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Contents of Significant Accounts | 12 Months Ended
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Dec. 31, 2023
Contents Of Significant Accounts [Abstract] |
Contents of Significant Accounts |
6. | CONTENTS OF SIGNIFICANT ACCOUNTS
| (1) | Cash and Cash Equivalents
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Cash on hand and petty cash |  | $ | 6,023 |  |  | $ | 6,200 |
Checking and savings accounts |  |  | 42,422,443 |  |  |  | 50,322,942 |
Time deposits |  |  | 125,467,386 |  |  |  | 80,276,114 |
Repurchase agreements collateralized by government bonds and corporate notes |  |  | 5,922,925 |  |  |  | 1,948,359 |
Total |  | $ | 173,818,777 |  |  | $ | 132,553,615 |
| (2) | Financial Assets at Fair Value through Profit or Loss
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Financial assets mandatorily measured at fair value through profit or loss |  |  |  |  |  |  |  |
Common stocks |  | $ | 10,275,563 |  |  | $ | 9,170,230 |
Preferred stocks |  |  | 2,939,939 |  |  |  | 2,862,119 |
Funds |  |  | 5,044,702 |  |  |  | 4,472,097 |
Convertible bonds |  |  | 230,365 |  |  |  | 480,715 |
Others |  |  | — |  |  |  | 153,300 |
Total |  | $ | 18,490,569 |  |  | $ | 17,138,461 |
Current |  | $ | 705,918 |  |  | $ | 443,601 |
Non-current |  |  | 17,784,651 |  |  |  | 16,694,860 |
Total |  | $ | 18,490,569 |  |  | $ | 17,138,461 |
| (3) | Financial Assets at Fair Value through Other Comprehensive Income
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Equity instruments |  |  |  |  |  |  |  |
Common stocks |  | $ | 15,007,053 |  |  | $ | 17,508,897 |
Preferred stocks |  |  | 182,547 |  |  |  | 175,063 |
Total |  | $ | 15,189,600 |  |  | $ | 17,683,960 |
Current |  | $ | 3,213,057 |  |  | $ | 5,753,379 |
Non-current |  |  | 11,976,543 |  |  |  | 11,930,581 |
Total |  | $ | 15,189,600 |  |  | $ | 17,683,960 |
The fair value of each investment in equity instrument to be measured at fair value through other comprehensive income is as follows:
|  |  |  | As of December 31, |
Type of securities |  | Name of securities |  | 2022 |  |  | 2023 |
|  |  |  | NT$ |  |  | NT$ |
|  |  |  | (In Thousands) |  |  | (In Thousands) |
Common stock |  | SILICON INTEGRATED SYSTEMS CORP. |  | $ | 2,316,197 |  |  | $ | — |
Common stock |  | UNIMICRON HOLDING LIMITED |  |  | 2,847,385 |  |  |  | 2,514,120 |
Common stock |  | ITE TECH. INC. |  |  | 1,023,266 |  |  |  | 2,100,977 |
Common stock |  | CHIPBOND TECHNOLOGY CORPORATION |  |  | 3,051,603 |  |  |  | 3,843,744 |
Common stock |  | NOVATEK MICROELECTRONICS CORP. (NOVATEK) |  |  | 5,188,267 |  |  |  | 8,501,851 |
Common stock |  | SHIN-ETSU HANDOTAI TAIWAN CO., LTD. |  |  | 580,335 |  |  |  | 548,205 |
Preferred stock |  | MTIC HOLDINGS PTE. LTD. |  |  | 182,547 |  |  |  | 175,063 |
| a. | These investments in equity instruments are held for medium to long-term purposes and therefore are accounted for as fair value through other comprehensive income.
| b. | Dividend income recognized in profit or loss from equity instruments designated as fair value through other comprehensive income were listed below:
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Held at end of period |  | $ | 1,431,931 |  |  | $ | 1,052,336 |
Derecognized during the period |  |  | — |  |  |  | 142,535 |
Total |  | $ | 1,431,931 |  |  | $ | 1,194,871 |
Please refer to Note 6(7) for derecognition of the equity instrument investment in SILICON INTEGRATED SYSTEMS CORP. (SIS) during the period.
| c. | The Company reclassified its equity instrument investment in SIS as investments accounted for under the equity method. Details on derecognition of such investments are as follow:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Fair value on the date of disposal |  | $ | — |  |  | $ | — |  |  | $ | 3,035,999 |
Cumulative gains (losses) reclassified to retained earnings due to derecognition |  | $ | — |  |  | $ | — |  |  | $ | (1,628,388 | )
| d. | UMC issued unsecured exchangeable bonds where the bondholders may exchange the bonds at any time on or after October 8, 2021 and prior to June 27, 2026 into NOVATEK common shares which UMC holds and accounts for as equity instruments investments measured at fair value through other comprehensive income. Please refer to Note 6(13) for the Company’s unsecured exchangeable bonds.
| (4) | Financial assets measured at amortized cost
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Financial assets measured at amortized cost |  |  |  |  |  |  |  |
Time deposits with original maturities over three months |  | $ | 849,308 |  |  | $ | 6,353,768 |
Bonds |  |  | 20,000 |  |  |  | — |
Total |  | $ | 869,308 |  |  | $ | 6,353,768 |
Current |  | $ | 861,817 |  |  | $ | 6,131,077 |
Non-current |  |  | 7,491 |  |  |  | 222,691 |
Total |  | $ | 869,308 |  |  | $ | 6,353,768 |
(5) Accounts Receivable, Net |  |  |  |  |  |  |  |
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Accounts receivable |  | $ | 36,653,611 |  |  | $ | 29,316,612 |
Less: loss allowance |  |  | (209,101 | ) |  |  | (79,062 | )
Net |  | $ | 36,444,510 |  |  | $ | 29,237,550 |
Aging analysis of accounts receivable: |  |  |  |  |  |  |  |
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Neither past due |  | $ | 30,545,437 |  |  | $ | 25,707,008 |
Past due: |  |  |  |  |  |  |  |
≤ 30 days |  |  | 5,303,765 |  |  |  | 3,008,126 |
31 to 60 days |  |  | 130,408 |  |  |  | 78,668 |
61 to 90 days |  |  | 3,247 |  |  |  | 5,599 |
91 to 120 days |  |  | 7,886 |  |  |  | — |
≥ 121 days |  |  | 662,868 |  |  |  | 517,211 |
Subtotal |  |  | 6,108,174 |  |  |  | 3,609,604 |
Total |  | $ | 36,653,611 |  |  | $ | 29,316,612 |
Movement of loss allowance for accounts receivable: |  |  |  |  |  |  |  |
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Beginning balance |  | $ | 194,491 |  |  | $ | 209,101 |
Net recognition (reversal) for the period |  |  | 14,610 |  |  |  | (130,039 | )
Ending balance |  | $ | 209,101 |  |  | $ | 79,062 |
The collection periods for third party domestic sales and third party overseas sales were month-end 30 - 60 days and net 30 - 60 days, respectively. An impairment analysis is performed at each reporting date to measure expected credit losses (ECLs) of accounts receivable. For the receivables past due within 60 days, including not past due, the Company estimates an expected credit loss rate to calculate ECLs. For the years ended December 31, 2021, 2022 and 2023, the expected credit loss rates were not greater than 0.2%. The rate is determined based on the Company’s historical credit loss experience and customer’s current financial condition, adjusted for forward-looking factors such as customer’s economic environment. For the receivables past due over 60 days, the Company applies the aforementioned rate and assesses individually whether to recognize additional expected credit losses by considering customer’s operating condition and debt-paying ability.
| (6) | Inventories, Net
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Raw materials |  | $ | 6,335,428 |  |  | $ | 10,995,569 |
Supplies and spare parts |  |  | 7,161,216 |  |  |  | 6,443,172 |
Work in process |  |  | 14,897,926 |  |  |  | 15,560,517 |
Finished goods |  |  | 2,675,390 |  |  |  | 2,713,300 |
Total |  | $ | 31,069,960 |  |  | $ | 35,712,558 |
| a. | For the years ended December 31, 2021, 2022 and 2023, the Company recognized NT$135,856 million, NT$145,979 million and NT$136,902 million, respectively, in operating costs, of which NT$426 million in 2021 was related to reversal of write-down of inventories, and NT$98 million and NT$1,148 million in 2022 and 2023, respectively, were related to write-down of inventories.
| b. | None of the aforementioned inventories were pledged.
| (7) | Investments Accounted for Under the Equity Method
| a. | Details of investments accounted for under the equity method are as follows:
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
Investee companies |  | Amount |  |  | Percentage of ownership or voting rights |  |  | Amount |  |  | Percentage of ownership or voting rights |
|  | NT$ |  |  |  |  |  | NT$ |  |  |  |
|  | (In Thousands) |  |  |  |  |  | (In Thousands) |  |  |  |
Listed companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SILICON INTEGRATED SYSTEMS CORP. (SIS) (Note A) |  | $ | — |  |  |  | — |  |  | $ | 2,373,060 |  |  |  | 19.02 |
FARADAY TECHNOLOGY CORP. (FARADAY) (Note B) |  |  | 1,862,245 |  |  |  | 13.78 |  |  |  | 1,990,073 |  |  |  | 13.78 |
UNIMICRON TECHNOLOGY CORP. (UNIMICRON) (Note C) |  |  | 13,285,169 |  |  |  | 13.27 |  |  |  | 13,644,560 |  |  |  | 13.05 |
Unlisted companies |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
MTIC HOLDINGS PTE. LTD. (Note D) |  |  | — |  |  |  | 45.44 |  |  |  | — |  |  |  | 45.44 |
UNITECH CAPITAL INC. |  |  | 426,070 |  |  |  | 42.00 |  |  |  | 625,667 |  |  |  | 42.00 |
TRIKNIGHT CAPITAL CORPORATION (TRIKNIGHT) (Note E) |  |  | 2,117,678 |  |  |  | 40.00 |  |  |  | 2,109,906 |  |  |  | 40.00 |
HSUN CHIEH CAPITAL CORP. |  |  | 210,690 |  |  |  | 40.00 |  |  |  | 235,098 |  |  |  | 40.00 |
PURIUMFIL INC. |  |  | 14,622 |  |  |  | 40.00 |  |  |  | 11,474 |  |  |  | 40.00 |
HSUN CHIEH INVESTMENT CO., LTD. (HSUN CHIEH) (Note F) |  |  | 2,980,984 |  |  |  | 36.49 |  |  |  | 4,126,878 |  |  |  | 36.49 |
YANN YUAN INVESTMENT CO., LTD. (YANN YUAN) |  |  | 5,455,743 |  |  |  | 26.78 |  |  |  | 7,516,327 |  |  |  | 26.78 |
UNITED LED CORPORATION HONG KONG LIMITED |  |  | 97,156 |  |  |  | 25.14 |  |  |  | 93,793 |  |  |  | 25.14 |
VSENSE CO., LTD. (Note D) |  |  | — |  |  |  | 23.98 |  |  |  | — |  |  |  | 23.98 |
TRANSLINK CAPITAL PARTNERS I, L.P. (Note G) |  |  | 54,556 |  |  |  | 10.38 |  |  |  | 58,964 |  |  |  | 10.38 |
Total |  | $ | 26,504,913 |  |  |  |  |  |  | $ | 32,785,800 |  |  |  |  |
| Note A: | In August 2023, the board chairman of SIS changed and became the same person as the board chairman of UMC. After considering the comprehensive conditions, including ownership interest held and representation on Board of Directors of SIS, etc., the Company determines that it has significant influence over SIS and accounts for its investment in SIS as an associate. SIS was previously measured at fair value through other comprehensive income and reclassified as investments accounted for under the equity method. UMC’s share of the net fair value of SIS’s identifiable assets and liabilities was in excess of the fair value of the previously held investment in SIS at the acquisition date, and the difference was recognized as bargain purchase gain. Cumulative fair value change that was previously recognized in other comprehensive loss up to reclassification date was reclassified to retained earnings in the current period.
| Note B: | Beginning from June 2015, the Company accounts for its investment in FARADAY as an associate given the fact that UMC obtained the ability to exercise significant influence over FARADAY through representation on its Board of Directors.
| Note C: | Beginning from June 2020, the Company accounts for its investment in UNIMICRON as an associate given the fact that UMC obtained the ability to exercise significant influence over UNIMICRON through representation on its Board of Directors. On January 6, 2023, UNIMICRON issued new shares to merge with SUBTRON TECHNOLOGY CO., LTD. (SUBTRON) through share conversion. The share conversion ratio was 1 common share of SUBTRON to exchange 0.219 common shares of UNIMICRON. The 23 million shares of SUBTRON held by the Company were exchanged to 5 million common shares newly issued by UNIMICRON.
| Note D: | When the Company’s share of losses of an associate equals or exceeds its interest in that associate, the Company discontinues recognizing its share of further losses. Additional losses and liabilities are recognized only to the extent that the Company has incurred legal or constructive obligations or made payments on behalf of that associate.
| Note E: | TRIKNIGHT executed a capital reduction and refunded NT$400 million and NT$560 million based on UMC’s stockholding percentage in June and December 2023, respectively. UMC’s stockholding percentage remains unchanged.
| Note F: | HSUN CHIEH executed a capital reduction and refunded NT$343 million based on UMC’s stockholding percentage in April 2023. UMC’s stockholding percentage remains unchanged.
| Note G: | The Company follows international accounting practices in equity accounting for limited partnerships and uses the equity method to account for these investees.
The carrying amount of investments accounted for using the equity method for which there are published price quotations amounted to NT$15,147 million and NT$18,008 million, as of December 31, 2022 and 2023, respectively. The fair value of these investments were NT$28,416 million and NT$53,726 million as of December 31, 2022 and 2023, respectively. Although the Company is the largest shareholder of some associates, after comprehensive assessment, the Company does not own the major voting rights as the remaining voting rights holders are able to align and prevent the Company from ruling the relevant operation. Therefore, the Company does not control but ha s significant influence over the aforementioned associates. None of the aforementioned associates were pledged.
| b. | Financial information of associates:
There is no individually significant associate for the Company. When an associate is a foreign operation, and the functional currency of the foreign entity is different from the Company, an exchange difference arising from translation of the foreign entity will be recognized in other comprehensive income (loss). Such exchange differences recognized in other comprehensive income (loss) in the financial statements for the years ended December 31, 2021, 2022 and 2023 were NT$(30) million, NT$103 million and NT$(3) million, respectively, which were not included in the following table. The aggregate amount of the Company’s share of all its individually immaterial associates that are accounted for using the equity method were as follows:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Profit from continuing operations |  | $ | 5,193,495 |  |  | $ | 1,626,103 |  |  | $ | 4,307,614 |
Other comprehensive income (loss) |  |  | 2,965,202 |  |  |  | (1,706,960 | ) |  |  | 1,540,436 |
Total comprehensive income (loss) |  | $ | 8,158,697 |  |  | $ | (80,857 | ) |  | $ | 5,848,050 |
| (8) | Property, Plant and Equipment
| a. | 2022
Assets Used by the Company: Cost:
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Transportation equipment |  |  | Furniture and fixtures |  |  | Leasehold improvement |  |  | Construction in progress and equipment awaiting inspection |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | 1,491,343 |  |  | $ | 36,827,480 |  |  | $ | 897,806,699 |  |  | $ | 55,959 |  |  | $ | 7,305,174 |  |  | $ | 61,282 |  |  | $ | 22,856,033 |  |  | $ | 966,403,970 |
Additions |  |  | — |  |  |  | 325,943 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 72,270,938 |  |  |  | 72,596,881 |
Disposals |  |  | — |  |  |  | (69,897 | ) |  |  | (6,391,003 | ) |  |  | — |  |  |  | (27,782 | ) |  |  | (2,414 | ) |  |  | (69,640 | ) |  |  | (6,560,736 | )
Transfers and reclassifications |  |  | — |  |  |  | 219,666 |  |  |  | 46,548,734 |  |  |  | 8,154 |  |  |  | 730,317 |  |  |  | 421 |  |  |  | (39,772,778 | ) |  |  | 7,734,514 |
Exchange effect |  |  | (21,127 | ) |  |  | 294,577 |  |  |  | 15,855,258 |  |  |  | 810 |  |  |  | 54,284 |  |  |  | 3,786 |  |  |  | 79,390 |  |  |  | 16,266,978 |
As of December 31, 2022 |  | $ | 1,470,216 |  |  | $ | 37,597,769 |  |  | $ | 953,819,688 |  |  | $ | 64,923 |  |  | $ | 8,061,993 |  |  | $ | 63,075 |  |  | $ | 55,363,943 |  |  | $ | 1,056,441,607 |
Accumulated Depreciation and Impairment: |
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Transportation equipment |  |  | Furniture and fixtures |  |  | Leasehold improvement |  |  | Construction in progress and equipment awaiting inspection |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | — |  |  | $ | 21,184,969 |  |  | $ | 810,904,881 |  |  | $ | 47,108 |  |  | $ | 6,222,383 |  |  | $ | 55,125 |  |  | $ | — |  |  | $ | 838,414,466 |
Depreciation |  |  | — |  |  |  | 1,443,545 |  |  |  | 38,565,229 |  |  |  | 3,946 |  |  |  | 456,017 |  |  |  | 2,816 |  |  |  | — |  |  |  | 40,471,553 |
Disposals |  |  | — |  |  |  | (69,489 | ) |  |  | (6,331,532 | ) |  |  | — |  |  |  | (27,421 | ) |  |  | (2,404 | ) |  |  | — |  |  |  | (6,430,846 | )
Transfers and reclassifications |  |  | — |  |  |  | 161 |  |  |  | (4,913 | ) |  |  | — |  |  |  | (176 | ) |  |  | — |  |  |  | — |  |  |  | (4,928 | )
Exchange effect |  |  | — |  |  |  | 172,320 |  |  |  | 14,604,120 |  |  |  | 543 |  |  |  | 46,714 |  |  |  | 3,846 |  |  |  | — |  |  |  | 14,827,543 |
As of December 31, 2022 |  | $ | — |  |  | $ | 22,731,506 |  |  | $ | 857,737,785 |  |  | $ | 51,597 |  |  | $ | 6,697,517 |  |  | $ | 59,383 |  |  | $ | — |  |  | $ | 887,277,788 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2022 |  | $ | 1,470,216 |  |  | $ | 14,866,263 |  |  | $ | 96,081,903 |  |  | $ | 13,326 |  |  | $ | 1,364,476 |  |  | $ | 3,692 |  |  | $ | 55,363,943 |  |  | $ | 169,163,819 |
Assets Subject to Operating Leases: Cost:
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Furniture and fixtures |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | 549,010 |  |  | $ | 2,422,389 |  |  | $ | — |  |  | $ | 1,312,703 |  |  | $ | 4,284,102 |
Disposals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (660 | ) |  |  | (660 | )
Transfers and reclassifications |  |  | — |  |  |  | (1,226 | ) |  |  | 6,345 |  |  |  | 15,562 |  |  |  | 20,681 |
Exchange effect |  |  | (3,223 | ) |  |  | 22,084 |  |  |  | — |  |  |  | 6,686 |  |  |  | 25,547 |
As of December 31, 2022 |  | $ | 545,787 |  |  | $ | 2,443,247 |  |  | $ | 6,345 |  |  | $ | 1,334,291 |  |  | $ | 4,329,670 |
Accumulated Depreciation and Impairment: |
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Furniture and fixtures |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | — |  |  | $ | 1,095,113 |  |  | $ | — |  |  | $ | 1,236,790 |  |  | $ | 2,331,903 |
Depreciation |  |  | — |  |  |  | 94,644 |  |  |  | — |  |  |  | 60,229 |  |  |  | 154,873 |
Disposals |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (660 | ) |  |  | (660 | )
Transfers and reclassifications |  |  | — |  |  |  | (161 | ) |  |  | 6,345 |  |  |  | 211 |  |  |  | 6,395 |
Exchange effect |  |  | — |  |  |  | 13,216 |  |  |  | — |  |  |  | 5,696 |  |  |  | 18,912 |
As of December 31, 2022 |  | $ | — |  |  | $ | 1,202,812 |  |  | $ | 6,345 |  |  | $ | 1,302,266 |  |  | $ | 2,511,423 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2022 |  | $ | 545,787 |  |  | $ | 1,240,435 |  |  | $ | — |  |  | $ | 32,025 |  |  | $ | 1,818,247 |
| b. | 2023
Assets Used by the Company: Cost:
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Transportation equipment |  |  | Furniture and fixtures |  |  | Leasehold improvement |  |  | Construction in progress and equipment awaiting inspection |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | 1,470,216 |  |  | $ | 37,597,769 |  |  | $ | 953,819,688 |  |  | $ | 64,923 |  |  | $ | 8,061,993 |  |  | $ | 63,075 |  |  | $ | 55,363,943 |  |  | $ | 1,056,441,607 |
Additions |  |  | — |  |  |  | 223,177 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 82,213,765 |  |  |  | 82,436,942 |
Disposals |  |  | — |  |  |  | (12,160 | ) |  |  | (6,475,636 | ) |  |  | — |  |  |  | (112,396 | ) |  |  | — |  |  |  | (33,581 | ) |  |  | (6,633,773 | )
Transfers a nd reclassifications |  |  | — |  |  |  | 902,122 |  |  |  | 77,170,979 |  |  |  | 7,104 |  |  |  | 953,582 |  |  |  | 3,379 |  |  |  | (54,194,544 | ) |  |  | 24,842,622 |
Exchange effect |  |  | (39,878 | ) |  |  | (341,045 | ) |  |  | (3,016,210 | ) |  |  | (315 | ) |  |  | (29,711 | ) |  |  | (631 | ) |  |  | (990,932 | ) |  |  | (4,418,722 | )
As of December 31, 2023 |  | $ | 1,430,338 |  |  | $ | 38,369,863 |  |  | $ | 1,021,498,821 |  |  | $ | 71,712 |  |  | $ | 8,873,468 |  |  | $ | 65,823 |  |  | $ | 82,358,651 |  |  | $ | 1,152,668,676 |
Accumulated Depreciation and Impairment: |
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Transportation equipment |  |  | Furniture and fixtures |  |  | Leasehold improvement |  |  | Construction in progress and equipment awaiting inspection |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | — |  |  | $ | 22,731,506 |  |  | $ | 857,737,785 |  |  | $ | 51,597 |  |  | $ | 6,697,517 |  |  | $ | 59,383 |  |  | $ | — |  |  | $ | 887,277,788 |
Depreciation |  |  | — |  |  |  | 1,416,727 |  |  |  | 35,031,869 |  |  |  | 4,924 |  |  |  | 490,468 |  |  |  | 4,149 |  |  |  | — |  |  |  | 36,948,137 |
Disposals |  |  | — |  |  |  | (12,160 | ) |  |  | (6,468,067 | ) |  |  | — |  |  |  | (112,330 | ) |  |  | — |  |  |  | — |  |  |  | (6,592,557 | )
Exchange effect |  |  | — |  |  |  | (107,933 | ) |  |  | (2,212,913 | ) |  |  | (264 | ) |  |  | (19,642 | ) |  |  | (494 | ) |  |  | — |  |  |  | (2,341,246 | )
As of December 31, 2023 |  | $ | — |  |  | $ | 24,028,140 |  |  | $ | 884,088,674 |  |  | $ | 56,257 |  |  | $ | 7,056,013 |  |  | $ | 63,038 |  |  | $ | — |  |  | $ | 915,292,122 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2023 |  | $ | 1,430,338 |  |  | $ | 14,341,723 |  |  | $ | 137,410,147 |  |  | $ | 15,455 |  |  | $ | 1,817,455 |  |  | $ | 2,785 |  |  | $ | 82,358,651 |  |  | $ | 237,376,554 |
Assets Subject to Operating Leases: Cost:
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Furniture and fixtures |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | 545,787 |  |  | $ | 2,443,247 |  |  | $ | 6,345 |  |  | $ | 1,334,291 |  |  | $ | 4,329,670 |
Transfers and reclassifications |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 54,469 |  |  |  | 54,469 |
Exchange effect |  |  | (6,084 | ) |  |  | (2,330 | ) |  |  | — |  |  |  | (3,020 | ) |  |  | (11,434 | )
As of December 31, 2023 |  | $ | 539,703 |  |  | $ | 2,440,917 |  |  | $ | 6,345 |  |  | $ | 1,385,740 |  |  | $ | 4,372,705 |
Accumulated Depreciation and Impairment:
|  | Land |  |  | Buildings |  |  | Machinery and equipment |  |  | Furniture and fixtures |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | — |  |  | $ | 1,202,812 |  |  | $ | 6,345 |  |  | $ | 1,302,266 |  |  | $ | 2,511,423 |
Depreciation |  |  | — |  |  |  | 94,944 |  |  |  | — |  |  |  | 23,395 |  |  |  | 118,339 |
Exchange effect |  |  | — |  |  |  | (688 | ) |  |  | — |  |  |  | (3,063 | ) |  |  | (3,751 | )
As of December 31, 2023 |  | $ | — |  |  | $ | 1,297,068 |  |  | $ | 6,345 |  |  | $ | 1,322,598 |  |  | $ | 2,626,011 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2023 |  | $ | 539,703 |  |  | $ | 1,143,849 |  |  | $ | — |  |  | $ | 63,142 |  |  | $ | 1,746,694 |
| c. | Details of interest expense capitalized were as follows:
|  | For the years ended December 31, |
| 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Interest expense capitalized |  | $ | 1,661 |  |  | $ | 9,355 |
Interest rates applied |  |  | 1.44% - 1.61% |  |  |  | 1.48% - 1.65% |
| d. | Please refer to Note 8 for property, plant and equipment pledged as collateral.
| (9) | Leases
The Company leases various properties, such as land (including land use right), buildings, machinery and equipment, transportation equipment and other equipment with lease terms of 1 to 31 years, except for the land use rights with lease term of 50 years. Most lease contracts of land located in R.O.C state that lease payments will be adjusted based on the announced land value. The Company does not have purchase options of leased land at the end of the lease terms.
| a. | The Company as a lessee
| (a) | Right-of-use Assets
|  | As of December 31, |
| 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Land (including land use right) |  | $ | 5,714,166 |  |  | $ | 5,318,986 |
Buildings |  |  | 124,420 |  |  |  | 156,483 |
Machinery and equipment |  |  | 1,748,244 |  |  |  | 1,506,824 |
Transportation equipment |  |  | 21,485 |  |  |  | 16,356 |
Other equipment |  |  | 3,676 |  |  |  | 1,706 |
Net |  | $ | 7,611,991 |  |  | $ | 7,000,355 |
|  | For the years ended December 31, |
| 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
Depreciation |  | (In Thousands) |  |  | (In Thousands) |
Land (including land use right) |  | $ | 359,007 |  |  | $ | 377,593 |
Buildings |  |  | 119,641 |  |  |  | 93,610 |
Machinery and equipment |  |  | 206,445 |  |  |  | 203,606 |
Transportation equipment |  |  | 12,287 |  |  |  | 13,267 |
Other equipment |  |  | 4,568 |  |  |  | 3,004 |
Total |  | $ | 701,948 |  |  | $ | 691,080 |
| i. | For the years ended December 31, 2022 and 2023, the Company’s addition to right-of-use assets amounted to NT$1,130 million and NT$206 million, respectively.
| ii. | Please refer to Note 8 for right-of-use assets pledged as collateral.
| (b) | Lease Liabilities
|  | As of December 31, |
| 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Current |  | $ | 537,314 |  |  | $ | 514,324 |
Non-current |  |  | 5,199,781 |  |  |  | 4,878,863 |
Total |  | $ | 5,737,095 |  |  | $ | 5,393,187 |
Please refer to Note 6(24) for the interest expenses on the lease liabilities.
| b. | The Company as a lessor
The Company entered into leases on certain property, plant and equipment which are classified as operating leases as they did not transfer substantially all of the risks and rewards incidental to ownership of the underlying assets. The main contracts are to lease the dormitory to the employees with cancellation clauses. Please refer to Note 6(8) for relevant disclosure of property, plant and equipment for operating leases.
| (10) | Intangible Assets
2022 Cost :
|  | Goodwill |  |  | Software |  |  | Patents and technology license fees |  |  | Others |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | 15,012 |  |  | $ | 4,845,037 |  |  | $ | 4,491,164 |  |  | $ | 3,348,071 |  |  | $ | 12,699,284 |
Additions |  |  | — |  |  |  | 2,713,534 |  |  |  | — |  |  |  | 480,880 |  |  |  | 3,194,414 |
Write-off |  |  | — |  |  |  | (1,857,289 | ) |  |  | (1,344,682 | ) |  |  | (869,940 | ) |  |  | (4,071,911 | )
Reclassifications |  |  | — |  |  |  | (10,721 | ) |  |  | — |  |  |  | — |  |  |  | (10,721 | )
Exchange effect |  |  | — |  |  |  | (20,774 | ) |  |  | 275,950 |  |  |  | (5,027 | ) |  |  | 250,149 |
As of December 31, 2022 |  | $ | 15,012 |  |  | $ | 5,669,787 |  |  | $ | 3,422,432 |  |  | $ | 2,953,984 |  |  | $ | 12,061,215 |
Accumulated Amortization and Impairment :
|  | Goodwill |  |  | Software |  |  | Patents and technology license fees |  |  | Others |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2022 |  | $ | 7,398 |  |  | $ | 2,913,824 |  |  | $ | 3,324,667 |  |  | $ | 2,808,462 |  |  | $ | 9,054,351 |
Amortization |  |  | — |  |  |  | 1,656,765 |  |  |  | 475,870 |  |  |  | 556,965 |  |  |  | 2,689,600 |
Write-off |  |  | — |  |  |  | (1,857,289 | ) |  |  | (1,344,682 | ) |  |  | (869,940 | ) |  |  | (4,071,911 | )
Exchange effect |  |  | — |  |  |  | (23,903 | ) |  |  | 141,658 |  |  |  | (3,780 | ) |  |  | 113,975 |
As of December 31, 2022 |  | $ | 7,398 |  |  | $ | 2,689,397 |  |  | $ | 2,597,513 |  |  | $ | 2,491,707 |  |  | $ | 7,786,015 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2022 |  | $ | 7,614 |  |  | $ | 2,980,390 |  |  | $ | 824,919 |  |  | $ | 462,277 |  |  | $ | 4,275,200 |
2023 Cost :
|  | Goodwill |  |  | Software |  |  | Patents and technology license fees |  |  | Others |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | 15,012 |  |  | $ | 5,669,787 |  |  | $ | 3,422,432 |  |  | $ | 2,953,984 |  |  | $ | 12,061,215 |
Additions |  |  | — |  |  |  | 1,399,699 |  |  |  | 346,896 |  |  |  | 999,510 |  |  |  | 2,746,105 |
Write-off |  |  | — |  |  |  | (1,498,642 | ) |  |  | (1,826,383 | ) |  |  | (632,860 | ) |  |  | (3,957,885 | )
Reclassifications |  |  | — |  |  |  | (5,855 | ) |  |  | — |  |  |  | — |  |  |  | (5,855 | )
Exchange effect |  |  | — |  |  |  | (98,912 | ) |  |  | (169,404 | ) |  |  | (9,993 | ) |  |  | (278,309 | )
As of December 31, 2023 |  | $ | 15,012 |  |  | $ | 5,466,077 |  |  | $ | 1,773,541 |  |  | $ | 3,310,641 |  |  | $ | 10,565,271 |
Accumulated Amortization and Impairment :
|  | Goodwill |  |  | Software |  |  | Patents and technology license fees |  |  | Others |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
As of January 1, 2023 |  | $ | 7,398 |  |  | $ | 2,689,397 |  |  | $ | 2,597,513 |  |  | $ | 2,491,707 |  |  | $ | 7,786,015 |
Amortization |  |  | — |  |  |  | 1,741,898 |  |  |  | 277,768 |  |  |  | 535,944 |  |  |  | 2,555,610 |
Write-off |  |  | — |  |  |  | (1,498,642 | ) |  |  | (1,826,383 | ) |  |  | (632,860 | ) |  |  | (3,957,885 | )
Exchange effect |  |  | — |  |  |  | (41,822 | ) |  |  | (139,933 | ) |  |  | (9,269 | ) |  |  | (191,024 | )
As of December 31, 2023 |  | $ | 7,398 |  |  | $ | 2,890,831 |  |  | $ | 908,965 |  |  | $ | 2,385,522 |  |  | $ | 6,192,716 |
Net carrying amount: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
As of December 31, 2023 |  | $ | 7,614 |  |  | $ | 2,575,246 |  |  | $ | 864,576 |  |  | $ | 925,119 |  |  | $ | 4,372,555 |
The amortization amounts of intangible assets were as follows:
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Operating costs |  | $ | 1,329,850 |  |  | $ | 1,144,960 |
Operating expenses |  | $ | 1,359,750 |  |  | $ | 1,410,650 |
| (11) | Short-Term Loans
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Unsecured bank loans |  | $ | — |  |  | $ | 13,530,000 |
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
Interest rates applied |  |  | — |  |  |  | 1.69% - 2.65% |
| (12) | Financial Liabilities at Fair Value through Profit or Loss, Current
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Embedded derivatives in exchangeable bonds |  | $ | 438,397 |  |  | $ | 1,019,362 |
| (13) | Bonds Payable
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Unsecured domestic bonds payable |  | $ | 23,100,000 |  |  | $ | 33,100,000 |
Unsecured exchangeable bonds payable |  |  | 5,757,373 |  |  |  | 5,757,373 |
Less: Discounts on bonds payable |  |  | (672,686 | ) |  |  | (498,021 | )
Total |  |  | 28,184,687 |  |  |  | 38,359,352 |
Less: Current or exchangeable portion due within one year |  |  | (5,101,591 | ) |  |  | (13,779,701 | )
Net |  | $ | 23,083,096 |  |  | $ | 24,579,651 |
| a. | UMC issued domestic unsecured corporate bonds. The terms and conditions of the bonds are as follows:
Term |  | Issuance date |  | Issued amount |  | Coupon rate |  |  | Repayment
Ten-year |  | In mid-June 2014 |  | NT$3,000 million |  |  | 1.95% |  |  | Interest will be paid annually and the principal will be repayable in June 2024 upon maturity.
Five-year |  | In late March 2017 |  | NT$6,200 million |  |  | 1.15% |  |  | Interest was paid annually and the principal was fully repaid in March 2022.
Seven-year |  | In late March 2017 |  | NT$2,100 million |  |  | 1.43% |  |  | Interest will be paid annually and the principal will be repayable in March 2024 upon maturity.
Five-year |  | In early October 2017 |  | NT$2,000 million |  |  | 0.94% |  |  | Interest was paid annually and the principal was fully repaid in October 2022.
Seven-year |  | In early October 2017 |  | NT$3,400 million |  |  | 1.13% |  |  | Interest will be paid annually and the principal will be repayable in October 2024 upon maturity.
Five-year |  | In late April 2021 |  | NT$5,500 million |  |  | 0.57% |  |  | Interest will be paid annually and the principal will be repayable in April 2026 upon maturity.
Seven-year |  | In late April 2021 |  | NT$2,000 million |  |  | 0.63% |  |  | Interest will be paid annually and the principal will be repayable in April 2028 upon maturity.
Ten-year (Green bond) |  | In late April 2021 |  | NT$2,100 million |  |  | 0.68% |  |  | Interest will be paid annually and the principal will be repayable in April 2031 upon maturity.
Five-year |  | In mid-December 2021 |  | NT$5,000 million |  |  | 0.63% |  |  | Interest will be paid annually and the principal will be repayable in December 2026 upon maturity.
Five-year (Green bond) |  | In mid-September 2023 |  | NT$10,000 million |  |  | 1.62% |  |  | Interest will be paid annually and the principal will be repayable in September 2028 upon maturity.
| b. | On July 7, 2021, UMC issued SGX-ST listed currency linked zero coupon exchangeable bonds. In accordance with IFRS 9, the value of the exchange right, call option and put option (together referred to as Option) of the exchangeable bonds was separated from the host and accounted for as “financial liabilities at fair value through profit or loss, current”. The effective rate of the host bond was 3.49%. The terms and conditions of the bonds are as follows:
| i. | Issue Amount: US$400 million
| ii. | Period: July 7, 2021 - July 7, 2026 (Maturity Date)
| iii. | Redemption:
| (i) | UMC may, at its option, redeem in whole or in part at the principal amount of the bonds with an interest calculated at the rate of -0.625% per annum (the Early Redemption Amount) at any time after the third anniversary from the issue date and prior to the Maturity Date, if the closing price of the common shares of NOVATEK on the TWSE, converted into U.S. dollars at the prevailing exchange rate, for 20 out of 30 consecutive trading days prior to the publication of the redemption notice is at least 130% of the quotient of the Early Redemption Amount multiplied by the then exchange price (converted into U.S. dollars at the Fixed Exchange Rate), divided by the principal amount of the bonds. The Early Redemption Amount will be converted into NTD based on the Fixed Exchange Rate (NTD 27.902=USD 1.00), and this fixed NTD amount will then be converted using the prevailing exchange at the time of redemption for payment in USD.
| (ii) | UMC may redeem the outstanding bonds in whole, but not in part, at the Early Redemption Amount, in the event that over 90% of the bonds have been previously redeemed, repurchased and cancelled or exchanged.
| (iii) | In the event of any change in ROC taxation resulting in increase of tax obligation or the necessity to pay additional interest expense or increase of additional costs to UMC, UMC may redeem the outstanding bonds in whole, but not in part, at the Early Redemption Amount. Bondholders may elect not to have their bonds redeemed but with no entitlement to any additional amounts or reimbursement of additional taxes.
| (iv) | All or any portion of the bonds will be redeemable at put price at the option of bondholders on July 7, 2024 at 98.14% of the principal amount.
| (v) | In the event that the common shares of NOVATEK cease to be listed or are suspended from trading for a period equal to or exceeding 30 consecutive trading days on the TWSE, each bondholder shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.
| (vi) | Upon the occurrence of a change of control (as defined in the indenture) of UMC, each bondholder shall have the right to require UMC to redeem the bonds, in whole but not in part, at the Early Redemption Amount.
| iv. | Terms of Exchange:
| (i) | Underlying Securities: Common Shares of NOVATEK
| (ii) | Exchange Period: The bonds are exchangeable at any time on or after October 8, 2021 and prior to June 27, 2026, into NOVATEK common shares. If for any reason UMC does not have sufficient NOVATEK common shares to deliver upon the exchange of any bond, then, UMC will pay to the exchanging bondholder an amount in U.S. dollars equal to the product of the volume-weighted average closing price per NOVATEK common share on the TWSE for five consecutive trading days starting from and including the applicable exercise date (as defined in the indenture) (or such fewer number of trading days as are available within ten days starting from and including the applicable exercise date) each converted into USD at the prevailing rate on the day preceding the applicable trading day and the number of NOVATEK common shares that UMC is unable to deliver. Provided, however, that if the exercise date falls within 5 business days from the beginning of, and during, any closed period, the right of the converting holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.
| (iii) | Exchange Price and Adjustment: The exchange price was originally NT$731.25 per NOVATEK common share. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture. The exchange price was NT$533.8 per NOVATEK common share on December 31, 2023.
| v. | Redemption on the Maturity Date:
The bonds will be redeemed with 96.92% principal amount on the maturity date unless:
| (i) | UMC shall have redeemed the bonds at the option of UMC, or the bonds shall have been redeemed at option of the bondholder,
| (ii) | The bondholders shall have exercised the exchange right before maturity, or
| (iii) | The bonds shall have been redeemed or repurchased by UMC and cancelled.
For the years ended December 31, 2022 and 2023, UMC has repurchased and cancelled the outstanding principal amount of exchangeable bonds totaling US$187.1 million and nil with derecognition of the related derivative financial liabilities, respectively. The difference between the repurchased amount and the carrying amount recognized in non-operating other gains and losses was immaterial.
| (14) | Long-Term Loans
| a. | Details of long-term loans as of December 31, 2022 and 2023 were as follows:
|  | As of December 31, |  |  |
Lenders |  | 2022 |  |  | 2023 |  |  | Redemption
|  | NT$ |  |  | NT$ |  |  |
|  | (In Thousands) |  |  | (In Thousands) |  |  |
Secured Long-Term Loan from Mega International Commercial Bank (1) |  | $ | 9,732 |  |  | $ | 4,866 |  |  | Repayable quarterly from October 24, 2019 to October 24, 2024 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Mega International Commercial Bank (2) |  |  | 18,000 |  |  |  | 13,765 |  |  | Repayable quarterly from February 23, 2022 to February 22, 2027 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Mega International Commercial Bank (3) |  |  | 60,500 |  |  |  | 46,265 |  |  | Repayable quarterly from December 22, 2022 to February 23, 2027 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Taiwan Cooperative Bank (1) |  |  | 35,676 |  |  |  | 23,784 |  |  | Repayable quarterly from October 19, 2015 to October 19, 2025 with monthly interest payments. Interest-only payment for the first year.
|  | As of December 31, |  |  |
Lenders |  | 2022 |  |  | 2023 |  |  | Redemption
|  | NT$ |  |  | NT$ |  |  |
|  | (In Thousands) |  |  | (In Thousands) |  |  |
Secured Long-Term Loan from Taiwan Cooperative Bank (2) |  |  | 4,375 |  |  |  | — |  |  | Repayable monthly from May 31, 2019 to May 31, 2023 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (3) |  |  | 32,000 |  |  |  | 20,000 |  |  | Repayable monthly from August 13, 2020 to August 13, 2025 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (4) |  |  | 16,552 |  |  |  | 10,345 |  |  | Repayable monthly from October 29, 2020 to August 29, 2025 with monthly interest payments.
Secured Long-Term Loan from Taiwan Cooperative Bank (5) |  |  | 84,166 |  |  |  | 58,916 |  |  | Repayable monthly from April 15, 2021 to April 15, 2026 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Taiwan Cooperative Bank (6) |  |  | — |  |  |  | 34,400 |  |  | Repayable quarterly from December 28, 2023 to December 28, 2028 with monthly interest payments. Interest-only payment for the first year.
Secured Syndicated Loans from China Development Bank and 6 others (1) |  |  | 1,915,577 |  |  |  | — |  |  | Repayable semi-annually from October 20, 2016 to October 19, 2024 with semi-annually interest payments. Interest-only payment for the first and the second year.
Secured Syndicated Loans from China Development Bank and 6 others (2) |  |  | 12,415,200 |  |  |  | 11,766,832 |  |  | Repayable semi-annually from March 19, 2021 to March 18, 2031 with semi-annually interest payments. Interest-only payment for the first and the second year.
Secured Long-Term Loan from First Commercial Bank |  |  | 47,000 |  |  |  | 35,668 |  |  | Repayable monthly from December 2, 2021 to December 2, 2026 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from KGI Bank |  |  | 21,000 |  |  |  | 21,000 |  |  | Settlement due on December 25, 2026 with monthly interest payments.
Secured Long-Term Loan from Shanghai Commercial Bank (1) |  |  | 22,200 |  |  |  | 16,650 |  |  | Repayable monthly from January 19, 2022 to December 15, 2026 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Shanghai Commercial Bank (2) |  |  | — |  |  |  | 4,980 |  |  | Repayable quarterly from March 23, 2023 to March 15, 2028 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from Shanghai Commercial Bank (3) |  |  | — |  |  |  | 45,000 |  |  | Repayable quarterly from June 6, 2023 to March 15, 2028 with monthly interest payments. Interest-only payment for the first year.
Secured Long-Term Loan from CTBC Bank |  |  | — |  |  |  | 131,750 |  |  | Repayable semi-annually from September 25, 2023 to September 25, 2028 with monthly interest payments. Interest-only payment for the first and the second year.
Unsecured Long-Term Loan from Bank of China |  |  | 1,797,364 |  |  |  | 1,515,790 |  |  | Repayable semi-annually from June 24, 2023 to June 24, 2026 with quarterly interest payments.
Unsecured Long-Term Loan from Bank of Taiwan |  |  | 2,000,000 |  |  |  | 1,333,333 |  |  | Repayable quarterly from March 24, 2023 to December 24, 2025 with monthly interest payments.
Unsecured Revolving Loan from First Commercial Bank (1) (Note A) |  |  | 300,000 |  |  |  | — |  |  | Settlement due on February 25, 2026 with monthly interest payments.
|  | As of December 31, |  |  |
Lenders |  | 2022 |  |  | 2023 |  |  | Redemption
|  | NT$ |  |  | NT$ |  |  |
|  | (In Thousands) |  |  | (In Thousands) |  |  |
Unsecured Revolving Loan from First Commercial Bank (2) (Note A) |  |  | 300,000 |  |  |  | — |  |  | Settlement due on March 15, 2026 with monthly interest payments.
Unsecured Revolving Loan from First Commercial Bank (3) (Note A) |  |  | 200,000 |  |  |  | — |  |  | Settlement due on June 15, 2026 with monthly interest payments.
Unsecured Revolving Loan from First Commercial Bank (4) (Note B) |  |  | — |  |  |  | 800,000 |  |  | Settlement due on July 13, 2028 with monthly interest payments.
Unsecured Revolving Loan from Yuanta Commercial Bank (Note C) |  |  | — |  |  |  | 3,000,000 |  |  | Repayable annually from March 2, 2023 to March 2, 2026 with monthly interest payments.
Unsecured Revolving Loan from CTBC Bank (Note D) |  |  | — |  |  |  | 4,000,000 |  |  | Settlement due on July 20, 2025 with monthly interest payments.
Subtotal |  |  | 19,279,342 |  |  |  | 22,883,344 |  |  |
Less: Current portion |  |  | (2,485,053 | ) |  |  | (2,227,096 | ) |  |
Total |  | $ | 16,794,289 |  |  | $ | 20,656,248 |  |  |
|  | As of December 31, |  |  |
|  | 2022 |  |  | 2023 |  |  |
Interest rates applied |  |  | 1.48% - 5.62% |  |  |  | 1.67% - 6.56% |  |  |
| Note A: | First Commercial Bank approved the 1-year credit loan on April 14, 2022, which offered UMC a revolving line of credit of NT$2 billion starting from the approval date to April 13, 2023. As of December 31, 2022, the unused line of credit was NT$1.2 billion.
| Note B: | First Commercial Bank approved the 1-year credit loan on April 25, 2023, which offered UMC a revolving line of credit of NT$2 billion starting from the approval date to April 24, 2024. As of December 31, 2023, the unused line of credit was NT$1.2 billion.
| Note C: | UMC entered into a 5-year loan agreement with Yuanta Commercial Bank, effective from March 3, 2021. The agreement offered UMC a revolving line of credit of NT$4 billion. This line of credit will be reduced starting from the end of the second year after the contract date and every twelve months thereafter, with a total of four adjustments. The expiration date of the agreement is March 2, 2026. As of December 31, 2022 and 2023, the unused line of credit were NT$4 billion and nil, respectively.
| Note D: | UMC entered into a 5-year loan agreement with CTBC Bank, effective from December 24, 2021. The agreement offered UMC a revolving line of credit of NT$4 billion. The expiration date of the agreement is July 20, 2025. As of December 31, 2022 and 2023, the unused line of credit were NT$4 billion and nil, respectively.
| b. | Please refer to Note 8 for property, plant and equipment and right-of-use assets pledged as collateral for long-term loans.
| c. | In 2016, HJ resolved to provide endorsement for USCXM’s syndicated loan from banks including China Development Bank. The maximum amount of endorsement for the years ended December 31, 2022 and 2023 were NT$7,547 million and NT$2,934 million, respectively. As of December 31, 2022 and 2023, the actual amount provided were NT$2,407 million and NT$1,686 million, respectively.
| d. | In 2017, UMC resolved to provide endorsement for USCXM’s syndicated loan from banks including China Development Bank. The maximum amount of endorsement for the years ended December 31, 2022 and 2023 were NT$17,876 million and NT$10,351 million, respectively. As of December 31, 2022 and 2023, the actual amount provided were NT$7,878 million and NT$9,946 million, respectively.
| (15) | Post-Employment Benefits
| a. | Defined contribution plan
The employee pension plan under the Labor Pension Act of the R.O.C. is a defined contribution plan. Pursuant to the plan, UMC and its domestic subsidiaries make monthly contributions of 6% based on each individual employee’s salary or wage to employees’ pension accounts. Pension benefits for employees of the Singapore branch and subsidiaries overseas are provided in accordance with the local regulations. Total pension expenses of NT$1,636 million, NT$1,880 million and NT$1,655 million were contributed by the Company for the years ended December 31, 2021, 2022 and 2023, respectively.
| b. | Defined benefit plan
The employee pension plan mandated by the Labor Standards Act of the R.O.C. is a defined benefit plan. The pension benefits are disbursed based on the units of service years and average monthly salary prior to retirement according to the Labor Standards Act. Two units per year are awarded for the first 15 years of services while one unit per year is awarded after the completion of the 15th year and the total units will not exceed 45 units. The Company contributes an amount equivalent to 2% of the employees’ total salaries and wages on a monthly basis to the pension fund deposited with the Bank of Taiwan under the name of a pension fund supervisory committee. The pension fund is managed by the government’s designated authorities and therefore is not included in the Company’s consolidated financial statements. For the years ended December 31, 2021, 2022 and 2023, total pension expenses of NT$23 million, NT$34 million and NT$45 million, respectively, were recognized by the Company.
| i. | Movements in present value of defined benefit obligation during the year:
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Defined benefit obligation at beginning of year |  | $ | (5,458,333 | ) |  | $ | (5,106,623 | )
Items recognized as profit or loss: |  |  |  |  |  |  |  |
Service cost |  |  | (9,911 | ) |  |  | (9,893 | )
Interest cost |  |  | (33,842 | ) |  |  | (63,322 | )
Subtotal |  |  | (43,753 | ) |  |  | (73,215 | )
Remeasurements recognized in other comprehensive income (loss): |  |  |  |  |  |  |  |
Arising from changes in financial assumptions |  |  | 227,790 |  |  |  | 166,401 |
Experience adjustments |  |  | (56,959 | ) |  |  | 226,634 |
Subtotal |  |  | 170,831 |  |  |  | 393,035 |
Benefits paid |  |  | 224,632 |  |  |  | 121,305 |
Defined benefit obligation at end of year |  | $ | (5,106,623 | ) |  | $ | (4,665,498 | )
| ii. | Movements in fair value of plan assets during the year:
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Beginning balance of fair value of plan assets |  | $ | 1,581,012 |  |  | $ | 2,237,221 |
Items recognized as profit or loss: |  |  |  |  |  |  |  |
Interest income on plan assets |  |  | 9,802 |  |  |  | 27,742 |
Contribution by employer |  |  | 745,066 |  |  |  | 307,556 |
Benefits paid |  |  | (224,632 | ) |  |  | (121,305 | )
Remeasurements recognized in other comprehensive income (loss): |  |  |  |  |  |  |  |
Return on plan assets, excluding amounts included in interest income |  |  | 125,973 |  |  |  | 9,199 |
Fair value of plan assets at end of year |  | $ | 2,237,221 |  |  | $ | 2,460,413 |
The actual returns on plan assets of the Company for the years ended December 31, 2022 and 2023 were NT$136 million and NT$37 million, respectively.
| iii. | The defined benefit plan recognized on the consolidated balance sheets were as follows:
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Present value of the defined benefit obligation |  | $ | (5,106,623 | ) |  | $ | (4,665,498 | )
Fair value of plan assets |  |  | 2,237,221 |  |  |  | 2,460,413 |
Funded status |  |  | (2,869,402 | ) |  |  | (2,205,085 | )
Net defined benefit liabilities, noncurrent recognized on the consolidated balance sheets |  | $ | (2,869,402 | ) |  | $ | (2,205,085 | )
| iv. | The major categories of plan assets as a percentage of the fair value of the total plan assets are as follows:
|  | As of December 31,
|  | 2022 |  | 2023
Cash |  |  | 20 | % |  |  | 21 | %
Equity instruments |  |  | 47 | % |  |  | 46 | %
Debt instruments |  |  | 22 | % |  |  | 23 | %
Others |  |  | 11 | % |  |  | 10 | %
Employee pension fund is deposited under a trust administered by the Bank of Taiwan. The overall expected rate of return on assets is determined based on historical trend and actuaries’ expectations on the assets’ returns in the market over the obligation period. Furthermore, the utilization of the fund is determined by the labor pension fund supervisory committee, which also guarantees the minimum earnings to be no less than the earnings attainable from interest rates offered by local banks for two-year time deposits.
| v. | The principal underlying actuarial assumptions are as follows:
|  | As of December 31,
|  | 2022 |  | 2023
Discount rate |  |  | 1.24 | % |  |  | 1.20 | %
Rate of future salary increase |  |  | 4.25 | % |  |  | 3.50 | %
| vi. | Expected future benefit payments are as follows:
Year |  | As of December 31, 2023 |
|  | NT$ (In Thousands) |
2024 |  | $ | 596,934 |
2025 |  |  | 529,837 |
2026 |  |  | 486,833 |
2027 |  |  | 465,919 |
2028 |  |  | 434,293 |
2029 and thereafter |  |  | 2,511,716 |
Total |  | $ | 5,025,532 |
The Company expects to make pension fund contribution of NT$700 million in 2024. The weighted-average durations of the defined benefit obligation were 7 years and 6 years as of December 31, 2022 and 2023, respectively.
| vii. | Sensitivity analysis:
|  | As of December 31, 2022 |
|  | Discount rate |  |  | Rate of future salary increase |
|  | 0.5% increase |  |  | 0.5% decrease |  |  | 0.5% increase |  |  | 0.5% decrease |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Decrease (increase) in defined benefit obligation |  | $ | 172,801 |  |  | $ | (182,478 | ) |  | $ | (151,050 | ) |  | $ | 145,000 |
|  | As of December 31, 2023 |
|  | Discount rate |  |  | Rate of future salary increase |
|  | 0.5% increase |  |  | 0.5% decrease |  |  | 0.5% increase |  |  | 0.5% decrease |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Decrease (increase) in defined benefit obligation |  | $ | 137,615 |  |  | $ | (144,683 | ) |  | $ | (117,784 | ) |  | $ | 113,478 |
The sensitivity analyses above have been determined based on a method that extrapolates the impact on the net defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
| (16) | Deferred Government Grants
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Beginning balance |  | $ | 8,543,798 |  |  | $ | 4,677,444 |
Arising during the period |  |  | 174,352 |  |  |  | 591,086 |
Recorded in profit or loss: |  |  |  |  |  |  |  |
Other operating income |  |  | (4,164,189 | ) |  |  | (2,663,843 | )
Exchange effect |  |  | 123,483 |  |  |  | (57,665 | )
Ending balance |  | $ | 4,677,444 |  |  | $ | 2,547,022 |
Current (classified under other current liabilities) |  | $ | 2,681,842 |  |  | $ | 717,457 |
Non-current (classified under other noncurrent liabilities) |  |  | 1,995,602 |  |  |  | 1,829,565 |
Total |  | $ | 4,677,444 |  |  | $ | 2,547,022 |
The significant government grants related to equipment acquisitions received by the Company are amortized as income over the useful lives of related equipment and recorded in the net other operating income and expenses.
| (17) | Refund Liabilities (classified under other current liabilities)
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Refund liabilities |  | $ | 1,139,227 |  |  | $ | 3,033,576 |
| (18) | Provisions
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Onerous Contracts (classified under other current liabilities) |  | $ | 469,779 |  |  | $ | 57,800 |
Decommissioning Liabilities (classified under other noncurrent liabilities) |  |  | 366,863 |  |  |  | 602,433 |
Total |  | $ | 836,642 |  |  | $ | 660,233 |
|  | Onerous Contracts |  |  | Decommissioning Liabilities |
|  | NT$ (In Thousands) |  |  | NT$ (In Thousands) |
Balance as of January 1, 2023 |  | $ | 469,779 |  |  | $ | 366,863 |
Arising during the period |  |  | 40,154 |  |  |  | 191,360 |
Unused provision reversed |  |  | (450,968 | ) |  |  | — |
Discount rate adjustment and unwinding of discount from the passage of time |  |  | — |  |  |  | 47,880 |
Exchange effect |  |  | (1,165 | ) |  |  | (3,670 | )
Balance as of December 31, 2023 |  | $ | 57,800 |  |  | $ | 602,433 |
When the Company expects that the unavoidable costs of fulfilling the contractual obligations exceed the expected economic benefits from the contracts, the present obligation under the onerous contract are recognized and measured as provisions. Under certain applicable agreement, the Company is obligated to dismantling and removing the items of property, plant and equipment and restoring the site on which they are located. Accordingly, the Company recognized the liability pursuant to the present value of the estimated decommissioning and restoration cost.
| (19) | Equity
| a. | Capital stock:
| i. | UMC had 26,000 million common shares authorized to be issued as of December 31, 2022 and 2023 , of which 12,505 million shares and 12,530 million shares were issued as of December 31, 2022 and 2023, respectively, each at a par value of NT$10.
| ii. | UMC had 135 million and 121 million ADSs, which were traded on the NYSE as of December 31, 2022 and 2023, respectively. The total number of common shares of UMC represented by all issued ADSs were 674 million shares and 607 million shares as of December 31, 2022 and 2023, respectively. One ADS represents five common shares.
| iii. | On December 5, 2022 and December 5, 2023, UMC issued restricted stocks for its employees in a total of 23 million shares and 27 million shares with a par value of NT$10 each, respectively. The aforementioned issuance of new shares was approved by the competent authority and the registration was completed. Please refer to Note 6(20) for the information of restricted stocks.
| iv. | For the years ended December 31, 2022 and 2023, UMC has recalled and cancelled 2 million shares and 2 million shares, respectively of unvested restricted stocks issued for employees according to the issuance plan. The aforementioned reduction of capital was approved by the competent authority and the registration was completed.
| b. | Details of UMC’s stock (thousand shares) held by the Company’s associates are as follows:
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
HSUN CHIEH |  |  | 441,371 |  |  |  | 441,371 |
YANN YUAN |  |  | 192,963 |  |  |  | 192,963 |
SUBTRON, the subsidiary of UNIMICRON (Note A) |  |  | — |  |  |  | 47 |
SIS (Note B) |  |  | — |  |  |  | 266,580 |
Total |  |  | 634,334 |  |  |  | 900,961 |
| Note A: | Beginning from January 2023, SUBTRON becomes an associate of the Company.
| Note B: | Beginning from August 2023, SIS becomes an associate of the Company.
| c. | Retained earnings and dividend policies:
According to UMC’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order :
| i. | Payment of taxes.
| ii. | Making up loss for preceding years.
| iii. | Setting aside 10% for legal reserve, except for when accumulated legal reserve has reached UMC’s paid-in capital.
| iv. | Appropriating or reversing special reserve by government officials or other regulations.
| v. | The remaining, if applicable, may be distributed preferentially as preferred shares dividends for the current year, and if there is still a remaining balance, in addition to the previous year’s unappropriated earnings, UMC shall distribute it according to the distribution plan proposed by the Board of Directors according to the dividend policy and submitted to the shareholders’ meeting for approval.
Because UMC conducts business in a capital intensive industry and continues to operate in its growth phase, the dividend policy of UMC shall be determined pursuant to factors such as the investment environment, its funding requirements, domestic and overseas competitive landscape and its capital expenditure forecast, as well as shareholders’ interest, balancing dividends and UMC’s long-term financial planning. The Board of Directors shall propose the distribution plan and submit it to the shareholders’ meeting every year. The distribution of shareholders’ dividend shall be allocated as cash dividend in the range of 20% to 100%, and stock dividend in the range of 0% to 80%. According to the regulations of Taiwan Financial Supervisory Commission (FSC), UMC is required to appropriate a special reserve in the amount equal to the sum of debit elements under equity, such as unrealized loss on financial instruments and debit balance of exchange differences on translation of foreign operations, 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 deficits. The appropriation of earnings for 2022 was approved by the shareholders’ meeting held on May 31, 2023, while the appropriation of earnings for 2023 was proposed by the Board of Directors’ meeting on February 27, 2024. The details of appropriation were as follows:
|  | Appropriation of earnings (in thousand NT dollars) |  |  | Cash dividend per share (NT dollars) |
|  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |
Legal reserve |  | $ | 8,905,139 |  |  | $ | 6,255,736 |  |  |  |  |  |  |  |  |
Special reserve |  |  | (2,180,156 | ) |  |  | (2,734,057 | ) |  |  |  |  |  |  |  |
Cash dividends |  |  | 45,017,096 |  |  |  | 37,587,102 |  |  | $ | 3.60 |  |  | $ | 3.00 |
The aforementioned 2022 appropriation approved by shareholders’ meeting was consistent with the resolutions of the Board of Directors’ meeting held on February 22, 2023. The cash dividend per share for 2022 was adjusted to NT$3.60046348 per share. The adjustment was due to the decrease of outstanding common shares from cancellation of the restricted stock in April 2023. The appropriation of 2023 unappropriated retained earnings has not yet been approved by the shareholders’ meeting as of the reporting date. Information relevant to the Board of Directors’ meeting resolutions and shareholders’ meeting approval can be obtained from the “Market Observation Post System” on the website of the TWSE. Please refer to Note 6(22) for information on the employees and directors’ compensation.
| d. | Non-controlling interests:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Balance as of January 1 |  | $ | 113,356 |  |  | $ | 223,181 |  |  | $ | 343,679 |
Impact of retroactive applications |  |  | — |  |  |  | (66,089 | ) |  |  | — |
Adjusted balance as of January 1 |  |  | 113,356 |  |  |  | 157,092 |  |  |  | 343,679 |
Attributable to non-controlling interests: |  |  |  |  |  |  |  |  |  |  |  |
Net income (loss) |  |  | (668,245 | ) |  |  | 819,960 |  |  |  | 450,184 |
Other comprehensive income (loss) |  |  | (19 | ) |  |  | 8 |  |  |  | (14 | )
Share-based payment transactions |  |  | — |  |  |  | 1,490 |  |  |  | 5,817 |
Changes in subsidiaries’ ownership |  |  | (11,126 | ) |  |  | (1,339 | ) |  |  | 456 |
Non-controlling interests |  |  | 23,430 |  |  |  | 5,456 |  |  |  | 4,187 |
Derecognition of the non-controlling interests |  |  | 765,785 |  |  |  | (638,988 | ) |  |  | (463,450 | )
Ending balance |  | $ | 223,181 |  |  | $ | 343,679 |  |  | $ | 340,859 |
| (20) | Share-Based Payment
| a. | Restricted stock plan for employees
On June 10, 2020, the shareholders approved a compensation plan in their meeting to issue restricted stocks to qualified employees of UMC without consideration. The maximum shares to be issued are 233 million common shares. UMC is authorized to issue restricted stocks in one tranche or in installments, under the custody of trust institution, within one year from the date of receiving the effective declaration from the competent authority. The issuance plan was authorized for effective registration by the Securities and Futures Bureau of the FSC and accordingly, 200 million shares and 1 million shares of restricted stock for employees were issued without consideration on September 1, 2020 and June 9, 2021, respectively. The life of the plan is four years. Beginning from the end of two years since the date of grant, those employees who fulfill both service period and performance conditions set by UMC are gradually eligible to the vested restricted stocks at certain percentage and time frame. For those employees who fail to fulfill the vesting conditions, UMC will recall and cancel their stocks without consideration. During the vesting period, the restricted stock holders are entitled the same rights as those of common stock holders including the right to receive dividends, but are restricted to sell, pledge, set guarantee, transfer, grant, or dispose the restricted stocks in any other ways. Related information can be obtained from the “Market Observation Post System” on the website of the TWSE. On May 27, 2022, the shareholders approved a compensation plan in their meeting to issue restricted stocks to qualified employees of the Company without consideration. The maximum shares to be issued are 50 million common shares. UMC is authorized to issue restricted stocks in one tranche or in installments, under the custody of trust institution, within two years from the date of receiving the effective declaration from the competent authority. The issuance plan was authorized for effective registration by the Securities and Futures Bureau of the FSC and accordingly, 23 million shares and 27 million shares of restricted stock for employees were issued without consideration on December 5, 2022 and December 5, 2023, respectively. The life of the plan is four years. Beginning from the end of two years since the date of grant, those employees who fulfill both service period and performance conditions set by UMC are gradually eligible to the vested restricted stocks at certain percentage and time frame. For those employees who fail to fulfill the vesting conditions, UMC will recall and cancel their stocks without consideration. During the vesting period, the restricted stock holders are entitled the same rights as those of common stock holders including the right to receive dividends, but are restricted to sell, pledge, set guarantee, transfer, grant, or dispose the restricted stocks in any other ways. Related information can be obtained from the “Market Observation Post System” on the website of the TWSE. The aforementioned compensation costs for the equity-settled share-based payment issued in 2020 and 2022 were measured at fair value based on the closing quoted market price of the shares on the grant date, NT$21.8, NT$53.0, NT$44.4 and NT$48.9 per share, respectively. The unvested restricted stocks issued on the grant date for employees are recognized in unearned employee compensation as a transitional contra equity account and such account shall be amortized as compensation expense over the vesting period. For the years ended December 31, 2021, 2022 and 2023, the compensation costs of NT$1,520 million, NT$1,352 million and NT$1,025 million, respectively, were recognized in expenses by the Company.
| b. | Stock appreciation right plan for employees
In September 2020 and June 2021, the Company executed a compensation plan to grant 26 million units and 1 million units of cash-settled stock appreciation right to qualified employees of the Company without consideration, respectively. One unit of stock appreciation right to employees represents a right to the intrinsic value of one common share of UMC. The life of the plan is four years. Beginning from the end of two years since the date of grant, those employees who fulfill both service period and performance conditions set by the Company are gradually eligible to the vested stock appreciation right at certain percentage and time frame. For those employees who fail to fulfill the vesting conditions, the Company will withdraw their rights without consideration. During the vesting period, the holders of the stock appreciation right are not entitled the same rights as those of common stock holders of UMC. The compensation cost for the cash-settled share-based payment was measured at fair value initially by using Black-Scholes Option Pricing Model and will be remeasured at the end of each reporting period until settlement. As of December 31, 2023, the assumptions used are as follows:
|  | Granted in September 2020 |  |  | Granted in June 2021 |
Share price of measurement date (NT$/ per share) |  | $ | 52.60 |  |  | $ | 52.60 |
Expected volatility |  |  | 23.95% |  |  |  | 23.21% - 28.72% |
Expected life |  |  | 0.67 years |  |  |  | 0.44 - 1.44 years |
Expected dividend yield |  |  | 6.02% |  |  |  | 6.02% |
Risk-free interest rate |  |  | 1.06% |  |  |  | 1.06% - 1.08% |
For the years ended December 31, 2021, 2022 and 2023, the compensation costs of NT$271 million, NT$210 million and NT$105 million, respectively, were recognized in expenses by the Company. The liabilities for stock appreciation right recognized which were classified under other payables and other noncurrent liabilities amounted to NT$340 million and NT$207 million as of December 31, 2022 and 2023, respectively. The intrinsic value for the liabilities of vested rights was nil.
| (21) | Operating Revenues
| a. | Disaggregation of revenue
| i. | By product
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Wafer |  | $ | 204,594,399 |  |  | $ | 265,600,173 |  |  | $ | 211,750,622 |
Others |  |  | 8,416,619 |  |  |  | 13,105,091 |  |  |  | 10,782,378 |
Total |  | $ | 213,011,018 |  |  | $ | 278,705,264 |  |  | $ | 222,533,000 |
| ii. | By geography
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Taiwan |  | $ | 92,427,670 |  |  | $ | 105,213,451 |  |  | $ | 68,360,231 |
China (includes Hong Kong) |  |  | 26,949,205 |  |  |  | 39,641,613 |  |  |  | 27,545,452 |
Japan |  |  | 13,445,127 |  |  |  | 17,053,279 |  |  |  | 11,612,866 |
Korea |  |  | 17,548,763 |  |  |  | 25,689,385 |  |  |  | 30,872,198 |
USA |  |  | 46,914,605 |  |  |  | 67,352,671 |  |  |  | 59,103,051 |
Europe |  |  | 15,708,303 |  |  |  | 23,711,284 |  |  |  | 24,932,099 |
Others |  |  | 17,345 |  |  |  | 43,581 |  |  |  | 107,103 |
Total |  | $ | 213,011,018 |  |  | $ | 278,705,264 |  |  | $ | 222,533,000 |
Beginning from 2023, the geographic breakdown of the Company’s operating revenues is based on the location where the Company’s customers are headquartered, and the comparative information in respect of the preceding period is also presented on a consistent basis.
| iii. | By the timing of revenue recognition
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
At a point in time |  | $ | 211,074,982 |  |  | $ | 276,175,120 |  |  | $ | 220,283,306 |
Over time |  |  | 1,936,036 |  |  |  | 2,530,144 |  |  |  | 2,249,694 |
Total |  | $ | 213,011,018 |  |  | $ | 278,705,264 |  |  | $ | 222,533,000 |
| b. | Contract balances
| i. | Contract assets, current
|  | As of January 1, |  |  | As of December 31, |
|  | 2022 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Sales of goods and services |  | $ | 677,326 |  |  | $ | 766,691 |  |  | $ | 1,132,477 |
Less: Loss allowance |  |  | (357,705 | ) |  |  | (393,373 | ) |  |  | (392,949 | )
Net |  | $ | 319,621 |  |  | $ | 373,318 |  |  | $ | 739,528 |
The loss allowance was assessed by the Company primarily at an amount equal to lifetime expected credit losses. The loss allowance was mainly resulted from the suspension of the joint technology development agreement as disclosed in Note 9(7).
| ii. | Contract liabilities
|  | As of January 1, |  |  | As of December 31, |
|  | 2022 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Sales of goods and services |  | $ | 4,083,140 |  |  | $ | 3,985,003 |  |  | $ | 3,681,352 |
Current |  | $ | 3,441,754 |  |  | $ | 3,546,815 |  |  | $ | 3,250,712 |
Non-current |  |  | 641,386 |  |  |  | 438,188 |  |  |  | 430,640 |
Total |  | $ | 4,083,140 |  |  | $ | 3,985,003 |  |  | $ | 3,681,352 |
The movement of contract liabilities is mainly caused by the timing difference of the satisfaction of a performance of obligation and the consideration received from customers. The Company recognized NT$3,112 million and NT$2,871 million, respectively, in revenues from the contract liabilities balance at the beginning of the period as performance obligations were satisfied for the years ended December 31, 2022 and 2023.
| c. | The Company’s transaction price allocated to unsatisfied performance obligations amounted to NT$223 million and NT$195 million as of December 31, 2022 and 2023, respectively. The Company will recognize revenue as the Company satisfies its performance obligations over time that aligns with progress toward completion of a contract in the future. The estimate of the transaction price does not include any estimated amounts of variable consideration that are constrained.
| d. | Asset recognized from costs to fulfill a contract with customer
As of December 31, 2022 and 2023, the Company recognized costs to fulfill engineering service contracts eligible for capitalization as other current assets which amounted to NT$721 million and NT$877 million, respectively. Subsequently, the Company will expense from costs to fulfill a contract to operating costs when the related obligations are satisfied.
| (22) | Operating Costs and Expenses
The Company’s employee benefit, depreciation and amortization expenses are summarized as follows:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | Operating costs |  |  | Operating expenses |  |  | Total |  |  | Operating costs |  |  | Operating expenses |  |  | Total |  |  | Operating costs |  |  | Operating expenses |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Employee benefit expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salaries |  | $ | 23,388,888 |  |  | $ | 11,806,207 |  |  | $ | 35,195,095 |  |  | $ | 30,074,528 |  |  | $ | 13,928,646 |  |  | $ | 44,003,174 |  |  | $ | 26,693,905 |  |  | $ | 12,002,205 |  |  | $ | 38,696,110 |
Labor and health insurance |  |  | 1,183,315 |  |  |  | 458,179 |  |  |  | 1,641,494 |  |  |  | 1,368,803 |  |  |  | 471,788 |  |  |  | 1,840,591 |  |  |  | 1,502,553 |  |  |  | 557,543 |  |  |  | 2,060,096 |
Pension |  |  | 1,259,044 |  |  |  | 399,879 |  |  |  | 1,658,923 |  |  |  | 1,489,076 |  |  |  | 424,752 |  |  |  | 1,913,828 |  |  |  | 1,240,577 |  |  |  | 460,079 |  |  |  | 1,700,656 |
Other employee benefit expenses |  |  | 335,829 |  |  |  | 144,668 |  |  |  | 480,497 |  |  |  | 373,739 |  |  |  | 165,114 |  |  |  | 538,853 |  |  |  | 421,871 |  |  |  | 196,739 |  |  |  | 618,610 |
Depreciation |  |  | 42,002,745 |  |  |  | 1,908,719 |  |  |  | 43,911,464 |  |  |  | 39,305,321 |  |  |  | 1,756,609 |  |  |  | 41,061,930 |  |  |  | 36,006,021 |  |  |  | 1,545,067 |  |  |  | 37,551,088 |
Amortization |  |  | 834,384 |  |  |  | 2,060,558 |  |  |  | 2,894,942 |  |  |  | 1,470,912 |  |  |  | 1,370,422 |  |  |  | 2,841,334 |  |  |  | 1,277,920 |  |  |  | 1,448,561 |  |  |  | 2,726,481 |
According to UMC’s Articles of Incorporation, the employees and directors’ compensation shall be distributed in the following order: UMC shall allocate no less than 5% of profit as employees’ compensation and no more than 0.2% of profit as directors’ compensation for each profitable fiscal year after offsetting any cumulative losses. The aforementioned employees’ compensation will be distributed in shares or cash. The employees of UMC’s subsidiaries who fulfill specific requirements stipulated by the Board of Directors may be granted such compensation. Directors may only receive compensation in cash. UMC may, by a resolution adopted by a majority vote at a meeting of the Board of Directors attended by two-thirds of the total number of directors, distribute the aforementioned employees and directors’ compensation and report to the shareholders’ meeting for such distribution. The Company recognized the employees and directors’ compensation in the profit or loss with corresponding other payables during the periods when earned for the years ended December 31, 2021, 2022 and 2023. The Board of Directors estimates the amount by taking into consideration the Articles of Incorporation, government regulations and industry averages. If the Board of Directors resolves to distribute employee compensation through stock, the number of stock distributed is calculated based on total employee compensation divided by the closing price of the day before the Board of Directors’ meeting. If the Board of Directors subsequently modifies the estimates significantly, the Company will recognize the change as an adjustment in the profit or loss in the subsequent period. The distributions of employees and directors’ compensation for 2021 and 2022 were reported to the shareholders’ meeting on May 27, 2022 and May 31, 2023, respectively, while the distributions of employees and directors’ compensation for 2023 were approved through the Board of Directors’ meeting on February 27, 2024. The details of distribution were as follows:
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Employees’ compensation – Cash |  | $ | 4,770,909 |  |  | $ | 9,160,485 |  |  | $ | 5,439,059 |
Directors’ compensation |  |  | 25,264 |  |  |  | 45,000 |  |  |  | 45,000 |
The aforementioned employees and directors’ compensation for 2021 and 2022 reported during the shareholders’ meeting were consistent with the resolutions of the Board of Directors’ meeting held on February 24, 2022 and February 22, 2023, respectively. Information relevant to the aforementioned employees and directors’ compensation can be obtained from the “Market Observation Post System” on the website of the TWSE.
| (23) | Net Other Operating Income and Expenses
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Government grants |  | $ | 5,269,412 |  |  | $ | 5,058,658 |  |  | $ | 3,862,001 |
Rental income from property, plant and equipment |  |  | 187,166 |  |  |  | 192,833 |  |  |  | 202,082 |
Gain on disposal of property, plant and equipment |  |  | 143,735 |  |  |  | 482,983 |  |  |  | 268,293 |
Others |  |  | (373,482 | ) |  |  | (394,827 | ) |  |  | (330,050 | )
Total |  | $ | 5,226,831 |  |  | $ | 5,339,647 |  |  | $ | 4,002,326 |
| (24) | Non-Operating Income and Expenses
| a. | Other gains and losses
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Gain (Loss) on valuation of financial assets and liabilities at fair value through profit or loss |  | $ | 2,892,470 |  |  | $ | (1,247,962 | ) |  | $ | (40,553 | )
Gain (Loss) on disposal of investments accounted for under the equity method |  |  | (16,388 | ) |  |  | 50,553 |  |  |  | 163,395 |
Others |  |  | (2,009,952 | ) |  |  | 62,869 |  |  |  | 100,254 |
Total |  | $ | 866,130 |  |  | $ | (1,134,540 | ) |  | $ | 223,096 |
Others included the one-time payment to MICRON TECHNOLOGY, INC. (MICRON) due to the worldwide settle agreement between UMC and MICRON (Please refer to Note 9(7)) and the losses of financial instrument transaction recognized in 2021.
| b. | Finance costs
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Interest expenses |  |  |  |  |  |  |  |  |  |  |  |
Bonds payable |  | $ | 437,055 |  |  | $ | 486,079 |  |  | $ | 444,424 |
Bank loans |  |  | 1,285,708 |  |  |  | 1,100,840 |  |  |  | 833,548 |
Lease liabilities |  |  | 145,187 |  |  |  | 166,928 |  |  |  | 179,367 |
Others |  |  | 139 |  |  |  | 31,464 |  |  |  | 16,390 |
Financial expenses |  |  | 94,841 |  |  |  | 81,018 |  |  |  | 96,645 |
Total |  | $ | 1,962,930 |  |  | $ | 1,866,329 |  |  | $ | 1,570,374 |
| (25) | Components of Other Comprehensive Income (Loss)
|  | For the year ended December 31, 2021 |
|  | Arising during the period |  |  | Reclassification adjustments during the period |  |  | Other comprehensive income (loss), before tax |  |  | Income tax effect |  |  | Other comprehensive income (loss), net of tax |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Items that will not be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Remeasurements of defined benefit pension plans |  | $ | (197,477 | ) |  | $ | — |  |  | $ | (197,477 | ) |  | $ | 39,495 |  |  | $ | (157,982 | )
Unrealized gains or losses from equity instruments investments measured at fair value through other comprehensive income |  |  | 5,811,342 |  |  |  | — |  |  |  | 5,811,342 |  |  |  | (360,061 | ) |  |  | 5,451,281 |
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |  |  | 2,959,130 |  |  |  | — |  |  |  | 2,959,130 |  |  |  | (96,510 | ) |  |  | 2,862,620 |
Items that may be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (4,743,299 | ) |  |  | 2,283 |  |  |  | (4,741,016 | ) |  |  | 23,175 |  |  |  | (4,717,841 | )
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |  |  | (24,018 | ) |  |  | (394 | ) |  |  | (24,412 | ) |  |  | 6,763 |  |  |  | (17,649 | )
Total other comprehensive income (loss) |  | $ | 3,805,678 |  |  | $ | 1,889 |  |  | $ | 3,807,567 |  |  | $ | (387,138 | ) |  | $ | 3,420,429 |
|  | For the year ended December 31, 2022 |
|  | Arising during the period |  |  | Reclassification adjustments during the period |  |  | Other comprehensive income (loss), before tax |  |  | Income tax effect |  |  | Other comprehensive income (loss), net of tax |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Items that will not be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Remeasurements of defined benefit pension plans |  | $ | 296,804 |  |  | $ | — |  |  | $ | 296,804 |  |  | $ | (59,361 | ) |  | $ | 237,443 |
Unrealized gains or losses from equity instruments investments measured at fair value through other comprehensive income |  |  | (4,646,064 | ) |  |  | — |  |  |  | (4,646,064 | ) |  |  | (71,121 | ) |  |  | (4,717,185 | )
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |  |  | (1,694,965 | ) |  |  | — |  |  |  | (1,694,965 | ) |  |  | 123,483 |  |  |  | (1,571,482 | )
Items that may be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | 9,292,308 |  |  |  | — |  |  |  | 9,292,308 |  |  |  | 883,238 |  |  |  | 10,175,546 |
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |  |  | 91,442 |  |  |  | — |  |  |  | 91,442 |  |  |  | (23,672 | ) |  |  | 67,770 |
Total other comprehensive income (loss) |  | $ | 3,339,525 |  |  | $ | — |  |  | $ | 3,339,525 |  |  | $ | 852,567 |  |  | $ | 4,192,092 |
|  | For the year ended December 31, 2023 |
|  | Arising during the period |  |  | Reclassification adjustments during the period |  |  | Other comprehensive income (loss), before tax |  |  | Income tax effect |  |  | Other comprehensive income (loss), net of tax |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Items that will not be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Remeasurements of defined benefit pension plans |  | $ | 402,234 |  |  | $ | — |  |  | $ | 402,234 |  |  | $ | (80,447 | ) |  | $ | 321,787 |
Unrealized gains or losses from equity instruments investments measured at fair value through other comprehensive income |  |  | 5,530,359 |  |  |  | — |  |  |  | 5,530,359 |  |  |  | (243,057 | ) |  |  | 5,287,302 |
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |  |  | 1,610,116 |  |  |  | — |  |  |  | 1,610,116 |  |  |  | (90,891 | ) |  |  | 1,519,225 |
Items that may be reclassified subsequently to profit or loss: |  |  |  |  |  |  |  |  |
Exchange differences on translation of foreign operations |  |  | (2,386,278 | ) |  |  | — |  |  |  | (2,386,278 | ) |  |  | 386,660 |  |  |  | (1,999,618 | )
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |  |  | (73,005 | ) |  |  | (1,413 | ) |  |  | (74,418 | ) |  |  | 3,768 |  |  |  | (70,650 | )
Total other comprehensive income (loss) |  | $ | 5,083,426 |  |  | $ | (1,413 | ) |  | $ | 5,082,013 |  |  | $ | (23,967 | ) |  | $ | 5,058,046 |
| (26) | Income Tax
| a. | The major components of income tax expense (benefit) for the years ended December 31, 2021, 2022 and 2023 were as follows:
| i. | Income tax expense (benefit) recorded in profit or loss
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Current income tax charge |  | $ | 7,088,975 |  |  | $ | 17,582,039 |  |  | $ | 6,426,598 |
Adjustments in respect of current income tax of prior periods |  |  | (150,260 | ) |  |  | (585,941 | ) |  |  | (217,891 | )
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Deferred income tax related to origination and reversal of temporary differences |  |  | 407,280 |  |  |  | 2,276,015 |  |  |  | 2,239,309 |
Deferred income tax related to recognition and derecognition of tax losses and unused tax credits |  |  | 723,270 |  |  |  | 60,178 |  |  |  | — |
Adjustment of prior year’s deferred income tax |  |  | (130,841 | ) |  |  | 8,611 |  |  |  | (120,230 | )
Deferred income tax arising from write-down or reversal of write-down of deferred tax assets |  |  | (20,172 | ) |  |  | (14,007 | ) |  |  | (16,516 | )
Income tax expense recorded in profit or loss |  | $ | 7,918,252 |  |  | $ | 19,326,895 |  |  | $ | 8,311,270 |
| ii. | Deferred income tax related to components of other comprehensive income (loss)
| (i) | Items that will not be reclassified subsequently to profit or loss:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Remeasurements of defined benefit pension plans |  | $ | 39,495 |  |  | $ | (59,361 | ) |  | $ | (80,447 | )
Unrealized gains or losses from equity instruments investments measured at fair value through other comprehensive income |  |  | (360,061 | ) |  |  | (71,121 | ) |  |  | (243,057 | )
Share of other comprehensive income (loss) of associates and joint ventures which will not be reclassified subsequently to profit or loss |  |  | (96,510 | ) |  |  | 123,483 |  |  |  | (90,891 | )
Income tax related to items that will not be reclassified subsequently to profit or loss |  | $ | (417,076 | ) |  | $ | (6,999 | ) |  | $ | (414,395 | )
(ii)  Items that may be reclassified subsequently to profit or loss: |
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Exchange differences on translation of foreign operations |  | $ | 23,175 |  |  | $ | 883,238 |  |  | $ | 386,660 |
Share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss |  |  | 6,763 |  |  |  | (23,672 | ) |  |  | 3,768 |
Income tax related to items that may be reclassified subsequently to profit or loss |  | $ | 29,938 |  |  | $ | 859,566 |  |  | $ | 390,428 |
iii.   Income tax charged directly to equity |  |  |  |  |  |  |  |  |
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Disposal of parent company’s stock by subsidiary recognized as treasury stock transactions |  | $ | (203 | ) |  | $ | — |  |  | $ | — |
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |
Adjustments of changes in net assets of associates and joint ventures accounted for using equity method |  |  | 22 |  |  |  | (2,720 | ) |  |  | (1,117 | )
Income tax charged directly to equity |  | $ | (181 | ) |  | $ | (2,720 | ) |  | $ | (1,117 | )
| b. | A reconciliation between income tax expense (benefit) and income before tax at UMC’s applicable tax rate were as follows:
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Income before tax |  | $ | 58,496,432 |  |  | $ | 109,625,660 |  |  | $ | 68,450,404 |
At UMC’s statutory income tax rate |  |  | 11,699,286 |  |  |  | 21,925,132 |  |  |  | 13,690,081 |
Adjustments in respect of current income tax of prior periods |  |  | (150,260 | ) |  |  | (585,941 | ) |  |  | (217,891 | )
Net changes in loss carry-forward and investment tax credits |  |  | (845,267 | ) |  |  | (465,152 | ) |  |  | (2,179,234 | )
Adjustment of deferred tax assets/liabilities for write-downs/reversals and different jurisdictional tax rates |  |  | 183,123 |  |  |  | (281,319 | ) |  |  | 211,639 |
Tax effect of non-taxable income and non-deductible expenses: |  |  |  |  |  |  |  |  |  |  |  |
Tax exempt income |  |  | (3,258,695 | ) |  |  | (4,384,566 | ) |  |  | (1,428,035 | )
Investment loss (gain) |  |  | (1,388,877 | ) |  |  | 1,827,822 |  |  |  | (755,800 | )
Dividend income |  |  | (171,725 | ) |  |  | (423,027 | ) |  |  | (323,182 | )
Others |  |  | 6,463 |  |  |  | (340,745 | ) |  |  | (145,520 | )
Basic tax |  |  | — |  |  |  | — |  |  |  | 43,506 |
Estimated income tax on unappropriated earnings |  |  | 1,558,031 |  |  |  | 1,247,910 |  |  |  | (1,160,324 | )
Effect of different tax rates applicable to UMC and its subsidiaries |  |  | 116,174 |  |  |  | 605,929 |  |  |  | 234,510 |
Taxes withheld in other jurisdictions |  |  | 43,443 |  |  |  | 35,979 |  |  |  | 38,346 |
Others |  |  | 126,556 |  |  |  | 164,873 |  |  |  | 303,174 |
Income tax expense recorded in profit or loss |  | $ | 7,918,252 |  |  | $ | 19,326,895 |  |  | $ | 8,311,270 |
| c. | Significant components of deferred income tax assets and liabilities were as follows:
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Deferred income tax assets |  |  |  |  |  |  |  |
Depreciation |  | $ | 2,056,568 |  |  | $ | 2,396,554 |
Pension |  |  | 569,193 |  |  |  | 436,129 |
Refund liabilities |  |  | 138,617 |  |  |  | 306,408 |
Allowance for inventory valuation losses |  |  | 507,621 |  |  |  | 682,909 |
Investment loss |  |  | 474,405 |  |  |  | 314,427 |
Unrealized profit on intercompany sales |  |  | 906,793 |  |  |  | 689,124 |
Others |  |  | 573,039 |  |  |  | 304,860 |
Total deferred income tax assets |  |  | 5,226,236 |  |  |  | 5,130,411 |
Deferred income tax liabilities |  |  |  |  |  |  |  |
Depreciation |  |  | (70,133 | ) |  |  | (2,085,916 | )
Investment gain |  |  | (2,648,989 | ) |  |  | (2,888,534 | )
Amortizable assets |  |  | (298,451 | ) |  |  | (283,405 | )
Others |  |  | (544,863 | ) |  |  | (374,109 | )
Total deferred income tax liabilities |  |  | (3,562,436 | ) |  |  | (5,631,964 | )
Net deferred income tax assets (liabilities) |  | $ | 1,663,800 |  |  | $ | (501,553 | )
| d. | Movement of deferred tax
|  | For the years ended December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Balance as of January 1 |  | $ | 3,154,352 |  |  | $ | 1,663,800 |
Amounts recognized in profit or loss during the period |  |  | (2,330,797 | ) |  |  | (2,102,563 | )
Amounts recognized in other comprehensive income (loss) |  |  | 852,567 |  |  |  | (23,967 | )
Amounts recognized in equity |  |  | (2,720 | ) |  |  | (1,117 | )
Exchange adjustments |  |  | (9,602 | ) |  |  | (37,706 | )
Balance as of December 31 |  | $ | 1,663,800 |  |  | $ | (501,553 | )
| e. | The Company is subject to taxation in Taiwan and other foreign jurisdictions. As of December 31, 2023, income tax returns of UMC and its subsidiaries in Taiwan have been examined by the tax authorities through 2021, while in other foreign jurisdictions, relevant tax authorities have completed the examination through 2012.
| f. | UMC’s branch in Singapore obtained two tax incentives granted by the Singapore government for a period of five years from August 2020. The qualifying incomes are either tax-exempt or taxed at concessionary tax rate. The incentive period will end in July 2025.
| g. | The information of the unused tax loss carry-forward for which no deferred income tax assets have been recognized were as follows:
|  | As of December 31, |
|  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |
Expiry period |  |  |  |  |  |  |  |
1-5 years |  | $ | 35,263,925 |  |  | $ | 15,395,514 |
6-10 years |  |  | 1,995,256 |  |  |  | 22,128,180 |
Total |  | $ | 37,259,181 |  |  | $ | 37,523,694 |
| h. | As of December 31, 2022 and 2023, deductible temporary differences for which no deferred income tax assets have been recognized amounted to NT$3,001 million and NT$3,410 million, respectively.
| i. | As of December 31, 2022 and 2023, the taxable temporary differences of unrecognized deferred tax liabilities associated with investments in subsidiaries amounted to NT$21,658 million and NT$20,389 million, respectively.
| j. | USJC, UMC KOREA and UME BV, the subsidiaries of UMC, are operating in jurisdictions where the Pillar Two legislation has been enacted or substantively enacted. However, the Pillar Two legislation is not yet implemented in the aforementioned jurisdictions as of December 31, 2023; therefore, the Company is not exposed to the income tax arising from the legislation for the year ended December 31, 2023. The average effective tax rate calculated in accordance with IAS 12 in the jurisdictions where USJC, UMC KOREA and UME BV operate is 27.70%, 3.55% and 20.12%, respectively, which is applicable to the accounting profits of NT$3,408 million, NT$2 million and NT$10 million, respectively, for the year ended December 31, 2023.
| (27) | Earnings Per Share
| a. | Earnings per share-basic
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Net income attributable to the parent company |  | $ | 51,246,425 |  |  | $ | 89,478,805 |  |  | $ | 59,688,950 |
Weighted-average number of ordinary shares for basic earnings per share (thousand shares) |  |  | 12,005,126 |  |  |  | 12,095,312 |  |  |  | 12,137,954 |
Earnings per share-basic (NTD) |  | $ | 4.27 |  |  | $ | 7.40 |  |  | $ | 4.92 |
| b. | Earnings per share-diluted
|  | For the years ended December 31, |
|  | 2021 |  |  | 2022 |  |  | 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Net income attributable to the parent company |  | $ | 51,246,425 |  |  | $ | 89,478,805 |  |  | $ | 59,688,950 |
Weighted-average number of ordinary shares for basic earnings per share (thousand shares) |  |  | 12,005,126 |  |  |  | 12,095,312 |  |  |  | 12,137,954 |
Effect of dilution |  |  |  |  |  |  |  |  |  |  |  |
Restricted stocks for employees |  |  | 159,478 |  |  |  | 156,098 |  |  |  | 114,974 |
Employees’ compensation |  |  | 80,243 |  |  |  | 238,242 |  |  |  | 129,196 |
Weighted-average number of ordinary shares after dilution (thousand shares) |  |  | 12,244,847 |  |  |  | 12,489,652 |  |  |  | 12,382,124 |
Earnings per share-diluted (NTD) |  | $ | 4.19 |  |  | $ | 7.16 |  |  | $ | 4.82 |
| (28) | Reconciliation of Liabilities Arising from Financing Activities
For the year ended December 31, 2021
|  |  |  |  |  |  |  | Non-cash changes |  |  |  |
Items |  | As of January 1, 2021 |  |  | Cash Flows |  |  | Foreign exchange |  |  | Others (Note A) |  |  | As of December 31, 2021 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Short-term loans |  | $ | 11,057,132 |  |  | $ | (8,974,216 | ) |  | $ | (158,792 | ) |  | $ | — |  |  | $ | 1,924,124 |
Long-term loans (current portion included) |  |  | 33,066,106 |  |  |  | 4,088,537 |  |  |  | (529,736 | ) |  |  | — |  |  |  | 36,624,907 |
Bonds payable (current portion included) |  |  | 18,690,384 |  |  |  | 23,703,692 |  |  |  | — |  |  |  | (1,857,418 (Note B | ) ) |  |  | 40,536,658 |
Guarantee deposits (current portion included) |  |  | 235,992 |  |  |  | 14,219,408 |  |  |  | (85,631 | ) |  |  | — |  |  |  | 14,369,769 (Note C | )
Lease liabilities |  |  | 5,576,864 |  |  |  | (699,680 | ) |  |  | (144,419 | ) |  |  | 335,989 |  |  |  | 5,068,754 |
Other financial liabilities (Note D) |  |  | 20,746,624 |  |  |  | — |  |  |  | (163,387 | ) |  |  | 382,972 |  |  |  | 20,966,209 |
For the year ended December 31, 2022
|  |  |  |  |  |  |  | Non-cash changes |  |  |  |
Items |  | As of January 1, 2022 |  |  | Cash Flows |  |  | Foreign exchange |  |  | Others (Note A) |  |  | As of December 31, 2022 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Short-term loans |  | $ | 1,924,124 |  |  | $ | (1,965,684 | ) |  | $ | 41,560 |  |  | $ | — |  |  | $ | — |
Long-term loans (current portion included) |  |  | 36,624,907 |  |  |  | (18,816,259 | ) |  |  | 1,470,694 |  |  |  | — |  |  |  | 19,279,342 |
Bonds payable (current portion included) |  |  | 40,536,658 |  |  |  | (13,305,050 | ) |  |  | — |  |  |  | 953,079 (Note B | ) |  |  | 28,184,687 |
Guarantee deposits (current portion included) |  |  | 14,369,769 |  |  |  | 14,984,941 |  |  |  | 1,402,291 |  |  |  | — |  |  |  | 30,757,001 (Note C | )
Lease liabilities |  |  | 5,068,754 |  |  |  | (712,854 | ) |  |  | 153,406 |  |  |  | 1,227,789 (Note E | ) |  |  | 5,737,095 |
Other financial liabilities (Note D) |  |  | 20,966,209 |  |  |  | — |  |  |  | 306,902 |  |  |  | 176,376 |  |  |  | 21,449,487 |
For the year ended December 31, 2023
|  |  |  |  |  |  |  | Non-cash changes |  |  |  |
Items |  | As of January 1, 2023 |  |  | Cash Flows |  |  | Foreign exchange |  |  | Others (Note A) |  |  | As of December 31, 2023 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |  |  | (In Thousands) |
Short-term loans |  | $ | — |  |  | $ | 13,530,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 13,530,000 |
Long-term loans (current portion included) |  |  | 19,279,342 |  |  |  | 3,857,704 |  |  |  | (253,702 | ) |  |  | — |  |  |  | 22,883,344 |
Bonds payable (current portion included) |  |  | 28,184,687 |  |  |  | 9,989,245 |  |  |  | — |  |  |  | 185,420 (Note B | ) |  |  | 38,359,352 |
Guarantee deposits (current portion included) |  |  | 30,757,001 |  |  |  | 10,423,345 |  |  |  | 419,040 |  |  |  | — |  |  |  | 41,599,386 (Note C | )
Lease liabilities |  |  | 5,737,095 |  |  |  | (666,439 | ) |  |  | (24,106 | ) |  |  | 346,637 |  |  |  | 5,393,187 |
Other financial liabilities (Note D) |  |  | 21,449,487 |  |  |  | (21,209,443 | ) |  |  | (330,783 | ) |  |  | 90,739 |  |  |  | — |
Note A: Other non-cash changes mainly consisted of discount amortization measured by the effective interest method. Note B: Please refer to Note 6(13) for the Company’s exchangeable bonds. Note C: Guarantee deposits mainly consisted of deposits of capacity reservation. Note D: Please refer to Note 9(6) for more details on other financial liabilities. Note E: Mainly due to the increase in land lease.

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