Laura Chen

Laura Chen asked for an update on TSMC's advanced packaging expansion plans in Arizona, specifically for CoWoS capacity. She also inquired if TSMC would collaborate more closely with OSAT partners to meet the current strong demand for advanced packaging. She then asked about the key drivers for TSMC's revenue growth in 2026, specifically whether it would be primarily driven by ASP increases due to technology migration (like N2 ramp) or by volume growth, including a mild recovery in non-AI segments. She also asked if TSMC would add more N3 capacity or continue conversion to support strong leading-edge demand.

Answer

CEO Che-Chia Wei confirmed plans to build two advanced packaging fabs in Arizona. He also mentioned working with a large OSAT partner who is building a fab in Arizona with an earlier schedule than TSMC's own fabs, indicating collaboration to support customers in the U.S. Che-Chia Wei stated that all factors—technology migration, ASP increase, and volume growth—would drive revenue growth in 2026. CFO Wendell Huang added that TSMC continues to optimize N5 and N3 capacity and plans new buildings for N2 technology expansion, implying a focus on N2 for new capacity rather than new N3 buildings.

Laura Chen asked about TSMC's strategy and timeline for advanced packaging to support increasingly large and power-hungry AI chips. She also inquired about the company's strategy for mature nodes amid reports of industry-wide overcapacity.

Answer

Chairman & CEO Dr. C.C. Wei explained that TSMC develops a wide variety of advanced packaging solutions in close partnership with customers to meet their specific needs. Regarding mature nodes, he stated TSMC's strategy is to focus on specialty technologies like RF and CMOS image sensors, driven by customer demand, which insulates it from general overcapacity and justifies its fab expansions in Japan and Germany.

Laura Chen from Citi asked for the long-term gross margin outlook, details on depreciation cost increases, and the operational strategy for UMC's fabs in China.

Answer

President Jason Wang outlined the roadmap to improved margins through better loading, technology differentiation, and cost control. CFO Qi Dong Liu specified that depreciation growth will slow from over 20% this year to below 10% next year. Wang added that UMC's China fabs are part of a diversified manufacturing footprint available to serve global customer needs for supply chain resilience.

Laura Chen of Citigroup asked about the possibility of UMC collaborating with other U.S. IDMs beyond Intel, specifically mentioning market rumors about GlobalFoundries. She also questioned if Q1 marked the trough for gross margin and inquired about the margin outlook.

Answer

CFO Chi-Tung Liu confirmed UMC works with multiple U.S.-based IDM customers but stated the 12nm collaboration is the most important project currently. He declined to comment on market rumors regarding GlobalFoundries but affirmed that UMC consistently explores strategic options to enhance shareholder value, clarifying no merger is currently ongoing. Regarding margins, Liu acknowledged Q1 was impacted by one-time price adjustments but cited low second-half visibility as a reason for not providing a longer-term margin forecast.

Laura Chen of Citigroup asked if the Q3 order strength is sustainable into Q4, probed the reasons for the sharp decline in IDM revenue, and questioned if IDM outsourcing would decrease as they expand internal capacity. She also requested more detail on the business model for 3D ICs and hybrid bonding.

Answer

President Jason Wang clarified the Q3 outlook is a 'mild pickup' reflecting a return to seasonality, not a strong rebound. He explained the IDM revenue decline was broad-based across all segments due to inventory correction, not just automotive, and expects a gradual recovery. While acknowledging IDMs are building internal capacity for supply chain resilience, he believes they will continue to rely on foundry partners. For 3D ICs, he stressed the business model relies on a strong ecosystem partnership with OSATs and other suppliers.