28nm contribution reaches 21% in 3Q16; Fab 12X to enter production in 4Q16

Third Quarter 2016 Overview¹:

• Revenue: NT$38.16 billion (US$1.22 billion)
• Gross margin: 21.8%
• Foundry revenue from 28nm: 21%; Foundry operating margin: 5.5%
• Foundry capacity utilization rate: 89%
• Net income attributable to the stockholders of the parent: NT$2.98 billion (US$95.0 million)
• Earnings per share: NT$0.24; earnings per ADS: US$0.038

TAIPEI, Taiwan — (BUSINESS WIRE) — October 26, 2016 — 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 2016.

Third quarter consolidated revenue was NT$38.16 billion, up 3.2% quarterly from NT$37 billion in 2Q16 and an increase of 8.1% YoY from NT$35.32 billion in 3Q15. 3Q16 consolidated gross margin was 21.8%. Net income attributable to the stockholders of the parent was NT$2.98 billion, with earnings per ordinary share of NT$0.24.

Mr. Po-Wen Yen, CEO of UMC, said, “In the third quarter of 2016, UMC’s foundry revenue increased 3.2% sequentially to NT$38.05 billion. Foundry operating margin was 5.5% as wafer shipments grew to 1.57 million 8-inch equivalent wafers, with quarterly capacity utilization remaining at 89%. During the quarter, our 28nm business exceeded 20% of quarterly revenue for the first time, mainly driven by strong chip demand within the communication segment. Our new high in 28nm contribution reflects customers’ robust wafer demand at our 300mm flagship Fab 12A in Tainan, Taiwan, which has demonstrated mature technology status with consistent yields to reach economy of scale. To further expand our 28nm market share into new applications, UMC has announced the availability of Faraday's 12.5G SerDes PHY on our 28HPC^u platform. The introduction of this IP highlights our ongoing efforts to introduce new features on UMC's 28nm process, including a wide range of high speed transfer interface IP for optical networking and other telecommunication applications. UMC also introduced Faraday’s PowerSlash^TM fundamental IP cells, which can be incorporated into our 55nm ULP (ultra low-power) technology to create an optimized low power operating environment for wireless applications such as those used in applications for Internet of Things (IoT).”

CEO Yen continued, “Turning our attention to the fourth quarter, we anticipate a flat outlook. We expect our Fab 12X in Xiamen, China to enter production for 40/55nm products to address the strong demand in China’s chip market. The production of Fab 12X signifies an important milestone as we enter China’s high growth IC supply chain to realize new market opportunities. Fab 12X’s location in Xiamen serves as an ideal manufacturing location for customers seeking to diversify their 12” manufacturing needs. We look forward to a successfully ramping production of our 12" Xiamen fab, which will strengthen UMC's global presence in the semiconductor industry. Fab 12X will continue to follow UMC’s core values and protocols in sustainable semiconductor manufacturing, which have been implemented throughout UMC’s global fabs. Through our green manufacturing, we hope to set positive industry examples through concrete actions in order to combat global warming, enhance resource conservation and save energy. UMC’s selection as a DJSI Global Component for the ninth consecutive year highlights our active participation in environment protection, community service and sustainable manufacturing practices, which reflects our commitment to attain higher corporate social responsibility goals.”

Summary of Operating Results