UMC Reports 2008 Second Quarter Results

Muted Third Quarter Due to Global Economic Uncertainty

    TAIPEI, Taiwan, July 30 /Xinhua-PRNewswire-FirstCall/ --

    Second Quarter 2008 Overview (Note 1):

    -- Revenue increased 5.1% sequentially to NT$25.24 billion (US$833
       million)
    -- Gross profit margin of 23%, operating margin of 9.3%
    -- Net income increased to NT$2.4 billion (US$79 million)
    -- Revenue from 90nm technology and below was 36%
    -- EPS was NT$0.19; EPADS was US$0.032

    Note 1: Unless otherwise stated, all financial figures discussed in
            this announcement are prepared in accordance with ROC GAAP,
            which differ in some material respects from generally accepted
            accounting principles in the United States. They are un-audited,
            unconsolidated, and represent comparisons among the three-month
            period ending June 30, 2008, the three-month period ending
            March 31, 2007, and the equivalent three-month period that
            ended June 30, 2007. For all 2Q08 results, New Taiwan Dollar
            (NT$) amounts have been converted into U.S. Dollars at the June
            30, 2008 exchange rate of NT$30.33 per U.S. Dollar.

United Microelectronics Corporation (NYSE: UMC) (TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the second quarter of 2008.

"As the newly appointed CEO of UMC, I am happy to report that in Q2 2008 UMC saw improvements in revenue, gross margin, and operating margin compared to Q1," said UMC CEO, Dr. Shih-Wei Sun.

"These results were in line with our previously released guidance. Customer demand for advanced 90nm and 65nm technologies remained steady, with combined revenue from these process nodes totaling 36%. Looking forward to Q3, we see that the environment is more challenging than we previously expected. In general, customers have adopted a cautious attitude due to the rising uncertainty in the global economy. We will continue to monitor the situation closely and adjust our operations accordingly."

"Going forward as CEO, my top priority is to ensure that UMC's foundry solutions deliver the greatest benefits to our global customer base. This will enable us to increase our market share among our key foundry customers and maximize profitability. UMC will also continue to focus on operational efficiency and cost control activities through an emphasis on teamwork and execution. At the same time, we will continue to invest in the development of advanced technologies that are critical to our future growth and profitability. UMC is well positioned to weather the headwinds that face the overall economy due to our strengths in R&D and manufacturing, as well as our sound financial structure and our excellent team that has a wealth of experience dealing with the cyclical nature of the semiconductor industry."



    Summary of Operating Results



    Operating Results
                                                QoQ%               YoY%
    (Amount: NT$ million)    2Q08      1Q08   change     2Q07    change

    Revenue                25,238    24,003      5.1   25,097       0.6
    Gross Profit            5,795     3,576     62.1    4,958      16.9
    Operating Expenses     (3,454)   (3,386)     2.0   (3,732)     (7.4)
    Operating Income        2,341       190  1,132.1     1226      90.9
    Non-op. Income
     (Expenses)               120        71     69.0    4,182     (97.1)
    Net Income              2,397       206  1,063.6    4,911     (51.2)
    EPS (NT$ per share)      0.19      0.02       --     0.28        --
        (US$ per ADS)       0.032     0.003       --    0.046        --


Revenue increased 5.1% quarter-over-quarter to NT$25.24 billion, from NT$24 billion in 1Q08. Gross profit was NT$5.8 billion, or 23% of revenue, compared to NT$3.58 billion, or 14.9% of 1Q08 revenue. Operating income increased 1,132% sequentially to NT$2.34 billion, or 9.3% of 2Q08 revenue. Better capacity utilization and activities on cost control were the key reasons for the increase in revenue, gross profit and operating income during the second quarter. Net income in 2Q08 was NT$2.4 billion, an increase of 1,064% compared to NT$206 million in 1Q08.

Earnings per ordinary share (EPS) for the quarter were NT$0.19. Earnings per ADS (EPADS) were US$0.032. This compares with 1Q08 EPS of NT$0.02 and EPADS of US$0.003. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 2Q08 was 12,494,809,580, compared with 12,494,809,580 shares in 1Q08 and 17,780,114,848 shares in 2Q07. The diluted weighted average number of outstanding shares was 12,507,200,403 in 2Q08, compared with 12,726,354,496 in 1Q08 and 18,413,194,360 shares in 2Q07. The fully diluted share count on June 30, 2008 was 13,856,573 thousand. On June 30, 2008, UMC held 704,299 thousand treasury shares acquired from the 8th, 9th, and 11th share buy-back programs. UMC will retire 348,583 thousand treasury shares acquired from the 8th share buy-back program in 3Q08.

Detailed Financials Section

Depreciation and amortization totaled NT$9.4 billion in 2Q08, compared with NT$9.61 billion in 1Q08. Depreciation within COGS of NT$7.51 billion went down by 7.3% from 1Q08. Other manufacturing costs within COGS decreased to NT$11.93 billion sequentially, which reflected the results of cost reduction activities. Total operating expenses increased by 2% to NT$3.45 billion. Higher General & Administrative expenses reflected consulting fees for goodwill valuation and additional lawyer fees associated with the LSI lawsuit issue. Sales & Marketing expenses decreased to NT$620 million, mainly due to reduced IP amortization and maintenance fees. The total R&D expenses were 8.28% of revenue in 2Q08.



    COGS & Expenses
                                                  QoQ%               YoY%
    (Amount: NT$ million)     2Q08      1Q08    change      2Q07   change

    Revenue                     25,238        24,003              5.1        25,097            0.6
        CoGS                                      (19,443)    (20,427)          (4.8)    (20,139)        (3.5)
          Depreciation                      (7,510)      (8,098)          (7.3)      (7,899)        (4.9)
          Other  Mfg.  Costs            (11,933)    (12,329)          (3.2)    (12,240)        (2.5)
        Gross  Profit                          5,795          3,576            62.1          4,958          16.9
        Gross  Margin  (%)                  23.0%          14.9%                --          19.8%              --
        Total  Operating  Exp.        (3,454)      (3,386)            2.0        (3,732)        (7.4)
          G&A                                            (744)          (636)          17.0            (691)          7.7
          Sales  &  Marketing                (620)          (716)        (13.4)          (732)      (15.3)
          R&D                                        (2,090)      (2,034)            2.8        (2,309)        (9.5)
        Operating  Income                  2,341              190      1,132.1          1,226          90.9
        Operating  Margin  (%)            9.3%            0.8%                --            4.9%              --


 


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