United Microelectronics Corp (NYSE:UMC) Q3 2019 Earnings Conference Call October 30, 2019 5:00 AM ET

Company Participants

Michael Lin - IR
Qi Dong Liu - CFO, VP & Company Secretary
Jason Wang - Co-President & Director

Conference Call Participants

Randy Abrams - Crédit Suisse
William Lu - UBS Investment Bank
Charlie Chan - Morgan Stanley
Zheng Lu - Goldman Sachs Group
Sebastian Hou - CLSA
Roland Shu - Citigroup

Operator

Welcome, everyone, to UMC's 2019 Third Quarter Earnings Conference Call. [Operator Instructions]. And for your information, this conference call is now being broadcasted 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. Mr. Lin, please begin.

Michael Lin

Thank you, and welcome to the UMC's Conference Call for the Third quarter of 2019. I'm joined by Mr. Jason Wang, the President of UMC; and Mr. Qi Dong Liu, the CFO of UMC. In a moment, we will hear our CFO present the third quarter financial results, followed by our President's key message to address UMC's focus and the fourth quarter 2019 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, Financials section.

During this conference, we will make forward-looking statements based on the management's current expectation and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that cause actual results to differ materially, including the risk that may be beyond company's 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. Qi Dong Liu, to discuss our third quarter 2019 financial results.

Qi Dong Liu

Thank you, Michael. I would like to go through the third quarter '19 investor conference presentation material, which can be downloaded from our website. Starting on Page 3. Third quarter of 2019. Consolidated revenue was TWD37.74 billion, with a gross margin at 17.1%. The net income attributable to the stockholder of the parent was TWD2.93 billion and the earnings per ordinary shares were TWD0.25. The capacity utilization rate in the third quarter was 91%, increased by 3 percentage point from the previous quarter, but down also 3 percentage point from the same period of last year.

So on Page 4. Third quarter revenue of TWD37.7 billion, is 4.7% sequential growth from second quarter. And gross margin rate increased to 17.1% or TWD6.4 billion. And net income grow 105.7% quarter-over-quarter to TWD1.938 billion. And net income attributable to the stockholder of the parent was TWD2.9 billion or EPS of 0.25.

For the first months -- the first 3 quarter of the year on Page 5. Revenue declined by about 8%, mainly due to lower wafer shipment to TWD106 billion. Gross margin rate was 13.5% or TWD14.3 billion. And net income attributable to the stockholder of parent was TWD5.87 billion for the first 3 quarter of 2019. And EPS is TWD0.5.

On Page 6, for UMC balance sheet, our cash on hand is around TWD86.7 billion and total equity is about TWD205 billion. And on Page 7, our quarterly blended ASP grow marginally in the third quarter of 2019 compared to the previous quarter. On Page 8, for sales breakdown. Asia remains the largest geographic breakdown of UMC for 2019 third quarter, which account for around 59%. And North America bounce a little bit back to 33%. And Europe and Japan is 6% and 2%, respectively. IDM remained 8% of the total pie chart on Page 9.

And on Page 10, communication account for 54% of the total revenue, and consumer electronics account for 26%, and computer remains around 13%. On Page 11, 28 nanometer remained steady around 12% of total sales, and 40% show a meaningful growth in the third quarter to now account for 26% of the total pie chart.

On Page 12, we provide our quarterly capacity table, which you can see on quarter 4. And we have -- we've shown almost 10% capacity growth for the 4Q 2019, mainly due to the addition of the recently acquired USJC or 12M fab in Japan. And with some minor increase in Fab8N or our [indiscernible] fab 8-inch wafer fab. On Page 13, we have updated our annual CapEx numbers to now stand around USD 700 million.

And above is a summary of UMC results for third quarter 2019. 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. Wang.

Jason Wang

Thank you, Qi Dong. Good evening, everyone. Here, I would like to update the third quarter operating result of UMC. In the third quarter, foundry revenue grew 4.8% quarter-over-quarter to TWD37.73 billion, leading to a foundry operating margin of 6.9%. Utilization rate increased to 91% and bringing wafer shipment to 1.81 million 8-inch equivalent wafers. The increase in the wafer segment was primarily driven by inventory restocking in the wireless communication market, which includes products such as Wi-Fi, RF switch and power management ICs.

On October 1, UMC also completed full acquisition MIFS, a 300-millimeter fab based in Japan. That is currently manufacturing 90-nanometer, 65-nanometer and 40-nanometer products. The fab which fits our specialty technology focus and long-term growth projections. As it is being renamed United Semiconductor Japan Corporation, we call it USJC. USJC will increase our foundry market share, provide business synergies and benefit from economies of scale, while broadening UMC's comprehensive specialty and larger technologies to serve Japan and international customers.

Looking to the fourth quarter. Based on customers' forecasts, the overall business outlook appears to remain firm, primarily due to sustained wafer demand from new product developments and a mild inventory replenishment across communications and computing market segments. This product rollout include RF ICs and OLED driver IC, found in 5G smartphone. And power management IC designed into computing and solid-state drive applications.

We expect these product releases to enable UMC to further gain market shares in 5G wireless devices as well as in the nonvolatile memory applications. We will continue to pursue our corporate strategy of focusing on business expansion in mature specialty and larger technologies, while delivering world-class service to our customers.

With the UMC's economic scale and our core strength in foundry technologies, we look forward to securing new business opportunities by delivering a variety of differentiated manufacturing solutions in the semiconductor industry.

Now let's move on to the fourth quarter 2019 guidance. Our wafer shipment will show an increase of 10%, most due to addition of a 12-inch fab in Japan, namely USJC, or we call it 12M. ASP in USD is expected to remain flat. The ASP in U.S. dollars will remain flat both with 12M and without 12M. Gross profit margin will be in the mid-teens percentage range. We expect to see a small margin dilution from USJC, given that it is currently operating below UMC corporate's average. And capacity utilization rate will be close to 90%. We have updated the foundry cash CapEx budget for 2019 to USD 700 million.

That concludes my comments. Thank you all for your attention. Now we are ready for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. And the first question is coming from Randy Abrams. Crédit Suisse.

Randy Abrams

First question I wanted to ask about -- I appreciate the color on the new USJC and also congratulations integrating that. I wanted to ask, with a little bit of dilution a need to improve utilization there. Could you talk about the view on -- like new applications and ability to fill that capacity into next year? And I think in the existing fab, there's a lot of high mix of CIS or CMOS image sensor. If you expect to maintain is that utilization or see the mix shift more to UMC-related products?

Jason Wang

Yes. I mean -- thank you for the comment. And first, due to the closure of the MIFS acquisition, just happened on October 1, we have just began the integration process of this 12M facility into our UMC Group. So the guidance that we have disclosed right now that, that includes all the contribution from USJC, that's what we know currently. And -- but we probably need -- we will probably see more evidence in 2 to 3 quarters given that in 2019 USJC will perform slightly below the operating breakeven today. So from a profitability and margin standpoint, we'll probably have a better view after the integration process.

As far for your margin segmentation and customer situation in the USJC, based on the data that we received on USJC business, the largest segment is communication. You can highlight that a little bit too. And so what we are looking at now is, after the communication, followed by automotive, okay? And for the customer specific -- and we can go into it yet.

As far as the synergy, if we can bring some of the UMC's product mix over there. We're definitely looking into that. And we do see this USJC acquisition is -- provides many synergies to our strategy down the ROI-driven path as well as the specialty technology growth. So our priority now is to focus on using this technology in the specialty area and -- by our current 90-nanometer, 65-nanometer processes. And with their 33,000 capacity in specialty. And I think that's complementary to our current foundry operation. So we have pretty good confidence that we will bring those synergies again, yes.

Randy Abrams

Okay, great. I appreciate the color. Second question just on the CapEx, I think it's been your strategy in the last two years to bring it down and now underspent around $700 million the past two years. With utilization kind of back to running about 90%, I guess your expectation if you think we can kind of hold these levels for another year. And are there any areas you're growing tight whether 8-inch or mature 12-inch that you may expect to start to ramp back up some investments?

Jason Wang

Well, that's always the consideration. We don't go into the next year. We have not finalized our 2020 CapEx budget yet. And the more detailed 2020 budget will be disclosed in our February call. With the growth momentum delivered from our 12M acquisition as we expected, in addition, we'll continue to value opportunity that will increase our market share and shareholder value. So however, all this business opportunity will be -- will need to be evaluated based on this very stringent ROI centers we stated a couple of years ago when we changed the course. And so right now, we're putting the ROI consideration at a very high level of the requirement. So I think we just have to continue to follow that path, yes.

Randy Abrams

Okay. And then the last question. There's been more optimism about kind of going into later this year into next year, we get into some kind of demand recovery or better outlook with some of the things like 5G coming through. I'm curious your outlook, like if you're seeing that from your customer base and order activity. And if there's kind of initial view how you see 2020 shaping up for UMC and offset the broader industry?

Jason Wang

Well, I mean, we definitely have our view on the overall industry. But if we look it from the UMC's addressable market, we expect to see a low single-digit growth in 2020. And this 2020 growth will primarily driven by the new product launch in the 5G communication, as you stated, and the consumer segment. With the 12M that we just acquired, we expect our market share to increase by 10% over the current level in 2020. So we do feel comfortable with our outlook in 2020 at this time, yes.

Randy Abrams

Okay. And last question to fit in. The -- because the TAM about 3%. The one area of under loading the 28 node. If you could give an update on some of the second wave or new qualifications? How you could see that trend as a percent of revenue going into next year?

Jason Wang

First of all, we've been reporting the 20 -- our 28-nanometer business is really based on a fragmented product that we have today. And we continue to foresee the demand will be soft in the 28 based on the fragment product line like what we stated in the past, largely. But right now, largely -- the softness is really largely due to the short-term demand fluctuation now. Short term, my definition, short term, probably within the next 3 quarters or so. Once we move beyond the market volatilities of the 3 quarters, we expect to secure some key products in our 28 pipeline that were currently under early customer engagement. So we start seeing some light at end of the terminal. And well, I will say this is something probably in between 2 to 3 quarters, yes, time frame.

Operator

And the next question is coming from Bill Lu of UBS.

William Lu

So, I think Jason may have talked about this. But if you look at the 4Q guidance, up about 10%, gross margin mid-teens, what is that guidance without the USJC?

Qi Dong Liu

Yes. The ASP part will remain flat with or without 12M. And the 10% volume increase is primarily coming from the addition of 12M. So which suggests UMC also has some very marginal increase, but the majority of the 10% growth coming from the addition of 12M.

William Lu

Great. What about gross margin without the Japan fab would have been roughly flat from 2Q? Or how do I think about that?

Qi Dong Liu

Well, we only give a range, which is around mid-teens. And also stated that the additional 12M actually diluted some of our gross margins. But it's rather -- it's not that significant, so we actually do not provide the breakdown between the 2 entities.

William Lu

Okay. And if I look at your capacity chart, it looks like the new Japan fab adds about 5% to your total capacity, it's adding 10% to revenues. Am I doing the math right, so ASP is actually quite a bit higher?

Qi Dong Liu

No, capacity is also 10%. What you are looking at is actually 12-inch wafer. And it's now being converted to 8-inch equivalent yet.

William Lu

Oh, I got you. Okay. Okay. On Randy's question on 28. I mean, just given that, if I look at your overall capacity, you're now at 91%. I would assume, for you to see additional growth, you will have to utilize 28 better going forward. Now Jason talked about maybe potentially some demand. It seems like I'm also hearing from others that the people are considering maybe converting from 28 to 40 or even to 55 in older nodes. I'm wondering what you think about that.

Jason Wang

Well, I can't really comment other suppliers, other foundry suppliers. Based on our current forecast, and we do expect this additional product in the pipeline in which we're currently engaged right now. So we are cautiously but optimistic about our 28 outlook right now.

Operator

And next we'll have Charlie Chan from Morgan Stanley for questions.

Charlie Chan

So first of all, a similar question regarding your next year guidance. I remember Jason talked about single-digit growth. But if you used pro forma, meaning, excluding USJC, what will that be for next year? Or actually that is for the UMC's sales growth for 2020?

Qi Dong Liu

Yes, we are not allowed to take revenue growth target by Taiwan Stock Exchange regulations. So we've been saying that this addition of USJC will allow UMC to expand another 10% in terms of market share as well as capacity. I think that's pretty much we can give right now for 2020. And although the addressable market may only show low single-digit growth from UMC's perspective. But given the capacity gains and also market share gains, we do expect to see optimistic assumption for 2020.

Charlie Chan

Okay. But is that kind of not organic, right? Meaning, you assume some share gains for 2020?

Qi Dong Liu

Of course, the addition of 12M will help the most. But UMC will continue to win market share as well in the specialty market.

Charlie Chan

Okay, okay. Got you. And then for 28-nanometer -- I'm sorry, did you comment about the utilization rate of 28 nanometer for the third quarter and fourth quarter? Because I was kind of surprised about the soft 28-nanometer demand in coming 3 quarters, because I really believe those are -- for example, OLED driver, those Wi-Fi demand should be quite sustainable. So how do I think about that temporary weakness for the coming 3 months of 28-nanometer?

Jason Wang

Well, for the near-term of the 28, obviously, without the 12M, because the 12M doesn't have any 28. The 28 nanometer contribution to the company will stay flattish quarter-over-quarter between the Q3 and Q4.

Charlie Chan

Sorry, what about utilization currently -- utilization?

Jason Wang

We don't comment on specific technology utilization but the 28 will stay flat. Right now I think it will hold about 12%, right, in the pie chart. So it will be a similar percentage.

Charlie Chan

Okay. And between now and then, what kind of application do you think it would ramp down or increase in a -- in the kind of transition period?

Jason Wang

Some of the fragmented product line will actually continue. And the application we see coming into 28 is mainly in relate to the communication of 5G smartphones.

Charlie Chan

Okay, okay. And lastly, I'm not sure if that's too sensitive you talk about this issue about Micron lawsuit. I'm not sure if there's any update of the status on this matter?

Jason Wang

Well, the litigation is still ongoing. And we stated before, we'll vigorously defend against any false charges and misconceived allegations. And at this point, there's no any significant development. If there is, we will disclose them according to a tiny matter.

Charlie Chan

Okay. And lastly, Jason, kind of a broader question, I guess, semi investors ask about our views about the semi inventory. So from top-down, what's your view about the semi cycle in terms of a demand, inventory? And how much of that do you think is kind of distorted by tariffs or China's globalization? So we'd love to learn from your thoughts.

Jason Wang

In Q3, we see some of the inventory replenishment in automotive and communication segment. But at the same time, we see some of the customer inventory correction in the -- in auto AP, baseband and the Wi-Fi, entry-level BB -- baseband. So there is a kind of mix in the different segments. Some start seeing a healthy inventory level and some continue having found the entry correction, which is -- this market is very, very volatile right now.

Operator

And the next question is coming from Bruce of Goldman Sachs. .

Zheng Lu

I want to ask you about the -- what is your revenue exposure to 5G at this moment? I've been surprised to hear that you will have -- you will see that as a revenue growth driver in 2020. So what is your revenue exposure to 5G in 2019? And what would that be in 2020?

Qi Dong Liu

Yes. We don't have the number per say categorized by 5G, but we can offer you a certain product category of drivers.

Jason Wang

Yes. I mean the -- some of the application that we are seeing in 5G area includes the power management and -- as well as the OLED driver, and they happen -- we category them as the communication segment. And the -- so between TDDI and OLED driver, RF SOI and the PMIC, power management. And those are associated with the 5G segment.

Zheng Lu

Understand. So I want to clarify about the market share. 10% market share growth from the 12M. The capacity for that fab is actually not that big as above 30,000 per month. How can they have like 10%? How can they provide you 10% additional market share?

Qi Dong Liu

Additional 10% capacity to UMC.

Jason Wang

Yes. The 10% in related to UMC's market share.

Zheng Lu

Okay. Okay. Not the overall 10% market share?

Qi Dong Liu

No, no.

Jason Wang

No, no, no.

Zheng Lu

Okay, Okay. That's clear. So lastly, I still try to follow up my question, in previous 2 quarters regarding your R&D expenses. Do we have a better picture for the R&D expenses in 2020? And where it is now?

Jason Wang

You had a better picture. I mean...

Zheng Lu

Can we expect R&D expenses as a percentage of revenue coming down in 2020 or '21?

Jason Wang

We're not finalizing our 2020 budget yet, at this time. And -- but it's our goal to continue examine those R&D spending and make sure they're fully justifiable and -- as well as aligned to our future growth. So at this point, I don't have a guidance on that percentage, yes.

Zheng Lu

But directionally, can we expect to come down?

Jason Wang

Conceptually, we always want to make sure that we control all expense, right? I mean -- and we have been doing that. But it's more of a conceptual level. I won't quote a number to it yet.

Operator

[Operator Instructions]. And the next one is coming from Sebastian Hou of CLSA.

Sebastian Hou

First question is that how long do you expect the new fab in Japan to reach the corporate average margin?

Jason Wang

What's the question about? When or how?

Sebastian Hou

Yes, yes. How many quarters do you expect after the integration?

Jason Wang

I mean, that's -- as I reported earlier, we just begun our integration process, and we expect the synergy from this merger will become more evident in 2 to 3 quarters. And so I think we will have a much better clarity after that, that is about 2 to 3 quarters for now, yes.

Sebastian Hou

Yes. But when we look at your 4Q guidance, margin guidance versus the quarter, it looks like they're all around mid-teens. So we couldn't like tell or couldn't tell for any margin dilution from your guidance.

Qi Dong Liu

So 12M is about 10% in terms of size relative to UMC. So the impact to our overall margin won't be that significant. As Jason mentioned, the synergies should start to appear in 2 to 3 quarter time frame. However, the UMC gross margin, hopefully, is also a dynamic trend given our hope to see the recovery in our 28-nanometer loadings also in 2 to 3 quarters. So it's both a moving target, and it is quite difficult to come in saying when the 12M will reach the UMC corporate average.

Sebastian Hou

All right. So even if the low corporate average is not too far?

Jason Wang

Well, what we're saying is actually you will see a small margin dilution, yes.

Sebastian Hou

Great. Got it. My second question is on the 28-nanometers. Just a follow on some other analyst's question. What are the applications that you're -- particularly applications, products now you are seeing in the 28-nanometer? Because we talk about you're engaging in some new projects.

Jason Wang

You're referring to the pipeline we updated earlier, right? And what we mentioned was the application is in related to the communications of the 5G smartphone area.

Sebastian Hou

Okay. Got it. And in the communication, when you talk about -- okay. But when you talk about communication then actually just your definition of communication actually categorized the OLED drive, IC, RF and all those things are accounted as 5G applications?

Jason Wang

Right. Yes, obviously the PMIC or RF SOI won't use the 28, but the drivers are -- again. Yes, right.

Sebastian Hou

Okay, got it. Got it. Once you -- what about the CMOS image sensors this product particularly you haven't [indiscernible] seen it out what's the trend you're seeing

Jason Wang

I mean the CIS, the sensor business within a current UMC without the 12M is insignificant, okay? And so the -- we think that without the 12M, it's not the primary focus of ours, the application that we fully focused on. But for the 12M, and we -- at this point, we usually don't like to comment specific customer and applications when they're very concentrated, yes.

Sebastian Hou

And last one, just a housekeeping question about the depreciation outlook. Do you still hold the same view for the depreciation schedule for 2020 and '21?

Qi Dong Liu

Yes, with the addition of 12M, we may see flat depreciation for 2020. But still the downward trend in a year or two following 2020 is still unchanged. So for the whole 2020, year-over-year depreciation should be flattish compared to that of 2019. In 2019, we are seeing around 5% to 7% year-over-year decline.

Sebastian Hou

A more decline, like you you'd see in 2020?

Qi Dong Liu

More decline to follow after 2020, yes.

Operator

[Operator Instructions]. And the next question is coming from Roland Shu of Citigroup.

Roland Shu

For the 12M, it looks like 12M was not loaded at a high utilization last year. I would like to ask how about the utilization for 12M is now?

Jason Wang

12M, you mean the...

Roland Shu

At USJC? Yes.

Jason Wang

USJC.

Qi Dong Liu

Yes. For USJC, as we mentioned, the operating situation right now is nearly breakeven. And it's also a more difficult year, slightly more difficult year for them in 2019 compared to 2018. And loading wise it's actually not too far below UMC. And we don't -- again, we don't provide the specific fab-by-fab loadings. So right now, it's slightly below UMC.

Roland Shu

Understood. So going forward if 12 USJC utilization is much lower than UMC then are you going to allocate the revenue from Taiwan or other fab to USJC? Or are you going to just let USJC to grow organically?

Jason Wang

We definitely look at this as a company as a whole. And so -- and given the UMC as a company, we see a pickup on the specialty application encompassing the 90-nanometer, 65-nanometer process. So we think there's definitely -- there's some synergy that we can help with their loading as well. So we look at this as a whole, yes.

Roland Shu

Okay. Understood. I think second question actually is also related to this 65-nanometer and 90-nanometer. I look at your revenue breakdown, year-to-date, 45 nanometer and 28 nanometer and below, total revenue declined year-on-year. But your revenue from 65, 90 and even for 413 Micron, total -- total increase. So will it be the same thing in next year or going forward? And how much for you to continue grow this 65, 90 or 415 Micron revenue going forward?

Jason Wang

Well, first of all, we do foresee the mature 12 inch, the 65, 90 business will remain over capacity in 2020. And as we continue to see strengths from communication and consumer segment. As of today, we actually showed more than 100% utilization rate in Q3 as well as the Q4 '19. And we're going to -- we -- right now, we are -- we'll continue leveraging our operations efficiency to provide additional capacity to our customer. And in the future, we do see the 12M, as you asked earlier, the 12M will also help to alleviate the overcapacity situation with this 12-inch mature nodes.

Roland Shu

Understood. So we do see the additional capacity to grow 65, 90-nanometer revenue going forward, right?

Jason Wang

We're hoping that in addition to our current productivity improvement within the current UMC, we hope the 12M acquisition will also help that as well, Yes. But again, the integration process does take some time. And right now, we just have to first finish the integration process with 12M then we can start focus on the synergy improvement, yes.

Operator

[Operator Instructions]. And the next one is coming from Bruce of Goldman Sachs.

Zheng Lu

Can you tell us the utilization rate between 12 inch and 8 inch in fourth quarter?

Jason Wang

Sure. For the Q4 '19, we see about low 90% for the 8 inch and high 80% for the 12 inch. The overall will close to a 90%, as a company.

Zheng Lu

So I can still assume that advanced node that the utilization is even lower than the overall 12-inch capacity utilization rate?

Jason Wang

Yes. Yes. For 28 specifically, yes.

Zheng Lu

Right. For -- UMC has a pretty sizable exposure to driver IC. And can you tell us that what kind of market share you have in the driver IC funding business? And what kind of addressable market you are looking at in 2020?

Jason Wang

We do have a sizable -- the driver IC market today. And it's our goal that we'll continue maintaining that shares going into 2020 and even longer. And so the goal is continue enhance our technology deliveries and as well as the capacity upgrade. So that will be our target, yes.

Zheng Lu

But can you tell us what kind of foundry addressable market size will drive IC in 2020? Do you see some meaningful increase in terms of market size?

Jason Wang

The driver IC market continue to grow, okay? And the -- especially in high-end area. The OLED driver is very new, and they start coming into 40 nanometer this year, and we expect there was some migration to the 28 nanometers next year. So those are the focus areas. Now I don't have a specific market share number being associated with that. But I mean we remain very committed to this driver space. And we'll stay competitive here.

Zheng Lu

But in terms of the market size, can you give us some quantitative market size increase? If they are moving from 40 to 28 with some ASP expansion or die size getting bigger, that should be very positive for your overall business. So we want to get some numerical numbers.

Jason Wang

I do not have any quantitative data to share today, no.

Operator

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

Michael Lin

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 UMC at ir@umc.com. Have a good day. Thank you.

Operator

Thank you. And ladies and gentlemen, that concludes our conference for third quarter 2019. 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 Event section. You may now disconnect. Goodbye.