UMC Reports 2006 Second Quarter Results; Profitability Improvement Expected to Continue on Better 300mm Fab Utilization
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UMC Reports 2006 Second Quarter Results; Profitability Improvement Expected to Continue on Better 300mm Fab Utilization

TAIPEI, R.O.C.—(BUSINESS WIRE)—Aug. 2, 2006— United Microelectronics Corporation (NYSE: UMC; TSE: 2303):

Second Quarter 2006 Overview(1):

-- Revenue increased 5.6% from 1Q06 to NT$25.75 billion (US$796 million)

-- Operating profit was NT$1.63 billion (US$50 million)

-- Net income was NT$6.05 billion (US$187 million)

-- Revenue from 90nm technology increased to 16% of total revenue

-- EPS was NT$0.34; EPADS was US$0.053

United Microelectronics Corporation (NYSE: UMC; TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the second quarter of 2006.

"The results for Q2 were basically in line with our earlier forecast," said UMC Chairman and CEO, Dr. Jackson Hu. "Revenue reached NT$25.75 billion, which represented a 5.6% growth over Q1. ASP increased by 1%, while wafer shipments increased by 4%. We are also happy to report that gross profit margin grew by 7%, with operating profit improving by 6%. Our gross profit and margins came in higher than we expected. This was primarily due to a higher number of shipments of leading edge 90nm and 0.13um chips."

Dr. Hu continued, "In terms of our market view, there has been a significant change in market conditions over the past 3 months. We have seen clear signs of higher inventory levels from some of our customers; however, inventory levels vary significantly by application. For ICs related to flat panel displays and digital TVs, overproduction in anticipation of high demand related to the World Cup has resulted in inventory buildup, which will take some time to digest. For PC-related applications, the second quarter is traditionally slow, and although there is typically a pick-up in demand in the third quarter, there are signs that demand is being postponed due to delays in the release of new CPUs and operating systems. For handset related products, inventory levels are normal for the major brand-name providers, although there is inventory buildup at second-tier and non-brand companies. "

"For the third quarter, we are expecting more than 20% of our revenue to come from 90nm sales. The utilization at our two 300mm fabs is also expected to improve significantly. Thus, we anticipate a steady growth in revenues and profitability for Q3. The 65nm technology node is progressing smoothly and is in the rollout stage. We believe UMC's success at 65/90nm will accelerate our growth and improve profitability in the coming years. "
Summary of Operating Results

Operating Results
======================================================================
                                                QoQ %           YoY %
(Amount: NT$ million)           2Q06    1Q06   change   2Q05   change
----------------------------------------------------------------------
Revenue                        25,751  24,384     5.6  19,443    32.4
----------------------------------------------------------------------
Gross Profit                    5,171   3,255    58.9     212  2339.2
----------------------------------------------------------------------
Operating Expenses             (3,541) (3,170)   11.7  (3,551)   (0.3)
----------------------------------------------------------------------
Operating Income (Loss)         1,630      85  1817.6  (3,339)      -
----------------------------------------------------------------------
Non-op. Income (Expenses)       5,076  14,090   (64.0)  3,638    39.5
----------------------------------------------------------------------
Net Income                      6,052  12,286   (50.7)    299  1924.1
----------------------------------------------------------------------
EPS   (NT$ per share)            0.34    0.67            0.02
----------------------------------------------------------------------
      (US$ per ADS)             0.053   0.104           0.003
----------------------------------------------------------------------


Revenue for 2Q06 was NT$25.75 billion, representing a 5.6% QoQ increase from NT$24.38 billion in 1Q06, and a 32.4% YoY increase from NT$19.44 billion in 2Q05. The gross profit for the quarter was NT$5.17 billion, or 20.1% of revenue, compared to NT$3.26 billion, or 13.3% of 1Q06 revenue. The operating profit was NT$1.63 billion, or 6.3% of revenue, compared to NT$85 million, or 0.3% of 1Q06 revenue. The primary reason the gross margin for the second quarter came in higher than our original guidance was because of improved utilization at the two 300mm fabs, Fab 12A and Fab 12i. Net income was NT$6.05 billion in 2Q06, compared with net income of NT$12.29 billion in 1Q06.

Earnings per ordinary share (EPS) for the quarter were NT$0.34. Earnings per ADS (EPADS) were US$0.053. This compares with 1Q06 earnings per ordinary share of NT$0.67 and earnings per ADS of US$0.104. One ADS represents five Taiwan listed ordinary shares. The basic weighted average outstanding shares in 2Q06 were 17,247,092,300 shares, compared with 18,454,530,476 shares in 1Q06 and 18,452,431,830 shares in 2Q05. The diluted weighted average outstanding shares were 17,872,839,605 shares in 2Q06, compared with 19,053,224,988 shares in 1Q06 and 18,555,975,483 shares in 2Q05. The decrease in the number of basic and diluted weighted average outstanding shares was mainly due to the execution of the Company's 10th share buy-back program in early April and the 11th share buy-back program in late May and June.

Detailed Financials Section

Depreciation and amortization expenses were NT$11.55 billion in 2Q06, compared to NT$12.09 billion in 1Q06. Depreciation within COGS decreased by 5.7% to NT$9.97 billion, due to lower depreciation of 8" fabs. Total operating expenses increased by 11.7% to NT$3.54 billion. General & Administrative expenses increased to NT$676 million, mainly because of an increase in audit fees due to Sarbanes-Oxley Act, Section 404 compliance. Sales & Marketing expenses increased to NT$761 million, largely because of the increased IP expenditures. The total R&D expense was 8.2% of revenue in 2Q06.
COGS & Expenses
======================================================================
                                               QoQ %            YoY %
(Amount: NT$ million)         2Q06     1Q06   change    2Q05   change
----------------------------------------------------------------------
Revenue                      25,751   24,384     5.6   19,443    32.4
COGS                        (20,580) (21,129)   (2.6) (19,231)    7.0
  Depreciation               (9,965) (10,566)   (5.7) (10,674)   (6.6)
  Other Mfg. Costs          (10,615) (10,563)    0.5   (8,557)   24.1
Gross Profit                  5,171    3,255    58.9      212  2339.2
Gross Margin (%)               20.1%    13.3%             1.1%
Total Operating Exp.         (3,541)  (3,170)   11.7   (3,551)   (0.3)
  G&A                          (676)    (532)   27.1     (851)  (20.6)
  Sales & Marketing            (761)    (612)   24.3     (530)   43.6
  R&D                        (2,104)  (2,026)    3.8   (2,170)   (3.0)
Operating Income(Loss)        1,630       85  1817.6   (3,339)      -
Operating Margin (%)            6.3%     0.3%           -17.2%
----------------------------------------------------------------------


Net non-operating income for 2Q06 was NT$5.08 billion. Gains on the disposal of investments were NT$4.47 billion, including a NT$4.37 billion gain from the sale of MediaTek shares. Net investment income was NT$433 million, which included NT$375 million in income from FVC, NT$189 million in income from Unimicron and a NT$109 million loss from UMCJ in 2Q06. Net non-operating income in 1Q06 was so much higher because it included a one-off investment disposal gain of NT$13.15 billion on the sale of Hsun Chieh Investments Corp. shares.
Non-operating Income (Expenses)
======================================================================
(Amount: NT$ million)                             2Q06   1Q06    2Q05
----------------------------------------------------------------------
Net Non-operating Income (Exp.)                  5,076  14,090  3,638
  Net Interest Income (Expense)                    176     137    (10)
  Net Investment Income (Loss)                     433    (437)  (439)
  Gain on Disposal of Investment                 4,465  14,244  3,515
  Exchange Gain (Loss)                              49      42    213
  Others                                           (47)    104    359
----------------------------------------------------------------------


The net cash outflow was NT$6.32 billion in 2Q06. UMC's free cash flow for the 6-month period ending June 30, 2006 was NT$13.02 billion. The financing cash outflow included NT$9.06 billion in share repurchases and NT$5.25 billion on the repayment of corporate bonds. Over the next 12 months, the company expects to repay an additional NT$10.4 billion in corporate bonds.
Cash Flow Summary
======================================================================
                                      For the 3-Month  For the 3-Month
                                      Period Ended     Period Ended
(Amount: NT$ million)                 Jun. 30, 2006    Mar. 31, 2006
----------------------------------------------------------------------
Cash Flow from Operations                     11,886           12,330
  Net Income                                   6,052           12,286
  Depreciation & Amortization                 11,551           12,088
  Changes in working capital                    (986)             717
  Others                                      (4,731)         (12,761)
Cash Flow from Investing                      (3,920)           1,469
  Capital Expenditures                        (5,056)          (6,142)
  Others                                       1,136            7,611
Cash Flow from Financing                     (14,304)         (14,031)
Effect of Exchange Rate                           16                7
Net Cash Flow                                 (6,322)            (225)
----------------------------------------------------------------------


Cash and cash equivalents decreased by NT$6.32 billion to NT$90.05 billion. The increase in Notes and Accounts Receivable reflected higher revenue from operations in 2Q06. The increase in inventory came from higher work-in-process wafers. Days sales outstanding(1) decreased slightly to 43 days, and average inventory turnover increased to 45 days.
Current Assets
======================================================================
(Amount: NT$ billion)                            2Q06    1Q06    2Q05
----------------------------------------------------------------------
Cash & Cash Equivalents                          90.05   96.37  68.07
Notes & Accounts Receivable                      12.56   11.80   9.65
  Days Sales Outstanding                            43      45     44
Inventory                                        10.38    9.61   7.90
  Avg. Inventory Turnover                           45      43     36
Total Current Assets                            119.57  126.29  93.58
----------------------------------------------------------------------


Total liabilities increased by NT$2 billion to NT$70.87 billion in 2Q06. UMC's Debt to Equity ratio was 26% at the end of 2Q06.
Liabilities
======================================================================
(Amount: NT$ billion)                              2Q06   1Q06   2Q05
----------------------------------------------------------------------
Total Current Liabilities                         36.97  29.56  22.07
  Accounts Payable                                 4.73   4.19   3.80
  Short-term Credit / Bonds                       10.31  10.25   6.90
  Others                                          21.93  15.12  11.37
Long-term Liabilities                             30.28  35.68  28.35
Total Liabilities                                 70.87  68.87  53.92
Debt to Equity                                       26%    24%    21%
----------------------------------------------------------------------


Analysis of Revenue(3)

The percentage of revenue from North American customers increased to 51% of total revenue in 2Q06, mainly due to a high number of orders from customers in the Communication sector. The percentage of revenue from Asia Pacific customers dropped to 35% from 43% due to inventory rationalization by some Consumer and Computer customers.
                     Revenue Breakdown by Region
----------------------------------------------------------------------
Region                                        2Q06 1Q06 4Q05 3Q05 2Q05
======================================================================
North America                                  51%  46%  49%  48%  44%
----------------------------------------------------------------------
Asia Pacific                                   35%  43%  42%  43%  45%
----------------------------------------------------------------------
Europe                                         11%   9%   7%   7%   9%
----------------------------------------------------------------------
Japan                                           3%   2%   2%   2%   2%
----------------------------------------------------------------------


The percentage of revenue from 90nm business increased to 16% in 2Q06, mainly due to strong demand for communication components and UMC's newly ramped PC graphics production. The percentage of revenue from 0.18um and below was 67% in 2Q06, which was in line with our original guidance.
                    Revenue Breakdown by Geometry
----------------------------------------------------------------------
Geometry                                      2Q06 1Q06 4Q05 3Q05 2Q05
======================================================================
90nm                                           16%  13%  15%  14%   9%
----------------------------------------------------------------------
0.13um                                         22%  20%  23%  18%  14%
----------------------------------------------------------------------
0.15um                                          9%  12%  10%  10%  10%
----------------------------------------------------------------------
0.15um (less than)x(less than)=0.18um          20%  21%  19%  19%  20%
----------------------------------------------------------------------
0.18um (less than)x(less than)=0.25um           6%   5%   6%   8%  11%
----------------------------------------------------------------------
0.25um (less than)x(less than)=0.35um          18%  21%  19%  22%  25%
----------------------------------------------------------------------
0.5um and above                                 9%   8%   8%   9%  11%
----------------------------------------------------------------------


The percentage of revenue from fabless customers decreased to 63% in 2Q06 from 73% in 1Q06 because a few Asian fabless customers adjusted their inventory levels.
                  Revenue Breakdown by Customer Type
----------------------------------------------------------------------
Customer Type                                 2Q06 1Q06 4Q05 3Q05 2Q05
======================================================================
Fabless                                        63%  73%  67%  71%  76%
----------------------------------------------------------------------
IDM                                            37%  27%  33%  29%  24%
----------------------------------------------------------------------
System                                          0%   0%   0%   0%   0%
----------------------------------------------------------------------


The percentage of revenue from the communication sector rose to 56% of total revenue in 2Q06 due to an increase of orders from the wireless communication sector. The percentage of revenue from the computer segment decreased to 14% due to inventory adjustment by PC chipset and LCD driver IC customers.
                 Revenue Breakdown by Application (1)
----------------------------------------------------------------------
Application                                   2Q06 1Q06 4Q05 3Q05 2Q05
======================================================================
Computer                                       14%  19%  20%  19%  20%
----------------------------------------------------------------------
Communication                                  56%  51%  54%  47%  44%
----------------------------------------------------------------------
Consumer                                       28%  28%  24%  32%  32%
----------------------------------------------------------------------
Memory                                          1%   1%   1%   1%   2%
----------------------------------------------------------------------
Others                                          1%   1%   1%   1%   2%
----------------------------------------------------------------------

(1) Computer consists of ICs such as HDD controllers, DVD-ROM/CD-ROM
drives ICs, LCD drivers, graphic processors, and PDAs. Communication
consists of xDSL, DSP, WLAN, LAN controllers, handset components,
caller ID devices, etc. Consumer consists of ICs used for DVD players,
game consoles, digital cameras, smart cards, toys, etc. Memory
consists of DRAM, SRAM, Flash, EPROM, ROM, and EEPROM.


Blended Average Selling Price Trend

The blended average selling price (ASP) in 2Q06 increased by 1%, mainly due to an increase of wafer shipments of leading-edge process technologies.

(To view ASP trend, visit http://www.umc.com/english/investors/2Q06_ASP_trend.asp)

Shipment and Utilization Rate(4)

Wafer shipments increased 4.2% QoQ to 786 thousand 8-inch equivalent wafers in 2Q06. Overall, the utilization rate for the quarter improved to 80%, and was in line with our previous guidance.
                           Wafer Shipments
----------------------------------------------------------------------
                                 2Q06    1Q06    4Q05    3Q05    2Q05
======================================================================
Wafer Shipments
('000 8-inch eq.)                 786     754     810     741     630
----------------------------------------------------------------------

                 Quarterly Capacity Utilization Rate
----------------------------------------------------------------------
                                 2Q06    1Q06    4Q05    3Q05    2Q05
======================================================================
Utilization Rate                   80%  79%(1)     86%     78%     65%
----------------------------------------------------------------------
Total Capacity
('000 8-inch eq.)               1,002     985     973     970     962
----------------------------------------------------------------------

(1) 1Q06 utilization rate was calculated based on 1Q06 available
capacity, which is about 95% of total capacity after factoring in a 5%
productivity loss due to annual scheduled maintenance.



Capacity(5)

Total capacity for 2Q06 was 1,002 thousand 8-inch equivalent wafers. This was an increase of 17 thousand 8-inch equivalent wafers from 1Q06 and reflects capacity expansion at Fab 12A and Fab 12i. Estimated capacity in 3Q06 will be about 1,015 thousand 8-inch equivalent wafers. The increase in estimated capacity during 3Q06 is expected to come from additional 12-inch capacity expansion at Fab 12A and Fab 12i.
 Annual Capacity in
 thousands of 8-inch wafer equivalents
 ---------------------------------------------------------------
        FAB          Geometry
                       (um)        2005    2004    2003    2002
 ===============================================================
 Fab 6A        6"    3.5 - 0.45     344     346     352     349
 ---------------------------------------------------------------
 Fab 8AB       8"    0.5 - 0.25     816     796     801     853
 ---------------------------------------------------------------
 Fab 8C        8"   0.35 - 0.15     401     386     325     355
 ---------------------------------------------------------------
 Fab 8D        8"   0.18 - 0.09     274     256     238     214
 ---------------------------------------------------------------
 Fab 8E        8"    0.5 - 0.18     404     401     354     376
 ---------------------------------------------------------------
 Fab 8F        8"   0.25 - 0.15     378     349     342     312
 ---------------------------------------------------------------
 Fab 8S (1)    8"   0.25 - 0.15     278     131       0       0
 ---------------------------------------------------------------
 Fab 12A      12"  0.18 - 0.065     597     392     234     119
 ---------------------------------------------------------------
 Fab 12i (2)  12"  0.13 - 0.065     363     101       0       0
 ===============================================================
   Total (3)                      3,855   3,158   2,646   2,578
 ===============================================================
   YoY Growth Rate                   22%     19%      3%    -11%
 ---------------------------------------------------------------


  Quarterly Capacity in
  thousands of 8-inch wafer equivalents
  --------------------------------------------------------------------
                 FAB                   3Q06E    2Q06    1Q06     4Q05
  ====================================================================
  Fab 6A                                  82      82       82      86
  --------------------------------------------------------------------
  Fab 8AB                                204     204      204     204
  --------------------------------------------------------------------
  Fab 8C                                 100     100      100     100
  --------------------------------------------------------------------
  Fab 8D                                  63      63       63      66
  --------------------------------------------------------------------
  Fab 8E                                 101     101      101     101
  --------------------------------------------------------------------
  Fab 8F                                  93      93       93      93
  --------------------------------------------------------------------
  Fab 8S                                  69      69       69      69
  --------------------------------------------------------------------
  Fab 12A                                199     191      178     160
  --------------------------------------------------------------------
  Fab 12i                                104      99       95      94
  ====================================================================
  Total (3)                            1,015   1,002      985     973
  --------------------------------------------------------------------

    (1) Former fab of SiSMC, which was acquired from Silicon
    Integrated Systems in July 2004.

    (2) Former fab of UMCi, a UMC wholly owned subsidiary in December
    2004 that was merged into UMC in April 2005

    (3) One 6-inch wafer is converted into 0.5625(6(2)/8(2)) 8-inch
    equivalent wafer; one 12-inch wafer is converted into
    2.25(12(2)/8(2)) 8-inch equivalent wafers.


CAPEX

CAPEX plans for 2006 remain unchanged at US$1 billion. Approximately 97% of the spending is expected to be for expansion and R&D at our 300mm facilities. Total capital expenditure during the first half of 2006 was US$346 million.
 UMC Capital Expenditure by Year
----------------------------------------------------------------
 (US$ billion)     2005    2004    2003    2002    2001    2000
================================================================
     CAPEX       $0.7(1)  $1.53   $0.37    $0.8    $1.1    $2.8
----------------------------------------------------------------

 2006 CAPEX Plan
----------------------------------------------------------------
                 8" fab  12" fab  12" R&D          Total
================================================================
 UMC                 3%      84%      13%   US$1 billion
----------------------------------------------------------------

(1) 2005 CAPEX contained UMC 2005 full year CAPEX and UMCi CAPEX
during 1Q05.



Recent Developments / Announcements
Jul. 17, 2006   UMC Delivers One Millionth 90nm RV516 chip to ATI

Jul. 06, 2006   Extreme DA and UMC Collaborate to Provide sub
                90-Nanometer Variation Aware IC Design Flows for
                Advanced Systems-on-Chips

Jul. 05, 2006   UMC Collaborates with NTU to Deliver RF Chip for WiMax

Jun. 22, 2006   UMC's 65nm Process Sees Widespread Acceptance

Jun. 15, 2006   UMC Demonstrates Research Accomplishments at Symposium
                on VLSI Technology

Jun. 13, 2006   UMC Becomes First Semiconductor Manufacturer to
                Achieve QC 080000 IECQ HSPM Qualification for All Fabs

Jun. 12, 2006   UMC Shareholders Approve NT$0.5 Dividend for Fiscal
                Year 2005 at Annual Shareholders Meeting

Jun. 05, 2006   UMC Announces Capital Reduction from the Retirement of
                1 Billion Treasury Shares

May 25, 2006    UMC Announces Readiness for 65-nanometer X
                Architecture Designs

May 22, 2006    UMC Announces its 11th Share Buy-Back Program
                On May 22, 2006, UMC announced its 11th share buy-back
                program to repurchase 400 million shares, or 2.12% of
                the total issued shares, from the open market and
                provide the Company's employees an option to purchase
                the treasury shares within 3 years. On July 17, 2006,
                UMC completed the 400 million share buy-back program
                with an average buy-back price of NT$19.12 per share.

Apr. 26, 2006   UMC 1Q 2006 Financial Results




 Please visit UMC's website 
http://www.umc.com/english/news/index.asp
        for further details regarding the above announcements.


Third Quarter of 2006 Outlook & Guidance

Quarter-over-quarter Guidance:

-- Wafer shipments: to increase by 0-2 points

-- Wafer ASP in US$: to increase by 6-8 points

-- Capacity utilization rate: approximately 80%

-- Profitability: operating profit margins will be approximately 10%

-- Percentage of revenues from 90nm: expected to be over 20%

-- The breakdown among communication, PC and consumer segments will be similar to Q2

-- 2006 CAPEX budget: US$1 billion

Conference Call / Webcast Announcement
Wednesday, August 2, 2006

Time: 8:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)

Dial-in numbers and Access Codes:
Asia/Europe: +1-617-597-5310
North America: 866-713-8562
Access Code: UMCCALL

  A live webcast and replay of the 2Q06 results announcement will be
                  available at 
www.umc.com under the
            "Investor Relations \ Investor Events" section.


About UMC

UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SoC) designs, including volume production 90nm, industry-leading 65nm, and mixed signal/RFCMOS. UMC's 10 wafer manufacturing facilities include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. The company employs approximately 12,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.
(1) Unless otherwise stated, all financial figures discussed in this
announcement are prepared in accordance with ROC GAAP, which differ in
some material respects from generally accepted accounting principles
in the United States. They are unaudited, unconsolidated, and
represent comparisons among the three-month period ending June 30,
2006, the three-month period ending March 31, 2006, and the equivalent
three-month period that ended June 30, 2005. For all 2Q06 results, New
Taiwan Dollar (NT$) amounts have been converted into U.S. dollars at
the exchange rate of NT$32.36 to one U.S. dollar.

(2) Days Sales Outstanding = 365/( (Operating revenues for the
three-month period end *4)/ (Beginning NR&AR balance, net + Ending
NR&AR balance, net)/2) )

Average Inventory Turnover = 365/( (COGS for the three-month period
end *4)/( (Beginning Inventory balance, net + Ending Inventory
balance, net)/2) )

(3) Revenue in this section represents net wafer sales.

(4) Quarterly utilization rate = Quarterly wafer out / Estimated
quarterly capacity

(5) 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.


Safe Harbor Statements

Except for statements in respect of historical matters, the statements in this release contain "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. 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, among other things: our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; the risks associated with international global business activities; our dependence upon key personnel; general economic and political conditions, including those related to the semiconductor, communications, consumer electronics and computer industries; possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases, such as SARS; reduced end-user purchases relative to expectations and orders; fluctuations in foreign currency exchange rates; and those risks identified in the section entitled "Risk Factors" in UMC's amended Annual Report on Form 20-F for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission on June 26, 2006.

The financial statements included in this release are unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and U.S. GAAP, as described in note 33 to the financial statements on Form 20-F for the year ended December 31, 2005 filed with the U.S. Securities and Exchange Commission on June 26, 2006.

The forward-looking statements in this release reflect the current belief of UMC as of the date of this release and UMC undertakes no obligation to update these forward-looking statements for events or circumstances that occur after such date or to reflect the occurrence of unanticipated events.
                  UNITED MICROELECTRONICS CORPORATION
           Unaudited Condensed Unconsolidated Balance Sheet
                          As of June 30, 2006
            Figures in Million of New Taiwan Dollars (NT$)
                        and U.S. Dollars (US$)

                                                    June 30, 2006
                                               -----------------------
                                                 US$     NT$      %
                                               ------- -------- ------
 ASSETS
 Current Assets
  Cash and Cash Equivalents                     2,783   90,050   26.4%
  Financial assets held for trading, current       46    1,506    0.4%
  Notes & Accounts Receivable                     388   12,556    3.7%
  Inventories                                     321   10,383    3.0%
  Other Current Assets                            157    5,071    1.5%
                                               ------- -------- ------
     Total Current Assets                       3,695  119,566   35.0%
                                               ------- -------- ------

 Non-Current Assets
  Funds and Long-term Investments               2,274   73,592   21.5%
  Property, Plant and Equipment                 4,222  136,628   40.0%
  Intangible Assets                               125    4,045    1.2%
  Other Assets                                    247    8,000    2.3%
                                               ------- -------- ------
     Total Non-Current Assets                   6,868  222,265   65.0%
                                               ------- -------- ------
 TOTAL ASSETS                                  10,563  341,831  100.0%
                                               ======= ======== ======

 LIABILITIES
 Current Liabilities
  Financial liabilities held for
   trading,current                                 37    1,188    0.3%
  Payables                                        507   16,415    4.8%
  Dividends payable                               221    7,161    2.1%
  Current Portion of Long-term Interest-Bearing
   Liabilities                                    319   10,313    3.0%
  Other Current Liabilities                        58    1,888    0.6%
                                               ------- -------- ------
     Total Current Liabilities                  1,142   36,965   10.8%
                                               ------- -------- ------

 Non-Current Liabilities
  Bonds Payable                                   936   30,279    8.8%
  Other Liabilities                               112    3,627    1.1%
                                               ------- -------- ------
     Total Non-Current Liabilities              1,048   33,906    9.9%
                                               ------- -------- ------
 TOTAL LIABILITIES                              2,190   70,871   20.7%
                                               ------- -------- ------

 STOCKHOLDERS' EQUITY
 Capital Stock                                  5,893  190,701   55.8%
 Capital Reserve                                2,082   67,368   19.7%
 Retained Earnings, Unrealized Gain on
  Financial Assets and Translation Adjustment   1,214   39,279   11.5%
 Treasury Stock                                  (816) (26,388)  -7.7%
                                               ------- -------- ------
 TOTAL STOCKHOLDERS' EQUITY                     8,373  270,960   79.3%
                                               ------- -------- ------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    10,563  341,831  100.0%
                                               ======= ======== ======

 ---------------------------------------------------------------------
 Note: New Taiwan Dollars have been translated into U.S. Dollars at 
       the June 30, 2006 exchange rate of NT$32.36 per U.S. Dollar.
       All figures are in ROC GAAP.



                 UNITED MICROELECTRONICS CORPORATION
         Unaudited Condensed Unconsolidated Income Statement
Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
                  Except Per Share and Per ADS Data


                                      Year over Year Comparison
                               ---------------------------------------
                                  Three-Month Period Ended
                                June 30, 2006   June 30, 2005     %
                               --------------- --------------- -------
                                US$     NT$     US$     NT$     Chg.
                               ------ -------- ------ -------- -------
Net Sales                        796   25,751    601   19,443    32.4%
Cost of Goods Sold              (636) (20,580)  (594) (19,231)    7.0%
                               ------ -------- ------ -------- -------
Net Gross Profit                 160    5,171      7      212  2339.2%
                               ------ -------- ------ -------- -------
                                20.1%    20.1%   1.1%     1.1%
Operating Expenses
  - Sales & Marketing             24      761     17      530    43.6%
  - General & Administrative      21      676     26      851   -20.6%
  - Research & Development        65    2,104     67    2,170    -3.0%
                               ------ -------- ------ -------- -------
                                 110    3,541    110    3,551    -0.3%
                               ------ -------- ------ -------- -------
Operating Income (Loss)           50    1,630   (103)  (3,339) -148.8%
                                 6.3%     6.3% -17.2%   -17.2%

Net Non-Operating Income
 (Expenses)                      157    5,076    112    3,638    39.5%
                               ------ -------- ------ -------- -------
Income (Loss) from continuing
 operations before income tax    207    6,706      9      299  2142.8%
                                26.0%    26.0%   1.5%     1.5%

Income Tax (Expense) Benefit     (20)    (654)    (0)      (0)      -
                               ------ -------- ------ -------- -------
Income (Loss) from continuing
 operations                      187    6,052      9      299  1924.1%
Cumulative effect of changes
 in accounting principles          -        -      -        -       -
                               ------ -------- ------ -------- -------
Net Income (Loss)                187    6,052      9      299  1924.1%
                               ====== ======== ====== ======== -------
                                23.5%    23.5%   1.5%     1.5%

Earnings per Share             0.011     0.34  0.001     0.02
                               ------ -------- ------ --------
Earnings per ADS (2)           0.053     1.70  0.003     0.10
                               ------ -------- ------ --------
Weighted Average Number of
 Shares
Outstanding (in millions)              17,247          18,452
                                      --------        --------


                                   Quarter over Quarter Comparison
                               ---------------------------------------
                                  Three-Month Period Ended
                                June 30, 2006  March 31, 2006     %
                               --------------- --------------- -------
                                US$     NT$     US$     NT$     Chg.
                               ------ -------- ------ -------- -------
Net Sales                        796   25,751    754   24,384     5.6%
Cost of Goods Sold              (636) (20,580)  (653) (21,129)   -2.6%
                               ------ -------- ------ -------- -------
Net Gross Profit                 160    5,171    101    3,255    58.9%
                               ------ -------- ------ -------- -------
                                20.1%    20.1%  13.3%    13.3%
Operating Expenses
  - Sales & Marketing             24      761     19      612    24.3%
  - General & Administrative      21      676     16      532    27.1%
  - Research & Development        65    2,104     63    2,026     3.8%
                               ------ -------- ------ -------- -------
                                 110    3,541     98    3,170    11.7%
                               ------ -------- ------ -------- -------
Operating Income (Loss)           50    1,630      3       85  1817.6%
                                 6.3%     6.3%   0.3%     0.3%

Net Non-Operating Income
 (Expenses)                      157    5,076    435   14,090   -64.0%
                               ------ -------- ------ -------- -------
Income (Loss) from continuing
 operations before income tax    207    6,706    438   14,175   -52.7%
                                26.0%    26.0%  58.1%    58.1%

Income Tax (Expense) Benefit     (20)    (654)   (22)    (700)   -6.6%
                               ------ -------- ------ -------- -------
Income (Loss) from continuing
 operations                      187    6,052    416   13,475   -55.1%
Cumulative effect of changes
 in accounting principles          -        -    (36)  (1,189) -100.0%
                               ------ -------- ------ -------- -------
Net Income (Loss)                187    6,052    380   12,286   -50.7%
                               ====== ======== ====== ======== -------
                                23.5%    23.5%  50.4%    50.4%

Earnings per Share             0.011     0.34  0.021     0.67
                               ------ -------- ------ --------
Earnings per ADS (2)           0.053     1.70  0.104     3.35
                               ------ -------- ------ --------
Weighted Average Number of
 Shares
Outstanding (in millions)              17,247          18,455
                                      --------        --------

----------------------------------------------------------------------
Note:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the
    June 30, 2006 exchange rate of NT$32.36 per U.S. Dollar.
    All figures are in ROC GAAP.

(2) 1 ADS equals 5 common shares.



                 UNITED MICROELECTRONICS CORPORATION
         Unaudited Condensed Unconsolidated Income Statement
Figures in Million 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 year Ended
                            June 30, 2006           June 30, 2006
                        ---------------------- -----------------------
                         US$     NT$      %      US$      NT$     %
                        ------ -------- ------ ------- -------- ------
Net Sales                 796   25,751  100.0%  1,549   50,135  100.0%
Cost of Goods Sold       (636) (20,580) -79.9% (1,289) (41,709) -83.2%
                        ------ -------- ------ ------- -------- ------
Net Gross Profit          160    5,171   20.1%    260    8,426   16.8%
                        ------ -------- ------ ------- -------- ------

Operating Expenses
  - Sales & Marketing      24      761    3.0%     42    1,373    2.8%
  - General &
   Administrative          21      676    2.6%     37    1,208    2.4%
  - Research &
   Development             65    2,104    8.2%    128    4,130    8.2%
                        ------ -------- ------ ------- -------- ------
                          110    3,541   13.8%    207    6,711   13.4%
                        ------ -------- ------ ------- -------- ------
Operating Income (Loss)    50    1,630    6.3%     53    1,715    3.4%

Net Non-Operating Income
 (Expenses)               157    5,076   19.7%    592   19,166   38.2%
                        ------ -------- ------ ------- -------- ------
Income (Loss) from
 continuing operations
 before income tax        207    6,706   26.0%    645   20,881   41.6%

Income Tax (Expense)
 Benefit                  (20)    (654)  -2.5%    (42)  (1,354)  -2.7%
                        ------ -------- ------ ------- -------- ------
Income (Loss) from
 continuing operations    187    6,052   23.5%    603   19,527   38.9%
Cumulative effect of
 changes in accounting
 principles                 -        -      -     (36)  (1,189)  -2.3%
                        ------ -------- ------ ------- -------- ------
Net Income (Loss)         187    6,052   23.5%    567   18,338   36.6%
                        ====== ======== ====== ======= ======== ======

Earnings per Share      0.011     0.34          0.031     1.01
                        ------ --------        ------- --------
Earnings per ADS (2)    0.053     1.70          0.156     5.05
                        ------ --------        ------- --------
Weighted Average Number
 of Shares
Outstanding (in
 millions)                      17,247                  18,149
                               --------                --------

----------------------------------------------------------------------
Note:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the
    June 30, 2006 exchange rate of NT$32.36 per U.S. Dollar.
    All figures are in ROC GAAP.

(2) 1 ADS equals 5 common shares.



                 UNITED MICROELECTRONICS CORPORATION
      Unaudited Condensed Unconsolidated Statement of Cash Flows
                For The Six Months Ended June 30, 2006
 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

                                                       US$      NT$
                                                     -------- --------
Cash flows from operating activities :
    Net Income                                           567   18,338
    Depreciation & Amortization                          731   23,639
    Bed debts expenses                                     0        8
    Decline in market value and absolesence of
     inventories                                          12      401
    Long-term investment income accounted for under
     the equity method                                   (18)    (582)
    Loss on valuation of financial assets and
     liabilities                                          52    1,690
    Impairment loss                                        1       22
    Gain on disposal of investments                     (578) (18,709)
    Gain on disposal of property, plant and
     equipment                                            (2)     (70)
    Exchange gain on financial assets and
     liabilities                                          (0)     (14)
    Exchange gain on long-term liabilities                (7)    (226)
    Bond discount amortization                             1       48
    Amortization of deferred grant income                 (2)     (60)
    Change in working capital & others                    (9)    (269)
                                                     -------- --------
    Net cash provided from operating activities          748   24,216

Cash flows from investing activities :
    Acquisition of available- for-sales financial
     assets                                               (9)    (297)
    Proceed from sale of available- for-sales
     financial assets                                    158    5,115
    Proceed from sale of financial assets measured
     at cost                                               1       31
    Acquisition of long-term investments accounted
     for the equity method                              (107)  (3,465)
    Proceed from sale of long-term investments
     accounted for the equity method                     241    7,801
    Acquisition of property, plant and equipment        (346) (11,198)
    Proceeds from disposal of property, plant and
     equipment                                             3      101
    Decrease in other assets - others, net                 2       60
    Increase in deferred charges                         (19)    (599)
                                                     -------- --------
    Net cash used in investing activities                (76)  (2,451)

Cash flows from financing activities :
    Redemption of bonds                                 (162)  (5,250)
    Decrease in deposits-in                                0        1
    Treasury stock                                      (736) (23,831)
    Employee stock option                                 23      745
                                                     -------- --------
    Net cash used in financing activities               (875) (28,335)

Effect of exchange rate on cash and cash equivalents       1       23
                                                     -------- --------
Net decrease in cash and cash equivalents               (202)  (6,547)

Cash and cash equivalents at beginning of period       2,985   96,597
                                                     -------- --------

Cash and cash equivalents at end of period             2,783   90,050
                                                     ======== ========

---------------------------------------------------------------------
Note: New Taiwan Dollars have been translated into U.S. Dollars at the
      June 30, 2006 exchange rate of NT$ 32.36 per U.S. Dollar.

      All figures are in ROC GAAP.




Contact:
United Microelectronics Corporation
Investor Relations
Chitung Liu or Bowen Huang, +886-2-2700-6999 ext. 6957

Email Contact
bowen_huang@umc.com
or
Christensen IR
Tip Fleming, +1-917-412-3333

Email Contact
or
Jane Liu, +852-2117-0861

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