EX-99.1 2 exhibit991.htm EXHIBIT 99.1 exhibit991.htm - Generated by SEC Publisher for SEC Filing

UNITED MICROELECTRONICS CORPORATION

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

WITH REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2012 AND 2011

Address: No. 3 Li-Hsin Road II, Hsinchu Science Park, Hsinchu City, 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.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

English Translation of a Report Originally Issued in Chinese

To United Microelectronics Corporation

We have reviewed the accompanying consolidated balance sheets of United Microelectronics Corporation and subsidiaries (the “Company”) as of March 31, 2012 and 2011, and the related consolidated statements of income and cash flows for the three-month periods ended March 31, 2012 and 2011. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to issue the review report based on our reviews. As described in Note 3(7) to the consolidated financial statements, certain long-term investments were accounted for under the equity method based on the financial statements as of March 31, 2012 and 2011 of the investees, which were reviewed by the other independent accountants. Our review, insofar as it related to the investment income amounted to NT$20 million and NT$34 million, which represented 1.51% and 0.71% of the consolidated income from continuing operations before income tax for the three-month periods ended March 31, 2012 and 2011, respectively, and the related long-term investment balances of NT$4,524 million and NT$4,835 million, which represented 1.60% and 1.71% of the total consolidated assets as of March 31, 2012 and 2011, respectively, are based solely on the reports of the other independent accountants.

We conducted our reviews in accordance with the Statements of Auditing Standards No. 36, “Review of Financial Statements” of the Republic of China. A review is limited primarily to applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the consolidated financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews and the reports of the other independent accountants, we are not aware of any material modifications or adjustments that should be made to the consolidated financial statements referred to above in order for them to be in conformity with requirements of the order VI-0960064020 issued by Financial Supervisory Commission, Executive Yuan, Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China.

As described in Note 2 to the consolidated financial statements, effective from January 1, 2011, the Company has adopted the third revision of the Statement of Financial Accounting Standards No. 34, “ Financial Instruments: Recognition and Measurement”, and the newly issued Statement of Financial Accounting Standards No. 41, “Operating Segments” of the Republic of China.

ERNST & YOUNG

CERTIFIED PUBLIC ACCOUNTANTS

Taipei, Taiwan

Republic of China

April 25, 2012

Notice to Readers

The accompanying unaudited 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.

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)

		As of March 31,						As of March 31,
Assets	Notes	2012		2011		Liabilities and Stockholders' Equity	Notes	2012		2011
Current assets						Current liabilities
Cash and cash equivalents	3(1)	$	47,100,888	$	49,643,038	Short-term loans	3(11)	$	6,344,213	$	6,444,863
Financial assets at fair value through profit or loss, current	3(2)	748,755		1,016,574		Financial liabilities at fair value through profit or loss, current	3(12)	829,264		1,904,388
Available-for-sale financial assets, current	3(5)	5,586,670		6,298,149		Notes and accounts payable		6,174,355		7,067,367
Notes receivable	2	297		75,032		Income tax payable		609,358		1,999,393
Accounts receivable, net	2, 3(3)	14,719,801		18,161,100		Accrued expenses	3(18)	9,413,763		10,765,138
Accounts receivable-related parties, net	2, 4	214,895		173,345		Payable on equipment		9,046,308		11,159,429
Other receivables	2	880,466		615,581		Current portion of long-term liabilities	3(13), 3(14), 5	8,605,557		6,500,945
Inventories, net	3(4)	12,541,499		14,114,066		Deferred income tax liabilities, current		31,071		12,771
Prepaid expenses		1,056,902		1,022,639		Other current liabilities		1,008,270		862,873
Non-current assets held for sale		257,633		16,831		Total current liabilities		42,062,159		46,717,167
Deferred income tax assets, current		410,913		941,609
Restricted assets		18,706		20,791		Long-term liabilities
Total current assets		83,537,425		92,098,755		Bonds payable	3(13)	12,008,820		-
						Long-term loans	3(14), 5	10,639,988		7,300,724
Funds and investments						Total long-term liabilities		22,648,808		7,300,724
Financial assets at fair value through profit or loss, noncurrent	3(2)	125,721		82,008
Available-for-sale financial assets, noncurrent	3(5)	20,700,667		26,305,098		Other liabilities
Financial assets measured at cost, noncurrent	3(6), 3(10)	8,389,734		8,459,881		Accrued pension liabilities		3,268,616		3,302,033
Long-term investments accounted for under the equity method	3(7), 3(10), 9(5)	11,955,215		9,485,481		Deposits-in		103,583		22,211
Prepayment for long-term investments		81,591		428,499		Deferred income tax liabilities, noncurrent		37,450		22,928
Total funds and investments		41,252,928		44,760,967		Other liabilities-others		469,448		161,508
						Total other liabilities		3,879,097		3,508,680
Property, plant and equipment	3(8), 5, 6					Total liabilities		68,590,064		57,526,571
Land		2,014,793		2,252,604
Buildings		26,262,041		26,156,535		Capital	3(15), 3(16)
Machinery and equipment		564,003,161		518,391,379		Common stock		129,264,072		129,879,123
Transportation equipment		64,551		74,147		Capital collected in advance		106,070		-
Furniture and fixtures		4,440,232		3,628,189		Additional paid-in capital	3(7), 3(13), 3(16)
Leasehold improvements		1,738,340		743,758		Premiums		43,966,944		44,203,728
Total cost		598,523,118		551,246,612		Treasury stock transactions		1,647,346		147,242
Less : Accumulated depreciation		(468,681,169)		(436,300,150)		Change in equities of long-term investments		-		1,841
Less : Accumulated impairment		(2,965,908)		(1,709,221)		Employee stock options		663,101		917,778
Add : Construction in progress and prepayments		23,702,383		25,916,914		Stock options		592,622		-
Property, plant and equipment, net		150,578,424		139,154,155		Retained earnings	3(7), 3(18)
						Legal reserve		3,442,856		1,064,881
Intangible assets						Unappropriated earnings		22,321,695		31,614,171
Trademarks		308		-		Adjusting items in stockholders' equity	3(5), 3(7), 3(15), 3(17)
Goodwill		50,863		295,225		Cumulative translation adjustment		(4,295,992)		(4,687,082)
Other Intangible assets		304,422		-		Unrealized gain or loss on financial instruments		17,643,023		23,028,185
Total intangible assets		355,593		295,225		Treasury stock		(4,963,389)		(6,223,357)
						Total stockholders' equity of parent company		210,388,348		219,946,510
Other assets
Deferred charges		1,611,892		1,276,398		Minority interests		4,163,176		5,666,515
Deferred income tax assets, noncurrent		2,806,744		2,889,468		Total stockholders' equity		214,551,524		225,613,025
Other assets-others	3(9), 5	2,998,582		2,664,628
Total other assets		7,417,218		6,830,494

Total assets		$	283,141,588	$	283,139,596	Total liabilities and stockholders' equity		$	283,141,588	$	283,139,596

The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the three-month periods ended March 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)

		For the three-month periods ended March 31,
	Notes	2012				2011
Operating revenues	4
Sales revenues		$		25,628,802		$		30,773,722
Less : Sales returns and discounts		(85,962)				(182,769)
Net Sales		25,542,840				30,590,953
Other operating revenues		726,594				574,723
Net operating revenues		26,269,434				31,165,676
Operating costs	3(4), 3(16)
Cost of goods sold		(21,726,149)				(23,202,274)
Other operating costs		(487,472)				(289,239)
Operating costs		(22,213,621)				(23,491,513)
Gross profit		4,055,813				7,674,163
Unrealized intercompany profit		(89)				(360)
Realized intercompany profit		8				-
Gross profit-net		4,055,732				7,673,803
Operating expenses	3(16)
Sales and marketing expenses		(711,979)				(622,833)
General and administrative expenses		(779,393)				(887,111)
Research and development expenses		(2,299,796)				(2,303,714)
Subtotal		(3,791,168)				(3,813,658)
Operating income		264,564				3,860,145
Non-operating income
Interest revenue		59,907				39,171
Investment gain accounted for under the equity method, net	3(7)	260,348				-
Gain on disposal of property, plant and equipment		11,230				10,399
Gain on disposal of investments		829,075				431,753
Exchange gain, net		-				204,820
Gain on valuation of financial assets	3(2)	54,054				-
Gain on valuation of financial liabilities	3(12)	-				313,632
Other income		179,613				385,439
Subtotal		1,394,227				1,385,214
Non-operating expenses
Interest expense	3(8)	(98,208)				(43,794)
Investment loss accounted for under the equity method, net	3(7)	-				(70,997)
Loss on disposal of property, plant and equipment		(355)				(8,440)
Exchange loss, net		(45,782)				-
Financial expenses		(21,319)				(17,483)
Impairment loss	3(10)	(45,959)				(118,995)
Loss on valuation of financial assets	3(2)	-				(108,899)
Loss on valuation of financial liabilities	3(12)	(119,066)				-
Other losses		(6,196)				(18,102)
Subtotal		(336,885)				(386,710)
Income from continuing operations before income tax		1,321,906				4,858,649
Income tax expense		(214,068)				(445,839)
Net income		$		1,107,838		$		4,412,810

Attributable to:
Stockholders of the parent		$		1,335,450		$		4,483,493
Minority interests		(227,612)				(70,683)
Net income		$		1,107,838		$		4,412,810

		Pre-tax		Post-tax		Pre-tax		Post-tax
Earnings per share-basic (NTD)	3(19)
Net income attributable to stockholders of the parent		$	0.12	$	0.11	$	0.39	$	0.36

Earnings per share-diluted (NTD)	3(19)
Net income attributable to stockholders of the parent		$	0.12	$	0.10	$	0.38	$	0.35

The accompanying notes are an integral part of the consolidated financial statements.

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three-month periods ended March 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)

	For the three-month periods ended March 31,
	2012		2011
Cash flows from operating activities:
Net income attributable to stockholders of the parent	$	1,335,450	$	4,483,493
Net loss attributable to minority interests	(227,612)		(70,683)
Adjustments to reconcile net income(loss) to net cash provided by operating activities:
Depreciation	8,286,929		7,620,946
Amortization	149,612		108,276
Bad debt expenses (reversal)	19,726		(16,220)
Loss (Gain) on decline (recovery) in market value, scrap and obsolescence of inventories	(881,104)		150,367
Cash dividends received under the equity method	25,834		236,520
Investment loss (gain) accounted for under the equity method	(260,348)		70,997
Loss (Gain) on valuation of financial assets and liabilities	65,012		(204,733)
Impairment loss	45,959		118,995
Gain on disposal of investments	(829,075)		(431,753)
Gain on disposal of property, plant and equipment	(10,875)		(1,959)
Amortization of bond discounts	85,002		58,101
Amortization of administrative expenses from syndicated loans	1,152		818
Exchange loss (gain) on financial assets and liabilities	(107,315)		91,187
Exchange loss (gain) on long-term liabilities	(140,893)		51,656
Exchange gain on disposal of non-current assets held for sale	-		(598)
Amortization of deferred income	(23,824)		(29,103)
Stock-based payment	82,037		213,470
Changes in assets and liabilities:
Financial assets and liabilities at fair value through profit or loss	-		(22,678)
Notes receivable and Accounts receivable	(472,332)		734,053
Other receivables	(76,848)		97,404
Inventories	936,877		(1,196,751)
Prepaid expenses	(255,222)		(194,371)
Deferred income tax assets and liabilities	80,291		(111,118)
Notes and accounts payable	1,215,676		(56,876)
Accrued expenses	6,193		30,591
Other current liabilities	58,533		(17,055)
Accrued pension liabilities	549		2,473
Other liabilities-others	165,571		(12,783)
Net cash provided by operating activities	9,274,955		11,702,666

Cash flows from investing activities:
Proceeds from disposal of available-for-sale financial assets	800,549		584,881
Acquisition of financial assets measured at cost	(301,596)		(1,051,243)
Proceeds from disposal of financial assets measured at cost	510,850		49,863
Acquisition of long-term investments accounted for under the equity method	(231,322)		(450,541)
Proceeds from maturity of held-to-maturity financial assets	13,524		-
Prepayment for long-term investments	(37,644)		(428,499)
Proceeds from capital reduction and liquidation of investments	-		13,831
Net cash paid for disposal of subsidiaries	-		(93,668)
Acquisition of property, plant and equipment	(10,027,930)		(15,691,397)
Proceeds from disposal of property, plant and equipment	11,341		(815)
Acquisition from disposal of non-current assets held for sale	(257,633)		-
Increase in deferred charges	(339,249)		(73,970)
Acquisition of intangible assets	(13,684)		-
Decrease in restricted assets	105		30
Increase in other assets-others	4,473		9,692
Net cash used in investing activities	(9,868,216)		(17,131,836)

English Translation of Consolidated Financial Statements Originally Issued in Chinese
UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three-month periods ended March 31, 2012 and 2011
(Expressed in Thousands of New Taiwan Dollars)

	For the three-month periods ended March 31,
	2012		2011
(continued)

Cash flows from financing activities:
Increase (decrease) in short-term loans	$	(2,981,481)	$	2,322,961
Proceeds from long-term loans	3,000,000		1,480,000
Repayments of long-term loans	(788,333)		(69,483)
Exercise of employee stock options	109,127		-
Proceeds from disposal of treasury stock	3,025		6,405
Increase (decrease) in deposits-in	261		(2,002)
Increase in minority stockholders	7,533		13,152
Net cash provided by (used in) financing activities	(649,868)		3,751,033
Effect of exchange rate changes on cash and cash equivalents	(726,111)		50,070
Net decrease in cash and cash equivalents	(1,969,240)		(1,628,067)
Cash and cash equivalents at beginning of period	49,070,128		51,271,105
Cash and cash equivalents at end of period	$	47,100,888	$	49,643,038

Supplemental disclosures of cash flow information:
Cash paid for interest	$	94,270	$	52,576
Less: Cash paid for capitalized interest	(26,432)		(14,336)
Cash paid for interest excluding capitalized interest	$	67,838	$	38,240
Cash paid for income tax	$	7,975	$	51,348

Investing activities partially paid by cash:
Acquisition of property, plant and equipment	$	10,560,292	$	14,246,357
Discount on property, plant and equipment	(3,748)		(10,757)
Add: Payable at beginning of period	8,517,694		12,620,481
Less: Effect of disposal of subsidiaries	-		(5,255)
Less: Payable at end of period	(9,046,308)		(11,159,429)
Cash paid for acquiring property, plant and equipment	$	10,027,930	$	15,691,397

The accompanying notes are an integral part of the consolidated financial statements.

UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012 and 2011

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

United Microelectronics Corporation and the consolidated entities (the “Company”) has prepared the notes in conformity with the order VI-0960064020 issued by Financial Supervisory Commission, Executive Yuan as of November 15, 2007, which simplifies the disclosure requirement. According to this order, the Company is only required to disclose the differences of accounting policies between the latest annual audited consolidated financial statements and the current ones and to disclose the consolidated entities. The following items can be exempt from disclosures:

i. History and organization;

ii. Income tax;

iii. Pension plan;

iv. Summary of operation cost and expenses including salary, depreciation, depletion, and amortization; and

v. Attachments pertaining to significant transactions, investments, and investments in Mainland China.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements were prepared in conformity with requirements of the order VI-0960064020 issued by Financial Supervisory Commission under the Executive Yuan, Guidelines Governing the Preparation of Financial Reports by Securities Issuers and accounting principles generally accepted in the Republic of China (R.O.C.).

Significant accounting policies adopted in preparing the accompanying consolidated financial statements are those adopted in preparing the annual consolidated financial statements of 2011, except those stated below:

General Description of Reporting Entities

a. Principles of Consolidation

Investees in which United Microelectronics Corporation (UMC), directly or indirectly, holds more than 50% of voting rights are consolidated into UMC’s financial statements. (UMC and the consolidated entities are hereinafter referred to as “the Company”.)

Transactions between consolidated entities are eliminated in the consolidated financial statements. The difference between the acquisition cost and the net equity of a subsidiary as of the acquisition date was amortized, and goodwill arising from new acquisitions is analyzed and accounted for under the R.O.C. Statement of Financial Accounting Standard (R.O.C. SFAS) No. 25, “Business Combination – Accounting Treatment under Purchase Method”(R.O.C. SFAS 25), in which goodwill is not subject to amortization.

b. The consolidated entities are as follows:

As of March 31, 2012

Investor	Subsidiary	Business nature	Percentage of ownership (%)
UMC	UMC GROUP (USA) (UMC-USA)	IC Sales	100.00
UMC	UNITED MICROELECTRONICS (EUROPE) B.V. (UME BV)	Market development	100.00
UMC	UMC CAPITAL CORP.	Investment holding	100.00
UMC	GREEN EARTH LIMITED	Investment holding	100.00
UMC	TLC CAPITAL CO., LTD. (TLC)	New business investment	100.00
UMC	UMC NEW BUSINESS INVESTMENT CORP. (NBI)	Investment holding	100.00
UMC	UMC INVESTMENT (SAMOA) LIMITED	Investment holding	100.00
UMC	FORTUNE VENTURE CAPITAL CORP. (FORTUNE)	Consulting and planning for investment in new business	100.00
UMC	UMC JAPAN (UMCJ)	Sales and manufacturing of integrated circuits	100.00
UMC	NEXPOWER TECHNOLOGY CORP. (NEXPOWER)	Sales and manufacturing of solar power batteries	44.16
FORTUNE	UNITRUTH INVESTMENT CORP. (UNITRUTH)	Investment holding	100.00
FORTUNE	TOPCELL SOLAR INTERNATIONAL CO., LTD. (TOPCELL)	Solar power cell manufacturing and sale	8.81
FORTUNE	NEXPOWER	Sales and manufacturing of solar power batteries	5.05
UNITRUTH	TOPCELL	Solar power cell manufacturing and sale	3.81
UNITRUTH	NEXPOWER	Sales and manufacturing of solar power batteries	2.25
UMC CAPITAL CORP.	UMC CAPITAL (USA)	Investment holding	100.00
UMC CAPITAL CORP.	ECP VITA LTD.	Insurance	100.00
TLC	SOARING CAPITAL CORP.	Investment holding	100.00
TLC	TOPCELL	Solar power cell manufacturing and sale	8.81
TLC	NEXPOWER	Sales and manufacturing of solar power batteries	5.87

Investor	Subsidiary	Business nature	Percentage of ownership (%)
SOARING CAPITAL CORP.	UNITRUTH ADVISOR (SHANGHAI) CO., LTD.	Investment holding and advisory	100.00
UMC INVESTMENT (SAMOA) LIMITED	UMC (Beijing) Limited	Market development	100.00
NBI	GREEN FIELD (SAMOA) LIMITED	Investment holding	100.00
NBI	TERA ENERGY DEVELOPMENT CO., LTD. (TERA ENERGY)	Energy Technical Services	100.00
NBI	EVERRICH ENERGY CORP. (EVERRICH)	Solar engineering integrated design services	90.97
NBI	UNISTARS CORP. (UNISTARS)	High brightness LED packages	72.83
NBI	WAVETEK MICROELECTRONICS CORPORATION (WAVETEK)	GaAs Foundry service	72.16
NBI	UNITED LIGHTING OPTO-ELECTRONIC INC. (UNITED LIGHTING) (NOTE A)	LED lighting manufacturing and sale	55.25
NBI	TOPCELL	Solar power cell manufacturing and sale	48.64
UNITED LIGHTING	UNITED LIGHTING OPTO-ELECTRONIC INVESTMENT (HK) LIMITED	Investment holding	100.00
UNITED LIGHTING	POWER LIGHT INVESTMENTS LIMITED (POWER LIGHT (SAMOA))	Investment holding	100.00
POWER LIGHT (SAMOA)	BAO LIN (SHANDONG) GUANG DIAN KE JI YOU XIAN GONGSI	LED lighting manufacturing and sale	100.00
WAVETEK	WAVETEK MICROELECTRONICS INVESTMENT (HK) LIMITED	Investment holding	100.00
EVERRICH	EVERRICH ENERGY INVESTMENT (HK) LIMITED (EVERRICH-HK)	Investment holding	100.00
EVERRICH	SMART ENERGY ENTERPRISES LIMITED (SMART ENERGY)	Investment holding	100.00
EVERRICH-HK	EVERRICH (SHANDONG) ENERGY CO., LTD.	Solar engineering integrated design services	100.00
SMART ENERGY	SMART ENERGY SHANDONG CORPORATION	Solar engineering integrated design services	100.00
TERA ENERGY	TERA ENERGY USA INC.	Solar project	100.00
GREEN FIELD (SAMOA) LIMITED	NEW BUSINESS REALTY (SAMOA) LIMITED	Investment holding	100.00

Investor	Subsidiary	Business nature	Percentage of ownership (%)
NEXPOWER	NEWENERGY HOLDING LIMITED	Investment holding	100.00
NEXPOWER	NPT HOLDING LIMITED	Investment holding	100.00
NEWENERGY HOLDING LIMITED	FUTUREPOWER HOLDING LIMITED	Investment holding	100.00
FUTUREPOWER HOLDING LIMITED	NEXPOWER (SHANDONG) ENERGY CO., LTD.	Sales and manufacturing of photovoltaic batteries and photovoltaic modules	100.00
NPT HOLDING LIMITED	NLL HOLDING LIMITED	Investment holding	100.00

As of March 31, 2011

Investor	Subsidiary	Business nature	Percentage of ownership (%)
UMC	UMC-USA	IC Sales	100.00
UMC	UME BV	Market development	100.00
UMC	UMC CAPITAL CORP.	Investment holding	100.00
UMC	GREEN EARTH LIMITED	Investment holding	100.00
UMC	TLC	New business investment	100.00
UMC	NBI	Investment holding	100.00
UMC	ALPHA WISDOM LIMITED (AWL) (Note B)	Investment holding	100.00
UMC	FORTUNE	Consulting and planning for investment in new business	100.00
UMC	UMCJ	Sales and manufacturing of integrated circuits	55.56
UMC	NEXPOWER	Sales and manufacturing of solar power batteries	44.32
FORTUNE	UNITRUTH	Investment holding	100.00
FORTUNE	NEXPOWER	Sales and manufacturing of solar power batteries	5.06
UNITRUTH	NEXPOWER	Sales and manufacturing of solar power batteries	2.26
UMC CAPITAL CORP.	UMC CAPITAL (USA)	Investment holding	100.00
UMC CAPITAL CORP.	ECP VITA LTD.	Insurance	100.00
TLC	SOARING CAPITAL CORP.	Investment holding	100.00
TLC	NEXPOWER	Sales and manufacturing of solar power batteries	5.89

Investor	Subsidiary	Business nature	Percentage of ownership (%)
SOARING CAPITAL CORP.	UNITRUTH ADVISOR (SHANGHAI) CO., LTD.	Investment holding and advisory	100.00
NBI	WAVETEK	GaAs Foundry service	99.79
NBI	UNITED LIGHTING OPTO-ELECTRONIC INC. (UNITED LIGHTING)	Sales and manufacturing of LED lighting	93.69
NBI	EVERRICH	Solar engineering integrated design services	90.97
NBI	UNISTARS	High brightness LED packages	65.63
NBI	TOPCELL	Solar power cell manufacturing and sale	51.49
UNITED LIGHTING	UNITED LIGHTING OPTO-ELECTRONIC INVESTMENT (HK) LIMITED	Investment holding	100.00
EVERRICH	EVERRICH-HK	Investment holding	100.00
EVERRICH-HK	EVERRICH (SHANDONG) ENERGY CO., LTD.	Solar engineering integrated design services	100.00
AWL	UMCJ	Sales and manufacturing of integrated circuits	44.44
NEXPOWER	JENENERGY SYSTEM CORPORATION (JENENERGY)	Energy Technology Service	66.67
NEXPOWER	NEWENERGY HOLDING LIMITED	Investment holding	100.00
JENENERGY	SMART ENERGY	Investment holding	100.00
NEWENERGY HOLDING LIMITED	FUTUREPOWER HOLDING LIMITED	Investment holding	100.00
FUTUREPOWER HOLDING LIMITED	NEXPOWER (SHANDONG) ENERGY CO., LTD.	Manufacture and sale of solar cells	100.00
SMART ENERGY	SMART ENERGY SHANDONG CORPORATION	Design of photovoltaic system and consulting services related to photovoltaic technology, etc.	100.00

Note A: On April 1, 2011, UNITED LIGHTING merged with POWER LIGHT TECH CO., LTD. (PLT). After the business combination, PLT is the surviving company and was renamed to UNITED LIGHTING.

Note B: On March 25, 2011, AWL filed for liquidation through a decision at its stockholders’ meeting. The liquidation of AWL was accounted for as an organization restructuring. As such, the Company continued accounting for AWL as a consolidated subsidiary until the liquidation was completed on August 30, 2011.

2. ACCOUNTING CHANGES

Notes, Accounts and Other Receivables

Effective January 1, 2011, the Company adopted the third revised R.O.C. SFAS 34. This change in accounting principles increased net income by NT$0.7 million and had no significant effect on earnings per share for the three-month period ended March 31, 2011.

Operating Segment Information

Effective January 1, 2011, the Company adopted R.O.C. SFAS No. 41, “Operating Segments” (R.O.C. SFAS 41), to present operating segment information. The newly issued R.O.C. SFAS 41 replaced R.O.C. SFAS No. 20, “Segment Reporting”, the comparative operating segment information has been presented accordingly. This change in accounting principles had no effect on consolidated net income or consolidated earnings per share for the three-month periods ended March 31, 2011.

3. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

	As of March 31,
	2012	2011
Cash
Cash on hand	$3,995	$4,056
Checking and savings accounts	12,173,083	12,268,391
Time deposits	29,839,068	32,182,118
Subtotal	42,016,146	44,454,565

Cash equivalents	5,084,742	5,188,473
Total	$47,100,888	$49,643,038

(2) FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

	As of March 31,
	2012	2011
Current
Listed stocks	$257,185	$517,656
Corporate bonds	491,570	495,076
Forward contracts	-	3,842
Subtotal	748,755	1,016,574
Noncurrent
Preferred stocks	28,637	-
Convertible bonds	97,084	82,008
Subtotal	125,721	82,008
Total	$874,476	$1,098,582

During the three-month periods ended March 31, 2012 and 2011, net gains (losses) arising from the changes in fair value of financial assets at fair value through profit or loss were a gain of NT$60 million and a loss of NT$93 million, respectively.

(3) ACCOUNTS RECEIVABLE, NET

	As of March 31,
	2012	2011
Accounts receivable	$15,604,977	$18,489,510
Less: Allowance for sales returns and discounts	(201,699)	(273,026)
Less: Allowance for doubtful accounts	(683,477)	(55,384)
Net	$14,719,801	$18,161,100

(4) INVENTORIES, NET

	As of March 31,
	2012	2011
Raw materials	$2,022,990	$2,196,067
Supplies and spare parts	2,216,728	2,306,137
Work in process	7,806,318	8,587,728
Finished goods	2,523,293	2,483,908
Total	14,569,329	15,573,840
Less: Allowance for loss on decline in market value and obsolescence	(2,027,830)	(1,459,774)
Net	$12,541,499	$14,114,066

a. The circumstances that caused the net realizable value of inventory to be lower than its cost no longer exist. As a result, the Company recognized gains of NT$910 million and NT$54 million on recovery of market value of inventories during the three-month periods ended March 31, 2012 and 2011, respectively.

b. Inventories were not pledged.

(5) AVAILABLE-FOR-SALE FINANCIAL ASSETS

	As of March 31,
	2012	2011
Current
Common stocks	$5,586,670	$6,298,149

Noncurrent
Common stocks	20,625,892	25,885,714
Depositary receipts	34,834	367,454
Funds	39,941	51,930
Subtotal	20,700,667	26,305,098
Total	$26,287,337	$32,603,247

During the three-month periods ended March 31, 2012 and 2011, the net unrealized gains (losses) adjustments to consolidated stockholders’ equity due to changes in fair value of available-for-sale assets were a gain of NT$3,227 million and a loss of NT$4,104 million, respectively. Additionally, the Company recognized gains of NT$462 million and NT$416 million due to the disposal of available-for-sale assets during the three-month periods ended March 31, 2012 and 2011, respectively.

UMC issued bonds that are exchangeable at any time on or after January 1, 2010 and prior to November 22, 2014, into common stocks originally classified as available-for-sale financial assets, noncurrent. Therefore, UMC reclassified the exchangeable shares to current assets.

(6) FINANCIAL ASSETS MEASURED AT COST, NONCURRENT

	As of March 31,
	2012	2011
Common stocks	$6,229,436	$5,948,171
Preferred stocks	1,738,192	1,923,875
Funds	422,106	562,801
Convertible bonds	-	25,034
Total	$8,389,734	$8,459,881

The Company acquired 4.6 million shares of FIRST INTERNATIONAL TELECOM CORP. (FIRST INTERNATIONAL TELECOM) through private placement in March 2008, 4 million shares of E-ONE MOLI ENERGY CORP. (E-ONE) through private placement in June 2009 and 2 million shares of A-DATA TECHNOLOGY CO., LTD. (A-DATA) through private placement in September 2009. In addition, 500 units of convertible bonds acquired through private placement in September, 2009 were converted to 2.4 million common shares of TOPOINT TECHNOLOGY CO., LTD. (TOPOINT) in September, 2010. The exchange of these securities listed above is restricted by Article 43 paragraph 8 of the Securities and Exchange Law. The above-mentioned restriction of FIRST INTERNATIONAL TELECOM, E-ONE, A-DATA and TOPOINT will be removed on April 25, 2011, August 31, 2012, September 30, 2012 and September 23, 2012, respectively.

(7) LONG-TERM INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

a. Details of long-term investments accounted for under the equity method are as follows:

	As of March 31,
	2012		2011
Investee Companies	Amount	Percentage of Ownership or Voting Rights	Amount	Percentage of Ownership or Voting Rights
Listed companies
CRYSTALWISE TECHNOLOGY INC.	$87,673	4.25	$-	-
(CRYSTALWISE) (Note F)
Unlisted companies
ASEPOWER 1 S.R.L. (Note D)	32,108	75.00	-	-
SOCIALNEX ITALIA 1 S.R.L. (Note D)	24,681	75.00	-	-
MOS ART PACK CORP. (MAP) (Note C)	238,373	72.98	238,373	72.98
SHANDONG HUAHONG ENERGY INVEST CO., INC. (SHANDONG HUAHONG) (Note D)	713,687	50.00	670,735	50.00
WINAICO SOLAR PROJEKT 1 GMBH (Note D)	45,433	50.00	-	-
LIST EARN ENTERPRISE INC.	9,708	49.00	9,293	49.00
SHENYANG PIONEER U-LIGHTING OPTO-ELECTRONIC CO., LTD. (SHENYANG U-LIGHTING) (Note D)	3,606	49.00	3,009	49.00
ALLIANCE OPTOTEK CORP.	71,466	47.99	157,997	48.43
MTIC HOLDINGS PTE. LTD.	216,039	46.49	241,085	46.49
ACHIEVE MADE INTERNATIONAL LTD.	95,593	45.66	34,597	48.54
YUNG LI INVESTMENTS, INC.	214,016	45.16	219,939	45.16
UNITED LED CORPORATION HONG KONG LIMITED	539,349	45.00	214,930	50.00
MEGA MISSION LIMITED PARTNERSHIP	1,437,437	45.00	1,821,562	45.00
UNITECH CAPITAL INC.	719,155	42.00	826,148	42.00
LTI REENERGY CO., LTD. (LTI) (Note D)	2,288	40.00	-	-
HSUN CHIEH INVESTMENT CO., LTD.	3,175,975	36.49	3,456,625	36.49
UC FUND II	35,014	35.45	83,080	35.45
BEST ELITE INTERNATIONAL LIMITED (Note G、H)	3,237,989	35.03	-	-
EXOJET TECHNOLOGY CORP.	101,832	33.10	96,163	34.32

	As of March 31,
	2012		2011
Investee Companies	Amount	Percentage of Ownership or Voting Rights	Amount	Percentage of Ownership or Voting Rights
SOLAR GATE TECHNOLOGY CO., LTD.	$31,374	32.73	$133,676	32.73
CTC CAPITAL PARTNERS I, L. P.	126,266	31.40	122,828	31.40
UNIMICRON HOLDING LIMITED	629,098	21.93	552,479	21.93
HIGH POWER LIGHTING CORP.	12,709	20.24	34,816	22.29
DAIWA QUANTUM CAPITAL PARTNERS I, L. P. (Note E)	60,292	12.52	59,863	12.52
TRANSLINK CAPITAL PARTNERS I L. P. (Note E)	94,054	10.38	77,171	10.55
UMCI LTD. (UMCI) (Note A)	-	-	-	100.00
UNITED MICRODISPLAY OPTRONICS CORP. (UMO) (Note B)	-	-	35,237	89.99
AEVOE INTERNATIONAL LTD.	-	-	103,318	43.77
POWER LIGHT TECH CO., LTD. (PLT) (Note I)	-	-	43,080	42.33
WALTOP INTERNATIONAL CORP.	-	-	209,160	42.32
CRYSTAL MEDIA INC.	-	-	28,410	31.80
ANOTO TAIWAN CORP.	-	-	4,760	24.12
TRANSLINK CAPITAL PARTNERS II L. P. (Note E)	-	-	7,147	9.76
Subtotal	11,867,542		9,485,481
Total	$11,955,215		$9,485,481

Note A: On July 30, 2010, UMCI has filed for liquidation through a decision at its stockholders’ meeting. The liquidation was completed on May 10, 2011.

Note B: On June 26, 2009, UMO has filed for liquidation through a decision at its stockholders’ meeting. The liquidation was completed on June 23, 2011.

Note C: On March 10, 2011, MAP has filed for liquidation through a decision at its stockholders’ meeting. The liquidation has not been completed as of March 31, 2012.

Note D: The Company uses the equity method to account for its investment in ASEPOWER 1 S.R.L., SOCIALNEX ITALIA 1 S.R.L., SHANDONG HUAHONG, WINAICO SOLAR PROJEKT 1 GMBH, SHENYANG U-LIGHTING and LTI, which are jointly controlled entities.

Note E: The Company follows international accounting practices in equity accounting for limited partnerships because no equivalent type of business exists in R.O.C., and therefore, the Company uses the equity method to account for these investees.

Note F: The Company acquired 2.7 million shares of CRYSTALWISE through private placement in August 2010. The exchange of these securities listed above is restricted by Article 43 paragraph 8 of the Securities and Exchange Law. The above-mentioned restriction of CRYSTALWISE will be removed on September 23, 2013. The Company determined it should apply the equity method to CRYSTALWISE because it was considered to have the significant influence according to Statements of Financial Accounting Standards through common Chairman of the Board.

Note G: Not until March 2005 did the Company receive an offer of approximately 106 million ordinary shares from Best Elite International Limited (Best Elite), the holding company of HeJian Technology Corp. (HeJian). The offered shares represented approximately 50% of Best Elite’s outstanding ordinary shares and approximately 15% of the total outstanding shares of Best Elite. The Company filed an inquiry with the Investment Commission of the Ministry of Economic Affairs on March 18, 2005 (Ref. No. 94-Lian-Tung-Tzu-0222), for their executive guidance with respect to the offer. Subsequent to Best Elite Board approval, the offered ordinary shares were placed in a trust while the Company awaited the Investment Commission’s guidance. While in trust, the Company could not receive ownership (nor any potential stock dividend or cash dividend distributed) and is not the beneficiary thereof unless Company received approval from the Investment Commission. In the event that any stock dividend or cash dividend was distributed, the Company’s potential stake in Best Elite would have accumulated accordingly.

No response from the Investment Commission of the Ministry of Economic Affairs was received on the Company’s inquiry for many years. In June 2011, the Company filed an application for the acquisition of the aforementioned donated Best Elite shares as well as for an additional purchase of Series B and B-1 preferred shares (Note H). Thereafter, on November 1, 2011, the Company received the approval letter from the Investment Commission of the Ministry of Economic Affairs (Ref. No. Jing-Shen-Er-Zi-10000274530). With such an approval, the Company was able to formally accept the ordinary shares, which have been held in trust since 2006. Based on the approval letter from the Investment Commission of the Ministry of Economic Affairs, which designated the ordinary shares offered by Best Elite as a donation, the Company recognized the said shares at their fair value of USD 23 million on the day of transfer, December 12, 2011, as a long term investment accounted for under the equity method with a corresponding gain recorded in other income.

Note H: On March 16, 2011, in order to achieve its global market objectives, the Company’s Board of Directors approved an offer to the stockholders of Best Elite to purchase up to 30% of the preferred shares of Best Elite. In June 2011, the Company filed an application on the 15.34% donated shares (in trust as described above) as well as 20.41% of the preferred shares of Best Elite based on the said shareholders’ offering.

Such purchase of 20.41% of the preferred shares of Best Elite was approved on November 1, 2011 in the same letter from the Investment Commission of the Ministry of Economic Affairs (Ref. No. Jing-Shen-Er-Zi-10000274530) granting approval for the Company’s ownership of Best Elite ordinary shares placed in trust. Pursuant to such approval, the Company acquired by way of purchase at fair value Series B and B-1 preferred shares representing 19.56% of Best Elite’s total outstanding shares on December 12, 2011 and the Company thereby increased its cumulative ownership in Best Elite to 34.90%. The Company accounts for its investment as a long term investment under the equity method in accordance with R.O.C. SFAS No.5, “Long-term investments under equity method”.

Note I: On April 1, 2011, UNITED LIGHTING OPTO-ELECTRONIC INC. was merged with PLT. PLT is the surviving company and was renamed to UNITED LIGHTING OPTO-ELECTRONIC INC. (UNITED LIGHTING). After the business combination, UNITED LIGHTING is included as a consolidated subsidiary.

b. The change of investees’ equity was charged to the Company’s equity. For the three-month periods ended March 31, 2012 and 2011, the changes charged to additional paid-in capital were increases of NT$0 and NT$2 million, respectively, and the changes charged to retained earnings were decreases of NT$70 million and NT$0, respectively.

c. Total gains (losses) arising from investments accounted for under the equity method were a gain of NT$260 million and a loss of NT$71 million for the three-month periods ended March 31, 2012 and 2011, respectively. Investment income amounted to NT$20 million and NT$34 million for the three-month periods ended March 31, 2012 and 2011, respectively, and the related long-term investment balances of NT$4,524 million and NT$4,835 million as of March 31, 2012 and 2011, respectively, were determined based on the investees’ financial statements reviewed by the other independent accountants.

d. The long-term equity investments were not pledged.

(8) PROPERTY, PLANT AND EQUIPMENT


	As of March 31, 2012
	Cost	Accumulated Depreciation	Accumulated Impairment	Book Value
Land	$2,014,793	$-	$(268,483)	$1,746,310
Buildings	26,262,041	(11,657,032)	(976,944)	13,628,065
Machinery and equipment	564,003,161	(453,442,035)	(1,707,407)	108,853,719
Transportation equipment	64,551	(52,490)	-	12,061
Furniture and fixtures	4,440,232	(3,261,771)	(13,074)	1,165,387
Leasehold improvement	1,738,340	(267,841)	-	1,470,499
Construction in progress and prepayments	23,702,383	-	-	23,702,383
Total	$622,225,501	$(468,681,169)	$(2,965,908)	$150,578,424

	As of March 31, 2011
	Cost	Accumulated Depreciation	Accumulated Impairment	Book Value
Land	$2,252,604	$-	$(265,629)	$1,986,975
Buildings	26,156,535	(10,613,444)	(966,692)	14,576,399
Machinery and equipment	518,391,379	(422,516,750)	(467,551)	95,407,078
Transportation equipment	74,147	(61,284)	-	12,863
Furniture and fixtures	3,628,189	(3,005,196)	(9,349)	613,644
Leasehold improvement	743,758	(103,476)	-	640,282
Construction in progress and prepayments	25,916,914	-	-	25,916,914
Total	$577,163,526	$(436,300,150)	$(1,709,221)	$139,154,155

a. Total interest expense before capitalization amounted to NT$167 million and NT$111 million for the three-month periods ended March 31, 2012 and 2011, respectively.

Details of capitalized interest are as follows:

	For the three-month periods ended March 31,
	2012	2011
Buildings	$110	$0
Machinery and equipment	68,508	66,383
Furniture and fixtures	10	1,098
Others	6	11
Total interest capitalized	$68,634	$67,492

Interest rates applied	1.61%~2.29%	1.02%~2.80%

b. Please refer to Note 5 for property plant and equipment pledged as collateral.

(9) OTHER ASSETS-OTHERS

	As of March 31,
	2012	2011
Leased assets	$1,007,801	$1,098,280
Deposits-out	1,343,392	923,922
Long-term prepayment	530,220	536,160
Others	117,169	106,266
Total	$2,998,582	$2,664,628

Please refer to Note 5 for Deposits-out pledged as collateral.

(10) IMPAIRMENT LOSS

	For the three-month periods ended March 31,
	2012	2011
Available-for-sale financial assets, noncurrent	$24,494	$-
Long-term investments accounted for under the equity method	-	9,503
Financial assets measured at cost, noncurrent	21,465	109,492
Total	$45,959	$118,995

After considering objective evidence and the result of the impairment loss testing, the Company recognized impairment losses amounted to NT$46 million and NT$119 million for its available-for-sale financial assets, noncurrent, long-term investments accounted for under the equity method and financial assets measured at cost, noncurrent, respectively, for the three-month periods ended March 31, 2012 and 2011.

(11) SHORT-TERM LOANS

	As of March 31,
	2012	2011
Unsecured bank loans	$6,344,213	$6,444,863

	For the three-month periods ended March 31,
	2012	2011
Interest rates	0.69%~2.82%	0.54%~2.37%

The Company’s unused short-term lines of credits amounted to NT$19,723 million and NT$15,312 million as of March 31, 2012 and 2011, respectively.

(12) FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS, CURRENT

	As of March 31,
	2012	2011
Derivatives embedded in exchangeable bonds	$829,264	$1,902,836
Forward contracts	-	1,552
Total	$829,264	$1,904,388

During the three-month periods ended March 31, 2012 and 2011, net gains (losses) arising from financial liabilities at fair value through profit or loss were a loss of NT$88 million and a gain of NT$300 million, respectively.

(13) BONDS PAYABLE

	As of March 31,
	2012	2011
Unsecured convertible bonds payable	$12,420,903	$-
Unsecured exchangeable bonds payable	5,971,528	5,953,340
Less: Discounts on bonds payable	(1,043,534)	(847,828)
Total	17,348,897	5,105,512
Less: Current or exchangeable portion	(5,340,077)	(5,105,512)
Net	$12,008,820	$-

A. On December 2, 2009, UMC issued SGX-ST listed zero coupon exchangeable bonds. The terms and conditions of the bonds are as follows:

a. Issue Amount: US$127.2 million

b. Period: December 2, 2009 ~ December 2, 2014 (Maturity date)

c. Redemption:

i. UMC may redeem the bonds, in whole or in part, after 12 months of the issuance and prior to the maturity date, at the principal amount of the bonds with an interest calculated at the rate of -0.5% per annum (the Early Redemption Price) if the closing price of the common shares of Unimicron Technology Corporation (Unimicron) on the TSE, translated into US dollars at the prevailing exchange rate, for a period of 20 consecutive trading days, the last of which occurs not more than 10 days prior to the date upon which notice of such redemption is published, is at least 130% of the exchange price then in effect translated into US dollars at the rate of NTD 32.197=USD 1.00.

ii. UMC may redeem the bonds, in whole, but not in part, at the Early Redemption Price if at least 90% in principal amount of the bonds has already been exchanged, redeemed or purchased and cancelled.

iii. UMC may redeem all, but not part, of the bonds, at the Early Redemption Price at any time, in the event of certain changes in the R.O.C.’s tax rules which would require UMC to gross up for payments of principal, or to gross up for payments of interest or premium.

iv. All, or any portion, of the bonds will be redeemable in US dollars at the option of bondholders on December 2, 2011 at 99% of the principal amount.

v. Bondholders have the right to require UMC to redeem all or any portion of the bonds at the Early Redemption Price if the common shares of the exchanged securities are officially delisted on the TSE for a period of five consecutive trading days.

vi. In the event that a change of control as defined in the indenture of the bonds occurs to UMC or Unimicron, the bondholders shall have the right to require UMC to redeem the bonds, in whole or in part, at the Early Redemption Price.

d. Terms of Exchange:

i. Underlying Securities: Common shares of Unimicron

ii. Exchange Period: The bonds are exchangeable at any time on or after January 1, 2010 and prior to November 22, 2014, into Unimicron common shares; 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 exchanging 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 NTD51.1875 per share, determined on the basis of a fixed exchange rate of NTD 32.197=USD 1.00. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The exchange price is NTD47.1615 per share on March 31, 2012.

e. Redemption on the Maturity Date: On the maturity date, UMC will redeem the bonds at 97.53% of the principal amount unless, prior to such date:

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 purchased by UMC and cancelled.

B. On December 2, 2009, UMC issued SGX-ST listed zero coupon exchangeable bonds. The terms and conditions of the bonds are as follows:

a. Issue Amount: US$80 million

b. Period: December 2, 2009 ~ December 2, 2014 (Maturity date)

c. Redemption:

i. UMC may redeem the bonds, in whole or in part, after 12 months of the issuance and prior to the maturity date, at the principal amount of the bonds with an interest calculated at the rate of -0.5% per annum (the Early Redemption Price) if the closing price of the common shares of Novatek Microelectronics Corp., Ltd. (Novatek) on the TSE, translated into US dollars at the prevailing exchange rate, for a period of 20 consecutive trading days, the last of which occurs not more than 10 days prior to the date upon which notice of such redemption is published, is at least 130% of the exchange price then in effect translated into US dollars at the rate of NTD 32.197=USD 1.00.

iv. All, or any portion, of the bonds will be redeemable in US dollars at the option of bondholders on December 2, 2011 at 99% of the principal amount.

vi. In the event that a change of control as defined in the indenture of the bonds occurs to UMC or Novatek, the bondholders shall have the right to require UMC to redeem the bonds, in whole or in part, at the Early Redemption Price.

d. Terms of Exchange

i. Underlying Securities: Common shares of Novatek

ii. Exchange Period: The bonds are exchangeable at any time on or after January 1, 2010 and prior to November 22, 2014, into Novatek common shares; 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 exchanging 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 NTD108.58 per share, determined on the basis of a fixed exchange rate of NTD 32.197=USD 1.00. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The exchange price is NTD96.1487 per share on March 31, 2012.

e. Redemption on the Maturity Date: On the maturity date, UMC will redeem the bonds at 97.53% of the principal amount unless, prior to such date:

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 purchased by UMC and cancelled.

C. On May 24, 2011, UMC issued SGX-ST listed currency linked zero coupon convertible bonds. The terms and conditions of the bonds are as follows:

a. Issue Amount: US$500 million

b. Period: May 24, 2011 ~ May 24, 2016 (Maturity date)

c. Redemption:

i. UMC may redeem the bonds, in whole or in part, after 3 years of the issuance and prior to the maturity date, at the principal amount of the bonds with an interest calculated at the rate of -0.25% per annum (the Early Redemption Amount) if the closing price of UMC’s ADS on the New York Stock Exchange, for a period of 20 out of 30 consecutive ADS trading days, the last of which occurs not more than 5 ADS trading days prior to the date upon which notice of such redemption is published, is at least 130% of the conversion price. The Early Redemption Price will be converted into NTD based on the Fixed Exchange Rate (NTD 28.846=USD 1.00), and this fixed NTD amount will be converted using the prevailing rate at the time of redemption for payment in USD.

ii. UMC may redeem the bonds, in whole, but not in part, at the Early Redemption Amount if at least 90% in principal amount of the bonds has already been converted, redeemed or repurchased and cancelled.

iii. UMC may redeem all, but not part, of the bonds, at the Early Redemption Amount at any time, in the event of certain changes in the R.O.C.’s tax rules which would require UMC to gross up for payments of principal, or to gross up for payments of interest or premium.

iv. All or any portion of the bonds will be redeemable in at Early Redemption Amount at the option of bondholders on May 24, 2014 at 99.25% of the principal amount.

v. Bondholders have the right to require UMC to redeem all of the bonds at the Early Redemption Amount if UMC’s ADS cease to be listed or admitted for trading on the New York Stock Exchange, or UMC’s common shares cease to be listed on the Taiwan Stock Exchange.

vi. In the event that a change of control as defined in the indenture of the bonds occurs to UMC, the bondholders shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.

d. Terms of Conversion

i. Underlying Securities: ADS of UMC

ii. Conversion Period: The bonds are convertible at any time on or after July 4, 2011 and prior to May 14, 2016, into UMC’s ADS; provided, however, that if the exercise date falls within 8 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 ADS it receives will be subject to certain restrictions.

iii. Conversion Price and adjustment: The conversion price was originally USD3.77 per ADS, determined on the basis of a Fixed Exchange Rate of NTD 28.846=USD 1.00. The conversion price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The conversion price is USD3.4713 per ADS on March 31, 2012.

e. Redemption on the Maturity Date: On the maturity date, UMC will redeem the bonds at 98.76% of the principal amount unless, prior to such date:

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 conversion right before maturity; or

iii. The bonds shall have been redeemed or repurchased by UMC and cancelled.

In accordance with R.O.C. SFAS No. 36 “Financial Instruments: Disclosure and Presentation”, the value of the conversion right of the convertible bonds was determined at issuance and recognized in additional paid-in capital – stock options amounting to NT$680 million, excluding issuance costs allocated to additional paid-in capital – stock options amounting to NT$3 million. The effective interest rate on the liability component of the convertible bonds was determined to be 0.82%.

D. Repayments of the above-mentioned bonds in the future year are as follows:

Bonds repayable (Year)		Amount
2014		$5,971,528
2016		12,420,903
Total		$18,392,431

(14) LONG-TERM LOANS

a. Details of long-term loans are as follows:

Lender	As of March 31, 2012	Redemption
Secured Long-Term Loan from Bank of Taiwan(1)	$408,333	Repayable quarterly from March 30, 2011 to December 30, 2013 and interest is paid monthly.
Secured Long-Term Loan from Bank of Taiwan(2)	1,437,160	Repayable quarterly from October 13, 2012 to July 13, 2016 and interest is paid monthly.
Secured Long-Term Loan from First Commercial Bank(1)	620,000	Repayable semiannually from June 30, 2012 to December 31, 2015 and interest is paid monthly.
Secured Long-Term Loan from First Commercial Bank(2)	200,000	Repayable semiannually from December 24, 2012 to June 24, 2016 and interest is paid monthly.
Secured Long-Term Loan from First Commercial Bank(3)	200,000	Bullet repayment on May 16, 2014 and interest is paid monthly.

Lender

As of March 31, 2012

Redemption

Secured Long-Term Loan from First Commercial Bank(4)

$400,000

Bullet repayment on June 27, 2014 and interest is paid monthly.

Secured Long-Term Loan from Mega International Commercial Bank

944,000

Repayable quarterly from June 30, 2012 to June 30, 2016 and interest is paid monthly.

Secured Syndicated Loans from Bank of Taiwan and 7 others

2,077,500

Repayable semiannually from February 10, 2012 to August 10, 2013 and interest is paid monthly.

Secured Syndicated Loans from Taiwan Cooperative Bank and 5 others

1,050,000

Repayable semiannually from October 25, 2010 to April 25, 2015 and interest is paid monthly.

Unsecured Long-Term Loan from Mega International Commercial Bank

4,000,000

Repayable quarterly from December 28, 2012 to December 28, 2015 and interest is paid monthly.

Unsecured Long-Term Loan from First Commercial Bank (1)

50,000

Repayable quarterly from May 22, 2011 to February 22, 2013 and interest is paid monthly.

Unsecured Long-Term Loan from First Commercial Bank (2)

125,000

Repayable quarterly from September 30, 2011 to June 30, 2013 and interest is paid monthly.

Unsecured Revolving Loan from China Trust Commercial Bank (Note 1)

1,500,000

Settlement due on August 30, 2016 and interest is paid monthly.

Unsecured Revolving Loan from Chang Hwa Commercial Bank (Note 2)

500,000

Settlement due on December 29, 2016 and interest is paid monthly.

Unsecured Long- Term Loan from Taishin Bank

400,000

Bullet Repayment on August 25, 2013 and interest is paid monthly.

Subtotal

13,911,993

Less: Administrative expenses from syndicated loans

(6,525)

Less: Current portion

(3,265,480)

Total

$10,639,988

For the three-month period ended

March 31, 2012

Interest Rates

1.28%~2.29%

Lender	As of March 31, 2011	Redemption
Secured Long-Term Loan from Bank of Taiwan	$641,666	Repayable quarterly from March 30, 2011 to December 30, 2013 and interest is paid monthly.
Secured Long-Term Loan from First Commercial Bank	620,000	Repayable semiannually from June 30, 2012 to December 31, 2015 and interest is paid monthly.
Secured Syndicated Loans from Bank of Taiwan and 7 others	5,540,000	Repayable semiannually from February 10, 2012 to August 10, 2015 and interest is paid monthly.
Secured Syndicated Loans from Taiwan Cooperative Bank and 5 others	1,350,000	Repayable semiannually from October 25, 2010 to April 25, 2015 and interest is paid monthly.
Unsecured Long-Term Loan from Mega International Commercial Bank (1)	55,400	Repayable quarterly from May 25, 2010 to May 25, 2012 and interest is paid monthly.
Unsecured Long-Term Loan from Mega International Commercial Bank (2)	200,000	Repayable quarterly from December 28, 2012 to December 28, 2015 and interest is paid monthly.
Unsecured Long-Term Loan from First Commercial Bank (1)	100,000	Repayable quarterly from May 22, 2011 to February 22, 2013 and interest is paid monthly.
Unsecured Long-Term Loan from First Commercial Bank (2)	200,000	Repayable quarterly from September 30, 2011 to June 30, 2013 and interest is paid monthly.
Subtotal	8,707,066
Less: Administrative expenses from syndicated loans	(10,909)
Less: Current portion	(1,395,433)
Total	$7,300,724

	For the three-month period ended March 31, 2011
Interest Rates	1.14%~2.10%

Note 1: UMC entered into a 5-year loan agreement with China Trust Commercial Bank, effective August 30, 2011. The agreement offered UMC a revolving line of credit of NT$2.5 billion starting from the first time use of the loan to the expiry date of the agreement, August 30, 2016. As of March 31, 2012, the unused line of credit was NT$1 billion.

Note 2: UMC entered into a 5-year loan agreement with Chang Hwa Commercial Bank, effective December 29, 2011. The agreement offered UMC a revolving line of credit of NT$3 billion starting from the first time use of the loan to the expiry date of the agreement, December 29, 2016. As of March 31, 2012, the unused line of credit was NT$2.5 billion.

b. The long-term loans on March 31, 2012 will be repaid by installments with the last payment on December 29, 2016. Repayments in the coming years respectively are as follows:

Long-Term Loans repayable (Year)		Amount
2012 2^nd quarter and thereafter		$2,024,103
2013		4,398,010
2014		2,917,177
2015		2,167,177
2016		2,405,526
Total		$13,911,993

c. Please refer to Note 5 for property, plant and equipment pledged as collateral for long- term loans.

(15) CAPITAL STOCK

a. UMC had 26,000 million common shares authorized to be issued, and 12,988 million shares were issued as of March 31, 2011, each at a par value of NT$10.

b. UMC had issued a total of 230 million ADSs, which were traded on the NYSE as of March 31, 2011. The total number of common shares of UMC represented by all issued ADSs was 1,148 million shares as of March 31, 2011. One ADS represents five common shares.

c. On March 14, 2012, the Company cancelled 158 million shares of treasury stock, which were repurchased during the periods from January 7 to February 16, 2009, for the purpose of transferring to employees.

d. UMC had 26,000 million common shares authorized to be issued, and 12,926 million shares were issued as of March 31, 2012, each at a par value of NT$10.

e. UMC had issued a total of 230 million ADSs, which were traded on the NYSE as of March 31, 2012. The total number of common shares of UMC represented by all issued ADSs was 1,148 million shares as of March 31, 2012. One ADS represents five common shares.

f. Among the employee stock options issued by UMC on June 19, 2009, 107,037 thousand options were exercised during the three-month period ended March 31, 2012. The issuance process for 96,430 thousand shares was completed through the authority as of March 31, 2012. UMC recorded cash collected for the remaining 10,607 thousand shares still pending authorization as of March 31, 2012 under Capital collected in advance.

(16) EMPLOYEE STOCK OPTIONS

On September 30, 2004, December 22, 2005, October 9, 2007 and May 12, 2009, the Company was authorized by the Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan, to issue employee stock options with a total number of 150 million, 350 million, 500 million and 500 million units, respectively. Each unit entitles an optionee to subscribe to 1 share of the Company’s common stock. Settlement upon the exercise of the options will be made through the issuance of new shares by the Company. The exercise price of the options was set at the closing price of the Company’s common stock on the date of grant. The contractual life is 6 years and an optionee may exercise the options in accordance with certain schedules as prescribed by the plan after 2 years from the date of grant. Detailed information relevant to the employee stock options is disclosed as follows:

Date of grant	Total number of options granted (in thousands)	Total number of options outstanding (in thousands)	Shares available to option holders (in thousands) (Note)	Exercise price (NTD) (Note)
October 13, 2004	20,200	-	-	$24.28
April 29, 2005	23,460	-	-	$22.37
August 16, 2005	54,350	-	-	$29.47
September 29, 2005	51,990	-	-	$26.89
January 4, 2006	39,290	-	-	$23.17
May 22, 2006	42,058	18,957	13,216	$25.19
August 24, 2006	28,140	10,455	7,289	$24.09
December 13, 2007	500,000	349,951	349,951	$18.03
June 19, 2009	300,000	151,648	151,648	$10.40
Total	1,059,488	531,011	522,104

Note: The employee stock options granted prior to August 7, 2007, the effective date of capital reduction, were adjusted in accordance with the capital reduction rate. Each option unit entitles an optionee to subscribe for about 0.7 share of the Company’s common stock. The exercise price of the options is also adjusted according to capital reduction rate. Each stock option unit granted after August 7, 2007 remains to be subscribed for 1 share of the Company’s common stock.

a. A summary of the Company’s stock option plan, and related information for the three-month periods ended March 31, 2012 and 2011 is as follows:

	For the three-month periods ended March 31,
	2012			2011
	Options (in thousands)	Shares available to option holders (in thousands)	Weighted- average Exercise Price per share (NTD)	Options (in thousands)	Shares available to option holders (in thousands)	Weighted- average Exercise Price per share (NTD)
Outstanding at beginning of period	560,526	547,724	$16.09	752,700	718,876	$16.05
Exercised	(10,493)	(10,493)	$10.40	-	-	$-
Forfeited	(6,512)	(6,406)	$16.83	(11,973)	(11,208)	$16.43
Expired	(12,510)	(8,721)	$23.17	-	-	$-
Outstanding at end of period	531,011	522,104	$16.08	740,727	707,668	$16.04

Exercisable at end of period	393,984	385,382	$17.93	378,438	345,887	$19.77

b. The information on the Company’s outstanding stock options as of March 31, 2012, is as follows:

		Outstanding Stock Options				Exercisable Stock Options
Authorization Date	Range of Exercise Price (NTD)	Options (in thousands)	Shares available to option holders (in thousands)	Weighted- average Expected Remaining Years	Weighted- average Exercise Price per share (NTD)	Options (in thousands)	Shares available to option holders (in thousands)	Weighted- average Exercise Price per share (NTD)
2005.12.22	$24.09~$25.19	29,412	20,505	0.23	$24.80	28,403	19,801	$24.80
2007.10.09	$18.03	349,951	349,951	1.70	$18.03	343,069	343,069	$18.03
2009.05.12	$10.40	151,648	151,648	3.21	$10.40	22,512	22,512	$10.40
		531,011	522,104	2.08	$16.08	393,984	385,382	$17.93

c. The Company used the intrinsic value method to recognize compensation costs for its employee stock options issued between January 1, 2004 and December 31, 2007. Compensation costs for these options were NT$0 for the three-month periods ended March 31, 2012 and 2011. For options granted on or after January 1, 2008, the Company recognized compensation cost of NT$25 million and NT$63 million using the fair value method in accordance with R.O.C. SFAS No. 39 “Accounting for Share-Based Payment.” (R.O.C. SFAS 39) for the three-month periods ended March 31, 2012 and 2011, respectively.

The Company granted options prior to adopting R.O.C. SFAS 39. Pro forma information on net income and earnings per share using the fair value method is as follows:

	For the three-month period ended March 31, 2012
	Basic earnings per share	Diluted earnings per share
Net income	$1,335,450	$1,355,716
Earnings per share (NTD)	$0.11	$0.10
Pro forma net income	$1,334,187	$1,354,453
Pro forma earnings per share (NTD)	$0.11	$0.10

	For the three-month period ended March 31, 2011
	Basic earnings per share	Diluted earnings per share
Net income	$4,483,493	$4,483,493
Earnings per share (NTD)	$0.36	$0.35
Pro forma net income	$4,447,460	$4,447,460
Pro forma earnings per share (NTD)	$0.36	$0.35

The fair value of the options outstanding as of March 31, 2012 and 2011 were estimated at the date of grant using the Black-Scholes options pricing model with the following weighted-average assumptions. The factors before and after the adoption of R.O.C. SFAS 39 to account for share-based payment were as follows:

Factors

Before

After

Expected dividend yields

Volatility factors of the expected market price of the Company’s common stock

1.37~1.71%

36.29%~49.10%

1.98%

40.63%

Risk-free interest rate

Weighted-average expected life

1.85%~2.85%

4~5 years

1.01%

3.16~5.03 years

(17) TREASURY STOCK

a. Changes in treasury stock during the three-month periods ended March 31, 2012 and 2011 are as follows:

For the three-month period ended March 31, 2012

(In thousands of shares)

Purpose

As of

January 1, 2012

Increase

Decrease

As of

March 31, 2012

For transfer to employees

457,934

157,934

300,000

For the three-month period ended March 31, 2011

(In thousands of shares)

Purpose

As of

January 1, 2011

Increase

Decrease

As of

March 31, 2011

For transfer to employees

457,934

b. According to the Securities and Exchange Law of the R.O.C., the total shares of treasury stock shall not exceed 10% of UMC’s issued stock, and the total purchase amount shall not exceed the sum of the retained earnings, additional paid-in capital – premiums and realized additional paid-in capital. As such, the maximum number of shares of treasury stock that UMC could hold as of March 31, 2012 and 2011, were 1,293 million shares and 1,299 million shares, while the ceiling amounts were NT$65,062 million and NT$62,996 million, respectively.

c. In compliance with Securities and Exchange Law of the R.O.C., treasury stock should not be pledged, nor should it be entitled to voting rights or receiving dividends. Stock held by subsidiaries is treated as treasury stock. These subsidiaries have the same rights as other stockholders except for subscription to new stock issuance and voting rights.

d. As of March 31, 2012, UMC’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held 16 million shares of UMC’s stock, with a book value of NT$14.45 per share. The closing price on March 31, 2012 was NT$14.45.

As of March 31, 2011, UMC’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held 16 million shares of UMC’s stock, with a book value of NT$15.30 per share. The closing price on March 31, 2011 was NT$15.30.

(18) 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:

a. Payment of all taxes and dues;

b. Offset prior years’ operation losses;

c. Set aside 10% of the remaining amount after deducting items (a) and (b) as a legal reserve;

d. Special capital reserve or reversal in accordance with relevant laws or regulations or as requested by the authorities in charge; (Note)

e. Set aside 0.1% of the remaining amount after deducting items (a), (b), (c) and (d) as directors’ remuneration; and

f. After deducting items (a), (b), (c) and (d) above from the current year’s earnings, no less than 5% of the remaining amount together with the prior years’ unappropriated earnings is to be allocated as employee bonus, which will be settled through issuance of new shares of UMC, or cash. Employees of UMC’s subsidiaries, meeting certain requirements determined by the board of directors, are also eligible for the employee stock bonus.

g. The distribution of the remaining portion, if any, will be recommended by the board of directors and resolved in the stockholders’ meeting.

The policy for dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the benefit of stockholders, stock dividend equilibrium, and long-term financial planning. The board of directors shall make the distribution proposal annually and present it at the stockholders’ meeting. UMC’s Articles of Incorporation further provide that no more than 80% of the dividends to stockholders, if any, may be paid in the form of stock dividends. Accordingly, at least 20% of the dividends must be paid in the form of cash.

Note: In light of the amendment of the Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies on March 31, 2011, UMC’s Articles of Incorporation were revised and revisions approved in the stockholders’ meeting held on June 15, 2011.

According to the regulation of Taiwan SFC, UMC is required to appropriate a special reserve in the amount equal to the sum of debit elements under stockholders’ equity, such as unrealized loss on financial instruments and negative cumulative translation adjustment, at every year-end. Such special reserve is prohibited from distribution. However, if any of the debit elements is reversed, the special reserve in the amount equal to the reversal may be released for earnings distribution or offsetting accumulated deficit.

During the years ended December 31, 2011 and 2010, the amounts of the employee bonus and remunerations to directors were estimated. The board of directors estimated the amount by taking into consideration of UMC’s Articles of Incorporation, government regulations and industry average. Estimated amount of employee bonus and remunerations paid to directors are charged to current income. If the board modified the estimates significantly in the subsequent periods, UMC will recognize the change as an adjustment to current income. Moreover, if the amounts were modified by the stockholders’ meeting in the following year, the adjustment will be regarded as a change in accounting estimate and will be reflected in the consolidated statement of income in the following year. Upon stockholders’ approval of the employee stock bonus, the distribution amount is determined by dividing the total approved bonus amount with the closing market price of UMC’s stock one day prior to the approved date. Information about appropriations of the bonus to employees and directors can be obtained from the “Market Observation Post System” on the website of the TSE.

The appropriation and compensation of 2011 unappropriated retained earnings has not yet been approved by the stockholder’s meeting as of the reporting date. Information on the board of directors’ recommendations and stockholders’ approval can be obtained from the “Market Observation Post System” on the website of the TSE.

The appropriation and compensation of 2011 unappropriated retained earnings has not yet been approved by the stockholders’ meeting as of the reporting date. Information on the board of directors’ recommendations and stockholders’ approval can be obtained from the “Market Observation Post System” on the website of the TSE.

The distributions of cash dividend, employee bonus and directors’ remuneration for 2011 and 2010 were approved through the board of directors meeting and the stockholders’ meeting held on March 14, 2012 and June 15, 2011, respectively. The details of distribution are as follows:

	2011	2010
Cash Dividend	NT$0.50 per share	NT$1.12 per share
Employee bonus – Cash (in thousand NTD)	1,618,217	2,476,611
Directors’ remuneration (in thousand NTD)	9,303	21,402

Employee bonus and directors’ remuneration for 2010 which were approved through the stockholders’ meeting, were consistent with the resolutions of meeting of Board of Directors held on March 16, 2011.

The aforementioned cash dividend for 2010 was adjusted to NT$1.11164840 per share due to the increase in outstanding common stock as a result of newly issued shares to settle employee stock options exercised. The distribution was approved through the Board of Directors’ meeting held on July 8, 2011.

(19) EARNINGS PER SHARE

For the three-month period ended March 31, 2012, there were unsecured convertible bonds outstanding and for the three-month periods ended March 31, 2012 and 2011, there were employee stock options outstanding and the Company calculated the effect of employee bonus in accordance with the ARDF Interpretation No. 97-169. The Company is considered as a complex capital structure. Therefore, in consideration of such complex structure, the calculated basic and diluted earnings per share for the three-month periods ended March 31, 2011 and 2010, are disclosed as follows:

	For the three-month period ended March 31, 2012
	Amount			Earnings per share (NTD)
	Income before income tax	Net income	Shares expressed in thousands	Income before income tax	Net income
Earnings per share-basic (NTD)
Income attributable to UMC’s common stock stockholders	$1,534,014	$1,335,450	12,613,307	$0.12	$0.11
Effect of dilution
Employee bonus	$-	$-	133,128
Employee stock options	-	-	46,030
Unsecured convertible bonds	24,417	20,266	628,007
Earnings per share-diluted:
Income attributable to UMC’s common stock stockholders	$1,558,431	$1,355,716	13,420,472	$0.12	$0.10

	For the three-month period ended March 31, 2011
	Amount			Earnings per share (NTD)
	Income before income tax	Net income	Shares expressed in thousands	Income before income tax	Net income
Earnings per share-basic (NTD)
Income attributable to UMC’s common stock stockholders	$4,928,880	$4,483,493	12,513,899	$0.39	$0.36
Effect of dilution
Employee bonus	$-	$-	202,868
Employee stock options	-	-	93,287
Earnings per share-diluted:
Income attributable to UMC’s common stock stockholders	$4,928,880	$4,483,493	12,810,054	$0.38	$0.35

4. RELATED PARTY TRANSACTIONS

(1) Name and Relationship of Related Parties

Name of related parties		Relationship with the Company
UMCI LTD.		Equity Investee (liquidation completed on May 10, 2011)
UNITECH CAPITAL INC.		Equity Investee
MEGA MISSION LIMITED PARTNERSHIP		Equity Investee
MTIC HOLDINGS PTE. LTD.		Equity Investee
UNIMICRON HOLDING LIMITED		Equity Investee
HSUN CHIEH INVESTMENT CO., LTD.		Equity Investee
UNITED MICRODISPLAY OPTRONICS CORP.		Equity Investee (liquidation completed on June 23, 2011)
BEST ELITE INTERNATIONAL LIMITED		Equity Investee (since December 2011)
SILICON INTEGRATED SYSTEMS CORP. (SIS)		The Company’s director
SOCIALNEX ITALIA 1 S.R.L.		Subsidiary’s equity investee
POWER LIGHT TECH CO., LTD. (PLT) (NOTE)		Subsidiary’s equity investee (NOTE)
EXOJET TECHNOLOGY CORP.		Subsidiary’s equity investee
MOS ART PACK CORP.		Subsidiary’s equity investee (has filed for liquidation on March 10, 2011)
CRYSTAL MEDIA INC.		Subsidiary’s equity investee (ceased to be an subsidiary’s equity investee since April 2011)
SHENYANG PIONEER U-LIGHTING OPTO-ELECTRONIC CO., LTD.		Subsidiary’s equity investee
UNITED LED CORPORATION HONG KONG LIMITED		Subsidiary’s equity investee
LTI REENERGY CO., LTD.		Subsidiary’s equity investee (since October 2011)
SOLAR GATE TECHNOLOGY CO., LTD.		Subsidiary’s equity investee
CRYSTALWISE TECHNOLOGY INC.		Subsidiary’s equity investee
UNIMICRON CORPORATION		Subsidiary’s director
JINING SUNRICH SOLARENERGY CORPORATION (JINING SUNRICH)		Same general manager with subsidiaries
HEJIAN TECHNOLOGY (SUZHOU) CO., LTD.		Equity Investee’s subsidiary

Note: On April 1, 2011, UNITED LIGHTING OPTO-ELECTRONIC INC. was merged with PLT. After the business combination, PLT is the surviving company and was renamed to UNITED LIGHTING OPTO-ELECTRONIC.

(2) Significant Related Party Transactions

a. Operating revenues

	For the three-month periods ended March 31,
	2012		2011
	Amount	Percentage	Amount	Percentage
SIS	$15,242	0	$95,840	0
Others	130,612	1	117,066	1
Total	$145,854	1	$212,906	1

The sales price to the above related parties was determined through mutual agreement based on the market conditions. The collection period for overseas sales to related parties was net 60 days, while the terms for domestic sales were month-end 45~60 days. The collection period for third party overseas sales was net 30~60 days, while the terms for third party domestic sales were month-end 30~60 days.

b. Accounts receivable, net

	As of March 31,
	2012		2011
	Amount	Percentage	Amount	Percentage
JINING SUNRICH	$105,437	1	$22,358	0
SIS	14,773	0	118,979	1
Others	94,722	0	32,457	0
Total	214,932	1	173,794	1
Less： Allowance for sales returns and discounts	(37)		(449)
Net	$214,895		$173,345

5. ASSETS PLEDGED AS COLLATERAL

As of March 31, 2012


	Amount	Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$646,048	Customs	Customs duty guarantee
Deposit-out (Time deposit)	132,819	Science Park Administration	Collateral for land lease
Deposit-out (Time deposit)	43,800	Liquefied Natural Gas Business Division, CPC Corporation, Taiwan	Energy resources guarantee
Deposit-out (Time deposit)	26,624	Securities and Futures Investors Protection Center	Negotiation guarantee


	Amount	Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$1,246	Bureau of Energy, Ministry of Economic Affairs	Energy resources guarantee
Land	699,627	First Commercial Bank	Collateral for long- term loans
Buildings	1,961,814	Syndicated Loans from Bank of Taiwan and 7 others and Syndicated Loans from Taiwan Cooperative Bank and 5 others	Collateral for long- term loans
Machinery and equipment	8,997,099	Bank of Taiwan, Taiwan Cooperative Bank, First Commercial Bank ,Mega International Commercial Bank, Syndicated Loans from Bank of Taiwan and 7 others and Syndicated Loans from Taiwan Cooperative Bank and 5 others	Collateral for long- term loans
Furniture and fixtures	72,948	Syndicated Loans from Bank of Taiwan and 7 others and Syndicated Loans from Taiwan Cooperative Bank and 5 others	Collateral for long- term loans
Construction in progress and prepayments	1,264,736	Bank of Taiwan, First Commercial Bank and Mega International Commercial Bank	Collateral for long- term loans
Total	$13,846,761

As of March 31, 2011


	Amount	Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$645,857	Customs	Customs duty guarantee
Deposit-out (Time deposit)	99,859	Science Park Administration	Collateral for land lease and guarantee for investment plan


	Amount	Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$43,800	Liquefied Natural Gas Business Division, CPC Corporation, Taiwan	Energy resources guarantee
Deposit-out (Time deposit)	26,624	Securities and Futures Investors Protection Center	Negotiation guarantee
Deposit-out (Time deposit)	960	Bureau of Energy, Ministry of Economic Affairs	Energy resources guarantee and construction guarantee
Machinery and equipment	7,855,753	Bank of Taiwan, First Commercial Bank, Syndicated Loans from Bank of Taiwan and 7 others and Syndicated Loans from Taiwan Cooperative Bank and 5 others	Collateral for long- term loans
Construction in progress and prepayments	39,232	First Commercial Bank	Collateral for long- term loans
Total	$8,712,085

6. COMMITMENTS AND CONTINGENT LIABILITIES

(1) The Company has entered into several patent license agreements and development contracts of intellectual property for a total contract amount of approximately NT$5.8 billion. Royalties and development fees payable in future years are NT$2.9 billion as of March 31, 2012.

(2) The Company signed several construction contracts for the expansion of its factory premise. As of March 31, 2012, these construction contracts amounted to approximately NT$3 billion and the unpaid portion of the contracts, which was not accrued, was approximately NT$0.5 billion.

(3) The Company entered into several operating lease contracts for land and office. These renewable operating leases will expire in various years through 2049. Future minimum lease payments under those leases are as follows:

For the years ended December 31,		Amount
2012 2^nd quarter and thereafter		$284,300
2013		350,940
2014		306,338
2015		283,163
2016		247,103
2017 and thereafter		1,474,730
Total		$2,946,574

7. SIGNIFICANT DISASTER LOSS

None.

8. SIGNIFICANT SUBSEQUENT EVENT

On April 25, 2012, in order to achieve its global market objectives, UMC’s Board of Directors approved an offer to the stockholders of Best Elite International Limited (Best Elite), the ultimate holding company of HeJian, to continue to purchase up to 64.97% of the voting shares UMC does not already own. The consideration will be in cash, and UMC will determine the purchase price based on the latest book value, market conditions and acquisition of controlling interest. UMC will file the offer with government authorities based on related regulations and make progress announcements accordingly.

9. OTHERS

(1) Financial risk management objectives and policies

The Company’s principal financial instruments, other than derivatives, are comprised of cash and cash equivalents, common stock, bonds, open-end funds, bank loans, and bonds payable. The main purpose of these financial instruments is to manage financing for the Company’s operations. The Company also holds various other financial assets and liabilities such as notes receivable, accounts receivable, notes payable and accounts payable, which arise directly from its operations.

UMC also enters into derivative transactions, including forward currency contracts. The purpose of these derivative transactions is to mitigate foreign currency exchange risks arising from UMC’s operations and financing activities.

The main risks arising from the Company’s financial instruments include cash flow interest rate risk, foreign currency risk, commodity price risk, credit risk, and liquidity risk.

Cash flow interest rate risk

The Company’s bank loans bear floating interest rates. The fluctuation of market interest will result in changes in the Company’s future cash flows.

Foreign currency risk

The Company has foreign currency risk arising from purchases or sales. The Company utilizes spot or forward contracts to avoid foreign currency risk. The notional amounts of the foreign currency contracts are the same as the amount of the hedged items. In principle, the Company does not carry out any forward contracts for uncertain commitments.

Commodity price risk

The Company's exposure to commodity price risk is minimal.

Credit risk

The Company only trades with established and creditworthy third parties. It is the Company's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, note and accounts receivable balances are monitored on an ongoing basis, which consequently minimizes the Company's exposure to bad debts.

With respect to credit risk arising from the other financial assets of the Company, it is comprised of cash and cash equivalents and certain derivative instruments, the Company's exposure to credit risk arising from the default of counter-parties is limited to the carrying amount of these instruments.

Although the Company only trades with established third parties, it will request collateral to be provided by third parties with less favorable financial positions.

Liquidity risk

The Company’s objective is to maintain a balance of funding continuity and flexibility through the use of financial instruments such as cash and cash equivalents, bank loans and bonds.

(2) Information of financial instruments

a. Fair value of financial instruments

	As of March 31,
	2012		2011
Financial Assets	Book Value	Fair Value	Book Value	Fair Value
Non-derivative
Cash and cash equivalents	$47,100,888	$47,100,888	$49,643,038	$49,643,038
Financial assets at fair value through profit or loss	874,476	874,476	1,094,740	1,094,740
Receivables	15,815,459	15,815,459	19,025,058	19,025,058
Restricted assets	18,706	18,706	20,791	20,791
Available-for-sale financial assets	26,287,337	26,287,337	32,603,247	32,603,247
Financial assets measured at cost	8,389,734	-	8,459,881	-
Long-term investments accounted for under the equity method	11,955,215	11,909,723	9,485,481	9,249,600
Prepayment for long-term investments	81,591	-	428,499	-
Deposits-out	1,343,392	1,343,392	923,922	923,922
Derivative
Forward contracts	-	-	3,842	3,842

	As of March 31,
	2012		2011
Financial Liabilities	Book Value	Fair Value	Book Value	Fair Value
Non-derivative
Short-term loans	$6,344,213	$6,344,213	$6,444,863	$6,444,863
Payables	24,634,426	24,634,426	28,991,934	28,991,934
Capacity deposits due within one year	2,955	2,955	-	-
Bonds payable (current portion included)	17,348,897	16,567,994	5,105,512	5,222,831
Long-term loans (current portion included)	13,905,468	13,905,468	8,696,157	8,696,157
Derivative
Derivatives embedded in exchangeable bonds	829,264	829,264	1,902,836	1,902,836
Forward contracts	-	-	1,552	1,552

b. The methods and assumptions used to measure the fair value of financial instruments are as follows:

i. The book values of short-term financial instruments approximate their fair value due to their short maturities. Short-term financial instruments include cash and cash equivalents, receivables, restricted assets, short-term loans, payables and capacity deposits due within one year.

ii. The fair value of financial assets at fair value through profit or loss and available-for-sale financial assets are based on the quoted market prices. If there are restrictions on the sale or transfer of an available-for-sale financial asset, the fair value of the asset will be determined based on similar but unrestricted financial assets’ quoted market price with appropriate discounts for the restrictions.

iii. The fair value of long-term investments accounted for under equity method are based on the quoted market prices. If market prices are unavailable, the Company estimates the fair value based on the book values.

iv. The fair value of financial assets measured at cost and prepayment for long-term investments are unable to be estimated since there is no active market in trading those unlisted investments.

v. Deposits-out is certificates of deposit collateralized at Customs or other institutions. The fair value of deposits-out is based on their carrying amount since the deposit periods are primarily within one year and renewed upon maturity.

vi. The fair value of bonds payable is determined by the market price or other information.

vii. The fair value of long-term loans is determined using discounted cash flow analysis, based on the Company’s current incremental borrowing rates for borrowings with similar types.

viii. The fair value of derivative financial instruments is based on the amount the Company expects to receive (positive) or to pay (negative) assuming that the contracts are settled in advance at the balance sheet date or is determined by the market price or other information.

c. The fair value of the Company’s financial instruments is determined by the quoted prices in active markets, or if the market for a financial instrument is not active, the Company establishes fair value by using a valuation technique:

	Active Market Quotation		Valuation Technique
Non-derivative Financial Instruments	As of March 31,
Non-derivative Financial Instruments	2012	2011	2012	2011
Financial assets
Financial assets at fair value through profit or loss	$874,476	$1,094,740	$-	$-
Available-for-sale financial assets	26,287,337	32,603,247	-	-
Long-term investments accounted for under the equity method	125,781	-	11,783,942	9,249,600
Financial liabilities
Bonds payable (current portion included)	-	-	16,567,994	5,222,831
Long-term loans (current portion included)	-	-	13,905,468	8,696,157
Derivative Financial Instruments
Financial assets
Forward contracts	-	-	-	3,842
Financial liabilities
Derivatives embedded in exchangeable bonds	-	-	829,264	1,902,836
Forward contracts	-	-	-	1,552

d. For the three-month periods ended March 31, 2012 and 2011, the total change in fair value estimated by using valuation techniques and recognized in the consolidated statement of income were a net loss of NT$88 million and a net gain of NT$322 million, respectively.

e. During the three-month periods ended March 31, 2012 and 2011, total interest revenues for financial assets or liabilities that are not at fair value through profit or loss were NT$60 million and NT$39 million, respectively, while interest expenses for the three-month periods ended March 31, 2012 and 2011 were NT$167 million and NT$111 million, respectively.

(3) UMC entered into forward contracts for hedging the exchange rate risk arising from the net assets or liabilities denominated in foreign currency. UMC entered into these derivative financial instruments in connection with its hedging strategy to reduce the market risk of the hedged items, and these financial instruments were not held for trading purpose. The relevant information on the derivative financial instruments entered into by UMC is as follows:

a. The details of forward contracts entered into by UMC are summarized as follows:

As of March 31, 2011

Type

Notional Amount

Contract Period

Forward contracts

Sell USD 56 million

February 25, 2011 to

April 25, 2011

b. Transaction risk

(a) Credit risk

There is no significant credit risk exposure with respect to the above transactions as the counter-parties are reputable financial institutions with good global standing.

(b) Liquidity and cash flow risk

The cash flow requirements on forward contracts are limited to the forward contract’s principal amount, which is the same as the underlying net assets or liabilities denominated in their foreign currencies at the settlement day. Therefore, no significant cash flow risk is anticipated since the working capital is sufficient to meet the cash flow requirements.

Forward contracts are intended for hedging purposes. Gains or losses arising from the fluctuations in exchange rates are likely to be offset against the gains or losses from the hedged items. As a result, no significant exposure to market risk is anticipated.

c. The presentation of derivative financial instruments in the financial statements is summarized as follows:

As of March 31, 2012 and 2011, the forward contracts were classified as financial assets at fair value through profit or loss amounted to NT$0 and NT$4 million, respectively, while the forward contracts were classified as financial liabilities at fair value through profit or loss amounted to NT$0 and NT$2 million, respectively. And for the changes in valuation, net losses of NT$0 and NT$23 million were recorded under non-operating expense for the three month periods ended March 31, 2012 and 2011, respectively.

(4) Significant intercompany transactions among consolidated entities for the three-month periods ended March 31, 2012 and 2011 are disclosed in Attachment 1.

(5) The Company uses the equity method to account for its investments in UNITED LED CORPORATION HONG KONG LIMITED, SHENYANG PIONEER U-LIGHTING OPTO-ELECTRONIC CO., LTD., SHANDONG HUAHONG ENERGY INVEST CO., INC., LTI REENERGY CO., LTD., WINAICO SOLAR PROJEKT 1 GMBH, ASEPOWER 1 S.R.L. and SOCIALNEX ITALIA 1 S.R.L., jointly controlled entities, since June 1, 2010, July 6, 2010, January 7, 2011, September 28, 2011, December 7, 2011, March 31, 2012 and March 31, 2012, respectively. Among them, UNITED LED CORPORATION HONG KONG LIMITED ceased to be a jointly controlled entity since October 17, 2011. The summarized financial information which the Company recognized is as follows:

Items	As of March 31
Items	2012	2011
Current assets	$78,953	$744,960
Noncurrent assets	35,952	1,789,557
Current liabilities	13,733	276,072
Long-term liabilities	895	273,943

Items	For the three-month periods Ended March 31
Items	2012	2011
Revenues	$2,414	$18,904
Expenses	1,835	8,398

(6) The functional currency of UMC and some of its subsidiaries is New Taiwan Dollar, while other subsidiaries have functional currencies in US Dollar, Japanese Yen or Chinese RMB. The exchange rates used to translate assets and liabilities denominated in foreign currencies are disclosed as follows:

	As of March 31, 2012			As of March 31, 2011
	Foreign Currency (thousand)	Exchange Rate	NTD (thousand)	Foreign Currency (thousand)	Exchange Rate	NTD (thousand)
Financial Assets
Monetary items
USD	$1,220,419	29.44	$35,928,691	$1,086,588	29.36	$31,903,424
JPY	16,850,430	0.3575	6,023,861	21,483,105	0.3540	7,604,763
EUR	12,200	39.23	478,597	17,083	41.65	711,588
SGD	30,908	23.42	723,864	31,696	23.26	737,237
CNY	66,382	4.68	310,555	44,432	4.47	198,723
Non-Monetary items
USD	72,973	29.45	2,149,057	28,351	29.36	832,389
CHF	2,800	32.63	91,364	2,649	32.00	84,762

Long-term investments accounted for under the equity method
USD	237,481	29.41	6,983,955	126,140	29.31	3,697,486
EUR	1,452	39.12	56,789	-	-	-
SGD	9,282	23.27	216,040	10,383	23.22	241,085

Joint controlled entities
USD	-	-	-	7,431	28.92	214,930
EUR	1,158	39.23	45,433	-	-	-
CNY	153,280	4.68	717,293	151,680	4.44	673,744

Financial Liabilities
Monetary items
USD	692,234	29.55	20,455,501	740,967	29.46	21,828,821
JPY	7,644,049	0.3615	2,763,502	7,715,257	0.3573	2,757,012
EUR	4,742	39.63	187,907	7,802	41.89	326,797
SGD	30,068	23.60	709,597	23,715	23.44	555,891
CNY	12,774	4.69	59,972	6,908	4.49	31,040

(7) Pre-disclosure for adoption of International Financial Reporting Standards

a. In accordance with Financial Supervisory Commission, Executive Yuan, R.O.C., (FSC) Announcement No. 0990004943, listed, over-the-counter and emerging stock companies should adopt International Financial Reporting Standards (IFRSs) which is translated and published by Accounting Research and Development Foundation (ARDF), as the criteria for preparation of financial reports, effective starting 2013. As such, a special project team was assembled and a project plan was developed to adopt IFRSs. Chidong Liu, the Chief Financial Officer is responsible for the coordination of the project.

The following table summarizes the progress to date against the key activities and target dates of the conversion plan:

Key Activity

Responsible Department

Progress to March 31, 2012

1. Assessment phase: (From June 1, 2009 to December 31, 2011)

◎ Development of the adoption plan and assembly of project team

◎ Internal IFRSs trainings for employees - First stage

◎ Comparison and analysis of differences between R.O.C. SFAS and IFRSs accounting policies

◎ Assessment on adjustments to current accounting policies

◎ Assessment on selection of IFRSs 1 “First-time Adoption of International Financial Reporting Standards” optional exemptions

◎ Assessment of changes required in the information systems and internal controls related to the adoption of IFRSs

Accounting Department

Internal Audit Department and IT Department

Completed

2. Preparation phase: (From January 1, 2011 to December 31, 2012)

◎ Adjustments on existing accounting policies to conform with IFRSs

◎ Selection of IFRS 1 “First-time Adoption of International Financial Reporting Standards”optional exemptions

◎ Modifications to information systems and internal control related to the adoption of IFRSs

◎ Internal IFRSs trainings for employees - Second stage

Accounting Department

Internal Audit Department and IT Department

Accounting Department

Completed

In progress

3. Execution phase: (From January 1, 2012 to December 31, 2013)

◎ Implementation test of modified information system related to the adoption of IFRSs

◎ Preparation of IFRSs opening balance sheet and opening financial statements

◎ Preparation of comparative IFRSs financial statements

IT Department

Accounting Department

In preparation

b. The major differences and influences assessed by the Company between accounting policies under R.O.C. SFAS and future adopted IFRSs are summarized as below:

(a) The Company assesses the material differences in accounting polices based on the IFRSs as approved by the FSC and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers expected to become effective in 2013.

Accounting Issue

Difference

Employee benefits

Under IFRSs, the Company elects as an accounting policy to recognize all actuarial gains and losses in the period in which they occur in other comprehensive income and then recognized immediately in retained earnings. In accordance with R.O.C. SFAS, actuarial gains and losses from each defined benefit plan shall be applied the corridor method and assessed to determine if there was any excess amount which to be recognized as current period gains or losses on each reporting date.

Investments in Associates

Under IFRSs, an investor shall discontinue the use of the equity method from the date when it ceases to have significant influence over an associate and shall account for as financial instrument under relevant standards. On the loss of significant influence, the investor shall measure at fair value any investment the investor retains in the former associate. The investor shall recognize in profit or loss any difference between: (a) the fair value of any retained investment and any proceeds from disposing of the part interest in the associate; and (b) the carrying amount of the investment at the date when significant influence is lost. Moreover, an investor shall derecognize for all additional paid-in capital and equity adjustment items related to the former associate to current profit and loss, the cash dividend received thereafter shall be treated as dividend income.

In accordance with R.O.C. SFAS, an investor shall discontinue the use of the equity method from the date when it ceases to have significant influence over an associate. The new investment cost should be the carrying amount of the former associate on the loss of significant influence. The additional paid-in capital and other equity adjustment items related to the former associate should be proportionately derecognized to current profit and loss, and the difference between the carrying amount plus the equity adjustment items and the amount proceed from the disposal shall be recognized as the disposal gain or loss. Any cash dividends received after the loss of significant influence, should be treated as the recovery of investment cost if the accumulated dividend amount was greater than the investor’s holding interest in the former associate.

Under R.O.C. SFAS, when the Company does not take up proportionately shares of its equity investee’s issuance of new shares, the change in equity in net assets for the investment shall be adjusted in the additional paid-in capital and the long-term investments accounts. However, in accordance with IFRSs, the investor should recognize as a disposal gain or loss transferred from other comprehensive income and other equity adjustment items proportionately related to the investment to the decrease in holding interest as a deemed disposal. For increase in shareholding (deemed acquisition), any difference between the cost of the investment and the investor’s share of the net fair value of the associate’s identifiable assets and liabilities is treated as goodwill and included in the carrying amount of the investment.

Accounting Issue

Difference

Business Combinations and Consolidated and Separate Financial Statements

In accordance with IFRSs, in a business combination achieved in stages, the acquirer shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in profit or loss or other comprehensive income, as appropriate. The acquirer shall recognize goodwill or gain on bargain purchase as of the acquisition date measured as the excess of (a) over (b) below:

(a) the aggregate of:

(i) the consideration transferred which generally is the fair value on acquisition date

(ii) the fair value of acquiree's non-controlling interest, and

(iii) in a business combination achieved in stages, the acquisition-date fair value of the acquirer's previously held equity interest in the acquiree.

(b) the fair value of identifiable assets acquired and the liabilities assumed on acquisition date.

In accordance with R.O.C. SFAS, goodwill is measured separately on each acquisition, and it excludes goodwill in non-controlling interest. In a step acquisition, the acquirer does not remeasure its previously held equity interest in the acquiree, therefore the acquisition would not result in gains or losses from remeasurements.

In accordance with IFRSs, changes in a parent's ownership interest in a subsidiary which do not result in the loss of control is treated as an equity transaction. In accordance with R.O.C. SFAS, acquiring part of or all shares from subsidiaries’ minority stockholders, shall be accounted for using acquisition method. When selling long-term investments accounted for under equity method, the differences between selling price and carrying amount shall be recognized as gains or losses at disposal of long-term equity investment.

Accounting Issue

Difference

Financial Instruments

In accordance with IFRSs, an entity is precluded from measuring the financial asset at fair value if the range of reasonable fair value estimates is significant and the probabilities of the various estimates cannot be reasonably assessed. Prior to adoption of IFRSs, in accordance with Criteria Governing the Preparation of Financial Reports by Securities Issuer, unlisted or emerging stock companies shall be classified as financial assets measured at cost. After adoption of IFRSs, unlisted and emerging stock companies will be reassessed in accordance with IFRSs and reclassified into available-for-sale financial assets or financial assets designated at fair value through profit or loss, or held for trading.

(b) The preliminary assessment on the quantitative impacts of the material differences between the existing accounting policies and the accounting policies to be adopted under IFRSs and the Guidelines Governing the Preparation of Financial Reports by Securities Issuers is as follows:

I. Reconciliation of the balance sheet as at January 1, 2012

Unit: NT$K

	ROC GAAP	Adjustments	IFRSs
Current assets (b)、(f)	$84,057,514	$(303,514)	$83,754,000
Available-for-sale financial assets, non-current (a)	18,835,224	4,609,323	23,444,547
Financial assets measured at cost, non-current (a)	8,298,967	(5,245,009)	3,053,958
Property, plant and equipment (b)、(c)	149,324,300	(7,462,738)	141,861,562
Intangible Assets (d)	350,860	978,363	1,329,223

	ROC GAAP	Adjustments	IFRSs
Other non-current assets (a)、(b)、(c)、(d)、(f)、(g)	$18,964,881	$8,909,687	$27,874,568
Total Assets	279,831,746	1,486,112	281,317,858
Current liabilities (f)	42,905,954	(32,985)	42,872,969
Accrued pension liabilities (e)	3,261,101	704,651	3,965,752
Other non-current liabilities(f)	21,539,728	379,868	21,919,596
Total liabilities	67,706,783	1,051,534	68,758,317
Capital	130,844,556	-	130,844,556
Additional paid-in capital (a)(f)、(g)	46,460,665	(100,746)	46,359,919
Retained earnings (a)、(b)、(c)、(e)、(f)、(g)	24,499,124	575,195	25,074,319
Other items in stockholders' equity (a)、(b)、(c)、(e)、(f)、(g)	12,156,099	(39,871)	12,116,228
Treasury stock	(6,223,357)	-	(6,223,357)
Minority interests/ Non-controlling interests	4,387,876	-	4,387,876
Stockholders' equity	212,124,963	434,578	212,559,541

(a). Under IFRSs, the Company reclassified non-current financial assets measured at cost to non-current available-for-sale financial assets measured at fair value. In addition, when the Company discontinues the use of the equity method because it ceases to have significant influence over an associate, the Company measures at fair value any investment the it retains in the former associate as well as eliminate all additional paid-in capital and equity adjustment items related to the former associate in current profit and loss, or at the date of transition to IFRSs recognized in retained earnings. This change in accounting principles caused non-current available-for-sale financial assets to increase by NT$4,609 million, non-current financial assets measured at cost to decrease by NT$5,245 million, other non-current assets to decrease by NT$15 million, Additional paid-in capital to decrease by NT$0.3 million, retained earnings to decrease by NT$538 million, and other adjusting items in stockholders' equity to decrease by NT$113 million.

(b). Under IFRS, the acquisition of a non-controlling interest is not within the scope of business combination, and therefore, it is not in the scope of exemptions for business combination in IFRS 1, “First-time Adoption of International Financial Reporting Standards.” As a result, a retroactive adjustment is required to adjust the differences for acquisitions of non-controlling interests prior to the transition date. This change in accounting principles would cause current assets to decrease by NT$6 million, property, plant and equipment, net to increase by NT$1,754 million, other non-current assets to increase by NT$36 million, retained earnings to increase by NT$1,694 million and other adjusting in stockholders' equity to increase by NT$90 million.

(c). Under R.O.C. SFAS, the Company‘s property that is leased to another entity is recorded as rental property under other non-current assets. Under IFRSs, the Company reclassified these assets from other non-current assets to property, plant and equipment as they do not meet the definition of investment property. In addition, prepayment for equipment is reclassified from property, plant and equipment to other non-current assets as they do not meet the definition of property, plant and equipment. This change in accounting principles would cause property, plant and equipment, net to decrease by NT$9,308 million, other non-current assets to increase by NT$9,308 million while other adjustments would cause property, plant and equipment, net to increase by NT$92 million, other non-current assets decrease by NT$62 million, retained earnings to increase by NT$29 million and other adjusting in stockholders' equity to increase by NT$2 million.

(d). Software, patent licenses and intellectual property are reclassified as intangible assets as it met the definition of intangible assets. This change would cause intangible assets to increase by NT$1,278 million and non-current assets to decrease by NT$1,278 million. The land use rights of a subsidiary are reclassified to noncurrent assets as they meet the definition of long-term operating lease since the ownership do not belong to the subsidiary. This would cause intangible assets to decrease by NT$300 million and non-current assets to increase by NT$300 million.

(e). The Company elects exemption for employee benefits under the IFRS 1,“First-time Adoption of International Financial Reporting Standards”, and recognizes all unrecognized actuarial gains and losses in retained earnings. The exemption election for employee benefits would cause the accrued pension liabilities to increase by NT$705 million and retained earnings to decrease by NT$686 million, and decrease other adjusting items in stockholders' equity by NT$19 million.

(f). Under the requirements of IAS 1 “Presentation of Financial Statements”, deferred tax assets or liabilities are classified as non-current. Therefore, deferred tax assets or liabilities, current, are reclassified as non-current. Under the requirements of IAS 12, an entity shall offset deferred tax assets and liabilities if, and only if, the entity has a legally enforceable right to set off the current tax assets and liabilities; and if the deferred tax assets and liabilities relate to income taxes raised by the same taxation authority on either the same taxable entity or different taxable entities which intend, in each future period in which significant amounts of deferred tax are expected to be settled or recovered, to settle their current tax assets and liabilities either on a net basis or simultaneously. Under the requirements of IAS 12, if the tax base of the liability component of the compound financial instrument on initial recognition is equal to the initial carrying amount of the sum of the liability and equity components, the resulting taxable temporary differences should be recognized as deferred tax liability. The deferred tax is charged directly to the carrying amount of the equity component and subsequent changes in the deferred tax liability are recognized in profit or loss as deferred tax expense (income). Due to differences discussed above, current assets decreased by NT$298 million, other non-current assets increased by NT$656 million, current liabilities decreased by NT$33 million, other non-current liabilities increased by NT$380 million, addition paid-in capital decreased by NT$101 million, retained earnings increased by NT$106 million and other adjusting items in stockholders' equity increased by NT$6 million.

(g). Other adjustments would cause other non-current assets to decrease by NT$36 million, retained earnings to decrease by NT$30 million, additional paid-in capital to increase by NT$0.4 million and other adjusting items in stockholders' equity to decrease by NT$6 million.

II. Reconciliation of the balance sheet as at March 31, 2012

Unit: NT$K

	ROC GAAP	Adjustments	IFRSs
Current assets (b)、(f)	$83,537,425	$(418,631)	$83,118,794
Available-for-sale financial assets, non-current (a)	20,700,667	5,526,823	26,227,490
Financial assets measured at cost, non-current (a)	8,389,734	(5,517,153)	2,872,581
Property, plant and equipment (b)、(c)	150,578,424	(5,228,552)	145,349,872
Intangible Assets (d)	355,593	1,226,609	1,582,202
Other non-current assets (a)、(b)、(c)、(d)、(f)、(g)	19,579,745	6,650,349	26,230,094
Total Assets	283,141,588	2,239,445	285,381,033
Current liabilities (f)	42,062,159	(31,071)	42,031,088
Accrued pension liabilities (e)	3,268,616	679,788	3,948,404
Other non-current liabilities(f)	23,259,289	577,618	23,836,907
Total liabilities	68,590,064	1,226,335	69,816,399
Capital	129,370,142	-	129,370,142
Additional paid-in capital (a)、(f)、(g)	46,870,013	(100,746)	46,769,267
Retained earnings (a)、(b)、(c)、(e)、(f) 、(g)	25,764,551	609,555	26,374,106
Other items in stockholders' equity (a)、(b)、(c)、(e)、(f)、(g)	13,347,031	504,301	13,851,332
Treasury stock	(4,963,389)	-	(4,963,389)
Minority interests/ Non-controlling interests	4,163,176	-	4,163,176
Stockholders' equity	214,551,524	1,013,110	215,564,634

(a). Under IFRSs, the Company reclassified non-current financial assets measured at cost to non-current available-for-sale financial assets measured at fair value. In addition, when the Company discontinues the use of the equity method because it ceases to have significant influence over an associate, the Company measures at fair value any investment the it retains in the former associate as well as eliminates all additional paid-in capital and equity adjustment items related to the former associate in current profit and loss, or at the date of transition to IFRSs recognized immediately in retained earnings. This change in accounting principles caused non-current available-for-sale financial assets to increase by NT$5,527 million, non-current financial assets measured at cost to decrease by NT$5,517 million, other non-current assets to decrease by NT$15 million, additional paid-in capital to decrease by NT$0.3 million, retained earnings to decrease by NT$550 million, and other adjusting items in stockholders' equity to increase by NT$545 million.

(b). Under IFRS, the acquisition of a non-controlling interest is not within the scope of business combination, and therefore, it is not in the scope of exemptions for business combination in IFRS 1, “First-time Adoption of International Financial Reporting Standards.” As a result, a retroactive adjustment is required to adjust the differences for acquisitions of non-controlling interests prior to the transition date. This change in accounting principles would cause current assets to decrease by NT$8 million, property, plant and equipment, net to increase by NT$1,591 million, other non-current assets to increase by NT$33 million, retained earnings to increase by NT$1,667 million and other adjusting in stockholders' equity to decrease by NT$51 million.

(c). Under R.O.C. SFAS, the Company‘s property that is leased to another entity is recorded as rental property under other non-current assets. Under IFRSs, the Company reclassified these assets from other non-current assets to property, plant and equipment as it does not meet the definition of investment property. In addition, prepayment for equipment is reclassified from property, plant and equipment to other non-current assets as they do not meet the definition of property, plant and equipment. This change in accounting principles would cause property, plant and equipment, net to decrease by NT$6,897 million, other non-current assets to increase by NT$6,897 million while other adjustments would cause property, plant and equipment, net to increase by NT$78 million, other non-current assets decrease by NT$57 million, retained earnings to increase by NT$21 million and other adjusting in stockholders' equity to decrease by NT$0.6 million.

(d). Software, patent licenses and intellectual property are reclassified as intangible assets as it met the definition of intangible assets. This change would cause intangible assets to increase by NT$1,531 million and non-current assets to decrease by NT$1,531 million. The land use rights of a subsidiary are reclassified to noncurrent assets as they meet the definition of a long-term operating lease since the ownership do not belong to the subsidiary. This would cause intangible assets to decrease by NT$304 million and other non-current assets to increase by NT$304 million.

(e). The Company elects the exemption for employee benefits under IFRS 1,“First-time Adoption of International Financial Reporting Standards”, and recognizes all unrecognized actuarial gains and losses in retained earnings. The exemption election for employee benefits would cause the accrued pension liabilities to increase by NT$680 million and retained earnings to decrease by NT$686 million, and other adjusting items in stockholders' equity to increase by NT$6 million.

(f). Under the requirements of IAS 1 “Presentation of Financial Statements”, deferred tax assets or liabilities are classified as non-current. Therefore, deferred tax assets or liabilities, current, are reclassified as non-current. Under the requirements of IAS 12, an entity shall offset deferred tax assets and liabilities if, and only if, the entity has a legally enforceable right to set off the current tax assets and liabilities; and if the deferred tax assets and liabilities relate to income taxes raised by the same taxation authority on either the same taxable entity or different taxable entities which intend, in each future period in which significant amounts of deferred tax are expected to be settled or recovered, to settle their current tax assets and liabilities either on a net basis or simultaneously. Under the requirements of IAS 12, if the tax base of the liability component of the compound financial instrument on initial recognition is equal to the initial carrying amount of the sum of the liability and equity components, the resulting taxable temporary differences should be recognized as deferred tax liability. The deferred tax is charged directly to the carrying amount of the equity component and subsequent changes in the deferred tax liability are recognized in profit or loss as deferred tax expense (income). Due to differences discussed above, current assets decreased by NT$411 million, other non-current assets increased by NT$973 million, current liabilities decreased by NT$31 million, other non-current liabilities increased by NT$578 million, addition paid-in capital decreased by NT$101 million, retained earnings increased by NT$113 million and other adjusting items in stockholders' equity increased by NT$3 million.

(g). Other adjustments would cause other non-current assets to increase by NT$46 million, retained earnings to increase by NT$44 million, addition paid-in capital to increase by NT$0.4 million and other adjusting items in stockholders' equity to increase by NT$1 million.

III Reconciliation of the income statement for the three months period ended March 31, 2012:

Unit: NT$K

	ROC GAAP	Adjustments	IFRSs
Operating revenues	$26,269,434	$-	$26,269,434
Operating costs (a)、(b)	(22,213,702)	(33,719)	(22,247,421)
Gross profit	4,055,732	(33,719)	4,022,013
Operating expenses (a)、(b)	(3,791,168)	(211)	(3,791,379)
Operating income	264,564	(33,930)	230,634
Non-operating income and expenses (a)、(b)	1,057,342	(14,577)	1,042,765
Income from continuing operations before income tax	1,321,906	(48,507)	1,273,399
Income tax expense (b)	(214,068)	7,447	(206,621)
Net income	1,107,838	(41,060)	1,066,778

(a). Under IFRS, the acquisition of a non-controlling interest is not within the scope of business combination, and therefore, it is not in the scope of exemptions for business combination in IFRS 1, “First-time Adoption of International Financial Reporting Standards.” As a result, a retroactive adjustment is required to adjust the differences for acquisitions of non-controlling interests prior to the transition date. This would cause cost of goods sold to increase by NT$26 million, operating expenses to increase by NT$0.5 million and non-operating income to decrease by NT$0.3 million.

(b). Other adjustments would cause cost of goods sold to increase by NT$7 million, operating expenses to decrease by NT$0.3 million, non-operating income to decrease by NT$14 million and income tax expense to decrease by NT$7 million.

c. According to the requirements under IFRS 1, “First-time Adoption of International Financial Reporting Standards”, the Company prepares its first IFRS financial statements based on the effective IFRS standards and makes adjustments retrospectively, except for the optional exemptions provided and mandatory exceptions required under IFRS 1. The optional exemptions selected by the Company are as follows:

(a) IFRS 3 “Business Combinations” has not been applied to acquisitions of subsidiaries or of interests in associates and joint ventures, that occurred before December 31, 2011. Applying this exemption would result in the carrying amount of assets acquired and liabilities assumed in the business combination in accordance with previous GAAP, which are required to be recognized under IFRS, to be their deemed costs in accordance with IFRSs as at the date of acquisition. Subsequent to the date of acquisition, the assets and liabilities would be measured in accordance with IFRSs. The carrying amount of goodwill in the opening IFRS Balance Sheet is its carrying amount in accordance with previous GAAP at December 31, 2011, after testing for impairments and adjusting for recognition or de-recognition of intangibles under IFRS 1.

(b) The Company has recognized all cumulative actuarial gains and losses directly to retained earnings as at January 1, 2012.

d. The major differences described above are determined in accordance with the Traditional Chinese version of IFRSs approved and published by FSC in 2010. As to the additional IFRSs published by International Accounting Standards Board after 2011, adjustments will be included, following effective dates announced by the FSC, if any.

10.Operating Segment Information

The Company determined its operating segments based on business activities with discrete financial information regularly reported through the Company’s internal reporting protocols to the Company’s chief operating decision maker. The Company is organized into business units based on its products and services. As of March 31, 2012, only the wafer fabrication operating segment exceeded the quantitative threshold to become a reportable segment. The primary service of the wafer fabrication segment is the manufacture of chips to the design specifications of our many customers by using our own proprietary processes and techniques. The company maintains a diversified customer base across industries, including communication, consumer electronics, computer, memory and others, while continuing to focus on manufacturing for high growth, large volume applications, including networking, telecommunications, internet, multimedia, PCs and graphics. The company also had other operating segments that did not exceed the quantitative threshold. These segments primarily engage in researching, developing, manufacturing, and providing solar energy and new generation light-emitting diode (LED) sectors.

Reportable segment information for the three-month periods ended March 31, 2012 and 2011 are as follows:

	For the three-month period ended March 31, 2012
	Wafer fabrication	Other	Subtotal	Adjustment and elimination	Consolidated
Segment revenues	$24,181,822	$2,087,967	$26,269,789	$(355)	$26,269,434
Segment profit (loss)	1,284,154	(683,636)	600,518	507,320	1,107,838

Segment assets	264,453,725	28,165,274	292,618,999	(9,477,411) (Note)	283,141,588
Segment liabilities	53,606,075	15,018,812	68,624,887	(34,823)	68,590,064

Capital expenditure	9,738,845	289,085	10,027,930	-	10,027,930
Depreciation	7,777,118	509,811	8,286,929	-	8,286,929
Investment gain (loss) accounted for under the equity method	(162,493)	(84,479)	(246,972)	507,320	260,348
Income tax expense	173,858	40,210	241,068	-	214,068

	For the three-month period ended March 31, 2011
	Wafer fabrication	Other	Subtotal	Adjustment and elimination	Consolidated
Segment revenues	$28,855,937	$2,309,739	$31,165,676	$-	$31,165,676
Segment profit (loss)	4,448,043	(164,640)	4,283,403	129,407	4,412,810

Segment assets	264,445,288	29,506,567	293,951,855	(10,812,259) (Note)	283,139,596
Segment liabilities	44,045,030	13,515,467	57,560,497	(33,926)	57,526,571

Capital expenditure	12,924,045	2,767,352	15,691,397	-	15,691,397
Depreciation	7,254,830	366,116	7,620,946	-	7,620,946
Investment gain (loss) accounted for under the equity method	(179,554)	(20,850)	(200,404)	129,407	(70,997)
Income tax expense	436,308	9,531	445,839	-	445,839

Note: The adjustment was primarily consisted of elimination entries for long-term investments accounted for under the equity method.

ATTACHMENT 1 (Significant intercompany transactions between consolidated entities)

(Amount in thousand; Currency denomination in NTD or in foreign currencies)

For the three-month period ended March 31, 2012

Related Party

Counterparty

Relationship with the Company
(Note 2)

Transactions

No.
(Note 1)

Account

Amount

Terms
(Note 3)

Percentage of consolidated
operating revenues or consolidated
total assets
(Note 4)

UNITED MICROELECTRONICS CORPORATION

UMC GROUP (USA)

Sales

$10,816,120

Net 60 days

41%

UNITED MICROELECTRONICS CORPORATION

UMC GROUP (USA)

Accounts receivable

3,769,191

UNITED MICROELECTRONICS CORPORATION

UMC JAPAN

Sales

245,724

Net 60 days

UNITED MICROELECTRONICS CORPORATION

UMC JAPAN

Accounts receivable

162,144

For the three-month period ended March 31, 2011

Related Party

Counterparty

Relationship with the Company
(Note 2)

Transactions

No.
(Note 1)

Account

Amount

Terms
(Note 3)

Percentage of consolidated
operating revenues or consolidated
total assets
(Note 4)

UNITED MICROELECTRONICS CORPORATION

UMC GROUP (USA)

Sales

$14,532,243

Net 60 days

47%

UNITED MICROELECTRONICS CORPORATION

UMC GROUP (USA)

Accounts receivable

6,003,383

UNITED MICROELECTRONICS CORPORATION

UMC JAPAN

Sales

212,933

Net 60 days

UNITED MICROELECTRONICS CORPORATION

UMC JAPAN

Accounts receivable

141,952

ATTACHMENT 1 (Significant intercompany transactions between consolidated entities)

(Amount in thousand; Currency denomination in NTD or in foreign currencies)

Note 1: UMC and its subsidiaries are coded as follows:

1. UMC is coded "0".

2. The subsidiaries are coded consecutively beginning from "1" in the order presented in the table above.

Note 2: Transactions are categorized as follows：

1. The holding company to subsidiary.

2. Subsidiary to holding company.

3. Subsidiary to subsidiary.

Note 3: The sales price to the above related parties was determined through mutual agreement based on the market conditions.

Note 4: The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each item's balance at period-end.

For profit or loss items, cumulative balances are used as basis.

Notice to Readers

2012

2011

Current

Common stocks

Noncurrent

Common stocks

Depositary receipts

Funds

Subtotal

2011

Common stocks

Preferred stocks

Funds

Convertible bonds

As of March 31,

2012

2011

Amount

Percentage of Ownership or Voting Rights

Amount

Percentage of Ownership or Voting Rights

$87,673

4.25

$-

-

32,108

-

24,681

-

238,373

238,373

713,687

670,735

45,433

-

9,708

9,293

3,606

3,009

71,466

157,997

216,039

241,085

95,593

34,597

214,016

219,939

539,349

214,930

1,437,437

1,821,562

719,155

826,148

2,288

-

3,175,975

3,456,625

35,014

83,080

3,237,989

-

101,832

96,163

As of March 31,

2012

2011

Amount

Percentage of Ownership or Voting Rights

Amount

Percentage of Ownership or Voting Rights

$133,676

122,828

552,479

34,816

59,863

77,171

-

-

-