UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

August 22, 2023

Commission File Number: 001-15128

United Microelectronics Corporation
———————————————————————————————————
(Translation of registrant’s name into English)
 

No. 3 Li-Hsin 2nd Road

 Hsinchu Science Park

Hsinchu, Taiwan, R.O.C

———————————————————————————————————
(Address of principal executive office)
 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:  [x] Form 20-F    [ ] Form 40-F
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  [ ]
 
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  [ ]
 
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
    United Microelectronics Corporation
     
Date: August 22, 2023 By: Chitung Liu

 
  Name:  Chitung Liu
  Title: CFO
     
 

 

 

 
 
EXHIBIT INDEX

Exhibit No.   Description

 
99.1   CONSOLIDATED FINANCIAL STATEMENTS
     

 

 

UNITED MICROELECTRONICS CORPORATION

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORT OF INDEPENDENT AUDITORS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2023 AND 2022

 

  

 

 

Address: No. 3 Li-Hsin 2nd Road, Hsinchu Science Park, Hsinchu, Taiwan, R.O.C.

Telephone: 886-3-578-2258

 

The reader is advised that these consolidated financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

   
 1 
 

 

Review Report of Independent Auditors

 

To United Microelectronics Corporation

 

Introduction

 

We have reviewed the accompanying consolidated balance sheets of United Microelectronics Corporation and its subsidiaries (collectively, “the Company”) as of June 30, 2023 and 2022, the related consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2023 and 2022 and consolidated statements of changes in equity and cash flows for the six-month periods ended June 30, 2023 and 2022, and notes to the consolidated financial statements, including the summary of significant accounting policies (together “the consolidated financial statements”).  Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed and became effective by Financial Supervisory Commission of the Republic of China. Our responsibility is to express a conclusion on these consolidated financial statements based on our reviews.

 

Scope of Review

 

We conducted our reviews in accordance with the Standard on Review Engagements 2410, “Review of Financial Information Performed by the Independent Auditor of the Entity” of the Republic of China. A review of consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the Standards on Auditing of the Republic of China and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

 

Based on our reviews and the review reports of other independent auditors (please refer to the Other Matter paragraph of our report), nothing has come to our attention that causes us to believe that the accompanying consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2023 and 2022, and its consolidated financial performance for the three-month and six-month periods ended June 30, 2023 and 2022, and its consolidated cash flows for the six-month periods ended June 30, 2023 and 2022, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Accounting Standard 34, “Interim Financial Reporting” as endorsed and became effective by Financial Supervisory Commission of the Republic of China.

   
 2 
 

 

Other Matter – Making Reference to the Reviews of Other Independent Auditors

 

We did not review the financial statement of certain associates and joint ventures accounted for under the equity method. Our review, insofar as it related to the investments accounted for under the equity method balances of NT$28,822 million and NT$24,970 million, which represented 5.21% and 5.00% of the total consolidated assets as of June 30, 2023 and 2022, respectively, the related shares of profit or loss from the associates and joint ventures in the amount of NT$396 million, NT$(2,208) million, NT$3,542 million and NT$(4,166) million, which represented 2.14%, (8.63%), 9.42% and (8.46%) of the consolidated income from continuing operations before income tax for the three-month and six-month periods ended June 30, 2023 and 2022, respectively, and the related shares of other comprehensive income (loss) from the associates and joint ventures in the amount of NT$(76) million, NT$(82) million, NT$(18) million and NT$14 million, which represented (0.49%), (0.46%), (0.05%) and 0.04% of the consolidated total comprehensive income (loss) for the three-month and six-month periods ended June 30, 2023 and 2022, respectively, are based solely on the reports of other independent auditors.

 

 

/s/ Yang, Yu-Ni

 

 

/s/ Hsu, Hsin-Min

 

 

Ernst & Young, Taiwan

 

 

July 26, 2023

 

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such consolidated financial statements are those generally accepted and applied in the Republic of China.

Accordingly, the accompanying consolidated financial statements and report of independent auditors are not intended for use by those who are not informed about the accounting principles or Standards on Auditing of the Republic of China, and their applications in practice.

   
 3 
 

 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2023, December 31, 2022 and June 30, 2022
(Expressed in Thousands of New Taiwan Dollars)
             
      As of
Assets  Notes  June 30, 2023  December 31, 2022  June 30, 2022
Current assets                    
 Cash and cash equivalents   4, 6(1)   $163,096,892   $173,818,777   $183,723,273 
 Financial assets at fair value through profit or loss, current   4, 5, 6(2)    592,787    705,918    704,464 
 Financial assets at fair value through other comprehensive income, current   4, 5, 6(3)    4,343,483    3,213,057    3,236,538 
 Financial assets measured at amortized cost, current   4, 6(4)    196,452    861,817    2,824,309 
 Contract assets, current   4, 6(21)    412,650    373,318    393,337 
 Accounts receivable, net   4, 6(5)    30,102,699    36,444,510    42,127,455 
 Accounts receivable-related parties, net   4, 7    514,839    530,577    756,589 
 Other receivables   4    2,415,968    1,807,999    1,120,961 
 Current tax assets   4    55,538    40,256    11,579 
 Inventories, net   4, 5, 6(6)    34,552,722    31,069,960    27,340,727 
 Prepayments        1,950,450    2,783,945    2,657,301 
 Other current assets   6(21)   798,277    720,904    881,660 
  Total current assets        239,032,757    252,371,038    265,778,193 
                     
Non-current assets                    
 Financial assets at fair value through profit or loss, noncurrent   4, 5, 6(2)    16,838,611    17,784,651    19,709,785 
 Financial assets at fair value through other comprehensive income, noncurrent   4, 5, 6(3)    13,670,744    11,976,543    11,903,762 
 Financial assets measured at amortized cost, noncurrent   4, 6(4)    7,491    7,491    8,786 
 Investments accounted for under the equity method   4, 6(7), 7    39,937,753    35,086,289    34,750,597 
 Property, plant and equipment   4, 6(8), 8    198,618,079    170,982,066    134,242,523 
 Right-of-use assets   4, 6(9), 8    7,286,864    7,611,991    7,899,812 
 Intangible assets   4, 6(10), 7    3,713,150    4,275,200    4,116,844 
 Deferred tax assets   4    5,139,501    5,051,369    5,114,686 
 Prepayment for equipment        20,712,111    19,439,559    9,779,912 
 Refundable deposits   8    2,729,901    2,749,691    2,739,947 
 Other noncurrent assets-others        5,508,702    5,716,204    3,709,295 
  Total non-current assets        314,162,907    280,681,054    233,975,949 
                     
Total assets       $553,195,664   $533,052,092   $499,754,142 
                     
(continued)

   
 4 
 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2023, December 31, 2022 and June 30, 2022
(Expressed in Thousands of New Taiwan Dollars)
             
      As of
Liabilities and Equity  Notes  June 30, 2023  December 31, 2022  June 30, 2022
Current liabilities            
 Short-term loans   6(11), 6(28)   $170,000   $-   $624,208 
 Financial liabilities at fair value through profit or loss, current   4, 6(12)    661,159    438,397    422,830 
 Contract liabilities, current   4, 6(21)    3,003,162    3,546,815    4,592,148 
 Accounts payable        8,830,982    8,982,418    9,949,243 
 Other payables   4, 6(20), 6(22), 7    30,338,752    31,279,208    65,598,270 
 Payables on equipment        13,011,520    18,632,245    11,598,684 
 Dividends payable   6(19)   45,017,096    -    - 
 Current tax liabilities   4    5,072,910    15,407,351    7,760,514 
 Lease liabilities, current   4, 6(9), 6(28)    530,271    537,314    506,580 
 Other financial liabilities, current   6(28), 9(6)    20,924,640    17,226,490    13,012,249 
 Current portion of long-term liabilities   4, 6(13), 6(14), 6(28)    11,422,124    7,586,644    12,592,959 
 Other current liabilities   4, 6(16), 6(17), 6(28), 7    3,995,687    4,928,283    5,155,891 
  Total current liabilities        142,978,303    108,565,165    131,813,576 
                     
Non-current liabilities                    
 Contract liabilities, noncurrent   4, 6(21)    436,520    438,188    548,729 
 Bonds payable   4, 6(13), 6(28)    17,987,544    23,083,096    23,080,240 
 Long-term loans   6(14), 6(28)    18,074,477    16,794,289    22,619,095 
 Deferred tax liabilities   4    3,869,637    3,372,512    2,108,575 
 Lease liabilities, noncurrent   4, 6(9), 6(28)    5,038,077    5,199,781    5,345,546 
 Net defined benefit liabilities, noncurrent   4    2,630,342    2,869,402    3,198,580 
 Guarantee deposits   6(28)   32,627,270    30,518,585    15,960,319 
 Other noncurrent liabilities-others   4, 6(16), 6(18), 6(20), 6(28), 9(6)    2,665,449    6,760,135    11,831,904 
  Total non-current liabilities        83,329,316    89,035,988    84,692,988 
                     
  Total liabilities        226,307,619    197,601,153    216,506,564 
                     
Equity attributable to the parent company                    
 Capital   4, 6(19)                
  Common stock        125,031,392    125,047,490    124,821,235 
 Additional paid-in capital   4, 6(19), 6(20)                
  Premiums        3,233,153    3,215,160    2,443,428 
  Treasury stock transactions        4,531,955    4,531,955    4,531,955 
  The differences between the fair value of the consideration paid or received from acquiring or
    disposing subsidiaries and the carrying amounts of the subsidiaries    
        466,457    466,457    466,457 
  Recognition of changes in subsidiaries’ ownership        -    -    1,366 
  Share of changes in net assets of associates and joint ventures accounted for using equity method        367,717    196,359    169,933 
  Restricted stock for employees        2,249,411    2,221,709    2,249,369 
  Other        2,807,658    1,746,193    537,613 
 Retained earnings   6(19)               
  Legal reserve        30,472,125    21,566,986    21,566,986 
  Special reserve        2,734,058    4,914,214    4,914,214 
  Unappropriated earnings        155,567,923    175,765,824    129,874,300 
 Other components of equity   4, 6(20)                
  Exchange differences on translation of foreign operations        (7,720,833)   (6,516,198)   (11,446,747)
  Unrealized gains or losses on financial assets measured at fair value through other comprehensive income        8,056,672    3,782,141    4,205,954 
  Unearned employee compensation        (1,252,492)   (1,831,030)   (1,453,731)
  Total equity attributable to the parent company        326,545,196    335,107,260    282,882,332 
                     
Non-controlling interests   6(19)   342,849    343,679    365,246 
 Total equity        326,888,045    335,450,939    283,247,578 
                     
Total liabilities and equity       $553,195,664   $533,052,092   $499,754,142 
                     
The accompanying notes are an integral part of the consolidated financial statements.

   
 5 
 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the three-month and six-month periods ended June 30, 2023 and 2022
(Expressed in Thousands of  New Taiwan Dollars, Except for Earnings per Share)
                
      For the three-month periods ended June 30,  For the six-month periods ended June 30,
   Notes  2023  2022  2023  2022
Operating revenues   4, 6(21), 7   $56,296,408   $72,055,140   $110,505,855   $135,477,960 
Operating costs   4, 6(6), 6(10), 6(15), 6(20), 6(21), 6(22), 7    (36,044,256)   (38,582,963)   (71,029,263)   (74,501,453)
Gross profit        20,252,152    33,472,177    39,476,592    60,976,507 
Operating expenses   4, 6(5), 6(10), 6(15), 6(20), 6(22), 7                     
 Sales and marketing expenses        (716,305)   (915,110)   (1,666,618)   (2,169,658)
 General and administrative expenses        (1,714,722)   (2,579,376)   (3,816,920)   (4,806,315)
 Research and development expenses        (3,317,365)   (3,209,359)   (6,083,972)   (6,242,298)
 Expected credit impairment gains (losses)        30,235    (2,683)   68,821    (1,738)
  Subtotal        (5,718,157)   (6,706,528)   (11,498,689)   (13,220,009)
Net other operating income and expenses   4, 6(16), 6(23)    1,140,748    1,398,355    2,177,538    2,741,693 
Operating income        15,674,743    28,164,004    30,155,441    50,498,191 
Non-operating income and expenses                         
 Interest income   4    1,288,293    285,710    2,518,012    454,680 
 Other income   4    632,042    190,952    645,987    207,582 
 Other gains and losses   4, 6(24)    (284,708)   (1,918,086)   457,458    646,084 
 Finance costs   6(24)   (349,439)   (479,080)   (696,689)   (982,970)
 Share of profit or loss of associates and joint ventures   4, 6(7)    726,057    (2,026,536)   3,974,111    (3,884,968)
 Exchange gain, net   4    798,508    1,360,550    559,627    2,286,789 
  Subtotal        2,810,753    (2,586,490)   7,458,506    (1,272,803)
Income from continuing operations before income tax        18,485,496    25,577,514    37,613,947    49,225,388 
Income tax expense   4, 6(26)    (2,588,823)   (4,087,070)   (5,332,727)   (7,669,321)
Net income        15,896,673    21,490,444    32,281,220    41,556,067 
Other comprehensive income (loss)   6(25)                    
Items that will not be reclassified subsequently to profit or loss                         
 Unrealized gains or losses from equity instruments investments measured at
  fair value through other comprehensive income
   4    (249,207)   (3,028,920)   2,824,626    (4,695,365)
 Share of other comprehensive income (loss) of associates and joint ventures
  which will not be reclassified subsequently to profit or loss
        128,818    (1,920,356)   1,472,382    (2,653,516)
 Income tax related to items that will not be reclassified subsequently   4, 6(26)    (11,938)   (106,175)   (5,065)   (161,295)
Items that may be reclassified subsequently to profit or loss                         
 Exchange differences on translation of foreign operations        (317,318)   1,359,271    (1,505,002)   5,132,703 
 Share of other comprehensive income (loss) of associates and joint ventures
  which may be reclassified subsequently to profit or loss
        (85,876)   (20,376)   (78,908)   112,691 
 Income tax related to items that may be reclassified subsequently   4, 6(26)    297,720    (32,657)   379,253    (62,547)
Total other comprehensive income (loss)        (237,801)   (3,749,213)   3,087,286    (2,327,329)
Total comprehensive income (loss)       $15,658,872   $17,741,231   $35,368,506   $39,228,738 
                          
 Net income (loss) attributable to:                         
  Shareholders of the parent       $15,640,917   $21,326,816   $31,823,919   $41,134,351 
  Non-controlling interests        255,756    163,628    457,301    421,716 
        $15,896,673   $21,490,444   $32,281,220   $41,556,067 
                          
 Comprehensive income (loss) attributable to:                         
  Shareholders of the parent       $15,403,135   $17,577,588   $34,911,227   $38,806,975 
  Non-controlling interests        255,737    163,643    457,279    421,763 
        $15,658,872   $17,741,231   $35,368,506   $39,228,738 
                          
 Earnings per share (NTD)   4, 6(27)                     
  Earnings per share-basic       $1.27   $1.74   $2.58   $3.35 
  Earnings per share-diluted       $1.25   $1.70   $2.53   $3.27 
                          
The accompanying notes are an integral part of the consolidated financial statements.

   
 6 
 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the six-month periods ended June 30, 2023 and 2022
(Expressed in Thousands of New Taiwan Dollars)
                                     
      Equity Attributable to the Parent Company      
      Capital     Retained Earnings  Other Components of Equity         
   Notes  Common Stock  Additional
 Paid-in Capital
  Legal Reserve  Special Reserve  Unappropriated
Earnings
  Exchange Differences on Translation of Foreign Operations  Unrealized
Gains or Losses
on Financial
Assets Measured
at Fair Value
through Other
Comprehensive
Income
  Unearned Employee Compensation  Total  Non-
Controlling
Interests
  Total Equity
Adjusted balance as of January 1, 2022   6(19)  $124,832,476   $47,898,093   $15,734,416   $8,164,648   $91,322,882   $(16,629,547)  $11,715,333   $(2,212,441)  $280,825,860   $157,092   $280,982,952 
Appropriation and distribution of 2021 retained earnings   6(19)                                                       
 Legal reserve        -    -    5,832,570    -    (5,832,570)   -    -    -    -    -    - 
 Special reserve reversed        -    -    -    (3,250,434)   3,250,434    -    -    -    -    -    - 
Cash distributed from additional paid-in capital    6(19)   -    (37,446,370)   -    -    -    -    -    -    (37,446,370)   -    (37,446,370)
Net income in the first half of 2022   6(19)   -    -    -    -    41,134,351    -    -    -    41,134,351    421,716    41,556,067 
Other comprehensive income (loss) in the first half of 2022   6(19), 6(25)    -    -    -    -    -    5,182,800    (7,510,176)   -    (2,327,376)   47    (2,327,329)
Total comprehensive income (loss)        -    -    -    -    41,134,351    5,182,800    (7,510,176)   -    38,806,975    421,763    39,228,738 
Share-based payment transaction   4, 6(20)    (11,241)   11,241    -    -    -    -    -    758,710    758,710    -    758,710 

Share of changes in net asets of associates and joint
  ventures accounted for using equity method

        -    82,044    -    -    (797)   -    797    -    82,044    -    82,044 
Changes in subsidiaries’ ownership   4, 6(19)    -    1,366    -    -    -    -    -    -    1,366    (1,366)   - 
Non-Controlling Interests   6(19)   -    -    -    -    -    -    -    -    -    5,356    5,356 
Others   6(19)   -    (146,253)   -    -    -    -    -    -    (146,253)   (217,599)   (363,852)
Balance as of June 30, 2022   6(19)  $124,821,235   $10,400,121   $21,566,986   $4,914,214   $129,874,300   $(11,446,747)  $4,205,954   $(1,453,731)  $282,882,332   $365,246   $283,247,578 
                                                             
Balance as of January 1, 2023   6(19)  $125,047,490   $12,377,833   $21,566,986   $4,914,214   $175,765,824   $(6,516,198)  $3,782,141   $(1,831,030)  $335,107,260   $343,679   $335,450,939 
Appropriation and distribution of 2022 retained earnings   6(19)                                                       
 Legal reserve        -    -    8,905,139    -    (8,905,139)   -    -    -    -    -    - 
 Special reserve reversed        -    -    -    (2,180,156)   2,180,156    -    -    -    -    -    - 
 Cash dividends        -    -    -    -    (45,017,096)   -    -    -    (45,017,096)   -    (45,017,096)
Net income in the first half of 2023   6(19)   -    -    -    -    31,823,919    -    -    -    31,823,919    457,301    32,281,220 
Other comprehensive income (loss) in the first half of 2023   6(19), 6(25)    -    -    -    -    -    (1,204,635)   4,291,943    -    3,087,308    (22)   3,087,286 
Total comprehensive income (loss)        -    -    -    -    31,823,919    (1,204,635)   4,291,943    -    34,911,227    457,279    35,368,506 
Share-based payment transaction   4, 6(20)    (16,098)   45,695    -    -    (4,221)   -    -    578,538    603,914    4,221    608,135 

Share of changes in net assets of associates and joint
  ventures accounted for using equity method

        -    54,094    -    -    17,468    -    (17,468)   -    54,094    -    54,094 
Disposal of investments accounted for under the equity
  method
        -    117,264    -    -    (56)   -    56    -    117,264    -    117,264 
Changes in subsidiaries’ ownership   4, 6(19)    -    -    -    -    (292,932)   -    -    -    (292,932)   (20)   (292,952)
Non-Controlling Interests   6(19)   -    -    -    -    -    -    -    -    -    1,356    1,356 
Others   6(19)   -    1,061,465    -    -    -    -    -    -    1,061,465    (463,666)   597,799 
Balance as of June 30, 2023   6(19)  $125,031,392   $13,656,351   $30,472,125   $2,734,058   $155,567,923   $(7,720,833)  $8,056,672   $(1,252,492)  $326,545,196   $342,849   $326,888,045 
                                                             
The accompanying notes are an integral part of the consolidated financial statements.

   
 7 
 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six-month periods ended June 30, 2023 and 2022
(Expressed in Thousands of New Taiwan Dollars)
       
   For the six-month periods ended June 30,
   2023  2022
Cash flows from operating activities:      
 Net income before tax  $37,613,947   $49,225,388 
 Adjustments to reconcile net income before tax to net cash provided by operating activities:          
  Depreciation   18,508,261    21,035,687 
  Amortization   1,326,196    1,461,320 
  Expected credit impairment losses (gains)   (68,821)   1,738 
  Net gain of financial assets and liabilities at fair value through profit or loss   (390,204)   (577,886)
  Interest expense   635,378    940,057 
  Interest income   (2,518,012)   (454,680)
  Dividend income   (645,987)   (207,582)
  Share-based payment   608,135    758,710 
  Share of loss (profit) of associates and joint ventures   (3,974,111)   3,884,968 
  Gain on disposal of property, plant and equipment   (135,110)   (335,590)
  Gain on disposal of investments accounted for under the equity method   (19,620)   -   
  Loss on repurchases of bonds   -      136,393 
  Exchange loss on financial assets and liabilities   332,584    1,149,500 
  Loss (gain) on lease modification   175    (1,188)
  Amortization of deferred government grants   (1,731,864)   (2,117,938)
Income and expense adjustments   11,927,000    25,673,509 
  Changes in operating assets and liabilities:          
Financial assets and liabilities at fair value through profit or loss   1,461,196    (331,829)
Contract assets   (53,794)   (80,869)
Accounts receivable   6,047,612    (7,616,458)
Other receivables   248,053    (61,373)
Inventories   (3,786,158)   (4,165,517)
Prepayments   917,836    (2,027,453)
Contract fulfillment costs   (87,342)   (266,762)
Contract liabilities   (523,906)   940,775 
Accounts payable   (40,150)   1,591,997 
Other payables   (312,338)   6,294,813 
Other current liabilities   11,502    51,260 
Net defined benefit liabilities   (239,060)   (678,741)
Other noncurrent liabilities-others   19,838    62,423 
  Cash generated from operations   53,204,236    68,611,163 
Interest received   2,488,006    429,407 
Dividend received   303,758    640,331 
Interest paid   (490,982)   (790,460)
Income tax paid   (14,780,991)   (3,681,540)
 Net cash provided by operating activities   40,724,027    65,208,901 
           
(continued)

   
 8 
 

 

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six-month periods ended June 30, 2023 and 2022
(Expressed in Thousands of New Taiwan Dollars)
       
   For the six-month periods ended June 30,
   2023  2022
Cash flows from investing activities:      
 Acquisition of financial assets at fair value through profit or loss  $(593,505)  $(691,272)
 Proceeds from disposal of financial assets at fair value through profit or loss   148,325    417,312 
 Acquisition of financial assets measured at amortized cost   (12,305)   (1,728,954)
 Proceeds from redemption of financial assets measured at amortized cost   670,121    28,147,040 
 Proceeds from disposal of investments accounted for under the equity method   293,266    -   
 Proceeds from capital reduction of investments accounted for under the equity method   743,106    -   
 Acquisition of property, plant and equipment   (53,895,133)   (21,709,817)
 Proceeds from disposal of property, plant and equipment   98,676    408,712 
 Increase in refundable deposits   (34,159)   (504,582)
 Decrease in refundable deposits   59,304    141,388 
 Acquisition of intangible assets   (1,211,956)   (1,235,757)
 Government grants related to assets acquisition   523,331    243 
 Increase in other noncurrent assets-others   (41,841)   (208,341)
  Net cash provided by (used in) investing activities   (53,252,770)   3,035,972 
Cash flows from financing activities:          
 Increase in short-term loans   220,000    80,000 
 Decrease in short-term loans   (50,000)   (1,428,841)
 Redemption of bonds   -      (9,732,651)
 Proceeds from long-term loans   4,049,980    709,521 
 Repayments of long-term loans   (3,766,013)   (11,588,154)
 Increase in guarantee deposits   3,312,781    936,058 
 Decrease in guarantee deposits   (1,034,505)   (2,664)
 Cash payments for the principal portion of the lease liability   (325,223)   (359,367)
 Change in non-controlling interests   1,356    5,356 
 Others   (434)   (830)
  Net cash provided by (used in) financing activities   2,407,942    (21,381,572)
Effect of exchange rate changes on cash and cash equivalents   (601,084)   4,237,841 
Net increase (decrease) in cash and cash equivalents   (10,721,885)   51,101,142 
Cash and cash equivalents at beginning of period   173,818,777    132,622,131 
Cash and cash equivalents at end of period  $163,096,892   $183,723,273 
           
           
The accompanying notes are an integral part of the consolidated financial statements.

   
 9 
 

 

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Six-Month Periods Ended June 30, 2023 and 2022

(Expressed in Thousands of New Taiwan Dollars unless Otherwise Specified)

 

1.HISTORY AND ORGANIZATION

 

United Microelectronics Corporation (UMC) was incorporated in Republic of China (R.O.C.) in May 1980 and commenced operations in April 1982. UMC is a full service semiconductor wafer foundry, and provides a variety of services to satisfy customer needs. UMC’s ordinary shares were publicly listed on the Taiwan Stock Exchange (TWSE) in July 1985 and its American Depositary Shares (ADSs) were listed on the New York Stock Exchange (NYSE) in September 2000.

 

The address of its registered office and principal place of business is No. 3, Li-Hsin 2nd Road, Hsinchu Science Park, Hsinchu, Taiwan. The principal operating activities of UMC and its subsidiaries (collectively as “the Company”) are described in Notes 4(3) and 14.

 

2.DATE AND PROCEDURES OF AUTHORIZATION OF FINANCIAL STATEMENTS FOR ISSUE

 

The consolidated financial statements of the Company were authorized for issue in accordance with a resolution of the Board of Directors’ meeting on July 26, 2023.

 

3.NEWLY ISSUED OR REVISED STANDARDS AND INTERPRETATIONS

 

(1)The Company applied International Financial Reporting Standards, International Accounting Standards, and Interpretations issued, revised or amended which are endorsed by Financial Supervisory Commission (FSC) and become effective for annual periods beginning on or after January 1, 2023. There are no newly adopted or revised standards and interpretations that have material impact on the Company’s financial position and performance.

 

(2)Standards issued by International Accounting Standards Board (IASB) but not yet endorsed by FSC (the effective dates are to be determined by FSC) are listed below:
     
New, Revised or Amended Standards and Interpretations   Effective Date issued by IASB
IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures   To be determined by IASB
IFRS 17 “Insurance Contracts”   January 1, 2023
Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or Non-current   January 1, 2024
Amendments to IFRS 16 “Leases” - Lease Liability in a Sale and Leaseback   January 1, 2024
Amendments to IAS 1 “Presentation of Financial Statements” - Non-current Liabilities with Covenants   January 1, 2024
Amendments to IAS 12 “Income Taxes” - International Tax Reform-Pillar Two Model Rules   January 1, 2023
Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures” - Supplier Finance Arrangements   January 1, 2024

 

The potential effects of adopting the standards or interpretations issued by IASB but not yet endorsed by FSC on the Company’s financial statements in future periods are summarized as below:

 

a.Amendments to IFRS 10 “Consolidated Financial Statements” (IFRS 10) and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Ventures (IAS 28)

 

The amendments address the inconsistency between the requirements in IFRS 10 and IAS 28, in dealing with the loss of control of a subsidiary that is contributed to an associate or a joint venture. IAS 28 restricts gains and losses arising from contributions of non-monetary assets to an associate or a joint venture to the extent of the interest attributable to the other equity holders in the associate or joint venture. IFRS 10 requires full profit or loss recognition on the loss of control of a subsidiary. IAS 28 was amended so that the gain or loss resulting from the sale or contribution of assets that constitute a business as defined in IFRS 3 “Business Combinations” (IFRS 3) between an investor and its associate or joint venture is recognized in full.

   
 10 
 

 

IFRS 10 was also amended so that the gain or loss resulting from the sale or contribution of a subsidiary that does not constitute a business as defined in IFRS 3 between an investor and its associate or joint venture is recognized only to the extent of the unrelated investors’ interests in the associate or joint venture.

 

b.IFRS 17 “Insurance Contracts” (IFRS 17)

 

IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects (including recognition, measurement, presentation and disclosure requirements). The core of IFRS 17 is the General (building block) Model, under this model, on initial recognition, an entity shall measure a group of insurance contracts at the total of the fulfilment cash flows and the contractual service margin. The carrying amount of a group of insurance contracts at the end of each reporting period shall be the sum of the liability for remaining coverage and the liability for incurred claims.

 

Other than the General Model, the standard also provides a specific adaptation for contracts with direct participation features (the Variable Fee Approach) and a simplified approach (Premium Allocation Approach) mainly for short-duration contracts.

 

IFRS 17 was issued in May 2017 and it was amended in 2020 and 2021. The amendments include deferral of the date of initial application of IFRS 17 by two years to annual beginning on or after 1 January 2023 (from the original effective date of 1 January 2021); provide additional transition reliefs; simplify some requirements to reduce the costs of applying IFRS 17 and revise some requirements to make the results easier to explain. IFRS 17 replaces an interim Standard - IFRS 4 Insurance Contracts - from annual reporting periods beginning on or after 1 January 2023.

 

c.Amendments to IAS 1 “Presentation of Financial Statements” (IAS 1) - Classification of Liabilities as Current or Non-current

These are the amendments to paragraphs 69-76 of IAS 1 presentation of financial statements and the amended paragraphs related to the classification of liabilities as current or non-current.

 

d.Amendments to IFRS 16 “Leases” (IFRS 16) - Lease Liability in a Sale and Leaseback

The amendments add seller-lessee additional requirements for the sale and leaseback transactions in IFRS 16, thereby supporting the consistent application of the standard.

 

e.Amendments to IAS 1 “Presentation of Financial Statements” - Non-current Liabilities with Covenants

The amendments improved the information companies provide about long-term debt with covenants. The amendments specify that covenants to be complied within twelve months after the reporting period do not affect the classification of debt as current or non-current at the end of the reporting period.

 

f.Amendments to IAS 12 “Income Taxes” - International Tax Reform-Pillar Two Model Rules

The amendments introduced a temporary exception to the requirements to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes; and targeted disclosure requirements for affected entities. An entity is not required to disclose the information required for any interim period ending on or before 31 December 2023.

 

g.Amendments to IAS 7 “Statement of Cash Flows” and IFRS 7 “Financial Instruments: Disclosures” - Supplier Finance Arrangements

The amendments introduced additional information of supplier finance arrangements and added disclosure requirements for such arrangements.

 

The Company is currently evaluating the potential impact of the aforementioned standards and interpretations listed (a) - (g) to the Company’s financial position and performance, and the related impact will be disclosed when the evaluation is completed.

 

4.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

(1)Statement of Compliance

 

The Company’s consolidated financial statements were prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers (Regulations) and IAS 34 “Interim Financial Reporting” which is endorsed and become effective by FSC.

 

   
 11 
 
(2)Basis of Preparation

 

The consolidated financial statements have been prepared on a historical cost basis, except for financial instruments measured at fair value.

 

(3)General Description of Reporting Entity

 

a.Principles of consolidation

 

The same principles of consolidation have been applied in the Company’s consolidated financial statements as those applied in the Company’s consolidated financial statements for the year ended December 31, 2022. For the principles of consolidation, please refer to Note 4(3) of the Company’s consolidated financial statements for the year ended December 31, 2022.

 

b.The consolidated entities are as follows:

 

As of June 30, 2023, December 31, 2022 and June 30, 2022

                 
           

Percentage of ownership (%)

As of

Investor   Subsidiary   Business nature  

June 30,

2023

 

December 31,

2022

 

June 30,

2022

UMC   UMC GROUP (USA)   IC Sales   100.00   100.00   100.00
UMC   UNITED MICROELECTRONICS (EUROPE) B.V.   Marketing support activities   100.00   100.00   100.00
UMC   UMC CAPITAL CORP.   Investment holding   100.00   100.00   100.00
UMC   GREEN EARTH LIMITED (GE)   Investment holding   100.00   100.00   100.00
UMC   TLC CAPITAL CO., LTD. (TLC)   Venture capital   100.00   100.00   100.00
UMC   UMC INVESTMENT (SAMOA) LIMITED   Investment holding   100.00   100.00   100.00
UMC   FORTUNE VENTURE CAPITAL CORP. (FORTUNE)   Consulting and planning for venture capital   100.00   100.00   100.00
UMC   UMC KOREA CO., LTD.   Marketing support activities   100.00   100.00   100.00
UMC   OMNI GLOBAL LIMITED (OMNI)   Investment holding   100.00   100.00   100.00
UMC   SINO PARAGON LIMITED   Investment holding   100.00   100.00   100.00
UMC   BEST ELITE INTERNATIONAL LIMITED (BE)   Investment holding   100.00   100.00   100.00
UMC   UNITED SEMICONDUCTOR JAPAN CO., LTD.   Sales and manufacturing of integrated circuits   100.00   100.00   100.00
UMC and FORTUNE   WAVETEK MICROELECTRONICS CORPORATION (WAVETEK)   Sales and manufacturing of integrated circuits   80.12   80.14   80.14
TLC   SOARING CAPITAL CORP.   Investment holding   100.00   100.00   100.00
SOARING CAPITAL CORP.   UNITRUTH ADVISOR (SHANGHAI) CO., LTD.   Investment holding and advisory   100.00   100.00   100.00
GE   UNITED MICROCHIP CORPORATION   Investment holding   100.00   100.00   100.00
FORTUNE   TERA ENERGY DEVELOPMENT CO., LTD. (TERA ENERGY)   Energy technical services   99.01   100.00   100.00
TERA ENERGY   EVERRICH ENERGY INVESTMENT (HK) LIMITED (EVERRICH-HK)   Investment holding   100.00   100.00   100.00
   
 12 
 

 

EVERRICH-HK   EVERRICH (SHANDONG) ENERGY CO., LTD.   Solar engineering integrated design services   100.00   100.00   100.00
OMNI   UNITED MICROTECHNOLOGY CORPORATION (CALIFORNIA)   Research and development   100.00   100.00   100.00
OMNI   ECP VITA PTE. LTD.   Insurance   100.00   100.00   100.00
WAVETEK   WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED (WAVETEK-SAMOA)   Investment holding   100.00   100.00   100.00
WAVETEK- SAMOA   WAVETEK MICROELECTRONICS CORPORATION (USA)   Marketing service   100.00   100.00   100.00
BE   INFOSHINE TECHNOLOGY LIMITED (INFOSHINE)   Investment holding   100.00   100.00   100.00
INFOSHINE   OAKWOOD ASSOCIATES LIMITED (OAKWOOD)   Investment holding   100.00   100.00   100.00
OAKWOOD   HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. (HEJIAN)   Sales and manufacturing of integrated circuits   99.9985   99.9985   99.9985
HEJIAN   UNITEDDS SEMICONDUCTOR (SHANDONG) CO., LTD.   Integrated circuits design services   100.00   100.00   100.00
UNITED MICROCHIP CORPORATION and HEJIAN   UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. (USCXM)   Sales and manufacturing of integrated circuits   72.73   71.86   69.95

 

(4)Other Significant Accounting Policies

 

The same accounting policies of consolidation have been applied in the Company’s consolidated financial statements as those applied in the Company’s consolidated financial statements for the year ended December 31, 2022. For the summary of significant accounting policies, please refer to Note 4 of the Company’s consolidated financial statements for the year ended December 31, 2022.

 

5.SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

 

The same significant accounting judgments, estimates and assumptions have been applied in the Company’s consolidated financial statements for the six-month period ended June 30, 2023 as those applied in the Company’s consolidated financial statements for the year ended December 31, 2022. For significant accounting judgments, estimates and assumptions, please refer to Note 5 of the Company’s consolidated financial statements for the year ended December 31, 2022.

 

6.CONTENTS OF SIGNIFICANT ACCOUNTS

 

(1)Cash and Cash Equivalents

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Cash on hand and petty cash   $6,162   $6,023   $5,745
Checking and savings accounts   49,961,305   42,422,443   48,017,282
Time deposits   102,913,898   125,467,386   124,668,929
Repurchase agreements collateralized by government bonds and corporate notes   10,215,527   5,922,925   11,031,317
Total   $163,096,892   $173,818,777   $183,723,273

 

   
 13 
 

  

(2)Financial Assets at Fair Value through Profit or Loss

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Financial assets mandatorily measured at fair value through profit or loss            
Common stocks   $9,272,036   $10,275,563   $11,990,723
Preferred stocks   2,609,561   2,939,939   2,795,271
Funds   5,042,756   5,044,702   5,306,476
Convertible bonds   351,645   230,365   321,703
Forward contracts   -   -   76
Others   155,400   -   -
Total   $17,431,398   $18,490,569   $20,414,249
             
Current   $592,787   $705,918   $704,464
Non-current   16,838,611   17,784,651   19,709,785
Total   $17,431,398   $18,490,569   $20,414,249

 

(3)Financial Assets at Fair Value through Other Comprehensive Income

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Equity instruments            
Common stocks   $17,846,300   $15,007,053   $14,963,163
Preferred stocks   167,927   182,547   177,137
Total   $18,014,227   $15,189,600   $15,140,300
             
Current   $4,343,483   $3,213,057   $3,236,538
Non-current   13,670,744   11,976,543   11,903,762
Total   $18,014,227   $15,189,600   $15,140,300

 

a.These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as fair value through other comprehensive income.

 

b.Dividend income recognized in profit or loss from equity instruments designated as fair value through other comprehensive income were listed below:

 

   

For the three-month periods ended June 30,

    2023   2022
Held at end of period   $376,161   $-
Derecognized during the period   -   -
Total   $376,161   $-

 

   

For the six-month periods ended June 30,

    2023   2022
Held at end of period   $376,161   $-
Derecognized during the period   -   -
Total   $376,161   $-

 

c.UMC issued unsecured exchangeable bonds where the bondholders may exchange the bonds at any time on or after October 8, 2021 and prior to June 27, 2026 into NOVATEK common shares which UMC holds and accounts for as equity instruments investments measured at fair value through other comprehensive income. Please refer to Note 6(13) for the Company’s unsecured exchangeable bonds.
   
 14 
 

 

(4)Financial assets measured at amortized cost

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Financial assets measured at amortized cost            

Time deposits with original maturities over three months

  $203,943   $849,308   $2,813,095
Bonds   -   20,000   20,000
Total   $203,943   $869,308   $2,833,095
             
Current   $196,452   $861,817   $2,824,309
Non-current   7,491   7,491   8,786
Total   $203,943   $869,308   $2,833,095

 

(5)Accounts Receivable, Net

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Accounts receivable   $30,244,985   $36,653,611   $42,329,501
Less: loss allowance   (142,286)   (209,101) (202,046)
Net   $30,102,699   $36,444,510   $42,127,455

 

Aging analysis of accounts receivable:

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Neither past due   $27,329,115   $30,545,437   $38,234,341
Past due:            
≤ 30 days   2,141,467   5,303,765   3,378,097
31 to 60 days   78,337   130,408   92,512
61 to 90 days   91,685   3,247   2,699
91 to 120 days   897   7,886   11,182
≥ 121 days   603,484   662,868   610,670
Subtotal   2,915,870   6,108,174   4,095,160
Total   $30,244,985   $36,653,611   $42,329,501

 

Movement of loss allowance for accounts receivable:

 

    For the six-month periods ended June 30,
    2023 2022
Beginning balance   $209,101  $194,491
Net recognition (reversal) for the period   (66,815) 7,555
Ending balance   $142,286  $202,046

 

The collection periods for third party domestic sales and third party overseas sales were month-end 30 - 60 days and net 30 - 60 days, respectively.

 

An impairment analysis is performed at each reporting date to measure expected credit losses (ECLs) of accounts receivable. For the receivables past due within 60 days, including not past due, the Company estimates an expected credit loss rate to calculate ECLs. For the six-month periods ended June 30, 2023 and 2022, the expected credit loss rates were not greater than 0.2%. The rate is determined based on the Company’s historical credit loss experience and customer’s current financial condition, adjusted for forward-looking factors such as customer’s economic environment. For the receivables past due over 60 days, the Company applies the aforementioned rate and assesses individually whether to recognize additional expected credit losses by considering customer’s operating condition and debt-paying ability.

 

   
 15 
 
(6)Inventories, Net

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Raw materials   $9,583,625   $6,335,428   $4,051,438
Supplies and spare parts   6,531,097   7,161,216   6,492,865
Work in process   16,193,842   14,897,926   15,925,781
Finished goods   2,244,158   2,675,390   870,643
Total   $34,552,722   $31,069,960   $27,340,727

 

a.For the three-month periods ended June 30, 2023 and 2022, the Company recognized NT$34,147 million and NT$36,949 million, respectively, in operating costs, of which NT$263 million was related to write-down of inventories and NT$66 million was related to reversal of write-down of inventories. For the six-month periods ended June 30, 2023 and 2022, the Company recognized NT$67,199 million and NT$71,320 million, respectively, in operating cost, of which NT$689 million was related to write-down of inventories and NT$395 million was related to reversal of write-down of inventories.

 

b.None of the aforementioned inventories were pledged.

 

(7)Investments Accounted for Under the Equity Method

 

a.Details of investments accounted for under the equity method are as follows:
             
    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Investee companies   Amount   Percentage of ownership or voting rights   Amount   Percentage of ownership or voting rights   Amount   Percentage of ownership or voting rights
Listed companies                        
FARADAY TECHNOLOGY CORP. (FARADAY) (Note A)   $1,875,560   13.78   $1,874,131   13.78   $1,824,503   13.78
UNIMICRON TECHNOLOGY CORP. (UNIMICRON) (Note B)   14,659,189   13.05   13,460,838   13.27   12,174,590   13.30
Unlisted companies                        
MTIC HOLDINGS PTE. LTD. (Note C)   -   45.44   -   45.44   -   45.44
UNITECH CAPITAL INC.   534,765   42.00   426,070   42.00   524,272   42.00

TRIKNIGHT CAPITAL CORPORATION (TRIKNIGHT)

(Note D)

  2,307,471   40.00   2,117,678   40.00   2,962,394   40.00
HSUN CHIEH CAPITAL CORP.   226,970   40.00   210,690   40.00   227,777   40.00
PURIUMFIL INC.   11,100   40.00   14,840   40.00   12,378   40.00
HSUN CHIEH INVESTMENT CO., LTD. (HSUN CHIEH) (Note E)   11,320,382   36.49   9,530,916   36.49   9,308,442   36.49
YANN YUAN INVESTMENT CO., LTD.   8,804,920   26.78   7,299,414   26.78   7,544,303   26.78
UNITED LED CORPORATION HONG KONG LIMITED   92,540   25.14   97,156   25.14   102,098   25.14
VSENSE CO., LTD. (Note C)   -   23.98   -   23.98   -   23.98
TRANSLINK CAPITAL PARTNERS I, L.P. (Note F)   104,856   10.38   54,556   10.38   69,840   10.38
Total   $39,937,753       $35,086,289       $34,750,597    

 

   
 16 
 

 

 

Note A:Beginning from June 2015, the Company accounts for its investment in FARADAY as an associate given the fact that the Company obtained the ability to exercise significant influence over FARADAY through representation on its Board of Directors.

 

Note B:Beginning from June 2020, the Company accounts for its investment in UNIMICRON as an associate given the fact that the Company obtained the ability to exercise significant influence over UNIMICRON through representation on its Board of Directors. On January 6, 2023, UNIMICRON issued new shares to merge with SUBTRON TECHNOLOGY CO., LTD. (SUBTRON) through share conversion. The share conversion ratio was 1 common share of SUBTRON to exchange 0.219 common shares of UNIMICRON. The 23 million shares of SUBTRON held by the Company were exchanged to 5 million common shares newly issued by UNIMICRON.

 

Note C:When the Company’s share of losses of an associate equals or exceeds its interest in that associate, the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of that associate.

 

Note D:TRIKNIGHT executed the capital reduction and refunded NT$400 million based on the Company’s stockholding percentage in June 2023. The Company’s stockholding percentage remains unchanged.

 

Note E:HSUN CHIEH executed the capital reduction and refunded NT$343 million based on the Company’s stockholding percentage in April 2023. The Company’s stockholding percentage remains unchanged.

 

Note F:The Company follows international accounting practices in equity accounting for limited partnerships and uses the equity method to account for these investees.

 

The carrying amount of investments accounted for using the equity method for which there are published price quotations amounted to NT$16,535 million, NT$15,335 million and NT$13,999 million, as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively. The fair value of these investments were NT$42,227 million, NT$28,416 million and NT$37,627 million as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively.

 

Certain investments accounted for under the equity method were reviewed by other independent accountants. Shares of profit or loss of these associates and joint ventures amounted to NT$396 million, NT$(2,208) million, NT$3,542 million and NT$(4,166) million for the three-month and six-month periods ended June 30, 2023 and 2022, respectively. Share of other comprehensive income of these associates and joint ventures amounted to NT$(76) million, NT$(82) million, NT$(18) million and NT$14 million for the three-month and six-month periods ended June 30, 2023 and 2022, respectively. The balances of investments accounted for under the equity method were NT$28,822 million, NT$25,801 million and NT$24,970 million as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively.

 

Although the Company is the largest shareholder of some associates; after comprehensive assessment, the Company does not own the major voting rights as the remaining voting rights holders are able to align and prevent the Company from ruling the relevant operation. Therefore, the Company does not control but owns significant influence over the aforementioned associates.

   
 17 
 

 

None of the aforementioned associates were pledged.

 

b.Financial information of associates:

 

There is no individually significant associate for the Company. When an associate is a foreign operation, and the functional currency of the foreign entity is different from the Company, an exchange difference arising from translation of the foreign entity will be recognized in other comprehensive income (loss). Such exchange differences recognized in other comprehensive income (loss) in the financial statements for the three-month and six-month periods ended June 30, 2023 and 2022 were NT$16 million, NT$31 million, NT$11 million and NT$69 million, respectively, which were not included in the following table.

 

The aggregate amount of the Company’s share of all its individually immaterial associates that are accounted for using the equity method were as follows:

 

    For the three-month periods ended June 30,
    2023   2022
Income (loss) from continuing operations   $726,057   $(2,026,536)
Other comprehensive income (loss)   27,192   (1,971,579)
Total comprehensive income (loss)   $753,249   $(3,998,115)

 

   

For the six-month periods ended June 30,

    2023   2022
Income (loss) from continuing operations   $3,974,111   $(3,884,968)
Other comprehensive income (loss)   1,384,249   (2,609,983)
Total comprehensive income (loss)   $5,358,360   $(6,494,951)

 

c.One of UMC’s associates, HSUN CHIEH INVESTMENT CO., LTD., held 441 million shares of UMC’s stock as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively. Another associate, YANN YUAN INVESTMENT CO., LTD., held 193 million shares, 193 million shares and 190 million shares of UMC’s stock as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively. The subsidiary of UNIMICRON, one of UMC’s associates, held 0.05 million shares, nil and nil of UMC’s stock as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively.

 

(8)Property, Plant and Equipment

 

a.For the six-month period ended June 30, 2023:

 

Assets Used by the Company:

 

Cost:

 

    Land   Buildings  

Machinery

and equipment

  Transportation equipment  

Furniture

and fixtures

  Leasehold improvement   Construction in progress and equipment awaiting inspection   Total
As of January 1, 2023   $1,470,216   $37,597,769   $953,819,688   $64,923   $8,061,993   $63,075   $55,363,943   $1,056,441,607
Additions   -   33,475   -   -   -   -   41,093,048   41,126,523
Disposals   -   (2,664)   (2,595,150)   -   (15,574)   -   -   (2,613,388)
Transfers and reclassifications   -   506,730   33,958,031   5,896   725,994   -   (29,124,974)   6,071,677
Exchange effect   (46,216)   (423,937)   (2,213,005)   (303)   (35,746)   (71)   (74,124)   (2,793,402)
As of June 30, 2023   $1,424,000   $37,711,373   $982,969,564   $70,516   $8,736,667   $63,004   $67,257,893   $1,098,233,017

 

   
 18 
 

Accumulated Depreciation and Impairment:

 

    Land   Buildings  

Machinery

and equipment

  Transportation equipment  

Furniture

and fixtures

  Leasehold improvement   Construction in progress and equipment awaiting inspection   Total
As of January 1, 2023   $-   $22,731,506   $857,737,785   $51,597   $6,697,517   $59,383   $-   $887,277,788
Depreciation   -   700,539   17,147,776   2,458   245,590   1,874   -   18,098,237
Disposals   -   (2,664)   (2,588,751)   -   (15,571)   -   -   (2,606,986)
Exchange effect   -   (114,416)   (1,242,053)   (271)   (22,333)   29   -   (1,379,044)
As of June 30, 2023   $-   $23,314,965   $871,054,757   $53,784   $6,905,203   $61,286   $-   $901,389,995
Net carrying amount:                                
As of June 30, 2023   $1,424,000   $14,396,408   $111,914,807   $16,732   $1,831,464   $1,718   $67,257,893   $196,843,022

 

Assets Subject to Operating Leases:

 

Cost:

                     
    Land   Buildings  

Machinery

and equipment

 

Furniture

and fixtures

  Total
As of January 1, 2023   $545,787   $2,443,247   $6,345   $1,334,291   $4,329,670
Transfers and reclassifications   -   -   -   29,445   29,445
Exchange effect   (7,051)   (893)   -   (4,212)   (12,156)
As of June 30, 2023   $538,736   $2,442,354   $6,345   $1,359,524   $4,346,959

 

Accumulated Depreciation and Impairment:

                     
    Land   Buildings  

Machinery

and equipment

 

Furniture

and fixtures

  Total
As of January 1, 2023   $-   $1,202,812   $6,345   $1,302,266   $2,511,423
Depreciation   -   47,404   -   16,185   63,589
Exchange effect   -   1,106   -   (4,216)   (3,110)
As of June 30, 2023   $-   $1,251,322   $6,345   $1,314,235   $2,571,902
Net carrying amount:                    
As of June 30, 2023   $538,736   $1,191,032   $-   $45,289   $1,775,057

 

b.For the six-month period ended June 30, 2022:

 

Assets Used by the Company:

 

Cost:

 

    Land   Buildings  

Machinery

and equipment

  Transportation equipment  

Furniture

and fixtures

  Leasehold improvement   Construction in progress and equipment awaiting inspection   Total
As of January 1, 2022   $1,491,343   $36,827,480   $897,806,699   $55,959   $7,305,174   $61,282   $22,856,033   $966,403,970
Additions   -   203,396   -   -   -   -   22,763,691   22,967,087
Disposals   -   -   (2,624,247)   -   (6,090)   -   (14,889)   (2,645,226)
Transfers and reclassifications   -   184,036   29,165,694   93   275,894   -   (28,342,375)   1,283,342
Exchange effect   (58,892)   98,170   11,118,693   533   39,573   1,836   26,490   11,226,403
As of June 30, 2022   $1,432,451   $37,313,082   $935,466,839   $56,585   $7,614,551   $63,118   $17,288,950   $999,235,576

 

   
 19 
 

 

Accumulated Depreciation and Impairment:

 

    Land   Buildings  

Machinery

and equipment

  Transportation equipment  

Furniture

and fixtures

  Leasehold improvement   Construction in progress and equipment awaiting inspection   Total
As of January 1, 2022   $-   $21,184,969   $810,904,881   $47,108   $6,222,383   $55,125   $-   $838,414,466
Depreciation   -   748,475   19,625,237   2,045   234,371   970   -   20,611,098
Disposals   -   -   (2,611,844)   -   (6,090)   -   -   (2,617,934)
Transfers and reclassifications   -  

161

  -   -   -   -   -   161
Exchange effect   -   93,005   10,324,572   392   35,720   2,030   -   10,455,719
As of June 30, 2022   $-   $22,026,610   $838,242,846   $49,545   $6,486,384   $58,125   $-   $866,863,510
Net carrying amount:                                
As of June 30, 2022   $1,432,451   $15,286,472   $97,223,993   $7,040   $1,128,167   $4,993   $17,288,950   $132,372,066

 

Assets Subject to Operating Leases:

 

Cost:

                 
    Land   Buildings  

Furniture

and fixtures

  Total
As of January 1, 2022   $549,010   $2,422,389   $1,312,703   $4,284,102
Disposals   -   -   (660)   (660)
Transfers and reclassifications   -   (1,227)   107   (1,120)
Exchange effect   (8,985)   16,249   6,433   13,697
As of June 30, 2022   $540,025   $2,437,411   $1,318,583   $4,296,019

 

Accumulated Depreciation and Impairment:

                 
    Land   Buildings  

Furniture

and fixtures

  Total
As of January 1, 2022   $-   $1,095,113   $1,236,790   $2,331,903
Depreciation   -   47,180   32,793   79,973
Disposals   -   -   (660)   (660)
Transfers and reclassifications   -   (161)   -   (161)
Exchange effect   -   9,120   5,387   14,507
As of June 30, 2022   $-   $1,151,252   $1,274,310   $2,425,562
Net carrying amount:                
As of June 30, 2022   $540,025   $1,286,159   $44,273   $1,870,457

 

   
 20 
 
c.Details of interest expense capitalized were as follows:

 

   

For the six-month periods ended June 30,

    2023   2022
Interest expense capitalized   $3,082   $329
Interest rates applied   1.48% - 1.53%   1.49% - 1.61%

 

d.Please refer to Note 8 for property, plant and equipment pledged as collateral.

 

(9)Leases

 

The Company leases various properties, such as land (including land use right), buildings, machinery and equipment, transportation equipment and other equipment with lease terms of 1 to 31 years, except for the land use rights with lease term of 50 years. Most lease contracts of land located in R.O.C state that lease payments will be adjusted based on the announced land value. The Company does not have purchase options of leased land at the end of the lease terms.

 

a.The Company as a lessee

 

(a)Right-of-use Assets

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Land (including land use right)   $5,500,410   $5,714,166   $5,813,696
Buildings   182,031   124,420   234,311
Machinery and equipment   1,582,980   1,748,244   1,830,937
Transportation equipment   18,990   21,485   16,226
Other equipment   2,453   3,676   4,642
Net   $7,286,864   $7,611,991   $7,899,812

 

    For the three-month periods ended June 30,
    2023   2022
Depreciation        
Land (including land use right)   $94,122   $89,651
Buildings   23,295   30,810
Machinery and equipment   50,575   51,774
Transportation equipment   3,405   2,967
Other equipment   884   1,213
Total   $172,281   $176,415

 

   

For the six-month periods ended June 30,

    2023   2022
Depreciation        
Land (including land use right)   $187,719   $171,643
Buildings   48,009   61,061
Machinery and equipment   101,936   103,779
Transportation equipment   6,867   5,731
Other equipment   1,904   2,402
Total   $346,435   $344,616

 

i.For the six-month periods ended June 30, 2023 and 2022, the Company’s addition to right-of-use assets amounted to NT$170 million and NT$1,047 million, respectively.

 

ii.Please refer to Note 8 for right-of-use assets pledged as collateral.

 

   
 21 
 
(b)Lease Liabilities
    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Current   $530,271   $537,314   $506,580
Non-current   5,038,077   5,199,781   5,345,546
Total   $5,568,348   $5,737,095   $5,852,126

 

Please refer to Note 6(24) for the interest expenses on the lease liabilities.

 

b.The Company as a lessor

 

The Company entered into leases on certain property, plant and equipment which are classified as operating leases as they did not transfer substantially all of the risks and rewards incidental to ownership of the underlying assets. The main contracts are to lease the dormitory to the employees with cancellation clauses. Please refer to Note 6(8) for relevant disclosure of property, plant and equipment for operating leases.

 

(10)Intangible Assets

 

For the six-month period ended June 30, 2023:

 

Cost:

 

    Goodwill   Software   Patents and technology license fees   Others   Total
As of January 1, 2023   $15,012   $5,669,787   $3,422,432   $2,953,984   $12,061,215
Additions   -   611,342   45,782   193,757   850,881
Write-off   -   (885,227)   (1,806,545)   (350,964)   (3,042,736)
Reclassifications   -   (8,456)   -   -   (8,456)
Exchange effect   -   (107,012)   (296,937)   (11,482)   (415,431)
As of June 30, 2023   $15,012   $5,280,434   $1,364,732   $2,785,295   $9,445,473

 

Accumulated Amortization and Impairment:

 

    Goodwill   Software   Patents and technology license fees   Others   Total
As of January 1, 2023   $7,398   $2,689,397   $2,597,513   $2,491,707   $7,786,015
Amortization   -   867,628   175,437   199,036   1,242,101
Write-off   -   (885,227)   (1,806,545)   (350,964)   (3,042,736)
Exchange effect   -   (41,628)   (200,745)   (10,684)   (253,057)
As of June 30, 2023   $7,398   $2,630,170   $765,660   $2,329,095   $5,732,323
Net carrying amount:                    
As of June 30, 2023   $7,614   $2,650,264   $599,072   $456,200   $3,713,150

 

For the six-month period ended June 30, 2022:

 

Cost:

 

    Goodwill   Software   Patents and technology license fees   Others   Total
As of January 1, 2022   $15,012   $4,845,037   $4,491,164   $3,348,071   $12,699,284
Additions   -   1,567,945   -   195,597   1,763,542
Write-off   -   (1,379,159)   -   (622,163)   (2,001,322)
Reclassifications   -   56   -   -   56
Exchange effect   -   (103,456)   290,715   (14,570)   172,689
As of June 30, 2022   $15,012   $4,930,423   $4,781,879   $2,906,935   $12,634,249

 

   
 22 
 

Accumulated Amortization and Impairment:

 

    Goodwill   Software   Patents and technology license fees   Others   Total
As of January 1, 2022   $7,398   $2,913,824   $3,324,667   $2,808,462   $9,054,351
Amortization   -   836,155   270,067   284,223   1,390,445
Write-off   -   (1,379,159)   -   (622,163)   (2,001,322)
Exchange effect   -   (65,328)   151,613   (12,354)   73,931
As of June 30, 2022   $7,398   $2,305,492   $3,746,347   $2,458,168   $8,517,405
Net carrying amount:                    
As of June 30, 2022   $7,614   $2,624,931   $1,035,532   $448,767   $4,116,844

 

The amortization amounts of intangible assets were as follows:

 

    For the three-month periods ended June 30,
    2023   2022
Operating costs   $313,481   $348,333
Operating expenses   $290,037   $340,359

 

   

For the six-month periods ended June 30,

    2023   2022
Operating costs   $649,405   $701,076
Operating expenses   $592,696   $689,369

 

(11)Short-Term Loans

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Unsecured bank loans   $170,000   $-   $624,208

 

   

For the six-month periods ended June 30,

   2023  2022
Interest rates applied  2.03% - 2.65%  0.33% - 3.60%

 

(12)Financial Liabilities at Fair Value through Profit or Loss, Current

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Embedded derivatives in exchangeable bonds   $661,159   $438,397   $422,588
Forward contracts   -   -   242
Total   $661,159   $438,397   $422,830

 

(13)Bonds Payable

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Unsecured domestic bonds payable   $23,100,000   $23,100,000   $25,100,000
Unsecured exchangeable bonds payable   5,757,373   5,757,373   7,366,409
Less: Discounts on bonds payable   (580,848)   (672,686)   (970,693)
Total   28,276,525   28,184,687   31,495,716
Less: Current or exchangeable portion due within one year   (10,288,981)   (5,101,591)   (8,415,476)
Net   $17,987,544   $23,083,096   $23,080,240

 

   
 23 
 

 

a.UMC issued domestic unsecured corporate bonds. The terms and conditions of the bonds are as follows:

 

                 
Term   Issuance date   Issued amount   Coupon rate   Repayment
Ten-year   In mid-June 2014   NT$3,000 million   1.95%   Interest will be paid annually and the principal will be repayable in June 2024 upon maturity.
Five-year   In late March 2017   NT$6,200 million   1.15%   Interest was paid annually and the principal was fully repaid in March 2022.
Seven-year   In late March 2017   NT$2,100 million   1.43%   Interest will be paid annually and the principal will be repayable in March 2024 upon maturity.
Five-year   In early October 2017   NT$2,000 million   0.94%   Interest was paid annually and the principal was fully repaid in October 2022.
Seven-year   In early October 2017   NT$3,400 million   1.13%   Interest will be paid annually and the principal will be repayable in October 2024 upon maturity.
Five-year   In late April 2021   NT$5,500 million   0.57%   Interest will be paid annually and the principal will be repayable in April 2026 upon maturity.
Seven-year   In late April 2021   NT$2,000 million   0.63%   Interest will be paid annually and the principal will be repayable in April 2028 upon maturity.
Ten-year (Green bond)   In late April 2021   NT$2,100 million   0.68%   Interest will be paid annually and the principal will be repayable in April 2031 upon maturity.
Five-year   In mid-December 2021   NT$5,000 million   0.63%   Interest will be paid annually and the principal will be repayable in December 2026 upon maturity.

 

b.On July 7, 2021, UMC issued SGX-ST listed currency linked zero coupon exchangeable bonds. In accordance with IFRS 9, the value of the exchange right, call option and put option (together referred to as Option) of the exchangeable bonds was separated from the host and accounted for as “financial liabilities at fair value through profit or loss, current”. The effective rate of the host bond was 3.49%. The terms and conditions of the bonds are as follows:

 

i.Issue Amount: US$400 million

 

ii.Period: July 7, 2021 - July 7, 2026 (Maturity Date)

 

iii.Redemption:
(i)UMC may, at its option, redeem in whole or in part at the principal amount of the bonds with an interest calculated at the rate of -0.625% per annum (the Early Redemption Amount) at any time after the third anniversary from the issue date and prior to the Maturity Date, if the closing price of the common shares of NOVATEK MICROELECTRONICS CORPORATION (NOVATEK) on the TWSE, converted into U.S. dollars at the prevailing exchange rate, for 20 out of 30 consecutive trading days prior to the publication of the redemption notice is at least 130% of the quotient of the Early Redemption Amount multiplied by the then exchange price (converted into U.S. dollars at the Fixed Exchange Rate), divided by the principal amount of the bonds. The Early Redemption Amount will be converted into NTD based on the Fixed Exchange Rate (NTD 27.902=USD 1.00), and this fixed NTD amount will then be converted using the prevailing exchange at the time of redemption for payment in USD.

 

(ii)UMC may redeem the outstanding bonds in whole, but not in part, at the Early Redemption Amount, in the event that over 90% of the bonds have been previously redeemed, repurchased and cancelled or exchanged.
(iii)In the event of any change in ROC taxation resulting in increase of tax obligation or the necessity to pay additional interest expense or increase of additional costs to UMC, UMC may redeem the outstanding bonds in whole, but not in part, at the Early Redemption Amount. Bondholders may elect not to have their bonds redeemed but with no entitlement to any additional amounts or reimbursement of additional taxes.
   
 24 
 
(iv)All or any portion of the bonds will be redeemable at put price at the option of bondholders on July 7, 2024 at 98.14% of the principal amount.
(v)In the event that the common shares of NOVATEK cease to be listed or are suspended from trading for a period equal to or exceeding 30 consecutive trading days on the TWSE, each bondholder shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.
(vi)Upon the occurrence of a change of control (as defined in the indenture) of UMC, each bondholder shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.

 

iv.Terms of Exchange:
(i)Underlying Securities: Common Shares of NOVATEK
(ii)Exchange Period: The bonds are exchangeable at any time on or after October 8, 2021 and prior to June 27, 2026, into NOVATEK common shares. If for any reason UMC does not have sufficient NOVATEK common shares to deliver upon the exchange of any bond, then, UMC will pay to the exchanging bondholder an amount in U.S. dollars equal to the product of the volume-weighted average closing price per NOVATEK common share on the TWSE for five consecutive trading days starting from and including the applicable exercise date (as defined in the indenture) (or such fewer number of trading days as are available within ten days starting from and including the applicable exercise date) each converted into USD at the prevailing rate on the day preceding the applicable trading day and the number of NOVATEK common shares that UMC is unable to deliver. Provided, however, that if the exercise date falls within 5 business days from the beginning of, and during, any closed period, the right of the converting holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.
(iii)Exchange Price and Adjustment: The exchange price was originally NT$731.25 per NOVATEK common share. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The exchange price was NT$583.3 per NOVATEK common share on June 30, 2023.

 

v.Redemption on the Maturity Date:

The bonds will be redeemed with 96.92% principal amount on the maturity date unless:

(i)UMC shall have redeemed the bonds at the option of UMC, or the bonds shall have been redeemed at option of the bondholder;
(ii)The bondholders shall have exercised the exchange right before maturity; or
(iii)The bonds shall have been redeemed or repurchased by UMC and cancelled.

 

For the six-month periods ended June 30, 2023 and 2022, the Company has repurchased and cancelled the outstanding principal amount of exchangeable bonds totaling nil and US$127.6 million with derecognition of the related derivative financial liabilities, respectively. The difference between the repurchased amount and the carrying amount recognized in non-operating other gains and losses was immaterial.

 

   
 25 
 
(14)Long-Term Loans

 

a.Details of long-term loans as of June 30, 2023, December 31, 2022 and June 30, 2022 were as follows:
         
    As of    
Lenders  

June 30,

2023

 

December 31,

2022

 

June 30,

2022

  Redemption
Secured Long-Term Loan from Mega International Commercial Bank (1)   $7,299   $9,732   $12,165   Repayable quarterly from October 24, 2019 to October 24, 2024 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from Mega International Commercial Bank (2)   15,882   18,000   18,000   Repayable quarterly from February 23, 2022 to February 22, 2027 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from Mega International Commercial Bank (3)   53,382   60,500   -   Repayable quarterly from December 22, 2022 to February 23, 2027 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from Taiwan Cooperative Bank (1)   29,730   35,676   41,621   Repayable quarterly from October 19, 2015 to October 19, 2025 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from Taiwan Cooperative Bank (2)   -   4,375   8,750   Repayable monthly from May 31, 2019 to May 31, 2023 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (3)   26,000   32,000   38,000   Repayable monthly from August 13, 2020 to August 13, 2025 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (4)   13,448   16,552   19,655   Repayable monthly from October 29, 2020 to August 29, 2025 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (5)   71,542   84,166   96,792   Repayable monthly from April 15, 2021 to April 15, 2026 with monthly interest payments.  Interest-only payment for the first year.
Secured Syndicated Loans from China Development Bank and 6 others (1)   -   1,915,577   9,957,734   Repayable semi-annually from October 20, 2016 to October 19, 2024 with semi-annually interest payments.  Interest-only payment for the first and the second year.
Secured Syndicated Loans from China Development Bank and 6 others (2)   11,674,943   12,415,200   12,499,200   Repayable semi-annually from March 19, 2021 to March 18, 2031 with semi-annually interest payments.  Interest-only payment for the first and the second year.
Secured Long-Term Loan from First Commercial Bank   41,364   47,000   47,000   Repayable monthly from December 2, 2021 to December 2, 2026 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from KGI Bank   21,000   21,000   21,000   Repayable semi-annually from December 27, 2021 to December 25, 2026 with monthly interest payments.  Interest-only payment for the first and the second year.
Secured Long-Term Loan from Shanghai Commercial Bank(1)   19,425   22,200   22,200   Repayable monthly from January 19, 2022 to December 15, 2026 with monthly interest payments.  Interest-only payment for the first year.
Secured Long-Term Loan from Shanghai Commercial Bank(2)   4,980   -   -   Repayable quarterly from March 23, 2023 to March 15, 2028 with monthly interest payments.  Interest-only payment for the first year.
   
 26 
 

 

Secured Long-Term Loan from Shanghai Commercial Bank(3)   $45,000   $-   $-   Repayable quarterly from June 6, 2023 to March 15, 2028 with monthly interest payments.  Interest-only payment for the first year.
Unsecured Long-Term Loan from Bank of China   1,716,958   1,797,364   1,747,794   Repayable semi-annually from June 24, 2023 to June 24, 2026 with quarterly interest payments.
Unsecured Long-Term Loan from Bank of Taiwan (1)   -   -   416,667   Repayable quarterly from March 10, 2022 to December 10, 2024 with monthly interest payments.
Unsecured Long-Term Loan from Bank of Taiwan (2)   1,666,667   2,000,000   450,000   Repayable quarterly from March 24, 2023 to December 24, 2025 with monthly interest payments.

Unsecured Revolving Loan from First Commercial Bank (1)

(Note A and B)

  300,000   300,000   300,000   Settlement due on February 25, 2026 with monthly interest payments.

Unsecured Revolving Loan from First Commercial Bank (2)

(Note A and B)

  300,000   300,000   300,000   Settlement due on March 15, 2026 with monthly interest payments.

Unsecured Revolving Loan from First Commercial Bank (3)

(Note A and B)

  200,000   200,000   200,000   Settlement due on June 15, 2026 with monthly interest payments.

Unsecured Revolving Loanfrom Yuanta Commercial Bank

(Note C)

  1,000,000   -   600,000   Settlement due on March 2, 2026 with monthly interest payments.

Unsecured Revolving Loan from CTBC Bank

(Note D)

  2,000,000   -   -   Settlement due on July 20, 2025 with monthly interest payments.
Subtotal   19,207,620   19,279,342   26,796,578    
Less: Current portion   (1,133,143)   (2,485,053)   (4,177,483)    
Total   $18,074,477   $16,794,289   $22,619,095    

 

  For the six-month periods ended June 30,
  2023  2022
Interest rates applied 1.61% - 6.40%  0.86% - 4.66%

 

Note A:First Commercial Bank approved the 1-year credit loan on April 14, 2022, which offered UMC a revolving line of credit of NT$2 billion starting from the approval date to April 13, 2023. As of December 31, 2022 and June 30, 2022, the unused line of credit were both NT$1.2 billion.

 

Note B:First Commercial Bank approved the 1-year credit loan on April 25, 2023, which offered UMC a revolving line of credit of NT$2 billion starting from the approval date to April 24, 2024. As of June 30, 2023, the unused line of credit was NT$1.2 billion.

 

Note C:UMC entered into a 5-year loan agreement with Yuanta Commercial Bank, effective from March 3, 2021. The agreement offered UMC a revolving line of credit of NT$4 billion. This line of credit will be reduced starting from the end of the second year after the contract date and every twelve months thereafter, with a total of four adjustments. The expiration date of the agreement is March 2, 2026. As of June 30, 2023, December 31, 2022 and June 30, 2022, the unused line of credit were NT$2 billion, NT$4 billion and NT$3.4 billion, respectively.

 

Note D:UMC entered into a 5-year loan agreement with CTBC Bank, effective from January 6, 2020. The agreement offered UMC a revolving line of credit of NT$2.9 billion. On December 24, 2021, UMC re-entered into the loan agreement with CTBC Bank, modifying the revolving line of credit limit to NT$4 billion. The expiration date of the agreement is July 20, 2025. As of June 30, 2023, December 31, 2022 and June 30, 2022, the unused line of credit were NT$2 billion, NT$4 billion and NT$4 billion, respectively.

 

b.Please refer to Note 8 for property, plant and equipment and right-of-use assets pledged as collateral for long-term loans.

 

(15)Post-Employment Benefits

 

a.Defined contribution plan

 

The employee pension plan under the Labor Pension Act of the R.O.C. is a defined contribution plan. Pursuant to the plan, UMC and its domestic subsidiaries make monthly contributions of 6% based on each individual employee’s salary or wage to employees’ pension accounts. Pension benefits for employees of the Singapore branch and subsidiaries overseas are provided in accordance with the local regulations. Total pension expenses of NT$481 million, NT$469 million, NT$952 million and NT$925 million were contributed by the Company for the three-month and six-month periods ended June 30, 2023 and 2022, respectively.

   
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b.Defined benefit plan

 

The employee pension plan mandated by the Labor Standards Act of the R.O.C. is a defined benefit plan. The pension benefits are disbursed based on the units of service years and average monthly salary prior to retirement according to the Labor Standards Act. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year and the total units will not exceed 45 units. The Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited with the Bank of Taiwan under the name of a pension fund supervisory committee. The pension fund is managed by the government’s designated authorities and therefore is not included in the Company’s consolidated financial statements. Pension cost for an interim period is calculated on a year-to-date basis by using the actuarially determined pension cost rate at the end of the prior financial year. For the three-month and six-month periods ended June 30, 2023 and 2022, total pension expenses of NT$11 million, NT$8 million, NT$23 million and NT$17 million, respectively, were recognized by the Company.

 

(16)Deferred Government Grants

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Beginning balance   $4,677,444   $8,543,798   $8,543,798
Arising during the period   523,331   174,352   686
Recorded in profit or loss:            
Other operating income   (1,731,864)   (4,164,189)   (2,117,938)
Exchange effect   (81,850)   123,483   172,264
Ending balance   $3,387,061   $4,677,444   $6,598,810
             
Current (classified under other current liabilities)   $1,332,921   $2,681,842   $3,785,253
Non-current (classified under other noncurrent liabilities-others)   2,054,140   1,995,602   2,813,557
Total   $3,387,061   $4,677,444   $6,598,810

 

The significant government grants related to equipment acquisitions received by the Company are amortized as income over the useful lives of related equipment and recorded in the net other operating income and expenses.

 

(17)Refund Liabilities (classified under other current liabilities)

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Refund liabilities   $1,247,334   $1,139,227   $720,567

 

(18)Decommissioning liabilities (classified under other noncurrent liabilities-others)

 

    As of
   

June 30,

2023

 

December 31,

2022

 

June 30,

2022

Decommissioning liabilities   $412,375   $366,863   $229,000

 

Under certain applicable agreement, the Company is obligated to dismantling and removing the items of property, plant and equipment and restoring the site on which they are located. Accordingly, the Company recognized the liability pursuant to the present value of the estimated decommissioning and restoration cost during the six-month periods ended June 30, 2023 and 2022.

 

 

   
 28 
 
(19)Equity

 

a.Capital stock:

 

i.UMC had 26,000 million common shares authorized to be issued as of June 30, 2023, December 31, 2022 and June 30, 2022, of which 12,503 million shares, 12,505 million shares and 12,482 million shares were issued as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively, each at a par value of NT$10.

 

ii.UMC had 130 million, 135 million and 120 million ADSs, which were traded on the NYSE as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively. The total number of common shares of UMC represented by all issued ADSs were 650 million shares, 674 million shares and 598 million shares as of June 30, 2023, December 31, 2022 and June 30, 2022, respectively. One ADS represents five common shares.

 

iii.On December 5, 2022, UMC issued restricted stocks for its employees in a total of 23 million shares with a par value of NT$10 each. The aforementioned issuance of new shares was approved by the competent authority and the registration was completed. Please refer to Note 6(20) for the information of restricted stocks.

 

iv.In March 2022, October 2022 and April 2023, UMC has recalled and cancelled 1 million shares, 0.4 million shares and 2 million shares, respectively of unvested restricted stocks issued for employees according to the issuance plan. The aforementioned reduction of capital was approved by the competent authority and the registration was completed.

 

b.Retained earnings and dividend policies:

 

According to UMC’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

 

i.Payment of taxes.
ii.Making up loss for preceding years.
iii.Setting aside 10% for legal reserve, except for when accumulated le