United Microelectronics Q4 2025 United Microelectronics Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 United Microelectronics Corp Earnings Call
Speaker #2: In a moment, we will hear our CFO present the fourth-quarter financial results, followed by our President's key message to address UMC's focus and the first quarter 2026 guidance.
Speaker #2: Once our President and CFO complete their remarks, there will be a Q&A session. UMC's quarterly financial reports are available on our website, www.umc.com, under the Investors' Financials section. During this conference, we may make forward-looking statements based on management's current expectations and beliefs.
Speaker #2: These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including risks that may be beyond the company's control.
Michael Lin: For a more detailed description of this risk and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC securities 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. Chih-Tung Liu, to discuss UMC's fourth quarter 2025 financial results.
For a more detailed description of this risk and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC securities 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. Chih-Tung Liu, to discuss UMC's fourth quarter 2025 financial results.
Speaker #2: For more risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the IOC security authorities.
Speaker #2: 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. Qi Dongliu, to discuss UMC's fourth quarter 2025 financial results.
Speaker #2: 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. Qi Dongliu, to discuss UMC's fourth quarter 2025 financial results.
Speaker #3: Thank you, Michael. I'd like to go through the full Q4 2025 Investor Conference presentation material, which can be downloaded or viewed in real time from our website.
Chih-Tung Liu: Thank you, Michael. I'd like to go through the Q4 2025 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page 4, the Q4 2025 consolidated revenue was NTD 61.81 billion, with a gross margin around 30.7%. The net income attributable to the stockholder of the parent was NTD 10.06 billion, and the earnings per ordinary shares were NTD 0.81. Utilization rate in the fourth quarter stayed the same as the previous one, around 78%. For the sequential comparison, revenue grew 4.5% quarter over quarter to NTD 61.8 billion. Gross margin improved to over 30% to now 30.7%, or gross margin of NTD 18.95 billion.
Q4 2025 United Microelectronics Corp Earnings Call
Chih-Tung Liu: Thank you, Michael. I'd like to go through the Q4 2025 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page 4, the Q4 2025 consolidated revenue was NTD 61.81 billion, with a gross margin around 30.7%. The net income attributable to the stockholder of the parent was NTD 10.06 billion, and the earnings per ordinary shares were NTD 0.81. Utilization rate in the fourth quarter stayed the same as the previous one, around 78%. For the sequential comparison, revenue grew 4.5% quarter over quarter to NTD 61.8 billion. Gross margin improved to over 30% to now 30.7%, or gross margin of NTD 18.95 billion.
Speaker #3: Starting on page four, the fourth quarter of 2025, consolidated revenue was NT$61.81 billion, with a gross margin around 30.7%. The net income attributable to the stockholder of the parent was NT$10.06 billion, and the earnings per ordinary share were NT$0.81.
Speaker #3: Utilization rate in the fourth quarter stayed the same as the previous one, around 78%. For the sequential comparison, revenue grew 4.5% quarter-over-quarter to NT$61.8 billion.
Speaker #3: Gross margin improved to over 30%, now at 30.7%, or a gross margin of NT$18.95 billion. The non-operating income remained similar to that of last quarter.
Chih-Tung Liu: The non-operating income remains similar to that of last quarter. The net income overall attributed, attributed to shareholder of the parent is around 10.05 billion NTD, or EPS of 0.81 in Q4 of 2025. For year-over-year comparison on page 6, revenue grew by 2.3% to reach 237.5 billion NTD for the whole year of 2025. Gross margin rate is around 29%, or 68.9 billion NTD. For the net income attributable to the shareholder of the parent for year 2025 is around 41.7 billion NTD, or 17.6% net income rate.
The non-operating income remains similar to that of last quarter. The net income overall attributed, attributed to shareholder of the parent is around 10.05 billion NTD, or EPS of 0.81 in Q4 of 2025. For year-over-year comparison on page 6, revenue grew by 2.3% to reach 237.5 billion NTD for the whole year of 2025. Gross margin rate is around 29%, or 68.9 billion NTD. For the net income attributable to the shareholder of the parent for year 2025 is around 41.7 billion NTD, or 17.6% net income rate.
Speaker #3: And the net income overall attributed to shareholders of the parent is around NT$10.05 billion, or EPS of 0.81 in Q4 of 2025. For year-over-year comparison, on page six, revenue grew by 2.3% to reach NT$237.5 billion for the whole year of 2025.
Speaker #3: Gross margin rate is around 29%, or NT$68.9 billion. And for the net income attributable to the shareholders of the parent for year 2025, it's around NT$40.7 billion, or a 17.6% net income rate.
Speaker #3: EPS for 2025 was $3.34, which is a decline compared to $3.80 in 2024. On page seven, our balance sheet at the end of 2025 shows cash amount still more than $110 billion NT.
Chih-Tung Liu: EPS for 2025 was 3.34, which is a decline compared to that of 3.8 in 2024. On page seven, our balance sheet at the end of 2025. Cash amount is still more than NTD 110 billion, with total equity of the company is now NTD 379.8 billion at the end of 2025. For ASP on page eight, you can tell for the last three quarter or four, it pretty much remained similar level for our blended ASP for throughout the 2025. For revenue breakdown on page nine, for quarterly comparison, the change is mainly showing in the increase in Asia and Europe, with now North America represent about 21% in Q4 of last year.
EPS for 2025 was 3.34, which is a decline compared to that of 3.8 in 2024. On page seven, our balance sheet at the end of 2025. Cash amount is still more than NTD 110 billion, with total equity of the company is now NTD 379.8 billion at the end of 2025. For ASP on page eight, you can tell for the last three quarter or four, it pretty much remained similar level for our blended ASP for throughout the 2025. For revenue breakdown on page nine, for quarterly comparison, the change is mainly showing in the increase in Asia and Europe, with now North America represent about 21% in Q4 of last year.
Speaker #3: With total equity of the company now at $379.8 billion NT. At the end of 2025, for ASP on page eight, you can tell for the last three quarters or four, it pretty much remained at a similar level.
Speaker #3: For our blended ASP, for throughout 2025. For the revenue breakdown on page nine, for quarterly comparison, the change is mainly showing in the increase in Asia and Europe, with now North America representing about 21% in Q4 of last year.
Chih-Tung Liu: For the full year breakdown on page 10, the change is similar. We see North America drop from 25% in 2024 to 22% in 2025. For page 11, IDM for Q4 revenue still represent about 20%, almost no change. But for the full year number on page 12, IDM account for 19%, increased by 3 percentage points to 19% in 2025. For quarterly revenue breakdown by application, it remains almost similar quarter-over-quarter on page 13. For the annual performance on the application breakdown on page 4, consumer increased by 3 percentage points to 31% from 28% in the previous year.
For the full year breakdown on page 10, the change is similar. We see North America drop from 25% in 2024 to 22% in 2025. For page 11, IDM for Q4 revenue still represent about 20%, almost no change. But for the full year number on page 12, IDM account for 19%, increased by 3 percentage points to 19% in 2025. For quarterly revenue breakdown by application, it remains almost similar quarter-over-quarter on page 13. For the annual performance on the application breakdown on page 4, consumer increased by 3 percentage points to 31% from 28% in the previous year.
Speaker #3: Page 10: The full-year breakdown on change is similar, with the North America drop from 25% in 2024 to 22% in 2025.
For page 11, IDM for Q4 revenue still represents about 20%, almost no change.
Speaker #3: But for the full-year number on page 12, IDM accounts for 19%, increasing by 3 percentage points to 19% in 2025. For the quarterly revenue breakdown by application, it remained almost similar quarter over quarter on page 13.
Speaker #3: For the annual performance on the application breakdown on page four, Consumer increased by 3 percentage points to 31%, up from 28% in the previous year.
Speaker #3: And we continue to see 22 nanometer to be our key driver of growth for the recent quarters and also forward-looking as well. So, 22 and 28 revenue in Q4 '25 now represent 36% of the total revenue pool.
Chih-Tung Liu: We continue to see 22-nanometer to be our key driver of growth for the recent quarters and also forward-looking as well. So 22- and 28-nanometer revenue in Q4 2025 now represent 36% of the total revenue pool. On page 16, for the full year, the increase of 22- and 28-nanometer revenue is 3 percentage points, and we also show about two percentage point increase in 14-nanometer on a year-over-year comparison. Capacity remains flat on quarter-over-quarter comparison base, but it will decline by roughly 1% due to the annual maintenance schedule. On page 18, our latest forecast for 2026 CapEx spend is around NTD 1.5 billion, which is slightly declined from NTD 1.6 billion in the year of 2025.
We continue to see 22-nanometer to be our key driver of growth for the recent quarters and also forward-looking as well. So 22- and 28-nanometer revenue in Q4 2025 now represent 36% of the total revenue pool. On page 16, for the full year, the increase of 22- and 28-nanometer revenue is 3 percentage points, and we also show about two percentage point increase in 14-nanometer on a year-over-year comparison. Capacity remains flat on quarter-over-quarter comparison base, but it will decline by roughly 1% due to the annual maintenance schedule. On page 18, our latest forecast for 2026 CapEx spend is around NTD 1.5 billion, which is slightly declined from NTD 1.6 billion in the year of 2025.
Speaker #3: On page 16, for the full year, the increase of 22 and 28 revenue is 3 percentage points. And we also show about a 2 percentage point increase in 14 nanometer on a year-over-year comparison.
Speaker #3: Capacity remained flat on a quarter-over-quarter comparison base, but it will decline by roughly 1% due to the annual maintenance schedule. On page 18, our latest forecast for 2026 CAPEX spend is around $1.5 billion.
Speaker #3: This is slightly declined from $1.6 billion in the year of 2025. The above is a summary of UMC's results for Q4 2025. More details are available in the report, which has been posted on our website.
Chih-Tung Liu: The above is a summary of UMC's results for Q4 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.
The above is a summary of UMC's results for Q4 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.
Speaker #3: I will now turn the call over to the President of UMC, Mr. Jason.
Speaker #3: Wong. Thank you,
Jason Wang: Thank you, Chih-Tung. Good evening, everyone. Here I would like to share UMC's fourth quarter results. In the fourth quarter, our results were in line with the guidance, with the flattish wafer shipments amid mild demand across most markets. The 4.5% revenue increase during the quarter was supported by favorable foreign exchange movement, as well as the sequential growth in our 22- and 28-nanometer systems, which continues to improve our product mix. With the 22- and 28-nanometer segment, 22-nanometer revenue increased to 31% quarter-on-quarter to a record high, accounting for more than 13% of total fourth quarter revenue. Looking at the full year, UMC delivered solid performance in 2025, with shipment increasing 12.3% and revenue in USD up 5.3% year-on-year.
Jason Wang: Thank you, Chih-Tung. Good evening, everyone. Here I would like to share UMC's fourth quarter results. In the fourth quarter, our results were in line with the guidance, with the flattish wafer shipments amid mild demand across most markets. The 4.5% revenue increase during the quarter was supported by favorable foreign exchange movement, as well as the sequential growth in our 22- and 28-nanometer systems, which continues to improve our product mix. With the 22- and 28-nanometer segment, 22-nanometer revenue increased to 31% quarter-on-quarter to a record high, accounting for more than 13% of total fourth quarter revenue. Looking at the full year, UMC delivered solid performance in 2025, with shipment increasing 12.3% and revenue in USD up 5.3% year-on-year.
Speaker #2: Qizong. Good evening, everyone. Here, I would like to share UMC's fourth quarter results. In the fourth quarter, our results were in line with the guidance.
Speaker #2: With a flattish wave of shipments, amid mild demand across most markets, the 4.5% revenue increase during the quarter was supported by favorable foreign exchange movements, as well as the sequential growth in our 22- and 28-nanometer systems.
Speaker #2: Could you continue to improve our product mix? With the 22 and 28-nanometer segment, 22-nanometer revenue increased to 31% quarter-on-quarter, reaching a record high.
Speaker #2: Accounting for more than 13% of total fourth quarter revenue. Looking at the full year, UMC delivers solid performance in 2025, with shipment increasing 12.3% and revenue in U.S. dollar up 5.3% year on year.
Speaker #2: Going into the first quarter of 2026, we expect wave of demand to remain firm. UMC is confident that 2026 will be another growth year as tape-out on our 22-nanometer platform accelerates.
Jason Wang: Going into Q1 of 2026, we expect wafer demand to remain firm. UMC is confident that 2026 will be another growth year as we tape out on our 22-nanometer platform accelerate, and other new solutions continue to gain business traction. We have been working hard to lay the foundation for our next phase of growth, investing for the future in both capacity and technology. In 2025, we complete the Phase 3 new Phase 3 facility at our Singapore Fab 12i, which is already playing a central role in supporting customers to diversify supply chain. At the same time, we are striving to expand our footprint in the US through an innovative yet cost-effective mode of a partnership, such as our 12-nanometer collaboration with Intel and the recently announced MOU with Polar Semiconductor.
Going into Q1 of 2026, we expect wafer demand to remain firm. UMC is confident that 2026 will be another growth year as we tape out on our 22-nanometer platform accelerate, and other new solutions continue to gain business traction. We have been working hard to lay the foundation for our next phase of growth, investing for the future in both capacity and technology. In 2025, we complete the Phase 3 new Phase 3 facility at our Singapore Fab 12i, which is already playing a central role in supporting customers to diversify supply chain. At the same time, we are striving to expand our footprint in the US through an innovative yet cost-effective mode of a partnership, such as our 12-nanometer collaboration with Intel and the recently announced MOU with Polar Semiconductor.
Speaker #2: And other new solutions continue to gain business traction. We have been working hard to lay the foundation for our next phase of growth, investing for the future in both capacity and technology.
Speaker #2: In 2025, we complete the new Phase Three facility at our Singapore Class 12I, which is already playing a central role in supporting customers to diversify supply chains.
Speaker #2: At the same time, we are striving to expand our footprint in the US through an innovative, cost-effective mode of partnership, such as our 12-nanometer collaboration with Intel and the recently announced MOU with Polar Semiconductor.
Jason Wang: The leadership UMC has built over the past few years across specialty technologies, including embedded high voltage, non-volatile memory, and VCB, has and will continue to sustain sustainable business growth. Looking ahead to 2026 and beyond, we expect advanced packaging and silicon photonics to serve as a new growth catalyst, positioning UMC to address the evolving needs of a high performance of application across AI, networking, consumer, automotive, and more. Now, let's move on to Q1 2026 guidance. Our wafer shipment will remain flat. ASP in US dollars will remain firm. Gross margin will be approximately in the high 20% range. Capacity utilization rate will be in the mid-70% range. Our 2026 cash-based CapEx budget will be $1.5 billion. That concludes my comments. Thank you all for your attention. Now we are ready for question.
The leadership UMC has built over the past few years across specialty technologies, including embedded high voltage, non-volatile memory, and VCB, has and will continue to sustain sustainable business growth. Looking ahead to 2026 and beyond, we expect advanced packaging and silicon photonics to serve as a new growth catalyst, positioning UMC to address the evolving needs of a high performance of application across AI, networking, consumer, automotive, and more. Now, let's move on to Q1 2026 guidance. Our wafer shipment will remain flat. ASP in US dollars will remain firm. Gross margin will be approximately in the high 20% range. Capacity utilization rate will be in the mid-70% range. Our 2026 cash-based CapEx budget will be $1.5 billion. That concludes my comments. Thank you all for your attention. Now we are ready for question.
Speaker #2: The leadership of UMC has failed over the past few years across specialty technologies, including embedded high voltage, non-volatile memory, and VCD, and will continue to sustain stable business growth.
Speaker #2: Looking ahead to 2026 and beyond, we expect advanced packaging and silicon photonics to serve as new growth catalysts, positioning UMC to address the evolving needs of high-performance applications across AI, networking, consumer, automotive, and more. Now, let's move on to first quarter 2026 guidance.
Speaker #2: Our wave of shipment will remain flat. ASP in US dollars will remain firm. Gross margin will be approximately in the high 20% range. Capacity utilization rate will be in the mid-70% range.
Speaker #2: Our 2026 cash-based CAPEX budget will be $1.5 billion. That concludes my comments. Thank you all for your attention. Now we are ready for questions.
Speaker #3: Yes, thank you, President Wong. And 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.
Operator: Yes, thank you, President Wang. And 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, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star key and number two to cancel the question... Now please press star one on your keypad to ask the question. Thank you. Now, first question will be coming from Sunny Lin, UBS. Go ahead, please.
Operator: Yes, thank you, President Wang. And 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, and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press star key and number two to cancel the question... Now please press star one on your keypad to ask the question. Thank you. Now, first question will be coming from Sunny Lin, UBS. Go ahead, please.
Speaker #3: 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.
Speaker #3: Now, please press star one on your keypad to ask the question. Thank you. Now, the first question will be coming from Sunny Ling, UBS. Go ahead, please.
Sunny Lin: Good afternoon. Thank you very much for taking my questions. So I have a few questions. Number one, Jason, may we have your thoughts on overall market outlook for 2026, and then for semi versus foundry? And if UMC can continue to outgrow your addressable market for this year?
Sunny Lin: Good afternoon. Thank you very much for taking my questions. So I have a few questions. Number one, Jason, may we have your thoughts on overall market outlook for 2026, and then for semi versus foundry? And if UMC can continue to outgrow your addressable market for this year?
Speaker #4: Good afternoon. Thank you very much for taking my questions. So, I have a few questions. Number one, Jason, may we have your thoughts on the overall market outlook for 2026?
Speaker #4: And then, for semi versus foundry, and if UMC can continue to outgrow your adjusted market for this.
Speaker #4: year?
Speaker #2: Sure. Well,
Jason Wang: Sure. Well, for 2026, we expect AI-related segment remain as the primary growth driver in semi industry. And furthermore, with the continuous commercial deployment of edge AI applications, demand for chip using a general purpose server is also expected to rise. In contrast, the adverse effect of memory supply imbalance could put some pressure on specific consumer electronics, but overall, the semiconductor industry is projected to grow by mid-teens in 2026. The question for foundry market, we believe that AI demand will remain strong and is the main contributor behind the low 20% growth projection in the foundry market this year.
Jason Wang: Sure. Well, for 2026, we expect AI-related segment remain as the primary growth driver in semi industry. And furthermore, with the continuous commercial deployment of edge AI applications, demand for chip using a general purpose server is also expected to rise. In contrast, the adverse effect of memory supply imbalance could put some pressure on specific consumer electronics, but overall, the semiconductor industry is projected to grow by mid-teens in 2026. The question for foundry market, we believe that AI demand will remain strong and is the main contributor behind the low 20% growth projection in the foundry market this year.
Speaker #2: For 2026, we expect the AI-related segment remains as the primary growth driver in the semi industry. And furthermore, with the continuous commercial deployment of edge AI applications, demand for chips using a general-purpose server is also expected to rise.
Speaker #2: In contrast, the adverse effect of memory supply imbalance could put some pressure on specific consumer electronics, but overall, the semiconductor industry is projected to grow by mid-2026.
Speaker #2: The question for the foundry market: We believe that AI demand will remain strong and is the main contributor behind the low 20% growth projection in the foundry market this year.
Speaker #2: On the other hand, although the memory pricing may impact demand of the foundry market at this time, we, the UMC, estimate that our addressable market will grow by a low single-digit percentage, and UMC's scores were expected to outperform the average growth of our addressable market.
Jason Wang: On the other hand, although the memory pricing may impact demand of the foundry market, at this time, we at the UMC estimate that our addressable market will grow by low single-digit percentage, and UMC's growth was expected to outperform the average growth of our addressable market.
On the other hand, although the memory pricing may impact demand of the foundry market, at this time, we at the UMC estimate that our addressable market will grow by low single-digit percentage, and UMC's growth was expected to outperform the average growth of our addressable market.
Speaker #2: market. Got it.
Sunny Lin: Got it. Thank you very much, Jason. So then my second question is on pricing. Lots of discussions and obviously, Chinese peers are raising pricing. So how should you think about the pricing outlook for mature foundry and for UMC through 2026? Will UMC be able to start to reflect better value? And if yes, which product categories should we expect more upside from here?
Sunny Lin: Got it. Thank you very much, Jason. So then my second question is on pricing. Lots of discussions and obviously, Chinese peers are raising pricing. So how should you think about the pricing outlook for mature foundry and for UMC through 2026? Will UMC be able to start to reflect better value? And if yes, which product categories should we expect more upside from here?
Speaker #4: Thank you very much, Jason. So then, my second question is on pricing. There have been lots of discussions, and obviously, Chinese peers are raising pricing. So how should we think about the pricing outlook for mature foundry and for UMC through 2026?
Speaker #4: Would UMC be able to start to reflect better value? And if yes, which product categories should we expect more upside from?
Speaker #4: here? Okay.
Jason Wang: Okay. Well, we do anticipate a more favorable ASP environment in 2026 versus 2025. This outlook really reflects our disciplined pricing strategy and the positive impact from multiple reasons: product mix optimization, loading improvement, and reduced exposure to more commoditized market segments. As you're referring to China players, we expect the strong growth momentum in our 22-nanometer demand to support our product mix in 2026 as well. Overall, our pricing strategy remains consistent and is anchored to the value, where we deliver technology differentiation and manufacturing excellence. So we do think the 2026 pricing environment is more favorable now. Now, the question about which product and, I mean, we don't comment pricing on specific product or any specific note.
Jason Wang: Okay. Well, we do anticipate a more favorable ASP environment in 2026 versus 2025. This outlook really reflects our disciplined pricing strategy and the positive impact from multiple reasons: product mix optimization, loading improvement, and reduced exposure to more commoditized market segments. As you're referring to China players, we expect the strong growth momentum in our 22-nanometer demand to support our product mix in 2026 as well. Overall, our pricing strategy remains consistent and is anchored to the value, where we deliver technology differentiation and manufacturing excellence. So we do think the 2026 pricing environment is more favorable now. Now, the question about which product and, I mean, we don't comment pricing on specific product or any specific note.
Speaker #2: Well, we do anticipate a more favorable ASP environment in 2026 versus 2025. This outlook really reflects our disciplined pricing strategy and the positive impact for multiple reasons, but that includes optimization, loading improvement, and reduced exposure to more commoditized market segments.
Speaker #2: You're referring to China players. We expect the strong growth, as momentum in our 22-nanometer demand, to support our product mix in 2026 as well.
Speaker #2: Overall, our pricing strategy remains consistent and is anchored to the value where we deliver technology differentiation and manufacturing excellence. So, we do think the 2026 pricing environment is more favorable now.
Speaker #2: Now, the question about which product, and I mean, we don't comment on pricing on specific products or any specific note. But in general, we do see the environment is more favorable now.
Speaker #2: Now, the question about which product—and I mean, we don't comment on pricing for any specific product or any specific note. But in general, we do see the environment is more favorable now.
Jason Wang: But in general, we do see the environment is more favorable now.
But in general, we do see the environment is more favorable now.
Sunny Lin: No problem. That's very helpful. And then a follow-up would be on the overall industry supply versus demand for the coming few years. TSMC, on the recent earnings conference, talked about the plan to optimize capacity for mature nodes to better support cloud AI demand in coming few years. So from your perspective, how should we think about the opportunity here? Are you starting to see more client engagement for new products in the coming few years?
Sunny Lin: No problem. That's very helpful. And then a follow-up would be on the overall industry supply versus demand for the coming few years. TSMC, on the recent earnings conference, talked about the plan to optimize capacity for mature nodes to better support cloud AI demand in coming few years. So from your perspective, how should we think about the opportunity here? Are you starting to see more client engagement for new products in the coming few years?
Speaker #4: No problem. That's very helpful. And then, a follow-up would be on the overall industry supply versus demand for the coming few years. TSMC, on the recent earnings conference, talked about the plan to optimize capacity for mature nodes to better support cloud AI demand in the coming few years.
Speaker #4: So, from your perspective, how should we think about the opportunity here? Are you starting to see more client engagement for new products in the coming few years?
Speaker #2: Oh, we are always excited to see more customer engagement. But more importantly, we need to prepare ourselves to cope with the market dynamics.
Jason Wang: Oh, we're always excited to see more customer engagement. But more importantly, we need to prepare ourselves to cope with the market dynamics, and we welcome any opportunity to support our customers. We view this landscape shift as an opportunity to further optimize our product mix and gradually improve ASP and margin as well.
Jason Wang: Oh, we're always excited to see more customer engagement. But more importantly, we need to prepare ourselves to cope with the market dynamics, and we welcome any opportunity to support our customers. We view this landscape shift as an opportunity to further optimize our product mix and gradually improve ASP and margin as well.
Speaker #2: And we welcome any opportunity to support our customers. So we view this landscape shift as an opportunity to further optimize our product mix and gradually improve ASP and margin as
Speaker #2: well. Nope.
Sunny Lin: No, got it, got it. And then maybe lastly, just on your Singapore expansion, how quickly are you planning to ramp capacity in 2026 and in 2027? And how should you think about the differentiations of products that you have for Singapore versus the Taiwan capacities for 22- and 28-nanometer? And then with that, how should we forecast the depreciation in 2026 and 2027?
Sunny Lin: No, got it, got it. And then maybe lastly, just on your Singapore expansion, how quickly are you planning to ramp capacity in 2026 and in 2027? And how should you think about the differentiations of products that you have for Singapore versus the Taiwan capacities for 22- and 28-nanometer? And then with that, how should we forecast the depreciation in 2026 and 2027?
Speaker #4: Got it, got it. And then, maybe lastly, just on your Singapore expansion, how quickly are you planning to ramp capacity in 2026 and in 2027?
Speaker #4: And how should you think about the differentiations of products that you have for Singapore versus the Taiwan capacities for '22 and '28 nanometer? And then, with that, how should we...
Speaker #4: Forecast the depreciation in 2026 and 2027?
Jason Wang: Well, first of all, for the year of 2026, the capacity increase will be around 1.2% year-over-year for us. For our Singapore facility, the expansion will start in the second half of 2026, and with capacity deployment ramp from second half of 2026 will continue into 2027. In terms the node available in our Singapore facility, it's our strategy that we have a geographically diverse and efficient footprint between Taiwan, Singapore, Japan, and US. From a technology node coverage standpoint, we would like to cover most of the nodes, so the customer has a benefit of crossing different sites supports. Yeah.
Jason Wang: Well, first of all, for the year of 2026, the capacity increase will be around 1.2% year-over-year for us. For our Singapore facility, the expansion will start in the second half of 2026, and with capacity deployment ramp from second half of 2026 will continue into 2027. In terms the node available in our Singapore facility, it's our strategy that we have a geographically diverse and efficient footprint between Taiwan, Singapore, Japan, and US. From a technology node coverage standpoint, we would like to cover most of the nodes, so the customer has a benefit of crossing different sites supports. Yeah.
Speaker #2: Well, first of all, for the year of 2026, the capacity increase will be around 1.2% year-over-year for us. And for our Singapore facility, the expansion will start in the second half of 2026.
Speaker #2: And we'll capacity deployment ramp from the second half of 2026 will continue into 2027. In terms of the nodes available in our Singapore facility, it's our strategy that we have a geographically diverse manufacturing footprint between Taiwan, Singapore, Japan, and the US.
Speaker #2: And from a technology node coverage standpoint, we would like to cover most of the nodes, so the customer has a benefit of crossing different spec supports.
Speaker #2: Yeah.
Chih-Tung Liu: As for the depreciation forecast, we are looking for some like low teen annual increase in the full year depreciation expenses.
Chih-Tung Liu: As for the depreciation forecast, we are looking for some like low teen annual increase in the full year depreciation expenses.
Speaker #3: And for the
Speaker #3: Depreciation forecast, we are looking for some low-teens annual increase in the full-year depreciation expenses. As for next year, we don't have the exact number yet, but it's very likely to be a similar amount for 2026.
Jason Wang: ... As for next year, we don't have the exact number yet, but it's very likely to be the similar amount for 2026. So in a way, we will see the depreciation curve to peak either this year or next year, with very similar numbers.
... As for next year, we don't have the exact number yet, but it's very likely to be the similar amount for 2026. So in a way, we will see the depreciation curve to peak either this year or next year, with very similar numbers.
Speaker #3: So, in a way, we will see the depreciation curve peak either this year or next year with a very similar
Speaker #3: number. Got it.
Felix Pan: Got it. Thank you very much.
Sunny Lin: Got it. Thank you very much.
Speaker #4: Thank you very
Speaker #4: much. Thank you.
Operator: Thank you. Next one, Xudong Lu, Bank of America. Go ahead, please.
Operator: Thank you. Next one, Xudong Lu, Bank of America. Go ahead, please.
Speaker #1: Next one, Hosliu, Bank of America. Go ahead, please.
Xudong Lu: Yes. Hi, Jason, Xudong, congrats on the results, and thanks for taking my questions. I would actually like to follow up on the pricing. If we look at the like-for-like pricing environments, based on your current mid- to high-70% utilization, if we strip out any of the consideration of the product mix improvement, are you able to improve or just to pass on your higher manufacturing costs or material costs to your customers at this stage? Or you still receive meaningful pushback from your customers? Thanks.
Xudong Lu: Yes. Hi, Jason, Xudong, congrats on the results, and thanks for taking my questions. I would actually like to follow up on the pricing. If we look at the like-for-like pricing environments, based on your current mid- to high-70% utilization, if we strip out any of the consideration of the product mix improvement, are you able to improve or just to pass on your higher manufacturing costs or material costs to your customers at this stage? Or you still receive meaningful pushback from your customers? Thanks.
Speaker #5: Yes. Hi, Jason. Jidong, congrats on the results. And thanks for taking my questions. I would actually like to follow up on the pricing. If we look at the like-for-like pricing environments, based on your current mid to high 70 percentage of the utilization, if we strip out any of the consideration of the product mix improvements, are you able to improve or just to pass on your higher manufacturing costs or material costs to your customers at this stage?
Speaker #5: Or are you still receiving meaningful pushback from your customers?
Speaker #5: Thanks. Well, I mean, the
Jason Wang: Well, I mean, the pricing discussion is always ongoing. The overall pricing strategy remains consistent, as I mentioned earlier. In 2026, we do see some market dynamic changes. So for certain customers, we do have some adjusted pricing upward. And so, and for certain customer, we still have some of the pricing, I mean, apply the one-time pricing adjustment at the beginning of year to support their market share expansion, as well as the competitiveness. So, net net, we think the environment is more favorable now in 2026.
Jason Wang: Well, I mean, the pricing discussion is always ongoing. The overall pricing strategy remains consistent, as I mentioned earlier. In 2026, we do see some market dynamic changes. So for certain customers, we do have some adjusted pricing upward. And so, and for certain customer, we still have some of the pricing, I mean, apply the one-time pricing adjustment at the beginning of year to support their market share expansion, as well as the competitiveness. So, net net, we think the environment is more favorable now in 2026.
Speaker #2: Pricing discussion is always ongoing. The overall pricing strategy remains consistent, as I mentioned earlier. In 2026, we do see some market dynamics changes.
Speaker #2: So, for certain customers, we do have some adjusted pricing offers. And so, for certain customers, we still have some of the pricing—I mean, the applied one-time pricing adjustment at the beginning of the year—to support their market share expansion.
Speaker #2: As well as the competitiveness. So, net-net, we think the environment is more favorable now in
Xudong Lu: Hmm. Okay. Yeah. So when you talk about you are supporting your customers to gain market share by strengthening their cost structure, do you mean you are actually adjusting down your pricing for those customers, or it is actually up for this year?
Xudong Lu: Hmm. Okay. Yeah. So when you talk about you are supporting your customers to gain market share by strengthening their cost structure, do you mean you are actually adjusting down your pricing for those customers, or it is actually up for this year?
Speaker #3: Okay. Yeah. So when you talk about you are supporting your customers to gain market share, by strengthening their cost structure, do you mean you are actually adjusting down your pricing for those customers?
Speaker #3: Or is it actually up for this?
Speaker #3: Year? We have a mix of that.
Jason Wang: We have a mix of that. For certain customer, we have adjusted pricing upward, and for certain customer, we will apply the one-time price adjustment downward, yes.
Jason Wang: We have a mix of that. For certain customer, we have adjusted pricing upward, and for certain customer, we will apply the one-time price adjustment downward, yes.
Speaker #2: For certain customers, we have adjusted pricing upward. And for certain customers, we will apply the one-time price adjustment downward. Yes.
Speaker #3: Okay. Got it. And then just on the near-term, a couple of your fabulous customers recently talked about earlier and also stronger inventory restocking because of the memory price.
Xudong Lu: Okay, got it. And then just on near term, a couple of your fabless customers recently talked about earlier and also stronger inventory restocking because of the memory price hike. I was just wondering, what impacts your Q1 outlook here, if your your customers are seeing stronger inventory pulling in the traditional low season? Why is your shipment for Q1 still relatively flat? And then, what's your put and take for the Q1 overall business outlook? Just wondering whether, which part of the business is actually relatively stronger and weak? Thank you.
Xudong Lu: Okay, got it. And then just on near term, a couple of your fabless customers recently talked about earlier and also stronger inventory restocking because of the memory price hike. I was just wondering, what impacts your Q1 outlook here, if your your customers are seeing stronger inventory pulling in the traditional low season? Why is your shipment for Q1 still relatively flat? And then, what's your put and take for the Q1 overall business outlook? Just wondering whether, which part of the business is actually relatively stronger and weak? Thank you.
Speaker #3: Hi, I was just wondering, what impacts your first-quarter outlook here if your customers are seeing stronger inventory pull-in in the traditional low season? Why is their shipment for first quarter still relatively flat?
Speaker #3: And then, what's your put-and-take for the first-quarter overall business outlook? Just wondering whether—which part of the business is actually relatively stronger and which is weak.
Speaker #3: Thank you.
Jason Wang: Well, for Q1, by segment, we are actually in line with our addressable market seasonality. We didn't see significant changes due to the inventory restocking. But if you're looking into by applications, we expect the revenue contribution from consumer segment to increase, driven by the Wi-Fi, DTV, and set-top box, while the revenue from the communication and automotive will decline due to a softer demand of ISP and DDI products.
Jason Wang: Well, for Q1, by segment, we are actually in line with our addressable market seasonality. We didn't see significant changes due to the inventory restocking. But if you're looking into by applications, we expect the revenue contribution from consumer segment to increase, driven by the Wi-Fi, DTV, and set-top box, while the revenue from the communication and automotive will decline due to a softer demand of ISP and DDI products.
Speaker #2: Well, for Q1, by segment, we are actually in line with our adversarial market seasonality. We didn't see significant changes due to the inventory restocking.
Speaker #2: But if you're looking into by applications, we expect the revenue contribution from the consumer segment to increase, driven by Wi-Fi and ETV and set-top box.
Speaker #2: While the revenue from the communication and automotive would decline due to a solid demand of ISP and DDI,
Speaker #2: products. Yeah.
Xudong Lu: Okay, that's pretty clear. And then since you just mentioned about the seasonality, are you expecting this year's seasonality to look pretty similar to the previous few years, that Q1 could be relatively light, and Q2 and Q3, you will be able to see relative strength into the year?
Xudong Lu: Okay, that's pretty clear. And then since you just mentioned about the seasonality, are you expecting this year's seasonality to look pretty similar to the previous few years, that Q1 could be relatively light, and Q2 and Q3, you will be able to see relative strength into the year?
Speaker #3: That's pretty clear. And then, since you just mentioned the seasonality, are you expecting this year's seasonality to look pretty similar to the previous few years, that first quarter could be relatively light and second quarter and third quarter you will be able to see relative strength into the year?
Speaker #2: Yep, I can probably provide you with this. If we look at the whole year, with the new project of a multi-specialty technology across the embedded high-voltage non-biophilic IC memory, power management IC, RFSOI, it supports the end market in communication, consumer, automotive, and AI server, which will ramp in the second half of 2026.
Jason Wang: If I can probably provide you with this. If we look at the whole year, with the new project of a multiple specialty technology across the embedded high voltage, nonvolatile memory, power management IC, RFSOI, it supports the end markets in communication, consumer, automotive, and AI server, which will ramp in second half 2026. So we were looking at this year that our second half will outperform the first year, first half, I'm sorry. The second half will be better than the first half. So, that may deviate from the traditional seasonality. But as far as for us, we think the overall shipment for the year will be a growth year, and as well as second half will be better than the first half.
Jason Wang: If I can probably provide you with this. If we look at the whole year, with the new project of a multiple specialty technology across the embedded high voltage, nonvolatile memory, power management IC, RFSOI, it supports the end markets in communication, consumer, automotive, and AI server, which will ramp in second half 2026. So we were looking at this year that our second half will outperform the first year, first half, I'm sorry. The second half will be better than the first half. So, that may deviate from the traditional seasonality. But as far as for us, we think the overall shipment for the year will be a growth year, and as well as second half will be better than the first half.
Speaker #2: So we're more looking at this year that our second half will outperform the first half. Our first half—I'm sorry, the second half will be better than the first half.
Speaker #2: So that may be the deviate from the traditional seasonality. But as far as for us, we think the overall shipment for the year will be a growth year.
Speaker #2: And as well as, the second half will be better than the first.
Speaker #2: half. Okay.
Xudong Lu: Okay. Yeah. And last question before I, I'm back in the queue is that, just based on the comment you had just now, what is the underlying market unit demand assumption you have right now? Is it smartphone business? The overall smartphone market will actually grow or decline, based on your current base case scenario, that second half will be better? Or it is actually already factoring a relatively more conservative expectation, the smartphone, TV, PC, these kind of consumer markets will actually see a unit decline? Thanks.
Xudong Lu: Okay. Yeah. And last question before I, I'm back in the queue is that, just based on the comment you had just now, what is the underlying market unit demand assumption you have right now? Is it smartphone business? The overall smartphone market will actually grow or decline, based on your current base case scenario, that second half will be better? Or it is actually already factoring a relatively more conservative expectation, the smartphone, TV, PC, these kind of consumer markets will actually see a unit decline? Thanks.
Speaker #3: Yeah. And last question before I'm back in the queue: just based on the comment you made just now, what is the underlying market unit demand assumption you have right now?
Speaker #3: Is it, smartphone—the overall smartphone market—will it actually grow or decline based on your current base-case scenario that the second half will be better?
Speaker #3: Or is it actually already factoring in a relatively more conservative expectation that smartphone, TV, PC—these kinds of consumer markets—will actually see a unit decline?
Speaker #3: Thanks.
Speaker #2: Always with the current forecast from our customer, I mean, we do see gain on overall segment, all applications. We do see some share gains.
Jason Wang: Well, with the current forecast on our customer, I mean, we do see gains on all across segments, all applications. We do see some share gains on those applications. So, right now, the forecast does show us that more of a share gain instead of market, market and market demand associated.
Jason Wang: Well, with the current forecast on our customer, I mean, we do see gains on all across segments, all applications. We do see some share gains on those applications. So, right now, the forecast does show us that more of a share gain instead of market, market and market demand associated.
Speaker #2: On those applications. So right now, the forecast does show us that it's more of a share gain instead of market- and market-associated demand.
Speaker #3: Okay. Thank you so much, Jason, Jidong. That's pretty—
Xudong Lu: Okay. Thank you so much, Jason. Xudong, that's pretty helpful.
Xudong Lu: Okay. Thank you so much, Jason. Xudong, that's pretty helpful.
Speaker #3: helpful. Thank
Jason Wang: Thank you.
Jason Wang: Thank you.
Speaker #2: you. Thank
Operator: Thank you. Next one, Felix Pan, KGI. Go ahead, please.
Operator: Thank you. Next one, Felix Pan, KGI. Go ahead, please.
Speaker #1: You. Next one, Felix Pan, KGI. Go ahead,
Speaker #1: please. Hi.
Felix Pan: Hi, thank you for taking my question. I just have a couple questions about the future growth driver, particularly in the remark you mentioned about advanced packaging and silicon photonics. So my first question will be-
Felix Pan: Hi, thank you for taking my question. I just have a couple questions about the future growth driver, particularly in the remark you mentioned about advanced packaging and silicon photonics. So my first question will be-
Speaker #4: Thank you for taking my question. I just have a couple of questions about the future growth driver, particularly in the remark you mentioned about advanced packaging and silicon foundry housing.
Speaker #4: So my first question will be: besides the interposer, what else might we have some engagement with for advanced packaging? And for the interposer, what's the capacity expansion plan for 2026?
Felix Pan: ...Besides the interposer, what else we might have some engagement for advanced packaging? And for interposer, what's the capacity expansion plan for 2026? And my second question will be the silicon photonics, particularly in the Singapore fab. A lot of rumor about your potential customer. Is there any color, any kind engagement or any contribution can generate from this segment? Any color will be grateful. Thanks.
...Besides the interposer, what else we might have some engagement for advanced packaging? And for interposer, what's the capacity expansion plan for 2026? And my second question will be the silicon photonics, particularly in the Singapore fab. A lot of rumor about your potential customer. Is there any color, any kind engagement or any contribution can generate from this segment? Any color will be grateful. Thanks.
Speaker #4: And my second question will be the silicon found housing, particularly in the Singapore fab. There are a lot of rumors about your potential customers. Is there any color, any kind of engagement, or any contribution that can be generated from this segment?
Speaker #4: Any color would be grateful.
Speaker #4: Thanks. Oh,
Jason Wang: Oh, okay. A big question. So, yeah, let me see if I can cover this. Well, if I look back, I mean, I understand you asked for 2026, but let me look back this. We have to leave a very solid 2025 performance with a 12.3% shipment growth and 5.3% revenue growth, which outperform our addressable market. This result is supported by our differentiated 22-nanometer technology and other specialty offering across those 12-inch and 8-inch amid a broad-based, world-class market, a broad-based market demand recovery. Building on the 2025, we do view 2026 as a year of both continuity and evolution. We believe the UMC will once again taking shares and outperform its addressable market, and we will also see several positive inflation.
Jason Wang: Oh, okay. A big question. So, yeah, let me see if I can cover this. Well, if I look back, I mean, I understand you asked for 2026, but let me look back this. We have to leave a very solid 2025 performance with a 12.3% shipment growth and 5.3% revenue growth, which outperform our addressable market. This result is supported by our differentiated 22-nanometer technology and other specialty offering across those 12-inch and 8-inch amid a broad-based, world-class market, a broad-based market demand recovery. Building on the 2025, we do view 2026 as a year of both continuity and evolution. We believe the UMC will once again taking shares and outperform its addressable market, and we will also see several positive inflation.
Speaker #2: Okay, a big question. So let me see if I can cover this. And, well, if I look back—I mean, I understand you asked for 2026—but let me look back at this.
Speaker #2: We have delivered a very solid 2025 performance. With a 12.3% shipment growth and 5.3% revenue growth, which outperformed our addressable market. This result is supported by our differentiated 22-nanometer technology and other specialty offerings across those 12-inch and 8-inch, amid a broad world-class market and a global-based market demand recovery.
Speaker #2: And building on 2025, we do view 2026 as a year of both continuity and evolution. We believe that UMC will once again take share and outperform its addressable market.
Speaker #2: And we will also see several positive inflations. First of all, as our guidance suggests, we are seeing a more favorable pricing environment. This will result in a tighter supply globally, as well as our differentiated technology and geographical footprint, which will drive our growth for the next few years.
Jason Wang: First of all, as our guidance suggests, we are seeing a more favorable pricing environment. This will result tighter supply globally, as well as our differentiated technology and geographical footprint, which will drive our growth for the next few years. We are on track with our 12-nanometer cooperation with Intel, which should start to see tape out in 2027. Now, that's the existing one. And your question about silicon photonics and advanced packaging. Secondly, we see 2026 as a pivotal year for those high performance, high potential opportunities, such, you know, like the silicon photonics and advanced packaging. And we are making those deliberated choice, you know, with working with, you know, imec to invest and to scale them into a significant driver for our future. If you ask specifically about the advanced packaging, they are two distinct opportunities for advanced packaging.
First of all, as our guidance suggests, we are seeing a more favorable pricing environment. This will result tighter supply globally, as well as our differentiated technology and geographical footprint, which will drive our growth for the next few years. We are on track with our 12-nanometer cooperation with Intel, which should start to see tape out in 2027. Now, that's the existing one. And your question about silicon photonics and advanced packaging. Secondly, we see 2026 as a pivotal year for those high performance, high potential opportunities, such, you know, like the silicon photonics and advanced packaging. And we are making those deliberated choice, you know, with working with, you know, imec to invest and to scale them into a significant driver for our future. If you ask specifically about the advanced packaging, they are two distinct opportunities for advanced packaging.
Speaker #2: We are on track with our 12-nanometer collaboration with Intel, which should start to see tape-out in 2027. Now, that's the existing one. And your question about silicon foundry housing and advanced packaging—secondly, we see 2026 as a pivotal year for those high-performance, high-potential opportunities, such as silicon foundry housing and advanced packaging.
Speaker #2: And we are making those delivery choices, working with IMAC to invest and scale them into a significant driver for our future. If you ask specifically, they are two distinct packaging, and opportunities for advanced—about the advanced packaging.
Jason Wang: One we call enabler, the other we call trend expander. Let us explain this. I know it's a bit long, but bear with me. So the, for enabler, we are seeing the 2.5D and 3D packaging, as well as the chiplets move well beyond just the data center and ultra-high-end chip, and start to spread across the broader market. Over time, we expect advanced packaging to be adopted even on mature nodes. A good example is RFSOI. We have mentioned many times where we're already in production. In addition to the RFSOI, we are also exploring other applications with the leading partners and believe we are at least two to three years ahead of our competition. What this really means for customers is better power efficiency, more form factors, and more differentiated products. And for UMC, it is a strategic win-win.
One we call enabler, the other we call trend expander. Let us explain this. I know it's a bit long, but bear with me. So the, for enabler, we are seeing the 2.5D and 3D packaging, as well as the chiplets move well beyond just the data center and ultra-high-end chip, and start to spread across the broader market. Over time, we expect advanced packaging to be adopted even on mature nodes. A good example is RFSOI. We have mentioned many times where we're already in production. In addition to the RFSOI, we are also exploring other applications with the leading partners and believe we are at least two to three years ahead of our competition. What this really means for customers is better power efficiency, more form factors, and more differentiated products. And for UMC, it is a strategic win-win.
Speaker #2: One, we call enabler; the other, we call 10 expander layers expanders. I know it's a bit long, but bear with me. So, the enabler, we are seeing the 2.5D and 3D packaging, as well as the chiplet, move well beyond just the data center and ultra-high-end chip.
Speaker #2: And start to spread across the broader market. Over time, we expect advanced packaging to be adopted even on mature nodes. A good example is RF SOI.
Speaker #2: We have mentioned many times where we are already in production. In addition, in addition to the RFSOI, we are also exploring other applications with leading partners and believe we are at least two to three years ahead of our competition.
Speaker #2: What this really means for customers is better power efficiencies, more form factors, and more differentiated products. And for UMC, it is a strategic win-win.
Speaker #2: We believe our leadership in advanced packaging will enable us to capture more share, sustain our higher ASP, and drive better margin in many of our already established businesses in the long run.
Jason Wang: We believe our leadership in advanced packaging will enable us to capture more shares, sustain our higher ASP, and drive better margin in many of our already established business in the long run. On the front end, we also believe that advanced packaging will help UMC address new opportunities. For example, customers are coming to us for AI-related applications. This is not necessarily just the XPU related, but we are adding value by stacking memory with the logic, adding DTC to the stack or selling the discrete DTC. We are also working with our partners to enable a total solution. Meanwhile, we are working with more than 10 customers in advanced packaging currently, and expect more than 20 new tape outs in 2026. We foresee revenue in 2027 will be a significant year for us.
We believe our leadership in advanced packaging will enable us to capture more shares, sustain our higher ASP, and drive better margin in many of our already established business in the long run. On the front end, we also believe that advanced packaging will help UMC address new opportunities. For example, customers are coming to us for AI-related applications. This is not necessarily just the XPU related, but we are adding value by stacking memory with the logic, adding DTC to the stack or selling the discrete DTC. We are also working with our partners to enable a total solution. Meanwhile, we are working with more than 10 customers in advanced packaging currently, and expect more than 20 new tape outs in 2026. We foresee revenue in 2027 will be a significant year for us.
Speaker #2: On the 10 expanders, we also believe advanced packaging will help UMC address new opportunities. For example, customers are coming to us for AI-related applications.
Speaker #2: This is not necessarily just the XPU-related. But we are adding value by stacking memory with logic, adding DTC to the stack, or selling the discrete DTC.
Speaker #2: We are also working with our partners to enable a total solution. Meanwhile, we are working with more than 10 customers in advanced packaging currently, expanding to more than 20 in 2026.
Speaker #2: We foresee revenue in 2027 will be a new tape-outs in significant year for us. And the capacity question you have, that capacity planning will be aligned with the customer ramp plan and market outlook.
Jason Wang: The capacity question you have, that capacity planning will be aligned with the customer ramp plan and market outlook. You also asked about the Silicon Photonics. For Silicon Photonics, we are developing solutions which includes PIC, OIO, OCS, and CPO. Our collaboration with imec allow us to deliver an industry standard PDK to our customer in 2027. In addition to platform preparation, we also work with the customer on captive technology of a 12-inch PIC, aiming for marketable product, which is expected to ramp this year. We'll also combine our Advanced Packaging know-how with the Silicon Photonics, as many of the applications require the integration and different substrates, process, technology, and materials. Looking ahead to achieve 1.6T bandwidth and beyond, we're working with both customer and vendor for the path finding on heterogeneous material such as the TFLN.
The capacity question you have, that capacity planning will be aligned with the customer ramp plan and market outlook. You also asked about the Silicon Photonics. For Silicon Photonics, we are developing solutions which includes PIC, OIO, OCS, and CPO. Our collaboration with imec allow us to deliver an industry standard PDK to our customer in 2027. In addition to platform preparation, we also work with the customer on captive technology of a 12-inch PIC, aiming for marketable product, which is expected to ramp this year. We'll also combine our Advanced Packaging know-how with the Silicon Photonics, as many of the applications require the integration and different substrates, process, technology, and materials. Looking ahead to achieve 1.6T bandwidth and beyond, we're working with both customer and vendor for the path finding on heterogeneous material such as the TFLN.
Speaker #2: You also asked about the Silicon Fund housing. For Silicon Fund housing, we are developing solutions which include PIC, OIO, OCS, and CPO. Our collaboration with IMAC allows us to deliver industry-standard PDK to our customers in 2027.
Speaker #2: In addition to platform preparation, we also work with customers on captive technology of 12-inch PIC. Aiming for placable products, which are expected to ramp this year.
Speaker #2: We will also combine our advanced packaging know-how with the silicon foundry housing, as many of the applications require the integration and different substrates, processed technology, and materials.
Speaker #2: Looking ahead, to achieve 1.6T bandwidth and beyond, we're working with both customers and vendors. From past findings on heterogeneous materials, such as the TFLM, those technologies could also be used in additional applications such as quantum computing.
Jason Wang: Those technologies will also be used in additional applications such as quantum computing. Again, we hope to integrate the new material via advanced packaging technology as well. So those are all integrated all together. That's why I gave you a bit of a longer answer. I hope that explains it.
Those technologies will also be used in additional applications such as quantum computing. Again, we hope to integrate the new material via advanced packaging technology as well. So those are all integrated all together. That's why I gave you a bit of a longer answer. I hope that explains it.
Speaker #2: Again, we hope to integrate the new materials via advanced packaging technology as well. So, those are all integrated altogether. That's why I gave you a bit of a longer answer.
Speaker #2: I hope that explains it.
Felix Pan: ... Yeah, okay, thank you. But, just, let me just quick follow up and rephrase my question. So for silicon photonics, what's the earliest timetable we can see the revenue contribution, like, by most likely?
Felix Pan: ... Yeah, okay, thank you. But, just, let me just quick follow up and rephrase my question. So for silicon photonics, what's the earliest timetable we can see the revenue contribution, like, by most likely?
Speaker #3: Yeah, okay. Thank you. But just let me quickly follow up and rephrase my question. So for silicon found housing, what's the earliest timetable we can see the revenue contribution?
Speaker #3: Most likely, for the 12-inch PIC, for the placable product, we'll be expecting to rent this year. Okay. And about the—because as I know about the interposer, currently, the interposer is also the bottleneck for our partners to expand their capacity.
Jason Wang: For the 12-inch PIC, for the programmable product, we'll be expecting to ramp this year.
Jason Wang: For the 12-inch PIC, for the programmable product, we'll be expecting to ramp this year.
Felix Pan: Okay. And about the, because as I know about the interposer currently, is the bottom. All interposer are also the bottleneck for our partner to expand their capacity. So, is there any color we can, how much capacity grows for the interposer, like how much year-over-year growth or something like that?
Felix Pan: Okay. And about the, because as I know about the interposer currently, is the bottom. All interposer are also the bottleneck for our partner to expand their capacity. So, is there any color we can, how much capacity grows for the interposer, like how much year-over-year growth or something like that?
Speaker #3: So, is there any color on how much capacity grows for the interposer? How much year-on-year growth, or something like that?
Jason Wang: Well, right now, the capacity planning will be aligned with the customer for the 2027 ramp.
Jason Wang: Well, right now, the capacity planning will be aligned with the customer for the 2027 ramp.
Speaker #2: Well, right now, the capacity planning will be aligned with the customers for the 2027 ramp. So we'll probably provide you some clarity when I come.
Felix Pan: Okay.
Felix Pan: Okay.
Jason Wang: So we probably guide, you know, provide you some clarity, when that come. Right now-
Jason Wang: So we probably guide, you know, provide you some clarity, when that come. Right now-
Speaker #2: Right now, 2026 will focus on the
Felix Pan: Okay.
Jason Wang: The 2026, we'll focus on the tape out.
Felix Pan: Okay.
Jason Wang: The 2026, we'll focus on the tape out.
Speaker #2: tape-outs. Okay.
Felix Pan: Okay, thank you.
Felix Pan: Okay, thank you.
Speaker #3: Thank you.
Speaker #1: Thank you. Next one, Goku Halihalan, JP Morgan. Go ahead, please.
Operator: Thank you. Next one, Gokul Hariharan, J.P. Morgan. Go ahead, please.
Operator: Thank you. Next one, Gokul Hariharan, J.P. Morgan. Go ahead, please.
Gokul Hariharan: Yeah, hi. Thanks for taking my question. Hi, Jason. Could you go a little bit deeper into the advanced packaging comment that you made? What is the involvement level of UMC in some of these advanced packaging solutions? Are you doing full stack? Or is it basically like previously, where you were largely focused on the interposer side of the equation? And in terms of the tape outs that you have, what are the nature of these tape outs? Are these mostly data center ASIC-related products, or is this a much wider array of products other than just data center ASIC?
Gokul Hariharan: Yeah, hi. Thanks for taking my question. Hi, Jason. Could you go a little bit deeper into the advanced packaging comment that you made? What is the involvement level of UMC in some of these advanced packaging solutions? Are you doing full stack? Or is it basically like previously, where you were largely focused on the interposer side of the equation? And in terms of the tape outs that you have, what are the nature of these tape outs? Are these mostly data center ASIC-related products, or is this a much wider array of products other than just data center ASIC?
Speaker #4: Yeah. Hi. Thanks for taking my question. Hi, Jason. Could you go a little bit deeper into that advanced packaging comment that you made? What is the involvement level of UMC in some of these advanced packaging solutions?
Speaker #4: Are you doing full stack, or is it basically like previously, where you were largely focused on the interposer side of the equation? And in terms of the tape-outs that you have, what are the nature of these tape-outs?
Speaker #4: Are these mostly data center ASIC-related products, or is it a much wider array of products other than just data center ASIC?
Speaker #2: Sure. Well, first of all, we have reported. In our advanced packaging space, we have been building out some of the capability from wafer-to-wafer stacking and TSD.
Jason Wang: Sure. Well, first of all, we have reported, you know, in our advanced packaging space, we have building out some of the capability from wafer to wafer.
Jason Wang: Sure. Well, first of all, we have reported, you know, in our advanced packaging space, we have building out some of the capability from wafer to wafer. Stacking and the TSE, as well as the interposer, the 2.5D, and the many different capabilities. And then, the way I, we see it, like I explained, for the enabler, is we can apply those to many of the current product that we currently serve. And then, and one good example I mentioned is the RFSOI. So we have a wafer to wafer hybrid bonding with the RF RFSOI solution for the mobile space already. And then, some of the capability can be built for the DTC.
Gokul Hariharan: Mm.
Jason Wang: Stacking and the TSE, as well as the interposer, the 2.5D, and the many different capabilities. And then, the way I, we see it, like I explained, for the enabler, is we can apply those to many of the current product that we currently serve. And then, and one good example I mentioned is the RFSOI. So we have a wafer to wafer hybrid bonding with the RF RFSOI solution for the mobile space already. And then, some of the capability can be built for the DTC.
Speaker #2: As well as the input interposer, the 2.5D, and the many different capabilities. And then, the way we see it, like I explained, for the enabler is we can apply those to many of the current products that we're currently serving.
Speaker #2: And then, one good RFSOI. So, the example I mentioned is the wafer-to-wafer hyperbonding with the RFSOI solution for the mobile space already.
Speaker #2: And then some of the capabilities can be built for the DTC, for the stacking. And as well, some of the customers are looking at the discrete DTC already.
Gokul Hariharan: Mm-hmm.
Jason Wang: For the stacking. As well, some of the customers looking at discrete DTC already. We're combining some of the capability into stacking, the logic and the memory. Of course, we do not provide memory ourselves, so the customer will have to provide memory wafer to us, and so then we can provide the wafer-to-wafer hybrid bonding on those. So, on one hand, the way we see it is advanced packaging is a capability, per se, and but it applies to a product, and then we call it an enabler and also extender.
For the stacking. As well, some of the customers looking at discrete DTC already. We're combining some of the capability into stacking, the logic and the memory. Of course, we do not provide memory ourselves, so the customer will have to provide memory wafer to us, and so then we can provide the wafer-to-wafer hybrid bonding on those. So, on one hand, the way we see it is advanced packaging is a capability, per se, and but it applies to a product, and then we call it an enabler and also extender.
Speaker #2: And we are combining some of the capabilities into stacking the larger end of memory. Of course, we do not provide memory ourselves, so the customer will have to provide a memory waiver to us.
Speaker #2: And so, then we can provide the wafer-to-wafer hybrid bonding on those. So on one hand, the way we see it is, the advanced packaging is a capability per se.
Speaker #2: But it implies to a product, and then we call it an enabler, and also expander. And meanwhile, the product coverage is all the way from the mobile space, power management discussion, the AI-related product, and also for the BCD application as well.
Jason Wang: And meanwhile, the product coverage is all the way from the mobile space, power management discussion, the AI-related pro—for AI-related product and also for the, yeah, the BCD application as well. So, we think this is going to be a broad, broad success on the packaging space.
And meanwhile, the product coverage is all the way from the mobile space, power management discussion, the AI-related pro—for AI-related product and also for the, yeah, the BCD application as well. So, we think this is going to be a broad, broad success on the packaging space.
Speaker #2: So they will, it's our belief, is a form of form factor reason or for the higher performance reason. And many different applications will start adapting the advanced packaging.
Speaker #2: So we think this is going to be a broad acceptance on the advanced packaging.
Speaker #2: space. Got
Gokul Hariharan: Got it. And any plans to further expand your Interposer capacity? I think we had expanded, I think, up to 6,000 and then kind of stopped it there. Now, some of that demand seems to be kind of coming back for some of, for one of your customers in China. So is there any plans to expand the capacity further?
Gokul Hariharan: Got it. And any plans to further expand your Interposer capacity? I think we had expanded, I think, up to 6,000 and then kind of stopped it there. Now, some of that demand seems to be kind of coming back for some of, for one of your customers in China. So is there any plans to expand the capacity further?
Speaker #4: And any plans to further expand your interposer capacity? I think we had expanded, I think, up to 6K and then kind of stopped it there.
Speaker #4: Now, some of that demand seems to be kind of coming back for some of one of your customers in China. So is there any plans to expand the capacity further?
Speaker #4: Now, some of that demand seems to be kind of coming back for some of one of your customers in China. So, is there any plan to expand the capacity further?
Jason Wang: There are discussions of around that. Right now, if you look at the technology itself, we have some common tools in place already, which we can leverage, you know, off of our 40-nanometer capacity, off our 65-nanometer capacity. From those common tools base, we're already allocating to this area. Now, from top for the unique tools, then we'll bring the plan for the future expansion and, you know, for the customer ramp profile, and we believe that will probably happen in 2027 for the unique-
Speaker #2: There are discussions around that. Right now, if you look at the technology itself, we have some common tools in place already, which is that we can leverage it.
Jason Wang: There are discussions of around that. Right now, if you look at the technology itself, we have some common tools in place already, which we can leverage, you know, off of our 40-nanometer capacity, off our 65-nanometer capacity. From those common tools base, we're already allocating to this area. Now, from top for the unique tools, then we'll bring the plan for the future expansion and, you know, for the customer ramp profile, and we believe that will probably happen in 2027 for the unique-
Speaker #2: Also, our 40-nanometer capacity, also on the 65-nanometer capacity. From those common tool space, we are already allocating to this area. Now, for the unique tools, then we'll put in the plan for the future expansion.
Speaker #2: And for the customer rent profile, we believe that will probably happen in 2027.
Speaker #2: the unique. Got
Gokul Hariharan: Got it. Understood. That's clear. Another question I had is on the just your expectations for the communication consumer segment, which is north of 70% of revenue, given all these concerns about smartphone PC. How are you budgeting for this? Are your customers telling you that they're really concerned about this memory cost inflation, or right now you still don't really hear that from the customers, that that's going to be a big issue from a unit perspective, going through the year?
Gokul Hariharan: Got it. Understood. That's clear. Another question I had is on the just your expectations for the communication consumer segment, which is north of 70% of revenue, given all these concerns about smartphone PC. How are you budgeting for this? Are your customers telling you that they're really concerned about this memory cost inflation, or right now you still don't really hear that from the customers, that that's going to be a big issue from a unit perspective, going through the year?
Speaker #4: Understood. That's clear. Another question I had is on your expectations for the communication consumer segment, which is north of 70% of revenue. Given all these concerns about smartphones and PCs, how are you budgeting for this?
Speaker #4: About this memory cost inflation, customers telling you that they're really concerned—are you, or right now you still don't really hear that from the customers? That there's going to be a big issue from a unit perspective going through the year?
Speaker #2: Well, we are also cautious about that topic. As of today, we have not observed any demand impact on our customers' forecast for the year, despite that recent surge in that price.
Jason Wang: Well, we, we're also cautious about that topic. As of today, we have not observed any demand impact on our customers' forecast for the year, despite that recent surge in that price. And our technology predominantly supported customers addressing the higher end of the market segment, where the demand tends to be more resilient in the past and in the period of memory tightness. You know, so because the supply usually typically prioritize in such high-end, higher value device. While we remain attentive to the potential impact on the memory market, and our current assessment is that any potential headwind are probably manageable, and we'll continue monitoring the situation closely with our customer together.
Jason Wang: Well, we, we're also cautious about that topic. As of today, we have not observed any demand impact on our customers' forecast for the year, despite that recent surge in that price. And our technology predominantly supported customers addressing the higher end of the market segment, where the demand tends to be more resilient in the past and in the period of memory tightness. You know, so because the supply usually typically prioritize in such high-end, higher value device. While we remain attentive to the potential impact on the memory market, and our current assessment is that any potential headwind are probably manageable, and we'll continue monitoring the situation closely with our customer together.
Speaker #2: And our technology predominantly supported customers addressing the higher end of the market segment, where the demand tends to be more resilient, in the past.
Speaker #2: And in the period of memory tightness, because the supply usually typically prioritizes such high-end, higher-value devices, while we remain attentive to the potential impact on the memory market. Our current assessment is that any potential headwinds are probably manageable, and we'll continue monitoring the situation closely together with our customers.
Gokul Hariharan: Got it. We questions on the geographic split of revenues. I think, could you talk a little bit about the progress and any color on how you will be booking revenues or profits from this partnership, given the fab is the Intel fab, while you are essentially the provider of customers and some degree of IPS fall into it? And secondly, on the Xiamen fab, what is the strategy for the Xiamen fab, medium to long term, given many of your semiconductor peers in Taiwan have kind of progressively exited capacity in mainland China?
Gokul Hariharan: Got it. We questions on the geographic split of revenues. I think, could you talk a little bit about the progress and any color on how you will be booking revenues or profits from this partnership, given the fab is the Intel fab, while you are essentially the provider of customers and some degree of IPS fall into it? And secondly, on the Xiamen fab, what is the strategy for the Xiamen fab, medium to long term, given many of your semiconductor peers in Taiwan have kind of progressively exited capacity in mainland China?
Speaker #4: Got it. We have questions on the geographic split of revenues. I think—could you talk a little bit about the progress, and any color on how you will be booking revenues or profits from this partnership, given the fab is Intel's fab, while you are essentially the provider of customers and some degree of IP as well into it?
Speaker #4: And secondly, on the Xiaomi fab, what is the strategy for the Xiaomi fab medium to long term, given many of your semiconductor peers in Taiwan have kind of progressively exited capacity in mainland?
Speaker #4: China? Well,
Jason Wang: Well, for the 12-nanometer project with Intel. Overall, the 12-nanometer cooperation project with Intel continues to advance smoothly. We remain on schedule to deliver the PDK and associate IP to customer in 2026. Furthermore, we anticipate the product paybacks will commence in 2027, making the significant step forward to a commercialized deployment and future revenue growth. Right now, UMC and Intel are working closely to ensure successful payout and-
Jason Wang: Well, for the 12-nanometer project with Intel. Overall, the 12-nanometer cooperation project with Intel continues to advance smoothly. We remain on schedule to deliver the PDK and associate IP to customer in 2026. Furthermore, we anticipate the product paybacks will commence in 2027, making the significant step forward to a commercialized deployment and future revenue growth. Right now, UMC and Intel are working closely to ensure successful payout and-
Speaker #2: For the 12-nanometer project with Intel, overall, the 12-nanometer cooperation project with Intel continues to advance on schedule. To deliver smoothly, we remain on PDK and associate the IP to customer in 2026.
Speaker #2: Furthermore, we anticipate a product payout will commence in 2027, making the significant step toward a commercialized deployment and future revenue growth. Right now, UMC and Intel are working closely to ensure successful payouts and efficient REMBA for the mass production.
Gokul Hariharan: Mm-hmm.
Jason Wang: An efficient member for the mass production. As the project advances, it is expected to further strengthen UMC's position in the US, right? For customer as well as for us, because the geo diversification manufacturing. Right now, the application on the 12-nanometer collaboration, including products on digital TV, Wi-Fi connectivity, and high-speed interface products. In terms of the business model, and, you know, we, it's probably not, it's not available for us to comment, you know. But it is a win-win strategy that we see and will be very synergistic, you know, for both parties as well as for our customers. And we have very high confidence this will be a win-win model.
An efficient member for the mass production. As the project advances, it is expected to further strengthen UMC's position in the US, right? For customer as well as for us, because the geo diversification manufacturing. Right now, the application on the 12-nanometer collaboration, including products on digital TV, Wi-Fi connectivity, and high-speed interface products. In terms of the business model, and, you know, we, it's probably not, it's not available for us to comment, you know. But it is a win-win strategy that we see and will be very synergistic, you know, for both parties as well as for our customers. And we have very high confidence this will be a win-win model.
Speaker #2: As the project advances, it is expected to further strengthen UMC's position in the US—for customers as well as for us—because of the geodiversification in manufacturing right now, the application on the 12-nanometer cooperation, including products on digital TV, Wi-Fi connectivity, and high-speed interface products.
Speaker #2: In terms of the business model, and it's probably not available for us to comment, but it is a win-win strategy that we see. And it will be very synergetic for both parties, as well as for our customers.
Speaker #2: And we have very high confidence this will be a win-win.
Speaker #4: Okay. And any thoughts for the Xiaomi capacity app?
Gokul Hariharan: Okay. And any thoughts for the Xiamen capacity? Yeah.
Gokul Hariharan: Okay. And any thoughts for the Xiamen capacity? Yeah.
Speaker #2: Yes. For the Xiaomi, I kind of touched on that earlier as well. I look at Xiaomi not just as Xiaomi itself—our core part of our competitive advantage is our geographically diverse manufacturing footprint.
Jason Wang: Yes. For the Xiamen, it is, you know, I kind of touched that earlier as well. You know, I look at Xiamen, not just Xiamen itself, is, you know, our core part of our competitive advantage is our geographically diverse manufacturing footprint. And the Xiamen, you know, plays one of the, you know, important place for us, and particularly for the local customer. So... At this point, the fab is actually at a full capacity; we are running at a full utilization as well. And we see, we're continuing seeing many different engagements come into this, and we will, you know, across regionally, optimize this, you know, from the customer engagement and product loading standpoint.
Jason Wang: Yes. For the Xiamen, it is, you know, I kind of touched that earlier as well. You know, I look at Xiamen, not just Xiamen itself, is, you know, our core part of our competitive advantage is our geographically diverse manufacturing footprint. And the Xiamen, you know, plays one of the, you know, important place for us, and particularly for the local customer. So... At this point, the fab is actually at a full capacity; we are running at a full utilization as well. And we see, we're continuing seeing many different engagements come into this, and we will, you know, across regionally, optimize this, you know, from the customer engagement and product loading standpoint.
Speaker #2: And the Xiaomi plays one of the important spaces for us, and particularly for the local customer. So at this point, the fab is actually at full capacity.
Speaker #2: We are running at a full utilization as well. And we continue seeing many different engagements coming to this. And we will, across regions, optimize this from the customer engagement and product loading standpoint.
Speaker #4: Okay, just one more on blended ASP. I think Jason, you mentioned that the ASP environment is more favorable this year. But overall, utilization is still in the mid-70s as of Q1, right?
Gokul Hariharan: Okay. Just one more on blended ASP. I think, Jason, you mentioned that the ASP environment is more favorable this year, but overall utilization is still in the mid-70s as of Q1, right? So do you expect that this year we could see a scenario that we could see blended ASPs moving up, meaningfully, like 5 to 10% or something like that, like we have had in the past? Or that requires a much higher level of utilization, that is probably not happening this year, given your low single-digit, foundry growth expectations.
Gokul Hariharan: Okay. Just one more on blended ASP. I think, Jason, you mentioned that the ASP environment is more favorable this year, but overall utilization is still in the mid-70s as of Q1, right? So do you expect that this year we could see a scenario that we could see blended ASPs moving up, meaningfully, like 5 to 10% or something like that, like we have had in the past? Or that requires a much higher level of utilization, that is probably not happening this year, given your low single-digit, foundry growth expectations.
Speaker #4: So, do you expect that this year we could see a scenario where blended ASPs move up meaningfully—like 5 to 10% or something like that, as we have had in the past—or does that require a much higher level of utilization that is probably not happening this year, given your low single-digit foundry growth expectations?
Jason Wang: Sure. I mean, the high utilization is one of the important factors, but that's not the only factor. You know, we want to make sure the pricing strategy enables not only ourselves but our customers to be competitive as well. So, but we do see the pricing environment is getting more favorable to foundries because of the loading. And so but the magnitude of that, we probably have to continue to manage it, you know, and if we have clarity, we'll share that with you.
Jason Wang: Sure. I mean, the high utilization is one of the important factors, but that's not the only factor. You know, we want to make sure the pricing strategy enables not only ourselves but our customers to be competitive as well. So, but we do see the pricing environment is getting more favorable to foundries because of the loading. And so but the magnitude of that, we probably have to continue to manage it, you know, and if we have clarity, we'll share that with you.
Speaker #2: Sure. I mean, the high utilization is one of the important factors, but that's not the only factor. We want to make sure the pricing strategy enables not only ourselves but our customers to be competitive as well.
Speaker #2: So, but we do see the pricing environment is getting more favorable to foundry because of the loading reason, and so, but the magnitude of that, we probably have to continue managing it.
Speaker #2: And if we have a clear view, we'll share that with you.
Speaker #4: Got it. Yeah. Thank you.
Gokul Hariharan: Got it. Yeah. Thank you.
Gokul Hariharan: Got it. Yeah. Thank you.
Jason Wang: Sure.
Jason Wang: Sure.
Speaker #3: Thank you. Next one, Alex Chang, BMP. Go ahead, please.
Operator: Thank you. Next one, Allen Chang, BNP. Go ahead, please.
Operator: Thank you. Next one, Allen Chang, BNP. Go ahead, please.
Allen Chang: Thank you for taking my question. I just have a very quick one. As I saw, the company announce that it started the mass production of the SuperFlash Generation 4. So just wondering, how much revenue contribution from the Non-Volatile Memory business in the past quarter or maybe past year? And also, how much revenue is contributed by the Power Management ICs for the server-related applications? Thank you.
Speaker #4: Thank you for taking my question. Just a very quick one. I saw the company announced that it started the mass production of the Super Flash Generation 4.
Alex Chang: Thank you for taking my question. I just have a very quick one. As I saw, the company announce that it started the mass production of the SuperFlash Generation 4. So just wondering, how much revenue contribution from the Non-Volatile Memory business in the past quarter or maybe past year? And also, how much revenue is contributed by the Power Management ICs for the server-related applications? Thank you.
Speaker #4: So just wondering, how much revenue contribution came from the volatile memory business in the past quarter, or maybe the past year? And also, how much revenue is contributed by the power management ICs for the server-related applications?
Speaker #4: Thank
Speaker #4: You... Well, I mean, we don't have a— we don't—
Jason Wang: Well, I mean, we don't have a breakdown, and the way that we break it down is based on the specialty technology. That includes the high voltage, non-volatile memory, and the BCD space. Right now, the specialty revenue representing about 50% of our overall revenue. And I can let you know, the high voltage is about 30% of that, and the rest of that, I would say, is combination of the non-volatile memory as well as the BCD.
Jason Wang: Well, I mean, we don't have a breakdown, and the way that we break it down is based on the specialty technology. That includes the high voltage, non-volatile memory, and the BCD space. Right now, the specialty revenue representing about 50% of our overall revenue. And I can let you know, the high voltage is about 30% of that, and the rest of that, I would say, is combination of the non-volatile memory as well as the BCD.
Speaker #2: Have a breakdown provided. And the way that we break it down is based on the specialty technology; that includes the high-voltage and non-volatile memory, and the PCB space.
Speaker #2: Right now, the specialty revenue represents about 50% of our overall revenue, and I can let you know the high-voltage is about 30% of that.
Speaker #2: And the rest of that, I would say, is a combination of the non-volatile memory as well as the PCB.
Speaker #4: Thank you very
Bruce Lu: ... Thank you very much.
Alex Chang: ... Thank you very much.
Speaker #4: much. Thank
Operator: Thank you. Next one, Laura Chen, Citi. Go ahead, please.
Operator: Thank you. Next one, Laura Chen, Citi. Go ahead, please.
Speaker #3: You. Next one, Laura Chang, Citi. Go ahead, please.
Speaker #5: Hello. Hi. Thank you for taking my question. Good afternoon, gentlemen. I just want to follow up on the iteration rate and also the gross margin outlook.
Laura Chen: Hello. Hi, thank you for taking my question. Good afternoon, gentlemen. I just want to follow up on the deterioration rate and also the growth margin outlook. Jason, you mentioned that the pricing environment seems to be improving and more favorable, and together with the firm shipment and the better product mix, as well as deterioration rate. So how should we think about the growth margin trend? You guided that will be high 20% for Q1, but with these variables factors, should we, how should we think about the margins throughout the year? That's my first question.
Laura Chen: Hello. Hi, thank you for taking my question. Good afternoon, gentlemen. I just want to follow up on the deterioration rate and also the growth margin outlook. Jason, you mentioned that the pricing environment seems to be improving and more favorable, and together with the firm shipment and the better product mix, as well as deterioration rate. So how should we think about the growth margin trend? You guided that will be high 20% for Q1, but with these variables factors, should we, how should we think about the margins throughout the year? That's my first question.
Speaker #5: Jason, you mentioned that the pricing environment seems to be improving and more favorable. And together with the firm shipment and the better product mix, as well as iteration rate, so how should we think about the gross margin trend?
Speaker #5: You guided that it will be high 20% for Q1, but with these favorable factors, how should we think about the margins throughout the year?
Speaker #5: That's my first question.
Chih-Tung Liu: Well, yes, when gross margin can be highly dependent upon the transition rate, including depreciation and foreign exchange rate. So, there's a lot of variables. So beyond this quarter, it's difficult for us to give a firm outlook. For the Q1 guidance, which is high 20s, it's mainly due to the higher cost, especially the higher depreciation expenses. As I mentioned, it will grow by low teens in the full year of 2026. As for 2026, we will continue to cope with the higher depreciation expenses, as well as the other inflationary pressure for our production, raw material and other costs.
Chih-Tung Liu: Well, yes, when gross margin can be highly dependent upon the transition rate, including depreciation and foreign exchange rate. So, there's a lot of variables. So beyond this quarter, it's difficult for us to give a firm outlook. For the Q1 guidance, which is high 20s, it's mainly due to the higher cost, especially the higher depreciation expenses. As I mentioned, it will grow by low teens in the full year of 2026. As for 2026, we will continue to cope with the higher depreciation expenses, as well as the other inflationary pressure for our production, raw material and other costs.
Speaker #2: Well, yes. Gross margin can be highly dependent upon utilization rate, ASP, product mix, iteration, and foreign exchange rate, so there are a lot of variables.
Speaker #2: So beyond this quarter, it's difficult for us to give a firm outlook. For the first quarter guidance, which is in the high 20s, it's mainly due to the higher cost.
Speaker #2: Especially the higher depreciation expenses—as I mentioned, they will grow by low teens in the full year of 2026. As for 2026, we will continue to cope with higher depreciation expenses as well as other inflationary pressures for our production raw materials and other costs.
Speaker #2: To mitigate and cope with the headwinds, we will continue with our cost reduction efforts and also all the activities to improve our productivity and drive operational efficiency.
Chih-Tung Liu: To mitigate and cope with the headwinds, we will continue with our cost reduction efforts and also all the activities to improve our productivity and drive operation efficiency. These measures hopefully will help UMC to deliver a stable EBITDA margin and ensure our long-term financial resilience to remain intact. As a matter of fact, our 2025 EBITDA margin is actually a good improvement compared to that of 2024.
To mitigate and cope with the headwinds, we will continue with our cost reduction efforts and also all the activities to improve our productivity and drive operation efficiency. These measures hopefully will help UMC to deliver a stable EBITDA margin and ensure our long-term financial resilience to remain intact. As a matter of fact, our 2025 EBITDA margin is actually a good improvement compared to that of 2024.
Speaker #2: And these measures, hopefully, will help UMC to deliver a stable EBITDA margin and ensure our long-term financial resilience to remain intact. As a matter of fact, our 2025 EBITDA margin is actually a good improvement compared to that of
Speaker #2: 2024.
Laura Chen: Yeah, sure. Thank you very much. Also, I think for the advanced packaging and, as well as the silicon photonics, is one of the key things that UMC may have a great opportunity. We know that UMC has already working on advanced packagings previously, interposer, probably, now we're seeing more various different design. So, could you share with us what about the revenue contributions of your advanced packaging right now, and how would that look like in 2, 3 years?
Laura Chen: Yeah, sure. Thank you very much. Also, I think for the advanced packaging and, as well as the silicon photonics, is one of the key things that UMC may have a great opportunity. We know that UMC has already working on advanced packagings previously, interposer, probably, now we're seeing more various different design. So, could you share with us what about the revenue contributions of your advanced packaging right now, and how would that look like in 2, 3 years?
Speaker #5: Yeah. Sure. Thank
Speaker #5: Thank you very much. And also, I think for the advanced packaging, as well as silicon photonics, one of the key things is that UMC may have a great opportunity. We know that UMC has already been working on advanced packaging previously, on interposer probably.
Speaker #5: Now we'll see more various different designs. So could you share with us, what about the revenue contributions of your advanced packaging right now, and how would that look like in two, three years?
Speaker #5: years? Well, currently,
Chih-Tung Liu: Well, currently, the interposer was, you know, exposed to very limited customer base and also narrow application. While we have engaged with more than 10 customers and expecting more than 20 new tape outs in 2026, we do see, foresee that revenue of a packaging, advanced packaging growth in 2027 will be significant.
Chih-Tung Liu: Well, currently, the interposer was, you know, exposed to very limited customer base and also narrow application. While we have engaged with more than 10 customers and expecting more than 20 new tape outs in 2026, we do see, foresee that revenue of a packaging, advanced packaging growth in 2027 will be significant.
Speaker #2: The interposer was exposed to a very limited customer base, and also had a narrow application. While we have engaged with more than 10 customers and are expecting more than 20 new tape-outs in 2026, we do foresee that revenue of advanced packaging growth in 2027 will be significant.
Speaker #5: So, 'significant'—does that mean like 5%, 10%, or higher?
Laura Chen: So significant means that, could that be like 5, 10% or higher?
Laura Chen: So significant means that, could that be like 5, 10% or higher?
Chih-Tung Liu: Oh, I expecting half more than that.
Chih-Tung Liu: Oh, I expecting half more than that.
Speaker #2: Oh, I think half a percent. But I mean, if you're referring to the overall revenue contribution, we'll probably give you more guidance later.
Laura Chen: Okay.
Laura Chen: Okay.
Chih-Tung Liu: But I mean, if you're referring to the overall revenue contribution, you know, we will probably give you more, you know, a guidance later. But if it's just looking at the packaging itself, it's going to be significantly larger than what we're shipping today.
Chih-Tung Liu: But I mean, if you're referring to the overall revenue contribution, you know, we will probably give you more, you know, a guidance later. But if it's just looking at the packaging itself, it's going to be significantly larger than what we're shipping today.
Speaker #2: But if you just look at the packaging itself, it's going to be significantly larger than what we're shipping.
Speaker #2: But if you just look at the packaging itself, it's going to be significantly larger than what we are shipping today. Okay.
Laura Chen: Okay. Thank you very much.
Laura Chen: Okay. Thank you very much.
Speaker #5: Thank you very
Speaker #5: much. Thank
Operator: Thank you. Next we'll have Bruce Lu, Goldman Sachs, for questions. Go ahead, please.
Operator: Thank you. Next we'll have Bruce Lu, Goldman Sachs, for questions. Go ahead, please.
Speaker #3: You. Next, we'll have Bruce Liu from Goldman Sachs for questions. Go ahead.
Speaker #3: please.
Bruce Lu: Okay. Thank you for taking my questions. I want to go a little bit deeper for the silicon photonics. I mean, as you might know, that your peers, like GlobalFoundries, Tower Semi, are pretty vocal about that. Can you tell us how big you think the addressable market for silicon photonics for you guys in two years? And how do you win market? What is the business though, I mean, other than working with IMEC?
Bruce Lu: Okay. Thank you for taking my questions. I want to go a little bit deeper for the silicon photonics. I mean, as you might know, that your peers, like GlobalFoundries, Tower Semi, are pretty vocal about that. Can you tell us how big you think the addressable market for silicon photonics for you guys in two years? And how do you win market? What is the business though, I mean, other than working with IMEC?
Speaker #4: Okay. Thank you for
Speaker #4: Taking my questions. I want to go a little bit deeper on silicon photonics. I mean, as you might know, your peers like GlobalFoundries and Tower Semi are pretty vocal about that.
Speaker #4: Can you tell us how big you think the addressable market for silicon photonics will be for you guys in two years, and how do you win that market?
Speaker #4: What is the competitive advantage for you in this business, though? I mean, other than working with IMEC.
Speaker #2: Well, I mean, the silicon facility is not going to only serve silicon photonics. The silicon facility is one of our important manufacturing sites and serves our worldwide customers.
Chih-Tung Liu: Well, I mean, the Singapore facility is not going to only serving the silicon photonics. Singapore facility is one of our important manufacturing sites. You know, it serves our worldwide customer, all different applications. And so it's part of our geographical diverse manufacturing strategy. So, you know-
Chih-Tung Liu: Well, I mean, the Singapore facility is not going to only serving the silicon photonics. Singapore facility is one of our important manufacturing sites. You know, it serves our worldwide customer, all different applications. And so it's part of our geographical diverse manufacturing strategy. So, you know-
Speaker #2: All different applications. And so, it's part of our geographically diverse manufacturing strategy.
Speaker #2: So I don't know.
Bruce Lu: No, no, my question is for silicon photonics, business strategy.
Bruce Lu: No, no, my question is for silicon photonics, business strategy.
Speaker #4: My question is for silicon photonics. Our business
Speaker #4: strategy. The
Chih-Tung Liu: The silicon photonics strategy-
Chih-Tung Liu: The silicon photonics strategy-
Bruce Lu: Yes.
Bruce Lu: Yes.
Speaker #2: was in
Chih-Tung Liu: was in Singapore. Okay? So-
Chih-Tung Liu: was in Singapore. Okay? So-
Speaker #2: Singapore. No, no, no, no.
Bruce Lu: No, no, no, no. I'm sorry. Let me rephrase my question.
Bruce Lu: No, no, no, no. I'm sorry. Let me rephrase my question.
Speaker #4: I'm sorry. Let me rephrase my question. So the growth driver for UMC, one of them is the CTO. I'm assuming it is having more business in silicon photonics.
Chih-Tung Liu: Sure.
Chih-Tung Liu: Sure.
Bruce Lu: So the growth driver for UMC, one of the, the CPO, I'm assuming, is, you know, having more business for, in the silicon photonics. You know, in, for your peers, like, you know, GlobalFoundries or, Tower Semi, they are pretty vocal about the, you know, silicon photonics and have, you know, meaningful revenue contribution already. For UMC perspective, you know, what is your, competitive advantage for UMC to win this business, and how, how much business you can win, or how big is the addressable market for you in two years?
Bruce Lu: So the growth driver for UMC, one of the, the CPO, I'm assuming, is, you know, having more business for, in the silicon photonics. You know, in, for your peers, like, you know, GlobalFoundries or, Tower Semi, they are pretty vocal about the, you know, silicon photonics and have, you know, meaningful revenue contribution already. For UMC perspective, you know, what is your, competitive advantage for UMC to win this business, and how, how much business you can win, or how big is the addressable market for you in two years?
Speaker #4: For your peers like GlobalFoundries or Tower Semi, they are pretty vocal about silicon photonics and have meaningful revenue contribution already. From UMC's perspective, what is your competitive advantage for UMC to win this business, and how much business can you win, or how big is the addressable market for you in two years?
Speaker #2: Got it. So for the silicon photonics, our strategy is simple. Our collaboration with IMEC allowed us to deliver the industry-standard PDK to our customers in 2027, particularly in 12-inch.
Chih-Tung Liu: Got it. So for the Silicon Photonics, our strategy is simple. Our collaboration with imec allow us to deliver the industry standard PDK to our customer in 2027, particularly in 12-inch.
Chih-Tung Liu: Got it. So for the Silicon Photonics, our strategy is simple. Our collaboration with imec allow us to deliver the industry standard PDK to our customer in 2027, particularly in 12-inch.
Speaker #2: So many of our competitors are at this today at the 8-inch, and we are focused on this in 12-inch. And we believe the 12-inch will have that advantage.
Jason Wang: ... So many of our competitors is at today at 8-inch, and we, we are focused on this in 12-inch. And as we, as we believe that 12-inch will have, have that advantage. And right now, we already have certain products that proven that performance is better and on the profitable product, and which we would expect to ramp this year. And meanwhile, we're also combining with the silicon photonics with our advanced packaging know-how. So for many different type of applications that we can integrate that. So by doing that, we think we will be even providing even more value from advanced packaging, combining with silicon photonics at 12-inch. I think that's where we believe we have competitive.
... So many of our competitors is at today at 8-inch, and we, we are focused on this in 12-inch. And as we, as we believe that 12-inch will have, have that advantage. And right now, we already have certain products that proven that performance is better and on the profitable product, and which we would expect to ramp this year. And meanwhile, we're also combining with the silicon photonics with our advanced packaging know-how. So for many different type of applications that we can integrate that. So by doing that, we think we will be even providing even more value from advanced packaging, combining with silicon photonics at 12-inch. I think that's where we believe we have competitive.
Speaker #2: And right now, we already have certain products that are proven—that performance is better and on a profitable product. And which we will expect to ramp this year.
Speaker #2: And meanwhile, we're also combining the silicon photonics with our advanced packaging know-how. So for many different types of applications, we can integrate that.
Speaker #2: So by doing that, we think we will be providing even more value from advanced packaging, combined with silicon photonics at 12-inch. I think that's where we believe we are competitive.
Bruce Lu: But that's mostly for plug-in, right? Because if you don't have the EIC, you know, the pure CPO product might not be your key growth driver.
Bruce Lu: But that's mostly for plug-in, right? Because if you don't have the EIC, you know, the pure CPO product might not be your key growth driver.
Speaker #4: But that's mostly for plug-in, right? Because if you don't have the EIC, the pure CPO product might not be your key growth driver?
Speaker #2: You're correct. We're now looking at a complete CPO package. We're looking at it particularly in the PIC and...
Jason Wang: So, correct. We're now looking at a completely CPO package. We're looking at, particularly in the PIC, OIO, and OTN.
Chih-Tung Liu: So, correct. We're now looking at a completely CPO package. We're looking at, particularly in the PIC, OIO, and OTN.
Speaker #2: OIO and OCS. I see.
Bruce Lu: I see. Understand. It's very clear. Next one is, and we do see that the progress with the progress for the Intel project for 12 nanometers is pretty smooth. I just want to know, what is the next step? I mean, when we can see a further collaboration in 10 7 and beyond? I mean, obviously, whatever you said, you know, the advantage at 12-inch, you can also use the same argument for 7-nanometer. What's, what's stopping you to doing that, to do that?
Bruce Lu: I see. Understand. It's very clear. Next one is, and we do see that the progress with the progress for the Intel project for 12 nanometers is pretty smooth. I just want to know, what is the next step? I mean, when we can see a further collaboration in 10 7 and beyond? I mean, obviously, whatever you said, you know, the advantage at 12-inch, you can also use the same argument for 7-nanometer. What's, what's stopping you to doing that, to do that?
Speaker #4: Understand. It's very clear. Next one is and we do see that the progress with the progress for the Intel projects for 12 nanometers is pretty smooth.
Speaker #4: I just want to know, what is the next step? I mean, when can we see a further collaboration in 10, 7, and beyond? I mean, obviously, whatever you said—the advantage at 12-inch—you can also use the same argument for 7 nanometer.
Speaker #4: What's stopping you from doing that, to do that?
Jason Wang: Well, you're also right on that. Our focus right now is on delivering the 12-nanometer platform to customer. In the future, should we make sense for both UMC and Intel as well as our customer, you know, we will surely consider expanding our collaboration to other derivatives as well as the technologies. Yeah.
Chih-Tung Liu: Well, you're also right on that. Our focus right now is on delivering the 12-nanometer platform to customer. In the future, should we make sense for both UMC and Intel as well as our customer, you know, we will surely consider expanding our collaboration to other derivatives as well as the technologies. Yeah.
Speaker #2: Well, you're also right on that. And our focus right now is on delivering the 12-nanometer platform to customers. In the future, should it make sense for both UMC and Intel, as well as our customer, we will surely consider expanding our collaboration to other derivatives as well as the technologies.
Speaker #2: Yeah.
Bruce Lu: But what is stopping now? What is the showstopper now?
Bruce Lu: But what is stopping now? What is the showstopper now?
Speaker #4: But what
Speaker #4: Is stopping now? What is the showstopper?
Speaker #4: now? It's not a I
Jason Wang: It's not a... I won't call it stopping. I think the focus is a focus on 12 nanometers. We have to deliver the 12-nanometer today, and make sure that we deliver that program. We execute it well, and I think anything that makes sense from there on, like you said, I think there will be a discussion. Yes.
Chih-Tung Liu: It's not a... I won't call it stopping. I think the focus is a focus on 12 nanometers. We have to deliver the 12-nanometer today, and make sure that we deliver that program. We execute it well, and I think anything that makes sense from there on, like you said, I think there will be a discussion. Yes.
Speaker #2: Won't call it stopping. I think the focus is a focus on 12 nanometers. We have to deliver the 12 nanometers today and make sure that we deliver that program.
Speaker #2: We execute it well. And I think anything that makes sense from that on, like you said, I think that will be a discussion.
Speaker #2: Yes. I see.
Bruce Lu: I see. Because we already assume that you can deliver something in 2027. So, you know, given that working for 7, maybe you need 2 to 3 years, we want to see the, you know, the project kick off as soon as possible.
Bruce Lu: I see. Because we already assume that you can deliver something in 2027. So, you know, given that working for 7, maybe you need 2 to 3 years, we want to see the, you know, the project kick off as soon as possible.
Speaker #4: Because we are already assuming that you can deliver something in '27. So, given that, working for seven, maybe you need two to three years.
Speaker #4: We want to see the project kick off as soon as possible.
Speaker #4: We want to see the project kick off as soon as possible. That's all my questions. Thank you.
Jason Wang: Right.
Chih-Tung Liu: Right.
Bruce Lu: That's all my question. Thank you.
Bruce Lu: That's all my question. Thank you.
Speaker #2: That's perfect.
Jason Wang: Sure.
Chih-Tung Liu: Sure.
Speaker #3: As a reminder, please press the star key and number one on your keypad if you would like to ask a question. Thank you. Now we'll have our last question.
Operator: As a reminder, please press star key and number one on your keypad if you would like to ask the question. Thank you. Now we'll have our last question, Sebastian Hou, Neuberger Berman. Go ahead, please.
Operator: As a reminder, please press star key and number one on your keypad if you would like to ask the question. Thank you. Now we'll have our last question, Sebastian Hou, Neuberger Berman. Go ahead, please.
Speaker #3: Sapo, Newberg-Berman, go ahead,
Speaker #3: please. Hi, Jason.
Sebastian Hou: Hi, Jason and Chih-Tung. It's been a while, and congrats on the progress you've made throughout these couple years. I just have a few questions. The first one is on the market dynamics. I think previously, Sunny has asked about the TSMC is shrinking or defocusing on this, the mature foundry process. It looks like not just TSMC, but also the other foundries are seeming to be doing some leading-edge logic foundries are seeming to be doing the same thing. Also, Powerchip recently just reached agreement with Micron, selling its Tonglu Fab, which means they're trying to streamline and reorg some of the foundry process, too.
Sebastian Hou: Hi, Jason and Chih-Tung. It's been a while, and congrats on the progress you've made throughout these couple years. I just have a few questions. The first one is on the market dynamics. I think previously, Sunny has asked about the TSMC is shrinking or defocusing on this, the mature foundry process. It looks like not just TSMC, but also the other foundries are seeming to be doing some leading-edge logic foundries are seeming to be doing the same thing. Also, Powerchip recently just reached agreement with Micron, selling its Tonglu Fab, which means they're trying to streamline and reorg some of the foundry process, too.
Speaker #5: It's you, Don. It's been a while. And congrats on the progress you've made throughout these couple of years. I just have a few questions.
Speaker #5: The first one is on the market dynamics. I think previously, Sunny has asked about whether TSMC is shrinking or defocusing on its mature foundry process.
Speaker #5: And it looks like not just TSMC, but also the other foundries are seems to be doing some leading-edge technology foundry are seems to be doing the same thing and also part chip recently just reached agreement with Micron selling its Tunglo fab, which means they're trying to streamline the reorg, some of the foundry process too.
Speaker #5: So it seems that there is a lot of supply is kind of being taken away because of the already out effects from the AI and crowding out some of this older nodes.
Sebastian Hou: So it seems like there is a lot of supply is kind of being taken away because of the crowding out effects from the AI and crowding out some of these older nodes. On the supply side, seems to be that's actually decreasing. And on the demand side, if you look at, I think TI just reported overnight, I think the, it seems like there, there's been more obvious recovery on the analog MCUs phase. So on demand side, that's also improving, on the supply side, that's actually decreasing. So it looks like supply-demand dynamics is moving to a more favorable situation. I think that's why you were mentioning the pricing dynamic is favorable this year. So I'm just curious about your view.
So it seems like there is a lot of supply is kind of being taken away because of the crowding out effects from the AI and crowding out some of these older nodes. On the supply side, seems to be that's actually decreasing. And on the demand side, if you look at, I think TI just reported overnight, I think the, it seems like there, there's been more obvious recovery on the analog MCUs phase. So on demand side, that's also improving, on the supply side, that's actually decreasing. So it looks like supply-demand dynamics is moving to a more favorable situation. I think that's why you were mentioning the pricing dynamic is favorable this year. So I'm just curious about your view.
Speaker #5: On the supply side, seems to be that's actually decreasing. And on the demand side, if you look at, I think TI just reported overnight, I think it seems like there's been more obvious recovery on the analog MCU space.
Speaker #5: So, on the demand side, that's also improving. But the supply side, that's actually decreasing. So it looks like supply-demand dynamics is moving toward a more favorable situation.
Speaker #5: I think that explains why you were mentioning the pricing dynamics is favorable this year. So I'm just curious about your view—if we try to compare the current, like, the mature foundry dynamics situation right now versus, I mean, back in 2021 when there was a severe shortage back then.
Sebastian Hou: If you try to compare the current, like, the mature foundries dynamic situation right now, versus, I mean, back in 2021, when there's a severe shortage back then, how would you compare this time around versus life cycle?
If you try to compare the current, like, the mature foundries dynamic situation right now, versus, I mean, back in 2021, when there's a severe shortage back then, how would you compare this time around versus life cycle?
Speaker #5: How would you compare this time around versus last cycle?
Jason Wang: Well, I mean, that's a really good question. I mean, we, you know, we saw some of the, the market movement, the, the changes. And, we also, you know, did a deep dive on this, demand and supply, outlook, and, we think whether this is short term or long term. If you look at the, the driver behind this, you know, we see, you mentioned, this is truly more the, the AI phenomenon ripple effect. And so, we see that AI demand remains to be very strong, at the least, kind of foreseeable.... I think this momentum will continue driving, the overall, demand.
Jason Wang: Well, I mean, that's a really good question. I mean, we, you know, we saw some of the, the market movement, the, the changes. And, we also, you know, did a deep dive on this, demand and supply, outlook, and, we think whether this is short term or long term. If you look at the, the driver behind this, you know, we see, you mentioned, this is truly more the, the AI phenomenon ripple effect. And so, we see that AI demand remains to be very strong, at the least, kind of foreseeable.... I think this momentum will continue driving, the overall, demand.
Speaker #2: I mean, that's a really good question. I mean, we saw the market movement, the changes. And we also did a deep dive on this demand and supply outlook.
Speaker #2: And we think whether this is a short-term or long-term. If you look at the driver behind it, we see you mentioned this is truly more of the AI phenomenon, repo effect.
Speaker #2: And so we see that AI demand we meant to be very strong, at least at a foreseeable future. And I think this momentum will continue driving the overall demand.
Speaker #2: And meanwhile, in many of these, AI capability will be portfoliating to even the other end market devices in the edge AI as well. So we think this will continue.
Jason Wang: Meanwhile, in many of this, the capability, AI capability will proliferate to even the other end market devices, so in the edge AI as well. So we think this will continue. From an economic standpoint, building any of the mature facility is not justifiable. So we do think this is a, this could last longer compared to the COVID time, and I think this situation could be more of a structural going forward. But again, this is at a very early stage of this market movement, so we'll pay attention to it, and we'll continue monitoring the progress. Meanwhile, like I said earlier, I think it is more favorable pricing environment, but more importantly, we need to prepare ourselves to cope with this market dynamic.
Meanwhile, in many of this, the capability, AI capability will proliferate to even the other end market devices, so in the edge AI as well. So we think this will continue. From an economic standpoint, building any of the mature facility is not justifiable. So we do think this is a, this could last longer compared to the COVID time, and I think this situation could be more of a structural going forward. But again, this is at a very early stage of this market movement, so we'll pay attention to it, and we'll continue monitoring the progress. Meanwhile, like I said earlier, I think it is more favorable pricing environment, but more importantly, we need to prepare ourselves to cope with this market dynamic.
Speaker #2: And from an economic standpoint, building any of the mature facilities is not justifiable. So we do think this could last longer compared to the COVID time.
Speaker #2: And I think this situation could be more of a structure going forward. But again, this is at a very early stage of this market movement.
Speaker #2: So, we'll pay attention to it, and we'll continue monitoring the progress. Meanwhile, like I said earlier, I think it is a more favorable pricing environment.
Speaker #2: But more importantly is, we need to prepare ourselves to cope with this market dynamic. So we are welcoming all the opportunity for us to engage and support the customer.
Jason Wang: So we are welcoming all the opportunity that, you know, for us to engage in supporting the customer. But the important focus today is we have to get ourself ready to capture those opportunities. Yeah.
So we are welcoming all the opportunity that, you know, for us to engage in supporting the customer. But the important focus today is we have to get ourself ready to capture those opportunities. Yeah.
Speaker #2: But the important focus today is we have to get ourselves ready to capture those opportunities. Yeah.
Speaker #4: Got it. Another question I have is regarding your earlier comments on the pricing. I think you offer some of the annual—maybe some discount to some of our strategic clients for their share again.
Sebastian Hou: Got it. Another question I have is your earlier comments on the pricing. I think the offer you offer some of the annual, maybe some discount to some of our strategic clients for their share again, but also net-net wise, and you also raised, seems to be prices going up for majority of the clients, so net-net is going to still be the, going to still be positive. But I'm just curious about for those clients that you're offering some discount at the beginning of the year, when down the road, if the next few months or quarter situation has become tighter, and would you be able to reprice with these customers?
Sebastian Hou: Got it. Another question I have is your earlier comments on the pricing. I think the offer you offer some of the annual, maybe some discount to some of our strategic clients for their share again, but also net-net wise, and you also raised, seems to be prices going up for majority of the clients, so net-net is going to still be the, going to still be positive. But I'm just curious about for those clients that you're offering some discount at the beginning of the year, when down the road, if the next few months or quarter situation has become tighter, and would you be able to reprice with these customers?
Speaker #4: But also, net-wise, you also seem to be pricing is going up for a majority of the clients. So net-net is going to still be, the SP is still be positive.
Speaker #4: But I'm just curious, for those clients that you're offering some discount at the beginning of the year, if in the next few months or in the next quarter the situation becomes tighter, would you be able to reprice with these customers?
Speaker #4: But I'm just curious, for those clients that you're offering some discount to at the beginning of the year, if, down the road, in the next few months or if the situation in the next quarter becomes tighter, would you be able to reprice with these customers?
Jason Wang: I mean, just those discussions will be ongoing. You know, we're always working with our customer to reflect the market dynamics as well as the cost increases. So, you know, I'm sure, you know, I believe this conversation will surely happen. You know, it happened in the past, it will happen now, and it will happen in the future. So, you know, this pricing discussion will continue, and I think customer understand that, and we just have to continue monitoring the market dynamic and maintain our competitiveness on both our customer and ourselves.
Jason Wang: I mean, just those discussions will be ongoing. You know, we're always working with our customer to reflect the market dynamics as well as the cost increases. So, you know, I'm sure, you know, I believe this conversation will surely happen. You know, it happened in the past, it will happen now, and it will happen in the future. So, you know, this pricing discussion will continue, and I think customer understand that, and we just have to continue monitoring the market dynamic and maintain our competitiveness on both our customer and ourselves.
Speaker #2: I mean, those discussions will be ongoing. We're always working with our customers to reflect the market dynamics as well as the cost increases. So, I'm sure—I believe this conversation will surely happen.
Speaker #2: It happened in the past. It will happen now. And it will happen in the future. So this pricing discussion will continue, and I think customers understand that.
Speaker #2: And then we just have to continue monitoring the market dynamic and maintain our competitiveness on both the customer and
Speaker #2: ourselves. Yeah.
Sebastian Hou: Yeah, one follow-on on that, because of some of the pricing that started to effective on 1 January this year. This was actually negotiated already in Q4 last year, right?
Sebastian Hou: Yeah, one follow-on on that, because of some of the pricing that started to effective on 1 January this year. This was actually negotiated already in Q4 last year, right?
Speaker #4: One thought on that—because of some of the pricing that started to take effect on January 1st this year, this was actually negotiated already.
Speaker #4: In fourth quarter last year, right?
Jason Wang: There's some alignment on that, on both volume and the pricing, so if the volume has changed, of course, that's a different topic. So, there are some volume dynamic in that as well.
Jason Wang: There's some alignment on that, on both volume and the pricing, so if the volume has changed, of course, that's a different topic. So, there are some volume dynamic in that as well.
Speaker #2: That sounds aligned on that, on both volume and the pricing. So if the volume has changed, of course, that's a different topic. So there are some volume dynamics in that as well.
Speaker #4: Yeah, my question is actually, is that because a lot of the pricing that is effective on January 1st, beginning of the year, was actually communicated a month or two months ago before that, toward the end of last year, at a time when the supply-demand dynamics hadn't been really that tight compared to some of the changes that happened in just the past couple of weeks?
Sebastian Hou: Yeah. My question is actually, is that because a lot of the pricing that's effective on 1 January, beginning of the year, was actually negotiated, communicated a month or two months ago, before that, toward the end of last year, when the time that the supply-demand dynamics haven't been really that tight as compared to some of the changes that happened in the just past couple weeks. Am I getting that right?
Sebastian Hou: Yeah. My question is actually, is that because a lot of the pricing that's effective on 1 January, beginning of the year, was actually negotiated, communicated a month or two months ago, before that, toward the end of last year, when the time that the supply-demand dynamics haven't been really that tight as compared to some of the changes that happened in the just past couple weeks. Am I getting that right?
Speaker #4: Am I getting that
Speaker #4: right? Yeah.
Jason Wang: Yeah, you're right. Yeah, but those also is on certain conditions. So given the condition has changed, then some of the pricing are dynamic.
Jason Wang: Yeah, you're right. Yeah, but those also is on certain conditions. So given the condition has changed, then some of the pricing are dynamic.
Speaker #2: You're right, yeah, but also under certain conditions. So, given the condition has changed, the sound of pricing are...
Speaker #2: dynamic. Yeah.
Sebastian Hou: Yeah. Yeah, exactly. That is what I'm trying to discuss with you. Because we also saw a lot of the other different components or different subsectors within the tech or semi supply chain that, like such as memory. I think the pricing were still down in July, August, but all of a sudden, September, prices are going up. So I'm just curious about that because when you negotiated some of this discount, months ago, the supply-demand dynamics was not the same as today. So things remain fluid, dynamic, and it's still going to be flexible, and it's going to be dynamic and open for changes down the road if things are moving more favorably.
Sebastian Hou: Yeah. Yeah, exactly. That is what I'm trying to discuss with you. Because we also saw a lot of the other different components or different subsectors within the tech or semi supply chain that, like such as memory. I think the pricing were still down in July, August, but all of a sudden, September, prices are going up. So I'm just curious about that because when you negotiated some of this discount, months ago, the supply-demand dynamics was not the same as today. So things remain fluid, dynamic, and it's still going to be flexible, and it's going to be dynamic and open for changes down the road if things are moving more favorably.
Speaker #4: Yeah, exactly. That is exactly what I'm trying to discuss with you. Because we also saw a lot of the other different components of different subsectors within the tech or semi-supply chain; for example, memory. I think the pricing was still down in July, August.
Speaker #4: But all of a sudden, September price is going up. So I'm just curious about that, because when you negotiated some of this discount months ago, the supply-demand dynamics were not the same as today.
Speaker #4: So things remained fluid, dynamic, and it's still going to be flexible. And it's going to be dynamic in the open for changes down the road.
Speaker #4: If things are moving more
Speaker #4: Favorably. I think the core of the
Jason Wang: I think the core of the pricing strategy is that it has to be consistent, and it has to anchor with the value that we deliver, and also the customer competitiveness. That is the core. Then usually that is how we centering about the pricing discussion. So that core is not compromised. Now, if the condition has changed, yes, they always have some flexibility to it. So, you know, one is called, you know, pricing strategy and position, and another is called pricing negotiation. So there will be some flexibility, yes.
Jason Wang: I think the core of the pricing strategy is that it has to be consistent, and it has to anchor with the value that we deliver, and also the customer competitiveness. That is the core. Then usually that is how we centering about the pricing discussion. So that core is not compromised. Now, if the condition has changed, yes, they always have some flexibility to it. So, you know, one is called, you know, pricing strategy and position, and another is called pricing negotiation. So there will be some flexibility, yes.
Speaker #2: Pricing strategy is that it has to be consistent, and it has to anchor with the value that we deliver, and also the customer competitiveness.
Speaker #2: That is the core. Then, usually, that is how we center in about the pricing discussion, so that core is not compromised. Now, if the condition has changed, yes, they always have some flexibility to it.
Speaker #2: So one is called pricing strategy and position. Another is called pricing negotiation. So there will be some flexibility, yes.
Speaker #4: Yeah. And the condition has started to change now.
Sebastian Hou: Yeah, and the condition has started to change now.
Sebastian Hou: Yeah, and the condition has started to change now.
Speaker #2: Yes, so I do think pricing discussion will be more favorable now.
Jason Wang: Yes.
Jason Wang: Yes.
Sebastian Hou: Okay.
Sebastian Hou: Okay.
Jason Wang: So we do think pricing discussion will be more favorable now, yes.
Jason Wang: So we do think pricing discussion will be more favorable now, yes.
Speaker #2: Yes. Okay.
Sebastian Hou: Okay, cool. Thank you, and Happy New Year.
Sebastian Hou: Okay, cool. Thank you, and Happy New Year.
Speaker #4: Cool. Thank you. And happy New Year.
Speaker #4: Year. Yeah.
Jason Wang: Yeah, you too.
Jason Wang: Yeah, you too.
Speaker #2: You
Speaker #2: too. Thank you.
Operator: Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I'll turn things over to UMC, head of IR, for closing remarks. Thank you.
Operator: Thank you. Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I'll turn things over to UMC, head of IR, for closing remarks. Thank you.
Speaker #5: Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I'll turn things over to UMC Head of IR for closing remarks.
Speaker #5: Thank
Speaker #5: you.
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.
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.
Speaker #2: Thank you for attending this conference today. As always, we appreciate your questions. If you have any additional follow-up questions, please feel free to contact IR at umc.com.
Speaker #2: Have a good day.
Speaker #5: Thank you. And ladies and gentlemen, that concludes the conference for fourth quarter 2025. Thank you for your participation in UMC's conference. There will be a webcast replay within two hours.
Operator: Thank you. And ladies and gentlemen, that concludes our conference for Q4 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.
Operator: Thank you. And ladies and gentlemen, that concludes our conference for Q4 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.
