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UMC Reports Q1

TAIPEI, Taiwan — United Microelectronics Corporation (NYSE: UMC; TWSE: 2303) (“UMC” or “The Company”), a leading global semiconductor foundry, today announced its unconsolidated operating results for the first quarter of 2011.

Revenue was NT$28.12 billion, a 10.2% quarter-over-quarter decrease from NT$31.32 billion in 4Q10, and a 5.3% year-over-year increase from NT$26.72 billion in 1Q10. Gross margin was 27.5%, operating margin was 15.8%, net income was NT$4.48 billion, and earnings per ordinary share were NT$0.36.

Dr. Shih-Wei Sun, CEO of UMC, said: “In Q1 2011, shipments reached 1.12 million 8-inch equivalent wafers. Capacity utilization was 90%, with revenue in line with projections. For Q2, we have tempered our expectations for revenue and profit, since more time is needed to accurately assess worldwide semiconductor demand due to Japan's March 11th earthquake and its impact on the global supply chain. With regard to UMC's own operations, the company's supply of raw materials and equipment components remained secure, while production at our UMCJ factory in Tateyama, Japan, recovered in minimal time. Following the quake, we promptly allocated resources to support customers' demands, while also assisting suppliers and partners that sustained earthquake damage with needed materials and supplies to help accelerate supply chain recovery.”

Dr. Sun emphasized: “The next several quarters involve several uncertainties, such as the schedule for supply chain recovery, inflation in emerging markets, European sovereign debt, and exit of the US quantitative easing program. These factors may potentially impact the global economy as well as UMC's performance in the second half of the year. Nevertheless, UMC remains optimistic about mid to long-term foundry growth and will proceed rationally with financial discipline. To ensure our core competitiveness, the company is moving forward as planned with R&D and capacity expansion for advanced technologies. Revenue contribution from UMC's volume production 40nm technology is expected to continue growing in the second half of 2011. 28nm R&D collaboration with customers is also progressing smoothly and is scheduled for pilot production by mid-year. To maintain favorable ROE, the Board of Directors has proposed for shareholder approval a cash dividend payout of NT$1.12 per share. Going forward, we will further improve technology and service quality to enhance the company's performance for the maximum benefit of customers, shareholders, and UMC.”

Revenue decreased 10.2% QoQ to NT$28.12 billion from NT$31.32 billion in 4Q10, and increased 5.3% YoY from NT$26.72 billion in 1Q10. Gross profit was NT$7.74 billion, or 27.5% of revenue, compared to NT$10.05 billion, or 32.1% of 4Q10 revenue. Operating income for the quarter was NT$4.44 billion, or 15.8% of revenue, compared to NT$6.60 billion, or 21.1% of 4Q10 revenue. The QoQ decrease in revenue was mainly due to lower blended ASP, appreciation of the NT dollar, and fewer wafer shipments. Net income in 1Q11 was NT$4.48 billion, compared to NT$6.42 billion in 4Q10.

Earnings per ordinary share for the quarter were NT$0.36. Earnings per ADS (2) were US$0.061. The basic weighted average number of outstanding shares in 1Q11 was 12,513,899,178, compared with 12,450,619,954 shares in 4Q10 and 12,638,040,544 shares in 1Q10. The diluted weighted average number of outstanding shares was 12,810,053,573 in 1Q11, compared with 12,576,463,301 shares in 4Q10 and 12,834,956,316 shares in 1Q10. The fully diluted share count on March 31, 2011 was approximately 13,695,580,000. On March 31, 2011, UMC held 458 million treasury shares acquired from the 13th and 14th share buy-back programs.

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