Jason Wang: Well, I mean, it is — like you said, we do have a methodology of calculating that. It is maybe a really complicated answer. The semi is better right now, it’s low single digit, but we are — the foundry is about mid-single digit. But even within the foundry, there are different technology nodes and some nodes are better than the others. So — and then, for instance, even we report that the foundry industry will shrink by mid-single digits, but UMC addressable may be a little bit different. And then if you look at the end market exposure and every foundry will probably be different. But — and so we do look at the multilayers of the data. And at this point, we think the foundry will be about mid-single-digit decline, yes.
Chi-Tung Liu: Low single-digit decline.
Charlie Chan: I’m sorry about that. Yes. So just a quick follow-up, right? First of all, with the UMC addressed low market does better or worse than the industry average? And second question, you said that you consider some major foundries, the wafer price hike in your foundry industry assumption? Thank you.
Jason Wang: I mean there are some, but not to the full extent. But going back to the question about the UMC addressable note. Currently, we anticipate the decline will be in the low teens percentage range.
Charlie Chan: Low teens?
Jason Wang: Yes.
Charlie Chan: Okay. Got it. Okay. And — you just said that 1Q could be better than the cycle. Do you mean that your second quarter foundry utilization will flat to up? Is that a right interpretation?
Jason Wang: I mean, we’ll give you the guidance.
Chi-Tung Liu: Just I’ll say, in the first half will be trough, it’s not Q1. So some time in first quarter, we hope to be the trough. Hopefully, this change to be Q1.
Charlie Chan: I see. Now I get it. Thanks, Chi-Tung. And let me switch gears to the pricing, right? I appreciate company strategy that cost cut doesn’t translate into better demand, et cetera, right? But some of your competitors are cutting price. Would you foresee some market share lows in some mature nodes, if you want to be firm up on your pricing? Thank you.
Jason Wang: I mean, our objective is clear. We will support our customers and to make sure they remain competitive and also with their respective market shares. Now the — for UMC consider the AC business loading trade-off, the way we see it is there is a considerable progress was made in pricing reposition for UMC. And the cost reduction — the productivity improvement in the past two years actually help us with that. We intend to preserve the win-win structure profitability between the foundry and customers. And under the recent market condition and our product portfolio, we believe the trade-off between the loading and the price will end up with limited benefit in demand creation, because the weakness of the PC and the smartphone and consumer sales group. However, we will continue to work with our customers to make sure they secure their market share in their respective markets.
Charlie Chan: Okay. So could you be nimble on pricing if customers come back to say, hey, is demand if you cut price. I’m just wondering how firm are you on the pricing?
Jason Wang: I mean we in terms of our guidance right now for 2023 and we also — I mean, it’s our intent to preserve that structure of the profitability and protecting the pricing position in terms of AC management, and we’ll continue to manage that with our customer closely.
Charlie Chan: Okay. And my last question is probably for Chi-Tung. So based on above discussion, assumptions, et cetera, can you give us a kind of full year gross margin guidance? And do you have like a minimal gross margin target based on your depreciation assumption, pricing assumption, et cetera? Thank you.
Chi-Tung Liu: Yes. We don’t give out the full year gross margin outlook. We do have the depreciation assumption for 2023, which right now after the cut in CapEx will be a low single-digit decline compared to year 2022.
