UMC Reports Record 2004 Third Quarter Results: Record Revenue with 15% Sequential Increase in Operating Income


Long-term Investments(6)

      Consolidated Long-term Investments as of September 30, 2004

                          As of End of 3Q04      As of End of 2Q04
----------------------------------------------------------------------
(Amount: NT$ million)    Book       Fair       Book        Fair
                         value    % value    % value    %  value    %
======================================================================
Foundry Industry         42,173  59 40,845  42 42,535  58  43,879  42
----------------------------------------------------------------------
Strategic Semiconductor
 Investments             12,394  18 36,748  38 13,129  18  38,191  37
----------------------------------------------------------------------
Other Investments        16,573  23 19,055  20 17,377  24  22,296  21
======================================================================
Total                    71,140 100 96,648 100 73,041 100 104,366 100
----------------------------------------------------------------------



As of September 30, 2004, the total book value of long-term investments held by UMC was NT$71.14 billion, and the estimated fair value of long-term investments was NT$96.65 billion. The decrease in book value of foundry industry investments and strategic semiconductor investments is mainly due to the recognition of losses in the Company's investments in UMCi and SiS. The decrease in fair value of strategic semiconductor investments is mainly due to the decrease in the share prices of several investments. The decrease in other investments is due to the disposal of AU Optronics shares and a decrease in the share price of several investments.

In 4Q04, as we expect to liquidate UMCi in order to prepare for the acquisition by UMC, we expect to book a one-time impairment loss of NT$3.5 billion to recognize the difference between the book value and market value of UMCi.

Recent Developments / Announcements

Oct. 18, 2004 UMC Appoints Lee Chung as Vice President of Corporate
               Marketing

Sep. 20, 2004 UMC Expands Embedded Memory Portfolio to Target Fast
               Growing Smart Card Market

Sep. 15, 2004 Ricoh Extends Partnership with UMC to 90nm

Sep. 07, 2004 UMC and CADENCE Deliver Digital Reference Flow for
               Advanced Processes

Aug. 26, 2004 UMC Acquires its Subsidiary Company

Aug. 26, 2004 SRC Expands Fellowship Program Outside of U.S.

Aug. 18, 2004 UMC First Foundry to Introduce 0.18um 32 Volt High
               Voltage Process

Aug. 02, 2004 UMC Introduces Enhanced Prototyping Program for its Most
               Advanced Production Technologies


 Please visit UMC's website 
http://www.umc.com/english/news/index.asp
        for further details regarding the above announcements.

(6) The long-term investment information disclosed is UMC Group consolidated data, which includes UMC, Hsun Chieh Investment Corp., Fortune Venture Capital Corp. and UMC Capital Corp. For publicly quoted investments, fair value is calculated by multiplying the average daily closing price of the last month of the accounting period (September of 2004) with the number of shares owned by the UMC Group as of September 30, 2004. Otherwise, book value or underlying equity net value of investments is taken as recorded on the balance sheet at the end of the accounting period (September 30, 2004) and is used as the fair value.

Fourth Quarter of 2004 Outlook & Guidance

Quarter-over-quarter Guidance:

-- Wafer ASP: flat

-- Wafer shipments: a decrease of 15% to 17%

-- Capacity utilization rate: approximately 70%

-- Profitability: operating profit margins to slip 10 percentage points due to lower utilization rates and wafer shipments

-- Percentage of 0.18um & below revenues: in the mid-sixty percent range with revenue from 90nm expected to exceed 5%

-- The PC segment is expected to show seasonal strength followed by communication and then consumer segments

-- 2005 Capex is expected to be within the range of US$1 billion to US$2 billion

Conference Call / Webcast Announcement

Wednesday, October 27, 2004

Time: 8:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)

Dial-in numbers and Access Codes:

Asia/Europe: +1 (719) 457-2626

North America: +1 (800) 967-7135

Access Code: UMC

A live webcast and replay of the 3Q04 results announcement will be available at www.umc.com under the "Investor Relations / Investor Events" section.

About UMC

UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SOC) designs, including 90nm copper, 0.13um copper, and mixed signal/RFCMOS. UMC is also a leader in 300mm manufacturing; Fab 12A in Taiwan and Singapore-based UMCi are both in volume production for a variety of customer products. UMC employs over 10,500 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.

Safe Harbor Statements

Except for statements in respect of historical matters, the statements in this release contain "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors, including, among other things: our dependence upon frequent introduction of new services and technologies based on the latest developments; the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; the risks associated with international global business activities; our dependence upon key personnel; general economic and political conditions, including those related to the semiconductor, communications, consumer electronics and computer industries; possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activity, armed conflict and highly contagious diseases, such as SARS; reduced end-user purchases relative to expectations and orders; fluctuations in foreign currency exchange rates; and those risks identified in the section entitled "Risk Factors" in UMC's Annual Report on Form 20-F for year 2003 filed with the U.S. Securities and Exchange Commission on June 17, 2004.

The financial statements included in this release were unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and U.S. GAAP, as described in note 31 to the financial statements on Form 20-F filed with the U.S. Securities and Exchange Commission on June 17, 2004.

The forward-looking statements in this release reflect the current belief of UMC as of the date of this release and UMC undertakes no obligation to update these forward-looking statements for events or circumstances that occur after such date or to reflect the occurrence of unanticipated events.

                  UNITED MICROELECTRONICS CORPORATION
           Unaudited Condensed Unconsolidated Balance Sheet
                                    As  of  September  30,  2004
  Figures  in  Million  of  New  Taiwan  Dollars  (NT$)  and  U.S.  Dollars  (US$)


                                                                                                    September  30,  2004
                                                                                                ----------------------
                                                                                                  US$          NT$                  %
                                                                                                ------  --------  ------
  ASSETS
  Current  Assets
    Cash  and  Cash  Equivalents                                          2,511      85,270      25.2%
    Marketable  Securities                                                        89        3,031        0.9%
    Notes  &  Accounts  Receivables                                        513      17,416        5.1%
    Inventories                                                                          266        9,029        2.7%
    Other  Current  Assets                                                        150        5,101        1.5%
                                                                                                ------  --------  ------
          Total  Current  Assets                                              3,529    119,847      35.4%
                                                                                                ------  --------  ------

  Non-Current  Assets
    Funds  and  Long-term  Investments                              2,146      72,868      21.5%
    Other  Financial  Assets                                                      45        1,537        0.5%
    Property,  Plant  and  Equipment                                  4,003    135,930      40.1%
    Intangible  Assets                                                                36        1,236        0.4%
    Other  Assets                                                                        214        7,254        2.1%
                                                                                                ------  --------  ------
          Total  Non-Current  Assets                                      6,444    218,825      64.6%
                                                                                                ------  --------  ------
  TOTAL  ASSETS                                                                      9,973    338,672    100.0%
                                                                                                ======  ========  ======

  LIABILITIES
  Current  Liabilities
    Payables                                                                                658      22,354        6.6%
    Current  Portion  of  Long-term  Interest-Bearing
      Liabilities                                                                        247        8,390        2.5%
    Other  Current  Liabilities                                                38        1,281        0.3%
                                                                                                ------  --------  ------
          Total  Current  Liabilities                                        943      32,025        9.4%
                                                                                                ------  --------  ------

  Non-Current  Liabilities
    Bonds  Payable                                                                      996      33,829      10.0%
    Other  Liabilities                                                              189        6,413        1.9%
                                                                                                ------  --------  ------
          Total  Non-Current  Liabilities                            1,185      40,242      11.9%
                                                                                                ------  --------  ------
  TOTAL  LIABILITIES                                                            2,128      72,267      21.3%
                                                                                                ------  --------  ------

  STOCKHOLDERS'  EQUITY
  Capital  Stock                                                                    5,226    177,478      52.4%
  Capital  Reserve                                                                2,492      84,619      25.0%
  Retained  Earnings,  Unrealized  Long-term
    Investment  Loss  and  Translation  Adjustment            942      31,993        9.5%
  Treasury  Stock                                                                    (815)  (27,685)    -8.2%
                                                                                                ------  --------  ------
  TOTAL  STOCKHOLDERS'  EQUITY                                          7,845    266,405      78.7%
                                                                                                ------  --------  ------
  TOTAL  LIABILITIES  AND  STOCKHOLDERS'  EQUITY          9,973    338,672    100.0%
                                                                                                ======  ========  ======


Note  :  New  Taiwan  Dollars  have  been  translated  into  U.S.  Dollars  at
              the  September  30,  2004  exchange  rate  of  NT$  33.96  per  U.S.
              Dollar.
              All  figures  are  in  ROC  GAAP.

                                    UNITED  MICROELECTRONICS  CORPORATION
                    Unaudited  Condensed  Unconsolidated  Income  Statement
  Figures  in  Million  of  New  Taiwan  Dollars  (NT$)  and  U.S.  Dollars  (US$)
                                      Except  Per  Share  and  Per  ADS  Data


                                                                              Year  over  Year  Comparison
                                                                --------------------------------------
                                                                                Three-Month  Period  Ended
                                                                September  30,      September  30,
                                                                        2004                          2003                    %
                                                                ---------------  ---------------  ------
                                                                  US$          NT$          US$          NT$          Chg.
                                                                ------  --------  ------  --------  ------
Net  Sales                                              1,018      34,580        634      21,539      60.5%
Cost  of  Goods  Sold                              (675)  (22,917)    (485)  (16,485)    39.0%
                                                                ------  --------  ------  --------  ------
Net  Gross  Profit                                    343      11,663        149        5,054    130.8%
                                                                ------  --------  ------  --------  ------
                                                                  33.7%        33.7%    23.5%        23.5%
Operating  Expenses
    -  Sales  &  Marketing                            17            579          11            373      55.2%
    -  General  &  Administrative              20            667          17            562      18.7%
    -  Research  &  Development                  49        1,680          45        1,530        9.8%
                                                                ------  --------  ------  --------  ------
                                                                      86        2,926          73        2,465      18.7%
                                                                ------  --------  ------  --------  ------
Operating  Income  (Loss)                      257        8,737          76        2,589    237.5%
                                                                  25.3%        25.3%    12.0%        12.0%

Net  Non-Operating  Income
  (Expenses)                                                64        2,177          59        2,015        8.0%
                                                                ------  --------  ------  --------  ------
Income  (Loss)  before  Income  Tax      321      10,914        135        4,604    137.1%
                                                                  31.6%        31.6%    21.4%        21.4%

Income  Tax  (Expense)  Benefit                -              (0)      (12)        (401)  -99.9%
                                                                ------  --------  ------  --------  ------
Net  Income  (Loss)                                  321      10,914        123        4,203    159.7%
                                                                ======  ========  ======  ========  ------
                                                                  31.6%        31.6%    19.5%        19.5%

Earnings  per  Share                            0.019          0.65    0.007          0.25
                                                                ------  --------  ------  --------
Earnings  per  ADS  (2)                        0.096          3.25    0.037          1.25
                                                                ------  --------  ------  --------
Weighted  Average  Number  of
  Shares
Outstanding  (in  millions)                              16,940                    16,610
                                                                              --------                --------
----------------------------------------------------------------------

                                                                        Quarter  over  Quarter  Comparison
                                                                --------------------------------------
                                                                              Three-Month  Period  Ended
                                                                  September  30,          June  30,                    
                                                                            2004                      2004                  %
                                                                ---------------  ---------------  ------
                                                                  US$          NT$          US$          NT$          Chg.
                                                                ------  --------  ------  --------  ------
Net  Sales                                              1,018      34,580        859      29,177      18.5%
Cost  of  Goods  Sold                              (675)  (22,917)    (563)  (19,119)    19.9%
                                                                ------  --------  ------  --------  ------
Net  Gross  Profit                                    343      11,663        296      10,058      16.0%
                                                                ------  --------  ------  --------  ------
                                                                  33.7%        33.7%    34.5%        34.5%
Operating  Expenses
    -  Sales  &  Marketing                            17            579          14            482      20.1%
    -  General  &  Administrative              20            667          18            603      10.6%
    -  Research  &  Development                  49        1,680          41        1,381      21.7%
                                                                ------  --------  ------  --------  ------
                                                                      86        2,926          73        2,466      18.7%
                                                                ------  --------  ------  --------  ------
Operating  Income  (Loss)                      257        8,737        223        7,592      15.1%
                                                                  25.3%        25.3%    26.0%        26.0%

Net  Non-Operating  Income
  (Expenses)                                                64        2,177        151        5,111    -57.4%
                                                                ------  --------  ------  --------  ------
Income  (Loss)  before  Income  Tax      321      10,914        374      12,703    -14.1%
                                                                  31.6%        31.6%    43.5%        43.5%

Income  Tax  (Expense)  Benefit                -              (0)          -              (1)  -59.2%
                                                                ------  --------  ------  --------  ------
Net  Income  (Loss)                                  321      10,914        374      12,702    -14.1%
                                                                ======  ========  ======  ========  ------
                                                                  31.6%        31.6%    43.5%        43.5%

Earnings  per  Share                            0.019          0.65    0.022          0.76
                                                                ------  --------  ------  --------
Earnings  per  ADS  (2)                        0.096          3.25    0.112          3.80
                                                                ------  --------  ------  --------
Weighted  Average  Number  of
  Shares
Outstanding  (in  millions)                              16,940                    16,650
                                                                              --------                --------


----------------------------------------------------------------------

Note:

(1)  New  Taiwan  Dollars  have  been  translated  into  U.S.  Dollars  at  the
        September  30,  2004  exchange  rate  of  NT$  33.96  per  U.S.  Dollar.

        All  figures  are  in  ROC  GAAP.

(2)  1  ADS  equals  5  common  shares.

                                  UNITED  MICROELECTRONICS  CORPORATION
                  Unaudited  Condensed  Unconsolidated  Income  Statement
Figures  in  Million  of  New  Taiwan  Dollars  (NT$)  and  U.S.  Dollars  (US$)
                                    Except  Per  Share  and  Per  ADS  Data


                                                For  the  Three-Month          For  the  Nine-Month
                                                        Period  Ended                        Period  Ended
                                                  September  30,  2004          September  30,  2004
                                              ----------------------  -----------------------
                                                US$          NT$                  %      US$          NT$                  %
                                              ------  --------  ------  -------  --------  ------
Net  Sales                            1,018      34,580        100%    2,623      89,083        100%
Cost  of  Goods  Sold            (675)  (22,917)  -66.3%  (1,759)  (59,750)  -67.1%
                                              ------  --------  ------  -------  --------  ------
Net  Gross  Profit                  343      11,663      33.7%        864      29,333      32.9%
                                              ------  --------  ------  -------  --------  ------

Operating  Expenses
    -  Sales  &  Marketing          17            579        1.7%          45        1,539        1.7%
    -  General  &
          Administrative              20            667        1.9%          53        1,804        2.0%
    -  Research  &
          Development                    49        1,680        4.8%        129        4,374        4.9%
                                              ------  --------  ------  -------  --------  ------
                                                    86        2,926        8.4%        227        7,717        8.6%
                                              ------  --------  ------  -------  --------  ------
Operating  Income  (Loss)    257        8,737      25.3%        637      21,616      24.3%

Net  Non-Operating
  Income  (Expenses)                64        2,177        6.3%        263        8,928      10.0%
                                              ------  --------  ------  -------  --------  ------
Income  (Loss)  before
  Income  Tax                            321      10,914      31.6%        900      30,544      34.3%

Income  Tax  (Expense)
  Benefit                                      -              (0)      0.0%          (1)          (34)      0.0%
                                              ------  --------  ------  -------  --------  ------
Net  Income  (Loss)                321      10,914      31.6%        899      30,510      34.3%
                                              ======  ========  ======  =======  ========  ======

Earnings  per  Share          0.019          0.65                    0.054          1.82
                                              ------  --------                -------  --------
Earnings  per  ADS  (2)      0.096          3.25                    0.268          9.10
                                              ------  --------                -------  --------
Weighted  Average  Number
  of  Shares
Outstanding  (in
  millions)                                          16,940                                    16,784
                                                            --------                                --------

---------------------------------------------------------------------
Note:

(1)  New  Taiwan  Dollars  have  been  translated  into  U.S.  Dollars  at  the
        September  30,  2004  exchange  rate  of  NT$  33.96  per  U.S.  Dollar.

        All  figures  are  in  ROC  GAAP.

(2)  1  ADS  equals  5  common  shares.


                                  UNITED  MICROELECTRONICS  CORPORATION
            Unaudited  Condensed  Unconsolidated  Statement  of  Cash  Flows
                          For  The  Nine  Months  Ended  September  30,  2004
  Figures  in  Million  of  New  Taiwan  Dollars  (NT$)  and  U.S.  Dollars  (US$)

                                                                                                    US$                  NT$
                                                                                            ----------    ---------
Cash  flows  from  operating  activities  :
        Net  Income                                                                            898          30,510
        Depreciation  &  Amortization                                          861          29,236
        Bad  debt  expense                                                                    1                  45
        Long-term  investment  loss  accounted  for
          under  the  equity  method                                                  16                544
        Cash  dividends  received  under  the  equity
          method                                                                                    13                440
        Other  investment  loss                                                          2                  85
        Inventory  loss                                                                      13                457
        Deferred  charges  transferred  to  loss                            8                269
        Gain  on  disposal  of  investments                                (322)      (10,943)
        Loss  on  disposal  of  property,  plant  and
          equipment                                                                                3                  86
        Exchange  gain  on  long-term  liabilities                      (2)              (73)
        Amortization  of  bond  premiums                                        (0)              (10)
        Change  in  working  capital  &  others                            (14)            (488)
                                                                                            ----------    ---------
        Net  cash  provided  from  operating
          activities                                                                      1,477          50,158

Cash  flows  from  investing  activities  :
        Increase  in  marketable  securities,  net                    (42)        (1,438)
        Cash  proceeds  from  merger                                                  2                  70
        Decrease  in  other  financial  assets,  net                    44            1,481
        Increase  in  long-term  investments                            (241)        (8,180)
        Proceeds  from  disposal  of  long-term
          investments                                                                        126            4,278
        Acquisition  of  property,  plant  and
          equipment                                                                          (950)      (32,246)
        Proceeds  from  disposal  of  property,  plant
          and  equipment                                                                        8                267
        Decrease  in  other  assets  -  others,  net                      29                986
        Increase  in  deferred  charges                                        (20)            (687)
                                                                                            ----------    ---------
        Net  cash  used  in  investing  activities                (1,044)      (35,469)

Cash  flows  from  financing  activities  :
        Repayment  of  short-term  loans                                      (12)            (400)
        Repayment  of  long-term  loans                                      (173)        (5,866)
        Reacquisition  of  bonds                                                      (1)              (41)
        Redemption  of  bonds                                                        (317)      (10,767)
        Treasury  stock                                                                  (153)        (5,198)
        Remuneration  to  directors  and  supervisors                (0)              (13)
                                                                                            ----------    ---------
        Net  cash  used  in  financing  activities                    (656)      (22,285)
                                                                                            ----------    ---------
Net  decrease  in  cash  and  cash  equivalents                    (223)        (7,596)
                                                                                            ----------    ---------

Cash  and  cash  equivalents  at  beginning  of
  period                                                                                      2,734          92,866

Cash  and  cash  equivalents  at  end  of  period                2,511          85,270
                                                                                            ==========    =========

-------------------------------------------------------------------

Note:  New  Taiwan  Dollars  have  been  translated  into  U.S.  Dollars  at  the
            September  30,  2004  exchange  rate  of  NT$  33.96  per  U.S.  Dollar.

            All  figures  are  in  ROC  GAAP.

 


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