United Microelectronics (NYSE:UMC) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
United Microelectronics achieved a capacity utilization rate of 92% in Q3, up from 85% in Q2, with an EPS of NT$1.32 and revenue growth of 8% to NT$74.2 billion.
Year-over-year, revenue increased by 16.1% to NT$204 billion, with net income up 136.5% to NT$74.86 billion, driven by high wafer shipments and improved gross margins.
The company anticipates ongoing growth in advanced packaging and silicon photonics, with plans to increase capacity to 1.33 million 12-inch equivalent wafers by Q4 2026.
UMC’s Board approved an additional US$3.2 billion capex to accelerate expansion in Singapore and Tainan, targeting long-term capacity growth to meet customer demands.
For 2027, the company expects a 10% blended ASP increase, driven by improved pricing and a richer product mix, with AI and specialty semiconductor solutions as key growth drivers.
The company remains cautious of potential oversupply risks but emphasizes strong demand in AI infrastructure and customer commitments to support its expansion plans.
Full Transcript
Chidong
Capacity utilization rate in the third quarter reached 92%, compared to 85% in the previous quarter, and overall EPS for the quarter was 1.32. On page 5, revenue grew 8% sequentially to reach NT$74.2 billion. As we stated earlier, the gross margin rate also improved from 32.5% in the previous quarter to 34% in this quarter, for NT$25.2 billion in gross profit, and EPS per US ADS is US$0.206. For the year-over-year comparison on page 6, revenue grew 16.1% to NT$204 billion, and gross profit also grew 30.8% year over year to NT$65.3 billion, or a 32% gross margin rate. With the help of non-operating income, overall net income attributable to the shareholders of the parent grew 136.5% year over year to reach NT$74.86 billion for the first nine months of the year. EPS for the first three quarters reached NT$6 in NT dollar terms and US$4.945 per ADS in US dollar terms.
On page 7, our balance sheet at the end of the third quarter: total equity is NT$470 billion, with cash accounting for about NT$142 billion as of September 30. For blended ASP, in the third quarter it was relatively stable and remained firm compared to the previous quarter. On page 8, for revenue breakdown. On page 9, there’s very little change for Q2 compared to Q3 of 2026. For revenue breakdown by geography on page 10, our revenue breakdown by customer type also remained virtually unchanged, with IDM at about 14% of total revenue and fabless accounting for the rest. For revenue breakdown by application, consumer stayed unchanged at around 32%, with communication and computer also quarter-over-quarter unchanged.
On page 12, our 22- and 28-nanometer revenue still accounts for more than one-third, about 35% of the total pie chart; 40 nanometer is around 16%, and 65 nanometer is about 19%. Our quarterly capacity continued to increase slightly, mainly coming from our 12i facility in Singapore. For Q4 2026, we expect the capacity for overall UMC to reach about 1.33 million 12-inch equivalent wafers. Capex compared to last quarter’s estimate remains unchanged at around US$2 billion.
So the above is the summary of United Microelectronics’ results for the third quarter of 2026. More details are available in the report which has been posted on our website. I will now turn the call over to the CEO of UMC, Mr. Jason Wong.
Jason Wong (Chief Executive Officer)
Thank you, Chidong. Good evening, everyone here. I would like to share UMC’s third quarter results. In the third quarter, we saw healthy demand across all market segments, driving a 7.3% growth in wafer shipments to more than 1.2 million 12-inch equivalent wafers, a record high. Our overall fab utilization rate reached 92%, with several of our 12-inch fabs operating at full capacity, while 8-inch operations also saw a strong recovery. By technology node, our 22/28-nanometer business had another record-breaking quarter, with 22-nanometer revenue now accounting for 18.3% of wafer sales, as customers continue to take out new products including display drivers, automotive radar, and fly-by ICs.
In new business areas, active customer engagement for advanced packaging and silicon photonics remains robust. We expect this engagement to translate into accretive growth over the coming quarters as we ramp existing projects and support new product takeouts. Looking ahead to the fourth quarter, we expect the positive demand momentum to sustain, supporting stable shipments and utilization rates. Revenue from our specialty technology portfolio will continue to grow sequentially, driven in part by the ramp-up of our advanced packaging and silicon photonics businesses.
We have seen a significant increase in demand for these new business areas, and we are in the process of converting some existing capacity to address new, unfulfilled demand. In the longer run, our dual-track expansion plan in Singapore and Tainan will be crucial to ensure UMC’s capacity growth keeps pace with our customers’ needs. We are pleased to announce our Board of Directors today approved an additional capital expenditure budget of approximately US$3.2 billion, which will enable us to accelerate our expansion schedule as we continue to align with customers on their product roadmaps and requirements.
Now let’s move on to fourth quarter 2026 guidance. Our wafer shipments will increase by low single digits. ASP in US dollars will remain firm. Gross margin will be comparable to the preceding quarter. Capacity utilization rate will be in the low-90% range. Our 2026 cash-based capex budget will be US$2 billion. That concludes my comments. Thank you all for your attention. Now we are ready for questions.
OPERATOR
Yes, thank you, ladies and gentlemen. We will now begin the question-and-answer session. If you have a question for any of today’s speakers, please press the star key and number one on your telephone keypad and you will enter the queue. After you are announced, please ask your question. If you find that your question has been answered before it is your turn to speak, please press the star key and number two to cancel the question. Thank you. Now, first question will be coming from Sungy Lin, UBS.
Go ahead, please.
Sungy Lin (Analyst)
Good afternoon. Thank you very much for taking my questions. Several questions from my side. So, number one, now that UMC will finish 2026 on a high note, any early view for 2027? Based on our current visibility,
Jason Wong (Chief Executive Officer)
Yes. For 2027 early view, we expect the growth momentum established in 2026 will continue into the next year, supported by the healthy demand across our core business and growing opportunity in differentiated technology and high-value applications. If we look at this in 2026, our growth has been driven primarily by high wafer shipments, improving utilization, and customer share gain. Looking ahead to 2027, we expect further growth, although with utilization already above 90% and several technologies operating at or near full capacity, our unit growth will increasingly be constrained by available manufacturing capacity.
AI remains a key growth driver, creating demand across power management, FPGA, and connectivity applications. Meanwhile, silicon photonics and advanced packaging are emerging as new growth engines for United Microelectronics, addressing the next-generation optics connectivity, power delivery, and memory bandwidth requirements for AI infrastructure. Beyond AI, we continue to see opportunity from customer market share gain and increasing function share across premier smartphone, automotive, industrial, and other specialty applications. Despite an uneven recovery in some end markets, with customer demand in selected technology already exceeding our available capacity, we see opportunity to capture greater value from our existing manufacturing footprint through improved pricing and a richer product/technology mix in 2027 alongside continued shipment growth.
So while 2026 growth was driven primarily by volume and utilization, we expect 2027 to become increasingly value-driven, with higher value per wafer and differentiated technology contributing more to UMC revenue growth and long-term earning potential.
Sungy Lin (Analyst)
Thank you very much, very helpful and encouraging. And so on the pricing side, how should we think about the ASP environment for UMC, especially going to 2027? How are negotiations with key clients progressing for the coming few quarters?
Jason Wong (Chief Executive Officer)
We are engaging with customers right now for our 2027 pricing, and we see a significant shift in the pricing environment heading into 2027, supported by strengthening customer demand and increasing tight capacity in selected technologies. We see clear opportunity for pricing improvement across both our 8-inch and 12-inch business, while maintaining our disciplined and value-based pricing approach. Importantly, we expect 2027 to mark a turning point in our blended ASP trend, moving from an environment of ASP erosion toward a meaningful positive uplift beginning in the first quarter. While we anticipate at least a 10% blended ASP increase year over year, this is more than an incremental pricing improvement. It reflects both a more constructive pricing environment and our increasing ability to capture value through a richer product and technology mix.
Our record-high 22-nanometer revenue contribution and continuous specialty technology momentum also provide a strong foundation, while silicon photonics and advanced packaging create additional higher-value growth opportunities at scale.
Sungy Lin (Analyst)
Thank you very much. Also, maybe a quick follow-up. So you mentioned 10% year-over-year improvement. Is that initial view for your blended ASP improvement going into Q1?
Jason Wong (Chief Executive Officer)
No, that will be on a year-over-year basis.
Sungy Lin (Analyst)
So 10% will be your target through 2027, not just for Q1.
Jason Wong (Chief Executive Officer)
Yeah, as a whole, year over year, as 2026 compared to 2027 year over year. And we will provide Q1 ASP guidance for the next quarter’s earnings call.
Sungy Lin (Analyst)
Got it. And then maybe on the capex, you just mentioned an additional US$3 billion budget on top of the US$5 billion budget announced a quarter ago. Could you share a bit more color on how that translates into a capacity extension in the coming few years? And then on silicon photonics and advanced packaging, how are you seeing the market demand overall in the coming years?
Jason Wong (Chief Executive Officer)
Well, I mean we are accelerating selected investment because several of our new growth businesses are moving from technology development into commercial execution faster than our original capacity roadmap anticipated. We are seeing three things happen at the same time. The market is expanding as the AI infrastructure drives higher requirements for bandwidth, power delivery, memory performance, and system integration. Our customer engagements are also progressing from qualification into production ramps and capacity planning.
And at the same time our solution roadmap is moving forward with product already in mass production and additional product completing takeouts, customer validation, and new generations of product already under development. And our focus now is shifting from whether this opportunity will materialize to how quickly we can extend capacity to meet the customer demand. Under our current expansion roadmap, we are targeting monthly capacity of approximately 18k wafers for silicon photonics, 22k for DTC and silicon capacitor, and 20k for Teflon modulators. This next phase of the capacity will start its ramp in late 2028 and reach its planned scale by 2030. While this is not a broad-based capacity expansion, we are directing our capital toward customer-facilitated growth opportunities that will fuel United Microelectronics’ next phase of growth.
So that will give you a bit of why we are accelerating and the milestones we planned for those capex. For your question on silicon photonics and advanced packaging, we believe United Microelectronics is well positioned to capture the next window with AI infrastructure opportunities through our competitive silicon photonics performance and proven manufacturing execution and advanced packaging capability. In silicon photonics, our data indicate that our PIC technology outperforms peers in key parameters such as propagation loss, supported by our manufacturing high production yield.
Now our 12-inch PIC platform already supports 1.6T optical applications, while our 8-inch Teflon platform has completed 1.6T system validation. With an industry leading deal building on this achievement, our roadmap extends toward 300g per lens and ultimately 400g per length per solution for next-generation 3.2T applications, supported by hybrid bounding TSV and chip-to-wave integrations. For advanced packaging, we are making progress in two key solution areas: DTC for power delivery and customized memory stacking. Our discrete DTC solution for mobile entered mass production; disqualges for AI and server applications. Our substrate-embedded DTC solution has completed takeout and functional verify, with our customized memory stacking solution as task initial customer verification to address the growing bandwidth requirement of AI inference.
All these achievements demonstrate United Microelectronics’ ability to trust translate technology innovation into commercial execution. Now, by combining device performance, manufacturing expertise, and close customer cooperation, we are expanding our role in next-generation AI infrastructure, helping the customer address three critical requirements including faster optical connectivity, more efficient power delivery, and high memory bandwidth. So that’s why we believe we are in a great position to capture those opportunities.
Well, I mean we look at this on twofold, right? I mean one is the demand side. Well first, we are seeing very strong demand driven by AI-related applications for silicon, for cloud, and advanced packaging. In silicon photonics, we have been working with a leading customer. We recently achieved significant milestones with multiple hyperscalers qualifying our 1.6T optical transceiver platform. Our 12-inch PIC platform supports the 1.6T application, and the 8-inch Teflon completed the 1.6 table validation and already demonstrated manufacturing yield.
I mean with the roadmap going to the next generation and with both the end of advanced packaging, our discrete solution, like you said, and our first interposal is discrete DTC solution for the AI and server application has completed PayPal with a key customer, and the focus of the customer discussion already moved to validation to customer demand planning. So our current expansion plan applies to those customer commitments in terms of demand. But how about the overfill? Based on what we see today, we do not believe we are building ahead of the market. Demand for silicon photonics and related AI infrastructure is growing faster than qualified capacity is being added, and we continue to monitor our peers’ expansion and timing of the new industry supply closely too. Oversupply, overcapacity is an industry question, not just a United Microelectronics question. We look at how quickly end demand is growing relative to the capacity being added by the overall industry.
Based on the customer demand and industry capacity plans we see today, we believe the market can support the expansion we are planning, and meanwhile United Microelectronics has been building the capacity in places to mitigate risk. At the same time we remain cautious and disciplined in how we add capacity. Most importantly, our capacity expansion is backed by customer commitment, like I said earlier, and tied with the customer product roadmap, production ramp, and capacity requirements.
Even with all this expansion, we expect customer demand to exceed our planned capacity according to the customer, underscoring the strength of the commercial opportunity ahead and our decision to accelerate the selected investment. Well, okay, first of all you remember now our AI-related business spans a broad range of specialty semiconductor solutions, supports power management, connectivity, FPGA as well as our growing advanced packaging and silicon photonics. All those applications are becoming increasingly important contributors to our growth going forward. So we are expanding our capacity, like we reported, and investing in technology manufacturing infrastructure to address all those growing demands.
Our AI-related revenue is close to $300 billion in 2026. But looking ahead in three years, we expect our AI exposure will for part EC quarter of our revenue.
OPERATOR
Thank you. Thank you. Next one, Laura Chen, Citi. Go ahead please.
Laura Chen (Analyst)
Yes, hi, thank you for taking my questions. Good afternoon, gentlemen. Just a quick follow-up on the 10% increase on pricing. It’s more like a blended ASP increasing or like-to-like increase into next
Jason Wong (Chief Executive Officer)
Year it is blended. Yeah. So yeah, it’s more than incremental pricing improvement. It reflects both the pricing environment improved and our increase captured the other products, richer product, and a different product mix.
Laura Chen (Analyst)
Yes. Okay, got it, very clear. And also we think we have various different plans for AI-related applications. Can you give us more color about that? What the capacities, how much the capacity we are planning for the silicon photonics including in Taiwan and also mainly in Singapore and also on the Teflon. We are ahead of our peers, so just wondering can you also give us update about the capacity build-up plan and in maybe two years how big the capacities we are looking for?
Thank you.
Jason Wong (Chief Executive Officer)
Given the current milestones and the facility and tool schedules, we’re doing all those expansions in phases, and we’re going to continue updating you in terms of progress. Meanwhile, we’re still working closely with our supplier. Hopefully we can accelerate and expedite those installations. Meanwhile, as I mentioned earlier, if I look at the overall capex plan which is approved by our board, the capacity buildup is approximately 18 for silicon photonics, 22k for DTC which is silicon capacitor, and 20k for Teflon modulator.
And at this current stage we project the initial install will happen in late 2028 and going into 2029 and reach the scale by 2020. Now for the location-wise, we are focused on the silicon photonics in Singapore facility and the silicon capacitor in our Tainan facility, and the Teflon will be in our 8-inch operation.
Laura Chen (Analyst)
Sure. Thank you very much. Just also very quickly on the—I know probably we will talk more next year—but I think given the high utilization rate is already like 90% plus and also pricing into next year is more favorable. So are we seeing any structural gross margin upside based on current visibility?
Jason Wong (Chief Executive Officer)
So certainly the price increase likely to happen in the first quarter. So we are also seeing some headwinds from the increased raw material cost, which we need to work hard to offset the impact. So it’s our view that the structural profitability remains intact. So EBITDA margin certainly we will see in good shape if we compare it to the previous cycle. But due to the stronger-than-expected capex led by stronger customer demand, depreciation will be higher, and gross margin as a result is unlikely to see near the previous high level.
So we will maintain disciplined spending and try to capture the megatrend of the AI growth opportunity.
Laura Chen (Analyst)
Okay, thank you, very helpful.
OPERATOR
Thank you. Next one, Hosloo, Bank of America. Go ahead please.
Hosloo (Analyst at Bank of America)
Yes, thanks for taking my question. I think just starting from price hike by 10% year-on-year, you clarified it is going to be on blended basis. Would you be able to share on the like-for-like basis how much is it going to be hiking and how much of the depth of the price hike is related to the cost pass-through and how much of that is because of the tighter supply-demand landscape?
Jason Wong (Chief Executive Officer)
Well, I mean, first of all, if we look at this on a very high level, like I said, we expect 2027 will mark a turning point. The ASP trajectory will be moving down, you know historically erosion, to an uplift. And so we are talking to our customers across a broad range of applications. Now the conversation actually is more complicated. One is there are current contractual relationships, a portion of that, and secondly focus on different nodes and application and technology, so there are various.
There is a mix of the pricing adjustment. So therefore it’s a lot easier to look at this on a blended basis, instead of going to every specific area, because they are quite complex in terms of the mix.
Hosloo (Analyst at Bank of America)
Okay, because the reason why I’m asking this question is because your utilization has been improving by 16% from fourth quarter last year to fourth quarter this year based on your guidance. But your pricing has been relatively stable. So just wondering why your customers suddenly decided to accept this price hike by 10% into 2027. If in the past couple of quarters you have been striving to improve your utilization by 16%, but the blended pricing has been relatively more stable, but now you are seeing an inflection of that.
Is it because of the product mix or pass-through that your customers decided to share the burden with you?
Jason Wong (Chief Executive Officer)
Well, I mean both, right? I mean the product mix is part of it, and part of it is really reflecting the inflationary cost increase we are seeing. Like Jidong mentioned earlier, we are seeing some of the rising cost headwinds and also additional depreciation associated with our investment. So while we are anticipating that overall the customer demand is increasing, there is increasing tight capacity on selected technology. So a combination of those is resulting in the conversation with the customer.
And I think the customer understands the overall industry constraints in terms of capacity and also understands the rising cost. So that’s why I think this is naturally a conversation that we have at this current point with the customer, and we usually do this on a yearly basis. So again, we started this conversation in Q3, and with the alignment going into Q4, we are at a very late stage of those conversations. So we feel fairly confident with the guidance that we just provided.
Well, I mean, first of all, let me explain about the utilization outlook. We are expecting the capacity utilization to remain at a very healthy level. In this year we improved from 85% in Q2 to above 90% in the second half of 2026 already, with several of 8-inch and 12-inch operating at full loading at this point. And we are seeing the AI upside demand, such as power management and FPGA, which we cannot fulfill today, and the backlog POs are piling up.
We will continue to optimize the production efficiency by debottlenecking the key steps and transferring the technology across different fabs to maximize the output. But operationally there are minor mismatches between our demand and capacity configuration. So when you see less than 100% it doesn’t mean the fab is not fully loaded. It is really more of the mismatch between the demand and capacity configuration. And so we are working diligently to address this capacity configuration mismatch.
We are upgrading our manufacturing capability to support our long-term product mix of the market as well. For instance, we are converting one of our 8-inch fabs to expanding Teflon capacity. And while we are converting that, the loadings will be lower, but it doesn’t mean that the facility is not being occupied and worked up. So while we’re strengthening our silicon photonics roadmap and positioning United Microelectronics’ future growth, all those are critical for our future growth.
And so we are managing that through this activity. So that said, the 90-some percent doesn’t translate to a vacancy in terms of capacity. It’s more of a mismatch situation. Well, I mean first of all we can provide you the update when the updates are more clear to us. We have board approval, and now we are closely working with the supplier to make sure that we can accelerate and expedite the schedule. So when those information conclude, we’ll be able to give you more concrete outlook in terms of milestones. Meanwhile we are phasing in the different capacity in a different time frame. But since we are still in the negotiation, it’s probably not the right time to provide you that.
But on a high level we feel very comfortable with all those demands, and the only thing we worry about now is we can’t really get them fast enough to our facility. So let us work on that, and when going into Q1 next year we should give you a clearer picture with the next phase. Now, in terms of each of the economics—scale and benefit to our business—the Certcom potential will run in 2027, followed by advanced packaging in 2028 because of the 30 reason, and I think all those will be accretive to our current model because right now they are above our current corporate average—higher than our corporate average compared to existing.
That’s what we have modeled right now at this point, yeah.
OPERATOR
Thank you. As a reminder, please press the star key and number one on your keypad if you would like to ask a question. Thank you. Next we’ll have Charlie Chen, Morgan Stanley, for questions. Go ahead please.
Charlie Chen (Analyst)
Thank you. Hi Jason. Again, congratulations for a very strong execution result. So my first question is probably to Jason. I know previously I had asked about some concern about the non-AI part of demand offsetting the AI side. But realistically, do you see any kind of cuts recently from non-AI segments? And do you have the preliminary assumption for next year’s PC, smartphone segment demand, and your observation on this end-market inventory? Thank you.
Jason Wong (Chief Executive Officer)
Right. Well, I mean right now we expect a positive demand momentum to sustain from 2026 into 2027, you know Q4 and 2027. So on a high level, we’re seeing the momentum will continue to sustain, and obviously the AI remains the key growth driver. So there’s no worry on the AI side. Beyond AI, we continue to see opportunity from customer market share gain as well and increased foundry share—that’s for United Microelectronics—because we primarily serve the premium smartphone and automotive industrial space, and we see healthy automotive industry recovery at this point.
And so I think we have less concern for automotive industry. However, on the smartphone, since we have less exposure in the mid/low-end smartphone, we think we have less exposure in that space, while we do project the market outlook in that base is weaker than the others. Meanwhile, near term we also see some decline in computer because we see a soft demand in the computer AI, LCD controller, EDI, and Wi‑Fi space. So while the communication and automotive industrial—and AI—remains… on non‑AI, the communication and the automotive industrial remains robust.
But we do see some weakness show up in the PC space.
Charlie Chen (Analyst)
Got it. So those kinds of weaknesses are all being considered. Yeah. So thank you, and I’m sorry, but I hope to clarify a little bit about blended ASP up 10%, because I assume your 8- and 12-inch blended ASP and 12-inch mix increase will bring up a lot of blended ASP, right? But I want to make sure, are you—are you— that you have a different product line that…
Jason Wong (Chief Executive Officer)
I’m sorry. Versus… yeah. Can you repeat that? Yeah.
Charlie Chen (Analyst)
Oh, okay. Blended ASP increased by 10%. Is that 12-inch plus 8-inch blended ASP or a different product mix? So you are referring to the 8-inch to be up 10%?
Jason Wong (Chief Executive Officer)
It’s a company-wide blended ASP as we reported, although we didn’t disclose the number. But we do have an annual number for 2026, and the 10% we are referring to is for the whole company on the whole year 2027. It’s going to be about a 10% year-over-year increase, including like-for-like price increase as well as the richer product mix.
Charlie Chen (Analyst)
Okay, gotcha. Okay. Okay. But you don’t want to further break it down to, like for example, if you remove the 12-inch mix change, what would be kind of like the like‑to‑like… would you be able to comment on that front?
Jason Wong (Chief Executive Officer)
It’s a very complicated process, and some of the technologies are totally different for different products. So it’s very difficult to give you a generalized idea. But 10% is probably the best indication for now.
Charlie Chen (Analyst)
Got it, thanks. And last one is probably kind of a very open question, yeah. Because we kind of think AI demand strength is a no-brainer, right? I think we just talked about—we’re not worried about AI demand—but the recent capital… AI infrastructure demand. No matter your cloud financing, there’s an AR issue, right? So I’m not sure how visible is kind of United Microelectronics on this real kind of AI demand, especially for your product you have exposure to.
How can you be sure? Is that still under-supply? Yeah, just a kind of open… because capital markets’ reaction seems to not believe that AI demand will be so sustainable into next year.
Jason Wong (Chief Executive Officer)
Well, I mean the AI demand is not in general AI demand. So when we talk about what we are serving, it’s really in selected technology and focus. For instance, on the optical side, I think the ramp is just starting, and so it could be a replacement mode. And to us, I think the silicon platform is really a new space that we are entering, and as well as the industry is entering, into the PIC platform that we’re offering. The Teflon is all associated with that.
While the industry is moving into 1.6T and, for the future, 3.2T, we actually think this demand will continue to be robust. The advanced packaging is really a solution that we… you know, we talk about the DTC—deep trench capacitor—solution, right? And they are more of a device that can be implemented in multiple different areas. The power integration—all this power—will continue driving the industry going forward. So I think with all those solutions, I think the market demand will continue to be robust.
Charlie Chen (Analyst)
Got you. So even if AI faster slows down, there’s a kind of technology migration like 1.6T to 3.2T, etc. Those will continue. So you are not that worried about overall AI demand expansion pace.
Jason Wong (Chief Executive Officer)
Yeah, because if you just look at it, truly what drives that demand is the compute and also power and speeds, right? So really, I mean, the optical speed requirement and the power integration requirement is more of a forward-looking type of application. We’re not talking about AI in general. We talk about technology migration to support the future growth and meeting the system requirements.
Charlie Chen (Analyst)
Understood. Very clear. Thank you. Yeah, I also agree that, etc., the big trench capacity is a very important northern trend. Thank you Jason. Thanks Qigong, that’s super helpful. Thanks.
Jason Wong (Chief Executive Officer)
Thank you.
OPERATOR
Next one, Goku Hale Hallen, JP Morgan. Go ahead please.
Goku Hale Hallen (Analyst)
Hi, thanks Jason for taking my questions. First of all, just want to clarify: Jason, you mentioned long-term AI revenues can be 25%. Was it 25% of current revenue, roughly $9 billion, or you think it will grow to 25% of revenues in 2030, which is probably a much bigger number? Just wanted to clarify that.
Jason Wong (Chief Executive Officer)
I’m referring to the revenue in the next three years.
Goku Hale Hallen (Analyst)
Okay, so in three years it can be 25% of total revenue. Right. Okay.
Jason Wong (Chief Executive Officer)
Well, I mean we are currently running at full capacity, so we said, you know, this year will be somewhere at the $300 million range, and for the new act the mass majority of the capacity will start coming in line in late 2028. So 2023 is still going to be under the constraint. So while we try to optimize, like I said, you know, we try to reconfigure in some of our facilities. Hopefully we can optimize some of the shorthand, but we are under the constraint for 2027, so we’ll probably be able to share some light in the next quarter.
But again, it’s not going to be of significant because the capacity is not available yet. So that’s the revenue for 2027. And what was your second question? I’m sorry. Market share, of course. Yes. I mean the aspirations are very high and we have very high confidence in terms of the decision, and moving into a 12 inch directly without going through the 8 inch right now, I think the decision actually did pay off. We have demonstrated with our 12 inch PIC technology, we already demonstrated better performance in many of the key parameters, and our customer and their end customer, and right now the product is being validated and qualified by the end customer as well.
And with the production yields getting to the manufacturer level, we think our 12 inch PIC platform is ready to support the customer for their current 1.6T optical application and going into the next generation as well. Now the tableau is a little bit different situation. I think we are much ahead of anyone else in the tableau department. And I think the customer also sees a benefit between the integration of the Pudding Teflon modulator with our 12 inch PIC solution. And so, you know, because of that, I mean our advanced packaging preparation is also barefoot now, because with hybrid bonding, the chip-to-wafer capability, I think those actually will help us to even become even more competitive, because the combination of the silicon photonic solution along with the packaging capability, and that just puts us in a unique position.
So we feel very competitive in those space. Yeah, I mean we announced the Hyperlite partnership because Hyperlite was a very early adopter of the Teflon. And so I think we’re very pleased with that program. And because we already demonstrated with Hyperlite and we see a very strong interest in the Teflon solution now, not just on Hyperlite, on many different customers in the space. Well, I guess my reaction is just not enough. So, I think we want to improve that number any way we can. Right now the best way to explain that is it’s not enough.
Chidong
Depreciation is going to be certainly higher, and maybe a couple years in a row, and we are talking about low single-digit depreciation growth at least for 2027, if not more for 2028. So for gross margin, this is going to be a big number offset. On top of that we also have rising raw material costs, et cetera. And like I mentioned earlier, we feel more confident to have a healthy EBITDA margin structure. But for gross margins for the next two years at least, depreciation along with the rising raw material costs is going to put pressures on overall financial gross margin.
Jason Wong (Chief Executive Officer)
I also like to echo what Qidong just said. I mean we are expecting ASP improvement and we are expecting higher utilization, and all those will provide support to our profitability for 2027. And at the same time, we are anticipating rising cost headwinds and additional depreciation, which are associated with our investment decision. Our priority now is to maintain a healthy profitability profile while continuing to invest in differentiated technology and support our long-term growth.
So that will give you some color on how we feel about this gross margin pressure.
OPERATOR
Thank you. And ladies and gentlemen, we thank you for all your questions. That concludes today’s Q&A session. Now I will turn things over to UMC Head of IR for closing remarks. Thank you. Thank you. And ladies and gentlemen, that concludes our conference for 3/26. Thank you for your participation in United Microelectronics’ conference. There will be a webcast replay within 2 hours. Please visit www.umc.com under the Investors Events section. You may now disconnect. Thank you again. Goodbye.
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