Welcome, everyone, to the UMC's 2015 fourth-quarter earnings conference call. All lines have been placed on mute to prevent background noise. And 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 a question. For your information, this conference call is now being broadcasted live over the Internet. A webcast replay will be available within an hour after the conference has finished. Please visit our website, www.umc.com, under the Investor Relations, investor events section. And now I would like to introduce Mr. Bowen Huang, Head of Investor Relations at UMC. Mr. Huang, you may begin.

Thank you, and welcome to UMC's conference call for the fourth quarter of 2015. I am joined by Mr. Po Wen Yen, the CEO of UMC; and Mr. Chitung Liu, the CFO of UMC. In a moment, we will hear our CFO present fourth-quarter financial results, followed by our CEO's key message to address UMC's focus and first quarter of 2016 guidance. Once our CEO and CFO complete their remarks, there will be a Q&A section. UMC's quarterly financial reports are available at our website, www.umc.com, under the Investors, financials section. During this conference we may make forward-looking statements based on management's current expectations and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially, including the risk that may be beyond the company's control. For these risks, please refer to UMC's filing with the SEC in the US and the ROC security authorities. I would now like to introduce UMC's CFO, Mr. Chitung Liu, to discuss UMC's fourth-quarter 2015 business results.

Thank you, Bowen. I would like to go through the fourth-quarter 2015 investor conference presentation material which can be downloaded from our website. Starting on page three, the fourth quarter of 2015, consolidated revenue was NT$33.85 billion, with gross margin at 20.6% and operating margin at 5.6%. The net income attributable to the stockholders of the parent was NT$3.16 billion. And earnings per ordinary shares were NT$0.25. And for page - for fourth quarter of 2015, the utilization rate dropped from 89% in the previous quarter to 83%, and that also leads to a decline in revenue reported of NT$33.8 billion in Q4 2015. On page 4, revenue declined by 4.2%, mainly due to the decrease in shipments. However, gross margin increased to 20.6% from 19.6% in the previous quarter. And operating income, as a result, also improved to 5.6% or equivalent of NT$1.88 billion. And net income for fourth quarter of 2015 is NT$3.07 billion, with an EPS of NT$0.25 per share. On page 5 is our full-year numbers. For 2015, revenue increased by 3.4% on a consolidated basis to NT$144.8 billion. Gross profit is in line with the number of 2014 at around NT$31.7 billion. With lower operating expenses, operating income has improved 7.5% year over year to NT$10.8 billion or an EPS of NT$1.08 per share. For year 2015, our balance sheet has a cash or cash equivalent of NT$53.3 billion, with total assets of NT$337.3 billion . In terms of operating segments, we can see that the impact from our new business is getting smaller. Revenue in Q4 of 2015 is around NT$578 million, with a loss of NT$310 million, which - and this performance will continue to be steady, with improvement in terms of operating income for new business. Our main contributions still coming from…

Okay. Thank you, Chitung. Hello, everyone. I would like to update to everyone UMC's fourth-quarter operating results. In the fourth quarter of 2015, UMC's foundry revenue declined 4.2% sequentially to [NT$33.849 billion] (Ph) due to the continued inventory correction within the semiconductor industry. Wafer shipments reached NT$1.38 million 8-inch-equivalent wafers, bringing overall capacity utilization rate to 83%. Our 28-nanometer technology constituted 11% of fourth-quarter 2015 revenue. For full year 2015, our foundry revenue grew 9% over 2014, aided by a 5% increase in total manufacturing capacity and higher blended ASP due to increased advanced node contribution and overall loading of approximately 90%. Our 28-nanometer business tripled in 2015, propelled by strong demand from the communications sector. Furthermore, we have introduced refined 28-nanometer process variations on High-K Metal Gate and Poly-SiON called 28 HPCU and 28 LPU, targeted for communication ICs. These two new processes operate at the same speed range as industry's 28 HPC and 28 LP, but at a lower power level to considerably extend the battery life of mobile devices. UMC will continue to strengthen our 28-nanometer technology roadmap with enhanced processes that raise chip performance by lowering power consumption. Besides our 28-nanometer technologies, we have also observed strong demand for chips used in the automotive industry on both 8-inch and 12-inch manufacturing processes. UMC customers are now migrating from consumer-grade products to more stringent grade one and grade zero semiconductors designed for critical automotive safety functions. These products include power management, display driver, imaging sensors, and microcontrollers. As more products begin to rely on UMC's comprehensive automotive service package, our exposure in the automotive supply chain will help generate a new revenue stream for our foundry business. We are seeing signs of semico bottoming as most of our customers' inventory has returned to reasonable levels. For the…

Thank you. And ladies and gentlemen, we will now begin our question-and-answer session [Operator Instructions] Our first question is from Randy Abrams, Credit Suisse. Please ask your question.

Okay. Thank you. My first question may be more for Chitung. About the guidance, where you're guiding for ASP softness offsetting the FX, if you could quantify the magnitude of ASP softness and what you're factoring in for the FX rate which would be the offsetting benefit. And maybe if you could talk about the softness, whether that's coming from the annual price reset or there's a technology mix factor.

I think it's a conceptual guidance. Basically we are looking for a flattish ASP in NT dollars. The positive driving force is NT dollar depreciation. However, the negative force is ASP decline. And for your question, it's mainly due to the year - beginning-of-the-year price reset and not so much for like-for-like price decline.

Okay. And then the gross margin, you're guiding back to high teens given the currency benefit. I guess if you could give the FX assumption and if that's - you guided last quarter high teens and did a little better, but if there's a factor for guiding it back to high teens with flat shipments and the FX benefit.

It is mainly due to the increase in cost. Our depreciation expenses in Q1 alone will show around 10% sequential growth. And for the full year we're actually looking for a 20% year-over-year depreciation increase. So that's mainly coming from the cost side. And we do expect the ASP to catch up gradually. But for the first quarter, we see more increase in cost than the ASP.

Okay. Thank you. And I guess that poses a question where you're bearing more depreciation, but it looks like you're taking a more optimistic view on CapEx. Could you discuss what's prompting the increase to go over to 2.2 versus - the older range was closer to operating cash flow. And then how much capacity - like maybe give an update on how much capacity for 28 and how much capacity adds you're planning for China within that budget.

Within that budget, a little more than 50% is for Taiwan. A little bit less than 50% is for Xiamen fab. And the Xiamen fab won't be able to start production until the end of 2016. And so it won't have any capacity contribution until end of this year. And for Taiwan, like-to-like CApEx is actually lower than the previous year.

Okay. And the follow-up to that for Taiwan, is it still the plan to go to, I think it was, 29,000 or 30,000? And if you could give your assumption on 28-nanometer contribution, say by end of the year, like percent of revenue from 28, so how much capacity on 28 and then how much contribution for that? Thank you.

By the end of this year our 28-nanometer capacity will increase to 29.5k per month from current 20.5k per month. And the revenue contribution from 28 for the second quarter, the next quarter will be around 15% to 20% digit range.

Okay. So a pretty big pickup in the second quarter. And then do you see further, in second half, I guess it's early to say, but do you have a target yet for where that could reach by year end?

We don't have a specific target, but we do see our 28-nanometer revenue contribution will be better quarter by quarter.

Okay. All right. Thanks a lot.

Thanks.

The next one is from Michael Chou, Deutsche Bank. Please ask your question.

Hi. My first question is for Chitung. What is your FX assumption for Q1 and what was the FX in Q4 last year?

Yes. Q4 last year, the conversion rate is at NT$32.81. And for - forecast for Q1 currently stands around NT$33.5. But we do follow the major banks' forecast for the Q1 and adjust accordingly.

Okay. The second question is the CEO mentioned the new 28-nanometer product. When would the new 28-nanometer solution enter mass production this year?

Sorry. Your question again? Sorry?

You mentioned you have a new 28-nanometer solution. When would that enter mass production this year?

It's already taking place starting from this quarter. But we will gradually increase the new solution, new enhanced solution in the coming quarters.

Coming quarters, okay. In terms of High-K Metal Gate sales portion, what is the portion of High-K Metal Gate as a total 28-nanometer this Q1 or end of this year?

Capacity?

Maybe capacity is fine.

Yes. Capacity-wise is our 28-nanometer - our High-K Metal Gate version will be, by the end of this year, will be reached 21.5k, mainly on High-K Metal Gate version, our capacity expansion.

Capacity expansion. So - and then what is the High-K Metal Gate portion now in terms of capacity?

Yes. Right now it's 14 - it's 12.5k.

12.5k.

12.5k per month. You will see our 28-nanometer capacity expansion is mainly on High-K Metal Gate version.

Okay. As a follow-up question for 28-nanometer sales portion, so you mentioned 28-nanometer sales portion will increase quarter by quarter. Am I right?

Yes.

So that means in Q2 15% to 20% or so. So in Q2 we can expect it could be higher than this range, right?

Yes. That is the trend. That is according our demand forecast.

Okay. Given that SMIC is ramping their 28-nanometer as well, so do you think the 28-nanometer pricing environment will be quite tough this year? And the follow-up question is when do you expect the 28-nanometer gross margin to reach its corporate average gross margin.

Yes. Your first question is regarding our 28-nanometer competitiveness.

Yes.

We believe that our High-K Metal Gate version, which UMC is the only - one of the two suppliers on this high-performance technology. So we see less intense pressure on this technology node. And that is UMC's focus, on High-K Metal Gate version. And we believe the other competitors might have a gap to catch up this technology. So, yes. And so your second question is regarding the…

28-nanometer gross margin trend, because it should be below the corporate average gross margin now. But when would I reach the corporate average gross margin?

Yes. Our trajectory, we believe that by the end of this year our 28-nanometer gross margin will catch up with our 12-inch average gross margin.

You mean end of Q4, right?

Yes.

Okay. So you factor in the [strict price condition] in 28-nanometer Poly-SiON. But given that your 28-nanometer High-K Metal Gate will be the only two alternatives in the market, so you think that your 28-nanometer gross margin should be able to reach the corporate average gross margin by the end of this year. Am I right?

Yes, correct.

Not corporate. It's 12.

12-inch average, yes.

12-inch? I'm sorry. 12-inch. And you can tell us what is your 12-inch gross margin now?

Yes, we don't have the - we don't provide this kind of breakdown because our range is almost fully depreciated. From a Company margin point of view, it's quite a difference.

I see. So do you have a forecast for your 28-nanometer gross margin to reach the corporate average gross margin, or it's too early to say that?

No, we only compare it to our 12-inch operation.

I see. Okay. Thank you so much. I go back to the queue.

Thank you.

Your next question is coming from Steven Pelayo, HSBC Please go ahead.

Yes. I would like to explore your comment about 28-nanometer doing the 15% to 20% of revenues in the second quarter. If I assume a little bit of top-line revenue growth and I play around with an ASP, that really seems like you're going to be pretty much fully loaded, I would almost assume. It depends on what we assume for ASPs in here, but what kind of utilization rates of your 28-nanometer capacity, if you only have currently less than 21k, do you think you will be at in the second quarter?

Yes. Our 28-nanometer utilization rate in the second quarter will be in the - it will be greater than 85% in the second quarter. And…

Sorry. Go ahead.

Yes. Our 28-nanometer capacity utilization rate in the second quarter will be greater than 85%.

And what was it in the fourth quarter?

The second half of this year will be greater than 90%.

But what was it in the fourth quarter last year? I'm just curious, what are we starting from? Was it only like 50% utilized in the fourth quarter last year?

The fourth quarter 2015 is around 50%.

Yes. That's great. That's what I thought. So if you go from a 50% to an 85% on 28-nanometer, I have to believe the leverage is pretty good and the margins are pretty good. So what do we think about the incremental margin and the drop-through as you go into the second quarter if your mix richens up that much?

Well, again, we have two forces accelerating with each other. One is our increasing depreciation. I mentioned Q-on-Q gross increase is around 10% in Q1. Full year is around 20%. So even though we are seeing pickup in our leading-edge node revenue, but the pace has to outgrow the depreciation increase in order to see improvement in profit margin.

Okay. Fair enough. And just a last question from me. You were highlighting some excitement maybe in the automotive supply chain. I know your other revenues are, what, about 6% of revenues. I don't know, what would you consider your percentage exposure to the auto segment today? I don't know if you're breaking out some of what display in a car might be on the consumer side. I don't know, what do you think your auto exposure is today?

Yes. So far it's still very minimum numbers, let's say 5% contribution from automotive. Now we do see that the growth rate will be better in other segments.

Do you want to take a guess on maybe exiting this year? Do you think that could be as much as 10% revenues?

No, we don't have that number here.

Okay. I'll get back in the queue. Thank you.

The next one if from Gokul Hariharan, JPMorgan. Please ask your question.

Yes. Hi. Thanks for taking my question. I just wanted to dwell a little bit on your comments on the inventory depletion getting over and starting to see some signs of restocking. Could you give us some color in terms of which are the supply chains where you're seeing that happening the most? Given that you're guiding for Q2 the 28-nanometer utilization also should start moving up, should we expect that we get back to a normal seasonality for the foundry space on the - going into the second quarter? Also, TSMC commented that inventory will - inventory days were pretty low, but customers were still holding back on putting order in given the macro situation. Could you comment on what you're seeing on that front?

Yes. For the - yes, the semiconductor supply chain inventory correction was pretty intense in the - since the second half last year. And after the inventory correction, based on the demand of our customers, now we are seeing our foundry business likely to begin recovery starting in the second quarter this year. However, due to the uncertainty of macroeconomics and the supply chain, will likely remain cautious in the inventory control. And we would adjust our 2016 semiconductor and foundry outlook to 3% and 4% growth respectively. And we estimate our full-year foundry growth will be around 4%. And we target our growth will be in line or a bit outpace the foundry industry.

Okay. That's great color. So 4% based on US dollar terms, right, given the currency is swinging around quite a bit?

Yes. And that's for the whole industry. UMC of course hope to outgrow that.

Okay. Just a follow-up question on the CapEx itself and the plants in China. It looks like, from a spend perspective, still more than 50% of the advanced geometry CapEx is going in Taiwan. Could you update a little bit on the China plants? Are they pretty much on schedule? Are we likely to see some wafers out in Q4 or is it going to be in Q1? And are we still starting with - or which node are we going to start with in the first place?

Yes. Our China fab construction are on track. And we are target to move our tools to this new fab facility in second quarter this year and start to - wafer start third quarter. And we expect to see some wafer products out in Q4. So we are expecting some revenue contribution by the end of this year.

Okay. And that is all 55 or 40?

It's mainly on 40-nanometer.

Okay. Okay. And the expansion in Taiwan is all 28, right?

Yes. Correct.

Okay. Thanks.

The next one is from Szeho Ng, BNP Paribas. Please ask your question.

Hi. Good afternoon, gentlemen. My first question is could you talk about the foundry gross margin for Q4?

Foundry gross margin, I think the whole corporate is around 5%. And as I reported, our new business had a minor loss of around NT$300 million, so pretty much you add back.

I mean at the gross level, not at the operating level.

Our gross level was again similar, 20.8% margin.

Okay. Got you. Thanks. And with regard to the China JV as of 12X, what will be the accounting treatment for that? Is it going to be equity accounted?

Yes. That's a little bit complicated. Maybe you can spare me a few minutes. UMC has the control of the Board. So according to the IFRS, we have to consolidate the operation even though we're only holding 30% of the equity. And the remaining of the 70% interest we'll give back to the other investors at the bottom-line level or the EPS level. And before the 12X go into mass production, all the costs will be put under the operating expenses item instead of allocating to each appropriate cost item. So only until the end of 2016, when it starts mass production, then we will see all the costs being fully consolidated into each item. Before that, all the expenses will be under operating expenses.

Okay. All right. And then - yes. And for fab 12A, what is maximum capacity?

12A or 12X?

12A.

12A. We are having a new phase 5 which can accommodate around 25k per month. But we will only start with around 10k of 28-nanometer.

Okay. All right. Thank you very much, Chitung.

Thanks.

And the next question is from Rick Hsu, Daiwa Securities. Please ask your question.

Yes. Hi. Thank you very much for taking my questions. My first question is probably for Chitung. Why was your Q4 gross margin so high, because I remember you guided around high teens, right, high teens gross margin for Q4? Why it cannot be at 20-point-something percent?

Well it's mainly due to some impact or help from the NT dollar weakness. But also there's quite an improvement from our yield production - production yield. So that helped the overall gross margin in Q4.

So can I refer to your yield improvement to your 28-nanometer?

Well, some of the impact. It's really a combination of weak NT dollar and better production yield.

Okay. Great. Thank you so much. Second question. I'm not sure if someone asked a question about this before, but could you give us some number about your 2016 capacity increase? By how much the total capacity?

Yes. The total capacity is, year on year, increased 6%. Around 6%.

Okay. So is it fair to assume that majority of the increase is coming from 12-inch, right?

Yes. 12-inch is increased by 8% and 8-inch by 3%.

Lovely. Thank you so much. I've finished my questions.

And the next one is from Roland Shu, Citigroup. Please go ahead.

Hi. Good afternoon, gentlemen. First question to me is looking at your 28-nanometer last year, actually revenue has been expanded by three times and overall revenue increased about 4% year on year. However, if I look at 28-nanometer revenue in absolute dollar amount actually have been declined. And also with [indiscernible] for most of time for your 40-nanometer and even for your 8-inch your capacity actually has been loaded at very high utilization. So why are the absolute dollar amount for this 28-nanometer revenue still declined last year? Was that due to the competition or was that due to this pricing pressure?

It's mainly due to the - our 12-inch mature node utilization is the decline in last year, especially on 65-nanometer technology node. And this - we see the customer is migrating from 65-nanometer to 40-nanometer faster cadence than our expectation. So we can see our 40-nanometer momentum is very strong last year, up to now. And our 65 utilization rate since second half last year is coming more weakened - weakening.

Understood. So how about this year? This year we also have a very strong growth on 28-nanometer. How about the other non-28 revenue? Is this going to increase or it will be pretty much like last year, probably be still decline slightly?

We certainly are managing to improve our 12-inch mature nodes' capacity utilization rate, especially on 65. And we are engaged to broaden our applications, especially on high voltage. We do see there are some technology migrations from latency nodes to the 12-inch technology nodes. For example, 55-nanometer and 40-nanometer high-voltage technology and some power management IC on 55, and also the embedded Flash on 55 technology node. So we see there's some improvement in the second half of this year on our 12-inch mature node technology.

Okay. So that means that we are very likely to grow all this non-28-nanometer revenue this year. Can I assume that?

Yes. Yes.

Understood. Okay. Thanks. And for your CapEx spending, NT$2.2 billion this year. I think that is probably a record high. So how are you going to fund this CapEx spending? Are you going to raise money on that?

Well, first of all, it's not a record high. We had bigger spending before.

Okay. So my mistake. Yes. Sorry.

No problem. And secondly, in reality we only spend a little bit more than 50% out of UMC's pocket. The other less than 50% is out of the Xiamen pocket, which is - UMC owns 30% only. And so if you calculate cash flow, it won't cost UMC that much money, or NT$2.2 billion. So basically we are like in a cash-positive position in 2016 due to the shareholding structure of the Xiamen fab. However, eventually, of course, we are going to buy back the remaining shares. But that's about seven or eight years later.

Okay. Understood. And for this year the overall depreciation is going to increase about 20% year on year. So that probably will impact the gross margin by two percentage points. So are you going to see the overall gross margin this year to be continuing to increase or that probably will be on the downside because of this increased depreciation?

All we know is on the cost side there is already a 20% increase from last year in depreciation. Of course we will try our very best to offset that or even outpace that, as I mentioned earlier. But for the time being we cannot give forecasts for profitability. But the cost side is already almost determined because of the depreciation schedule. And the rest is really how much we can strive ourselves to enhance our ASP combination.

Understood. Thank you. This is all my questions. Thank you very much.

Thanks.

And the next one is from Sebastian Hou, CLSA. Please ask your question.

Hi. Good afternoon, gentlemen. Thanks for taking my questions. The first one is a follow-up on the 28-nanometer utilization rate. So earlier mentioned the second quarter will reach over 85%. So I wonder, can you give the numbers for this quarter, first quarter 2016?

Yes. This quarter is around - it's 62%.

62%?

Yes.

Okay. Thank you. And I think earlier you mentioned - also mentioned about in second half you expect the utilization rate to reach over 90%. But I also remember that you're going to add 9k [incremental] capacity. So that will also include those incremental capacity.

Yes. Correct. We already factor in this capacity incremental. Yes.

Okay. Okay. Thank you. And my third question is also on the 28-nanometer, on the pricing environment. Earlier you made a comment that the High-K Metal Gate is not seeing the - has not seen the competition from another person. So far pretty much you and TSMC. So are you seeing any fierce pricing competition in High-K Metal Gate as well?

We cannot forecast that because the pricing is always intense - pricing pressure is always intense. But your question depends on our customers, their supply chain management strategy, and our competition, their pricing strategy. So I cannot comment on this.

Okay. The reason I ask this question is because your competitors also see their 28-nanometer utilization rate up from 80% to 90% this quarter and your utilization rate also increased. So it seems like a lot of the 28-nanometer High-K Metal Gate capacity utilization rate is already running at a high level. So I just wonder if you might need to lower your price or - to gain more orders, or actually this demand is very strong that automatically they just flow in?

Yes. My observation is actually due to - we see that more and more customers and products, they are moving from 28 low-power version to High-K Metal Gate version. So the demand on the High-K Metal Gate version is increasing. And UMC, we continue to improve our yield and our performance. So we are gaining traction on High-K Metal Gate demand. So that's why we still see - even we expand our 28-nanometer capacity, but we still see that demand is coming there.

Okay. Thank you. Another question is on the margin of your 28-nanometer. So earlier you mentioned about you have the two new products, which is the 28 HPU and LPU. So I wonder, if you look at - compare margin of these two new products versus the existing version, how is that in terms of margin? Is it better or still in line?

We improved the version for our customers. So the main purpose is gaining the traction from our customers. It's not to defend our demand. It's not prepare for improve the ASP.

Okay. So how about the cost? The same?

This cost is the same. Yes.

Okay. Okay. And my next question is on your yield rate. Can you update us on your yield rate for Poly SiON and High-K Metal Gate on 28 nanometers respectively?

Yes, our - actually both our Poly SiON version and High-K Metal Gate version are pioneer products. The yield is around 90%.

So both are 90%. Okay.

Yes, both are in 90% range.

Okay. I remember the last quarter the High-K Metal Gate was still 88%. So improved by two percentage points, if I can say that?

Yes.

Okay. Last questions from me. Can you give us a detailed breakdown of your utilization rate for 8-inch wafer and 12-inch wafer for first quarter?

Yes. For the first quarter our 8-inch utilization rate is in the high 80% range, high 80%, and 12-inch is mid to high 70 percentage range.

Okay. And you expect these two will be higher in second quarter?

In 12-inch, yes.

How about 8-inch?

Yes. 8-inch also. Yes.

Okay. Thank you very much, gentlemen.

Ladies and gentlemen, we are running out of time, so we are taking the last question. And the last one if from Randy Abrams, Credit Suisse. Please ask your question.

Okay. Yes. Thanks for squeezing me in. On the 28, I just wanted to clarify in first quarter, I think second quarter 15% to 20% of sales, the percent ramp you expect in first quarter. And then for the second stage of the ramp, if you could talk now how broad that customer base is for 28, if it's a few customers driving that or how it's broadening out, and then which applications, if it's mobile or any other applications?

Yes. We have more than 15 products in production in this and second quarter on the 28-nanometer technology. And mostly are on the baseband and integrated AP and baseband, integrated, and also the DTV, digital TV and WiFi connectivity.

Okay. And then if you could say, I guess, number of customers tied to that 15 products, like how broad are the customers and percent of revenue, if it's going to start to jump up in first quarter or it's more second quarter?

Yes. On first quarter, so far we have 20 customers engaged on 28-nanometer. More than 20.

Okay. Would the…

Yes?

Okay. And would the percent of revenue already start to increase in first quarter or it's holding about 10% now in fourth quarter?

Yes. First quarter, 28 will contribute actually around 10%. It's flat compared to previous quarters.

Okay. Okay. And then could you talk about the applications or end markets? You are getting flat overall, but is there any relative strength or weakness or end market outperforming that overall flat guidance and anything declining in first quarter?

Yes. On this quarter, in communication, we decline - we have some decline. However, the - among the communication, the WiFi and [indiscernible] there are some increase. And only ISP, Image Signal Processor and SDI, Small Display Interface chips, they were going down. And for the computer segment, Flash and LCD ICs and tablet were going up and the power IC is going down.

Okay. Great. The last question I had on the ramp-up of China, if you could talk about the OpEx, if you'll be adding expense, how we should think about the expense growth through this year. And then also on non-op, where you had some disposal gains. What was the benefit in fourth quarter? Like what drove that higher non-op and if we should expect that to continue?

For Q4 it's really a one-off. We recover our debt from a high-speed railway in Taiwan through a lawsuit. So that's really one-off. For the Xiamen in the OpEx, we're talking about one percentage point in operating margin negative impact. And this number will go up to maybe around 4% or even 5% by the end of this year.

Okay. So that's at the operating level, a few more percent. We should assume R&D then or SG&A grows a few percent as percent of sales, to factor that in?

The rest of the OpEx will be in line with our revenue. The ratio will remain the same.

Okay. Thanks a lot.

Thanks.

Thank you for all your questions. That concludes today's Q&A session. I'll turn things over to UMC Head of Investor Relations for closing remarks.

Thank you, everyone, for joining us 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.