Thank you, and welcome to UMC's conference call for the first quarter of 2026. I'm joined by Mr.

Chitung Liu, CFO of UMC, and Mr. Michael Lin, Senior Director of Finance.

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

These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the 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 ROC Security 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.

Chitung Liu, to discuss UMC's first quarter 2026 financial results.

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.

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, and the earnings per ordinary share were NT$1.29, which showed a 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 NT$61.4 billion. Gross margin at 29.2% slightly decline from the previous quarter of 30.7%.

Net income attributable attributable to shareholder of the parent, though, see increase 60% sequentially to 16.17 billion, partially due to the strength of the stock market performance and the non-operating income grow 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. On page 6, year-over-year comparison, revenue grow by 5.5% year-over-year, mainly due to shipment increase.

Gross margin also show a 2.5 percentage point improvement to 29.2% to NT$17.8 billion in the first quarter of '26. EPS also showed nearly more than 100% growth in the net income compared to 7.7 billion in the first quarter of last year.

On page 7, our balance sheet highlight: total equity reached NT$406 billion, and cash on hand still over NT$100 billion at the end of first quarter of '26. On page 8, our ASP declined slightly in the first quarter of '26, mainly due to a better-than-expected 8-inch wafer shipment, which bring down the blended ASP.

On page 9, our revenue breakdown by different geography, the change is very minor. We see some decline in Europe region from 11% in the previous quarter to 9% this quarter, and the other region pretty stay relatively similar compared to Q4 '25.

On page 10, IDM show a 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 40 4% to 32% in first Q '26.

For technology breakdown, our revenue below 40-nanometer still remain over 50% of the total shipment, and 28/22 is around 34%, slightly decline 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.

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 stay around $1.5 billion US dollars.

The above is a summary of UMC's results for first quarter of 2026. Next, I would like to go to share our key messages.

In the first quarter, 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. Despite decline in blended ASP during the quarter, which I explained earlier, this is partially reflected higher 8-inch 8-inch wafer shipment.

Gross margin held firm at 29.2%. Demand from for our 22-nanometer logic and specialty process continue to gain momentum, with 22-nanometer revenue now reached another record high and accounting for about 14% of total first quarter 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. 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 second quarter, 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, industrial markets. While 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 dynamics amidst evolving semiconductor landscape change. Now, let's move on to second quarter 2026 guidance.

Our wafer shipment will increase by high single digit. The ASP in US dollar terms will increase by low single digit low single digit.

Gross margin will be approximately 30%. Capacity utilization rate will be in the low 80% range.

Our 2026 cash-based CapEx, as I mentioned earlier, so far will maintain around 1.5 billion budget. That concludes my comments, and thank you all for your attention.

Now, we are ready for questions.

Hi, Chitung. Thanks for taking my question.

On the pricing environment, I think last time you guys have talked about pricing environment being more favorable. 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? When I look at Q2 low-single-digit Q-on-Q 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?

Yes. We recently sent out the letter to our customers talking about the price increase to happen in the second half of 2026.

The blended ASP in second quarter 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 second quarter.

When the first half of '26 well underway, we are seeing resilient demand across a broad range of application, including communication, industrial, consumer, and even the AI-related segment for us. This momentum is contributing to a sustained and increasingly 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. 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 2026, which will set up a more favorable position for the upcoming 2027. The pricing reflect both the evolving supply and demand environment and the continued investment required to support our customers' growth.

Pricing adjustment will based on the factor including UMC's product mix strategy, capacity agreement, and also the long-term partnership. This pricing adjustment will be implemented in a very disciplined and sustainable manner to ensure our operational health when continuing to support our customer growth and long-term success.

Got it. Thanks, Chitung.

Just to follow up on that, I think if I remember right, I think your letter was 8% to 10% for 8-inch and 12-inch. 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?

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?

One thing we don't want to do and 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, world-class operational excellence. This trend continued to enhance our customers' product competitiveness and strengthen their supply chain resilience.

As supply chain evolve, we are seeing market recognition of 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 vigorous cycle of value creation.

In parallel, we continue to enhance ASP through structure 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.

I'm pretty sure we didn't really mention anything numerical in our letter to customers. It will be based upon different segment, different technology, and our long-term partnership.

Got it. My second question on gross margin.

We had some improvement in utilization from mid-70s to low-80s in Q2 based on your guidance. Gross margin still roughly hanging around 30% now.

With this price increase, how should we think about gross margins? Are we likely to get back to high-30s or 40% kind of levels that we were in back in the '21-'22 kind of timeframe, or that might require a much bigger improvement in utilization?

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 still under 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.

However, the margin uplift from higher shipments will be largely offset by the higher depreciation and higher utility costs, like I mentioned. For the remainder of the 2026, the 12i 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.

Of course, on UMC's side, we will continue to proactively deploy cost reduction efforts, including multi-sourcing, streamlining our operation, managing supply chain pricing, and drive automation transformation. All this measure will help UMC to partially offset the cost headwinds and maintain or hopefully enhance our EBITDA margin.

Got it. Thanks, Chitung.

Thank you very much.

Thank you.

Thanks for taking my question. Thanks, Chitung.

Also congratulations for a very strong guidance and outlook. I do have some questions about the details, 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 are also seeing so-called the rebound? Thank you.

Communication was weaker in first quarter. There will be a meaningful rebound in second quarter.

For UMC will be driven by DDI, networking, FPGA, and ISP. Those segment will show stronger growth in the communication segment for the second quarter.

Okay. If I may, I think the company also offering lots of new technology, no matter the silicon photonic foundry service, or your advanced packaging, right?

Can management talk about your future plan for those advanced packaging capacity expansion, and also the potential revenue contribution in the coming two years?

These are two questions. One is on advanced packaging, one is on silicon photonics.

Maybe David can help to answer the question.

Sure. Okay.

As far as advanced packaging, as you're aware, we're seeing more engagements pick up on our advanced packaging solutions. As 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 four and bridge die solutions and discrete DTC, deep trench capacitor, with more products that will ramp up shortly.

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

We don't really comment on our partnership, but as as we talked about last quarter, these things are picking up a little bit of steam.

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 silicon interposers consume more wafer capacity, whereas a bridge die, although more advanced, right, but it doesn't really consume that much wafer capacity.

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.

Okay. Thanks, David.

Thanks, Chitung.

We're moving on to silicon photonics as well.

Oh, sure. Yes, please.

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 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're also enabling integration for our customer by evaluating hybrid bond, TSV, and chiplet integration.

Got it. Thanks.

I'll be back to the queue. Thanks.

Thank you.

Good afternoon. Thank you for taking my questions and congrats on the improving outlook.

My first question is to follow up on how you guided earlier this year. So 3 months ago, you did guide better growth from second half 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 second half?

Do you still hold the view that for this year, you should see even stronger growth going to second half of the year?

We remain optimistic about our overall 2026 business outlook. In the first half, we are seeing resilient demand across a broad range of application such as communication, industrial, consumer, and AI-related segment.

This momentum, we think, is continue to sustain an increasingly tight capacity environment across UMC's portfolio. We expect this momentum to continue into second half, especially our 22-nanometer logic and embedded high-V platform, where we expect to grow in the high-teen percentage range for those segment second half compared to first half.

There's also another driver coming from our 8-inch recovery, which is progressively to deliver good growth year-over-year because of somewhat low base last year. The stronger second half outlook support our expectation of a full-year performance improvement.

I think we still stick to UMC is going to outperform the growth of our addressable market in 2026. From UMC's side, we committed to deliver a better performance and exceed last year's results.

Hopefully, this will be a turning point for UMC to broaden our addressable market. This ASP uplift we talked about in the second half 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.

Thank you very much, Chitung. 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?

I think the UMC addressable market show some incremental improvement, but not really significantly difference. Overall market, I think, is 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 maybe slightly better, but still grow by the low-single-digit percentage, which is again only slightly better than last quarter's forecast.

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?

Then for UMC, how should we think about your server exposure? What would be the key products that you get to serve from server?

Then from here, would you be able to benefit from server opportunity as well? Although

our technology predominantly support customer addressing high-end market segment, those end demand tend to be more resilient, even with recent memory tightness. Supplies typically prioritize 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 get more shares in the high-end smartphone segment in 2026. This will also help UMC navigate the headwinds from the communication/mobile segment.

Our current assessment is that any potential headwinds are manageable. We will continue to monitor the situation closely with our customers.

The other factor is really UMC has been de-focus on the commoditized segment. 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.

No problem. Thank you very much.

Yes, thanks, Chitung and David, and congrats on the very good result and the guidance. I guess two questions from me, started from utilization.

You reported in first quarter of 79% and will be up to 80% plus or minus range in second quarter. Would you be able to provide some of the breakdown between 8-inch versus 12-inch nodes?

Also, your expectation for second half this year, judging from your guidance just now that you think second half will be better than first half, also separate between respective for 8-inch and also 12-inch into second half? Thank you.

It's not around 80%, it's above 80%. It will definitely 80-something and for the second quarter.

For Q2, we will see stronger growth coming from 22 and 28, relatively speaking. And 8-inch will continue with some rebound, but our Japanese operation is below corporate average, which is more in the 65-nanometer, 80-nanometer technologies.

For quarter two, even though 8-inch will show some improvement, it's still slightly below corporate average. And 12-inch, as a whole, still slightly above corporate average, but the gap is certainly narrowing.

Got it. Second question is just regarding the pricing, right?

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 is a lot of moving factors in the macro environment that you might need to pass on the cost to your customers. 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 a price hike when your utilization is at around low 80 percentage levels?

Two questions here. First one is on the pricing outlook for full year, any update versus the last time firm 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 your customers to accept a price hike across the board? Thank you.

Again, we really don't want to be perceived as opportunist to take advantage of our customers. 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 structure demand rather than short-term pricing tactics.

We are seeing customer market share gains along with ongoing structure shifts in the foundry landscape, generating durable demand for UMC. We want to emphasize our differentiated technology and global footprint enable customer to strengthen their competitiveness across all segments, including AI, communication, consumer, and industrial automotive segment.

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 when maintaining customers' competitiveness. 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 blended ASP lift, our overall 8-inch recovery plan is progressing well, with several fabs running nearly 100%.

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 this actually incrementally better?

On the EBITDA margins, you mentioned just now that you have a better target on that. Would you be able to quantify it?

Thanks.

If we take out the increased depreciation largely coming from the Singapore fab ramp, with a 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 logistic, etc. Our pricing outlook, certainly, with the price increase letter to customers, is slightly better than the previous quarter.

Got it. Thank you so much, Chitung and David.

I'll be back in the queue.

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 mix.

I wonder is it because of the demand recovery or the pricing dynamic changes? Going forward into the second quarter and the full year, how would you see the trend will be like?

Thank you.

Consumer's growth in Q1 was mainly driven by Wi-Fi and DTV set-top box segment. For the second quarter, the growth will continue and will be driven by MCU, LCD controller, and power-related product.

Got it. Thank you very much.

Yes, hi. Can you hear me clearly?

Yes.

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, as we already have good progress per management's previous mentioned. I'm just wondering that for next year, if we start to see some progress and breakthrough, how should we think about the potentially again increasing maybe R&D force or any impact on our revenue and also expense?

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.

In terms of investment, it's already happening, and that's also partially reflect in our increased R&D expenses. Maybe Michael can help me to comment more in some details.

Yeah. Yes, this 12-nanometer project worked with Intel continue to go well.

We remain on schedule to deliver the PDK and associate IP to customers in 2026. We anticipate that product tape-out will commence in 2027, which will making a significant step toward the commercial deployment and future revenue growth.

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 for this 12-nanometer project will be including the DTV, Wi-Fi connectivity, and high-speed interface product.

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

We have to stick to whatever 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 expand our collaboration to other derivative or technologies.

For the time being, the only focus is on 12-nanometer platform.

Very clear. Thank you.

Hi, thank you for taking my question. I got two question.

Recently, there's a lot of rumor talking about UMC in talk with the client about the potential memory foundry business. I know it's a little bit unlikely, and Chitung also mentioned that you guys going to scale down the commodity business, but I still want to get some clarification.

How the company see the opportunity for the currently strong memory demand, both DRAM or NAND? Is that possible we do anything business related to the memory?

That's my first question.

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 embedded high-V, embedded non-volatile memory, BCD, RF-SOI, etc., etc. Again, we will not do short-term opportunity chase.

This is just not our way of managing business.

Okay. Thank you.

That's very clear. My second question regarding to the 8-inch tightness at moment.

Based on my understanding, this is primarily driven by the global leading foundries they optimized their capacity, 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 may have a follow-up to follow up previous question, what's the 8-inch utilization rate in first quarter? Thanks.

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 factor you mentioned. Again, we'd 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.

Okay. The first quarter's utilization for 8-inch, if I may ask?

First quarter company-wide was 79%. As I mentioned previously, 8-inch is below corporate average.

The improvement in the second quarter is higher for 8-inch, although for second quarter, the 8-inch average loading still will below corporate average.

Thanks.

Hi, thank you for taking my question. My question is regarding to the legacy node for 12-inch.

Your competitor is talking about like exiting the market. What what's the real situation for UMC's is facing right now?

How much more business we can expect for the legacy node, overflow, or in a in different ways, that do we see the possibility to, kick off another round of CapEx in especially in Singapore for like LTA with a customer for the potential new business?

This this is a very hypothetical questions for for us to answer. It's very difficult.

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, and we think there's still plenty of upside there, no matter it's 8-inch or 12- 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 competitive edge to to gain those opportunities. Those are the areas where focusing right now.

If you talk about this advanced packaging, actually going to take some of the legacy part of the 12-inch capacities in in in our Singapore fab, and 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.

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

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, and that's where the LTA come from. Going forward, with all the new technology opportunities such as 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, and the outlook is promising, but it's still a little bit too early to comment.

Understand. Thank you.

My second question is, can you comment a bit about 14-nanometer high-voltage progress? Because I think we asked the 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 14-nanometer high-voltage process, right? Is that the technology trend is getting clear that the driver IC will continue to migrate to the smaller geometry?

I think disclaimer first, we don't comment on competitor. Okay?

We have a proven track record for driver IC, and for the current industry-leading 22, 28 OLED display solution, UMC is always recognized of global leader. Fine customer migrating to FinFET, and that's where our FinFET HV solution will continue to provide better performance, lower leakage, and more die size savings.

Again, it's all boiled down to our own competitiveness, and we do have the upcoming FinFET HV solution as well.

All right. Great.

Thank you.

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 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?

As far as the current silicon photonics, the key milestone is for us to release the PDK in 2027, 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 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 a lot of the PICs discussions and designs that were under customer engagement.

Okay. That's clear.

Secondly, on the mature 12-inch nodes, I think 28, 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 is the utilization there, especially given you commented there is some slack in the Japan fab, which I think if I remember right was 55 and 40-nanometer, and any forward-looking comments on how that utilization is likely to get filled, given that you're also engaging in some of the bridge IC projects?

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 going to be more designs, and that'll hopefully lift some of that long-term utilization rates.

Any products that you can call out here that are critical here to lift that utilization rate?

I think right now they're under discussion on customer engagements, but once we see some real material uplift in UTR, we'll be more than happy to share them with you. Okay.

Cool. Thank you.

Thanks for taking my follow-up questions. First question is really follow on the pricing strategy.

As a previous caller just mentioned that you did send some letters to customers. I'm wondering what's 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 management can give us some preliminary second half price hike assumption. Thank you.

I cannot speak for our customers. Again, we appreciate their long-term support.

Just like our vendors, those raw material supplier and the energy supplier to UMC, how is 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. 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.

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 package, especially this bridge die and DTC, the deep trench capacitor.

Is that a right way to think about that because Intel's EMIB, right, also need those bridge die and DTC discrete components? Do you think is that a 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.

There's a lot of speculation here, and we cannot do that, and we have to respect our important partner. Again, our current focus is on 12-nanometer platform

and

nothing else. There is a important collaboration for both parties, and we have to make it work.

This is too important, especially for UMC. We are putting all the possible resources, try to make sure we deliver.

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. Thanks, Chitung.

Thanks.

Thank you.

Thank you.

Thank you, everyone, for joining us today. We appreciate your questions.

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