Bruce Lu: I see. Okay. The next question is for the advanced 3D IC packaging which Jason started to talk a bit more. I want to know the value proposition for UMC in this business because you don’t have the advanced node. You don’t have the three or five nanometers, which is somehow vertical integration is important. So where do you see your value when you don’t have the advanced node dies for the packaging? And what’s the profitability look like for this business? It’s got to be the margin of credit [ph] for you.
Jason Wang: Well, I mean first of all I mean, you’re right. But if we look at this market specifically, the sounder device is looking from a phone factor standpoint. And sound device is looking from the enhanced bandwidth standpoint and lower power consumption. So if you have a horizontal view, I think from the small phone factor standpoint, some of the applications do not require most advanced technology nodes. And sounder applications will probably need a little bit better but still not the most advanced because they’re seeking for the balance between the phone factor and the higher bandwidth and the power consumption. And if you’re directly referring to the very super high bandwidth, that’s a space that we have not addressed. So there’s still a sizable market within the 3D IC space.
Bruce Lu: So that is what you mentioned about 15% to 20% of the addressable market.
Jason Wang: That’s among the AI.
Bruce Lu: Of the total.
Jason Wang: Yes, the overall AI semiconductor market. And that’s part of it.
Bruce Lu: I understand. Okay, thank you. And the profitability? Profitability for this business?
Jason Wang: I mean, we’re very cautious about that. And we’ve been running the company, improved our structural probability for a few years already. And of course, any solution we’re offering and operational efficiency, we’re always part of the consideration. That will be a profitable operation for us.
Bruce Lu: So we can consider as a marginal equivalent for this business?
Jason Wang: Right now, I can’t comment on the marginal equivalent. But we’ll try our best to maintain our structural profitability. I can’t really say.
Bruce Lu: Okay, thank you.
Jason Wang: Thank you, Bruce.
Operator: Thank you. Next one, Charlie Chan, Morgan Stanley. Go ahead, please.
Charlie Chan: Hi, Jason, Chi-Tung, Michael and David thanks for taking my question. So first of all Jason, great calls on the cycle and the market forecast. I think your industry peers is converging to your forecast on the non-AI market. And also excellent job on the pricing, displaying so well done on the margin side. So a couple of questions from my side. So first of all, the CapEx right? Does that include some spending for the U.S. partner Fab? Because you kind of mentioned that there could be some bottlenecking required for the U.S. operation.
Jason Wang: I mean, for the 2024 number, that’s not a whole lot. That will not change, the current CapEx projection. When we say we pick out in 2024 in terms of CapEx and the 2025 was declining that’s already including that assumption.
Charlie Chan: Okay, so any CapEx for that de-bottlenecking should be more 2025?
Jason Wang: Well, yes most of it will happen there, yes.
Charlie Chan: Okay. And yes, also staying on this 12 nanometer business, right? You said you try to accelerate customer schedule. Do you think any kind of production can be ahead of 2027?
Jason Wang: We certainly hope so. But cooperation like this scale naturally comes with serious kind of challenges, right. So we have gone through a rigorous due diligence since day one, and we have been proactive in managing those potential challenges. But so far, the collaboration has been a positive for us. And so we want to focus on to accelerate that. But I can’t give you any specifics at this point. But I think I can tell you the project is on track, and we have good confidence that we’re making good progress right now.
Charlie Chan: Got you. So in terms of the customer’s feedback or demand compared to maybe three months ago or six months ago, do you see more commitment from your customers or partners? So I remember the Intel Fab capacity is 50K to 60K, right? Are you confident that you can feel that capacity?
Jason Wang: I mean, we never specific talk about capacity size. In terms of the capacity arrangements is very typical. We have to work with our customer and align with them based on their forecast and then we can deploy that. So there is no specific capacity number at this point. Secondly, we are seeing more interest because we announced this early this year, obviously that customers want to know more about it. And so we see a lot of interest. And I think we’re making some good traction. But first thing first, we have to demonstrate that ourselves. So [Indiscernible] is we just focus on execution today and giving the project execution standpoint, we don’t foresee any major risks.
Charlie Chan: Okay, yes. So, yes I heard that your progress also get on the nerves of your industry peers. For example, at least a key customer Novatek, right? I’m not sure whether there’s some dynamic that you exceed Novatek’s goals, because Novatek in the future, probably they would more depends on TSMC and TSMC also want to bundle with this customer tighter. So I’m not sure if there’s already some counter move from your major competitor in 12 nanometers.
Jason Wang: I mean, first of all we do not comment any specific customer, we never do. And from the competition standpoint, we will look at this in a way of a building a strong relationship with our customers. It can only forge upon a fundamental strength of technology leadership, manufacturer’s capability, excellent capacity offering. And so you have to win by that you don’t win by relationship. Oh, having a relationship is always good, but that’s not we focus on. And we will continue strengthening our competitive advantage in supporting our customer and winning their business and building that relationship.
