1Q 2026 Earnings Release & Investor Conference Call >Teleconference Live Webcast and Replay >Video

Welcome everyone to UMC's 2026 First Quarter Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the presentation, there will be a question and answer session. Please follow the instructions given at that time if you would like to ask the question. For your information, this conference call is now being broadcasted live over the internet. Webcast replay will be available within two hours after the conference has finished. Please visit our website, www.umc.com. Under the Investor Relations, Investors, Events, said everyone, Investor Relations Manager of UMC.

Mr. Wong, please begin. ...financial results, followed by our key message. 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 Set. 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 Securities 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. Chidong Liu, to discuss UMC's first quarter 2026 financial results.

Thank you, David. I'd like to go through the first quarter of 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 $61.04 billion NT, with gross margin at 29.2%. Net income attributable to the stockholders of the parents was $16.17 billion NT, and the earnings per ordinary share were 1.29 NT dollar, which showed pretty good growth compared to both last quarter as well as the same quarter of last year. On page five, first starting from the sequential comparison, revenue was basically flat or down 1.2 percent sequentially to $61.4 billion NT. Gross margin at 29.2%, slightly declined from the previous quarter of 30.7%. Income attributable to shareholders of the parent, though, has increased 60% sequentially to $16.17 billion, partially due to the strength of the stock market performance and the non-operating income grew 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 2026. On page six, year-over-year comparison, revenue grew by 5.5% year-over-year, mainly due to shipment increase. And gross margin also showed 2.5 percentage point improvement to 29.2% to $17.8 billion NT 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. Balance sheet highlights total equity reached $406 billion NT and cash on hand still over $100 billion, $20,000 at the end of first quarter of 26. On page 8, ASP declined slightly in the first quarter of 26, mainly due to a better than expected age 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% in this quarter. And the other region pretty stay relatively similar compared to Q475. On page 10, IDM show a bigger decline from 20% in the previous quarter to now 14% of the total revenue. On page 11, communication also declined to 39% when consumer increased by 4% to 32%. For technology breakdown, our revenue below 40 nanometers still remained over 50% of the total shipment. and 28-22 is around 34%, slightly declined from the previous quarter. 13, there's some annual maintenance schedule or maintenance in the first quarter of 26, resulting slight decline in available capacity in the first quarter of 26, and we will see the total available capacity to go back to the previous level in the second quarter. On page 14 is our overall annual CAPEX, which for the time being still stays around $1.5 billion U.S. dollars. And the above is a summary of UMC's results for first quarter of 2026. Next, I would like to go. So in the first quarter, our welfare 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. Expect decline in blended ASP during the quarter, which I explained earlier, this is a partially reflected higher A-inch wafer shipment. And gross margin held firm at 29.2%. and demand for our 22-nm logic and specialty process continue to gain momentum. With 22-nm 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 on our 22-nm platform for very diverse range, 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 U.S.-based manufacturing option. UMC also recently announced important development in the emerging business, including a strategic partnership to deploy thin-film lithium-neobates TFLN photonics for AI infrastructure. Going into 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, and industrial markets. When the current memory supply shortage and ongoing conflict in the Middle East are creating certain headwinds and market volatilities, UMC continues 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. Now let's move on to second quarter, 2026 guidance. Our wafer shipment will increase by high single digits, and ASP in U.S. dollar terms will increase by low single digits. Coors margin will be approximately 30%, and capacity utilization rate will be in the low 80% range. Our 2026 cash-based KPAS, as I mentioned earlier, around $1.5 billion budget. So that concludes my comments, and thank you all for your attention. Now we are ready for questions.

Thank you, Mr. Liu. And ladies and gentlemen, we will now begin the question and answer session. If you have a question for any of today's speakers, come on on your telephone keypad and you will enter the queue. And after you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, Pat, if you would like to ask. Our first question will be coming from Goku Ali Allen of JPMorgan. Go ahead, please.

Hi, Machi Tong. Thanks for taking my question. First of all, on the pricing environment, I think last time you guys 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? And when I look at Q2, low single digit Q&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?

We recently sent out a letter to our customers talking about the price increase to happen in the second half of 2026. So the blended AHP in second quarter increase is, yes, mainly from the mixed improvement. And I would say 22 and 28 nanometers will be the main help for the blended ASP increase in the second quarter. And when the first half of 26 were underway, we are seeing resilient demand across a broad range of application, including communication industry and consumer, and even the AI-related segment. This momentum is contributing to a sustained increase in tight capacity environment across UMC's portfolio. And to support such demand, UMC continues to enhance manufacturing efficiency and invest in technology and capacity to ensure reliable, high-quality wafer supply. So this ongoing investment, together with increasing key cost drivers, including raw materials, energy, and logistics, are essential to sustain our long-term operational excellence. In light of this fact, we implemented a wafer price adjustment in the second half of 2026, which will set up a more favorable position for the upcoming 2027. So the pricing reflect both the evolving supply and demand environment and the continued investment required to support our customers' growth. So pricing adjustment will be based on the factor including UMC's product mix, strategy, capacity agreement, and also the long-term partnership. So this pricing adjustment will be implemented. Hopefully we will do our best in a very disciplined and sustainable manner to ensure our operational health and continuing to support customer growth and long-term success.

Got it. Thanks, Chitong. So just to follow up on that, I think if I remember right, I think your letter was like 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 pluggish?

Yeah, one thing we don't want to do or we never really did is being an opportunist to take advantage of customers. That's something we will never do. So our pricing strategy has always been anchored in the value, where we deliver our differentiated technology, diversified manufacturing footprint, and hopefully, again, overclass operational excellence. So these strengths continue to enhance our customers' product competitiveness and strengthen their supply chain resilience. As the semi-supply chain evolves, we are seeing market recognition of UMC's value, and this is driving structural demand. And we remain committed to investing in this core cycle of value creation, continue to enhance AASPization. This includes strong momentum in our 22 nanometer platform and reduction in commoditized and thereby strengthening UNC's long-term AASP profile. And I'm pretty sure we didn't really mention anything numerical in our letter to customers based upon different segments, different technologies, and our long-term partnership.

Got it. My second question on gross margin. So we had some improvement in utilization from mid-70s to low-80s in Q2 based on your guidance. Gross margin is still roughly hanging around 30% now. With its price increase, how should we think about gross margins? Are we likely to get back to like high 30s or 40% kind of levels that we were in back in the 21-22 kind of time frame or that might require a much bigger improvement in utilization?

Unfortunately we're still in the peak of our depreciation increase cycle and I think in the previous quarter we mentioned our depreciation curve will only pick up starting from next year so we still see quarter after quarter depreciation expenses so if you ask me about EBITDA margin i think i will be more comfortable talking about cost margin or operating margin we're still under a lot of depreciation expenses increase not to mention the recent geopolitical tension lead to raw material costs, and our utilization rate will be in the low 80% range. The margin uplift from higher shipments will be largely offset by the higher depreciation and higher utility costs, like I mentioned. The remainder of the 2026, the 12-I in Singapore ramp-up will start in meaningful terms in the second half of 2026, which will continue to carry higher depreciation expenses over the next several quarters. And, of course, some UMCs will continue to proactively deploy cost reduction efforts, including multi-sourcing, streamlining our operation, managing supply chain pricing, and drive automation transformation. So all these measures will help UMC to partially offset the cost, headwinds, and maintain our, or hopefully enhance our EBITDA margin.

Got it. Yeah, thanks, Shidong.

Thank you very much. Charlie Chan, Morgan Stanley, go ahead, please.

Thanks, Shidong, and I'll look. But I do have some questions about the details, especially you comment about the communication segment. Is that coming from AI-related?

This will be driven for UMC, will be driven by DDI, now working communication segment.

If I may, I think coming also to the new technology normator, the SICOM botanic foundry service, capacity expansion, and also potential revenue contribution in the coming two years.

These are two questions. One is maybe David can help.

As you're aware, we're seeing more engagements pick up on our advanced packaging solutions. And as you know, we're working with more than 10 companies on advanced packaging. And currently, we expect more than 35 new tape outs in 2026. And we foresee that revenue for advanced packaging next year will be significantly higher. And as of now, we're in production for a bridge die solution and discrete DTC, deep trench capacitor, with more products. That will ramp up shortly.

For the bridge die or DTC, are those working with other foundry partners? and is that part of the TSMC supply chain or TSMC supply chain?

Partnership. But as you know, as we talked about last quarter, these things are picking up a little bit of steam.

Do you need to further expand your so-called interpulsa for that bridge die demand or capacity is sufficient for that bridge die?

So I'm assuming that the second interpulsa is more with capacity, As far as capacity planning for all of our new businesses, that will be aligned with our customers as well as the market demand and our ramp-up schedule will be aligned with the market outlook.

Thanks, David. Thanks, Chidong.

We're moving on to Silicon Photonics as well.

Oh, sure. Yes, please.

So, for Silicon Photonics leading customers, that will help us ramp on Silicon Photonics. Additionally, our Silicon Photonics 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. We tried to deliver our PDK 1.0 in 2027, which is based on the IMAC license. We are also enabling integration for our customer by evaluating hybrid bond, TSV, and chiplet integration.

Good afternoon. Thank you for taking my questions, and congrats on the improving outlook. So my first question is to follow up on what you guided earlier this year. And so three months ago, you did guide better growth from second half of this year driven by new products and market share expansion. And now Q2 is indeed pretty solid, but I wonder how do you 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 applications, such as communication, industrial consumer, and AI-related sectors. So this momentum, we think, is continuing to sustain an increasingly high-capacity environment across UMC's portfolio. So we expect this momentum to continue into second half, especially our 22-nm logic embedded high-V path. We expect to grow in the high-team percentage range for those second half compared. There's also another driver coming from our Ainge recovery, which is progressing to deliver good growth year over year because of a somewhat lower base last year. So 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 address in 2026. And definitely from UMC side, we committed to deliver a better performance and in this last year's results. And hopefully this will be a turning point for UMC to broaden our addressable market. And this ASP uplift we talked about in the second half, together with our strategic investment for the upcoming 12-narometer silicon photonic and advanced packaging sustainable long-term growth.

Thank you very much, Shidong. So may I follow up on four-year outlook? And so I think several foundries have reported better outlook for 2026. And so one is for Johnson Market, do you see some upside for low single-digit growth?

I think the UMC addressable market, some incremental improvement, but not really significantly different. And overall market, I think it's definitely better if you include all the AI boom. So overall, the semiconductor industry is projected now grow up by mid-team in 2026. But UMC's adjustment market may be slightly better, but still grow by the low single-digit percentage, which is, again, only slightly better than our last quarter's forecast.

And my second question is, if we look at high level, there are lots of concerns around disconnect between consumer end market and material foundry improvement. And so maybe if you could help us understand why for this year, although Spark4 and PC and market are showing some weakness, border material foundry space, including UMC, get to see improving demand throughout the year, it seems. And then for UMC, how should we think about your server exposure? What would be the key products that you get to serve from server? And then from here, would you be able to benefit from server opportunity as well?

The technology predominantly supports market segments. The nodes and demand tend to be more resilient. Even with recent memory tightness, it's typically priority. As a matter of fact, including 28, 22, high voltage and RFSOI We will help customers gain more shares in the high-end smartphone segment in 2020 phase. This will also help UMC navigate the headwinds from the communication slash mobile segment. When we remain attentive to the potential impact from either memory tightness or assessment is that any potential headwinds are manageable, and we will continue to monitor the situation closely with our customers. And the other factor is really UMC has been defocused on the commoditized commodity type of segment. UMC will certainly try to. As for server, we don't really have a breakdown by the week and maybe try to do that, but this is maybe two layers, three layers away from our market segment.

No problem. Thank you very much.

America, go ahead, please.

Yes, thanks, Chidong and David, and congrats on the very good results and the guidance. I guess two questions from me started from utilization. You reported in first quarter 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? and 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 separately between respectively for a inch and also 12 inch into second half.

It's not around 80%, it's above 80%, so it will definitely 80-something for the second quarter. For Q2, we will see coming from 22 and 28, relatively with some rebound but it's really but our Japanese operation is below corporate in the 65 nanometer 80 nanometer technologies even though age will show some improvement it's still slightly below corporate as a whole

still slightly above corporate average but the gap is certainly narrowing okay got it and 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 but 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 and 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's a lot of macro factors moving on, a lot of moving factors in the macro environment that you might need to pass on the cost to your customers. But 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 when your utilization is at around low 80 percentage levels? So two questions here. First one is on the pricing outlook portfolio. Any update on the versus the last timeframe? outlook second thing is just under a long-term view that's regarding the pricing environment right now versus your long-term trajectory of the business that 80% is this sufficient enough for you for your customers to accept of a price hike across the board advantage of our customers so the pricing adjustment coming back to our fundamentally anchor in our value of technology and manufacturing service, which is supported by a structured demand

rather than short-term pricing tactics. We are seeing customer market share gains along with ongoing structure shift in the foundry landscape, generating durable demand for UMC. And we want to emphasize our differentiated technology and global footprint, enable customers to strengthen their competitiveness across all segments. including AI, communication, consumer, and industrial automotive segment. Stated in our letter to customers, starting from the second half of 2026, we will implement discipline pricing adjustment to mitigate some cost high-wings by maintaining customers' competitiveness. Hopefully more product mix optimization driven by a strong 22-narometer demand will continue to drive ASP extension. Even though the steady recovery in A-inch loading may partially upset the blended ASP list, our overall A-inch recovery plan is progressing well, with several FABs running nearly 100%.

That's great. That's very clear. And I think just a quick follow-up on that is probably the firm pricing outlook for a full year you guided last time. is it still holding the same statement or is it actually incrementally better and on the EBITDA margins you stated 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 5 ramps with better loadings and potentially some pricing adjustment in the second half, we are confident if you take out the depreciation, improve outlook, some

of the cost increase, especially energy and logistic, et cetera. And our pricing outlook certainly was increased later in the previous quarter.

Thank you so much, Shidong and David. I'll be back in the queue.

Next one, Scarlett, BNP. Go ahead, please.

Hello, management. Congrats on the very good result and the guidance. My question is a follow-up to a previous one. So the consumer segment revenue seems very strong with a 4% point increase in the product mix. So I wonder, is it because of the demand recovery or the pricing dynamic changes? And going forward into the second quarter and the three years, so how would you see the trend will be like? Thank you.

The second quarter, the growth will continue, will be driven by MCE.

Thank you very much.

Citi, go ahead, please.

Yes, hi. Can you hear me clearly? 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 as the previous mentioned, I'm just wondering that for next year, if we start to see some progress and breakthrough, how should we think about that the potentially again increasing maybe R&D force or any impact on our like revenue and also expense we cannot give revenue guidance now I think the timing wise we are talking we are planning by later

2020 safe start to see initial commercial production and in terms of investment is 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.

Yes, this 12 nanometer project work with Intel continues to go well. We remain on schedule to deliver the PTK and social IP to customers in 2026, and we anticipate that the product tape out will commence in 2027, which will make a significant step toward the commercial deployment and future revenue growth. And USA and Intel are working closely to ensure this successful tape out and efficient rainbow to mass production for the 12 nanometer customer product so the application that we for this 12 nanometer project will be including the DTV Wi-Fi connectivity and high-speed interface product sure thank you um I'm also wondering that since the expansion in the US is probably one of the direction UMC is looking for so I'm just wondering that the following the 12

inch technology any plan to further engage with the more advanced node with intel however we have execute well and we cannot speculate the future our focus now is delivered in the future if anything makes sense for both partners as well as our customers certainly we will consider

consider to expand to other derivatives or technologies but for the time being the only focus is on 12 nanometer okay very clear thank you KGI go ahead please hi thank you for taking my question I got two questions so 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 you don't also mention that you guys gonna scale down the commodity business but i still want to sound clarification how um the company see the opportunity for uh the strong memory demand uh both dna or nor is that possible we do anything business related to the memory uh that's my first question so again we will not be able to comment on of course, market speculation like this, but our strength is really in the differentiated specialty technology which pursue long-term and sustainable business opportunities, which

demonstrate by our current comprehensive technology portfolio, such as embedded high V, embedded their non-volatile memory, PCD, RFSOI, et cetera, et cetera. And again, we will not do the, this is just not a finishing basis.

Okay, thank you. That's very clear. My second question regarding the 8-inch tightness at the moment. So, based on my understanding, this is primarily driven by the global leading foundries. They optimize their capacity. So they're exceeding some business for their 8-inch foundry. So primarily, I think this is supply-driven, but also we see some incremental demand improvement. So is that possible to break down how you guys see the 8-inch tightness? Is more demand-driven or supply-tightness-driven? And if I can may have a follow-up. I have to follow up with Hess's previous question. What's the 8-inch utilization rate in the first quarter?

We like to see this is really because of our company with industry. We view this landscape shift as an opportunity of product mix. It's very difficult to differentiate the two factors you mentioned. And again, we like to think the only thing we can control is our own competitiveness and our technology portfolio. So we will continue to work hard to invest in our service to our customers.

Okay. So first quarter, if I say training for 8-inch, if I may.

Company-wide, it was 79%. I mentioned previously below the situation, the delta, the improvement in the second quarter is higher for A&H. Although, for the second quarter, the A&H average loading.

Okay, thanks. Goldman Sachs.

Hi, thank you for taking my question. My question is regarding to the legacy note for Tophie. You know, your competitors are talking about exiting the market. You know, what's the real situation for UMC is facing right now? You know, how much more business we can expect for the legacy node overflow or in different ways that do we see the possibility to, you know, kick off another round of capex, especially in Singapore for, like, LTO with the customer for the potential new business?

This is very difficult. I mean, it's somewhat similar to the fundamental of our A&H views. The only thing we can control is our own competitiveness and technology portfolio. And we think there's still plenty of upside there. The market dynamic shift helped present us the opportunity, but it's really up to us to have the competitors to gain those. Those are the areas we are focusing right now. And if you talk about this, it's actually going to take off the 12-inch capacity in Singapore FAPS. And if the market dynamic continues with the customer demand, certainly there's an upside for those 12-inch capacity in Singapore.

Well, I should ask in different ways. is that earlier, the previous investment is that, you know, 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 presents the need and we need the customers going forward with all the new technology opportunities, such as the second photonic and advanced packaging, continue to work closely with our customers, including share the risk. 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 that it's still...

I understand. Thank you. So my second question is, can you comment a bit about, like, you know, 14 nanometers high-voltage progress? Because I think we asked a question a couple quarters ago when Jason answered that the driver IC might not need to go for 14 nanometers and beyond. But right now, TSMC is talking about, like, 14 nanometers high-voltage process, right? Is that the technology trend is getting clear that the driver of IEC will continue to migrate to the smaller geometry?

Disclaimer first.

No, I'm not asking about the driver of IEC technology trend, right?

So we have a proven track record for the current industry lead in 2022. UMC is always recognized as a global leader. So when customers migrate into thin-fas, that's where our thin-fas heavy solution continues to provide better performance, lower leakage, and more die-size, we do have the upcoming thin-fas.

Thank you.

Thank you. Next one, Goku Harihalan, JP Morgan. Go ahead, please.

So, 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? And 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 this CPO, or sorry, 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?

Yeah, as far as the current silicon photonics, the key milestone is for us to release the PDK in 2027. It will be version 1.0, and obviously it's based on the IMAC license. And as far as the current designs for PICs, they're basically pluggable solutions. But at the same token, we're also looking to a patient for customers by considering other, you know, 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. But for now, it's pretty much a lot of the PICs' discussions and designs that were under customer engagement.

Secondly, on the mature 12-inch nodes, I think 20-22 still seems to be pretty strong in terms of utilization. Could you comment a little bit on 40 and 65-55 status, like how 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 nanometers. And any forward-looking comments on how that utilization is likely to get failed, given that you're also engaging some of the bridge IEC projects?

Yeah, 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. So we are seeing longer term there's going to be, you know, more designs, and that will 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?

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

Okay, cool, thank you. And the last one, Charlie Chen, Morgan Stanley. Go ahead, please, Charlie.

Oh, thanks for taking my follow-up questions. So the first question is really a follow-up on the pricing strategy that you did send some letters to customers. So I'm wondering what's the customer's reaction, meaning they're kind of very happy to accept because it can also pass through given some in-market difficulty. So some customers have that. So it would be much easier if management can give us some like preliminary second half price hike assumption.

I appreciate the long-term UMC. It's going to be a win-win for the longer term. We need those to continue to provide efficient manufacturing and continue the investment. So I'm pretty sure our customers understand where this is coming from. The key is really how UMC can help them in the longer term and get more shares. So I think that's the key message we want to deliver to our customers, and also we appreciate their long-term support.

I have a question to you, partnership. I want to associate that to my previous question about your compensation, especially the deep trench. Is that the right way to think about that because Intel's eMIP-E also needs those BridgDight and DTC discrete components? Do you think it's the right way to think about UNC would be a very important partner for Intel's eMIP-E or Intel's advanced packaging supply chain?

Not partners, so I mean the platform, nothing else. And there's important collaboration for both parties, and we have to make it work. And this is too important, especially for UMC resources. We'll try to make sure we deliver.

But 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.

Thank you. And that concludes today's Q&A session. I'll turn things over to UMC IR Manager for closing remarks.

We appreciate your questions. As always, if you have any additional follow-up questions, Contact UMC at IR at UMC.com. Have a good day.

Thank you. And ladies and gentlemen, that concludes our conference for 1Q26. Thank you for your participation in UMC's conference. There will be a webcast replay within two hours. Please visit www.umc.com under the Investors Event section. You may now disconnect. Thank you again.