UMC Reports Third Quarter 2009 Results

Revenue exceeds expectation with profit increasing substantially

    TAIPEI, Taiwan, Oct. 28 /PRNewswire-Asia-FirstCall/ --

    Third Quarter 2009 Overview (Note 1):

    -- Revenue increased 21.1% sequentially to NT$27.41 billion (US$853
    -- Gross margin of 27.9%, operating margin of 15.4%
    -- Utilization rate rose to 89%
    -- Net income of NT$6.09 billion (US$190 million)
    -- Earnings per share of NT$0.48, earnings per ADS of US$0.075

    Note 1: Unless otherwise stated, all financial figures discussed in this
    announcement are prepared in accordance with ROC GAAP, which differ in
    some material respects from generally accepted accounting principles in
    the United States. They are un-audited, unconsolidated, and represent
    comparisons among the three-month period ending September 30, 2009, the
    three-month period ending June 30, 2009, and the equivalent three-month
    period that ended September 30, 2008. For all 3Q09 results, New Taiwan
    Dollar (NT$) amounts have been converted into U.S. Dollars at the
    September 30, 2009 exchange rate of NT$32.14 per U.S. Dollar.

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 2009. Revenue increased 21.1% QoQ to NT$27.41 billion, from NT$22.63 billion in 2Q09, and increased 10.7% YoY, from NT$24.75 billion in 3Q08. Gross profit margin was 27.9%, with operating margin of 15.4%. Net income in 3Q09 was NT$6.09 billion, with earnings per ordinary share of NT$0.48.

Dr. Shih-Wei Sun, CEO of UMC said, "The positive momentum we experienced in Q2 carried over into Q3. Shipments surpassed 1 million wafers, rising to 1,017,000 8-inch equivalent wafers, the second highest number in UMC's history. Utilization rate grew to 89% for the third quarter. Revenue for Q3 was the highest it's been for the past seven quarters, while gross profit margin increased to the highest level in five years. UMC is optimistic about the fourth quarter and expects ASP to rise as our product mix continues to improve. However, factors such as seasonal adjustment and appreciation of the NTD may slightly impact our revenue in Q4. As a whole, UMC expects continued profitability from our foundry business and will be overall profitable for the year. Moreover, UMC intends to distribute dividends and employee bonuses next year.

Dr. Sun continued, "Demands for advanced process nodes continued to rise in the third quarter. Revenue from 65nm and below technologies grew by more than 40% in Q3 over Q2, with further growth anticipated for Q4. Continuing with our "Customer-Driven Foundry Solutions" commitment, UMC is expanding 65/55nm capacity at our 300mm Fab12i and enabling the fab for 45/40nm production capabilities. This project will increase Fab12i's capacity by over 30% to better serve customers' demands for leading edge technology. It will also allow them to mitigate geographic risk through diversification of manufacturing locations. In addition, UMC plans to substantially increase 2010 CAPEX for 45/40nm production capacity and for continued 28nm R&D equipment procurement at Fab12A. Furthermore, construction of Fab12A's phase 3 and 4 fab complex has been completed, and we are currently implementing clean-room related support facilities. These 300mm efforts will further expand our capacity and market share in advanced nodes so that we may pursue stable, long-term growth, while increasing profitability and shareholders' return on equity."

    Summary of Operating Results

    Operating Results
                                                    QoQ%                YoY%
    (Amount: NT$ million)     3Q09       2Q09     change      3Q08    change

    Revenue                 27,406     22,628       21.1    24,748      10.7
    Gross Profit (Loss)      7,655      5,381       42.3     4,160      84.0
    Operating Expenses      (3,446)    (2,685)      28.3    (3,421)      0.7
    Operating Income (Loss)  4,209      2,696       56.1       739     469.6
    Non-op. Income
     (Expenses)              2,180       (901)        --    (1,897)       --
    Net Income (Loss)        6,091      1,547      293.7    (1,413)       --
    EPS   (NT$ per share)     0.48       0.12         --     (0.11)       --
          (US$ per ADS)      0.075      0.019         --    (0.017)       --

Revenue increased 21.1% QoQ to NT$27.41 billion, from NT$22.63 billion in 2Q09 and increased 10.7% YoY, from NT$24.75 billion in 3Q08. Gross profit was NT$7.66 billion, or 27.9% of revenue, compared to NT$5.38 billion, or 23.8% of 2Q09 revenue. Operating income for the quarter was NT$4.21 billion, or 15.4% of revenue, compared to NT$2.70 billion, or 11.9% of 2Q09 revenue. Higher wafer shipments and improved blended ASP were the main reasons for the increase in revenue. The increase in gross profit is attributed to better capacity utilization rate and cost control activities. Net income in 3Q09 was NT$6.09 billion, compared to NT$1.55 billion in 2Q09.

Earnings per ordinary share for the quarter was NT$0.48. Earnings per ADS was US$0.075. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 3Q09 was 12,671,692,578, compared with 12,671,692,578 shares in 2Q09 and 13,129,987,534 shares in 3Q08. The diluted weighted average number of outstanding shares was 12,794,357,470 in 3Q09, compared with 12,677,712,645 shares in 2Q09 and 13,129,987,534 shares in 3Q08. The fully diluted share count on September 30, 2009 was approximately 13,842,163,000. On September 30, 2009, UMC held 300 million treasury shares acquired from the 13th share buy-back program.

    Detailed Financials Section

    COGS & Expenses
                                                   QoQ%                 YoY%
    (Amount: NT$ million)        3Q09     2Q09   change    3Q08       change

    Revenue                    27,406   22,628     21.1   24,748        10.7
    CoGS                      (19,751) (17,247)    14.5  (20,588)       (4.1)
         Depreciation                          (7,529)    (8,861)      (15.0)    (8,086)              (6.9)
            Other  Mfg.  Costs                (12,222)    (8,386)        45.7    (12,502)              (2.2)
        Gross  Profit                                7,655        5,381          42.3        4,160                84.0
        Gross  Margin  (%)                        27.9%        23.8%              --        16.8%                    --
        Total  Operating  Exp.              (3,446)    (2,685)        28.3      (3,421)                0.7
            G&A                                                (593)        (454)        30.6          (639)              (7.2)
            Sales  &  Marketing                    (629)        (376)        67.3          (673)              (6.5)
            R&D                                            (2,224)    (1,855)        19.9      (2,109)                5.5
        Operating  Income                        4,209        2,696          56.1            739              469.6


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