United Microelectronics Corporation (NEW)

Welcome everyone to UMC's 2020 first quarter earnings conference call. All lights 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 that time if you would like to ask the question. For your information, this conference call is now being broadcast live over the internet. Webcast replay will be available within an hour after the conference is finished. please visit our website, www.umc.com, under the Investor Relations, Investors, Events section. And now I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. And Mr. Lin, please begin.

Thank you and welcome to the UMC's conference call for the first quarter of 2020. I am joined by Mr. S.G. Jian, the Co-President of UMC. and Mr. Chi-Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the first quarter financial results, followed by our President's key message to address UMC's focus and the second quarter 2020 guidance. Once our President and the CFO complete their remarks, there will be a Q&A session. UMC's quarterly financial reports are available at our website, www.umc.com, under the Investors Financial section. During this conference, we will make forward-looking statements based on the management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause special results to differ materially, including the risks that may be beyond companies' control. For this risk, please refer to UMC's filing with the SEC in the U.S. and the ROC security authorities. Now, I would like to introduce UMC's CFO, Mr. Chi-Dong Liu, to discuss our first quarter 2020 financial results. Mr. Thank you, Michael.

I would like to go through the first quarter 2020 investor conference presentation material, which can be downloaded from our website. Starting on page three, the first quarter of 2020 consolidated revenue was 42.27 billion NT dollars with a gross margin at around 19.2%. The net income attributable to the stockholder of the parent was 2.21 billion NT and the earnings per ordinary shares were 19 cent NT dollar. Our capacity utilization rate in the first quarter was 93%. versus 92% in the previous quarter and 83% in the same first quarter of 2019. For page four, as we discussed earlier, sequential growth is about 1% to 42.2 billion NT for operating revenue. Gross margin almost quadrupled, sorry, almost reached 20%. It's around 19.2%. of gross margin rate, or 8.1 billion NT dollars. And operating income is 3.4 billion NT, or 8.1% operating income percentage. And because of the global stock market meltdown, we book an unrealized market-to-market investment loss, nearly 2 billion NT in the first quarter of 2020, which will result in about 2.59 billion of net non-operating losses. And as a result, our net income attributable to stockholder of the parent in the first quarter of 2020 was 2.2 billion NT or an equivalent of 19 cents NT dollars in EPS. On page 5, for year-over-year comparison, our revenue grew by nearly 30% to 42.6% from the same period of last year. And gross margin almost quadrupled here to $8.1 billion compared to $2.26 in the first quarter of 2019. And operating expenses has increased about 16%. largely due to the combination of USJC, which we acquired on October 1st of last year. And net earning is about 0.19 versus 0.1 in the same quarter of last year. For page six, our cash on hand has reached $95 billion NT, and total equity for the company is about $210 billion NT. On page 7, our quarterly ASP down a little bit in the first quarter by low single digits. And for next page, for revenue breakdown by geography, Asia represents 56% of our total revenue, while U.S. is about 29%. For IBM, remain almost unchanged, around 12% versus the last quarter of 13%. And communication remain at 54% of the pie, which is the largest shares of our application breakdown. For technology breakdown, 40 nanometer growth to 25% from the 22% in the previous quarter. And 28 nanometers represent about 9% of the revenue, which is mainly because of our larger revenue base. And first quarter, we have quite a few scheduled FED maintenance, new FED maintenance. So there's not much growth in the capacity, but the growth of capacity will be more significant in the fall. It's not really significant, but will be more noticeable in the second quarter, mainly coming from FEDs, AN or HGN FEDs, as well as some incremental increase in 12A. Our cap has remained unchanged at $1 billion US. About 85% of the capacity extension-related capacity goes to 12-inch. So the above is a summary of UMC's results for first quarter of 2020. More details are available in the report, which has been posted on our website. I will now turn the call over to President of UMC, Mr. H.C. Chen.

Thank you, Chi-Dong. Good evening, everyone. Here I would like to update the first quarter operating result of UMC. In the first quarter, foundry revenue grew 1.0% Q over Q to 42.27 billion NT, leading to a foundry operating margin of 8.2%. Utilization rate increased slightly to 93%, bringing wafer shipments to 2.15 million. 8-inch equivalent wafers, primarily attributed to display driver demand in consumer and communication devices. The demand in consumer IC partially reflected work-from-home initiatives adopted in many areas around the world to combat the spread of COVID-19. As the pandemic continues to impact populations across the globe, UMC has given priority to all welfare manufacturing of medical-related ICs so that hospitals and the care centers receive the equipment they need in the shortest time possible in order to deal with the coronavirus. We will continue to commit all resources within our means to accelerate the shipment of healthcare-related ICs. in a universal fight against COVID-19. Looking into the second quarter of 2020, despite significantly higher levels of uncertainty caused by the COVID-19 pandemic, current outlook indicates slightly higher welfare demand, mainly supported by inventory refreshment across computer peripherals and the consumer electronics and market. We will continue to monitor market dynamics. Meanwhile, we anticipate a surge in the number of customer 28 nanometer takeouts in the first half of 2020. While we strive to maintain the business momentum attained during the first quarter, UMC's corporate strategy of delivering a high dividend payout ratio remains intact. In Q1, Our board of directors proposed to distribute a cash dividend of approximately $20.75 share, subject to shareholder approval during the annual shareholder meeting. We will also continue to strengthen our financial structure while gaining additional market share by executing our technology development and corporate strategy. As the world navigates the COVID-19 situation, UMC is committed to the philosophy of employee care, environmental focus, and public service, while furthering sustainable development and corporate social responsibility. We will confront this challenge together with our employees, shareholders, and suppliers We also deeply appreciate the efforts of all the frontline professionals confronting this pandemic and will continue to support our communities in Taiwan and abroad. Let's move on to second quarter 2020 guidance. Our waiver shipments were increased by 1 to 2%. ASP in US dollar is expected to increase by 1 to 2 percent. The gross profit margin will be approximately 20 percent. The capacity utilization rate will be in the mid-90 percent range. Our 2020 CAPEX budget will be US dollar 1 billion. That concludes my comment. Thank you all for your attention. Now we are ready for questions.

Thank you, President Jin. And ladies and gentlemen, we will now begin our question and answer session. If you have a question for any of today's speakers, please press 01 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 02 to cancel the question. Thank you. And the first question is coming from Randy Abrams of Credit Suisse. Go ahead, please.

Okay, yes, thank you. Good afternoon, and good job on the results and margins. If I could ask the first question on your 2020 outlook, It looks like based on the guidance for Q2, you could get to mid-teens growth for the year with a flat third and fourth quarter. Could you give an updated view if you still expect to have that type of growth for the year or if you expect any inventory correction in the second half? And if you could also elaborate through the last few weeks of April, how have the customer order trends tracked just over the last few weeks?

I think maybe we started with update view on the semi-industry. After the COVID-19, we do expect to see a mid-single-digit decline of the global semiconductor market. However, for various reasons, we still expect to see foundry segment to grow by about low single-digit. And as for UMC, under these updated big picture view, we expect to show meaningful growth over the foundry industry if you include our recently acquired USJC revenues. Even if you exclude the USJC revenue, we're still comfortable to say that we should be able to grow in line or even grow a little bit of the global foundry segment. So that's our current view for UMC versus the industry under the new impact from the COVID-19. As for customers, we think the order cut is inevitable, even though for the second quarter, we still managed to be able to mitigate certain order adjustment, but quarter two outlook is still stable. But for the second half, because of the mounting uncertainties, it's really difficult for us right now to pinpoint what's going to happen in the sector, as well as for UMC's order trend. So all we can say is according to we are somewhat intact, but the cancellation might be inevitable. So we really cannot see through the second half yet.

Okay. Thank you, Chetan. The second question, you talked about the strong tape-out activity continuing on 28. Could you discuss from this level how you expect 28 to scale as a percent of revenue through second half. And do you also see any sensitivity on timing or ramp of these projects due to the macro? So some of the projects like the OLED, the ISP, Wi-Fi 6, or PMIC, if you see any change factoring the macro, or you still expect that to ramp?

Okay. I think for the 28-year project, as you just mentioned, I think so far all the projects are still on track. We do not see any change from the customer side yet. But based on this pandemic situation, there are some uncertainties there. But we still have a look at it in a positive way that so far the progress is on track. Of course, there could be some impact, but essentially what we're talking about is more on the new application for another existing product line.

Okay. And how would it translate if they continue to track? Do you have a feel with that could grow as a percent of revenue if you see those ramping in second half?

OK, I think the contribution in second quarter 2020 is expected to increase. OK, I think mainly because of higher demand in the second quarter, especially for the 4G segment, and also have higher AMOLED adoption rate. OK, and also for the multi-camera module, chain continue to take place for those mid-end and entry-level models. That's what we see. So we still have some good expectations for that.

Yeah. Yeah, if I may add on that, we don't really provide the percentage of revenue for any geometry. However, I think our view that quarter one, should be the trough of Tangier revenue in terms of percentage of total revenue.

Okay, thanks. And one last question. For the gross margins, maybe for Chitang, where you reported high teens and got into 20%, is that purely a function of the better utilization and also better loading 40? Or is there another improvement going on? And as 28 starts to grow as percent of sales, Filling that capacity, would that help the overall corporate margin expand a bit further? Or would it be a diluted?

Certainly. The recovery of our 28 nanometer business will certainly help our overall corporate gross margin as well as operating profit margins. For second quarter, we do expect the higher 12-inch loadings, especially in demand related to 28 nanometer. will help to drive the growth margin expansion, coupled with age capacity likely to run at full capacity utilization rate in the second quarter. And of course, we continue to work on product mix enhancement, as well as production cost reduction.

OK, great. Thanks a lot, Chih-Tung and Jason.

Thank you.

And next we'll have Roland Shi of Citigroup for questions. Go ahead, please.

Hi, good afternoon. First question I would like to ask about your blended ASP. So in first quarter, your blended ASP declined slightly. However, look at all of your product mix. I think for 19 nanometer and below, I think the percentage as a total revenue was the same as 4Q. And also you have a little bit lower contribution from 19 nanometer, but higher contribution from 14 nanometer. So on this kind of product exchange, why you still see the ASP, when the ASP decline in first quarter?

First of all, the first quarter ASB declined by about 1%, so really a minor change. Secondly, the reason I said it's been in the opening remarks is mainly because we actually experienced more age revenue contribution than anything else. Of course, you can say that there's not much growth for 20 nanometer segment, but we do expect a situation where a change in the second quarter as we are guiding for 1% to 2% increase in the second quarter for ASP.

OK, so the second quarter ASP increase is mainly from the product mischange for more contribution from 12-inch?

That's correct.

Do you see any seasonal ASP erosion in first quarter and the second quarter?

I think that's inevitable for certain large, long-term customer, although Right now, for example, for 8-inch wafers, it's nearly at full capacity utilization rate. So it's very unlikely we will see price erosions. But I think for selective large long-term 12-inch related, especially high-end, that will be inevitable. That's an industry practice, common practice.

Okay, thank you. And second question, I would like to see your view for this supply chain inventory. How do you think about this supply chain inventory level? And also for the customer side, do you think our customers are willing to take more inventory to ensure no supply chain disruption in the near term or our customer actually is thinking opposite, you know, will turn more conservative for stop taking the inventory because of the demand weakening?

First of all, the customer order cut might be inevitable in the second half, as we highlighted, although we don't really have the crystal ball to tell the magnitude. Based upon the impact of COVID-19 on the air market, here's what we have observed. It's actually different by customer segment. Some customers in last year, 2019, they have already experienced a weak year. We believe those customers, their inventory level, even at the impact of COVID-19, is pretty lean. For some other customers who are actually concerned about capacity support, we do foresee inventory correction in the second half. All the cuts from those customers will be inevitable. However, the magnitude will be uncertain. And lastly, we hope through our effort in customer engagement, the diversification of our product pipeline and increasing penetration in wireless segment will soften the correction.

Understood. But for the technology note point of view, I think the last quarter, You expect some demand on 8-inch for 0.18 micron and below. Demand was strong and with this tight utilization. And this is also the same for 12-inch material node from 19 nanometer to 14 nanometer. So you still think hold the same view for this technology node, the technology the demand will be still strong and that the capacity will be still tight through end of this year?

Yeah, for second quarter, we actually got mean 90. And that's virtually full capacity utilization, right? OK. Except for spotty segment in the second quarter. So everything except for very leading edge, related, is almost full in the second quarter.

Understood. And lastly, I would like to follow up Randy's question for the whole year growth point of view for UMC, because I did not hear you clearly. So can you repeat what's your view for the foundry and UMC's growth outlook this year? Thank you.

So the update view for the semi-globally is declined by mid-single digits. the foundry can continue to grow, but at a lower rate, around low single digits. And UMC, with the combination of USJC, we should be able to comfortably beat the foundry market growth rate. Even without USJC, we should be able to grow in line or slightly better than the global foundry market.

OK. Thank you. Yeah, I will go back to the queue for follow-up questions. Thank you.

Thank you.

And the next one is coming from Bruce of Goldman Sachs. Go ahead, please.

Hi. I have a question again about the gross margin and upgrading margins. So first of all, what's the key differences between, you know, your guidance versus your deliver, which is gross margin at 19%? You know, the revenue is pretty much in that. why the growth market is so much higher, at least at the very, very high end of the guidance. The second thing is that I'm so happy to see that operating expenses, especially for R&D expenses, declined quite a bit in first quarter 2020, almost down to 7.5% of total revenue. Do we expect this could be the new norm for the R&D expenses? So what is the key to drive the lower R&D expenses? That was my first question. Thank you.

First of all, regarding gross margin doing better than guidance, it's because we do have a stronger quarter two outlook. And wafer in the pipeline actually represent better than expected loadings. So overall, the wafer shipment and also wafer being produced is higher than expected. So our unit cost is slightly lower than what we expected when we give the first quarter guidance. So the actual loading Q1 was 93% versus the original 90%.

Does that mean that your outlook for second quarter is better than what you have like three months ago?

Slightly. The production pipeline, yes.

I see. I understand.

Thank you. Partially in the number I just gave you, the actual loading was 93%. versus patents of 90%. And of course, we also tried pretty hard by our president that we continue to lower our manufacturing costs. So there's also some factor related to cost reduction efforts.

So what is, you know, excluding that better outlook for the second quarter, what would be the new norm for the gross margin? I think that's the most important expectation we want to have for the investors.

There's really no answer for that. There's too many factors combined to determine the gross margin. All we can say is we will continue to drive our cost reduction effort and at the same time try to enhance product mix. Most importantly, we like to see a meaningful increase in our 28 nanometer capacity utilization rate. That, for the time being, is probably the single key factors to drive the upside of our overall gross margin.

Okay, thank you.

And the second question regarding your OPEX issues. So for our OPEX in Q1, I think it's a bit of lower than known in absolute dollar terms. However, we continue, again, we try to our effort to bring down the operating expenses. But when we have better profit, we also have to book a higher employee bonus as a provision. So that's a kind of dilemma for the overall operating expenses, one of the factors. Again, we can say that there's unlikely to increase as a absolute dollar term for OPEX. And hopefully, through the increase of revenue, we will continue to see percentage of revenue for both in operating expenses and R&D can continue to come down gradually. I don't want to give you an unrealistic expectation that this number will see further reduction or can stay at the current level for a long time.

But the first quarter earning is pretty good. Do we incorporate employee bonus within the first quarter operating expenses already?

Already, yes.

Still very good.

Thank you. We want to do better.

Okay, the next question is for the 28 nanometers. I mean, management mentioned that, you know, the 28 demand, one of them is driven by, you know, 5G as well as some of the overflow of business. So with recent correction in terms of like smartphone shipment or the penetration rate changes in terms of 5G smartphones in later part of this year, do you expect that will have any impact for your 20 nanometers revenue in second half?

OK, I think we do expect smartphone shipment with decline year over year, especially, I think, in the second half. However, we hope that higher penetration rates in the wireless segment uh will help you know to offset the medical impact yeah to umc i'm sorry i don't quite get it you mean that your revenue exposure to publication is higher that's why you can help that's why you can have stronger revenue what i'm trying to say is that we have higher penetration penetration rate in you know what is segment by uh new customer and our customer again in the market share in a smartphone-wise area.

I see. I see. I understand. So your current outlook for the second half in 20 nanometers remains unchanged compared to three months ago?

I think we still have some uncertainty, you know, due to the COVID-19. But so far, the data we have, Yes, that's what I'm trying to say, yes.

So for your 28 nanometers capacity expansion plan also remain unchanged?

Yes, currently based on our alignment with customers, we still don't see the change. Of course, we will continue to align with customers based on the COVID-19 situation, you know, when dynamic changes. We will continue to align with customers. But so far, there's no change.

Thank you. Very good result. Thank you.

Thank you.

And the next question is coming from Goku Harihalan of JP Morgan. Go ahead, please.

Yeah, hi. Thanks for taking my question. A couple of things. First of all, could you talk a little bit about what is your outlook for 8-inch capacity utilization and demand through the rest of the year, especially I think first half has been pretty tight with full capacity. Second question, when you talk about potential for order cuts and inventory correction in second half, could you give us some idea about which segments would you see the bigger cuts, which segment do you think is going to be more resilient for you in a bit more detail, especially given that you mentioned that you're gaining some share in the wireless especially on image camera-related components, etc. And lastly, a quick question on USJC FAB status. I think last time we checked, I think it was kind of close to break-even. What do you think is the status for the customers in USJC, given that they have a lot of automotive industrial kind of exposure, which seems to be a little bit weaker than the overall semiconductor industry? Are you able to move some of your design wins into that fab already, or that's going to take some more time? Thanks.

Okay. I think let me answer the first one. I think the ANG, we expect, you know, how ANG will operate at the full utilization in the second quarter, okay? And we also foresee that... change utilization will remain full, mainly driven by the solid demand power, MCU, and display related requirements. And as for the USCC, the question is, how is the loading situation? And do we transfer the new pipeline product to there yet. Okay, I think, yeah. We do, started to do the technology transfer, okay, but that still may take one more quarter to get some business, okay. I think Trevor and so far the profitability in the first quarter has improved, you know, Q over Q. So we have already set up the profitability target based on the FAB condition and cost structure. I think so far the synergies are already seeing a good result. So I think we are doing good for USAC integration so far.

So for second half, in terms of other cuts. Again, all we can say is what we mentioned earlier, that there are different categories of customers. For example, the automotive one may have already started inventory correction back in 2019. So we don't really expect the inventory level for automotive related is too high. However, for those customers who are requiring capacity support, and we do foresee in second half, it may show a stronger magnitude in terms of other parts. And again, we really hope through our customer engagement and more diversified clientele base, we should be able to offset some of that, if not all.

Got it.

Thank you.

And the next one is coming from Zihou Ng of China Renaissance. Go ahead, please.

Hi, gentlemen. I just want to ask a question regarding tax. I looked at the Q1 numbers for the last couple of years. Actually, the company books tax credit in Q1 every year. Is it just a coincidence, or are there any specific reasons behind?

I think for tax, I think they always book a little bit higher expenses through the normal tax rate first. And through all the effort by taking the qualified incentive program, et cetera, you get some tax returns. And that's what happened in the first quarter of this year. That is another norm. Our corporate tax rate still stays around 15% or so.

Okay, all right. Okay, second question regarding Q2. You gave up the quantity guidance, but how would the monthly pattern be shaping up? Anything you can share?

We don't really see a clear pattern for second quarter in terms of monthly revenue. No, we don't have a guidance on that.

Okay, all right. Okay, no problem. Okay, congratulations.

Thank you.

And next, we'll have Sebastian Ho of CLSA for questions. Go ahead, please.

Thank you for taking my questions. But first, I want to follow up on 28 nanometer. So with the improving utilization rate, we're seeing growth margin to go up in the second quarter. So I wonder what's the outlook for second half this year on your margin versus 28 nano UTR? whether you expect that the 28 nanometers utilization rate to continue to go up and likely to reach the full utilization level in second half. And if that were to happen, if we assume that OL is equal, what's the possible gross margin range UMC can achieve when that happens? Thank you.

Sebastian, you know this is a question that I cannot answer. Okay. So that that's a various parameters for determining our course margin. And we have. Improvement coming from USJC and we also have recovery capacity utilization rate from 20 nanometers. And yes, we also under this threat of the cancellation overall profits because of the COVID-19. So that's why. we cannot really see through the Bristol goal for second half. But for quarter two, we do expect to see further margin expansion based upon a better capacity utilization rate and higher contribution from 20 annum meters.

Okay. How about let me ask from another perspective. Can we assume that most of the revenue growth in second quarter is driven by 20 annum meters?

Overall corporate capacity dilation rate goes up to mid-90s from 93% in the first quarter, and pretty much 8 inches full. No, 28 is not the only factor. It's actually pretty obvious, mainly coming from overall improvement in the capacity dilation rate.

OK, got it. My second question is, I'm not sure if I heard it correctly on 8-inch, the comments from Co-CEO. Can you elaborate again on the 8-inch outlook into second half? Did you say that you continue to expect very high loading into second half?

OK, yeah. I think we foresee 8-inch utilization Okay, so that is already factoring that even with a potential order adjustment for some of the customers due to COVID-19,

and we still expect the age to be pretty full.

I think, yeah, yes, that's what we believe because we see a customer waiting for, you know, the capacity support.

Okay. So we can also interpret that as because most of these customers are pretty confirmed with new projects or their maybe their new design order or allocation so that's why we are pretty concerned about these orders regardless how macro will change is that the right way to interpret uh uh so far yeah so far yes yeah of course there are some uncertainty you know uh for the second half because of the quality 19 but so far that's what we see from our data and customer alignment Okay, got it. My last question is a follow-up on depreciation. Let me teach you. When do you expect our depreciation starts to fall more obviously? I mean, I understand that's starting by next year, but can you possibly specify by which quarter or is the first half next year or potentially by the end of this year we could see that?

No, we probably only see low single-digit this year. A little bit more than in 2021, but the majority, the more noticeable one will be 2022.

Okay, so this year low single digit. Next year more than low single digit. But still, I remember earlier, I think the past two quarters, the regardless was down, could be down like tens or double digit. Are we still looking for that or 21?

I cannot really have a firm set of figures for you for 2021, but it will be done.

Got it. Okay. Thank you.

As a reminder, please press 01 on your keypad if you would like to ask the question. Thank you. And the next question is coming from Goku Halihalan of JP Morgan. Go ahead, please.

Hi, just one quick question. Could you talk a little bit on how you're thinking about dividend, given that we are potentially getting into a bit of a downturn situation? Given, I think this is probably one of the highest dividend, absolute dividend that we paid last year, 75 cents. Is there any change in policy in terms of thinking about keeping a flattish dividend? on an absolute basis, or are we still going to be sticking to the payout ratio kind of formula?

It's both. We will like to see continued high dividend payout ratio based upon our earnings, and hopefully we can continue to improve our earnings. But during these cyclical industries, we also want to make sure our shareholders receive a certain protection in absolute dividend received. So it depends on which circle are we in, in terms of dividend. So I think high payout ratio is definitely, but a certain minimum protection is also what we wish to maintain.

How should we think about that? certain minimum ratio, if you think about it, average of the last two, three years?

I really don't have an answer. All I can say is we will be trying very hard to have high dividend payouts. If there is a bad day, we will also try to come up with certain minimum payouts. Because of the COVID-19, of course, we try to be a little bit financially responsible by not too aggressive in every corporate action, including share buyback. But that probably won't impact our dividend payout, at least for the near term.

Okay. Thank you very much.

And the next question is coming from Bruce of Goldman Sachs. Go ahead, please, Bruce.

Hi. I have a question about your assumption for the foundry industry growth. You guys are doing like 30% year-on-year growth in the first quarter. And TSMC is growing like 45% year-on-year in the first quarter. And they are guiding for me to high-keyness. And, you know, why is that the foundry growth is only growth by low single digit in 2020? What's your basic assumption for that?

First of all, I think the overall semiconductor actually show a decline of mid-single digit. And so as an important component of the semiconductor industry, it's actually a pretty good result already for foundry to continue to show growth. And of course, this is coming from our corporate marketing department. And they're playing all the different views from research, data center, as well as customer visits, et cetera. So I don't have a straightforward answer why we are using this single digit number. And I also cannot comment on our competitors. All we can see from UMC is that we seen penetrating into new segments through new product wins. And so UMC is winning market share. And more importantly, our customers seem to win market share as well. So that's a combination that why UMC can do slightly better than the industry, at least as far as we can see.

I understand. I have no question about why UMG is able to outgrow the industry, but I thought the industry growth is a lot lower than the expectations. And I think the gap is actually pretty big. That's why, you know, we want to know a bit more detail. Maybe even we can follow up with this, but this is definitely the gap is a lot bigger than our expectations.

Yeah, we can certainly follow up on this with more data we gather from outside.

Okay, thank you.

Thank you.

We thank you for all your questions, and that concludes today's Q&A session. I'll turn things over to UMC Head of IR for closing remarks.

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

Thank you. And ladies and gentlemen, that concludes our conference for first quarter 2020. Thank you for your participation in UMC's conference. There will be a webcast replay within an hour. please visit www.umc.com under the Investors Events section. You may now disconnect. Goodbye.