校正紀錄
本檔為 AI 語音轉寫，落地前已校正下列轉寫誤植；未列出者為原文。AI 摘要（Memo 區塊）與 Transcript 衝突以 Transcript 為準。 - 刪除站方募款宣傳行 - Memo 區塊與 Transcript：「IBM 約佔 14%」「fabulous」→ IDM 約佔 14%、fabless（CFO 原話 IDM 14%、Fabless 其餘）；「3Q 營收年增 16.1%」→ 16.1% 為前三季累計 YoY，3Q26 單季 YoY 為 +25.6%（74,239 對 3Q25 約 59.1bn）；「先進封裝 ADTC 已量產」→ 實為行動裝置用分離式 DTC 量產、AI／伺服器基板嵌入式 DTC 完成 tape-out 與功能驗證 - 財務驗算：毛利 25.205bn／營收 74.239bn＝34.0%；營業利益 18.643bn（營益率 25.1%）＝毛利 − 營業費用 6.562bn；稅前 19.911bn（業外 1.268bn）；前三季 EPS 1.29＋3.39＋1.32＝5.99 元（約 6 元）；前三季淨利 16.171＋42.260＋16.434＝74.865bn 與 74.86bn 相符、毛利 17.818＋22.323＋25.205＝65.346bn 與 65.3bn 相符 - 「twelve-five facility」→ 12i facility（新加坡 Fab 12i）；「capacity … unchanged around 2 billion US dollars」→ capex ≈ US$2 billion（與 CEO 結語 cash-based capex US$2bn 一致） - 「4.945 per ADS」→ [數字存疑]：以 3Q26 ADS EPS US$0.206 對應 NT$1.32 推算前三季 ADS EPS 應約 US$0.94–0.95，原值疑為 0.945 轉寫誤植 - 「fly-by ICs」→ Wi-Fi ICs [待確認]；「rent existing projects … new product tables」→ ramp … tape-outs；「due track」→ dual-track；「remain first」→ remain firm；「Growth margin」→ Gross margin - 「20.7」「through 0.27」「in 2017」→ 2027（Q&A 多處年份誤植）；「positive outlet」→ outlook；「a key growth AI remand」→ AI demand - 「18K laser」→ 18K wafers（矽光子月產能 1.8 萬片，與 CFO 同場口徑、各券商一致）；「22K forDTC」→ 22K for DTC - 「1.6 Topical」→ 1.6T optical；「300G／400G per LAN」→ per lane；「hybrid-bounding／chip-to-wave」→ hybrid-bonding／chip-to-wafer - 「ADTC」→ DTC（Deep Trench Capacitor）；「tape box」→ tape-out；「functional verifier」→ functional verification；「deep branch capacitor」→ deep trench capacitor - 「overbill／overfill」→ overbuild；「playball with a cut key customer」→ tape-out with a key customer - 「deterioration rate」→ utilization rate；「structure grows margin」→ structural gross margin；「probability」→ profitability（多處）；「K-pass／K-tags」→ CapEx - 「Pfizer supply demand landscape」→ tighter supply-demand landscape；「Tableau」→ TFLN；「Capital Light」→ HyperLight；「circumphotonic」→ silicon photonics；「1.62, 3.15」→ 1.6T, 3.2T - 「the 97 percent」→ 92 percent [待確認]（依上下文為 3Q26 稼動率） - [數字存疑] CFO 折舊成長「low single-digit」：Citi 3Q26 報告記為 2027 年高個位數以上年增、2028 年可能更高；7 月法說（Citi）折舊未來至少 2 年 low-teens% 年增，故原轉寫疑為 high single-digit，memo 採 Citi 口徑 - [待確認] 「renowned robots」「creative growth」「the circle of potential」「Hans Lu 問『2027 CapEx up to like 3 billion』」等語意不全處未臆測改寫，memo 僅採可確認內容 - 地區營收百分比、客戶別等 AI 摘要數字與 CFO 口述一致者未改
聯電_2026-10-28
警語：此 Memo 和逐字稿為 AI 生成，可能因為音檔品質導致轉錄逐字稿有誤，或是 AI 曲解原意／幻覺導致 Memo 內容有誤，請以原始音檔為準。
Memo 亮點 • 聯電 2026 年第三季營收達新台幣 742.4 億元，季增 8%，毛利率提升至 34%，歸屬母公司淨利為 164.3 億元，EPS 為 1.32 元，產能利用率達 92%，多座 12 吋廠滿載，8 吋廠亦強勁復甦。22/28 奈米業務再創新高，22 奈米營收佔比達 18.3%。 [CFO - 00:02:45] [CEO - 00:07:30] [CEO - 00:08:07] • 2027 年公司預期全年平均 ASP（平均售價）將年增 10%，標誌著價格環境由過去下滑轉為明顯正向，並反映產品組合升級與客戶需求強勁。 [CEO - 00:14:26] [Analyst - 00:15:24] • AI 相關業務 2026 年營收約 3 億美元，預期 2029 年將超過公司總營收的四分之一，成為主要成長動能。 [CEO - 00:25:32] [Analyst - 00:49:32] • 董事會通過額外 32 億美元資本支出預算，加速新加坡與台南產能擴充，並聚焦於矽光子、先進封裝等 AI 基礎設施新業務。 [CEO - 00:09:34] 產業循環週期 • 2026 年產業需求健康，AI 相關應用帶動產業進入新一波成長循環，聯電預期 2027 年成長動能將延續，但因產能利用率已高於 90%，未來成長將逐漸受限於產能。 [CEO - 00:11:23] 產業供需 • AI 相關應用需求強勁，部分技術產能已滿載，聯電多座 12 吋廠滿載，8 吋廠亦強勁復甦，部分產品需求超過現有產能，短期內供不應求。 [CEO - 00:07:30] [CEO - 00:35:37] • 公司產能擴充計畫以客戶需求為依據，並分階段進行以降低產能過剩風險，目前預期市場需求將持續超過規劃產能。 [CEO - 00:23:41] 產業狀況 • AI 基礎設施需求推動矽光子、先進封裝等新技術快速商業化，聯電積極投入相關產能與技術開發，並已取得多家超大規模客戶認證。 [CEO - 00:16:53] 獲利 • 2026 年第三季毛利率 34%，較上季提升 1.5 個百分點，全年前三季 EPS 達 6 元（新台幣），全年毛利率結構穩健，但原物料成本與折舊上升將壓抑未來毛利率表現。 [CFO - 00:02:45] [CFO - 00:04:40] [CFO - 00:29:17] • 2027 年預期 ASP 提升與高利用率將支撐獲利，但原物料成本與折舊增加將壓抑毛利率，EBITDA 結構仍維持健康。 [CFO - 00:56:51] [CEO - 00:57:43] 公司展望、未來成長動能 • 2027 年成長動能將由 AI、差異化技術與高價值應用驅動，產品組合升級與客戶市佔提升將成為主要成長來源。AI 相關業務預期 2029 年佔營收超過 25%。 [CEO - 00:11:23] [CEO - 00:25:32] • 矽光子與先進封裝業務將於 2028-2029 年進入量產，並帶來高於公司平均的毛利率，成為未來主要成長引擎。 [CEO - 00:39:17] 市場競爭策略 • 矽光子與先進封裝領域同業亦積極擴產，聯電強調自身產能擴充以客戶需求為依據，並已取得多家超大規模客戶認證，技術表現優於同業。 [CEO - 00:21:41] [CEO - 00:52:33] 營收 • 2026 年第三季營收新台幣 742.4 億元，季增 8%（年增 25.6%），前三季累計營收 2040 億元（年增 16.1%）。 [CFO - 00:02:45] • AI 相關業務 2026 年營收約 3 億美元，預期 2029 年將超過公司總營收的四分之一。 [CEO - 00:25:32] 訂單 • AI、電源管理、FPGA 等應用訂單需求強勁，部分技術產能已滿載，訂單能見度高。 [CEO - 00:35:37] 產品組合 • 22/28 奈米營收佔比約 35%，22 奈米單季營收佔比達 18.3%，40 奈米約 16%，65 奈米約 19%。產品組合持續向高價值應用與先進製程傾斜。 [CFO - 00:06:12] [CEO - 00:08:07] 營收地區 • 2026 年 Q2 與 Q3 地區營收分佈變化不大，IDM 約佔 14%，其他為無廠半導體公司（Fabless）。 [CFO - 00:05:42] 下游客戶 • AI、電源管理、FPGA 等應用客戶需求強勁，部分技術產能已滿載，與多家超大規模客戶合作並取得認證。 [CEO - 00:21:41] 同業 • 矽光子、先進封裝等新興領域同業亦積極擴產，聯電強調自身技術表現優於同業，並已取得多家客戶認證。 [CEO - 00:52:33] 稼動率 • 2026 年第三季產能利用率達 92%，較上季提升 7 個百分點，12 吋廠多數滿載，8 吋廠亦強勁復甦。預期 Q4 維持低 90% 區間。 [CFO - 00:02:45] [CEO - 00:10:24] 新產品／新技術 • 矽光子（PIC）、TFLN 調變器、先進封裝（DTC）等新技術已進入量產或客戶驗證階段，12 吋 PIC 平台已支援 1.6T 應用，8 吋 TFLN 平台完成 1.6T 系統實現，未來將推進至 3.2T 應用。 [CEO - 00:18:52] • 先進封裝：行動裝置用分離式 DTC 已於本季進入量產，AI／伺服器用基板嵌入式 DTC 已完成 tape-out 與功能驗證，客製化記憶體堆疊方案通過初步客戶驗證。 [CEO - 00:19:50] 產品價格 • 2027 年公司預期全年平均 ASP 將年增 10%，標誌價格環境由過去下滑轉為明顯正向，反映產品組合升級與客戶需求強勁。 [CEO - 00:14:26] • 2026 年第三季 ASP 維持穩定，未來價格談判以價值為基礎，並考量成本上升與產品組合優化。 [CFO - 00:05:12] [CEO - 00:13:25] 合約價、現貨價 • 2027 年價格談判包含合約與現貨多元組合，產品組合複雜，價格調整以公司整體平均為主。 [CEO - 00:31:17] 出貨量 • 2026 年第三季晶圓出貨量季增 7.3%，達到 120 萬片 12 吋等效晶圓，創歷史新高。預期 Q4 出貨量將再小幅成長。 [CEO - 00:07:30] [CEO - 00:09:34] 成本毛利 • 原物料成本與折舊上升將壓抑未來毛利率表現，公司將持續嚴控費用並優化產品組合以維持獲利結構。 [CFO - 00:29:17] [CFO - 00:56:51] 原物料／關鍵零組件 • 原物料成本上升為未來毛利率壓力來源之一，公司需努力抵銷其影響。 [CFO - 00:29:17] 折舊 • 2027-2028 年折舊將持續上升，為毛利率帶來壓力，主要來自於新產能投資。 [CFO - 00:56:51] 擴廠規劃 • 董事會通過額外 32 億美元資本支出預算，加速新加坡與台南產能擴充，矽光子、先進封裝等新業務產能將於 2028-2030 年分階段開出。 [CEO - 00:09:34] [CEO - 00:17:52] 業外損益 • 2026 年前九個月非營業收入助攻，歸屬母公司淨利年增 136.5%，達 748.6 億元。 [CFO - 00:04:13] 現金、現金流 • 2026 年第三季底現金部位約新台幣 1420 億元，資本支出規劃充足。 [CFO - 00:04:40] Transcript Presentation Speaker01 - Operator
(00:00:00)Welcome everyone to UMC's 2026 third quarter earnings conference call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at the time if you would like to ask a question. For your information, this conference call is now being broadcast live over the internet. Webcast replay will be available within two hours after the conference is finished.Please visit our website www.umc.com under the
Michael Lin - UMC, Investor Relation
(00:00:46)Investor Relations Investors Events section. Now I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, please begin. Thank you and welcome to UMC's conference call for the third quarter of 2026. I am joined by Mr. Jason Wang, CEO of UMC, and Mr. Chi-Tung Liu, the CFO of UMC. In a moment, we will hear our CFO present the third quarter financial results, followed by our CEO's key message to address UMC's focus and fourth quarter 2026 guidance. Once our CEO and CFO complete their remarks, there will be a Q and A section.
Michael Lin - UMC, Investor Relation
(00:01:22)UMC's quarterly financial reports are available at our website www.umc.com under the Investors' Financial section. During this conference, we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties.That could cause actual results to differ materially, including 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 security authorities. During this conference, you may view our financial presentation materials.
Chitung Liu - UMC, CFO
(00:02:16)Which is being broadcast live through the internet. Now I would like to introduce UMC's CFO Mr. Chi-Tung Liu to discuss UMC's third quarter 2026 financial results. Thank you, Michael. I'd like to go through the third quarter 26 investor conference presentation material which can be downloaded for viewing in real time from our website. Starting on page four, the third quarter of 2026
Chitung Liu - UMC, CFO
(00:02:45)consolidated revenue was 74.24 billion NT with gross margin rate at 34 percent. Net income attributable to the shareholder of the parent was 16.43 billion NT, and the earnings per ordinary share were 1.32 NT dollar. Capacity utilization rate in the third quarter reached 92 percent compared to 85 percent in the previous quarter, and overallEPS for the quarter was 1.32 NT. On page five, revenue grew 8 percent sequentially to reach 74.2 billion NT. As we stated earlier, gross margin rate also improved from 32.5 percent in the previous quarter to 34 percent in this quarter for NT 25.2 billion NT dollars.
Chitung Liu - UMC, CFO
(00:03:47)And EPS per US ADS is 0.206 US dollars. For the year-over-year comparison on page six, revenue grew 16.1 percent to 204 billion NT and gross profit also grew 30.8 percent year-over-year.To 65.3 billion or 32 percent of the gross margin rate. With the help of the non-operating income, overall net income attributable to the shareholder of the parent grew 136.5 percent year over year to reach 74.86 billion NT for the first nine months of the year.
Chitung Liu - UMC, CFO
(00:04:40)EPS for the first three quarters reached six dollars in NT dollar terms or 4.945 [數字存疑：依 3Q26 ADS EPS US$0.206 對應匯率回推，應約 US$0.94–0.95] per ADS in US dollar terms. On page seven, our balance sheet at the end of third quarter total equity is 470 billion NT dollar with cash account for about 142 billion on the September 30th.For blended ASP in the third quarter was relatively stable, remains firm compared to the previous quarter on page eight. For revenue breakdown on page nine, there is very little change for quarter two compared to quarter three of 2026 for revenue breakdown by geography. On page ten,
Chitung Liu - UMC, CFO
(00:05:42)or revenue breakdown by customer type also remain virtually unchanged for IDM with about 14 percent of the total revenue and fabless account for the others. Revenue breakdown by application consumers stay unchanged at around 32 percent when communication and computer also stay quarter over quarter unchanged.On page twelve, our twenty-two and twenty-eight nanometer revenue still account for more than one third, reach about thirty-five percent of the total pie chart, and forty nanometer is around sixteen percent, and sixty-five nanometer is about nineteen percent. Our quarterly capacity continues to increase slightly, mainly coming from our 12i facility in Singapore.
Chitung Liu - UMC, CFO
(00:06:40)And for quarter four of 2026 we expect the capacity for overall UMC reach about one point three three twelve inch equivalent, one point three three million for twelve inch equivalent capacity by Q4 2026. And capex compared to the last quarter's estimate still remain unchanged around US$2 billion. So the above is the summary of UMC result for third quarter of 20
Jason Wang - UMC, CEO
(00:07:30)26. More details are available in the report which has been posted on our website. I will now turn the call over to CEO of UMC Mr. Jason Wang. Thank you Chi-Tung. Good evening everyone. Here I would like to share UMC third quarter results. In the third quarter we saw a healthy demand across all market segments driving a 7.3 percent growth in wafer shipments to more than 1.2 million twelve-inch equivalent wafers, a record high. Our overall fab utilization rate reached 92 percent, with several of our twelve-inch fabs operating at full capacity, while eight-inch operations also saw a strong recovery. By technology note, our twenty-two twenty-eight nanometer business had another record breaking quarter.
Jason Wang - UMC, CEO
(00:08:07)With 22 nm revenue now accounting for 18.3 percent of wafer sales as the customers continue to take out new products including display drivers, automotive radar, and Wi-Fi ICs [待確認：原轉寫 fly-by ICs]. In new business area, active customer engagement for advanced packaging and silicon photonics renowned robots. We expect this engagement to translate into a creative growth over the coming quarters.
Jason Wang - UMC, CEO
(00:08:37)As we ramp existing projects and support new product tape-outs. Looking ahead to the fourth quarter, we expect the positive demand momentum to sustain, supporting stable shipments and utilization rate. Revenue from our specialty technology portfolio will continue to grow sequentially, driven in part by the ramp-up of our advanced packaging and silicon photonics businesses.
Jason Wang - UMC, CEO
(00:09:04)We have seen a significant increase in demand for this new business area, and we are in the process of converting some existing capacity to address near-term unfulfilled demand. In the longer run, our dual-track expansion plan in Singapore and Tainan will be crucial to ensure UMC's capacity growth can keep pace with our customers' needs. We are pleased to announce our board of directors today approved an additional
Jason Wang - UMC, CEO
(00:09:34)capital expenditure budget of approximately US 3.2 billion dollars which will enable us to accelerate our expansion schedule as we continue to align with customers on their product roadmap and requirements. Now, let's move on to fourth quarter twenty twenty six guidance. Our wafer shipment will increase by low single digit. ASP in US dollars will remain firm.Gross margin will be comparable to the preceding quarter. Capacity utilization rate will be in the
Speaker01 - Operator
(00:10:24)low 90 percent range. Our 2026 cash-based capex budget will be at US $2 billion. That concludes my comments. Thank you all for your attention.
Q&A Speaker01 - Operator
(00:10:28)Now we are ready for questions. Yes, thank you. 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
Sunny Lin - UBS, Analyst
(00:10:57)the question. Thank you. Our first question will be coming from Sunny Lin, UBS. Go ahead please. Good afternoon.Thank you very much for taking my questions.Several questions from my side so
Jason Wang - UMC, CEO
(00:11:23)number one now that UMC will finish 2026 on high note any early view for 2027 based on our current visibility？ Yes, for 2027 early view we expect the growth momentum established in 2026 will continue into the next year supported by the healthy demand across our core business and growing opportunity in differentiated technology and high value applications. If we look at this in 2026, our growth has been driven primarily by a high wave achievement, improving utilization and customer share gain. Looking ahead to 2027, we expect further growth, although with utilization already above 90 percent and several technologies
Jason Wang - UMC, CEO
(00:11:59)operating at our near full capacity, our shipment growth will increasingly be constrained by available manufacturing capacity. So at the remand, AI demand to be a key growth driver, creating demand across power management, FPGA and connectivity applications. Meanwhile, the silicon photonics and advanced packaging are emerging as a new growth engine for UMC.
Jason Wang - UMC, CEO
(00:12:29)Addressing the next generation optics connectivity power delivery and memory bandwidth requirement for AI infrastructure. So beyond AI, we continue to see opportunity from customer market share again and increasing function share across premier smartphone, automotive, industrial and other specialty applications, despite an uneven recovery in some end markets, with customer demand in selected technology already exceeding
Jason Wang - UMC, CEO
(00:12:59)our available capacity. We see opportunity to capture greater value from our existing manufacturing footprint through improved pricing and richer product or technology mix in 2027 alongside continued achievement growth. So while 2026 growth was driven primarily by volume and utilization, we expect 2027 to become increasingly value-driven.
Jason Wang - UMC, CEO
(00:13:25)With higher value per waiver and differentiate the technology and contribute more to UMC revenue growth and long-term earning potential. Thank you very much very helpful and encouraging and so on the pricing side how should we think about the ASP environment for UMC especially going to 2027？ How are the negotiations with key clients progressing for the coming few quarters？ We are engaging with customers right now for our 2027 pricing and we've seen a significant shift in pricing environment heading into 2027, supported by strengthening the customer demand and increasing high capacity in selected technologies. We see clear opportunity for pricing improvement across both our 8-inch and 12-inch businesses, while maintaining our disciplined and value-based pricing approach.
Jason Wang - UMC, CEO
(00:14:26)Importantly, we expect 2027 to mark a turning point in our blended ASP trajectory, moving from an environment of ASP erosion toward a meaningful positive outlook beginning in the first quarter. While we anticipate a 10 percent blended ASP increase year over year, this is more than an incremental pricing improvement, it reflects bothboth a more constructive pricing environment and our increasing ability to capture value through a richer product and technology mix. Our record-high 22 nanometer revenue contribution and continued special technology momentum also provide a strong foundation, while silicon photonics and advanced packaging create
Sunny Lin - UBS, Analyst
(00:15:24)additional higher value growth opportunities at safe scale. Thank you very much also. Maybe a quick follow up so you mentioned 10% year over year improvement is that initial view for your blended ASP improvement going to Q1？ Not that will be on a year over year basis. So 10% will be your target through 2027 not just for Q1. As a whole year over year as in 2026 year compared to 2027 year over year yes.
Sunny Lin - UBS, Analyst
(00:15:55)And we will provide Q1 ASP guidance for the next quarter's earnings call. Got it and then maybe on the CAPEX you just mentioned an additional three billion budget on top of the five billion budget announced a quarter ago and so now could you share a bit more color on how that translate into a capacity expansion in the coming few years and then on silicon photonics advanced packaging
Jason Wang - UMC, CEO
(00:16:25)How are you seeing the market demand overall in coming years？ We are accelerating selective investment because several of our new growth business are moving from technology development into a commercial execution, which faster than our original capacity roadmap anticipated. We are seeing three things happen at the same time.
Jason Wang - UMC, CEO
(00:16:53)The market is expanding as the AI infrastructure drives higher requirements for bandwidth, power delivery, memory performance and system integration. Our customer engagement are also progressing from qualification into production ramps and capacity planning. And at the same time, our solution roadmap is moving forward, with the product already in mass production and additional product completing take-out
Jason Wang - UMC, CEO
(00:17:23)customer validation and new generation of product already under development. And our focus now is shifting from whether this opportunity will materialize to how quickly can we expand capacity to meet the customer demand. Under our current expansion roadmap, we are targeting monthly capacity approximately 18K wafers for silicon photonics, 22K for DTC and silicon capacitor and 20K for TFLN modulators. This next phase of capacity will start its ramp in late 2028 and reach its planet scale by 2030. This is not a broad-based capacity expansion, we are directing our capital toward customer-backed growth opportunities that will fuel UMC's next phase of growth.
Jason Wang - UMC, CEO
(00:18:22)So that will give you a bit of a why we are accelerating and a milestone that we plan for those those categories. For your question on the silicon photonics and advanced packaging, we believe UMC is well positioned to capture the next wave of AI infrastructure opportunities through our competitive silicon photonics performance andproven manufacturing execution and advanced packaging capability. So in silicon photonics our data indicate that our PIC technology outperform peers in key parameters such as propagation loss supported by our manufacturing high production EONL. Our 12-inch PIC platform already supported 1.6T optical application while our 8-inch TFLN platform
Jason Wang - UMC, CEO
(00:19:21)has completed 1.6T system realization with an industry-leading yield. Building on this achievement, our roadmap extends toward 300G per lane and ultimately 400G per lane solution for next-generation 3.2T applications, supported by hybrid-bonding TSV and chip-to-wafer integrations. For the advanced packaging,
Jason Wang - UMC, CEO
(00:19:50)We are making progress in two key solution areas. DTC for power delivery and customized memory stacking. Our discrete DTC solution for mobile is already entered mass production this quarter. For AI and server applications, our substrate embedded DTC solution has a completed tape-out and functional verification. With our customized memory stacking solution has passed initial customer verification
Jason Wang - UMC, CEO
(00:20:20)to address the growing bandwidth requirement of AI inference. All those achievements they demonstrate UMC's ability to translate technology innovation into the commercial execution now by combining the device performance manufacturing expertise and close customer cooperation. We are expanding our role in next generation AI infrastructure helping the customer to address the three critical requirements include
Sunny Lin - UBS, Analyst
(00:20:48)faster optical connectivity, more efficient power delivery and high memory bandwidth so that's you know that's why we believe that we are in a great position to capture those opportunities. Thank you so it does sound like your capabilities are pretty competitive but then for both photonics and also advanced packaging say forEDTC or silicon capacitors some of your peers are also building more supply and so should we be concerned about maybe potential overbuild say if AI demand slow down at one point how should we think about the overbuild risk？ Well I mean we look at this
Jason Wang - UMC, CEO
(00:21:41)on two fold right I mean one is the demand side well first we are seeing on very strong demand driven by the AI related application for silicon photon and advanced packaging. In silicon photon we have been working with a leading customer. We recently achieved significant milestones with multiple hyperscalers and qualified our 1.6T optical transceiver platform. Our 12-inch PIC platform supports the 1.6T application and the 8-inch TFLN
Jason Wang - UMC, CEO
(00:22:12)complete the 1.6T validation and always demonstrate the manufacturing yield with the roadmap that's going to the next generation and with all this the end of advanced packaging our discrete solution like you said and our first interposer was discrete DTC solution for the AI and server applications a completed tape-out with a key customer and those
Jason Wang - UMC, CEO
(00:22:42)The focus of the customer discussion has already shifted from validation to customer demand planning. Our current expansion plan is tied to those customer commitments in terms of demand. However, regarding the overbuild based on what we see today, we do not believe we are building ahead of the market. Demand for silicon photonics and related AI infrastructure is growing faster than the qualified capacity being added.
Jason Wang - UMC, CEO
(00:23:11)We continue to monitor our peers' expansion and the timing of new industry supply closely. Oversupply and overcapacity are industry-wide concerns, not just UMC's. We assess how quickly end demand is growing relative to the capacity being added across the industry. Based on customer demand and industry capacity plans today, we believe the market can support the expansion we are planning.
Jason Wang - UMC, CEO
(00:23:41)Meanwhile, UMC is building capacity in phases to mitigate risk. At the same time, we remain cautious and disciplined in how we add capacity. Most importantly, our capacity expansion is backed by customer commitments, as I mentioned earlier, and tied to the customer product roadmap, production ramp, and capacity requirements. Even with all this expansion, we expect customer demand to exceed our planned capacity.
Sunny Lin - UBS, Analyst
(00:24:10)According to the customer, this underscores the strength of the commercial opportunity ahead and our decision to accelerate the selected investment. Got it, sounds good. Sorry, last question： if I recall correctly from a quarter ago, you quantified the related sales to be about 300 million US dollars for 2026, and you have a target to......triple or more than triple to over a billion by 2029. So now with...
Jason Wang - UMC, CEO
(00:24:56)...the accelerated expansion for both solar photonics and advanced packaging, how should we think about your AI revenue by 2029？ First of all, remember our AI-related business spans a broad range of specialty semiconductor solutions supporting power management, connectivity, FPGAs, along with our growing advanced packaging and silicon photonics. All those applications are becoming increasingly important contributors to our growth going forward. We are expanding our capacity as reported and investing in technology manufacturing infrastructure to address all those growing demands. Our AI-related revenue...
Jason Wang - UMC, CEO
(00:25:32)...is close to 300 million dollars in 2026, but looking ahead three years, we expect our AI exposure will probably exceed a quarter of our revenue. A quarter of UMC sales may be by 2029？ Yes. Got it, thank you very much. Sorry, let me get back to the queue. Thank you. Thank you.
Laura Chen - Citi, Analyst
(00:26:02)Next on, Laura Chen from Citi, go ahead please. Yes, thank you for taking my questions. Good afternoon, gentlemen. Just a quick follow-up on the 10 percent increase in pricing—is it more like a blended ASP increase or more of a like-to-like increase into next year？ It is blended, yes, so it's more than an incremental pricing improvement. It reflects both......the improved pricing environment and our inquiries capturing other products, richer product, and different product mix. Yes. Okay, got it, very clear. Also, we think we have various plans for AI-related applications. Can you give us more color about that？ What is the capacity？ How much capacity are we planning？
Laura Chen - Citi, Analyst
(00:26:59)For the silicon photonics, including in Taiwan and also many in Singapore, and also on the TFLN, we are ahead of our peers, so just wondering...
Jason Wang - UMC, CEO
(00:27:24)...can you also give us an update about the capacity build-up plan？ In maybe two years, how big is the capacity we are looking at？ Thank you for giving the current milestone and the facility and tool schedules. As you know, we're doing all those expansions on a basis, and we're going to continue updating you in terms of progress. Meanwhile, we are still working closely with our supplier. Hopefully, we can accelerate and expedite those installations. Meanwhile, as I mentioned earlier, if I look at the overall CapEx plan approved by our board, the capacity...
Jason Wang - UMC, CEO
(00:27:57)buildup is approximately 18K for silicon photonics, 22K for DTC, which is silicon capacitor, and 20K for TFLN demodulator. At this current stage, we project the initial install will happen in late 2028 and go into 2029, reaching scale by 2030.Now, for the location...
Laura Chen - Citi, Analyst
(00:28:44)wise, we are focused on the silicon photonics in a single facility and the silicon capacitor in our Tainan facility. The TFLN will be in our 8-inch operation. Sure, thank you very much. Just also very quickly, I know probably we will talk more next year, but I think given the high utilization rate is already like 90 percent plus and...
Chitung Liu - UMC, CFO
(00:29:17)also pricing in the next year is more favorable. So are we seeing that any structural gross margin upside based on current visibility？ Certainly, the price increase is likely to happen in the first quarters. We are also seeing some headwinds from increased raw material costs, which we need to work hard to offset the impacts. So it's our view that the structural profitability remains intact. EBITDA margin certainly will see good shape if we compare it to the previous cycle.
Chitung Liu - UMC, CFO
(00:29:50)But due to the stronger-than-expected CapEx led by stronger customer demands, depreciation will be higher, and gross margin as a result is unlikely to see or near the previous high level. So we will maintain disciplined spending and try to capture the...
Hans Lu - Bank of America, Analyst
(00:30:21)...make a trend of the AI growth opportunity. OK, thank you, very helpful. Thank you. Next one has Lu, Bank of America.Go ahead please. Yes, thanks, manager Tim, for taking my question. I think just starting from price, high by 10% year-on-year, you clarified it is going to be on a blended basis. We should be able to share on the like-for-like basis.
Jason Wang - UMC, CEO
(00:30:49)How much is it going to be hiking, and how much of that price hike is related to cost pass-through, and how much of that is because of the tighter supply-demand landscape？ Well, I mean, first of all, if we look at the on a very high level, like I said, the week by 2027 will mark a turning point. The A3...trajectory or moving from historically erosion to uplift. So we are talking to our customers across the broad range of applications now. The conversation actually is more complicated. You know, one is there are current contractual relationships, a portion of that, and secondly...
Jason Wang - UMC, CEO
(00:31:46)...and focus on different known application and technology. So they are various. There is a mix of the pricing adjustments. Therefore, it's lot easier to look at this from the blender basis, and so instead of going to every specific area because they are quite complex in terms of the mix.
Hans Lu - Bank of America, Analyst
(00:32:18)Okay, because the reason why I'm asking this question is because your utilization has been improving by 16 percent from fourth quarter last year to fourth quarter this year based on your guidance. But your pricing has been relatively stable. So just wondering why your customers suddenly decided to accept this price hike by 10 percent into 20.7 if in the past couple of quarters you have been striving to improve your utilization by 16 percent.
Jason Wang - UMC, CEO
(00:32:46)But the blended pricing has been relatively more stable. But now you are seeing an inflection of that. Is it because of the product mix or cost pass-through that your customers decided to share the burden with you？ Well, I mean, both, right？ I mean, the product mix is part of it, and part of it is really reflecting the inflationary cost increase. But we are seeing, as you know, like Chi-Tung mentioned earlier, we are seeing some of the...
Jason Wang - UMC, CEO
(00:33:16)rising cost headwinds and also additional depreciation associated with our investments. So while we anticipate that, while the overall customer demand is increasing and increasing type capacity on selected technology, so combination of those resulting in the conversation with the customer. And I think the customer understands the overall industry tightness in terms of capacity...and also understands the rising costs in a variable space. That's why I think this is naturally a conversation that we will have at this current point with the customer, and we usually do this on a yearly basis. So again, we started this conversation in Q3, and with the alignment going into Q4, we have...
Hans Lu - Bank of America, Analyst
(00:34:13)at a very latest stage of those conversations. So we have a feeling fairly confident with the guidance that we just provided. Now that is very helpful. And second question is probably just on your current expectation for the customer and market demand in 2027 because the supply chain seems to be suggesting that the unit demand across smartphones, TVs, and PCs could be down from the unit demand perspective.And so if that negatively affects your utilization, keeping at around low 90 percent...
Jason Wang - UMC, CEO
(00:35:01)percentage levels instead of further hiking to close to full levels, would your customers be able to request some price discounts or push back on the price hike through 2027？ And how would you deal with it？ Well, I mean, first of all, let me kind of explain about the utilization. We are expecting the capacity utilization to remain at a very healthy level. In this year, we improved on 85 percent in Q2 to above 90 percent in the second half of 2026 already, with several of the eight-inch and twelve-inch fabs operating at full loading at this current point. And we are seeing the AI-driven upside demand such as power management and FPGA, which we cannot fulfill the demand today.
Jason Wang - UMC, CEO
(00:35:37)And the backlog PO is powering up. We will continue to optimize the production efficiency by debottlenecking the key steps and transferring the technology across different steps to maximize the output. But operationally, there are minor mismatch between our demand and capacity configuration. So when you see less than hundred percent, it doesn't mean the fab is not fully loaded.
Jason Wang - UMC, CEO
(00:36:07)So it is really more of the mismatch between the demand and capacity configuration. And so we are working diligently to address this capacity configuration mismatch. We are upgrading our manufacturing capability to support our long-term product mix optimization as well. For instance, we are converting one of our eight-inch fabs to expanding TFLN capacity. And while we're converting that and the loading will be lower,
Jason Wang - UMC, CEO
(00:36:37)but doesn't mean that the facility is not being occupied and worked on it. So strengthening while we're strengthening our silicon photonics role and positioning UMC's future growth, all those are critical for our future growth, and so we are managing that through this activity. So that said, the 92 percent [待確認：原轉寫 97 percent，依 3Q26 稼動率 92% 校正]...
Hans Lu - Bank of America, Analyst
(00:37:03)doesn't translate to a vacancy in terms the capacity is more of a mismatch situation. Okay, yeah, and just a quick question before jumping back to the curious. It is very encouraging to see that you approved CapEx, additional CapEx to support your new businesses including silicon photonics, TFLN, and silicon capacitor. But would you be able to provide a timeframe on your spending through the next few years？ Because last time you guided...
Hans Lu - Bank of America, Analyst
(00:37:32)2027 CapEx could be up to like 3 billion US dollars, but now with incremental CapEx, we should be able to just provide an update on that. And relatedly, how should we think about the economies of scale of your new businesses including TFLN, silicon capacitor, as well as silicon photonics, that by 2029 when these capacities start to run to a certain scale...
Jason Wang - UMC, CEO
(00:37:57)with those businesses, be the gross margins for those businesses？ Will they be comparable to the corporate average or still going to be below because of the higher depreciation burden？ Thanks. First of all, we can provide you the updated when the update is more clear to us. Like, you know, we have force approval, and now we are closely working with the supplier...to make sure that we can accelerate and expedite the schedule once those information are concluded, and we be able to give you more concrete outlook in terms the milestone. Meanwhile, we are facing in the different, different capacity in a different timeframe, and but since we still...
Jason Wang - UMC, CEO
(00:38:49)still in motion of that negotiation, and we probably not the right time to provide you that. But on a high level, we feel very comfortable with all those demand, and we—the only thing, you know, we worry about now is we can really get them fast enough to our facility. So let us work on that, and when going into the Q1 next year, we should give you a more clear picture with the next phase.Now, in terms the each of the economics, you know, benefit, I mean skill and the benefit to the total our business, the silicon photonics potential will run in 2027 [待確認：原轉寫 the circle of potential], follow the advanced packaging 2028 because of the authority reason, and I think all those will be acquitted to our current model because the...
Hans Lu - Bank of America, Analyst
(00:39:45)you know right now they above our current corporate average, higher than our corporate average in our compared to existing solution. So by the time these new businesses start ramping in 2028-2029, those businesses should be carrying higher than corporate average margins even with higher depreciation. That's what we have modeled right now at this point, not under the same circumstance for the same ramp.
Speaker01 - Operator
(00:40:14)If you compare it to say previously 2022-2028, of course the curve looks better. Got it, let's hear a couple. Thank you so much. Thank you. As a reminder, please press star key and number one on your keypad if you would like to ask a question. Thank you. Next, we will have Charlie Chan, Morgan Stanley.
Charlie Chan - Morgan Stanley, Analyst
(00:40:42)For questions, go ahead please. Thank you. Hi Jason, again congratulations for very strong execution results. So my first question is probably to Jason that I know previously had asked about some concern about the non-AI part of demand offsetting the AI size, right？ But realistically, do you see any kind of cuts recently from non-AI...
Jason Wang - UMC, CEO
(00:41:11)secondhand demand？ And do you have a preliminary assumption for next year's PCs, smartphones secondhand demand and your observation on this in-market inventory？ Thank you. Well, I mean right now we expect a positive demand momentum to sustain from 2026 into 2027, you know, Q4 and 2027, so...on a high level is within the momentum will continue to stand. Obviously, the AI remains the key growth driver, but so there's no worry on the AI side beyond AI. We continue to see opportunity from customer market share again as well and increase the foundry share. That's for UMC because we primarily serving the premier smartphone...
Jason Wang - UMC, CEO
(00:42:11)and automotive industrial space, and we see healthy automotive industry recovery at this point. And so I think we have less concern about automotive industry and however on the smartphones since we have less exposure in the mid and low-end smartphone, we think we have less exposure in that space while we do project the market outlook in that space is weaker than the others. Meanwhile, an earlier term...
Jason Wang - UMC, CEO
(00:42:40)we also see some decline in computer because we see soft demand in the computer AI LCD controller EDI and WiFi space. So while the communication and automotive industry and AI remains non-AI, the communication, the automotive industry remains robust. We do see some weakness show up in the PCs space.
Charlie Chan - Morgan Stanley, Analyst
(00:43:12)Got it.So those are kind of working areas all being considered.Yeah, so thank you.And I'm sorry, but I hope to clarify a little bit about blended ASP of 10 percent because I actually use eight-inch, twelve-inch blended ASP and twelve-inch mixed increase will bring up lots of blended ASP, right？But I want to make sure are you......saying that you have a different product line than typical？ I'm sorry, let's break down a little bit. Can you repeat that？ Oh, okay. Blended ASP increased by 10 percent—is that 12-inch plus age blended ASP or a different product mix？ So you are referring to the age.
Charlie Chan - Morgan Stanley, Analyst
(00:44:13)To be up 10%, so it's a company-wide blended SBA as we reported. Although we didn't disclose the number, we do have an annual number for 2026, and the 10% we are referring to is for the whole company for the whole year. 2027 is going to be about a 10% year-over-year increase, including price increases as well as a richer product mix. OK, gotcha. OK, but you don't want to further break it down to, like, for example, if you remove the twelve-inch make change, what would be kind of likely？ Would you be able to comment on that problem？ It's a very complicated process, and some of the technology are totally different or different products, so it's very difficult to
Charlie Chan - Morgan Stanley, Analyst
(00:45:14)give you a generalized idea. About 10% is probably the best indication for now. Got it, thanks. And last one is probably kind of a very open question. Yeah, because we kind of think AI demand strength is no-brainer, right？ I think we just didn't talk about we're not worried about AI demand； that's the reason we kept talking aboutAI infrastructure demand. No matter your cloud financing, there's an error issuer, right？ So I'm not sure how visible it is. Kind of UMC, I mean, real kind of AI demand, especially for your product that you have a resource to, how can you be sure it is still undersupply？ Yeah, just a kind of open question because capital market is a reaction.
Jason Wang - UMC, CEO
(00:46:14)She just doesn't believe that the AI demand will be so sustainable into next year. Well, I mean, the AI demand is not in general AI demand. So when we talk about what we are serving, really in a selective technology and focus. For instance, on the optical space, I see the rainbow just starting. And so it's more of AI isIt will be a replacement mold, and so I, you know, to us, I think the silicon photonics is really a new space that we are entering, and as well as the industry is entering into the PIC platform that we're offering. The TFLN is all associated with that, while the industry is moving from the 1.6T moving into the 1.6T and for the future 3.2T.
Jason Wang - UMC, CEO
(00:47:13)We actually think this demand will continue robust. The advanced packaging is really a solution that we talk about, the DTC deep trench capacitor solution, and they are more of a device that can be implemented in multiple different areas.The power integration all
Charlie Chan - Morgan Stanley, Analyst
(00:48:00)This power will continue driving the industry going forward. So I think with all those solutions, I think the market will continue； the demand will continue to be robust. Got you. So even like AI pressures slow down, there's a kind of a package migration like 1.6T, 3.2T, etc.
Charlie Chan - Morgan Stanley, Analyst
(00:48:14)Those will continue, so you are not that worried about overall AI demand expansion pace. Yeah, because if you just look at truly what drives that demand is the compute and also power and speed, right？ So really the optical speed requirement and the power integration requirement is more of a forward-looking type of application we not talk about. The AI domain in general, we talk about technology migration to support the future growth and meeting the system requirement. Understood, very clear, thank you. Yeah, I also agree that the DTC, the deep trench capacity, is a very important non-fault learning train. Thank you, Jason, thank you, Chi-Tung, that's super helpful. Thanks, thank you. Next one, Gokul Hariharan, JPMorgan, go ahead please.
Gokul Hariharan - J.P. Morgan, Analyst
(00:49:13)Hi, thanks Jason and Chi-Tung for taking my questions.First of all, just want to clarify, Jason, you mentioned long-term AI revenues can be 25 percent.Was it 25 percent of current revenue, roughly nine billion dollars, or you think it will grow to 25 percent of revenues in 2030, which is probably a much bigger
Jason Wang - UMC, CEO
(00:49:40)number？ Just wanted to clarify that.
Gokul Hariharan - J.P. Morgan, Analyst
(00:49:41)I'm referring to the revenue in the next three years, the three years from today. Okay, so in three years it can be twenty-five percent of total revenue. Yes, right. Okay, understood.Thank you very much. And could you talk a little bit about your any indication on revenue contribution from silicon photonics andthe embedded deep trench capacitor for next year, given those teams to be ramping earlier？ And also on silicon photonics, any aspirations you have in terms of where you want your market positioning to be, given you are starting off later than competition but you also have some unique advantages here.
Jason Wang - UMC, CEO
(00:50:37)I mean, we are currently running at full capacity, so we said, you know, this year will be somewhere at the 300 million dollar range, and for the new act, the majority of the capacity will start coming in line in late 2028. So 2027 is still going to be under the constraints, sowhile we try to optimize, like I said, you know, we try to reconfigure some of our facilities. Hopefully, we can optimize some of the shorter term, but we are under the constraint for 2027, so we probably be able to share some lights, you know, in the next quarter, but again it's not going to be of significance because the capacity is not
Jason Wang - UMC, CEO
(00:51:35)available yet. So that's the revenue for 2027. And what was your second question？ I'm sorry. Yeah, secondly, what is your aspiration from a silicon photonics market share perspective, given you are starting a little bit later than your competitors, but you also are kind of migrating straight to twelve-inch？ You're already starting to see some, like, at least test results which are comparable or better than your competition. Just wanted to highlight, think about where we could end up in our next market share. Well, of course, yes, I mean the aspirations are very high and we have very high confidence, you know, in terms of decision and moving into a twelve-inch directly without going through the eight-inch, right？ Now in India, the decision actually did pay off.
Jason Wang - UMC, CEO
(00:52:33)We have demonstrated with our 12-inch PIC technology. We already demonstrated better performance in many of the key parameters, our customer and their end customer, and right now the product is being validated and qualified by the end customer as well, and with the production yields get to the manufacturer level.We think our 12-inch PIC platform is ready to support the customer for their current 1.6T optical application and going into the next generation as well. Now the TFLN is a little bit different situation. I think we are much, much ahead about anyone else in the tablets development and
Jason Wang - UMC, CEO
(00:53:32)I think the customer also see a benefit between the integration of the pudding TFLN modulator with our 12-inch PIC solution, and so because that, I mean, our advanced packaging preparation is also bare foot now because with hybrid bonding the chip to wafercapability, I think those actually will help us to even become even more competitive because com
Gokul Hariharan - J.P. Morgan, Analyst
(00:54:23)bination of the silicon photonics solution along with the packaging capability, and that is putting us in a unique position, so we feel very competitive in those space. Yeah. So just to follow up on the TFLN engagement, Jason, is this mainly going to be HyperLight whom
Jason Wang - UMC, CEO
(00:54:43)you're going to be supporting, or are there a broader set of customers that you've already got beyond HyperLight, which I think you've already invested in the and kind of publicly announced as well？ Yeah, I mean, we announced the HyperLight partnership because HyperLight was a very early adopter of the TFLN, and so I think we're very pleased with that program, and because we al
Gokul Hariharan - J.P. Morgan, Analyst
(00:55:12)ready demonstrated with HyperLight, and we've seen a very strong interest in the TFLN solution now, not just from HyperLight, from many different customers in the space. Yeah. And maybe on the 2027, given your capacity constraint, any read on how much capacity can you still
Jason Wang - UMC, CEO
(00:55:40)squeeze out on an overall basis？ Let's say for 12-inch, can we do make single-digit capacity growth next year, or is it still like low single-digit potentially next year？ Well, I guess my reaction is just not enough. I think we want to improve
Gokul Hariharan - J.P. Morgan, Analyst
(00:56:01)that number anyway we can, right now the biggest, you know, the best way to explain that is is calling not enough, but you're right, very minimized. Yeah, okay. So Ji Tong just wanted to also lastly examine the gross margin puts and takes. Obviously, price increase blended ASP of 10% or thereabouts is quite positive. If you carry the utilization gains from Q4 into or of next year, it also is positive. Could you give us some indication on how depreciation is going to shape up？I think last quarter you mentioned depreciation will be moving higher.
Gokul Hariharan - J.P. Morgan, Analyst
(00:56:33)But it looks like the pace might be a little
Chitung Liu - UMC, CFO
(00:56:51)bit more. So are we saying that we are largely going to be in similar gross margin range, or can we still squeeze out some gross margin expansion into next year even with heavier investments coming through？ So depreciation is going to be certainly higher and maybe a couple years in a row, and we are talking about low single-digit [數字存疑：與 Citi 3Q26 報告記載之「2027 年折舊高個位數以上年增、2028 年可能更高」不符，疑為 high single-digit 轉寫誤植] depreciation growth, at least for 2027 if not more for 2028. So for gross margin, this is going to be a big number to offset, and on top of that, we also have rising raw material cost, etc., and like I mentioned earlier, we feel more confident to have a healthy EBITDA margin structure, but for gross margins
Jason Wang - UMC, CEO
(00:57:43)for next two years at least, depreciation along with the rising raw material cost is going to put pressures on our overall financial gross margin. I also like to echo what Chi-Tung just said. I mean, we are expecting ASP improvement and we are expecting higher utilization, and all those will provide support to our profitability for 2027. And at the same time, we are anticipating a rising cost, having an additional depreciation which associated with our investment decision. Our priority now is to maintain a healthy profitability profile while continue investing different differentiated technology and support our long-term growth, so
Speaker01 - Operator
(00:58:20)that will give you some color on, you know, how we feel about this growth market question. Got it, thank you, thank you very much. Thank you, and ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session, and now turning things over to UMC head of IR for closing remarks. Thank you.
Speaker01 - Operator
(00:58:48)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 at umc dot com. Have a good day. Thank you, and ladies and gentlemen, that concludes our conference for 3Q26. Thank you for your participation in UMC's conference. There will be a webcast replay within two hours. Please visit www dot umc dot com.Under the investor section, you may now disconnect. Thank you again, goodbye.