UMC United Microelectronics Corp

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

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 28HPCu 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 PowerSlashTM 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

Operating Results (Amount: NT$ million)   3Q16   2Q16   QoQ %change   3Q15   YoY %change Net Operating Revenues   38,164   36,997   3.2   35,320   8.1 Gross Profit 8,301 8,285 0.2 6,911 20.1 Operating Expenses (6,373 ) (5,859 ) 8.8 (5,126 ) 24.3 Net Other Operating Income and Expenses (443 ) 23 - (804 ) (44.9 ) Operating Income 1,485 2,449 (39.4 ) 981 51.4 Net Non-Operating Income and Expenses 466 (650 ) - 410 13.7 Net Income Attributable to Stockholders of the Parent 2,975 2,583 15.2 1,708 74.2 EPS (NT$ per share) 0.24 0.21 0.14 (US$ per ADS)   0.038     0.033         0.022      

Net operating revenues in 3Q16 increased 3.2% to NT$38.16 billion, including NT$38.05 billion from the foundry segment, as 28nm contribution grew to 21% sales. Gross profit was NT$8.30 billion, or 21.8% of revenue. Operating expenses increased 8.8% sequentially to NT$6.37 billion. Net other operating expenses was NT$443 million, leading to an operating income of NT$1.49 billion. Net non-operating income was NT$466 million. Net income attributable to stockholders of the parent in 3Q16 grew 15.2% to NT$2.98 billion.

Earnings per ordinary share for the quarter was NT$0.24. Earnings per ADS was US$0.038. The basic weighted average number of outstanding shares in 3Q16 was 12,208,239,978, compared with 12,334,888,329 shares in 2Q16 and 12,524,504,594 shares in 3Q15. The diluted weighted average number of outstanding shares was 13,402,233,597 in 3Q16, compared with 13,460,073,526 shares in 2Q16 and 13,694,010,855 shares in 3Q15. The fully diluted share count on September 30, 2016 was approximately 13,818,312,000. On September 30, 2016, UMC held 400 million treasury shares acquired from the 16th and 17th share buy-back programs.

Detailed Financials Section

Consolidated revenues increased to NT$38.16 billion. COGS rose 4% to NT$29.86 billion, as depreciation remained flat at NT$11.27 billion, while other manufacturing costs increased 6.5% to NT$18.59 billion, mainly from higher wafer shipments. Gross profit was NT$8.30 billion. Operating expenses grew 8.8% to NT$6.37 billion. G&A and Sales & Marketing grew to NT$1.77 billion and NT$1.21 billion, respectively, which included expenses related to the initial production at Fab 12X. R&D expenses increased 5.3% to NT$3.40 billion or 8.9% of operating revenues. Higher operating expense and a NT$455 million impairment loss from a solar subsidiary company, Nexpower, resulted in an operating income of NT$1.49 billion in 3Q16.

COGS & Expenses (Amount: NT$ million)   3Q16   2Q16   QoQ %change   3Q15   YoY %change Net Operating Revenues   38,164   36,997   3.2   35,320   8.1 COGS (29,863 ) (28,712 ) 4.0 (28,409 ) 5.1 Depreciation (11,274 ) (11,264 ) 0.1 (9,654 ) 16.8 Other Mfg. Costs (18,589 ) (17,448 ) 6.5 (18,755 ) (0.9 ) Gross Profit 8,301 8,285 0.2 6,911 20.1 Gross Margin (%) 21.8 % 22.4 % 19.6 % Operating Expenses (6,373 ) (5,859 ) 8.8 (5,126 ) 24.3 G&A (1,769 ) (1,541 ) 14.8 (942 ) 87.8 Sales & Marketing (1,207 ) (1,092 ) 10.5 (1,045 ) 15.5 R&D (3,397 ) (3,226 ) 5.3 (3,139 ) 8.2 Net Other Operating

Income & Expenses

(443 ) 23 - (804 ) (44.9 ) Operating Income   1,485     2,449     (39.4 )   981     51.4  

Net non-operating income in 3Q16 was NT$466 million, including a NT$834 million net investment gain, which was mainly offset by a NT$338 million in exchange loss and a NT$326 million loss from net interest expense.

Non-Operating Income and Expenses (Amount: NT$ million)   3Q16   2Q16   3Q15 Non-Operating Income and Expenses   466   (650 )   410 Net Interest Income and Expenses (326 ) (154 ) (23 )

Net Investment Gain and Loss

834

(504

)

(396

)

Gain and Loss on Disposal of Investment

304 548 612 Exchange Gain and Loss (338 ) (501 ) 471 Other Gain and Loss   (8 )   (39 )   (254 )

Cash inflow from operating activities reached NT$13.89 billion. Cash outflow from investing activities totaled NT$15.40 billion, including NT$19.86 billion in CAPEX spending for the foundry segment, resulting in a free cash outflow of NT$5.97 billion. Cash inflow from financing activities was NT$8.89 billion, mainly due to a cash inflow of NT$13.45 billion in bank loans, the capital injection from United Semiconductor (Xiamen) leading to the increase in other financial liabilities of NT$2.35 billion and a cash dividend payment of NT$6.91 billion. Net cash inflow for 3Q16 was NT$5.84 billion. Over the next 12 months, the company expects to repay NT$3.73 billion in bank loans.

Cash Flow Summary

(Amount: NT$ million)  

For the 3-MonthPeriod EndedSep. 30, 2016

 

 

For the 3-MonthPeriod EndedJun. 30, 2016

 

Cash Flow from Operating Activities   13,888   5,618 Net income before tax 1,951 1,799 Depreciation & Amortization 12,901 13,040 Gain on disposal of investments (304 ) (548 ) Impairment loss on financial assets 68 395 Impairment loss on non-financial assets 455 - Exchange loss (gain) on financial assets and liabilities (12 ) 315 Changes in working capital 559 (9,330 ) Income tax paid (1,688 ) (244 ) Other (42 ) 191 Cash Flow from Investing Activities (15,400 ) (27,113 ) Capital expenditures (19,862 ) (29,307 ) Proceeds from disposal of AFS financial assets 594 808 Changes in refundable deposits 402 (581 ) Acquisition of intangible assets (567 ) (219 ) Other 4,033 2,186 Cash Flow from Financing Activities 8,885 11,152 Bank loans 13,446 13,548 Increase in other financial liabilities 2,345 - Treasury stock acquired - (2,396 ) Cash dividends (6,907 ) - Other 1 (0 ) Effect of Exchange Rate (1,532 ) 227 Net Cash Flow   5,841     (10,116 )

Cash and cash equivalents increased to NT$55.27 billion, mostly due to bank loans of NT$13.45 billion and the capital injection for United Semiconductor (Xiamen), which was offset by NT$6.91 billion in cash dividend payment. Days of inventory remained at 53 days.

Current Assets (Amount: NT$ billion)   3Q16   2Q16   3Q15 Cash and Cash Equivalents   55.27   49.43   52.14 Notes & Accounts Receivable 22.37 24.53 19.76 Days Sales Outstanding 56 54 53 Inventories, net 17.17 17.59 16.56 Days of Inventory 53 53 52 Total Current Assets   106.97   103.60   95.03

Current liabilities increased to NT$83.44 billion, primarily reflecting an increase in short-term credit, offset by cash dividend payment. Long-term investment liabilities increased to NT$20.54 billion, mostly reflecting the capital injection for United Semiconductor (Xiamen) from non-UMC shareholders which increased long-term investment liabilities due to the share buy-back agreement. Total liabilities increased to NT$155.96 billion, leading to a debt to equity ratio of 71%.

Liabilities (Amount: NT$ billion)   3Q16   2Q16   3Q15 Total Current Liabilities   83.44   80.05   44.47 Notes & Accounts Payable 6.74 7.58 6.34 Short-Term Credit / Bonds 47.05 33.48 8.84 Payable on Equipment 14.45 14.94 14.08 Dividends payable - 6.91 - Other 15.20 17.14 15.21 Long-Term Credit / Bonds 39.68 40.47 47.79 Long-Term Investment Liabilities 20.54 18.80 6.24 Total Liabilities 155.96 148.15 105.21 Debt to Equity   71 %   67 %   47 %

Analysis of Revenue2 for Foundry Segment

Revenue from North America and Asia Pacific accounted for 52% and 42% of 3Q16 sales, respectively.

Revenue Breakdown by Region Region   3Q16   2Q16   1Q16   4Q15   3Q15 North America   52 %   49 %   48 %   47 %   45 % Asia Pacific   42 %   45 %   45 %   37 %   41 % Europe   4 %   4 %   3 %   6 %   6 % Japan   2 %   2 %   4 %   10 %   8 %

Revenue from 28nm technologies accounted for 21% of 3Q16 revenue, reflecting strong wafer demand within the communication segment. 40nm constituted 27% of sales.

Revenue Breakdown by Geometry Geometry   3Q16   2Q16   1Q16   4Q15   3Q15 28nm and below   21 %   17 %   8 %   11 %   10 % 28nm<x<=40nm   27 %   26 %   29 %   24 %   25 % 40nm<x<=65nm   15 %   18 %   19 %   23 %   21 % 65nm<x<=90nm   4 %   4 %   4 %   4 %   4 % 90nm<x<=0.13um   11 %   11 %   12 %   12 %   14 % 0.13um<x<=0.18um   11 %   12 %   13 %   11 %   11 % 0.18um<x<=0.35um   8 %   9 %   12 %   12 %   12 % 0.5um and above   3 %   3 %   3 %   3 %   3 %

Fabless customers continued to account for 93% of revenue in 3Q16.

Revenue Breakdown by Customer Type Customer Type   3Q16   2Q16   1Q16   4Q15   3Q15 Fabless   93 %   93 %   91 %   85 %   88 % IDM   7 %   7 %   9 %   15 %   12 %

Revenue from the communication segment stayed unchanged at 55% of sales, while consumer business was 26%. Computer related applications rose to 12%, partly fueled by tablet computing products.

Revenue Breakdown by Application (1) Application   3Q16   2Q16   1Q16   4Q15   3Q15 Computer   12 %   11 %   15 %   11 %   11 % Communication   55 %   55 %   48 %   52 %   55 % Consumer   26 %   27 %   30 %   29 %   27 % Others   7 %   7 %   7 %   8 %   7 %

(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.

Blended ASP Trend for Foundry Segment

Blended average selling price (ASP) increased during 3Q16.

(To view ASP trend, visit http://www.umc.com/english/investors/3Q16_ASP_trend.asp)

Shipment and Utilization Rate3 for Foundry Segment

Wafer shipments increased 3.6% to 1,569K in 3Q16. Quarterly capacity increased nearly 3.0% QoQ to 1,774K, leading to an overall utilization rate of 89% for 3Q16.

Wafer Shipments     3Q16   2Q16   1Q16   4Q15   3Q15 Wafer Shipments(8” K equivalents)   1,569   1,514   1,432   1,384   1,467   Quarterly Capacity Utilization Rate     3Q16   2Q16   1Q16   4Q15   3Q15 Utilization Rate   89%   89%   82%   83%   89% Total Capacity(8” K equivalents)   1,774   1,723   1,692   1,690   1,685

Capacity4 for Foundry Segment

Overall capacity in the third quarter increased to 1,774K 8-inch equivalent wafers. Estimated capacity in the fourth quarter will slightly increase to 1,794K 8-inch equivalent wafers, from the initial production ramp at Fab 12X.

Annual Capacity in

thousands of wafers

    Quarterly Capacity in

thousands of wafers

FAB   Geometry(um)   2015   2014   2013   2012 FAB   4Q16E   3Q16   2Q16   1Q16 WTK 6"   3.5 – 0.45   311   -   -   - WTK   106   106   106   105 Fab 6A 6"   3.5 – 0.45   111   448   448   481 Fab 8A   207   207   207   206 Fab 8A 8"   0.5 – 0.25   813   813   813   815 Fab 8C   87   87   87   87 Fab 8C 8"   0.35 – 0.11   347   347   347   360 Fab 8D   86   86   86   85 Fab 8D 8"   0.13 – 0.09   341   358   382   371 Fab 8E   105   105   105   104 Fab 8E 8"   0.5 – 0.18   418   418   418   449 Fab 8F   102   102   100   97 Fab 8F 8"   0.18 – 0.11   388   388   388   389 Fab 8S   84   84   84   84 Fab 8S 8"   0.18 – 0.11   335   335   335   348 Fab 8N   188   188   188   187 Fab 8N 8"   0.5 – 0.13   667   547   469   - Fab 12A   233   233   214   205 Fab 12A 12"   0.18 – 0.028   793   700   651   579 Fab 12i   148   148   144   144 Fab 12i 12”   0.13 – 0.040   572   573   550   537 Fab 12X   9   -   -   - Total(1)   6,617   6,323   6,107   5,514 Total   1,794   1,774   1,723   1,692

YoY Growth Rate

  5%   4%   11%   4%        

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

CAPEX spending in 3Q16 totaled US$627 million, bringing the spending for the first nine month of 2016 to US$2.14 billion. Full year 2016 CAPEX plan is budgeted for US$2.2 billion.

Capital Expenditure by Year - in US$ billion Year   2015   2014   2013   2012   2011 CAPEX   $ 1.9   $ 1.4   $ 1.1   $ 1.7   $ 1.6

2011~2012 figures account for UMC parent company only.

2016 CAPEX Plan

8"     12"     Total 5%     95%     US$2.2 billion

Fourth Quarter of 2016 Outlook & Guidance

Quarter-over-Quarter Guidance:

• Wafer Shipments: To increase by approximately 5%
• ASP in NTD: To decrease by approximately 5%
• Profitability: Gross profit margin will be in the low 20% range
• Foundry Segment Capacity Utilization: Approximately 90%
• 2016 CAPEX for Foundry Segment: US$2.2bn

Recent Developments / Announcements

Oct 12, 2016

Faraday's PowerSlashTM IP Available on UMC's 55nm Ultra-Low-Power IoT Platform

Oct 11, 2016

UMC's Fab 8A Earns MFCA Verification in Accordance with ISO 14051

Sep 8, 2016

UMC Selected as a DJSI Global Component for Ninth Consecutive Year

Sep 5, 2016

UMC Forges Strategic Partnership with APM to Enhance MEMS Service Capabilities

Aug 3, 2016

Faraday 12.5G SerDes PHY Debuts on UMC 28HPCU Process

Aug 1, 2016

UMC Qualifies 0.18um BCD Process for Most Stringent AEC-Q100 Grade-0 Automotive ICs

Jul 27, 2016

UMC 2Q 2016 Financial Results

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

Conference Call / Webcast Announcement

Wednesday, October 26, 2016

Time: 5:00 PM (Taipei) / 5:00 AM (New York) / 10:00 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 3Q16 results announcement will be available at

www.umc.com under the “Investors / Events” section.

About UMC

UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides advanced IC production for applications spanning every major sector of the electronics industry. UMC’s robust foundry solutions enable chip designers to leverage the company’s sophisticated technology and manufacturing, which include volume production 28nm gate-last High-K/Metal Gate technology, ultra-low power platform processes specifically engineered for Internet of Things (IoT) applications and the automotive industry’s highest-rated AEC-Q100 Grade-0 manufacturing capabilities for production of ICs found in cars. UMC’s 10 wafer fabs are strategically located throughout Asia and are able to produce over 500,000 wafers per month. The company employs more than 17,000 people worldwide, with 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 introduction of new services and technologies, future outsourcing, competition, wafer capacity, 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 UMC’s filings with the U.S. Securities and Exchange Commission. 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 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.

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, 2016, the three-month period ending Jun 30, 2016, and the equivalent three-month period that ended Sep 30, 2015. For all 3Q16 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Sep 30, 2016 exchange rate of NT$ 31.36 per U.S. Dollar.

2 Revenue in this section represents wafer sales

3 Utilization Rate = Quarterly Wafer Out / Quarterly Capacity

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.

- FINANCIAL TABLES TO FOLLOW -

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheet As of September 30, 2016 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)             September 30, 2016 US$ NT$ % Assets Current assets Cash and cash equivalents 1,762 55,266 14.7 % Financial assets at fair value through profit or loss, current 24 751 0.2 % Notes & Accounts receivable, net 713 22,366 6.0 % Inventories, net 547 17,167 4.6 % Other current assets 365   11,420   3.0 % Total current assets 3,411   106,970   28.5 %   Non-current assets Funds and investments 1,205 37,799 10.1 % Property, plant and equipment 6,869 215,414 57.5 % Other non-current assets 472   14,776   3.9 % Total non-current assets 8,546   267,989   71.5 % Total assets 11,957   374,959   100.0 %   Liabilities Current liabilities Short-term loans 1,142 35,821 9.6 % Payables 1,079 33,853 9.0 % Current portion of long-term liabilities 358 11,225 3.0 % Other current liabilities 82   2,542   0.7 % Total current liabilities 2,661   83,441   22.3 %   Non-current liabilities Bonds payable 1,097 34,395 9.2 % Long-term loans 169 5,290 1.4 % Other non-current liabilities 1,046   32,834   8.7 % Total non-current liabilities 2,312   72,519   19.3 % Total liabilities 4,973   155,960   41.6 %   Equity Equity attributable to the parent company Capital 4,026 126,243 33.7 % Additional paid-in capital 1,307 41,005 11.0 % Retained earnings, unrealized gain or loss on available-for-sale

financial assets and exchange differences on translation of

foreign operations

1,749 54,862 14.6 % Treasury stock (150 ) (4,719 ) (1.3 %) Total equity attributable to the parent company 6,932 217,391 58.0 % Non-controlling interests 52   1,608   0.4 % Total equity 6,984   218,999   58.4 % Total liabilities and equity 11,957   374,959   100.0 %                  

Note: New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2016 exchange rate of NT $31.36 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, 2016 September 30, 2015 Chg. September 30, 2016 June 30, 2016 Chg. US$ NT$ US$ NT$ % US$ NT$ US$ NT$ % Net operating revenues 1,217 38,164 1,126 35,320 8.1 % 1,217 38,164 1,180 36,997 3.2 % Operating costs (952 ) (29,863 ) (906 ) (28,409 ) 5.1 % (952 ) (29,863 ) (916 ) (28,712 ) 4.0 % Gross profit 265   8,301   220   6,911   20.1 % 265   8,301   264   8,285   0.2 % 21.8 % 21.8 % 19.6 % 19.6 % 21.8 % 21.8 % 22.4 % 22.4 % Operating expenses - Sales and marketing expenses (39 ) (1,207 ) (33 ) (1,045 ) 15.5 % (39 ) (1,207 ) (35 ) (1,092 ) 10.5 % - General and administrative expenses (57 ) (1,769 ) (30 ) (942 ) 87.8 % (57 ) (1,769 ) (49 ) (1,541 ) 14.8 % - Research and development expenses (108 ) (3,397 ) (100 ) (3,139 ) 8.2 % (108 ) (3,397 ) (103 ) (3,226 ) 5.3 % Subtotal (204 ) (6,373 ) (163 ) (5,126 ) 24.3 % (204 ) (6,373 ) (187 ) (5,859 ) 8.8 % Net other operating income and expenses (14 ) (443 ) (26 ) (804 ) (44.9 %) (14 ) (443 ) 1   23   -   Operating income 47 1,485 31 981 51.4 % 47 1,485 78 2,449 (39.4 %) 3.9 % 3.9 % 2.8 % 2.8 % 3.9 % 3.9 % 6.6 % 6.6 %   Net non-operating income and expenses 15   466   13   410   13.7 % 15   466   (21 ) (650 ) -   Income from continuing operations before

income tax

62 1,951 44 1,391 40.3 % 62 1,951 57 1,799 8.4 % 5.1 % 5.1 % 3.9 % 3.9 % 5.1 % 5.1 % 4.9 % 4.9 %   Income tax expense (6 ) (195 ) (2 ) (84 ) 132.1 % (6 ) (195 ) (7 ) (220 ) (11.4 %) Net income 56 1,756 42 1,307 34.4 % 56 1,756 50 1,579 11.2 % 4.6 % 4.6 % 3.7 % 3.7 % 4.6 % 4.6 % 4.3 % 4.3 %   Other comprehensive income (loss) (71 ) (2,213 ) 49   1,543   -   (71 ) (2,213 ) (31 ) (977 ) 126.5 %   Total comprehensive income (loss) (15 ) (457 ) 91   2,850   -   (15 ) (457 ) 19   602   -     Net income attributable to: 　　Stockholders of the parent 95 2,975 54 1,708 74.2 % 95 2,975 82 2,583 15.2 % 　　Non-controlling interests (39 ) (1,219 ) (12 ) (401 ) 204.0 % (39 ) (1,219 ) (32 ) (1,004 ) 21.4 %   Comprehensive income (loss) attributable to: 　　Stockholders of the parent 26 802 103 3,215 (75.1 %) 26 802 52 1,635 (50.9 %) 　　Non-controlling interests (41 ) (1,259 ) (12 ) (365 ) 244.9 % (41 ) (1,259 ) (33 ) (1,033 ) 21.9 %   Earnings per share-basic 0.008   0.24   0.004   0.14   0.008   0.24   0.007   0.21   Earnings per ADS (2) 0.038   1.20   0.022   0.70   0.038   1.20   0.033   1.05   Weighted average number of shares outstanding (in millions) 12,208   12,525   12,208   12,335                                                   Notes: (1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2016 exchange rate of NT $31.36 per U.S. Dollar. (2) 1 ADS equals 5 common shares.   UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$) Except Per Share and Per ADS Data           For the Three-Month Period Ended For the Nine-Month Period Ended September 30, 2016 September 30, 2016 US$ NT$ % US$ NT$ % Net operating revenues 1,217 38,164 100.0 % 3,494 109,564 100.0 % Operating costs (952 ) (29,863 ) (78.2 %) (2,805 ) (87,944 ) (80.3 %) Gross profit 265   8,301   21.8 % 689   21,620   19.7 %     Operating expenses - Sales and marketing expenses (39 ) (1,207 ) (3.2 %) (105 ) (3,308 ) (3.0 %) - General and administrative expenses (57 ) (1,769 ) (4.6 %) (136 ) (4,280 ) (3.9 %) - Research and development expenses (108 ) (3,397 ) (8.9 %) (310 ) (9,708 ) (8.9 %) Subtotal (204 ) (6,373 ) (16.7 %) (551 ) (17,296 ) (15.8 %) Net other operating income and expenses (14 ) (443 ) (1.2 %) (13 ) (407 ) (0.3 %) Operating income 47 1,485 3.9 % 125 3,917 3.6 %   Net non-operating income and expenses 15   466   1.2 % (4 ) (137 ) (0.1 %) Income from continuing operations before

income tax

62 1,951 5.1 % 121 3,780 3.5 %     Income tax expense (6 ) (195 ) (0.5 %) (12 ) (366 ) (0.4 %) Net income 56 1,756 4.6 % 109 3,414 3.1 %   Other comprehensive income (loss) (71 ) (2,213 ) (5.8 %) (120 ) (3,773 ) (3.4 %)   Total comprehensive income (loss) (15 ) (457 ) (1.2 %) (11 ) (359 ) (0.3 %)   Net income attributable to: 　　Stockholders of the parent 95 2,975 7.8 % 184 5,768 5.3 % 　　Non-controlling interests (39 ) (1,219 ) (3.2 %) (75 ) (2,354 ) (2.2 %)   Comprehensive income (loss) attributable to: 　　Stockholders of the parent 26 802 2.1 % 66 2,081 1.9 % 　　Non-controlling interests (41 ) (1,259 ) (3.3 %) (77 ) (2,440 ) (2.2 %)   Earnings per share-basic 0.008   0.24   0.015   0.47   Earnings per ADS (2) 0.038   1.20   0.075   2.35     Weighted average number of shares

outstanding (in millions)

12,208   12,317                             Notes: (1) New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2016 exchange rate of NT $31.36 per U.S. Dollar. (2) 1 ADS equals 5 common shares.   UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statement of Cash Flows For The Nine-Month Period Ended September 30, 2016 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)       US$ NT$ Cash flows from operating activities : Net income before tax 121 3,780 Depreciation & Amortization 1,231 38,607 Gain on disposal of investments (34 ) (1,074 ) Changes in notes & accounts receivable (104 ) (3,271 ) Changes in prepayments (267 ) (8,379 ) Changes in assets, liabilities and others 38   1,241   Net cash provided by operating activities 985 30,904   Cash flows from investing activities : Proceeds from disposal of available-for-sale financial assets 65 2,044 Acquisition of property, plant and equipment (2,221 ) (69,656 ) Acquisition of intangible assets (39 ) (1,238 ) Others 225   7,085   Net cash used in investing activities (1,970 ) (61,765 )   Cash flows from financing activities : Increase in short-term loans 1,001 31,379 Proceeds from long-term loans 64 2,000 Repayments of long-term loans (175 ) (5,475 ) Increase in other financial liabilities 510 15,979 Cash dividends (220 ) (6,907 ) Treasury stock acquired (76 ) (2,396 ) Others (1 ) (5 ) Net cash provided by financing activities 1,103 34,575   Effect of exchange rate changes on cash and cash equivalents (55 ) (1,738 ) Net Increase in cash and cash equivalents 63 1,976   Cash and cash equivalents at beginning of period 1,699   53,290     Cash and cash equivalents at end of period 1,762   55,266               Note: New Taiwan Dollars have been translated into U.S. Dollars at the September 30, 2016 exchange rate of NT $31.36 per U.S. Dollar.

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