Global expansion to ensure long term growth; significant 28nm ramp in 4Q

TAIPEI, October 29, 2014 /PRNewswire/ —

Third Quarter 2014 Overview[1]:

Revenue: NT$35.21 billion (US$1.16 billion)

  • Gross margin: 21.5%; operating margin: 4.8%
  • Foundry revenue from advanced node: 3% from 28nm, 24% from 40nm
  • Foundry capacity utilization rate: 93%
  • Net income attributable to the stockholders of the parent: NT$2.92 billion (US$96 million)
  • Earnings per share: NT$0.23; earnings per ADS: US$0.038

United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the third quarter of 2014.

Revenue was NT$35.21 billion, with gross margin at 21.5% and operating margin at 4.8%. Net income attributable to the stockholders of the parent was NT$2.92 billion, with earnings per ordinary share of NT$0.23.

Mr. Po-Wen Yen, CEO of UMC, said, “In the third quarter, our foundry revenue grew 2.9% sequentially to NT$33.51 billion. Foundry operating margin was 8.8%. Overall capacity utilization reached 93%, led by increasing demand from communication products such as handsets and tablet devices, bringing wafer shipments to 1.462 million 8-inch equivalent wafers. Moreover, 24% of our revenue came from 40nm, while 28nm contribution rose from 1% to 3% quarter-over-quarter, demonstrating the sustained traction of UMC’s leading edge geometries. Our 28nm yield progress for poly-SiON & gate-last, High-K Metal Gate products has continued to improve, which will drive significant production ramp during the fourth quarter. This progress will help attract multiple waves of new customers and products to strengthen UMC’s 28nm growth and further diversify our customer base in advanced nodes.”

CEO Yen continued, “UMC has collaborated with Asian regional partners for capacity deployment plans with the intention to expand our operating scale, strengthen efficiency and capture additional market share. This cooperative model will establish regional manufacturing centers that will build economy of scale to increase productivity and serve local markets, while helping UMC’s global customers mitigate geographical risks in the supply chain. UMC’s recent announcement with Fujitsu Semiconductor and our joint venture in Xiamen illustrates these collaborative efforts. Our foundry alliance with Fujitsu includes a 40nm licensing agreement which will enable UMC to better serve the Japanese local market, including automotive, industrial, consumer electronics, and other related sectors. Recently, we also announced an investment venture with Xiamen Municipal People’s Government and FuJian Electronics & Information Group to establish a 12″ fab in China for 40nm and 55nm foundry services, subject to approval by Taiwan government authorities. Meanwhile, UMC’s dedicated engineering team continues to work on 10nm and 14nm advanced technologies in our Taiwan headquarters to ensure the company’s next stage of growth. Our differentiated approach via global expansion, combined with the leadership in advanced manufacturing technologies, will serve as the engine that drives UMC’s growth to enhance corporate profitability and provide long-term returns for our shareholders.”

[1]Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with TIFRSs recognized by Financial Supervisory Commission in the ROC, which is different from IFRSs issued by the International Accounting Standards Board. They represent comparisons among the three-month period ending Sep 30, 2014, the three-month period ending Jun 30, 2014, and the equivalent three-month period that ended Sep 30, 2013. For all 3Q14 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Sep 30, 2014 exchange rate of NT$ 30.41 per U.S. Dollar.

Summary of Operating Results

Operating Results

(Amount: NT$ million)

3Q14

2Q14

QoQ %
change

3Q13

YoY %
change

Net Operating Revenues

35,214

35,869

(1.8)

33,407

5.4

Gross Profit

7,559

8,207

(7.9)

7,337

3.0

Operating Expenses

(5,270)

(5,280)

(0.2)

(4,894)

7.7

Net Other Operating Income and Expenses

(602)

(10)

5,920.0

(48)

1,154.2

Operating Income

1,687

2,917

(42.2)

2,395

(29.6)

Net Non-Operating Income and Expenses

1,305

937

39.3

1,561

(16.4)

Net Income Attributable to the Stockholders of the Parent

2,916

3,482

(16.3)

3,476

(16.1)

EPS (NT$ per share)

0.23

0.28

0.28

(US$ per ADS)

0.038

0.046

0.046

During 3Q14, foundry revenue increased 2.9% QoQ to NT$33.51 billion while New Business segment revenue, mainly consisting of solar subsidiary companies, decreased 48.2% sequentially to NT$1.72 billion, leading to a consolidated revenue of NT$35.21 billion, a 1.8% quarterly decline. Gross profit was NT$7.56 billion, or 21.5% of revenue. Operating income was NT$1.69 billion, or 4.8% of consolidated revenue, primarily due to a NT$602 million net other operating expense, mainly from an impairment loss in a solar subsidiary company during 3Q14. Net income attributable to the stockholders of the parent in 3Q14 was NT$2.92 billion, compared to NT$3.48 billion in 2Q14.

Earnings per ordinary share for the quarter were NT$0.23. Earnings per ADS were US$0.038. The basic weighted average number of outstanding shares in 3Q14 was 12,500,808,739, compared with 12,489,095,718 shares in 2Q14 and 12,459,978,088 shares in 3Q13. The diluted weighted average number of outstanding shares was 12,582,502,645 in 3Q14, compared with 12,607,860,758 shares in 2Q14 and 13,201,315,449 shares in 3Q13. The fully diluted share count on September 30, 2014 was approximately 12,781,655,000. On September 30, 2014, UMC held 200 million treasury shares acquired from the 15th share buy-back programs.

Detailed Financials Section

Foundry revenue increased by 2.9% to NT$33.51 billion due to sustained demand while New Business segment declined 48.2% to NT$1.72 billion due to a global slowdown in the solar sector, resulting in consolidated revenue of NT$35.21 billion. Cost of goods sold remained relatively flat from last quarter. Research and development expenses increased 4.3% to NT$3.47 billion. Net other operating expenses of NT$602 million was mostly due to an impairment loss from a solar subsidiary company.

COGS & Expenses

(Amount: NT$ million)

3Q14

2Q14

QoQ %
change

3Q13

YoY %
change

Net Operating Revenues

35,214

35,869

(1.8)

33,407

5.4

COGS

(27,655)

(27,662)

(0.0)

(26,070)

6.1

Depreciation

(8,483)

(8,662)

(2.1)

(8,151)

4.1

Other Mfg. Costs

(19,172)

(19,000)

0.9

(17,919)

7.0

Gross Profit

7,559

8,207

(7.9)

7,337

3.0

Gross Margin (%)

21.5%

22.9%

22.0%

Operating Expenses

(5,270)

(5,280)

(0.2)

(4,894)

7.7

G&A

(845)

(857)

(1.4)

(854)

(1.1)

Sales & Marketing

(957)

(1,097)

(12.8)

(778)

23.0

R&D

(3,468)

(3,326)

4.3

(3,262)

6.3

Net Other Operating Income & Expenses

(602)

(10)

5,920.0

(48)

1,154.2

Operating Income

1,687

2,917

(42.2)

2,395

(29.6)

Net non-operating income in 3Q14 was NT$1.3 billion. Net investment gain was NT$487 million. Gains from investment disposal totaled NT$580 million.

Non-Operating Income and Expenses

(Amount: NT$ million)

3Q14

2Q14

3Q13

Non-Operating Income and Expenses

1,305

937

1,561

Net Interest Income and Expenses

(8)

(149)

(77)

Net Investment Gain and Loss

487

188

639

Gain and Loss on Disposal of Investment

580

792

506

Exchange Gain and Loss

114

(4)

53

Other Gain and Loss

132

110

440

Cash inflow from operations was NT$12.04 billion. In 3Q14, CAPEX spending of NT$12.87 billion included NT$12.74 billion from the foundry segment, resulting in free cash outflow of NT$828 million. Cash outflow from financing activities was NT$6.66 billion, mostly due to the payment of NT$6.25 billion in cash dividends and cash paid from additional paid-in-capital to shareholders and loan repayment of NT$627 million. Total cash outflow was NT$6.89 billion in 3Q14. Over the next 12 months, the company expects to repay NT$4.44 billion in bank loans.

Cash Flow Summary

(Amount: NT$ million)

For the 3-Month

For the 3-Month

Period Ended

Period Ended

Sep. 30, 2014

Jun. 30, 2014

Cash Flow from Operating Activities

12,039

7,681

Net Income before tax

2,992

3,854

Depreciation & Amortization

10,195

9,949

Share of profit or loss of associates and joint ventures

54

(132)

Gain on disposal of investments

(580)

(792)

Impairment loss on non-financial assets

597

Changes in Working Capital

(1,488)

(5,002)

Other

269

(196)

Cash Flow from Investing Activities

(12,684)

(7,032)

Capital Expenditures

(12,867)

(7,885)

Proceeds from disposal of available-for-sale financial assets

568

1,102

Acquisition of intangible assets

(268)

(428)

Other

(117)

179

Cash Flow from Financing Activities

(6,659)

(4,423)

Bank Loans

(627)

755

Bonds Issued

5,000

Redemption of Bonds

(10,249)

Cash Dividends and Cash paid from additional paid-in capital

(6,253)

Other

221

71

Effect of Exchange Rate Changes
on Cash and Cash Equivalents

414

(523)

Net Decrease in Cash and Cash Equivalents

(6,890)

(4,297)

Cash and cash equivalents decreased to NT$42.74 billion, mostly from CAPEX spending, cash dividends, and cash paid from additional paid-in-capital to shareholders in 3Q14. The days of inventory decreased to 46 days.

Current Assets

(Amount: NT$ billion)

3Q14

2Q14

3Q13

Cash and Cash Equivalents

42.74

49.63

47.71

Notes & Accounts Receivable

21.93

21.62

18.66

Days Sales Outstanding

56

52

52

Inventories, net

14.31

13.84

14.17

Days of Inventory

46

47

50

Total Current Assets

91.8

98.37

88.9

Current liabilities decreased to NT$45.44 billion, largely from the payment of NT$6.25 billion in cash dividends and cash paid from additional paid-in-capital to shareholders. Debt to equity ratio decreased to 39%.

Liabilities

(Amount: NT$ billion)

3Q14

2Q14

3Q13

Total Current Liabilities

45.44

49.68

52.27

Notes & Accounts Payable

6.75

6.85

7.62

Short-Term Credit / Bonds

15.26

15.75

23.44

Payables on Equipment

10.4

7.19

8.95

Other

13.03

19.89

12.26

Long-Term Credit / Bonds

31.98

31.92

28.8

Total Liabilities

84.43

88.69

88.35

Debt to Equity

39%

41%

42%

Analysis of Revenue[2] for Foundry Segment

Revenue from North America and Europe rose to 45% and 6% of sales respectively, primarily from the demand in the communication segment.

Revenue Breakdown by Region

Region

3Q14

2Q14

1Q14

4Q13

3Q13

North America

45%

43%

45%

47%

43%

Asia Pacific

44%

46%

45%

41%

44%

Europe

6%

5%

7%

8%

7%

Japan

5%

6%

3%

4%

6%

28nm revenue contribution rose to 3% while 40nm revenue represented 24% during 3Q14.

Revenue Breakdown by Geometry

Geometry

3Q14

2Q14

1Q14

4Q13

3Q13

28nm and below

3%

1%

0%

0%

0%

28nm<x<=40nm

24%

21%

20%

24%

20%

40nm<x<=65nm

26%

31%

31%

29%

34%

65nm<x<=90nm

7%

6%

7%

7%

6%

90nm<x<=0.13um

14%

13%

14%

14%

16%

0.13um<x<=0.18um

12%

13%

12%

12%

11%

0.18um<x<=0.35um

11%

12%

12%

11%

10%

0.5um and above

3%

3%

4%

3%

3%

3Q14 Revenue from fabless customers increased to 91%.

Revenue Breakdown by Customer Type

Customer Type

3Q14

2Q14

1Q14

4Q13

3Q13

Fabless

91%

90%

92%

89%

86%

IDM

9%

10%

8%

11%

14%

The communication segment represented 54% of revenue in 3Q14, demonstrating the robust demand in handset and tablet devices.

Revenue Breakdown by Application (1)

Application

3Q14

2Q14

1Q14

4Q13

3Q13

Computer

15%

18%

18%

15%

16%

Communication

54%

49%

46%

49%

52%

Consumer

28%

29%

31%

31%

28%

Others

3%

4%

5%

5%

4%

(1) Computer consists of ICs such as CPU, GPU, HDD controllers, DVD/CD-RW control ICs, PC chipset, audio codec, keyboard controller, monitor scaler, USB, I/O chipset. Communication consists of handset components, broadband, WLAN, bluetooth, Ethernet, LAN, DSP, etc. Consumer consists of ICs used for DVD players, DTV, STB, MP3/MP4, flash controller, game consoles, DSC, smart cards, toys, etc.

[2] Revenue in this section represents wafer sales

Blended ASP Trend for Foundry Segment

Blended average selling price (ASP) remained flat in 3Q14.
(To view ASP trend, visit http://www.umc.com/english/investors/3Q14_ASP_trend.asp)

Shipment and Utilization Rate[3] for Foundry Segment

Wafer shipments increased 2.5% quarterly to 1,462K in 3Q14, bringing overall utilization rate to 93%.

Wafer Shipments

3Q14

2Q14

1Q14

4Q13

3Q13

Wafer Shipments

1,462

1,426

1,258

1,236

1,329

(8″ K equivalents)

Quarterly Capacity Utilization Rate

3Q14

2Q14

1Q14

4Q13

3Q13

Utilization Rate

93%

90%

81%

79%

87%

Total Capacity

1,586

1,597

1,563

1,560

1,548

(8″ K equivalents)

[3] Utilization Rate = Quarterly Wafer Out / Quarterly Capacity

Capacity[4] for Foundry Segment

Capacity during the third quarter was 1,586K 8-inch equivalent wafers. The difference of 11K 8-inch equivalent wafers during 3Q14 compared to 2Q14 was primarily due to the change in capacity profile at Fab8D and the capacity upgrades at Fab12i. Fourth quarters estimated capacity will be approximately 1,577K 8-inch equivalent wafer, the net result of 28nm capacity expansion at Fab12A with current capacity upgrades at Fab12i.

Annual Capacity in

thousands of wafers

Quarterly Capacity in

thousands of wafers

FAB

Geometry
(um)

2013

2012

2011

2010

FAB

4Q14E

3Q14

2Q14

1Q14

Fab6A

6″

3.5 – 0.45

448

481

538

588

Fab6A

113

113

113

111

Fab8A

8″

0.5 – 0.25

813

815

813

816

Fab8A

204

204

204

201

Fab8C

8″

0.35 – 0.11

347

360

359

366

Fab8C

87

87

87

86

Fab8D

8″

0.13 – 0.09

382

371

364

314

Fab8D

86

86

93

94

Fab8E

8″

0.5 – 0.18

418

449

469

410

Fab8E

105

105

105

103

Fab8F

8″

0.18 – 0.11

388

389

388

388

Fab8F

98

98

98

96

Fab8S

8″

0.18 – 0.11

335

348

307

304

Fab8S

84

84

84

83

Fab8N

8″

0.5 -0.13

469

Fab8N

140

140

140

126

Fab12A

12″

0.18 – 0.028

651

579

501

374

Fab12A

180

174

174

171

Fab12i

12″

0.13 – 0.040

550

537

530

454

Fab12i

135

145

147

145

Total(1)

6,107

5,514

5,322

4,791

Total

1,577

1,586

1,597

1,563

YoY Growth Rate

11%

4%

11%

4%

2010~2012 figures account for UMC parent company only.

(1)One 6-inch wafer is converted into 0.5625(62/82) 8-inch equivalent wafer; one 12-inch wafer is converted into 2.25(122/82) 8-inch equivalent wafers. Capacity total figures are expressed in 8-inch equivalent wafers.

CAPEX for Foundry Segment

The foundry capital expenditure for 2014 will be US$1.3 billion. Spending during the first nine months of 2014 in the foundry segment was US$885 million.

Capital Expenditure by Year- in US$ billion

Year

2013

2012

2011

2010

2009

CAPEX

$1.10

$1.70

$1.60

$1.80

$0.55

2009~2012 figures account for UMC parent company only.

2014 CAPEX Plan

8″

12″

Total

12%

88%

US$ 1.3 billion

[4] Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.

Fourth Quarter of 2014 Outlook & Guidance

Quarter-over-Quarter Guidance:

  • Foundry Segment Wafer Shipment: To decrease by approximately 3%
  • Foundry Segment ASP in US$: To increase by approximately 1%
  • Foundry Segment Profitability: Gross margin will be in the mid-20 percentage range
  • Foundry Segment Capacity Utilization: Approximately 90%
  • Expect to recognize approximately US$50mn from Fujitsu for 40nm licensing fee
  • Guidance to New Business Segment: Revenue to be approximately NT$2.5bn and net loss attributable to UMC parent company to be approximately NT$400mn

Recent Developments / Announcements

Please visit UMC’s website for further details regarding the above announcements

Conference Call / Webcast Announcement

Wednesday, October 29, 2014

Time: 5:00 PM (Taipei) / 5:00 AM (New York) / 09:00 AM (London)

Dial-in numbers and Access Codes:

USA Toll Free:

1-800 871-3110, 1-888 700-7397

Taiwan Number:

02-2192-8016

Other Areas:

+886-2-2192-8016

Access Code:

UMC

A live webcast and replay of the 3Q14 results announcement will be available at http://www.umc.com under the “Investors / Events” section.

About UMC

UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced technology and manufacturing for applications spanning every major sector of the IC industry. UMCs robust foundry solutions allow chip designers to leverage the companys leading-edge processes, which include 28nm poly-SiON and gate-last High-K/Metal Gate technology, mixed signal/RFCMOS, and a wide range of specialty technologies. Production is supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i. Fab 12A consists of Phases 1-4 which are in production for customer products down to 28nm. Construction has been completed for Phases 5&6, with future plans for Phases 7&8. The company employs over 15,000 people worldwide and has offices in Taiwan, mainland China, Europe, Japan, Korea, Singapore, and the United States. UMC can be found on the web at http://www.umc.com

Note from UMC Concerning Forward-Looking Statements

Some of the statements in the foregoing announcement are forward looking within the meaning of the U.S. Federal Securities laws, including statements about future outsourcing, wafer capacity, technologies, business relationships and market conditions. Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from UMC; and technological and development risks. Further information regarding these and other risks is included in UMCs filings with the U.S. Securities and Exchange Commission, including its registration statements and reports on Forms F-1, F-3, F-6 and 20-F and 6-K, in each case as amended. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Safe Harbor Statements

This release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning. You can also identify them by the fact that they do not relate strictly to historical or current facts.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors including, but not limited to: (i) our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international global business activities; (iv) our dependence upon key personnel; (v) general economic and political conditions; (vi) possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders; and (viii) fluctuations in foreign currency exchange rates. Further information regarding these and other risks is included in UMC’s filings with the U.S. Securities and Exchange Commission, including its registration statements and reports on Form F-1, F-3, F-6 and 20-F and 6-K, in each case as amended. UMC does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

The financial statements included in this release are prepared and published in accordance with TIFRSs recognized by Financial Supervisory Commission in the ROC, which is different from IFRSs issued by the International Accounting Standards Board. Investors are cautioned that there may be significant differences between TIFRSs and IFRSs. In addition, TIFRSs and IFRSs differ in certain significant respects from ROC GAAP and US GAAP.

This presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.

– FINANCIAL TABLES TO FOLLOW –

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

Consolidated Condensed Balance Sheet

As of September 30, 2014

Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

September 30, 2014

US$

NT$

%

Assets

Current assets

Cash and cash equivalents

1,406

42,744

14.2%

Financial assets at fair value through profit or loss, current

21

649

0.2%

Available-for-sale financial assets, current

72

2,190

0.7%

Notes & Accounts receivable, net

721

21,932

7.3%

Inventories, net

471

14,310

4.8%

Other current assets

328

9,977

3.3%

Total current assets

3,019

91,802

30.5%

Non-current assets

Funds and investments

1,093

33,236

11.0%

Property, plant and equipment

5,343

162,474

54.0%

Other non-current assets

437

13,310

4.5%

Total non-current assets

6,873

209,020

69.5%

Total assets

9,892

300,822

100.0%

Liabilities

Current liabilities

Short-term loans

233

7,075

2.4%

Financial liabilities at fair value through profit or loss, current

0

8

0.0%

Payables

963

29,271

9.7%

Current portion of long-term liabilities

269

8,188

2.7%

Other current liabilities

29

902

0.3%

Total current liabilities

1,494

45,444

15.1%

Non-current liabilities

Bonds payable

821

24,977

8.3%

Long-term loans

231

7,008

2.4%

Other non-current liabilities

230

7,001

2.3%

Total non-current liabilities

1,282

38,986

13.0%

Total liabilities

2,776

84,430

28.1%

Equity

Equity attributable to the parent company

Capital

4,184

127,248

42.3%

Additional paid-in capital

1,296

39,418

13.1%

Retained earnings, unrealized gain or loss on available-for-sale
financial assets and exchange differences on translation of
foreign operations

1,587

48,244

16.0%

Treasury stock

(78)

(2,365)

(0.8%)

Total equity attributable to the parent company

6,989

212,545

70.6%

Non-controlling interests

127

3,847

1.3%

Total equity

7,116

216,392

71.9%

Total liabilities and equity

9,892

300,822

100.0%

Note: New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2014 exchange rate of NT
$30.41 per U.S. Dollar.

All figures are prepared in accordance with TIFRSs.

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income

Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

Except Per Share and Per ADS Data

Year over Year Comparison

Quarter over Quarter Comparison

Three-Month Period Ended

Three-Month Period Ended

September 30, 2014

September 30, 2013

%

September 30, 2014

June 30, 2014

%

US$

NT$

US$

NT$

Chg.

US$

NT$

US$

NT$

Chg.

Net operating revenues

1,158

35,214

1,099

33,407

5.4%

1,158

35,214

1,180

35,869

(1.8%)

Operating costs

(909)

(27,655)

(858)

(26,070)

6.1%

(909)

(27,655)

(910)

(27,662)

(0.0%)

Gross profit

249

7,559

241

7,337

3.0%

249

7,559

270

8,207

(7.9%)

21.5%

21.5%

22.0%

22.0%

21.5%

21.5%

22.9%

22.9%

Operating expenses

– Sales and marketing expenses

(32)

(957)

(26)

(778)

23.0%

(32)

(957)

(36)

(1,097)

(12.8%)

– General and administrative expenses

(28)

(845)

(28)

(854)

(1.1%)

(28)

(845)

(28)

(857)

(1.4%)

– Research and development expenses

(114)

(3,468)

(107)

(3,262)

6.3%

(114)

(3,468)

(110)

(3,326)

4.3%

Subtotal

(174)

(5,270)

(161)

(4,894)

7.7%

(174)

(5,270)

(174)

(5,280)

(0.2%)

Net other operating income and expenses

(20)

(602)

(1)

(48)

100.0%

(20)

(602)

(0)

(10)

100.0%

Operating income

55

1,687

79

2,395

(29.6%)

55

1,687

96

2,917

(42.2%)

4.8%

4.8%

7.2%

7.2%

4.8%

4.8%

8.1%

8.1%

Net non-operating income and expenses

43

1,305

51

1,561

(16.4%)

43

1,305

31

937

39.3%

Income from continuing operations before income tax

98

2,992

130

3,956

(24.4%)

98

2,992

127

3,854

(22.4%)

8.5%

8.5%

11.8%

11.8%

8.5%

8.5%

10.7%

10.7%

Income tax expense

(13)

(413)

(19)

(590)

(30.0%)

(13)

(413)

(18)

(528)

(21.8%)

Net income

85

2,579

111

3,366

(23.4%)

85

2,579

109

3,326

(22.5%)

7.3%

7.3%

10.1%

10.1%

7.3%

7.3%

9.3%

9.3%

Other comprehensive income (loss)

(50)

(1,501)

(74)

(2,249)

(33.3%)

(50)

(1,501)

4

103

Total comprehensive income

35

1,078

37

1,117

(3.5%)

35

1,078

113

3,429

(68.6%)

Net income attributable to:

Stockholders of the parent

96

2,916

114

3,476

(16.1%)

96

2,916

115

3,482

(16.3%)

Non-controlling interests

(11)

(337)

(3)

(110)

100.0%

(11)

(337)

(6)

(156)

100.0%

Comprehensive income attributable to:

Stockholders of the parent

45

1,372

41

1,255

9.3%

45

1,372

120

3,636

(62.3%)

Non-controlling interests

(10)

(294)

(4)

(138)

100.0%

(10)

(294)

(7)

(207)

42.0%

Earnings per share-basic

0.008

0.23

0.009

0.28

0.008

0.23

0.009

0.28

Earnings per ADS (2)

0.038

1.15

0.046

1.40

0.038

1.15

0.046

1.40

Weighted average number of shares

outstanding (in millions)

12,501

12,460

12,501

12,489

Notes:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2014 exchange rate of NT $30.41 per U.S. Dollar.

All figures are prepared in accordance with TIFRSs.

(2) 1 ADS equals 5 common shares.

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income

Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

Except Per Share and Per ADS Data

For the Three-Month Period Ended

For the Nine-Month Period Ended

September 30, 2014

September 30, 2014

US$

NT$

%

US$

NT$

%

Net operating revenues

1,158

35,214

100.0%

3,380

102,777

100.0%

Operating costs

(909)

(27,655)

(78.5%)

(2,668)

(81,110)

(78.9%)

Gross profit

249

7,559

21.5%

712

21,667

21.1%

Operating expenses

– Sales and marketing expenses

(32)

(957)

(2.7%)

(95)

(2,888)

(2.8%)

– General and administrative expenses

(28)

(845)

(2.4%)

(84)

(2,549)

(2.5%)

– Research and development expenses

(114)

(3,468)

(9.9%)

(333)

(10,129)

(9.9%)

Subtotal

(174)

(5,270)

(15.0%)

(512)

(15,566)

(15.2%)

Net other operating income and expenses

(20)

(602)

(1.7%)

(18)

(557)

(0.5%)

Operating income

55

1,687

4.8%

182

5,544

5.4%

Net non-operating income and expenses

43

1,305

3.7%

86

2,594

2.5%

Income from continuing operations before income tax

98

2,992

8.5%

268

8,138

7.9%

Income tax expense

(13)

(413)

(1.2%)

(37)

(1,122)

(1.1%)

Net income

85

2,579

7.3%

231

7,016

6.8%

Other comprehensive income (loss)

(50)

(1,501)

(4.2%)

90

2,731

2.7%

Total comprehensive income

35

1,078

3.1%

321

9,747

9.5%

Net income attributable to:

Stockholders of the parent

96

2,916

8.3%

249

7,578

7.4%

Non-controlling interests

(11)

(337)

(1.0%)

(18)

(562)

(0.6%)

Comprehensive income attributable to:

Stockholders of the parent

45

1,372

3.9%

338

10,269

10.0%

Non-controlling interests

(10)

(294)

(0.8%)

(17)

(522)

(0.5%)

Earnings per share-basic

0.008

0.23

0.020

0.61

Earnings per ADS (2)

0.038

1.15

0.100

3.05

Weighted average number of shares
outstanding (in millions)

12,501

12,490

Notes:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2014 exchange rate of NT $30.41 per U.S. Dollar.

All figures are prepared in accordance with TIFRSs.

(2) 1 ADS equals 5 common shares.

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

Consolidated Condensed Statement of Cash Flows

For The Nine-Month Period Ended September 30, 2014

Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

USD

NTD

Cash flows from operating activities :

Net income before tax

268

8,138

Depreciation & Amortization

986

29,994

Impairment loss on financial assets

8

257

Impairment loss on non-financial assets

20

597

Gain on disposal of investments

(57)

(1,739)

Changes in notes & accounts receivable

(167)

(5,084)

Changes in other current assets

(158)

(4,796)

Changes in assets, liabilities and others

(47)

(1,415)

Net cash provided by operating activities

853

25,952

Cash flows from investing activities :

Acquisition of available-for-sales financial assets

(5)

(167)

Proceeds from disposal of available-for-sale financial assets

72

2,199

Acquisition of financial assets measured at cost

(24)

(747)

Proceeds from sale of financial assets measured at cost

22

674

Acquisition ofinvestments accounted for under the equity method

(4)

(121)

Acquisition of property, plant and equipment

(889)

(27,029)

Proceeds from disposal of property, plant and equipment

8

253

Acquisition of intangible assets

(29)

(871)

Others

(0)

(7)

Net cash used in investing activities

(849)

(25,816)

Cash flows from financing activities :

Increase in short-term loans

78

2,364

Proceeds from bonds issued

164

5,000

Redemption of bonds

(339)

(10,306)

Proceeds from long-term loans

60

1,824

Repayments of long-term loans

(57)

(1,735)

Cash dividends and cash paid from additional paid-in capital

(206)

(6,253)

Others

14

419

Net cash used in financing activities

(286)

(8,687)

Effect of exchange rate changes on cash and cash equivalents

16

464

Net decrease in cash and cash equivalents

(266)

(8,087)

Cash and cash equivalents at beginning of period

1,672

50,831

Cash and cash equivalents at end of period

1,406

42,744

Note: New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2014 exchange rate of NT $30.41 per U.S. Dollar.

All figures are prepared in accordance with TIFRSs.

Contacts:

Bowen Huang / David Wong
UMC, Investor Relations
+886-2-2658-9168, ext. 16900
bowen_huang@umc.com / david_wong@umc.com