UMC Reports Fourth Quarter 2018 Results

Date : 01/29/2019 @ 9:19AM
Source : Business Wire
Stock : United Microelectronics Corp. (New) (UMC)
Quote : 2.13  0.04 (1.91%) @ 9:02PM

UMC Reports Fourth Quarter 2018 Results

United Microelectron (NYSE:UMC)
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6 Months : From Dec 2018 to Jun 2019

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Disciplined CAPEX and operating performance enhancements to continue in 2019

Fourth Quarter 2018 Overview1:

  • Revenue: NT$35.52 billion (US$1.16 billion)
  • Gross margin: 13.0%
  • Foundry revenue from 28nm: 10%; Foundry operating margin: -1.3%
  • Foundry capacity utilization rate: 88%
  • Net loss attributable to stockholders of the parent: NT$1.71 billion (US$56 million)
  • Loss per share: NT$0.14; Loss per ADS: US$0.023

United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its consolidated operating results for the fourth quarter of 2018.

Fourth quarter consolidated revenue was NT$35.52 billion, down 9.8% QoQ from NT$39.39 billion in 3Q18 and declined 3.0% YoY from NT$36.63 billion in 4Q17. Consolidated gross margin for 4Q18 was 13.0%. Net loss attributable to stockholders of the parent was NT$1.71 billion, with loss per ordinary share of NT$0.14.

Jason Wang, co-president of UMC, said, “In the fourth quarter, foundry revenue declined 9.8% QoQ to NT$35.49 billion, leading to a foundry operating loss of 1.3%. Utilization rate was 88%, bringing wafer shipments to 1.71 million 8-inch equivalent wafers. Despite softened wafer demand during the fourth quarter, UMC continued to maintain stable capacity utilization for 8" and mature 12" geometries.”

Co-president Wang continued, “In 2018, we started seeing the early fruits of our strategy with measurable results. Our disciplined capital expenditure approach helped to generate a free cash flow total of NT$31.34 billion for the year. In addition, we completed two rounds of treasury share buybacks for cancellation, amounting to approximately NT$6.5 billion.”

Co-president Wang further commented, “Looking into the first quarter of 2019, we anticipate further deceleration in customers’ wafer demand, due to a softer than expected outlook in entry-level and mid-end smartphones as well as falling crypto currency valuations. Although UMC’s ongoing transformation will need time to reach its full synergy and potential, our progress so far has enabled the company to better endure these current headwinds. Going forward, we will continue executing our strategy of evaluating and pursuing return-driven investment while focusing on our technology strength within specialty processes on existing nodes. We are confident that our sustained efforts and calculated global capacity expansion will strengthen UMC’s resilience during a challenging market, while favorably positioning the company to take maximum advantage during strong demand cycles.”

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 December 31, 2018, the three-month period ending September 30, 2018, and the equivalent three-month period that ended December 31, 2017. For all 4Q18 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the December 31, 2018 exchange rate of NT$ 30.72 per U.S. Dollar.

Summary of Operating Results

  Operating Results (Amount: NT$ million)   4Q18   3Q18   QoQ %   4Q17   YoY %             change       change Net Operating Revenues 35,517 39,387 (9.8 ) 36,631 (3.0 ) Gross Profit 4,601 6,922 (33.5 ) 6,298 (26.9 ) Operating Expenses (6,396 ) (5,702 ) 12.2 (5,198 ) 23.0 Net Other Operating Income and Expenses 1,206 1,215 (0.7 ) 801 50.6 Operating Income (Loss) (589 ) 2,435 - 1,901 - Net Non-Operating Income and Expenses (1,998 ) (1,606 ) 24.4 (152 ) 1,214.5 Net Income (Loss) Attributable to Stockholders of the Parent (1,707 ) 1,720 - 1,771 - EPS (NT$ per share) (0.14 ) 0.14 0.15 (US$ per ADS)   (0.023 )   0.023         0.024        

Net operating revenues in 4Q18 declined 9.8% to NT$35.52 billion, including NT$35.49 billion from the foundry segment. Revenue contribution from 40nm and below technologies was 34%. Gross profit fell 33.5% to NT$4.60 billion, or 13.0% of revenue. Operating expenses increased 12.2% to NT$6.40 billion. Net other operating income remained flat at NT$1.21 billion, leading to an operating loss of NT$0.59 billion. Net non-operating expense was NT$2.00 billion. Net loss attributable to stockholders of the parent was NT$1.71 billion.

Loss per ordinary share for the quarter was NT$0.14. Loss per ADS was US$0.023. The basic weighted average number of outstanding shares in 4Q18 was 12,111,826,935, compared with 12,053,892,152 shares in 3Q18 and 12,208,239,978 shares in 4Q17. The diluted weighted average number of outstanding shares was 12,111,826,935 in 4Q18, compared with 13,354,955,886 shares in 3Q18 and 13,474,873,551 shares in 4Q17. The fully diluted share count on December 31, 2018 was approximately 13,512,438,000. On December 31, 2018, UMC held 480 million treasury shares acquired from the 17th and 19th share buy-back programs.

Detailed Financials Section

Net operating revenues decreased 9.8% to NT$35.52 billion. COGS declined 4.8% to NT$30.92 billion, as depreciation declined 11.4% to NT$10.23 billion while other manufacturing costs declined 1.1% to NT$20.69 billion. Gross profit was NT$4.60 billion. Operating expenses increased 12.2% to NT$6.40 billion due to an increase of 12.5% in R&D expense to NT$3.75 billion and an Expected Credit Loss of NT$409 million, which was partially offset by decreases in Sales & Marketing and General and Administrative (G&A) expenses. R&D expense represented 10.6% of 4Q18 net operating revenues. Net other operating income was NT$1.21 billion, leading to an operating loss of NT$0.59 billion.

  COGS & Expenses (Amount: NT$ million)   4Q18   3Q18   QoQ %   4Q17   YoY %             change       change Net Operating Revenues 35,517 39,387 (9.8) 36,631 (3.0) COGS (30,916) (32,465) (4.8) (30,333) 1.9 Depreciation (10,228) (11,549) (11.4) (10,990) (6.9) Other Mfg. Costs (20,688) (20,916) (1.1) (19,343) 7.0 Gross Profit 4,601 6,922 (33.5) 6,298 (26.9) Gross Margin (%) 13.0% 17.6% 17.2% Operating Expenses (6,396) (5,702) 12.2 (5,198) 23.0 G&A (1,339) (1,386) (3.4) (1,164) 15.0 Sales & Marketing (903) (987) (8.5) (944) (4.3) R&D (3,745) (3,329) 12.5 (3,090) 21.2 Expected Credit Loss (409) - - - -

Net Other Operating Income & Expenses

1,206 1,215 (0.7) 801 50.6 Operating Income (Loss)   (589)   2,435   -   1,901   -  

Net non-operating expense in 4Q18 was NT$2.00 billion, primarily resulting from NT$1.86 billion in net investment loss and NT$438 million in net interest expense, partly offset by NT$304 million in exchange gain.

  Non-Operating Income and Expenses (Amount: NT$ million)   4Q18   3Q18   4Q17 Non-Operating Income and Expenses   (1,998)   (1,606)   (152) Net Interest Income and Expenses (438) (507) (542) Net Investment Gain and Loss (1,859) (126) (102) Exchange Gain and Loss 304 (961) 500 Other Gain and Loss   (5)   (12)   (8)  

Cash inflow from operating activities was NT$12.12 billion. Cash outflow from investing activities totaled NT$4.61 billion, including NT$4.36 billion in CAPEX spending for the foundry segment, resulting in free cash flow of NT$7.76 billion. Cash outflow from financing activities totaled NT$5.72 billion, including NT$3.02 billion in treasury share buyback and NT$2.86 billion in the payment of bank loans. Net cash inflow in 4Q18 was NT$2.14 billion. Over the next 12 months, the company expects to repay NT$2.62 billion in bank loans.

 

Cash Flow Summary

  For the 3-Month   For the 3-Month (Amount: NT$ million) Period Ended Period Ended     Dec. 31, 2018   Sep. 30, 2018 Cash Flow from Operating Activities 12,123 15,772 Net income (loss) before tax (2,587 ) 829 Depreciation & Amortization 12,414 12,973 Expected credit loss 409 -

Net loss of financial assets and liabilities at FVTPL

635 797

Share of profit or loss of associates and joint ventures

1,148 (193 ) Exchange loss (gain) on financial assets and liabilities (68 ) 1,126 Changes in working capital 1,319 158 Interest paid (905 ) (94 ) Other (242 ) 176 Cash Flow from Investing Activities (4,613 ) (5,476 ) Acquisition of PP&E (4,361 ) (5,612 ) Acquisition of intangible assets (292 ) (169 ) Other 40 305 Cash Flow from Financing Activities (5,724 ) (3,253 ) Bank loans (2,863 ) 3,114 Treasury stock acquired (3,019 ) - Treasury stock sold to employees - 2,204 Cash dividends - (8,557 ) Other 158 (14 ) Effect of Exchange Rate 356 (716 ) Net Cash Flow   2,142     6,327    

Cash and cash equivalents increased to NT$83.66 billion. Days of inventory increased three days to 53 days.

  Current Assets (Amount: NT$ billion)   4Q18   3Q18   4Q17 Cash and Cash Equivalents   83.66   81.52   81.68 Notes & Accounts Receivable 23.88 25.61 20.97 Days Sales Outstanding 64 61 54 Inventories, net 18.20 17.59 18.26 Days of Inventory 53 50 53 Total Current Assets   141.19   140.15   139.16  

Current liabilities decreased to NT$49.90 billion. Total liabilities decreased to NT$158.07 billion, leading to a debt to equity ratio of 77%.

  Liabilities (Amount: NT$ billion)   4Q18   3Q18   4Q17 Total Current Liabilities   49.90   51.43   88.06 Notes & Accounts Payable 6.80 6.89 6.54 Short-Term Credit / Bonds 18.23 20.33 52.81 Payable on Equipment 4.01 2.59 4.67 Other 20.86 21.62 24.04 Long-Term Credit / Bonds 67.08 67.46 53.32 Long-Term Investment Liabilities 20.41 20.16 20.49 Total Liabilities 158.07 160.11 180.06 Debt to Equity   77%   75%   84%  

Analysis of Revenue2 for Foundry Segment

Revenue from Asia Pacific decreased to 51%, while contribution from North American customers increased to 38%. Revenue from Japan remained at 3%.

  Revenue Breakdown by Region Region   4Q18   3Q18   2Q18   1Q18   4Q17 North America   38%   34%   37%   42%   43% Asia Pacific   51%   52%   51%   47%   45% Europe   8%   11%   9%   8%   9% Japan   3%   3%   3%   3%   3%          

Business from 14nm fell to 1% revenue, while 28nm contribution declined to 10%.

  Revenue Breakdown by Geometry Geometry   4Q18   3Q18   2Q18   1Q18   4Q17 14nm and below   1%   5%   3%   2%   2% 14nm<x<=28nm   10%   13%   15%   12%   15% 28nm<x<=40nm   23%   22%   26%   30%   28% 40nm<x<=65nm   13%   12%   12%   13%   12% 65nm<x<=90nm   11%   10%   7%   6%   5% 90nm<x<=0.13um   13%   11%   11%   11%   12% 0.13um<x<=0.18um   15%   14%   13%   13%   13% 0.18um<x<=0.35um   11%   10%   10%   10%   10% 0.5um and above   3%   3%   3%   3%   3%          

Revenue from fabless customers decreased to 92% of revenue.

  Revenue Breakdown by Customer Type Customer Type   4Q18   3Q18   2Q18   1Q18   4Q17 Fabless   92%   93%   92%   92%   91% IDM   8%   7%   8%   8%   9%          

The communication segment increased to 44% of sales, while revenue from consumer applications reached 30%. Computer related applications declined to 15% of revenue.

  Revenue Breakdown by Application (1) Application   4Q18   3Q18   2Q18   1Q18   4Q17 Computer   15%   19%   16%   14%   13% Communication   44%   43%   47%   47%   49% Consumer   30%   28%   28%   29%   29% Others   11%   10%   9%   10%   9%          

(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.

2 Revenue in this section represents wafer sales

Blended ASP Trend for Foundry SegmentBlended average selling price (ASP) in 4Q18 decreased.

(To view ASP trend, visit http://www.umc.com/english/investors/4Q18_ASP_trend.asp)

Shipment and Utilization Rate3 for Foundry Segment

In 4Q18, wafer shipments decreased 5.2% to 1,711K. Quarterly capacity increased 1.0% QoQ to 1,958K, resulting in an overall utilization rate of 88%.

  Wafer Shipments     4Q18   3Q18   2Q18   1Q18   4Q17 Wafer Shipments(8” K equivalents)   1,711   1,804   1,846   1,747   1,670   Quarterly Capacity Utilization Rate     4Q18   3Q18   2Q18   1Q18   4Q17 Utilization Rate   88%   94%   97%   94%   90% Total Capacity(8” K equivalents)   1,958   1,938   1,918   1,858   1,886          

3 Utilization Rate = Quarterly Wafer Out / Quarterly Capacity

Capacity4 for Foundry Segment

Total capacity in the fourth quarter totaled 1,958K 8-inch equivalent wafers. We expect first quarter capacity to decline by approximately 1.1% QoQ to 1,937K 8-inch equivalent wafers, primarily due to fewer working days and tool maintenance.

     

Annual Capacity inthousands of wafers

Quarterly Capacity inthousands of wafers

FAB   Geometry(um)   2018   2017   2016   2015 FAB   1Q19E   4Q18   3Q18   2Q18 WTK   6"   3.5 – 0.45   396   422   423   421 WTK   91   93   93   106 Fab 8A   8"   0.5 – 0.25   825   825   827   813 Fab 8A   204   207   207   207 Fab 8C   8"   0.35 – 0.11   383   357   348   347 Fab 8C   106   108   92   92 Fab 8D   8"   0.13 – 0.09   347   341   342   341 Fab 8D   89   90   86   86 Fab 8E   8"   0.5 – 0.18   418   418   419   418 Fab 8E   103   105   105   105 Fab 8F   8"   0.18 – 0.11   431   417   401   388 Fab 8F   107   108   108   108 Fab 8S   8"   0.18 – 0.11   372   347   336   335 Fab 8S   92   93   93   93 HJ   8"   0.5 – 0.11   771   753   750   667 HJ   201   194   194   194 Fab 12A   12"   0.13 – 0.014   997   970   885   793 Fab 12A   246   250   250   250 Fab 12i   12"   0.13 – 0.040   555   537   584   572 Fab 12i   141   144   144   136 USCXM   12"   0.040 – 0.028   183   97   9   - USCXM   50   51   51   46 Total(1)   7,673   7,304   6,983   6,617 Total   1,937   1,958   1,938   1,918 YoY Growth Rate   5%   5%   6%   5%        

(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 4Q18 was US$141 million, bringing 2018 capital expenditures to US$650 million. Full year 2019 CAPEX is budgeted for US$1.0 billion.

Capital Expenditure by Year - in US$ billion Year   2018   2017   2016   2015   2014 CAPEX   $ 0.7   $ 1.4   $ 2.8   $ 1.9   $ 1.4          

2019 CAPEX Plan

8"

 

12"

 

Total

25%

 

75%

 

US$1.0 billion

 

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.

Brief Summary of Full Year 2018 Consolidated Results

  • Consolidated revenue in NTD increased 1.3% YoY to NT$151.25 billion, up from NT$149.29 billion in 2017.
  • Gross margin was 15.1%, compared to 18.1% in 2017.
  • Operating margin was 3.8%, compared to 4.4% in 2017.
  • Net income attributable to stockholders of the parent was NT$7.07 billion in 2018.
  • EPS was NT$0.58, or EPADS of US$0.094 for 2018.
  • The contribution from 28nm technologies and below accounted for 16% in 2018. The revenue from 40nm in 2018 decreased to 25%.
  Operating Results (Amount: NT$ million)   2018     2017     YoY %change Net Operating Revenues   151,253   149,285   1.3 Gross Profit 22,840 27,058 (15.6 ) Operating Expenses (22,160 ) (22,143 ) 0.1 Net Other Operating Income & Expenses 5,117 1,653 209.4 Operating Income 5,797 6,568 (11.7 ) Net Non-Operating Income & Expenses (3,613 ) 1,230 - Income Tax Benefit (Expenses) 459 (1,167 ) - Net Income Attributable to Stockholders of the Parent 7,073 9,629 (26.5 ) EPS (NT$ per share) 0.58 0.79 (US$ per ADS)   0.094     0.129      

Annual Sales Breakdown in Revenue for Foundry Segment

          Region   2018   2017 North America   38%   43% Asia Pacific   50%   47% Europe   9%   7% Japan   3%   3%           Technology   2018   2017 14nm and below   3%   1% 14nm<x<=28nm   13%   16% 28nm<x<=40nm   25%   28% 40nm<x<=65nm   12%   12% 65nm<x<=90nm   8%   5% 90nm<x<=0.13um   12%   12% 0.13um<x<=0.18um   14%   12% 0.18um<x<=0.35um   10%   10% 0.5um and above   3%   4%           Customer Type   2018   2017 Fabless   92%   91% IDM   8%   9%           Application   2018   2017 Computer   16%   13% Communication   45%   49% Consumer   29%   29% Others   10%   9%

First Quarter of 2019 Outlook & Guidance

Quarter-over-Quarter Guidance:

  • Wafer Shipments: To decrease by 6-7%
  • ASP in USD: To decline by 1-2%
  • Profitability: Gross profit margin will be in the mid-single digit % range
  • Foundry Segment Capacity Utilization: low 80% range
  • 2019 CAPEX for Foundry Segment: US$1.0 billion

Recent Developments / Announcements

Nov. 22, 2018  

UMC Receives Highest Platinum Award for 2018 Taiwan Corporate Sustainability Report

Nov. 9, 2018  

UMC Issues Follow-up Statement Regarding Recent Legal Developments

Nov. 2, 2018  

UMC Issues Statement in Response to Recent Indictment and Civil Complaint

Oct. 24, 2018  

UMC 3Q 2018 Financial Results

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

Conference Call / Webcast Announcement

 

Tuesday, January 29, 2019

  Time: 5:00 PM (Taipei) / 4:00 AM (New York) / 09:00 AM (London)   Dial-in numbers and Access Codes:   USA Toll Free: 1-866 836-0101 Taiwan Number: 02-2192-8016 Other Areas: +886-2-2192-8016  

Access Code:

UMC

 

A live webcast and replay of the 4Q18 results announcement will be available atwww.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 comprehensive foundry solutions enable chip designers to leverage the company’s sophisticated technology and manufacturing, which include world-class 28nm High-K/Metal Gate technology, 14nm FinFET volume production, specialty process platforms specifically developed for AI, 5G and IoT applications and the automotive industry’s highest-rated AEC-Q100 Grade-0 manufacturing capabilities for the production of ICs found in vehicles. UMC’s 11 wafer fabs are strategically located throughout Asia and are able to produce over 600,000 wafers per month. The company employs more than 20,000 people worldwide, with offices in Taiwan, 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 release 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.

- FINANCIAL TABLES TO FOLLOW -

  UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Balance Sheet As of December 31, 2018 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)         December 31, 2018 US$ NT$ % Assets Current assets Cash and cash equivalents 2,723 83,662 22.9 % Financial assets at fair value through profit or loss, current 17 528 0.1 % Contract assets, current 3 92 0.0 % Notes & Accounts receivable, net 777 23,875 6.5 % Inventories, net 593 18,203 5.0 % Other current assets 483   14,833   4.2 % Total current assets 4,596   141,193   38.7 %   Non-current assets Funds and investments 1,091 33,523 9.2 % Property, plant and equipment 5,627 172,847 47.4 % Other non-current assets 555   17,042   4.7 % Total non-current assets 7,273   223,412   61.3 % Total assets 11,869   364,605   100.0 %   Liabilities Current liabilities Short-term loans 427 13,104 3.6 % Contract liabilities, current 30 932 0.3 % Payables 824 25,325 6.9 % Current portion of long-term liabilities 167 5,121 1.4 % Other current liabilities 177   5,417   1.5 % Total current liabilities 1,625   49,899   13.7 %   Non-current liabilities Bonds payable 1,266 38,879 10.7 % Long-term loans 918 28,204 7.7 % Other non-current liabilities 1,337   41,086   11.3 % Total non-current liabilities 3,521   108,169   29.7 % Total liabilities 5,146   158,068   43.4 %   Equity Equity attributable to the parent company Capital 4,044 124,243 34.1 % Additional paid-in capital 1,315 40,399 11.1 % 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 1,533 47,075 12.9 % Treasury stock (184 ) (5,647 ) (1.6 %) Total equity attributable to the parent company 6,708 206,070 56.5 % Non-controlling interests 15   467   0.1 % Total equity 6,723   206,537   56.6 % Total liabilities and equity 11,869   364,605   100.0 %                 Note:New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2018 exchange rate of NT $30.72 per U.S. Dollar.             UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income Figures in Millions of New Taiwan Dollars (NT$) 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

December 31, 2018 December 31, 2017 Chg. December 31, 2018 September 30, 2018 Chg. US$ NT$ US$ NT$ %   US$ NT$ US$ NT$ %   Net operating revenues 1,156 35,517 1,192 36,631 (3.0 %) 1,156 35,517 1,282 39,387 (9.8 %) Operating costs (1,006 ) (30,916 ) (987 ) (30,333 ) 1.9 % (1,006 ) (30,916 ) (1,057 ) (32,465 ) (4.8 %) Gross profit 150   4,601   205   6,298   (26.9 %) 150   4,601   225   6,922   (33.5 %) 13.0 % 13.0 % 17.2 % 17.2 % 13.0 % 13.0 % 17.6 % 17.6 % Operating expenses

- Sales and marketing expenses

(29 ) (903 ) (31 ) (944 ) (4.3 %) (29 ) (903 ) (32 ) (987 ) (8.5 %)

- General and administrative expenses

(44 ) (1,339 ) (38 ) (1,164 ) 15.0 % (44 ) (1,339 ) (45 ) (1,386 ) (3.4 %)

- Research and development expenses

(122 ) (3,745 ) (100 ) (3,090 ) 21.2 % (122 ) (3,745 ) (109 ) (3,329 ) 12.5 %

- Expected credit loss

(13 ) (409 )

-

 

-

  100.0 % (13 ) (409 )

-

 

-

  100.0 % Subtotal (208 ) (6,396 ) (169 ) (5,198 ) 23.0 % (208 ) (6,396 ) (186 ) (5,702 ) 12.2 % Net other operating income and expenses 39   1,206   26   801   50.6 % 39   1,206   40   1,215   (0.7 %) Operating income (loss) (19 ) (589 ) 62 1,901

-

(19 ) (589 ) 79 2,435

-

(1.7 %) (1.7 %) 5.2 % 5.2 % (1.7 %) (1.7 %) 6.2 % 6.2 %  

Net non-operating income and expenses

(65 ) (1,998 ) (5 ) (152 ) 1,214.5 % (65 ) (1,998 ) (52 ) (1,606 ) 24.4 %

Income (loss) from continuing operations before income tax

(84 ) (2,587 ) 57 1,749

-

(84 ) (2,587 ) 27 829

-

(7.3 %) (7.3 %) 4.8 % 4.8 % (7.3 %) (7.3 %) 2.1 % 2.1 %   Income tax expense (14 ) (413 ) (18 ) (556 ) (25.7 %) (14 ) (413 ) (21 ) (632 ) (34.7 %) Net income (loss) (98 ) (3,000 ) 39 1,193

-

(98 ) (3,000 ) 6 197

-

(8.4 %) (8.4 %) 3.3 % 3.3 % (8.4 %) (8.4 %) 0.5 % 0.5 %   Other comprehensive income (loss) 4   110   (45 ) (1,366 )

-

  4   110   (51 ) (1,568 )

-

    Total comprehensive income (loss) (94 ) (2,890 ) (6 ) (173 ) 1,570.5 % (94 ) (2,890 ) (45 ) (1,371 ) 110.8 %   Net income (loss) attributable to:

Stockholders of the parent

(56 ) (1,707 ) 58 1,771

-

(56 ) (1,707 ) 56 1,720

-

Non-controlling interests

(42 ) (1,293 ) (19 ) (578 ) 123.7 % (42 ) (1,293 ) (50 ) (1,523 ) (15.1 %)   Comprehensive income (loss) attributable to:

Stockholders of the parent

(52 ) (1,608 ) 14 416

-

(52 ) (1,608 ) 9 279

-

Non-controlling interests

(42 ) (1,282 ) (20 ) (589 ) 117.7 % (42 ) (1,282 ) (54 ) (1,650 ) (22.3 %)  

Earnings per share-basic

(0.005 ) (0.14 ) 0.005   0.15   (0.005 ) (0.14 ) 0.005   0.14   Earnings per ADS (2) (0.023 ) (0.70 ) 0.024   0.75   (0.023 ) (0.70 ) 0.023   0.70   Weighted average number of shares outstanding (in millions) 12,112   12,208   12,112   12,054                                               Notes: (1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2018 exchange rate of NT $30.72 per U.S. Dollar. (2) 1 ADS equals 5 common shares.     UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statements of Comprehensive Income Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$) Except Per Share and Per ADS Data             For the Three-Month Period Ended For the Twelve-Month Period Ended December 31, 2018 December 31, 2018 US$ NT$ % US$ NT$ % Net operating revenues 1,156 35,517 100.0 % 4,924 151,253 100.0 % Operating costs (1,006 ) (30,916 ) (87.0 %) (4,181 ) (128,413 ) (84.9 %) Gross profit 150   4,601   13.0 % 743   22,840   15.1 %     Operating expenses - Sales and marketing expenses (29 ) (903 ) (2.5 %) (127 ) (3,902 ) (2.6 %) - General and administrative expenses (44 ) (1,339 ) (3.8 %) (157 ) (4,824 ) (3.2 %) - Research and development expenses (122 ) (3,745 ) (10.6 %) (424 ) (13,025 ) (8.6 %) - Expected credit loss (13 ) (409 ) (1.2 %) (13 ) (409 ) (0.3 %) Subtotal (208 ) (6,396 ) (18.1 %) (721 ) (22,160 ) (14.7 %) Net other operating income and expenses 39   1,206   3.4 % 167   5,117   3.4 % Operating income (loss) (19 ) (589 ) (1.7 %) 189 5,797 3.8 %   Net non-operating income and expenses (65 ) (1,998 ) (5.6 %) (118 ) (3,613 ) (2.4 %)

Income (loss) from continuing operations before income tax

(84 ) (2,587 ) (7.3 %) 71 2,184 1.4 %     Income tax benefit (expense) (14 ) (413 ) (1.1 %) 15   459   0.4 % Net income (loss) (98 ) (3,000 ) (8.4 %) 86 2,643 1.8 %   Other comprehensive income (loss) 4   110   0.3 % 31   950   0.6 %   Total comprehensive income (loss) (94 ) (2,890 ) (8.1 %) 117   3,593   2.4 %   Net income (loss) attributable to:

Stockholders of the parent

(56 ) (1,707 ) (4.8 %) 230 7,073 4.7 %

Non-controlling interests

(42 ) (1,293 ) (3.6 %) (144 ) (4,430 ) (2.9 %)   Comprehensive income (loss) attributable to:

Stockholders of the parent

(52 ) (1,608 ) (4.5 %) 265 8,127 5.4 %

Non-controlling interests

(42 ) (1,282 ) (3.6 %) (148 ) (4,534 ) (3.0 %)   Earnings per share-basic (0.005 ) (0.14 ) 0.019   0.58   Earnings per ADS (2) (0.023 ) (0.70 ) 0.094   2.90    

Weighted average number of shares outstanding (in millions)

 

12,112   12,104     Notes: (1) New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2018 exchange rate of NT $30.72 per U.S. Dollar. (2) 1 ADS equals 5 common shares.     UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES Consolidated Condensed Statement of Cash Flows For The Twelve-Month Period Ended December 31, 2018 Figures in Millions of New Taiwan Dollars (NT$) and U.S. Dollars (US$)     US$ NT$ Cash flows from operating activities : Net income before tax 71 2,184 Depreciation & Amortization 1,694 52,049 Net loss of financial assets and liabilities at fair value through profit or loss 38 1,168 Exchange loss on financial assets and liabilities 40 1,218 Changes in notes & accounts receivable (45 ) (1,383 ) Changes in contract liabilities (98 ) (3,021 ) Changes in assets, liabilities and others (42 ) (1,280 ) Net cash provided by operating activities 1,658 50,935   Cash flows from investing activities : Acquisition of investments accounted for under the equity method (27 ) (840 ) Acquisition of property, plant and equipment (638 ) (19,590 ) Increase in refundable deposits (32 ) (983 ) Acquisition of intangible assets (27 ) (839 ) Others 219   6,752   Net cash used in investing activities (505 ) (15,500 )   Cash flows from financing activities : Decrease in short-term loans (400 ) (12,288 ) Redemption of bonds (244 ) (7,500 ) Proceeds from long-term loans 25 759 Repayments of long-term loans (86 ) (2,639 ) Cash dividends (279 ) (8,558 ) Treasury stock acquired (200 ) (6,148 ) Treasury stock sold to employees 72 2,204 Others 22   685   Net cash used in financing activities (1,090 ) (33,485 )   Effect of exchange rate changes on cash and cash equivalents 1   37   Net increase in cash and cash equivalents 64 1,987   Cash and cash equivalents at beginning of period 2,659   81,675     Cash and cash equivalents at end of period 2,723   83,662      

Note: New Taiwan Dollars have been translated into U.S. Dollars at the December 31, 2018 exchange rate of NT $30.72 per U.S. Dollar.

 

Michael Lin / David WongUMC, Investor Relations+ 886-2-2658-9168, ext. 16900jinhong_lin@umc.comdavid_wong@umc.com

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