UMC Reports 2005 Third Quarter Results: Rebound in ASP, Wafer Shipments Expected to Drive Operating Profit in 4Q05

TAIPEI, R.O.C.--Oct. 26, 2005--UMC (NYSE: UMC, TSE: 2303):

Third Quarter 2005 Overview:

• Revenue increased 21.3% sequentially to NT$23.58 billion (US$711 million)
• Net income increased sequentially to NT$2,165 million (US$65 million)
• Wafer shipments increased 17.6% sequentially to 741 thousand 8-inch equivalent wafers
• EPS was NT$0.12; EPADS was US$0.018
• Revenue from 90nm technology increased from 9% to 14%

United Microelectronics Corporation (NYSE: UMC; TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the third quarter of 2005.

"The third quarter of 2005 marked a fairly significant turnaround for our operations," said UMC CEO, Dr. Jackson Hu. "We noticed demand increasing across a wide rage of applications, including wireless and wired communications, PC chipsets and LCD drivers in the computer segment, and DVD and MP3 products in the consumer segment. These positive developments all set a new stage for growth that started towards the end of the second quarter and continued into the third quarter. As a result, our blended ASP grew 2% and wafer shipments increased 17.6% sequentially to 741 thousand 8-inch equivalent wafers in Q3."

Dr. Hu continued, "We are seeing strong demand for our 90nm technologies and we are building momentum in our development of new technologies at the leading edge. It will be exciting to watch as these 90nm products begin spreading within the mainstream markets in the coming months. UMC led all foundries in 90nm wafer shipments in July 2005 with over 10,000 shipments and by the end of August, UMC shipped over 100,000 90nm wafers in total. We believe this is a solid indication of the production maturity and readiness of UMC's 90nm process for every major advanced application. We are currently producing 90nm chips at two 300mm fabs and one 200mm fab, and now have over 20 different products that are currently being manufactured. In addition to UMC's standard 90nm device offering, customers are also utilizing either the company's 90nm low-power or high-speed device options, depending upon their product application."

"I would also like to note that we have already delivered working 65nm product samples to customers. This not only demonstrates that this technology is a reality at UMC today, but is also a testament to our commitment to maintaining our leadership in the industry at the leading edge. About 70% of UMC's revenue comes from our fabless customers, and their dependency on System-on-Chip (SoC) solutions is increasing as process geometries shrink. In response to this, in the past two years we have particularly focused on enhancing our capabilities in system and architecture knowledge, Electronic Design Automation (EDA) methodology, and tape-out services, and expanding our IP portfolio. This intense focus on delivering premium value-added services to our customers has been at the center of our SoC Solution Foundry strategy and has been a primary factor in helping to drive our success with leading edge 90nm, and now 65nm technologies. As the semiconductor industry continues to evolve, we believe that this strategy will help lead UMC into a long-term phase of sustainable success and profitability."

Summary of Operating Results

Operating Results

(Amount: NT$ million)	3Q05	2Q05	QoQ % change	3Q04	YoY % change
Revenue	23,579	19,443	21.3	34,580	(31.8)
Gross Profit	2,954	212	1293.4	11,663	(74.7)
Operating Expenses	(3,514)	(3,551)	(1.0)	(2,926)	20.1
Operating Income (Loss)	(560)	(3,339)	(83.2)	8,737	(106.4)
Non-op. Income (Expenses)	2,725	3,638	(25.1)	2,177	25.18
Net Income	2,165	299	624.1	10,914	(80.2)
EPS (NT$ per share)	0.12	0.02		0.58
(US$ per ADS)	0.018	0.003		0.087

Revenue in 3Q05 was NT$23.58 billion, representing a 21.3% quarter-over-quarter increase from NT$19.44 billion in 2Q05, and a 31.8% year-over-year decrease from NT$34.58 billion in 3Q04. Gross profit for the quarter was NT$2.95 billion, or 12.5% of revenue, compared to NT$212 million, or 1.1% of revenue in 2Q05. The operating loss in 3Q05 was NT$560 million compared to a loss of NT$3.34 billion in 2Q05. The increase in gross profit was mainly attributable to the increase in wafer shipments and an improved product mix. Net income for 3Q05 was NT$2.17 billion, a sequential increase of 624.1% from 2Q05, which was mainly due to the significant increase in the gross profit.

Earnings per ordinary share (EPS) for the quarter were NT$0.12. Earnings per ADS (EPADS) were US$0.018. This compares with 2Q05 earnings per ordinary share of NT$0.02 and earnings per ADS of US$0.003. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 3Q05 was 18,433,685,226, compared to 18,452,431,830 shares in 2Q05 and 18,878,621,323 shares in 3Q04. The diluted weighted average number of outstanding shares was 18,610,270,285 in 3Q05, compared to 18,555,975,483 shares in 2Q05 and 19,221,590,458 shares in 3Q04. The decrease in basic and diluted weighted average outstanding shares in 3Q05 was mainly due to the execution of the Company's 8th treasury share repurchase program in early July.

Detailed Financials Section

3Q 2005 Report (pdf, 144kb)
3Q 2005 Investors Conference Presentation Material (pdf, 76kb)
3Q 2005 Financial Statement (pdf, 40kb)

About UMC

UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SoC) designs, including 90nm copper, 0.13um copper, and mixed signal/RFCMOS. UMC is also a leader in 300mm manufacturing; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. UMC employs approximately 10,500 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.