UMC Reports Third Quarter 2018 Results

Safe Harbor Statements

This release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and as defined in the United States 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) dependence upon the frequent introduction of new services and technologies based on the latest developments in the industry in which UMC operates; (ii) the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; (iii) the risks associated with international business activities; (iv) 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 natural disasters, 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 United States Securities and Exchange Commission. All information provided in this release is as of the date of this release and are based on assumptions that UMC believes to be reasonable as of this date, and 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 Taiwan International Financial Reporting Standards, or TIFRSs, recognized by the Financial Supervisory Commission in the ROC, which is different from International Financial Reporting Standards, or 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 generally accepted accounting principles in the ROC and generally accepted accounting principles in the United States.

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.


UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheet As of September 30, 2018 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)


	September 30, 2018
	US$	NT$	%
Assets
Current assets
Cash and cash equivalents	2,670	81,520	21.9%
Financial assets at fair value through profit or loss, current	14	422	0.1%
Contract assets, current	11	338	0.1%
Notes & Accounts receivable, net	839	25,610	6.9%
Inventories, net	576	17,589	4.7%
Other current assets	481	14,674	3.9%
Total current assets	4,591	140,153	37.6%

Non-current assets
Funds and investments	1,188	36,278	9.7%
Property, plant and equipment	5,821	177,716	47.7%
Other non-current assets	607	18,522	5.0%
Total non-current assets	7,616	232,516	62.4%
Total assets	12,207	372,669	100.0%

Liabilities
Current liabilities
Short-term loans	485	14,818	4.0%
Hedging financial liabilities, current	2	64	0.0%
Contract liabilities, current	65	1,979	0.5%
Payables	777	23,714	6.4%
Current portion of long-term liabilities	180	5,510	1.5%
Other current liabilities	176	5,348	1.4%
Total current liabilities	1,685	51,433	13.8%

Non-current liabilities
Bonds payable	1,271	38,788	10.4%
Long-term loans	939	28,670	7.7%
Other non-current liabilities	1,350	41,220	11.1%
Total non-current liabilities	3,560	108,678	29.2%
Total liabilities	5,245	160,111	43.0%

Equity
Equity attributable to the parent company
Capital	4,069	124,243	33.3%
Additional paid-in capital	1,319	40,270	10.8%
Retained earnings, unrealized gains or losses on financial assets measured at fair value through other comprehensive income, exchange differences on translation of foreign operations and gains or losses on hedging Instruments	1,640	50,068	13.5%
Treasury stock	(82)	(2,516)	(0.7%)
Total equity attributable to the parent company	6,946	212,065	56.9%
Non-controlling interests	16	493	0.1%
Total equity	6,962	212,558	57.0%
Total liabilities and equity	12,207	372,669	100.0%


Note：New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2018 exchange rate of NT $30.53 per U.S. Dollar.

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, 2018		September 30, 2017		Chg.	September 30, 2018		June 30, 2018		Chg.
	US$	NT$	US$	NT$	%	US$	NT$	US$	NT$	%
Net operating revenues	1,290	39,387	1,235	37,698	4.5%	1,290	39,387	1,273	38,852	1.4%
Operating costs	(1,063)	(32,465)	(1,019)	(31,106)	4.4%	(1,063)	(32,465)	(1,054)	(32,177)	0.9%
Gross profit	227	6,922	216	6,592	5.0%	227	6,922	219	6,675	3.7%
	17.6%	17.6%	17.5%	17.5%		17.6%	17.6%	17.2%	17.2%
Operating expenses
- Sales and marketing expenses	(32)	(987)	(35)	(1,070)	(7.8%)	(32)	(987)	(36)	(1,103)	(10.5%)
- General and administrative expenses	(46)	(1,386)	(32)	(991)	39.9%	(46)	(1,386)	(36)	(1,083)	28.0%
- Research and development expenses	(109)	(3,329)	(110)	(3,343)	(0.4%)	(109)	(3,329)	(99)	(3,027)	10.0%
Subtotal	(187)	(5,702)	(177)	(5,404)	5.5%	(187)	(5,702)	(171)	(5,213)	9.4%
Net other operating income and expenses	40	1,215	14	441	175.5%	40	1,215	56	1,719	(29.3%)
Operating income	80	2,435	53	1,629	49.5%	80	2,435	104	3,181	(23.5%)
	6.2%	6.2%	4.3%	4.3%		6.2%	6.2%	8.2%	8.2%

Net non-operating income and expenses	(53)	(1,606)	41	1,236	-	(53)	(1,606)	(36)	(1,095)	46.7%
Income from continuing operations before income tax	27	829	94	2,865	(71.1%)	27	829	68	2,086	(60.3%)
	2.1%	2.1%	7.6%	7.6%		2.1%	2.1%	5.4%	5.4%

Income tax benefit (expense)	(21)	(632)	(13)	(401)	57.6%	(21)	(632)	11	331	-
Net income	6	197	81	2,464	(92.0%)	6	197	79	2,417	(91.8%)
	0.5%	0.5%	6.5%	6.5%		0.5%	0.5%	6.2%	6.2%

Other comprehensive income (loss)	(51)	(1,568)	(35)	(1,068)	46.8%	(51)	(1,568)	87	2,641	-

Total comprehensive income (loss)	(45)	(1,371)	46	1,396	-	(45)	(1,371)	166	5,058	-

Net income attributable to:
Stockholders of the parent	56	1,720	114	3,473	(50.5%)	56	1,720	120	3,659	(53.0%)
Non-controlling interests	(50)	(1,523)	(33)	(1,009)	50.9%	(50)	(1,523)	(41)	(1,242)	22.6%

Comprehensive income (loss) attributable to:
Stockholders of the parent	9	279	79	2,402	(88.4%)	9	279	206	6,297	(95.6%)
Non-controlling interests	(54)	(1,650)	(33)	(1,006)	64.0%	(54)	(1,650)	(40)	(1,239)	33.2%

Earnings per share-basic	0.005	0.14	0.009	0.28		0.005	0.14	0.010	0.30
Earnings per ADS ⁽²⁾	0.023	0.70	0.046	1.40		0.023	0.70	0.049	1.50
Weighted average number of shares
outstanding (in millions)		12,054		12,208			12,054		12,049


Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2018 exchange rate of NT $30.53 per U.S. Dollar.
(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$) and U.S. Dollars (US$)


	For the Three-Month Period Ended September 30, 2018			For the Nine-Month Period Ended September 30, 2018
	US$	NT$	%	US$	NT$	%
Net operating revenues	1,290	39,387	100.0%	3,791	115,735	100.0%
Operating costs	(1,063)	(32,465)	(82.4%)	(3,194)	(97,496)	(84.2%)
Gross profit	227	6,922	17.6%	597	18,239	15.8%


Operating expenses
- Sales and marketing expenses	(32)	(987)	(2.5%)	(98)	(2,999)	(2.6%)
- General and administrative expenses	(46)	(1,386)	(3.5%)	(114)	(3,485)	(3.0%)
- Research and development expenses	(109)	(3,329)	(8.5%)	(304)	(9,280)	(8.0%)
Subtotal	(187)	(5,702)	(14.5%)	(516)	(15,764)	(13.6%)
Net other operating income and expenses	40	1,215	3.1%	128	3,911	3.3%
Operating income	80	2,435	6.2%	209	6,386	5.5%

Net non-operating income and expenses	(53)	(1,606)	(4.1%)	(53)	(1,615)	(1.4%)
Income from continuing operations before income tax	27	829	2.1%	156	4,771	4.1%


Income tax benefit (expense)	(21)	(632)	(1.6%)	29	872	0.8%
Net income	6	197	0.5%	185	5,643	4.9%

Other comprehensive income (loss)	(51)	(1,568)	(4.0%)	27	840	0.7%

Total comprehensive income (loss)	(45)	(1,371)	(3.5%)	212	6,483	5.6%

Net income attributable to:
Stockholders of the parent	56	1,720	4.4%	288	8,780	7.6%
Non-controlling interests	(50)	(1,523)	(3.9%)	(103)	(3,137)	(2.7%)

Comprehensive income (loss) attributable to:
Stockholders of the parent	9	279	0.7%	319	9,734	8.4%
Non-controlling interests	(54)	(1,650)	(4.2%)	(107)	(3,251)	(2.8%)

Earnings per share-basic	0.005	0.14		0.024	0.73
Earnings per ADS ⁽²⁾	0.023	0.70		0.120	3.65

Weighted average number of shares outstanding (in millions)		12,054			12,101


Notes:
(1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2018 exchange rate of NT $30.53 per U.S. Dollar.
(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, 2018 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)


	US$	NT$
Cash flows from operating activities :
Net income before tax	156	4,771
Depreciation & Amortization	1,298	39,635
Exchange loss on financial assets and liabilities	42	1,286
Changes in notes & accounts receivable	(109)	(3,322)
Changes in other current assets	34	1,051
Changes in contract liabilities	(65)	(1,970)
Changes in other payables	(36)	(1,091)
Changes in assets, liabilities and others	(49)	(1,548)
Net cash provided by operating activities	1,271	38,812

Cash flows from investing activities :
Acquisition of investments accounted for under the equity method	(28)	(840)
Acquisition of property, plant and equipment	(499)	(15,229)
Increase in refundable deposits	(28)	(861)
Others	198	6,044
Net cash used in investing activities	(357)	(10,886)

Cash flows from financing activities :
Decrease in short-term loans	(343)	(10,469)
Redemption of bonds	(246)	(7,500)
Cash dividends	(280)	(8,557)
Treasury stock acquired	(102)	(3,129)
Treasury stock sold to employees	72	2,204
Others	(10)	(310)
Net cash used in financing activities	(909)	(27,761)

Effect of exchange rate changes on cash and cash equivalents	(10)	(320)
Net decrease in cash and cash equivalents	(5)	(155)

Cash and cash equivalents at beginning of period	2,675	81,675

Cash and cash equivalents at end of period	2,670	81,520


Note: New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2018 exchange rate of NT $30.53 per U.S. Dollar.

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