Contacts:
Bowen Huang / Jason Ho
UMC, Investor Relations
+ 886-2-2658-9168, ext. 16944 / 16970
bowen_huang@umc.com / jason_ho@umc.com
UMC Reports Third Quarter 2011 Results
28nm technology platform development accelerating;
company to maintain operating profitability despite declining utilization
Third Quarter 2011 Overview1:
Revenue: decreased 10.5% QoQ to NT$25.19 billion (US$ 826.35 million)
Gross margin: 19.8%; operating margin: 6.1%
Capacity utilization: 74%
Net income: NT$1.95 billion (US$ 64.11 million)
Earnings per share: NT$0.16; earnings per ADS: US$0.03
Taipei, Taiwan, ROC – October 26, 2011 – United Microelectronics Corporation (NYSE:
UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today
announced its unconsolidated operating results for the third quarter of 2011.
Revenue was NT$25.19 billion, a 10.5% quarter-over-quarter decrease from NT$28.15 billion in
2Q11, and a 22.9% year-over-year decrease from NT$32.65 billion in 3Q10. Gross margin was
19.8%, operating margin was 6.1%, net income was NT$1.95 billion, and earnings per ordinary
share were NT$0.16.
Dr. Shih-Wei Sun, CEO of UMC, said: “In Q3 2011, revenue was in line with UMC’s guidance.
We shipped 1.03 million 8-inch equivalent wafers, with ASP remaining flat. Overall utilization
rate was 74%, with 40% of revenue coming from 65nm & below technologies.”
Dr. Sun continued “We maintain our previous semiconductor market view as we enter the fourth
1
Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with
ROC GAAP, which differ in some material respects from generally accepted accounting principles in the United
States. They are un-audited, unconsolidated, and represent comparisons among the three-month period ending Sep
30, 2011, the three-month period ending Jun 30, 2011, and the equivalent three-month period that ended Sep 30,
2010. For all 3Q11 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. Dollars at the Sep 30,
2011 exchange rate of NT$30.48 per U.S. Dollar.
Page 1 of 11 UMC 3Q11
quarter of 2011, with unresolved European and U.S. sovereign debt, China inflation, and limited
inventory distribution and digestion visibility through the supply chain all contributing to industry
uncertainty. Accordingly, semiconductor market demand remains weak, as reflected by our
customers’ conservative order patterns. During this time, UMC will continue with its cautious
approach. We do anticipate UMC’s rate of revenue decline to ease in Q4, and will maintain
operating profitability as our efforts to strengthen the company’s operating efficiency and cost
structure bear fruit.”
“Despite the dynamic nature of the semiconductor industry, we believe that customer-driven
development of advanced processes and IP platforms will form the foundation of UMC’s next
growth phase. In addition to our volume-production 40nm technologies, we have also invested
heavily to develop our 28nm technologies and IP platforms, including the High-K/Metal-Gate
28HPM and the Poly/SiON 28HLP processes. UMC’s 28HPM process is developed with the
mainstream Gate-Last approach, and is suitable for high performance mobile devices and
high-speed networking products. The 28HLP platform delivers industry leading
performance-to-cost ratio through the adoption of traditional Poly/SiON gate-stack and
proprietary performance enhancement process features. These 28nm technologies are
supported with robust IP platforms developed through cross collaboration with ARM, Synopsys,
and our customers to create optimized 28nm integrated solutions. Customer 28HLP product
has entered pilot production, with 28HPM scheduled for pilot production in mid 2012. We are
optimistic about our 28HLP and 28HPM since they form the dual-engine that will propel UMC’s
advanced process growth, strengthen our future competitiveness, and enhance our portfolio of
comprehensive foundry solutions available to UMC customers.”
Page 2 of 11 UMC 3Q11
Summary of Operating Results
Operating Results
QoQ % YoY %
(Amount: NT$ million) 3Q11 2Q11 3Q10
change change
Revenue 25,187 28,150 (10.5) 32,652 (22.9)
Gross Profit 4,984 6,718 (25.8) 10,648 (53.2)
Operating Expenses (3,449) (3,398) 1.5 (3,461) (0.3)
Operating Income 1,535 3,320 (53.8) 7,187 (78.6)
Non-Operating Income 445 203 119.2 1,937 (77.0)
Net Income 1,954 3,192 (38.8) 8,720 (77.6)
EPS (NT$ per share) 0.16 0.26 0.70
(US$ per ADS) 0.026 0.043 0.115
Revenue decreased 10.5% QoQ to NT$25.19 billion from NT$28.15 billion in 2Q11, and
decreased 22.9% YoY from NT$32.65 billion in 3Q10. Gross profit was NT$4.98 billion, or 19.8%
of revenue, compared to NT$6.72 billion, or 23.9% of 2Q11 revenue. Operating income for the
quarter was NT$1.54 billion, or 6.1% of revenue, compared to NT$3.32 billion, or 11.8% of 2Q11
revenue. The QoQ decrease in revenue was mainly due to lower volume. Net income in 3Q11
was NT$1.95 billion, compared to NT$3.19 billion in 2Q11.
Earnings per ordinary share for the quarter were NT$0.16. Earnings per ADS2 were US$0.026.
The basic weighted average number of outstanding shares in 3Q11 was 12,606,278,572,
compared with 12,513,899,178 shares in 2Q11 and 12,449,924,578 shares in 3Q10. The
diluted weighted average number of outstanding shares was 13,359,501,028 in 3Q11, compared
with 13,013,072,483 shares in 2Q11 and 12,569,431,682 shares in 3Q10. The fully diluted
share count on September 30, 2011 was approximately 14,314,979,000. On September 30,
2011, UMC held 458 million treasury shares acquired from the 13th and 14th share buy-back
programs.
2
One ADS represents five Taiwan-listed ordinary shares.
Page 3 of 11 UMC 3Q11
Detailed Financials Section
Revenue decreased 10.5% QoQ to COGS & Expenses
NT$25.19 billion from NT$28.15 billion in QoQ % YoY %
(Amount: NT$ million) 3Q11 2Q11 3Q10
2Q11 due to reduced shipment volume. change change
Gross profit was NT$4.98 billion, or 19.8% Revenue 25,187 28,150 (10.5) 32,652 (22.9)
COGS (20,203) (21,432) (5.7) (22,004) (8.2)
of revenue, compared to NT$6.72 billion,
Depreciation (6,622) (6,495) 2.0 (6,561) 0.9
or 23.9% of 2Q11 revenue, reflecting the Other Mfg. Costs (13,581) (14,937) (9.1) (15,443) (12.1)
lower capacity utilization. Total operating Gross Profit 4,984 6,718 (25.8) 10,648 (53.2)
expenses increased 1.5% to NT$3.45 Gross Margin (%) 19.8% 23.9% 32.6%
billion, mainly due to the increase in R&D Total Operating Exp. (3,449) (3,398) 1.5 (3,461) (0.3)
expenses for advanced process nodes. G&A (630) (588) 7.1 (692) (9.0)
The total R&D expense was 9.1% of Sales & Marketing (535) (585) (8.5) (567) (5.6)
revenue in 3Q11. R&D (2,284) (2,225) 2.7 (2,202) 3.7
Operating Income 1,535 3,320 (53.8) 7,187 (78.6)
Net non-operating income during 3Q11 Non-Operating Income (Expenses)
increased QoQ to NT$445 million. Net
(Amount: NT$ million) 3Q11 2Q11 3Q10
investment loss was NT$473 million,
Net Non-Operating Income 445 203 1,937
including a NT$1.5 billion investment loss
Net Interest Income 1 17 30
accounted for under the equity method
Net Investment Loss
and NT$1.3 billion of cash dividends (473) (253) 1,778
Gain on Disposal of Investment
received. Exchange gain was NT$169 (22) 203 460
million mainly due to the depreciation of Exchange Gain 169 29 (111)
the NT dollar. The increase of the gain Other Gain 770 207 (220)
from other items was mainly due to the
valuation gain from embedded options of
exchangeable bonds.
Page 4 of 11 UMC 3Q11
Operating cash inflow was NT$10.99 billion. Cash Flow Summary
Free cash flow3 for 3Q11 was NT$454 million, For the 3-Month For the 3-Month
as CAPEX spending for the quarter was (Amount: NT$ million) Period Ended Period Ended
Sep. 30, 2011 Jun. 30, 2011
NT$10.53 billion. The NT$13.01 billion of
financing cash outflow was mainly from the Cash Flow from Operations 10,985 10,594
payment of cash dividends. Net cash Net Income 1,954 3,192
outflow was NT$11.92 billion in 3Q11. Depreciation & Amortization 7,675 7,598
Changes in Working Capital (669) (793)
Other 2,025 597
Cash Flow from Investing (10,559) (10,108)
Capital Expenditures (10,531) (10,255)
Other (28) 147
Cash Flow from Financing (13,006) 14,019
Bank Loans 1,763 (1,262)
ECB Issued - 14,365
Employee Stock Option 69 918
Cash Dividends (14,034) -
Reacquisition of ECB (804) -
Other - (2)
Effect of Exchange Rate 665 (153)
Net Cash Flow (11,915) 14,352
Cash and cash equivalents decreased to Current Assets
NT$33.47 billion due to cash dividend (Amount: NT$ billion) 3Q11 2Q11 3Q10
payments in 3Q11. Cash & Cash Equivalents 33.47 45.38 38.93
Notes & Accounts Receivable 13.99 15.54 18.55
Days Sales Outstanding 53 51 52
Inventories 11.35 11.39 10.67
Avg. Inventory Turnover 52 51 44
Total Current Assets 66.80 81.26 78.41
Current liabilities decreased to NT$28.16 Liabilities
billion, mainly due to the payment of (Amount: NT$ billion) 3Q11 2Q11 3Q10
NT$14.03 billion in cash dividends to Total Current Liabilities 28.16 48.72 41.90
stockholders. Total liabilities decreased to Accounts Payable 4.94 5.14 6.16
NT$46.96 billion in 3Q11. The Debt to equity Short-Term Credit / Bonds 7.35 6.90 8.21
ratio returned to UMC’s normal condition. Cash Dividends Payable - 14.03 -
Payable on Equipment 4.72 9.03 14.26
Other 11.15 13.62 13.27
Long-Term Liabilities 15.28 14.38 0.81
Total Liabilities 46.96 66.63 46.2
Debt to Equity 22% 32% 21%
3
Free cash flow = Operating cash flow – Capital expenditures
Page 5 of 11 UMC 3Q11
Analysis of Revenue4
Revenue from Asia Pacific contributed 40% Revenue Breakdown by Region
of UMC’s Q3 revenue, reflecting the relative Region 3Q11 2Q11 1Q11 4Q10 3Q10
strength of Asia Pacific based
North America 48% 49% 51% 53% 46%
communication customers.
Asia Pacific 40% 39% 35% 30% 40%
Europe 11% 11% 13% 16% 13%
Japan 1% 1% 1% 1% 1%
Revenue from 65nm and below accounted Revenue Breakdown by Geometry
for 40% of total revenue, with 40nm
Geometry 3Q11 2Q11 1Q11 4Q10 3Q10
remaining at 6% of UMC’s Q3 revenue.
40nm and below 6% 6% 6% 5% 4%
40nm99%
Total Capacity
1,358 1,330 1,259 1,234 1,220
(8” K equivalents)
5
Utilization Rate = Quarterly Wafer Out / Quarterly Capacity
Page 7 of 11 UMC 3Q11
Capacity6
Capacity during the third quarter was 1,358K 8-inch equivalent wafers. The increase in total
capacity is mainly due to advanced capacity expansion at 12” fabs. The estimated installed
capacity in 4Q11 will increase to 1,376K 8-inch equivalent wafers.
Annual Capacity in Quarterly Capacity in
thousands of 8-inch wafer equivalents thousands of 8-inch wafer equivalents
Geometry
FAB 2011E 2010 2009 2008 FAB 4Q11E 3Q11 2Q11 1Q11
(um)
Fab6A 6" 3.5 – 0.45 303 331 328 328 Fab6A 76 76 76 75
Fab8A 8" 0.5 – 0.25 813 816 816 816 Fab8A 204 204 204 201
Fab8C 8" 0.35 – 0.11 359 366 405 417 Fab8C 90 90 90 89
Fab8D 8" 0.13 – 0.09 364 314 267 257 Fab8D 93 93 93 85
Fab8E 8" 0.5 – 0.18 469 410 408 408 Fab8E 118 119 119 114
Fab8F 8" 0.18 – 0.11 388 388 381 372 Fab8F 98 98 98 96
Fab8S 8" 0.18 – 0.11 307 304 300 291 Fab8S 79 77 77 75
Fab12A 12" 0.18 – 0.040 1,128 841 866 876 Fab12A 316 300 278 234
Fab12i 12" 0.13 – 0.065 1,192 1,021 815 742 Fab12i 302 302 296 291
(1)
Total 5,322 4,791 4,586 4,507 Total 1,376 1,358 1,330 1,259
YoY Growth Rate 11% 4% 2% 5%
(1) 2 2
One 6-inch wafer is converted into 0.5625(6 /8 ) 8-inch equivalent wafer; one 12-inch wafer is converted into
2 2
2.25(12 /8 ) 8-inch equivalent wafers.
CAPEX
The capital expenditure budget remains UMC Capital Expenditure by Year - in US$ billion
unchanged. By the end of the third quarter, Year 2010 2009 2008 2007 2006
UMC’s year-to-date CAPEX totaled US$1.1 CAPEX $ 1.8 $ 0.55 $ 0.35 $ 0.9 $ 1.0
billion.
2011 CAPEX Plan
8" 12" Total
Approximately
UMC 15% 85%
US$1.8 billion
6
Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual
capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced
process technologies, and other factors affecting production ramp-up.
Page 8 of 11 UMC 3Q11
Recent Developments / Announcements
Oct. 12, 2011 UMC and Synopsys Collaborate to Develop DesignWare IP for 28-nanometer
Technology
Oct. 6, 2011 ARM and UMC Extend Long-Term IP Partnership into 28nm
Sep. 13, 2011 UMC Delivers Foundry Industry's Most Compact MTP IP Solution
Sep. 8, 2011 UMC Selected as a DJSI Global Component for Fourth Consecutive Year
Aug. 30, 2011 UMC Delivers High Endurance, Variable Voltage Range Embedded EEPROM
Solution
Please visit UMC’s website
for further details regarding the above announcements
Page 9 of 11 UMC 3Q11
Fourth Quarter of 2011 Outlook & Guidance
Quarter-over-Quarter Guidance:
Wafer shipment: Approximately 10% decrease
Wafer ASP in NT$: Approximately 5% increase
Operating Margin: Low single-digit percentage range
Capacity utilization: Mid to high 60% range
Segments: Communication segment will outpace consumer and computer segments
Conference Call / Webcast Announcement
Wednesday, October 26, 2011
Time: 8:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)
Dial-in numbers and Access Codes:
USA Toll Free: 1866 519 4004
UK Toll Free: 0808 234 6646
Singapore and Other Areas: +65 6723 9381
Access Code: UMC
A live webcast and replay of the 3Q11 results announcement will be available at
www.umc.com under the “Investor Relations \ Investor Events” section.
About UMC
UMC (NYSE: UMC, TWSE: 2303) is a leading global semiconductor foundry that provides
advanced technology and manufacturing services for applications spanning every major sector of
the IC industry. UMC’s customer-driven foundry solutions allow chip designers to leverage the
strength of the company’s leading-edge processes, which include production proven 65nm,
45/40nm, mixed signal/RFCMOS, and a wide range of specialty technologies. Production is
supported through 10 wafer manufacturing facilities that include two advanced 300mm fabs;
Fab12A in Taiwan and Singapore-based Fab12i are both in volume production for a variety of
customer products. The company employs approximately 13,000 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.
Page 10 of 11 UMC 3Q11
Safe Harbor Statements
This release contains forward-looking statements. These statements constitute
“forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined
in the U.S. Private Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by use of words such as “strategy,” “expects,” “continues,” “plans,”
“anticipates,” “believes,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words
of similar meaning. You can also identify them by the fact that they do not relate strictly to
historical or current facts.
These forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause the actual performance, financial condition or results of operations of
UMC to be materially different from what is stated or may be implied in such forward-looking
statements. Investors are cautioned that actual events and results could differ materially from
those statements as a result of a number of factors including, but not limited to: (i) our
dependence upon the frequent introduction of new services and technologies based on the latest
developments in our industry; (ii) the intensely competitive semiconductor, communications,
consumer electronics and computer industries and markets; (iii) the risks associated with
international global business activities; (iv) our dependence upon key personnel; (v) general
economic and political conditions; (vi) possible disruptions in commercial activities caused by
natural and human-induced events and disasters, including terrorist activity, armed conflict and
highly contagious diseases; (vii) reduced end-user purchases relative to expectations and orders;
and (viii) fluctuations in foreign currency exchange rates. Further information regarding these
and other risks is included in UMC’s filings with the U.S. Securities and Exchange Commission,
including its registration statements on Form F-1, F-3, F-6 and 20-F, in each case as amended.
UMC does not undertake any obligation to update any forward-looking statement as a result of
new information, future events or otherwise, except as required under applicable law.
The financial statements included in this release are unaudited and unconsolidated, and
prepared and published in accordance with ROC GAAP. Investors are cautioned that there are
many differences between ROC GAAP and US GAAP.
This presentation is not an offer of securities for sale in the United States. Securities may not be
offered or sold in the United States absent registration or an exemption from registration. Any
public offering of securities to be made in the United States will be made by means of a
prospectus that may be obtained from the issuer or selling security holder and that will contain
detailed information about the company and management, as well as financial statements.
- FINANCIAL TABLES TO FOLLOW -
Page 11 of 11 UMC 3Q11