for their product to be produced in our China facility, that is something that we very much welcome. It is just the same thing that we have a customer moving from China to other locations, and we very much welcome that. We believe with the diversified manufacturing offering, it will give us a benefit of supporting customers with their supply chain resilience needs. Right now, for the IDM customer moving into the China facility, there are certainly some signals, but I think the signal goes bilateral, multiple different ways. We are working closely with different customers, and hopefully, we can fulfill their desired needs.

Well I mean first of all.

The we are satisfied and manufacturing sites.

We'd definitely be able to serve different customer needs.

And if there is a customer needs for their product to be produced.

Our China facility.

That's something that we're very much welcome.

Uh huh.

Essentially that we have a customer moving.

I'm trying not to other locations and we very much will come back.

And we believe with a diversified manufacturer offering.

Gave us a benefit of supporting customers with their supply chain resiliency.

Right now 44.

The idea and customer moving in.

Into the into China.

China facility that.

They're studying suddenly some signals, but I seem to see how it goes.

Multiple different ways and so we are working closely with different customer and hopefully we can a few there.

These R&D.

Okay. Thank you very much.

Sunny Lin: Okay. Thank you very much.

Laura Chen: Okay. Thank you very much.

Elaine: Okay. Thank you very much.

Thank you.

Charlie Chan: Thank you. Next one, Tim Schultz-Molander. Redburn, go ahead, please.

Charlie Chan: Thank you. Next one, Timm Schulze-Melander. Redburn, go ahead, please.

Jason Wang: Thank you.

Brad Ling: Next one, Tim Schultz, Morgan Stanley, Redburn? Go ahead, please.

Next one team showed splendor Redburn go ahead. Please.

Yeah, Hi, there. Thank you very much for taking my questions I.

Tim Schultz-Molander: Yeah. Hi there. Thank you very much for taking my questions. I had two, please. The first one is on pricing behavior and particularly just how rivals are behaving in terms of pricing in the communications segment. Is that disciplined pricing, particularly given the steady improvements in days of inventory, or is pricing more challenging? Then I had a follow-up.

Timm Schulze-Melander: Yeah. Hi there. Thank you very much for taking my questions. I had two, please. The first one is on pricing behavior and particularly just how rivals are behaving in terms of pricing in the communications segment. Is that disciplined pricing, particularly given the steady improvements in days of inventory, or is pricing more challenging? Then I had a follow-up.

Tim Schultz: Hi there. Thank you very much for taking my questions. I had two, please. The first one is on pricing behavior, and particularly just how rivals are behaving in terms of pricing in the communications segment. Is that disciplined pricing, particularly given the steady improvements in days of inventory, or is pricing more challenging? Then I had a follow-up.

I had two please the first one is on pricing behavior.

And particularly just how rivals Oh.

Is behaving in terms of pricing in the communications segment is that.

Disciplined pricing, particularly given the steady improvements in days of inventory.

Is pricing more challenging and then I had a follow up.

But when what.

Jason Wang: Well, when there's an ample capacity available, pricing becomes a tactics topic. Not until the capacity becomes tightened, I think the pricing will always be a topic. I think from a behavior standpoint, it's really subject to the capacity situation. Given that the current capacity situation of different regions are different, I think that conversation is still quite often. Yeah.

Jason Wang: When there is ample capacity available, pricing becomes a tightness topic. Not until the capacity becomes tight, I think the pricing will always be a topic. I think from a behavior standpoint, it is really subject to the capacity situation. Given that the current capacity situation in different regions is different, I think that conversation is still quite often.

When there's ample capacity available.

Pricing.

Next topic, so not until D C.

The capacity become heightened.

Pricing will always be.

Topic.

So I think on the behavioral standpoint.

It's really subject to the capacity situation.

So given that the current.

Capacity situation in different regions have different and I think that conversations do still.

Quite often.

Okay. That's very helpful. The second one.

Tim Schultz-Molander: Okay. That's very helpful. The second one was in terms of the collaboration with Intel. Good to know that the PDK 2026, production 2027, is still on track. I had a two-parter there. It's just in terms of the work you're doing with your partner, do you see any impact from the headcount reductions? Does that influence that cooperation in any way? The second part, talking about gross margins and the outlook in 2027, 2028, this journey to get back into the 30s. Obviously, loadings are the most critical factor, but does this cooperation with Intel play a material part in your sort of medium-term gross margin outlook? Many thanks.

Timm Schulze-Melander: Okay. That's very helpful. The second one was in terms of the collaboration with Intel. Good to know that the PDK 2026, production 2027, is still on track. I had a two-parter there. It's just in terms of the work you're doing with your partner, do you see any impact from the headcount reductions? Does that influence that cooperation in any way? The second part, talking about gross margins and the outlook in 2027, 2028, this journey to get back into the 30s. Obviously, loadings are the most critical factor, but does this cooperation with Intel play a material part in your sort of medium-term gross margin outlook? Many thanks.

Tim Schultz: Okay. That's very helpful. The second one was in terms of the collaboration with Intel. Good to know that the PDK 2026 production, 2027 is still on track. I had a two-parter there. It's just in terms of the work you're doing with your partner, do you see any impact from the headcount reductions? Does that influence that cooperation in any way? The second part, talking about gross margins and the outlook in 2027, 2028, this journey to get back into the 30s. Obviously, loadings are the most critical factor. But does this cooperation with Intel play a material part in your sort of medium-term gross margin outlook? Many thanks.

In terms of the collaboration within so good to know that the P. D. K 2026 production 2027 still on track to part of that is just in terms of the work you're doing with your partner do you see any any impact from head count reductions does that does that influence that cooperation in.

Anyway, and then the second part talking about gross margins and the outlook in 27 28 this journey to.

To get back into the thirties, obviously loadings or.

The most critical factor, but does this cooperation with Intel play a material part in your sort of medium term gross margin outlook. Many thanks.

So while the absolute dollar term, yes, you will and the because the business model that we have.

Jason Wang: From an absolute dollar term, yes, it will. Because of the business model that we have, if we are coming back to the question about the headcount and the commitment from our partners, it is actually quite.

Jason Wang: From an absolute dollar term, yes, it will. Because the business model that we have, coming back to the question about the headcount and the commitment from our partners, it's actually quite positive. I think the product itself is being expanding from the R&D development, now getting into the high-volume production preparation. There's more involvement from different organizations. I would say from the involvement standpoint, from the different organizations, it's actually increased. I can't really comment about their headcount situation, but I can tell you we see a lot more activity from various different departments and organizations because we're moving from the R&D, the activity gradually start moving into the so-called high-volume production preparations. You can see while we're expanding the activity scope, there's actually more involved with the program today. Yeah.

If we coming back to the question about the headcount in the coming months Thomas is actually quite positive and the.

HKBN Enterprise Solutions Operator: It's positive. I think the program itself is extending from the R&D development, now getting into the high-volume production preparation. There's more involvement from different organizations. I would say, from the involvement standpoint, from the different organizations, it's actually increasing. I can't really comment about the headcount situation, but I can tell you we see a lot more activity from the various different departments and organizations because we're moving from the R&D, the activity gradually starts moving into the so-called high-volume production preparations. You can see, while we're extending the activity scope, there's actually more involved with the program today.

Yes.

I think there's a.

I didn't need the Probot yourself is extending from the R&D development now get into the high volume production preparation. So theres some more evolving from different organization, So I would say.

The environment standpoint from a different organization, he's actually increased but I can't really comment about the satcom situations, but I can tell you we see it.

The activity there is.

E Commerce organization, because we are moving from the R&D.

The activity gradually you start moving into the so called high volume production preparations. So you can see while we are expanding the activities scope.

As you want you felt was appropriate today.

That's super helpful. Many thanks.

Tim Schultz-Molander: That's super helpful. Many thanks.

Timm Schulze-Melander: That's super helpful. Many thanks.

HKBN Enterprise Solutions System: That's super helpful. Many thanks.

Thank you.

Charlie Chan: Thank you. Now we are taking the last question. Alex Chang, BNP, go ahead, please.

Operator: Thank you. Now we are taking the last question. Alex Chang, BNP, go ahead, please.

HKBN Enterprise Solutions Operator: Thank you. Now we are taking the last question. Alex Chen, BNP, go ahead, please.

And now we are taking the last question Alex James B M. P. Go ahead. Please.

Thank you for taking my question I only have one follow up question regarding to your China business.

Alex Chang: Thank you for taking my question. I only have one follow-up question regarding your China business. Can you comment in terms of utilization, how is your China fabs utilization versus the overall utilization? In terms of the price pressure, have you seen the ease in recent months, or what is the outlook for the price pressure in China? Thank you.

Conference Operator: Thank you for taking my question. I only have one follow-up question regarding your China business. Can you comment, in terms of utilization, how is your China SaaS utilization versus the overall utilization? In terms of the price pressure, have you seen the ease in the recent months? What is the outlook for the price pressure in China? Thank you.

Can you comment like are in terms of utilization how's that kind of stops.

So overall utilization and ensure yourself to.

This pressure have you seen.

Yes.

So what is the outlook for the price pressure in China. Thank you.

I'll.

Jason Wang: Well, our Fab 12X facility today is actually running at full capacity. It's above our corporate average. Since that, our different sites are mainly serving as the manufacturing facility, the business management is all centralized. At this point, there's no pricing differentiation between different locations for us.

HKBN Enterprise Solutions Operator: Our 12X facility today is actually running at full capacity, so it is above our corporate average. Since our different sites are mainly serving as a manufacturing facility, the business management is all centralized. At this point, there is no pricing differentiation between different locations for us.

The 12.

Facility today is that you're running at full capacity. So is it above our corporate average.

The since that we we are.

These are different sites on many serving us manufacturing facilities.

Management. He says it's all centralized it so there at this point, there's no pricing differentiation between different locations for us.

Thank you.

Alex Chang: Thank you.

HKBN Enterprise Solutions System: Thank you.

Thank you.

Charlie Chan: Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I'll turn it over to UMC Head of IR for closing comments.

HKBN Enterprise Solutions Operator: Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I will turn it over to UMC Head of IR for closing comments.

Ladies and gentlemen, we thank you for all your questions that concludes today's Q&A session.

Turn it over to UMC head of IR for closing comments.

Thank you for attending this conference today.

Michael Lin: Thank you for attending this conference today. We appreciate your questions. As always, if you have any additional follow-up questions, please feel free to contact ir@umc.com. Have a good day.

Rachel Smith: Thank you for attending this conference today. We appreciate your questions. As always, if you have any additional follow-up questions, please feel free to contact ir@umc.com. Have a good day.

We appreciate your questions and as always if you have any additional follow up questions. Please feel free to contact IR UMC.

And you wouldn't see dot com have a good day.

Thank you.

Charlie Chan: Thank you. Ladies and gentlemen, that concludes our conference for Q2 2025. Thank you for your participation in UMC's conference. There will be a webcast replay within two hours. Please visit www.umc.com under the investors events section. You may now disconnect. Thank you again. Goodbye.

HKBN Enterprise Solutions Operator: Thank you. Ladies and gentlemen, that concludes our conference for Q2 2025. Thank you for your participation in United Microelectronics Corporation's conference. There will be a webcast replay within two hours. Please visit www.umc.com under the Investors Event section. You may now disconnect. Thank you again. Goodbye.

And gentlemen that concludes our conference for second quarter 2025. Thank you for your participation in Umc's conference there will be a webcast replay within two hours. Please visit www UMC com onto the investors events section you may now disconnect. Thank you again and goodbye.

Okay.

Q2 2025 United Microelectronics Corp Earnings Call

Request a DemoDemo

UMC

United Microelectronics

Earnings