Welcome, everyone, to UMC's 2019 Fourth Quarter Earnings Conference Call. All lines have been placed in 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. And for your information, this conference call is now being broadcasted live over the Internet. Webcast replay will be available within an hour after the conference is finished. Please visit our website, www.umc.com, under the Investor Relations, Investors, Events section And now, I would like to introduce Mr. Michael Lin, Head of Investor Relations at UMC. Mr. Lin, please begin.

Thank you, and welcome to the UMC's conference call for the fourth quarter of 2019. I'm joined by Mr. Jason Wang, the President of UMC; and Mr. Chitung Liu,, the CFO of UMC. In a moment, we will hear our CFO present the fourth quarter financial results, followed by our President's key message to address UMC's focus and the first quarter 2020 guidance. Once our President and the CFO complete their 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 section. During this conference, we will make forward-looking statements based on the management's current expectation and beliefs. These forward-looking statements are subject to a number of risks and uncertainties that would cause actual results to differ materially, including the risk that may be beyond company's control. For this risk, please refer to UMC's filing with the SEC in the U.S. and the ROC security authorities. Now I would like to introduce UMC's CFO, Mr. Chitung Liu, to discuss our fourth quarter 2019 financial results.

Thank you, Michael. I would like to go through the 4Q 2019 Investor Conference presentation material which can be downloaded from our website. Starting on page three, the fourth quarter of 2019. Consolidated revenue was NT41.85 billion, with a gross margin at 16.7%. The net income attributable to the stockholder of the parent was NT3.84 billion and the earnings per ordinary shares was NT0.33. Our loading utilization rate in Q1 of 2019 was 92%, slightly better than 91% in the previous quarter and also 88% in the same quarter of last year. And revenue NT41.8 billion was record high for UMC. On page four, financial income statement on the sequential basis, revenue NT41.8 [ph] grow by 10.9% quarter-over-quarter and gross margin as a result also grow 8.3% sequentially to NT6.96 billion or 16.7% [ph] gross margin. And because the combination of our newly acquired U.S. Japan operations, so our operating expenses grow to NT6.1 billion, which lead to a operating income of NT2.018 billion. --: So, on the page five, our year-over-year comparison. The full-year revenue was NT148 billion, small decline of 2% year-over-year which mainly due to the weakness in the beginning of 2019. Gross margin rate is around NT14.4 or an total gross margin of NT21.3 billion and operating expense is under control and reduced to NT21.8 billion for the full year. And as a result, the total net income attributable to the stockholder of the parent for the full 2019 was NT9.7 billion or equivalent to an EPS of NT$0.82. For balance sheet for the full year our cash has accumulated to NT$95.4 billion and the total equity for the company is at NT207 billion. So on page seven, our ASP for the quarter was somewhat flattish compared to the previous quarter. On page eight, our revenue breakdown and because of the combination of the new acquisition in Japan our total revenue from Japan grow to 9% of the total pie compared to 2% in the previous quarter. And Asia remain as big as 55% our single largest market and North America is around 30%. And for the full year, Asia is about 57% and North America is 32%. And Japan, Europe about 5% to 6% each. And for IDM, again because of the combination of Japan operation, in Q4 IDM percentage jump to 13% of the pie and fabless is the remaining 87%. And for the full-year the difference is much less, is similar to the previous year around 8% to 9% for IDM. One page 12, our segment breakdown still with the similar descriptions among communication in computer, and consumers, with communication is the single largest segment around 54%. And for the whole year, we'll continue to see more communication contribution to 52% for the whole year and consumer is around 26%. On page 14, our total revenue coming from 40-nanometer and below is around 32% with 28-nanometer is around 10%. And for the full year, we have minimum contribution from 14 and stable contribution from 28 and 40-nanometer which in combined around 34% for the full year of 2019. On page 15, our Q1 capacity here is factoring the annual maintenance already, but still we see somewhat flattish total capacity available in Q1 versus the previous quarter. Our full year CapEx for the 2020, right now the budget around NT$1 billion and 85% will be 12-inch related. So the above is the summary of UMC result for Q4 [ph] 2019. More details are available in the report which has been posted on our website. I will now turn the call over to President of UMC Mr. Wang

Thank you, Chitung. Good evening everyone. Here I would like to update the fourth quarter operating result of UMC. During the fourth quarter, we started to account for the Foundry operation and our recent acquired USJC which is a FAS12M [ph] in Japan. In spite of the currency headwinds that come in the foreign exchange market, our Foundry revenue increased to 10.9% quarter-over-quarter to NT41.83 billion, leading to Foundry operating margin of 4.9%. Utilization rate increased to 92%, bringing wafer shipment to NT2.04 million, 8-inch equivalent to wafer primarily driven by the communication and computing segments. For the year, our earning per share increased to 41% year-over-year to NT0.82. Our continued disciplined in CapEx approach also enabled UMC to generate a total of NT37.1 billion in free cash, up 19% year-over-year. In terms of technology, we've recently validated our 22-nanometer process on the USB 2.0 test vehicle, demonstrating the technology readiness of this design rule shrink from 28-nanometer. UMC's 22-nanometer process features a 10% area reduction, better power to performance ratio and enhance RF capabilities compare to our existing 28 high-K Metal Gate technology. Looking to this first quarter of 2020 based on the customer forecast, the overall business outlook appears to remain consistent with the previous quarter primary due to the stable wafer demand across wireless communication and computer peripherals segments. As we receive new product tape-outs that will enter future production pipeline, we expect to benefit some 5G and IoT trends that will generate additional semiconductor demand, specifically in wireless device as well power management applications. While our focus remains to maintain a disciplined in capital expenditure spending, owing to mid to long-term customer and market demand, we have setup our 2020 CapEx budget of US$1 million. UMC will continue to penetrate into new segments and expand our presence in existing market. Our core competence in process technology development, and world-class foundry service will strengthen our position in delivering logic and specialty manufacturing solutions. Now I will like to address the Wuhan coronavirus situation here. Regarding the novel coronavirus outbreak, we promptly setup a cross functional prevention team prior to Chinese New Year. That is specifically tasked with managing the potential risk of the coronavirus at UMC. Today, all of our operations remain normal. And we will continue actively monitor the rate, both internally and externally. So we may better kindly to respond to any changes in this fluid situation. Now, let's move on to the first quarter 2020 guidance. Our wafer shipment will remain flat. ASP in U.S. dollar is expect to remain flat. Gross profit margin will be in the meetings percentage range, capacity utilization rate will be around to 90%. Our 2020 CapEx budget will be US$1 billion. That concludes my comment. Thank you all for your attention. Now we are ready for questions.

Thank you President Wang. And ladies and gentlemen we will now begin now question and answer session. [Operator Instructions] And the first question is coming from Randy Abrams of Credit Suisse. Go ahead please.

Okay. Yes. Thank you. Good evening. I wanted to ask the first question just if you could give a look at to a view for 2020, maybe an outlook for foundry sector weathers for the whole industry or stripping out the advanced technology you don't access. And then, your view relative to that how you expect UMC to perform? And the second part of -- if you've discerned any changes from virus at this stage, whether from the customer demand side, or some of the activity from that at this stage?

Sure. Hi, Randy. Thank you for the question. The first question is about the overview of the foundry outlook in 2020. We expect semi to grow in mid single-digit and foundry segment to grow in high single-digit percentage range. And that's actually including the advanced node as well, okay? That's not exclude event. No, that's not focus on addressable only. Now, if we look at the UMC growth in 2020, with USJC, our newly acquired the fab, we will grow higher than the foundry industry. And without the USJC, we will grow in line or slightly better than the foundry industry. So that's kind of where we project at this point for the 2020. As far as for the question of the coronavirus impact. At this point, we are closely communicating with our customer to monitor the development of the situation. At this moment, there's no change in our Q1 demand, should that outbreak deteriorates into a situation that may cause supply chain issues, which we are looking at it closely in China, that could be some impacts to the entire semiconductor industry. And at this point, there's no change yet.

Okay. Thank you for that. If I could ask you on the 28-nanometer where last quarter I think you saw some light at the end of the tunnel or some improvement. Could you maybe give an update on the application if your qualifying and then timing to bring that in? And maybe in that like how you could see 28 ramp-up as percent of revenue through the year or towards year end? And I also had a question just as you ramp back 28, how that would impact the gross margin where you get the benefit of filling the fab, but I guess relative to corporate average, how you how you see it, whether it will be accretive to corporate gross margin or still dilutive to the margin?

Sure. Well, we've been reporting many quarters about the 28 contribution to us, and we've been talking about this fragment in the market and we're still at this recovery mode. So, we expect to see the 28-nanometer contributing Q1 2020 was still be under the recovery mode. But we are confident in improving our 28 utilization in second half 2020. What we per se is our -- found our key 28 project engagement will start to enter volume production in third quarter 2020, mainly driven by the wireless communication IC. And as far as for the gross margin.

Yes. For the gross margin, I think any recovery in the currently underutilized 28-nanometer capacity will be incremental positive to our overall corporate gross margin.

Okay, great. And then last question. Just on the CapEx of 1 billion [ph] with the 85% 12-inch and then the rest 8-inch. Could you maybe lay out in capacity addition to where like the fabs are where you expect to increase the actual wafer capacity?

Sure. The way that you break it down first is between 8-inch and 12-inch. But the other way we look at is more we split into three different category. One-third of the CapEx will for the non-capacity related, for example, our general budget. The one-third was account for the increase of capacity major for 28-nanometers in our 12x, the Xiamen [ph] facility. And the other one-third is truly a upgrade throughout our overall capacity pool. So, the overall capacity worldwide will be a low single-digit year-over-year in 2021. While we have been -- the budget for 2020 is more of a capacity plan for the 2021.

Okay. And on the 28, if you could give an update how much capacity you have? I think maybe last update, it was -- if I were right, 39,500 and 5K in Xiamen. But if you can maybe give an update how much you have for 28 and how much you may expand 28?

Well, the 28 monthly capacity will remain unchanged at the 45K to 46K a month in 2020. And what we budgeted for the 2020 CapEx is mainly for the increase of 2021.

So, just adding to that, the Xiamen capacity likely to reach 25,000 wafer per month at mid of 2021.

Okay, great. Thanks a lot, guys.

Thank you.

The next question is coming from Charlie Chan of Morgan Stanley. Go ahead, please.

Hi. Happy New Year. And first of all, I want to follow-up the question regarding the 28- nanometer demand. So, you said that demand comes on the wireless semiconductor. So my question is that, what kind of wireless? Because most of smartphone AP already migrate to 12-nanometers or below. And secondly, do you classify the AMOLED driver IC and Image Signal Processor as the wireless as semiconductor conductor for a 28-nanometer? Thanks.

Sure. First, Happy New Year to you too. Yes, the answer is yes. We are [Indiscernible] the WiFi devices and the display drivers IC and the sound sensor device. They are [Indiscernible] the application for the 28-nanometers, yes.

Okay. And sort of clarification. And the second thing is that we're being seeing that a lot of tooling-edge [ph] are in tightness and some order overflow from those bigger players. So can you just comments, which process nodes you see are in tightness or even in shortage. And second thing is that, do you see any possibility that you have to select customers even hike in the price in the coming quarters?

Okay. Well, that's more a question for across all nodes. So, let me see if I can break it down this way. We see tightness of the capacity tightness across the 8-inch advanced nodes, okay, which is anything more than the 0.18 micron. And we see the 12-inch all the legacy nodes, we found the 19-nanometers [ph] all the way to 55-nanometers [ph], okay. And for the 40-nanometers, we see some decline in the Q4 2019 and largely due to the weakened demand, but in the long-term view, we are continue cautiously monitoring the migration and about this particular node, the 40-nanometers. So, that's kind of how we look at the market right now.

Okay. So, do you expect that tightness will continue and you'll have to kind of be more firm on your pricing or even doing some price hike at headquarters [ph]?

Well, I mean, we do think this tightness will continue and particular on those nodes, I highlighted and in terms of pricing, we still have to align with the market price and we'll continue working closer with our customer based on the market price trend.

Okay. And lastly, maybe some updates on the lawsuit with Micron. Maybe Chitung or Jason can help us. Because this has been a very big overhand to the stock and it had been for more than a year. So, we really hope to kind of get some clarification regarding the status and the timing, potential impact to company's finance and operations. It will be very helpful for long-term investors? Thanks

Yes. We understand that. Right now litigation is still ongoing. Giving the case that is under the judicial process, we do not have any update information -- updated information. So if there's any significant development we'll disclosed down accordingly. So there's truly not about that right now.

Okay. And then just to clarify, in your opening remark, sorry, the answer to Randy's question. You said that your 2020 revenue is going to outgrow the foundry industry without including the Japan fab, is that right takeaway?

Yes. I said, with all the Japan fab we will grow in line or slightly better than foundry industry, yes.

Okay. So what was the reason that you're outgrowing or gaining market share, because I can understand TSMC [Indiscernible] because they continue investing kind of advanced nodes, right? But for you guys, you also competing with the Chinese vendors, but Chinese vendors seems to be very confident they are well-positioned for the Chinese customers growth, right? So can you give us some elaboration, why you can outgrow?

Sure. Well, first of all, we expect to capture high growth from the wireless communication including early 5G rollout opportunities in both logic and specialty technology. And, obviously, the change we believe, is mainly driven by the demand pickup. That's one reason. And second is of course the market share gain in 2020.

Okay. So, so in which segment you are gaining share?

Well, I mean, let me go this way. If we look at the market trend, and we already start observing some of the evidence by one, increasing power and RF application such as transceiver and the switch that in a 5G phone and the base station, that's one area. Second is increase of OLED adoption in a smartphone. Okay. And that's second, which will fuel the OLED driver IC. And we also touched on earlier too the driver. And the third is the multi-camera modules, that found in the smartphone that will drive the sensor and controller wafer demand. And also we look -- we saw the upgrades in a WiFi standard for the faster connectivity requirement and we will get benefit from that as well. So this probably where I can think of this for different area.

Yes. We had also seen of AMOLED driver IC and ISP from Korea customer. Do you think there is something structural? I mean, maybe they have some internal fab shortage this year, but long term how solid and how sustainable do you think this outsourcing is going to be?

Well, we usually don't comment any specific customer and so I don't see its appropriate for me to comment that, yes.

Okay. Okay. Sure. Just if you can give us some perspective from kind of high-level strategy perspective, right, why this could be structural. I think that should be helpful. I mean, not -- maybe not for specific customer to that, but just for the sector or industry overall. Is that possible?

Well, I think the change in the market space does fuel the increase of the wafer semiconductor demand, right. So I will say that the opportunity that we're participating right now, yes.

Okay. Okay. This is very helpful. Thank you.

Sure. Thank you.

And the next question is coming from Gokul Hariharan of JP Morgan. Please ask your question.

Thanks for taking my questions. First of all, could you talk a little bit about how you expect depreciation to shape up in 2020 and with Fujitsu fab consolidation and higher CapEx compared to last year. What is our expectation of depreciation going into 2021? I think previously we had expected I think 2021 probably to be the year where we will see a meaningful drop-off in depreciation expenses. Is there a change to that given the increase in CapEx and expansion on 28 nanometer? That's my first question. And I had a couple of follow ups also.

For depreciation in 2019, it declined about 5% to 6% as we expected. And because of the combination of Japanese fab, our 2020 expectation in terms of depreciation decline, is around low single digits. And of course, yes, as we mentioned earlier, the peak of the 10 [ph] year spending was about four years ago. So, 2021 or 2022, we will start to see even much bigger rate of decline in terms of our depreciation expenses.

Could we be – be a little bit more specific given we are spending a little bit more CapEx are we thinking about like 15%, 20% decline in depreciation in 2021. Or it is going to be more gradual than that?

I think it will be a little bit more gradual than that, but still our spending for 2018 and 2019 both are around NT$0.7 billion only. So, still I think the mega trend won't change much, but the magnitude for 2021 will be less than what you mentioned.

Got it. Thank you. Also given the roughly 10% accretion on revenue side from the Fujitsu acquisition, could you also comment about what is the margin in fact, from consolidating this fab? Is it additive in fact to gross margin or is it similar to corporate average?

So, for the Q4, the first quarter, they are slightly above breakeven. And as we mentioned earlier, we're driving the synergy and it may take up to two to three quarters. So, we do expect the contributions to improve over time. And that's the current situation they are in black in Q4 already, and we expect they will continue to be profitable in Q1 of this year.

Okay, thank you. And last question from me, could you talk a little bit about how is the current situation on 8-inch utilization demand capacity and pricing? And if the Coronavirus situation deteriorates and the current weakness that you’re seeing in China 5G demand persists, if there is a lower expectation on 5G demand itself, does that affect your 8-inch utilization or demand or 8-inch you would say is relatively is less impacted?

Our Q4 2019 the 8-inch is at a low 90% utilization rates. And in Q1, 2020 our utilization will be in mid-90 range. We are expecting to see higher 8-inch utilization rate after the Q1 2020. So we remain confident about this outlook of the 8-inch. And in terms of the virus outbreak, as we reported earlier, based on the communication with our customer at this point, there's no change in Q1 yet.

Okay, got it. Thank you.

And the next one is coming from [Indiscernible] of China Renaissance Securities. Go ahead, please.

Oh, hi, good evening gentlemen. With the company turning a lot more cash generated, wondering whether the company will continue to pay a special dividend or to raise the payout ratio over 100%?

Well our last year payout ratio was 100% already, so it’s probably difficult to gain higher than that. And for this coming year, of course, we will continue with our high dividend payout policy, and we were propose to our board in due course.

Okay, great. And the other question, again, on the Japanese fab, I believe it is still not fully loaded, right. With the company conceded to move more business from Taiwan to Japan or how easy would that be?

Well, that's part of our, our synergy plans. You know, the, in addition to streamlining the material procurement and fab productivity enhancement, we also try to bridging product from the [Indiscernible] to the Japan fabs. So that is part of our activities there.

And the customers are actually quite receptive to that arrangement, right? To move from the Taiwan fab to Japan fab?

Well, yes, I mean, yes. We are aligned with our customers for those activities. Yes.

Okay, all right. Thank you very much. Happy New Year.

Yes, you too.

Thank you.

And the next question is coming from Garen [Ph] of Goldman Sachs. Go ahead please.

Hi, this is Bruce. So I need to clarify one thing that you know 28 nanometer profitability was similar to corporate average even with full capacity, is that right?

No, that’s not the way we look at this. I mean, any recovery in the 28 nanometer capacity utilization, which we expect to see that starting from mid of this year. We have been incrementally positive to our current corporate average possibilities.

Okay, but that will be still running like 20%, 30% range is that right?

No, I didn’t say that. I mean, it’s quite complicate even for the same 28 nanometer technology, different customer we have different profit margins not to mention the different fabs we have also -- different profit rates [ph].

Okay, so my question is that, we -- I’m kind of very surprised to see the 28 nanometer capacity expansion. If you use the $1 billion CapEx, 70%, 80% for 20 -- the variance award for 28-inch, -- 28 nanometer’s capacity might increase by 20%, 30% in 2021. But TSMC, the biggest 28 nanometer capacity providers suggests that the industry is oversupplied. And do you expect this incremental capacity for your 28 will be margin accretive, ROE [Ph] accretive?

If you put all actions in one pictures, yes, because our current Xiamen factory will be the main area for 28 nanometer expansion And right now, our Xiamen factory is only about 70% equipped and the remaining 30%, 35% once we reach the full capacity, the whole earning means profit, profitability structure will be a lot more ideal, and will be also much easier to reach your breakeven positions with 40 equipped with 25,000 wafer per month fabs compared to their current status.

Yes, but my question is that by the end of 2020, assuming you're increasing your capacity for 2020 does, based on value do you have the full capacity for 28 by the end of 2020. So you will have a better profitability by then and with this increase incremental capacity without the margin and how your credit is?

Yes, they won't be equivalent to our current corporate average, but it will be much better than it’s current single fab profitability. So we will see a pretty significant profitability improvements because of the economy of scale benefit for that one particular fab.

I see. What is the revenue of concentration for your 28 nanometer to a single customer or single end customers? Did you see the high revenue concentration on that, because, you know we are trying to evaluate and risk for that?

Yes, let me answer you in a different way first. Our top 10 customer is around 55% to 60% above us and top two, top three customers sometimes is around 10% steadfast [ph]. And for 28 nanometers we are now have more than dozen of customers. So the diversity may not be as that specifies the whole company but also are quite diversified. So, I don't have 28 nanometer customer list for you right now, but the concentration won't be too much higher than our corporate average.

I see. I understand, understand. Now the last question is that the management guidance guided by industry, foundry industry growth rates are high single digit, and this is much slower than what you simply guided for the foundry industry. Can I know the differences?

We all have a different view to look at this market outlook. So it’s our intelligence telling us the outlook for the 2020 will be somewhere at the high single digits, so that's why we – see our outlook.

But the gap is quite big.

I can comment. I don't know, how they calculate it.

Okay, I'm just saying that because we need to -- I just tried to know the differences.

Of course. Yes. Yes, because we don't -- we don't have a detail on how they calculate it. So, it’s hard to…

But if they are having 50% growth market share for the whole market and they are guiding for 20% for their revenue growth, if you are guiding for line, height and growth for the industry growth which means that rest of the foundry will be like you know, low single digit decline.

You can [Indiscernible] I am making one story, so I think it’s always difficult for us to answer that.

When you take away your stuff, you 8-inch factor in my case will grow by 20% as they guided?

We use our market intelligence to come out with this high single digit number.

Understand. Thank you.

[Operator Instructions] And the next question is coming from Sebastian Hou of CLSA. Go ahead, please.

Thank you. First question is on what Paul [Ph] on what you don’t just said about the improvement possibility in your Xiamen fab. So would that change? Would that change the subsidy from the government you're receiving?

No, the subsidies we have already received in cash in our pocket, but accounting wise, we have to recognize that along with our depreciation timetable, which is around six years. So the fab we already recognized that for more than two, three years, remaining three to four years is intact.

Okay. Okay. So that's still coming through the operating -- the other incomes in operating line?

Yes, it's financial…

Okay, so basically, it's irrelevant to the actual profitability of Xiamen fab?

Yes, the test might be different, but the subsidy wise is that all particles about the same.

Okay, but net net is still a positive to the company?

Yes, yes, sure.

Okay. Got it. And also in the prepayment remarks, the Co-President nations that your company is receiving new product about to enter future production pipeline up, can you elaborate more about what type of the amount you're receiving that make you excited?

Well, the outlook of the table is across its different various nodes. For the -- our 28 nanometer project engagements, we kind of talk about that earlier, mainly driven by the wireless communication, including Wi-Fi the space drivers and others. The -- for the 8-inch and we also touched that -- talked about the RF trends, the switch and the transceiver and those area. So, they are four different various nodes. And but mainly I will say if you look at this in general, it’s really a lot of this is associated with the 5G rollout. And we see this 5G rollout in the overall semiconductor demand increase. So, we see quite a bit of opportunity there.

Okay, got it. And when you mentioned about the four areas that you're seeing grow to drive the likely above industry average growth earlier and the one of that is 5G's smartphone and base station. So can you give us more details about what types of the ICs that you're supplying into 5G smartphone and base station?

Yes, under the 5G infrastructure such like the sub [Ph] 6G, the RF-SOI and the RF Switch will associate with that. Power Management also associates with that and that's for the 8-inch. The some of the – display requirement actually for the 5G smartphone, the AMOLED that’s the switch drivers as we relate to 5G as well and that's where the area we see that many of the opportunities.

Okay. Got it. And I have another question is about your plan on the Fujitsu fab, that you just acquired. I understand that you don’t mention is already you are above breakeven now and probably windproof. But, if you evaluate that, what, how long does it firstly -- how long does it take for that fab to reach the corporate average rising rate? And second is, that once you reach the corporate average is why this rate, and what's the probability like will we be also be similar to the corporate average, will still be interesting to know.

Well again there, our corporate average hopefully is improving as well. So it's difficult to just benchmark to corporate average. The goal is really to fight the synergy of this newly acquired fab. And so far, it has been meeting or even exceeding our expectations. So we’re pretty happy with the current achievement and we do expect to see further benefit out of the whole integration effort. But again, we cannot quote in terms of numbers, as we see no reason why this fab cannot have similar fab profitability as any single fab we have in Taiwan or Singapore.

Okay, I see. Last question from me. I think this probably be addressed by the other analysts, but I sort of dialled in later. But just, to follow up on the depreciation outlook for 2021 with the new CapEx zone to the A now in place, what's your updated view on the depreciation on magnitude for 2021 [ph]?

Well it’s still on the decline trend. So again, back in 2019, the overall depreciation expenses declined by about 5% to 6%. And for 2020, we expect to see low single digit decline with a little bit more decline rate in 2021.

Okay, we're literally more than low single digit.

It will be a little lot more than low single digit.

A lot more. Okay, got it. Thank you.

And the next question is coming from Stephen Chin [Ph] of Elisha Capital. Go ahead, please.

Thank you for taking my question. This is a Stephen from Aleta [ph] Capital. The first question I would like to follow on is CapEx. So in the past few years, the CapEx has been pretty disciplined. And this year we see it higher. You already explained the reason. I'm just wondering if from the company management point of view, use your own for discipline CapEx and high-tech generation business model, or we should treat this year as kind of an inflection point, that you start to see more semiconductor contemplate the opportunity. So you'll start to earn for more growth.

Well our CapEx policy is remains it remains the same. It’s disciplined the CapEx policy. So we will continue cautiously, proceed with this approach, as our budget will be subject to the strengthening ROI criteria every year. And we -- when we do that, we actually factor in our overall cash dividends payoff to shareholder while ensuring affordable spending that will deliver our target organic growth. So it is a balance act, and we will continue with our discipline CapEx.

Understood, thank you so much. And my second question is regarding your customer portfolio change regarding based on the geography breakdown. So, in 2019, we see Asian customer percentage wise increase quite significantly. Just wonder, do you consider this trend will continue?

I think in the past couple of years, we, we actually observed this trend as a couple years ago is not the reason and we think we would get to a situation we start saturating and this will be probably the outlook will be similar to what we seen today.

Understood. Yes, and the next question is regarding a follow up and your estimate for the foundry revenue growth, so curious, do you consider those internal supply also as part of your number in your calculation or you're only considered a third party?

Can you repeat that question again?

Yes, the question is, when you guided for the foundry market growth, I was just wondering if you consider those, the -- of foundry but most of the revenue is for the internal demand. Do you consider that as part of your calculation?

No, I don't think we include that.

I see. Okay. And last question is, you mentioned about as a 200 millimeter is part of that, the growth is SOI, which and you also mentioned about I, SOI. So I so I'm curious if you also see the I, SOI growth at a 300 millimeter and for us in particular, do you see -- I mean, is that and I say yes, do you see it is mainly on the RFSOI or you are also doing the FDSOI?

We are not participating in FDSOI today, and we only referring to the RFSOI. And the product migration trend, we do see the RFSOI will migrating by 8-inch to 12-inch. And as part of the 8-inch demand outlook, beside the RF switch, RF transceiver, we also see in the -- area and we see it in our power management ICs.

Understood. Thank you very much. And also congratulations to you to your good Q outlook. Thank you.

Thank you.

And the next question is coming from Randy Abrams of Credit Suisse. Go ahead, please.

Okay, yes. Thank you. Yes. A few quick follow up questions. One for the OpEx, we're still running about 10% to 11% of sales. If you could talk about now, how you kind of see that growing in the coming year just an absolute or is that a percent of revenue? And the other one, just the tax rate to use?

For OpEx in absolute dollar terms, because of the addition of the Japanese operation, we do not see too much fluctuations in the absolute OpEx dollars. But, because of the kind of optimistic outlook for the whole 2020, we do expect the OpEx as a percentage of revenue will gradually trend down. So that’s how it goes. And for tax, there’s not much change in the current circumstance. And we do have some tax expenses reversal in Q4 of last year with regarding tax credit instead of tax expenses for Q4 last year, but overall, we are talking about 10% plus minus of corporate tax average.

Okay, and then last question on the end markets, the stable first quarter, even with the Chinese New Year's a pretty decent for shipments. Could you give maybe a split by the applications what you're seeing maybe areas that may be growing a bit in first quarter in the near end areas declining a bit?

Yes, the -- we see the Q1, 2020 the strongest is in a computer segment. Then the followed by the communication and the consumer is still the weakest right now.

Okay, computer segment. I guess, but within that, because overall PC there's -- there's I guess not that much happening. But is there's something, driving that to be better?

Yes, we actually see a lot of a high-speed I/O interface devices, the USB, the HDMI, the -- all those high speeds devices we see quite a bit it may increase.

Okay, great. Thank you.

Ladies and gentlemen, we thank you for all your questions. That concludes today's Q&A session. I’ll turn things over to UMC Head of IR for closing remarks.

Thank you for attending this conference 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. Thank you.

Thank you. And ladies and gentlemen, that concludes our conference for fourth quarter 2019. We thank you for your participation in UMC's conference. There will be a webcast replay within an hour. Please visit www.umc.com under the Investors Event section. You may now disconnect. Goodbye.