Q1 2026 United Microelectronics Corp Earnings Call

April 29, 2026

Speaker #2: In a moment, we will hear our CFO present the first quarter financial results. Followed by our key message to address UMC's focus and second quarter 2026 guidance.

Speaker #2: Once our CFO complete the remarks, there will be a Q&A session. UMC's quarterly financial reports are available at our website. www.umc.com under the Investors Financials section.

Speaker #2: During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially.

Speaker #2: Including the risks that may be beyond the company's control. For a more detailed description of these risks and uncertainties, please refer to our recent and subsequent filings with the SEC and the ROC Securities Authorities.

David Wong: For a more detailed description of these risks 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 broadcasted live through the internet. I would now like to introduce UMC CFO, Mr. Chi-Tung Liu, to discuss UMC's Q1 2026 financial results.

Speaker #2: During this conference, you may view our financial presentation material, which is being broadcasted live through the internet. I would now like to introduce UMC CFO, Mr. Qidong Liu, to discuss UMC's first quarter 2026 financial results.

Speaker #3: Thank you, David. I'd like to go through the first quarter 2026 investor conference presentation material, which can be downloaded or viewed in real time from our website.

Chi-Tung Liu: Thank you, David. I'd like to go through the Q1 2026 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page 4, the Q1 2026 consolidated revenue was TWD 61.04 billion, with gross margin at 29.2%. Net income attributable to the stockholders of the parent was TWD 16.17 billion. The earnings per ordinary share were TWD 1.29, which show pretty good growth compared to both last quarter as well as the same quarter of last year. On page 5, first starting from the sequential comparison. Revenue was basically flat or down 1.2% sequentially to TWD 61.4 billion.

Chi-Tung Liu: Thank you, David. I'd like to go through the Q1 2026 investor conference presentation material, which can be downloaded or viewed in real time from our website. Starting on page four, the Q1 2026 consolidated revenue was TWD 61.04 billion, with gross margin at 29.2%. Net income attributable to the stockholders of the parent was TWD 16.17 billion. The earnings per ordinary share were TWD 1.29, which show pretty good growth compared to both last quarter as well as the same quarter of last year. On page five, first starting from the sequential comparison. Revenue was basically flat or down 1.2% sequentially to TWD 61.4 billion.

Speaker #3: Starting on page 4, the first quarter of 2026, consolidated revenue was NT$61.04 billion, with gross margin at 29.2%. Net income attributable to the stockholders of the parent was NT$16.17 billion.

Speaker #3: And the earnings per ordinary share were 1.29 NT dollar. Which show a pretty good growth compared to both last quarter as well as the same quarter of last year.

Speaker #3: On page 5, first starting from the sequential comparison, revenue was basically flat or down 1.2% sequentially to NT$61.4 billion. Gross margin at 29.2% slightly declined from the previous quarter of 30.7%.

Chi-Tung Liu: Gross margin at 29.2%, slightly declined from the previous quarter of 30.7%. Net income attributable to shareholder of the parent, though, has increased 50% sequentially to TWD 16.17 billion, partially due to the strength of the stock market performance and the non-operating income, grow 50% to TWD 5.3 billion in Q1 2026. EPS as a result reached TWD 1.29, EPS per ADS is TWD 0.204 in Q1 2026. On page 6, year-over-year comparison. Revenue grow by 5.5%, year over year, mainly due to shipment increase.

Chi-Tung Liu: Gross margin at 29.2%, slightly declined from the previous quarter of 30.7%. Net income attributable to shareholder of the parent, though, has increased 50% sequentially to TWD 16.17 billion, partially due to the strength of the stock market performance and the non-operating income, grow 50% to TWD 5.3 billion in Q1 2026. EPS as a result reached TWD 1.29, EPS per ADS is TWD 0.204 in Q1 2026. On page six, year-over-year comparison. Revenue grow by 5.5%, year over year, mainly due to shipment increase.

Speaker #3: Net income attributed to shareholders of the parent has increased 60% sequentially to $16.17 billion, partially due to the strength of the stock market performance.

Speaker #3: And the non-operating income growth 60% to 5.3 billion in the first quarter of 2026. EPS as a result reached 1.29. EPS per ADS is 0.204 in the first quarter of '26.

Speaker #3: On page 6, year-over-year comparison: Revenue grew by 5.5% year-over-year, mainly due to shipment increase. Gross margin also showed a 2.5 percentage point improvement to 29.2%, or NT$17.8 billion, in the first quarter of '26.

Chi-Tung Liu: Gross margin also show 2.5 percentage point improvement to 29.2%, to TWD 17.8 billion in Q1 2026. EPS also showed nearly more than 100% growth in the net income, compared to TWD 7.7 billion in Q1 last year. On page 7, balance sheet highlights. Total equity reach TWD 406 billion and cash on hand still over TWD 100 billion at the end of Q1 2026. On page 8, our ASP declined slightly in Q1 2026, mainly due to a better-than-expected HWA for shipment, which bring down the blended ASP. On page 9, our revenue breakdown by different geography.

Speaker #3: And EPS also showed nearly more than 100% growth in net income compared to $7.7 billion in the first quarter of last year. On page 7, balance sheet highlight.

Speaker #3: Total equity reached 406 billion NT. And cash on hand still over 100 billion NT dollars at the end of first quarter of '26. On page 8, our SPE declined slightly in the first quarter of '26, mainly due to a better-than-expected page wafer shipment, which bring down the blended ASP.

Speaker #3: On page 9, our revenue breakdown by different geography changes very minor with some decline in Europe region from 11% in the previous quarter to 9% in this quarter.

Chi-Tung Liu: The changes are very minor. We see some decline in Europe region from 11% in the previous quarter to 9% in this quarter. The other region pretty stay relatively similar compared to the Q4 2025. On page 10, IDM show a bigger decline from 20% in the previous quarter to now 14% of the total revenue. On page 11, communication also decline 3% quarter-over-quarter to 39%, when consumer increased by 4% to 32% in Q1 2026. For technology breakdown, our revenue below 40 nanometer still remain over 50% of the total shipment. 28 22 is around 34%. Slightly declined from the previous quarter.

Speaker #3: And the other region pretty much stayed relatively similar compared to Q4 '25. On page 10, IDM shows a bigger decline from 20% in the previous quarter to now 14% of the total revenue.

Speaker #3: On page 11, communication also declined 3% quarter over quarter to 39%, while consumer increased by 4% to 32% in Q1 '26. For technology breakdown, our revenue below 40 nanometer still remains over 50% of total shipment.

Speaker #3: And 28, 22 is around 34%. Slightly declined from the previous quarter. On page 13, there's some annual maintenance schedule or maintenance in the first quarter of '26, resulting in slight decline in available capacity in the first quarter of '26.

Chi-Tung Liu: On page 13, there's some annual maintenance schedule or maintenance in Q1 2026, resulting slight decline in available capacity in Q1 2026. We will see the total available capacity to go back to the previous level in Q2 2026. On page 14 is our overall budget annual CapEx, which for the time being still stay around $1.5 billion. The above is a summary of UMC's results for Q1 2026. Next, I would like to go to share our key messages. In Q1, our wafer shipment increased 2.7% sequentially on a relatively strong growth in the consumer segment, lifting overall utilization rate to 79%, which is a continued improvement.

Speaker #3: And we will see the total available capacity to go back to the previous level in the second quarter of '26. On page 14 is our overall budget annual CapEx, which for the time being still stays around $1.5 billion.

Speaker #3: US dollars. And the above is a summary of UMC's results for the first quarter of 2026. Next, I would like to go to share our key messages.

Speaker #3: So in the first quarter, our wafer shipment increased 2.7% sequentially on relatively strong growth in the consumer segment, lifting overall utilization rate to 79%, which is a continued improvement.

Speaker #3: Despite the decline in blended ASP during the quarter, which I explained earlier, this is partially reflected in higher eight-inch wafer shipment. And gross margin held firm at 29.2%.

Chi-Tung Liu: Despite decline in blended ASP during the quarter, which I explained earlier, this is partially reflected higher 8-inch wafer shipment. Gross margin held firm at 29.2%. Demand from, for our 22 nanometer logic and specialty process continued to gain momentum, with 22 nanometer revenue now reach another record high and accounting for about 14% of total Q1 revenue. At the end of this year, over 50 customers will have complete tape outs on our 22 nanometer platform for a very diverse range of applications, including display driver ICs, network chips, and microcontrollers. We continue to invest in the next generation technology beyond 22 nanometer. Our 12 nanometer collaboration with our partner will provide customers with technology continuity as well as a US-based manufacturing option.

Speaker #3: And demand for our 22-nanometer logic and specialty process continues to gain momentum, with 22-nanometer revenue now reaching another record high and accounting for about 14% of total first-quarter revenue.

Speaker #3: At the end of this year, over 50 customers will have complete takeout on our 22-nanometer platform for a very diverse range of applications.

Speaker #3: Including display driver ICs, network chips, and microcontrollers. We continue to invest in the next generation technology beyond 22 nanometer, our 12 nanometer collaboration with our partner, will provide customers with technology continuity as well as the US-based manufacturing option.

Speaker #3: UMC also recently announced important development in the emerging business, including a strategic partnership to deploy thin-film lithium neophytes TFLN photonics for AI infrastructures. Going to second quarter, we expect strong wafer shipment growth across both eight-inch and 12-inch portfolios.

Chi-Tung Liu: UMC also recently announced important development in the emerging business, including a strategic partnership to deploy thin-film lithium niobate, TFLN photonics for AI infrastructures. Going to Q2, we expect strong wafer shipment growth across both 8-inch and 12-inch portfolios, supported by a strong rebound in the communication segment, as well as healthy demand across computer, consumer, and industrial markets. When the current memory supply shortage and ongoing conflict in the Middle East are creating certain headwinds and market volatilities, UMC continue to foresee resilient market demand. UMC will continue to monitor industry and macroeconomic development closely when prudently managing our business to cope with market dynamic amid evolving semiconductor landscape change. Now let's move on to Q2 2026 guidance. Our wafer shipment will increase by high single digits, and ASP in USD terms will increase by low single digits.

Speaker #3: Supported by a strong rebound in the communication segment, as well as healthy demand across computer, consumer, and industrial markets. While the current memory supply shortage and ongoing conflict in the Middle East are creating certain headwinds and market volatilities, UMC continues to foresee resilient market demands.

Speaker #3: UMC will continue to monitor industry and macroeconomic development closely for imprudently managing our business to cope with market dynamics. Submit evolving semiconductor landscape change.

Speaker #3: Now, let's move on to second quarter 2026 guidance. For our wafer shipment, we'll increase by high single digits. And ASP in U.S. dollar terms will increase by low single digits.

Speaker #3: Gross margin will be approximately 30%. And capacity utilization rate will be in the low 80% range. Our 2026 cash base capex, as I mentioned earlier, so far will maintain around 1.5 billion budget.

Chi-Tung Liu: Gross margin will be approximately 30%, and capacity utilization rate will be in the low 80% range. Our 2026 cash base CapEx, as I mentioned earlier, so far will maintain around TWD 1.5 billion budget. That concludes my comments. Thank you all for your attention. Now we are ready for questions.

Speaker #3: So, that concludes my comments, and thank you all for your attention. Now, we are ready for questions.

Speaker #1: Yes, thank you, Mr. Liu. 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 one on your telephone keypad, and you will enter the queue.

Operator: Yes. Thank you, Mr. Liu. 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 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, then please press star two to cancel the question. Thank you. Now please press star one on your keypad if you would like to ask a question. Thank you. Our first question will be coming from Gokul Hariharan of J.P. Morgan. Go ahead, please.

Speaker #1: And after you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, then please press star two to cancel the question.

Speaker #1: Thank you. Now, please press star one on your keypad if you would like to ask the question. Thank you. And our first question will be coming from Goku Halialan of JPMorgan.

Speaker #1: Go ahead, please.

Speaker #2: Yeah. Hi, Ma Qitong. Thanks for taking my question. First of all, on the pricing environment, I think last time you guys had talked about the pricing environment being more favorable.

Gokul Hariharan: Yeah. Hi, Chi-Tung. Thanks for taking my question. First of all, on the pricing environment, I think last time, you guys have talked about pricing environment being more favorable. Any more improvement that you are seeing on the pricing front right now, in terms of your discussions with customers? Is it mainly to reflect the higher operating costs, or are you able to kind of recognize some price increases even beyond the operating cost improvement? When I look at Q2 low single digit Q1 price increase, is that mainly a blended price increase because 12-inch is growing faster or is there a like pricing increase included here as well?

Speaker #2: Any more improvement that you're seeing on the pricing front right now in terms of your discussions with customers? Is it mainly to reflect the higher operating costs, or are you able to kind of recognize some price increases even beyond the operating cost improvement?

Speaker #2: And when I look at Q2 low single digit, Q1, Q2 price increase, is that mainly a blended price increase because 12-inch is growing faster, or is there a like-for-like price increase included here as well?

Speaker #3: Oh, yes. We recently sent out a letter to our customers talking about the price increase to happen in the second half of 2026. So the blended ASP in second quarter increase is, yes, mainly from the mix improvement.

Chi-Tung Liu: yes. We recently sent out a letter to our customers, talking about the price increase to happen in H2 2026. The blended ASP in Q2 increase is, yes, mainly from the mix improvement. I would say, 22 and 28 nanometer will be the main help for the blended ASP increase in Q2. When H1 2026 were underway, we are seeing resilient demand across a broad range of applications, including communication, industrial, and consumer, and even the AI related segment for us. This momentum is contributing to a sustained and increasing tight capacity environment across UMC's portfolio. To support such demand, UMC continue to enhance manufacturing efficiency and invest in technology and capacity to ensure reliable, high quality wafer supply.

Speaker #3: And I would say 22 and 28 nanometer will be the main help for the blended ASP increase in second quarter. And when the first half of '26 will underway, we are seeing resilient demand across a broad range of application, including communication industry and consumer and even the AI-related segment.

Speaker #3: For us, this momentum is contributing to a sustained increase in a tight capacity environment across UMC's portfolio. And to support such demand, UMC continues to enhance manufacturing efficiency and invest in technology and capacity to ensure reliable, high-quality wafer supply.

Speaker #3: So this ongoing investment, together with increasing key cost drivers—including raw materials, energy, and logistics—are essential to sustain our long-term operational excellence and service commitment.

Chi-Tung Liu: This ongoing investment, together with increasing key cost drivers, including raw materials, energy and logistics, are essential to sustain our long-term operational excellence and service commitment. In light of these factors, we will implement a wafer price adjustment in the second half of 2006, which will set up a more favorable position for the upcoming 2027. The pricing reflects both the evolving supply and demand environment and the continuing investment required to support our customers' growth. Pricing adjustment will place on the factor including UMC's product mix, strategy, capacity agreement, and also the long-term partnership. This pricing adjustment will be implemented. Hopefully, we will do our best in a very disciplined and sustainable manner to ensure our operational health and continuing to support our customer growth and long-term success.

Speaker #3: In light of these factors, we will implement a wafer price adjustment in the second half of 2026, which will set up a more favorable position for the upcoming 2027.

Speaker #3: So the pricing reflects both the evolving supply and demand environment and the continued investment required to support our customers' growth. So pricing adjustment will be based on factors, including UMC's product mix strategy, capacity agreement, and also the long-term partnership.

Speaker #3: So, this pricing adjustment will be implemented, hopefully, with our best effort in a very disciplined and sustainable manner to ensure our operational health and continue to support our customer growth and long-term success.

Gokul Hariharan: Got it. Thanks, Chi-Tung Liu. Just to follow up on that, I think, I think if I remember right, I think your letter was like 8% to 10% for 8-inch and 12-inch. Are we seeing further potential for increasing price? Like, what is the reception you're hearing from the customers that have that you've been in consultation with? I think, is there broad acceptance of this price increase, or you see some degree of pushback, given some of the customers, the demand seems to be still pretty sluggish.

Speaker #2: Got it, thanks, Qitong. So just to follow up on that, I think if I remember right, I think your letter was like 8% to 10% for 8-inch and 12-inch.

Speaker #2: Are we seeing further potential for increasing price? And what is the reception you're hearing from the customers that you've been in consultation with?

Speaker #2: Do you think there is broad acceptance of this pricing freeze, or do you see some degree of pushback, given that for some customers the demand still seems to be pretty sluggish?

Speaker #3: Yeah. One thing we don't want to do, and we never really did, is be opportunistic and take advantage of customers. So that's something we will never do.

Chi-Tung Liu: Yeah. One thing we don't want to do, or we never really did, is being opportunist to take advantage of customers. That's something we will never do. Our pricing strategy has always been anchored in the value, where we deliver our differentiated technology, diversified manufacturing footprint, and hopefully, again, work at operational excellence. These trends continue to enhance our customers' product competitiveness and strengthen their supply chain resilience. As semi supply chain evolves, we are seeing market recognition on UMC's value, and this is driving structurally higher and more sustainable demand. We remain committed to investing in this core strength to reinforce a virtuous cycle of value creation. In parallel, we continue to enhance ASP through structure product mix optimization.

Speaker #3: So our pricing strategy has always been anchored in the value, where we deliver our differentiated technology, diversified manufacturing footprint, and hopefully, again, world-class operational excellence.

Speaker #3: So these trends continue to enhance our customers' product competitiveness and strengthen their supply chain resilience. As semi-supply chain evolves, we are seeing market recognition of UMC's value.

Speaker #3: And this is driving structurally higher and more sustainable demand. We remain committed to investing in this core strength to reinforce a vigorous cycle of value creation.

Speaker #3: So, in parallel, we continue to enhance ASP through structured product mix optimization. This includes strong momentum in our 22-nanometer platform and reduction in commoditized segment exposures, and thereby strengthening UMC's long-term ASP profile. And I'm pretty sure we didn't really mention anything numerical in our letter to customers.

Chi-Tung Liu: This includes strong momentum in our 22 nanometer platform and reduction in commoditized segment exposures, and thereby strengthening UMC's long-term ASP profile. I'm pretty sure we didn't really mention anything numerical in our letter to customers, so it will be based upon different segments, different technology, and our long-term partnership.

Speaker #3: So it will be based upon different segments, different technology, and our long-term partnership.

Speaker #2: Got it. My second question on gross margin. So, we had some improvement in utilization from the mid-70s to the low 80s in Q2 based on your guidance.

Gokul Hariharan: Got it. My second question on gross margin. We had some improvement in utilization from like mid-70s to low 80s in Q2 based on your guidance. Gross margin is still roughly hanging around 30% now. With this price increase, like, how should we think about gross margins? Are we likely to get back to like high 30s or 40% kind of levels that we were in back in the 2021, 2022 kind of time frame? That might require a much bigger improvement in utilization.

Speaker #2: Gross margin is still roughly hanging around 30% now. With this price increase, how should we think about gross margin? Are we likely to get back to a high-30s or 40% kind of level that we were in back in the '21, '22 timeframe?

Speaker #2: Or, that might require a much bigger improvement in utilization?

Speaker #3: So, unfortunately, we're still in the peak of our depreciation increase cycle. And I think in the previous quarter, we mentioned our depreciation curve will only pick up starting from next year.

Chi-Tung Liu: Unfortunately, we're still in the peak of our depreciation increase cycle. I think in the previous quarter, we mentioned our depreciation curve will only peak out starting from next year. We're still seeing quarter after quarter depreciation expenses. If you ask me about EBITDA margin, I think I will be more comfortable talking about a better upside. If you talk about gross margin or operating margin, we found there are a lot of pressures from depreciation expenses increase. Not to mention the recent geopolitical tension, lead to raw material costs and the energy costs and logistic costs to increase. Our utilization rate will be in the low 80% range in Q2.

Speaker #3: So, we're still seeing quarter after quarter of depreciation expenses. So if you ask me about EBITDA margin, I think I will be more comfortable talking about a better upside.

Speaker #3: But if you talk about gross margin or operating margin, we've found a lot of pressures from depreciation expenses increase, not to mention the recent geopolitical tension leading to raw material costs and energy costs and logistic costs to increase.

Speaker #3: So our utilization rate will be in the low 80% range in Q2. However, the margin uplift from higher shipments will be largely offset by the higher depreciation and the higher utility costs, like I mentioned.

Chi-Tung Liu: However, the margin uplift from higher shipments will be largely offset by the higher depreciation and utility costs, like I mentioned. For the remainder of 2026, the Fab 12i in Singapore ramp up will start in meaningful terms in H2 2026, which we will continue to carry higher depreciation expenses over the next several quarters. Of course, from UMC's side, we will continue to proactively deploy cost reduction efforts, including multi-sourcing, streamlining our operations, managing supply chain pricing, and drive automation transformation. All these measures will help UMC to partially offset the cost headwinds and maintain our, or hopefully enhance our EBITDA margin.

Speaker #3: So the remainder of the 2026, the 12 I in Singapore ramp-up will start in a meaningful terms. In the second half of 2026, which will continue to carry higher depreciation expenses over the next several quarters.

Speaker #3: And of course, from UMC's side, we will continue to proactively deploy cost reduction efforts, including multi-sourcing, streamlining our operation, managing supply chain pricing, and driving automation transformation.

Speaker #3: So all these measures will help UMC to partially offset the cost headwinds and maintain our or hopefully enhance our EBITDA margin.

Speaker #2: Got it. Yeah. Thanks, Qitong. Thank you very much.

David Wong: Got it. Yeah. Thanks, Chi-Tung Liu. Thank you very much.

Gokul Hariharan: Got it. Yeah. Thanks, Chi-Tung Liu. Thank you very much.

Speaker #3: Thank you.

Chi-Tung Liu: Thank you.

Speaker #4: Next one, Charlie Chen, Morgan Stanley. Go ahead, please.

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

Charlie Chan: Thanks for taking my question. Thanks, Chi-Tung Liu. Also, congratulations for a very strong guidance and outlook. I do have some questions about the details of it, especially you comment about the communication segment is very strong. May I know, is that coming from AI-related networking or also the smartphone business you're also seeing, so-called a rebound? Thank you.

Speaker #5: Thanks for taking my question. Thanks, Qitong. And also, congratulations—very strong guidance and outlook. But I do have some questions about the details, especially your comment about the communication segment being very strong.

Speaker #5: So may I know, is that coming from AI-related networking or also the smartphone business? You're also seeing so-called rebound. Thank you.

Chi-Tung Liu: First of all, communication was weaker in Q3, so there will be a meaningful rebound in Q2. This will be driven. For UMC will be driven by DDI, networking, FPGA, and ISP. Those segments will show stronger growth in the communication segment for Q2.

Speaker #3: So first of all, communication was weaker in the third quarter. So there will be a meaningful rebound in the second quarter, and this will be driven—for UMC—by DDI, networking, FPGA, and ISP.

Speaker #3: So those segments will show stronger growth in the communication segment for the second quarter.

Speaker #4: Okay. And if I may, I think companies are also offering lots of new technology, no matter if it's silicon photonic foundry service or your advanced packaging, right?

Charlie Chan: Okay. If I may, I think the company also offering lots of the new technology, no matter the Silicon Photonics, foundry service, or your advanced packaging, right? Can management talk about your future plan for those advanced packaging capacity expansion and also potential revenue contribution in the coming 2 years?

Speaker #4: So can you mention and talk about your future plan for those advanced packaging capacity expansion and also potential revenue contribution in the coming two years?

Speaker #3: So, these are two questions. One is on packaging. One is on silicon photonics. So maybe David can help to answer the question.

Chi-Tung Liu: These are two questions. One is on packaging, one is on Silicon Photonics. Maybe David can help to answer the question.

Speaker #5: Yeah.

David Wong: Yeah. As far as advanced packaging, as you're aware, we're seeing more engagements pick up on our advanced packaging solutions. As you know, we're working with more than 10 customers on advanced packaging. Currently, we expect more than 35 new tape outs in 2026. We foresee that revenue for advanced packaging next year will be significantly higher. As of now, we're in production with our for an bridge die solution and discrete DTC, deep trench capacitor, with more products that'll ramp up shortly.

Speaker #4: Okay.

Speaker #5: As far as advanced packaging, as you're aware, we're seeing more engagements pick up on our advanced packaging solutions. And, as you know, we're working with more than 10 customers on advanced packaging, and currently we expect more than 35 new tape-outs in 2026.

Speaker #5: And we foresee that revenue for advanced packaging next year will be significantly higher. And as of now, we're in production with our 4A bridge die solution and discrete DTC, deep trench capacitor, with more products that will ramp up shortly.

Charlie Chan: May I know the for the bridge die or DTC, are those working with other foundry partners? Is that part of the TSMC supply chain or non-TSMC supply chain?

Speaker #4: May I know for the bridge die or DTC, are those working with other foundry partners, and is that part of a TSMC supply chain or non-TSMC supply chain?

Charlie Chan: May I know the for the bridge die or DTC, are those working with other foundry partners? Is that part of the TSMC supply chain or non-TSMC supply chain?

Speaker #5: Yeah, we don't really comment on our partnership. But as you know, as we talked about last quarter, these things are picking up a little bit of steam.

David Wong: Yeah. We don't really comment on our partnership. As you know, as we talked about last quarter, these things are picking up a little bit of steam.

Speaker #4: Okay, okay. So on top of that, do you need to further expand your so-called interposer capacity for that bridge die demand, or is the current capacity sufficient for that bridge die?

Charlie Chan: Okay. Okay. On top of that, do you need to further expand your so-called interposer capacity for that bridge die demand or the current capacity is sufficient for that bridge die? I'm assuming that the silicon interposers require capacity, whereas the bridge die, they're more advanced, right? It doesn't really count as much of required capacity.

Speaker #4: So I'm assuming that silicon interposers need more wafer capacity, whereas the bridge die—are those more advanced, right? But it doesn't really use much wafer capacity.

Speaker #5: Yeah. As far as capacity planning for all of our new businesses, that will be aligned with our customers as well as market demand. And our ramp-up schedule will be aligned with the market outlook.

David Wong: Yeah. As far as capacity planning for all of our new businesses, that will be aligned with our customers as well as market demand, and our ramp-up schedule will be aligned with the market outlook.

Speaker #4: Okay. Okay. Thanks, David. Thanks, Qitong.

Charlie Chan: Okay. Okay. Thanks, David. Thanks, Chi-Tung Liu.

Speaker #3: Before we move on to silicon photonics as well.

Chi-Tung Liu: We're moving on to Silicon Photonics as well.

Speaker #4: Oh, sure. Yes, please.

Charlie Chan: Oh, sure. Yes, please.

David Wong: For Silicon Photonics, we're now working with industry leading customers that will help us ramp on Silicon Photonics. Additionally, preliminary data shows that our Silicon Photonics performance is on par or better than our peers. This is a result of our manufacturing excellence and also the fact that we use 12-inch equipment versus peers. In addition, we're on track to deliver our PDK 1.0 in 2027, which is based on the imec license. We are also enabling integration for our customer by evaluating hybrid bonding, TSV, and chiplet integration.

Speaker #3: So, for silicon photonics, we're now working with industry-leading customers that will help us ramp on silicon photonics. Additionally, preliminary data shows that our silicon photonic performance is on par with or better than our peers.

Speaker #3: This is a result of our manufacturing excellence and also the fact that we use 12-inch equipment versus peers. In addition, we're on track to deliver our PDK 1.0 in 2027, which is based on the IMAC license.

Speaker #3: We are also enabling integration for our customer by evaluating hybrid bond, TSV, and chiplet integration.

Speaker #4: Okay, got it. Thanks. I'll be back to the queue. Thanks.

Charlie Chan: Okay. Got it. Thanks. I will be back to the queue. Thanks.

Speaker #3: Thank you.

Chi-Tung Liu: Sure.

Speaker #4: Next question, Sonny Lin, UBS. Go ahead, please.

Operator: Next question, Sunny Lin, UBS. Go ahead, please.

Speaker #6: Good afternoon. Thank you for taking my questions and congrats on the improving outlook. So my first question is to follow up on what you guided earlier this year.

Sunny Lin: Good afternoon. Thank you for taking my questions, and congrats on the improving outlook. My first question is to follow up on what you guided earlier this year. Three months ago, you did guide better growth from H2 of this year, driven by new products and market share expansion. Now, Q2 is indeed pretty solid. I wonder how should we think about going to H2? Do you still hold the view that for this year, you should see even stronger growth going to H2 the year?

Speaker #6: And so three months ago, you did guide better growth from second half of this year. Driven by new products and market share expansion. And now, Q2 is indeed pretty solid but I wonder how should you think about going to second half?

Speaker #6: Do you still hold the view that, for this year, you should see even stronger growth going into the second half of the year?

Chi-Tung Liu: We remain optimistic about our overall 2026 business outlook. In H1, we are seeing resilient demand across a broad range of applications, such as communication, industrial, consumer, and AI-related segments. This momentum, we think, is continuing to sustain an increasingly tight capacity environment across UMC's portfolio. We expect this momentum to continue into H2, especially our 22 nanometer logic, embedded high-voltage platform, where we expect to grow in the high teen percentage range for those segments, H2 compared to H1. There's also another driver coming from our 8-inch recovery, which is progressing to deliver good growth year-over-year because of somewhat low base last year. The stronger H2 outlook support our expectation of a full year performance improvement.

Speaker #3: So we remain optimistic about our overall 2026 business outlook. In the first half, we are seeing resilient demand across a broad range of applications, such as communication, industrial, consumer, and AI-related segments.

Speaker #3: So this momentum, we think, is continuing to sustain an increasingly tight capacity environment across UMC's portfolio. So we see this momentum continuing into the second half.

Speaker #3: Especially our 22-nanometer logic and embedded high-V platform, where we expect to grow in the high 10 percent range. For those segments, second half compared to first half.

Speaker #3: This is also another driver coming from our age recovery, which is progressing to deliver good growth year over year because of a somewhat low base last year.

Speaker #3: So, the stronger second half outlook supports our expectation of a full-year performance improvement. I think we still stick to UMC is going to outperform the growth of our transfer market in 2026.

Chi-Tung Liu: I think we still stick to UMC's going to outperform the growth of our addressable market in 2026. We're definitely from UMC side, we're committed to deliver a better performance than last year's results. Hopefully this will be a turning point for UMC to broaden our addressable market. This ASP uplift we talk about in the H2, together with our strategic investment for the upcoming 12 nanometer Silicon Photonics and advanced packaging, are all going to support UMC's sustainable long-term growth.

Speaker #3: And so, we're definitely, from UMC's side, committed to delivering better performance and exceeding last year's results. Hopefully, this will be a turning point for UMC to broaden our addressable market.

Speaker #3: And this ASP uplift we talk about in the second half, together with our strategic investment for the upcoming 12-nanometer silicon photonic and advanced packaging, are all going to support UMC's sustainable long-term growth.

Speaker #6: Thank you very much, Qitong. So may I follow up on the full-year outlook? And I think several foundries have reported a better outlook for 2026.

Sunny Lin: Thank you very much, Yi-Gang. May I follow up on full year outlook? I think several foundries have reported better outlook for 2026. One is for addressable market, do you see some upside for low single digit growth?

Speaker #6: And so, one is for addressable market. Do you see some upside for low single-digit growth?

Speaker #3: So I think the UMC addressable market showed some incremental improvement, but not really significantly different. And overall, the market, I think, is definitely better if you include all the AI boom.

Chi-Tung Liu: I think the UMC addressable market shows some incremental improvement, but not really significantly different. Overall market, I think it's definitely better if you include all the AI boom. Overall, the semiconductor industry is projected now grow by mid-teen in 2026. UMC's addressable market may be slightly better, but still grow by the low single-digit percentage, which is again, only slightly better than our last quarter's forecast.

Speaker #3: So overall, the semiconductor industry is projected now to grow by mid-10 percent in 2026. But UMC's addressable market may be slightly better, but still grow by the low single-digit percentage.

Speaker #3: Which is, again, only slightly better than last quarter's forecast.

Speaker #6: No problem. Thank you. And my second question is, if we look at high-level, zero-level concerns around the disconnect between consumer and market, and mature foundry improvement.

Sunny Lin: No problem. Thank you. My second question is if we look at high level, there are lots of concerns around disconnect between consumer end market and mature foundry improvement. Maybe if you could help us understand why for this year, although smartphone and PC end market are showing some weakness, broader mature foundry space, including UMC, get to see improving demand throughout the year, it seems. For UMC, how should we think about your server exposure? What would be the key products that you get to serve from server? From here, would you be able to benefit from server opportunity as well?

Speaker #6: And so maybe if you could help us understand why, for this year, although the smartphone and PC market are showing some weakness, the broader mature foundry space—including UMC—seems to be seeing improving demand throughout the year.

Speaker #6: And then for UMC, how should we think about your server exposure? What would be the key products that you get to serve from server?

Speaker #6: And then from here, would you be able to benefit from server opportunity as well?

Speaker #3: So there are technologies predominantly supporting customers addressing the high-end market segment. No end demand tends to be more resilient. Even with recent memory tightness, supply is typically prioritized for those high-end, high-value devices.

Chi-Tung Liu: Our technology predominantly support customer addressing high-end market segment. The low-end demand tend to be more resilient, even with recent memory tightness. Supply is typically prioritized for those high-end, high-value devices. As a matter of fact, our value-added technology, including 28, 22, High Voltage and RF SOI, will help customer gain more shares in the high-end smartphone segment in 2026. This will also help UMC navigate the headwinds from the communication/mobile segment. When we remain attentive to the potential impact from either memory tightness, market tightness or our current assessment is that any potential headwinds are manageable, and we will continue to monitor the situation closely with our customers. The other factor is really UMC has been defocused on the commoditized segment.

Speaker #3: And as a matter of fact, our value-added technology, including 28, 22, high voltage, and RF SOI, will help customers gain more shares in the high-end smartphone segment in 2026.

Speaker #3: This will also help UMC navigate the headwinds from the communication/mobile segment. So, while we remain attentive to the potential impact from either memory tightness or other factors, our current assessment is that any potential headwinds are manageable.

Speaker #3: And we will continue to monitor the situation closely with our customers. And the other factor is, really, UMC has been defocused on the commoditized segment.

Speaker #3: So any so-called generic commodity type of market segment, UMC will certainly try to scale down our exposures. And that will also help our overall position as a foundry.

Chi-Tung Liu: Any so-called generic commodity type of market segment, UMC will certainly try to scale down our exposures. That will also help our overall position as a foundry. As for server, we don't really have a breakdown by the server end market. Which we can maybe try to do that, this is maybe two layers, three layers away from our market segment.

Speaker #3: As for server, we don't really have a breakdown by the server and market, which we can maybe try to do. But this is maybe two layers, three layers away from our market segment.

Speaker #6: No problem. Thank you very much.

Sunny Lin: No problem. Thank you very much.

Speaker #1: Thank you. Next question, calls Liu, Bank of America. Go ahead, please.

Operator: Thank you. Next question, Hosley, Bank of America. Go ahead, please.

Speaker #7: Yes. Thanks, Qitong and David. And congrats on the very good result and the guidance. I guess two questions from me. Starting with utilization—you reported in the first quarter 79%, and will be up to 80% plus or minus range in the second quarter.

[Analyst] (Bank of America): Yes. Thanks, Chi-Tung and David Wong, and congrats on the very good result and the guidance. I guess two questions from me, starting from utilization. You reported in Q1 79% and will be up to 80% plus or minus range in Q2. Would you be able to provide some of the breakdown between 8-inch versus 12-inch nodes? Also your expectation for H2 this year. Judging from your guidance just now, that you think H2 will be better than H1. Also separate, between, respectively for, 8-inch and also 12-inch into H2. Thank you.

Speaker #7: Would you be able to provide some of the breakdown between age versus 12-inch nodes? And also, your expectation for the second half of this year, judging from your guidance just now that you think the second half will be better than the first half.

Speaker #7: Also, separate between, respectively, for age and also 12-inch into second half. Thank you.

Chi-Tung Liu: It's not around 80%, it's above 80%. It was definitely 80 something and it for Q2. For Q2, we will see stronger growth coming from 22 and 28, relatively speaking. 8-inch will continue with some rebound. Our Japanese operation is below corporate average, which is more in the 65 nanometer, 80 nanometer technologies. For Q2, even though 8-inch will show some improvement, it's still slightly below corporate average. 12-inch as a whole are still slightly above corporate average, the gap is certainly narrowing.

Speaker #3: So it's not around 80%. It's above 80%. So it will definitely be 80-something. And for the second quarter, and for Q2, we will see stronger growth coming from 22 and 28, relatively speaking.

Speaker #3: And age will continue with some rebound. But it's really—our Japanese operation is below corporate average, which is more in the 65-nanometer, 80-nanometer technologies.

Speaker #3: So for Q2, even though age will show some improvement, it's still slightly below the corporate average. And 12-inch as a whole is still slightly above the corporate average.

Speaker #3: But the gap is certainly narrowing.

Speaker #7: Okay, got it. And the second question is just regarding pricing, right? You discussed how the like-for-like pricing and blended pricing outlook seem to be tracking better because of an improving mix.

[Analyst] (Bank of America): Okay. Got it. Second question is just regarding the pricing line. You discussed about the like-for-like pricing, blended pricing outlook seems to be tracking better because of improving mix as well as improving utilization across the board. I think two things. One is just on the pricing outlook for full year. I remember last time you mentioned it is going to be firm throughout this year. Would you be able to provide some update on that? Second thing is for the pricing on the like-for-like basis, would you be able to just share with us that your strategy on pricing? I understand there's a lot of macro factors moving, a lot of moving factors in the macro environment, that you might need to pass on the cost to your customers.

Speaker #7: As well as improving utilization across the board. But I think two things. One is just on the pricing outlook for the full year. I remember last time you mentioned it is going to be firm throughout this year.

Speaker #7: Would you be able to provide some update on that? And second thing is, for the pricing on a like-for-like basis, would you be able to just share with us your strategy on pricing?

Speaker #7: I understand there are a lot of macro factors, a lot of moving factors in the macro environment, that might mean you need to pass on the cost to your customers.

Speaker #7: But would you be able to share if there's any time in the history that your customers have been willing to, or were willing to, accept the price hike when your utilization is at around low 80 percent levels?

[Analyst] (Bank of America): Would you be able to share if there's any time in the history that your customers are, have been willing to or were willing to accept a price hike when your utilization is at around those 80% levels? Two questions here. First one is on the pricing outlook for full year. Any update on the versus the last time frame outlook. Second thing is just on your long-term view that regarding the pricing environment right now versus your long-term trajectory of the business, that 80%, is this sufficient enough for you, for your customers to accept a price hike across the board? Thank you.

Speaker #7: So, two questions here. First one is on the pricing outlook for the full year. Any update on that versus the last time—firm outlook? Second thing is just on your long-term view: that's regarding the pricing environment right now versus your long-term trajectory of the business, that 80%.

Speaker #7: Is this sufficient enough for your customers to accept a price hike across the board? Thank you.

Speaker #3: Again, we really don't want to be perceived as opportunistic or as taking advantage of customers. So, the pricing adjustment comes back to our pricing strategy.

Chi-Tung Liu: Again, we really don't want to be perceived as opportunists to take advantage of our customers. The pricing adjustments are coming back to our pricing strategy. The ASP improvements are fundamentally anchored in our value proposition, and also the technology and manufacturing service, which is supported by a structured demand rather than short-term pricing tactics. We are seeing customer market share gains along with ongoing structural shift in the foundry landscape, generating durable demand for UMC. We want to emphasize our differentiated technology and global footprint enable customers to strengthen their competitiveness across all segments, including AI, communication, consumer, and industrial automotive segments. Like stated in our letter to customers, starting from H2 2026, we will implement disciplined pricing adjustment to mitigate some cost headwinds by maintaining customers' competitiveness.

Speaker #3: So the AC improvements from the mentally anchored in our value proposition, and also the technology and manufacturing service, which is supported by a structured demand rather than short-term pricing tactics.

Speaker #3: So, we are seeing customer market share gains, along with ongoing structural shifts in the foundry landscape, generating durable demand for UMC. And we want to emphasize our differentiated technology and global footprint.

Speaker #3: Enable customers to strengthen their competitiveness across all segments, including AI, communication, consumer, and industrial automotive. So, like stated in our letter to customers, starting from the second half of 2026, we will implement disciplined pricing adjustment to mitigate some cost headwinds while maintaining customers' competitiveness.

Speaker #3: Meanwhile, hopefully more product mix optimization driven by strong 22-nanometer demand will continue to drive ASB extension. Even though the steady recovery in inch loading may partially upset the blended ASB list, our overall inch recovery plan is progressing well.

Chi-Tung Liu: Meanwhile, hopefully more product mix optimization driven by a strong 22 nanometer demand will continue to drive ASP expansion. Even though the steady recovery in 8-inch loading may partially offset the ASP, blended ASP list, our overall 8-inch recovery plan is progressing well with several fabs running nearly 100%.

Speaker #3: With several fabs running nearly 100%.

Speaker #7: That's great. That's very clear. And I think just a quick follow-up on that is probably the firm pricing outlook for the full year. You guided last time.

[Analyst] (Bank of America): That's great. That's very clear. I think just a quick follow-up on that is probably the firm pricing outlook for full year you guided last time. Is it still holding the same statement, or is it actually incrementally better? On the EBITDA margins, you stated, you mentioned just now that you have a better target on that. Would you be able to quantify it? Thanks.

Speaker #7: Is this still holding the same statement? Or is this actually incrementally better? And on the EBITDA margins, you stated—you mentioned just now that you have a better target on that.

Speaker #7: Would you be able to quantify it? Thanks.

Speaker #3: So if we take out the increased depreciation, largely coming from the Singapore fab rent, with a better loading and potentially some pricing adjustment in the second half, we are confident that if you take out the depreciation, the improved outlook should be able to offset some of the cost increase, and logistics, etc.

Chi-Tung Liu: If we take out the increased depreciation largely coming from the Singapore fab ramp with better loadings and potentially some pricing adjustment in the second half, we are confident if you take out the depreciation, the improved Outlook should be able to offset some of the cost increase, especially in energy and logistics, et cetera. Our pricing outlook, certainly with the price increase letter to customers, it's slightly better than the previous quarter.

Speaker #3: And our pricing outlook, certainly with the price increase letter to customers, is slightly better than the previous quarter.

Operator: Got it. Thank you so much, Chi-Tung Liu and David Wong. I'll be taking the cue. Thank you. Next one, Scott Carter at BNP Paribas. Go ahead, please.

Speaker #7: Got it. Thank you so much, Shidong and David. I'll be back in the queue.

Speaker #1: Thank you. Next one, Scarlett, BNP. Go ahead, please.

Speaker #8: Hello, management. Congrats on the very good result and the guidance. My question is a follow-up to a previous one. So the consumer segment revenue seems very strong, with a 4 percentage point increase.

Scott Carter: Hello, management. Congrats on the very good result and the guidance. My question is a follow-up to a previous one. The consumer segment revenue seems very strong with a 4 percentage point increase in the product. I wonder, is it because of the demand recovery or the pricing dynamic changes? Going forward into Q2 and the full year, how would you see the trends will be like? Thank you.

Speaker #8: In the product mix. So I wonder is it because of the demand recovery or the pricing dynamic changes? And going forward into the second quarter and the full year, so how would you see the trend will be like?

Speaker #8: Thank you.

Chi-Tung Liu: consumers, growth in Q1 was mainly driven by Wi-Fi and DTV set-top box tech. For Q2, the growth will continue and will be driven by MCU, LCD controller, and power-related products.

Speaker #3: So, consumer growth in Q1 was mainly driven by Wi-Fi and DTV set-top box segments. For the second quarter, the growth will continue and will be driven by MCU, LCD controller, and power-related products.

Chi-Tung Liu: consumers, growth in Q1 was mainly driven by Wi-Fi and DTV set-top box tech. For Q2, the growth will continue and will be driven by MCU, LCD controller, and power-related products.

Scott Carter: Yes. Got it. Thank you very much.

Speaker #8: Got it. Thank you very much.

Speaker #1: Thank you. Next one, Laura Cheng, Citi. Go ahead, please.

Operator: Thank you. Next one, Laura Chang, Citi. Go ahead, please.

Laura Chang: Yes. Hi, can you hear me clearly?

Laura Chen: Yes. Hi, can you hear me clearly?

Speaker #9: Yes. Hi. Can you hear me clearly?

Speaker #3: Yes.

Chi-Tung Liu: Yes.

Speaker #9: Yes. Hi, thank you for taking my question, and congrats on the good result. I'm just wondering about the progress with Intel's engagement, as we already have good progress per management.

Laura Chang: Yes. Hi, thank you for taking my question and congrats for the good result. I'm just wondering that the progress with Intel's engagement. We already have a good progress per management of previous mention. Just wondering that for next year, if we start to see some like progress and breakthrough, how should we think about that, the potentially, again, increasing, maybe R&D force or any impact on our, like, revenue and also expense?

Laura Chen: Yes. Hi, thank you for taking my question and congrats for the good result. I'm just wondering that the progress with Intel's engagement. We already have a good progress per management of previous mention. Just wondering that for next year, if we start to see some like progress and breakthrough, how should we think about that, the potentially, again, increasing, maybe R&D force or any impact on our, like, revenue and also expense?

Speaker #9: Previously mentioned, I’m just wondering that for next year, if we start to see some progress and breakthroughs, how should we think about that—potentially again increasing maybe R&D force—or any impact on our revenue and also expense?

Chi-Tung Liu: we cannot give revenue guidance now. I think the timing-wise, we are talking, we are planning by later 2026-2027, we will start to see initial commercial production. In terms of investment, it's already happened, happening, and that's also partially reflect in our increased R&D expenses. Maybe help, Michael can help me to comment more in some details.

Speaker #3: So we cannot give revenue guidance now. I think the timing-wise, we are planning by later 2027. We will start to see initial commercial production.

Speaker #3: And in terms of investment, it's already happening. And that's also partially reflected in our increased R&D expenses. Maybe Michael can help me to comment more in some details.

Speaker #10: Yeah. Yes. This 12-nanometer project work with Intel continues to go well. We remain on schedule to deliver the PDK and associated IP to customers in 2026.

Michael Lin: Yeah. Yes. This 12 nanometer project work with Intel continue to go well. We remain on schedule to de-deliver the PDK and associate IP to customer in 2026. We anticipate that the product tape-out will commence in 2027, which will making a significant step toward the commercial deployment and future revenue growth. Intel, UMC and Intel are working closely to ensure this successful tape-out and efficient ramp-up to mass production for the 12 nanometer customer product. The application that we, for this 12 nanometer project will be including the DTV, Wi-Fi connectivity, and high-speed interface product.

Speaker #10: And we anticipate that the product table will commence in 2027, which will make a significant step toward the commercial deployment and future revenue growth.

Speaker #10: And UMC and Intel are working closely to ensure this successful table and efficient ramp-up to mass production. For the 12-nanometer customer product, so the application that we for this 12-nanometer project will be included in the DTV, Wi-Fi connectivity, and high-speed interface product.

Speaker #8: Sure, thank you. I'm also wondering, since expansion in the US is probably one of the directions UMC is looking toward, I'm just wondering, following the 12-inch technology, is there any plan to further engage with the more advanced node with Intel?

Laura Chang: Sure. Thank you. I'm also wondering that, since the expansion in the US is probably one of the direction UMC is looking for. So I'm just wondering that following the 12-inch technology, any plan to further engage with the more advanced node with Intel?

Laura Chen: Sure. Thank you. I'm also wondering that, since the expansion in the US is probably one of the direction UMC is looking for. So I'm just wondering that following the 12-inch technology, any plan to further engage with the more advanced node with Intel?

Chi-Tung Liu: We have to stick to however we have and to make it execute well and solid. We cannot speculate the future. Our focus now is deliver the 12 nanometer platform to customers. In the future, if anything makes sense for both partners as well as our customers, certainly we will consider to extend our collaboration to other diversity for technologies. For the time being, the only focus is on 12 nanometer platform.

Speaker #3: So we have to stick to whatever we have and make it execute well and solid. So we cannot speculate about the future. So our focus now is to deliver the 12-nanometer platform to customers.

Speaker #3: So in the future, if anything makes sense for both partners, as well as our customers, certainly we will consider expanding our collaboration to other derivatives or technologies.

Speaker #3: But for the time being, the only focus is on the 12-nanometer platform.

Speaker #8: Okay. Very clear. Thank you.

Laura Chang: Okay. Very clear. Thank you.

Laura Chen: Okay. Very clear. Thank you.

Operator: Next one, Felix Pan, KGI. Go ahead, please.

Speaker #1: And next one, Felix Pan, KGI. Go ahead, please.

Operator: Next one, Felix Pan, KGI. Go ahead, please.

Speaker #11: Hi. Thank you for taking my question. I got two questions. So recently there's a lot of rumor talking about UMC in talk with the client about the potential memory foundry business.

Felix Pan: Hi. Thank you for taking my question. I got two question. Recently there's a lot of rumor talking about the UMC in talk with the client about the potential memory foundry business. I know it's a little bit unlikely, and Chi-Tung Liu also mentioned that you guys gonna scale down the commodity business. I still want to sound clarification how the company see the opportunity for the current strong memory demand, both DRAM or NOR. Is that possible? Would do anything business related to the memory? That's my first question.

Speaker #11: I know it's a little bit unlikely, and Shidong also mentioned that you guys are going to scale down the commodity business. But I still want to seek clarification.

Speaker #11: How does the company see the opportunity for the current strong memory demand, both DRAM or NOR? Is that possible? Does the company do anything business-related to the memory?

Speaker #11: That's my first question.

Chi-Tung Liu: Again, we will not be able to comment on, of course, market speculation like this. Our strength is really in the differentiated specialty technology, which elevate our competitiveness to collaborate with customers. We will pursue long-term and sustainable business opportunities, which demonstrate by our current comprehensive technology portfolio, such as eHV, embedded non-volatile memory, BCD, RF SOI, et cetera. Again, we will not do short-term opportunity chase. This is just not our way of managing business.

Speaker #3: So again, we will not be able to comment on, of course, market speculation like this. But our strength is really in the differential specialty technology, which elevates our competitiveness to collaborate with customers.

Speaker #3: So, we will presume pursuing long-term and sustainable business opportunities, which is demonstrated by our current comprehensive technology portfolio, such as embedded Hi-V, embedded non-volatile memory, BCD, RFSOI, etc., etc.

Speaker #3: And again, we will not do short-term opportunity chase. This is just not our way of managing business.

Speaker #11: Okay, okay. Thank you, that's very clear. My second question regarding the eight-inch tightness at the moment. So based on my understanding, this is primarily driven by the global leading foundries—they are optimizing their capacity.

Felix Pan: Okay. Okay. Thank you. That's very clear. My second question regarding to the 8-inch tightness at the moment. Based on my understanding, this is primarily driven by the global leading foundries. They optimize their capacity, so some they're exiting some business for their 8-inch foundry. Primarily, I think this is a supply driven, but also we see some incremental demand improvement. Is that possible to break down how you guys see the 8-inch tightness is more demand driven or supply tightness driven? If I can may have a follow-up to follow up the last previous question, what's the 8-inch utilization rate in Q1? Thanks.

Speaker #11: So their existing sound business for their eight-inch foundry. So primarily, I think this is supply-driven. But also, we see some incremental demand improvement.

Speaker #11: So is that possible to break down how you guys see the eight-inch tightness is more demand-driven or supply tightness-driven? And if I can may have a follow-up, I have to follow up the has previous question.

Speaker #11: What's the eight-inch utilization rate in the first quarter? Thanks.

Speaker #3: Oh, we like to see this is really because of our competitiveness. So, we always prepare ourselves to cope with industry dynamics, and we work on any opportunity to support our customers.

Chi-Tung Liu: Well, we like to see this is really because of our competitiveness. We always prepare ourselves to cope with industry dynamics, and we welcome any opportunity to support our customers. We view this landscape shift as an opportunity rather than a given. We want to work hard to further optimize our product mix and gradually improve our performance. It's very difficult to differentiate the two factors you mentioned. Again, we like to think the only thing we can control is our own competitiveness and our technology portfolio. We will continue to work hard to invest, to broaden our technology portfolio and our service to our customers.

Speaker #3: So we view this landscape shift as an opportunity rather than a given. So, we want to work hard to further optimize our product mix.

Speaker #3: And gradually improve our performance, so it's very difficult to differentiate the two factors you mentioned. And again, we like to think the only thing we can control is our own competitiveness and our technology portfolio.

Speaker #3: So, we will continue to work hard to invest, to broaden our technology portfolio and our service to our customers.

Speaker #11: Okay. And first quarter's utilization for eight-inch, if I may have.

Felix Pan: Okay. Q1's utilization for 8-inch, if I may ask?

Chi-Tung Liu: Q1 company-wide was 79%. As I mentioned previously, eight-inch is below corporate average. The situation, the delta, the improvement in Q2 is higher for eight-inch. Although for Q2, the eight-inch average loading still were below corporate average.

Speaker #3: First quarter, our company-wide was 79%. And as I mentioned, previously it was eight-inch is below corporate average. But the situation, the delta, the improvement in the second quarter is higher for eight-inch.

Speaker #3: Although for the second quarter, the eight-inch average loading still will be below corporate average.

Speaker #11: Okay. Thanks.

Felix Pan: Okay, thanks.

Speaker #1: Thank you. Next one, Bruce Liu, Goldman Sachs. Go ahead, please.

Operator: Thank you. Next one, Bruce Liu, Goldman Sachs. Go ahead, please.

Speaker #12: Hi. Thank you for taking my question. My question is regarding the legacy node for 12 inches. Your competitor is talking about exiting the market.

Bruce Liu: Hi. Thank you for taking my question. The question is regarding the legacy node for 12-inch. You know, your competitor is talking about, like, exiting the market. You know, what's the real situation UMC is facing right now? You know, how much more business we can expect for the legacy node, you know, overflow. In a different way, but do we see the possibility to, you know, kick off another round of CapEx in especially Singapore for like LTA with the customer for the potential new business?

Bruce Lu: Hi. Thank you for taking my question. The question is regarding the legacy node for 12-inch. You know, your competitor is talking about, like, exiting the market. You know, what's the real situation UMC is facing right now? You know, how much more business we can expect for the legacy node, you know, overflow. In a different way, but do we see the possibility to, you know, kick off another round of CapEx in especially Singapore for like LTA with the customer for the potential new business?

Speaker #12: What's the real situation UMC is facing right now? How much more business can we expect for the legacy node? Is there overflow, or in different ways, do we see the possibility to kick off another round of CapEx, especially in Singapore for LTL, with a customer for potential new business?

Chi-Tung Liu: Well, this is a very hypothetical question for us to answer. I mean, it's very difficult. I mean, it's somewhat similar to the fundamental of our 8-inch views. The only thing we can control is our own competitiveness and technology portfolio. We think there's still plenty of upside there, no matter it's 8-inch or 12-inch legacy market segment. Of course, the market dynamic shift help us or have presented the opportunity, but it's really up to us to have the competitive edge to gain those opportunities. Those are the areas we are focusing right now. If you talk about this advanced packaging, it actually going to take some of the legacy part of the 12-inch capacity in our Singapore fab.

Speaker #3: So, this is a very hypothetical question for us to answer. I mean, it's very difficult. I mean, it's somewhat similar to the fundamentals of our 8-inch views.

Speaker #3: The only thing we can control is our own competitiveness and technology portfolio, and we think there's still plenty of upside there, no matter if it's the eight-inch or 12-inch legacy.

Speaker #3: Market segment. And of course, the market dynamic shift helped present the opportunity, but it's really up to us to have the competitive edge to gain those opportunities.

Speaker #3: So those are the areas we are focusing right now. And if you talk about this advanced packaging, it's actually going to take some of the legacy part of the 12-inch capacities in our Singapore fab.

Speaker #3: And if the market dynamic continues with the customer demand, certainly there's upside in terms of capacity for those 12-inch capacity in Singapore.

Chi-Tung Liu: If the market dynamic continues with the customer demand, certainly there's a upside in terms of capacity for those 12-inch capacity in Singapore.

Bruce Liu: Well, I should ask in different ways, but earlier, the previous investment is that, you know, you only take LTA for the new capacity expansion for your 12-inch. Is that still the case for the future capacity expansion?

Bruce Lu: Well, I should ask in different ways, but earlier, the previous investment is that, you know, you only take LTA for the new capacity expansion for your 12-inch. Is that still the case for the future capacity expansion?

Speaker #12: Well, I should ask in different ways than earlier, so the previous investment is that you only take LTA for the new capacity expense, expense for your 12-inch.

Speaker #12: Is that still the case for the future capacity expansion?

Speaker #3: Well, we don't want to limit ourselves to the market opportunities. And back in three, four years ago, when the market present the need and we need the customers to share the investment risk, that's where the LTA comes from.

Chi-Tung Liu: Well, we don't want to limit ourselves to the market opportunities. Back in 3, 4 years ago, when the market present that need and we need the customers to share the investment risk, that's where the LTA comes from. Going forward, with all the new technology opportunities, such as the Silicon Photonics and advanced packaging, we will continue to work closely with our customers, including share the risk of further investment. Will that be in the form of LTA or any other forms, we cannot comment because we are still in the early stage of the technology development. The outlook is promising, but it's still a little bit too early to comment.

Speaker #3: And going forward with all the new technology opportunities, such as the Silicon Photonic and advanced packaging, we will continue to work closely with our customers.

Speaker #3: Including share the risk of further investment. But will that be in the form of LTA or any other forms, we cannot comment because we are still in the early stage of the technology development, and the outlook is promising, but it's still a little bit too early to comment.

Bruce Liu: Understand. Thank you. My second question is, can you comment a bit about like, you know, 14 nanometers high voltage progress? Because I think we asked a question a couple quarters ago when Jason answered that the driver IC might not need to go for 14 nanometer and beyond. Right now, TSMC is talking about like 14 nanometers high voltage process, right? Is that the, like, the technology trend, is getting clear that the driver IC will continue to migrate to the smaller geometry?

Bruce Lu: Understand. Thank you. My second question is, can you comment a bit about like, you know, 14 nanometers high voltage progress? Because I think we asked a question a couple quarters ago when Jason answered that the driver IC might not need to go for 14 nanometer and beyond. Right now, TSMC is talking about like 14 nanometers high voltage process, right? Is that the, like, the technology trend, is getting clear that the driver IC will continue to migrate to the smaller geometry?

Speaker #12: Understood. Thank you. So my second question is, can you comment a bit about 14-nanometer high voltage progress? Because I think we asked a question a couple of quarters ago, when Jason answered that the driver IC might not need to go for 14 nanometers and beyond.

Speaker #12: But right now, TSMC is talking about 14-nanometer high-voltage process, right? Is it that the technology trend is getting clear that the driver IC will continue to migrate to the smaller geometry?

Chi-Tung Liu: I think it's fair to say we don't comment on competitor. Okay.

Speaker #3: So I think disclaimer first, we don't comment. Okay.

Chi-Tung Liu: I think it's fair to say we don't comment on competitor. Okay.

Bruce Liu: No, I'm asking about the driver IC technology trend, right?

Bruce Lu: No, I'm asking about the driver IC technology trend, right?

Speaker #12: No, I'm asking about the driver IC technology trend, right?

Speaker #3: So, we have a proven track record for driver IC. And for the current industry lead in '22, '28, or late display solution, UMC is always recognized as a global leader.

Chi-Tung Liu: We have a proven track record for driver IC. For the current industry lead in 22, 28 or late display solution, UMC is always recognized as a global leader. When customer migrating to FinFET, that's where our FinFET IV solution will continue to provide better performance, lower leakage and more die type savings. Again, it's all boil down to our own competitiveness. We do have the upcoming FinFET IV solution as well.

Speaker #3: So when customers migrate into FinFET, that's where our FinFET-heavy solution will continue to provide better performance, lower leakage, and more die. More die size savings.

Speaker #3: So again, it's all boiled down to our own competitiveness. And we do have the upcoming FinFET-heavy solution as well.

Speaker #12: Thank you. Thank you.

Bruce Liu: All right, C. Thank you.

Bruce Lu: All right, C. Thank you.

Speaker #1: Thank you. Next one, Goku, Hali Halan, J.P. Morgan. Go ahead, please.

Operator: Thank you. Next one, Gokul Hariharan, J.P. Morgan. Go ahead, please.

Speaker #13: Yeah, hi. So, on the silicon photonics piece, could you talk a little bit more about the kind of engagements that UMC is making? Are these mostly for pure pluggable silicon photonics, or are you also engaging in some of the CPO-related projects?

Gokul Hariharan: Yeah, hi. On the silicon photonics piece, could you talk a little bit more about the kind of engagements that UMC is making? Are these mostly for pure pluggable silicon photonics, or are you also engaging in some of the CPO related projects? Given that you also have this PDK for the IMEC version of the technology coming out soon, how should we think about the ramp of this CPO or sorry, the photonics related revenues over the next couple of years? Should we expect some meaningful progress next year, or do we have to wait for this IMEC related IP to really be out there, before we start to see some photonics related revenues really kind of hitting the P&L?

Speaker #13: And given that you also have this PDK for the IMEC version of the technology coming out soon, how should we think about the ramp of this CPO—or, sorry, the photonics-related revenues—over the next couple of years?

Speaker #13: Should we expect some meaningful progress next year, or do we have to wait for this IMEC-related IP to really be out there before we start to see some photonics-related revenues really kind of hitting the P&L?

Speaker #3: Yeah, as far as the current silicon photonics, the key milestone is for us to release the PDK in 2027. It will be version 1.0.

Chi-Tung Liu: Yeah. As far as the current Silicon Photonics, the key milestone is for us to release the PDK in 2027. It will be version 1.0. Obviously, it's based on the imec license. As far as the current designs, they're for PICs, they're basically pluggable solutions. At the same token, we're also looking to enabling integration for customers by considering other, you know, hybrid bonds, TSV solutions or chiplet integrations that will help us be in a better position when CPO kind of takes place further down the road. For now, it's pretty much all the a lot of the PICs discussions and designs that we're under customer engagement.

David Wong: Yeah. As far as the current Silicon Photonics, the key milestone is for us to release the PDK in 2027. It will be version 1.0. Obviously, it's based on the imec license. As far as the current designs, they're for PICs, they're basically pluggable solutions. At the same token, we're also looking to enabling integration for customers by considering other, you know, hybrid bonds, TSV solutions or chiplet integrations that will help us be in a better position when CPO kind of takes place further down the road. For now, it's pretty much all the a lot of the PICs discussions and designs that we're under customer engagement.

Speaker #3: And obviously, it's based on the IMEC license. And as far as the current designs, they're for PICs. They're basically pluggable solutions. But at the same token, we're also looking to enabling integration for customers by considering other HyperBonds PSV solutions or chiplet integrations that will help us be in a better position when CPO kind of takes place further down the road.

Speaker #3: But for now, it's pretty much all—a lot of the PICs discussions and designs—that were under customer engagement.

Speaker #13: Okay, that's clear. Secondly, on the mature 12-inch nodes, I think 2022 still seems to be pretty strong in terms of utilization. Could you comment a little bit on 40 and 6555 status?

Gokul Hariharan: Okay. That's clear. Secondly, on the mature 12-inch nodes, I think 20 to 22 still seems to be pretty strong in terms of utilization. Could you comment a little bit on 40 and 65, 55 status, like how are the utilization there? Especially given you commented there is some slack in Japan's fab, which I think, if I remember right, was 55 and 40 nanometer. Any forward-looking comments on how that utilization is likely to get filled given that you're also engaging some of the bridge IC projects?

Speaker #13: How are the utilization numbers there? Especially given you commented there is some slack in the Japan fab, which I think, if I remember right, was 55 and 40 nanometers.

Speaker #13: And any forward-looking comments on how that utilization is likely to get filled, given that you're also engaging some of the bridge IC projects?

Speaker #3: Yeah. As far as for the 40-nanometer, 55- and 65-nanometer, short term, I think the revenue contribution for Q2 will be healthy. From a longer-term perspective, we're confident on the business outlook for UMC's 40-nanometer and 55- and 65-nanometer technologies.

Chi-Tung Liu: Yeah. As far as for the 40 nanometer, 55 and 65 nanometer, short term, I think the revenue contribution for Q2 will be healthy. From a longer term perspective, we're confident on the business outlook for UMC's 40 nanometer and 55 and 65 nanometer technologies. We are seeing longer term, there's gonna be, you know, more designs and that'll hopefully lift some of that long-term utilization rates.

Speaker #3: So, we are seeing, longer term, there's going to be more designs, and that'll hopefully lift some of those long-term utilization rates.

Gokul Hariharan: Any products that are that you can call out here that are critical here to lift the utilization rate?

Speaker #13: Are there any products that you can call out here that are critical to lift that utilization rate?

Gokul Hariharan: Any products that are that you can call out here that are critical here to lift the utilization rate?

Speaker #3: Well, I think right now they're under discussion on customer engagements. But once we've seen some real material uplift in UTR, we'll be more than happy to share them with you.

Chi-Tung Liu: Well, I think, right now they're under discussion on customer engagements, but, once, we've seen some real material uplift in UTR, we'll be more than happy to share them with you.

Speaker #13: Okay. Cool. Thank you.

Gokul Hariharan: Okay, cool. Thank you.

Speaker #1: Thank you. And, ladies and gentlemen, in the interest of time, we're taking the last question. And the last one, Charlie Chen, Morgan Stanley. Go ahead, please, Charlie.

Operator: Thank you. Ladies and gentlemen, in the interest of time, we're taking the last question. The last one, Charlie Chan, Morgan Stanley. Go ahead please, Charlie.

Speaker #14: Oh, thanks for taking my follow-up questions. So, my first question is really a follow-up on the pricing strategy. As the previous caller just mentioned, you did send some letters to customers.

Charlie Chan: Oh, thanks for taking my follow-up questions. First question is really follow on the pricing strategy. As Paula just mentioned that you did send some letters to customers. I'm wondering what's the customer's reaction. Meaning are they kind of very happy to accept the price hike because they can also pass through to customers or, given some end market difficulty, some customers have some pushback. It would be much easier if you can, management can give us some like preliminary H2 price hike assumption. Thank you.

Speaker #14: So I'm wondering what the customers' reaction is? Meaning, are they very happy to accept the price hike because they can also pass it through to their customers?

Speaker #14: Or given some in-market difficulty, so some customers have some pushback? So it would be much easier if management can give us some preliminary second-half price hike assumption.

Speaker #14: Thank you.

Speaker #3: All right. Can I speak for our customers? Again, we appreciate their long-term support. And just like our vendors—those raw material suppliers and the energy suppliers to UMC—it's going to be a win-win for the longer term.

Chi-Tung Liu: All right. Can I speak for our customers? Yeah, we appreciate their long-term support. Just like our vendors, those raw material supplier and the energy supplier to UMC, it's going to be a win-win for the longer term. We need those to continue to provide efficient manufacturing and continuous investment. I'm pretty sure our customer understand where it is coming from, but the key is really how UMC can help them to increase their competitiveness in the longer term and gain more shares. I think that's the key message we want to deliver to our customer, and also we appreciate their long-term support.

Speaker #3: We need those to continue to provide efficient manufacturing and continuous investment. So I'm pretty sure our customers understand where it is coming from. But the key is really how UMC can help them to increase their competitiveness in the longer term and gain more share.

Speaker #3: So I think that's the key message we want to deliver to our customer, and also we appreciate their long-term support.

Speaker #1: Got it, thanks. And also, a follow-up question to you. Laura—Laura's question about the Intel partnership—I want to associate that to my previous question about your 11 stages, especially since you said 'bridge die.'

Charlie Chan: Got it. Thanks. Also a follow-up question to Laura's question about the Intel partnership. I want to associate that to my previous question about your advanced stage, especially the bridge die and DTC, the deep trench capacitor. Is that the right way to think about that, because Intel's EMIB also need those bridge die and DTC discrete components. Do you think, is it right way to think about UMC would be a very important partner for Intel's EMIB or Intel's advanced packaging supply chain? Thank you.

Speaker #1: And did you see the deep trench capacitor? So is that the right way to think about that? Because Intel has those bridge die and DTC discrete components.

Speaker #1: Do you think the right way to think about UMC would be as a very important partner for Intel's eMIPT or Intel's advanced packaging supply chain?

Speaker #1: Thank you.

Speaker #3: So, there's a lot of speculation here, and we cannot do that. And we have to respect our important partners. So again, our current focus is on the 12-nanometer platform.

Chi-Tung Liu: there's a lot of speculation here and we cannot do that, and we have to respect our important partners. Again, our current focus is on 12-nanometer platform.

Charlie Chan: Mm.

Chi-Tung Liu: No, nothing else. There's this important collaboration for both parties, and we have to make it work. This is too important, especially for UMC, where we are putting all the possible resources, try to make sure we deliver.

Speaker #3: Nothing else. And there's an important collaboration for both parties, and we have to make it work. This is too important, especially for UMC.

Speaker #3: We are putting all the possible resources in, or trying to make sure we deliver.

Charlie Chan: Yeah. Anyway, it sounds very reasonable because you have other capability and technology that your key partner may want. We look forward to your next updates.

Speaker #1: Yeah, but yeah, anyway, it sounds very reasonable because you have all the capability and technology that your key partner may want. But we look forward to your next updates.

Charlie Chan: Yeah. Anyway, it sounds very reasonable because you have other capability and technology that your key partner may want. We look forward to your next updates.

Speaker #1: Thanks, Cheeto.

Chi-Tung Liu: Thank you. Thank you.

Speaker #3: Thank you.

Speaker #1: Thanks. Thank you. And that concludes today's Q&A session. Now, to turn things over to UMC IR Manager for closing remarks. Go ahead, please.

Charlie Chan: Thanks.

Operator: Thank you. That concludes today's Q&A session. Now I'll turn things over to UMC IR manager for closing remarks. Go ahead, please.

Speaker #3: Thank you, everyone, for joining us today. We appreciate your questions. As always, if you have any additional follow-up questions, please feel free to contact UMC at ir@umc.com.

David Wong: Thank you everyone for joining us today. We appreciate your questions. As always, if you have any additional follow-up questions, please feel free to contact UMC at ir@umc.com. Have a good day.

Speaker #3: Have a good day.

Speaker #1: Thank you. And ladies and gentlemen, that concludes our conference for Q1 2026. Thank you for your participation in UMC's conference. There will be a webcast replay available within two hours.

Operator: Thank you. Ladies and gentlemen, that concludes our conference for Q1 2026. 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.

Q1 2026 United Microelectronics Corp Earnings Call

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