Edgar Filing: UNITED MICROELECTRONICS CORP

As of June 30,

Notes receivable

Form 6-K

1934 Act Registration No. 1-15128

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

Dated September 15, 2005

For the month of August 2005

United Microelectronics Corporation

(Translation of Registrant’s Name into English)

No. 3 Li Hsin Road II

Science Park

Hsinchu, Taiwan, R.O.C.

(Address of Principal Executive Office)

(Indicate by check mark whether the registrant files or will file annual reports under cover of form 20-F or Form 40-F.)

Form 20-F X Form 40-F

(Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes No X

(If “Yes” is marked, indicated below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable )


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	United Microelectronics Corporation

Date: 9/16/2005	By	/s/ Stan Hung
		Stan Hung
		Chief Financial Officer


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Exhibit


Exhibit		Description
99.1		Announcement on August 16, 2005: Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Mega Financial Holding Co., Ltd. securities

99.2		Announcement on August 16, 2005: Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Faraday Technology Corp. securities

99.3		Announcement on August 22, 2005: Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Unimicron Technology Corp. securities

99.4		Announcement on August 23, 2005: Rambus and UMC expand availability of Rambus PCI Express PHY IP for a broader range of process technologies

99.5		Announcement on August 29, 2005: To announce related materials on acquisition of machinery and equipment

99.6		Announcement on August 30, 2005: To announce related materials on acquisition of machinery and equipment

99.7		Announcement on August 30, 2005: UMC Clarifies Misleading Media Story Regarding Investment Activities

99.8		Announcement on September 6, 2005: Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Mega Financial Holding Co., Ltd. securities

99.9		Announcement on September 6, 2005: To announce related materials on acquisition of machinery and equipment

99.10		Announcement on September 7, 2005: To announce related materials on acquisition of machinery and equipment

99.11		Announcement on September 7, 2005: August Revenue

99.12		Announcement on September 9, 2005: The board meeting approved a resolution to change the purpose of the Company’s 8th phase of Share Repurchase Program

99.13		Announcement on September 12, 2005: Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Unimicron Technology Corp. securities

99.14		Announcement on September 15, 2005: To announce related materials on acquisition of machinery and equipment

99.15		Announcement on September 15, 2005: To announce related materials on acquisition of machinery and equipment

99.16		Announcement on September 15, 2005: 1) the trading and pledge of UMC common shares by directors, supervisors, executive officers and 10% shareholders of UMC 2) the acquisition and disposition of assets by UMC

99.17		United Microelectronics Corporation Financial Statements with Report of Independent Auditors For The Six-Month Periods Ended June 30, 2005 and 2004

99.18		United Microelectronics Corporation and Subsidiaries Unaudited Consolidated Financial Statements with Review Report of Independent Accountants For The Six-Month Period Ended June 30, 2005


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Exhibit 99.1

Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Mega Financial Holding Co., Ltd. securities

1.	Name of the securities: Common shares of Mega Financial Holding Co., Ltd.

2.	Trading date: 2005/07/27~2005/08/16

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 14,200,000 shares; average unit price: $21.37 NTD; total amount: $303,519,100 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Loss of $145,565,961 NTD

5.	Relationship with the underlying company of the trade: None

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 30,948,683 shares; amount: 978,774,027 NTD; percentage of holdings: 0.27%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 83.39%; ratio of shareholder’s equity: 83.58%; the operational capital as shown in the most recent financial statement: $852,073 thousand NTD

8.	Concrete purpose/objective of the acquisition or disposal: Financing operation

9.	Do the directors have any objections to the present transaction? None

10.	Any other matters that need to be specified: None


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Exhibit 99.2

Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Faraday Technology Corp. securities

1.	Name of the securities: Common shares of Faraday Technology Corp.

2.	Trading date: 2005/07/29~2005/08/16

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 5,200,000 shares; average unit price: $61.82 NTD; total amount: $321,444,300 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Loss of $62,867,610 NTD

5.	Relationship with the underlying company of the trade: investee company under equity method

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 4,885,452 shares; amount: 361,064,881 NTD; percentage of holdings: 1.88%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 83.39 %; ratio of shareholder’s equity: 83.58 %; the operational capital as shown in the most recent financial statement: $852,073 thousand NTD

8.	Concrete purpose/objective of the acquisition or disposal: Financing operation

9.	Do the directors have any objections to the present transaction? None

10.	Any other matters that need to be specified: None


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Exhibit 99.3

Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Unimicron Technology Corp. securities

1.	Name of the securities: Common shares of Unimicron Technology Corp.

2.	Trading date: 2005/07/28~2005/08/22

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 12,320,000 shares; average unit price: $25.24 NTD; total amount: $310,926,850 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Gain of $ 84,691,119 NTD

5.	Relationship with the underlying company of the trade: investee company under equity method

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 79,052,265 shares; amount: 1,435,321,286 NTD; percentage of holdings: 9.06%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 82.07 %; ratio of shareholder’s equity: 82.25 %; the operational capital as shown in the most recent financial statement: $852,073 thousand NTD

8.	Concrete purpose/objective of the acquisition or disposal: Financing operation

9.	Do the directors have any objections to the present transaction? None

10.	Any other matters that need to be specified: None


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Exhibit 99.4

Rambus and UMC expand availability of RAMBUS PCI Express PHY IP for a broader range of process technologies

1.	Date of occurrence of the event: 2005/08/23

2.	Cause of occurrence:

LOS ALTOS, Calif. and HSINCHU, Taiwan — August 23, 2005 — Rambus Inc. (Nasdaq: RMBS), one of the world’s premier technology licensing companies specializing in high-speed chip interfaces and UMC, a world leading semiconductor foundry (NYSE: UMC, TAIEX: 2303), today announced that they have extended the availability of Rambus’s patented PCI Express* PHY cells to UMC’s 180nm, 150nm, and 90nm processes. This development expands on the existing 130nm licensing agreement between the two companies, which was signed in 2004.

Under the agreement, UMC foundry customers gain access to Rambus’s broad portfolio of PCI Express-based interfaces. The Rambus PCI Express PHY cells have been designed to provide chip developers with a solution that optimizes link utilization, latency, power consumption and silicon footprint. The PCI Express interface standard is one of the industry’s most successful for chip-to-chip interconnects and can be found in system applications ranging from supercomputers to PCs and digital TVs.

UMC customers currently in production with Rambus’s PCI Express PHY cells include the high-volume PC chipset manufacturers ULi Electronics and the high-volume PC graphics manufacturer XGI Technology, Inc. Rambus PCI Express PHY cells are also in production in various bridge and communication IC products based on the UMC foundry process.

“By partnering with UMC, Rambus continues to enable mass adoption for advanced interface technology that results in faster, lower cost, and more capable systems,” said Laura Stark, vice president of Rambus’s Platform Solutions Group. “In addition, the availability of this combined offering helps chip and system developers bring new capabilities to market with lower risk.”

“We are pleased to expand our licensing agreement with Rambus to make its proven IP solutions available to a broader range of technologies, including our mainstream 90nm process,” said Ken Liou, director of UMC’s IP and Design Support Division. “This agreement allows our customers designing SoCs targeting PCI Express applications to benefit from Rambus’s broad offering of PCI Express PHY cells.”

3.	Countermeasures: none

4.	Any other matters that need to be specified: none


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Exhibit 99.5

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2005/01/25~2005/08/26

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 34; average unit price: $15,228,162 NTD; total transaction price: $517,757,504

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): TOKYO ELECTRON LIMITED; non-related party transaction

Where the counterpart to the trade is an actual related party, a public announcement shall also include the reason for choosing the related party as trading counterpart and the identity of the previous owner (including its relationship with the company and the trading counterpart), price of transfer and the date of acquisition: Not applicable

Where a person who owned the property within the past five years has been an actual related person of the company, a public announcement shall also include the dates and prices of acquisition and disposal by the related person and the person’s relationship to the company at those times: Not applicable

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

The manner of deciding on this transaction (such as tender invitation, price comparison, or price negotiation), the reference basis for the decision on price and the decision-making department: transaction: price negotiation; the reference basis for the decision on price: market price. The decision-making department: the Selection Meeting

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


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Exhibit 99.6

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2005/08/22~2005/08/29

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 7; average unit price: $93,771,896 NTD; total transaction price: $656,403,270 NTD

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): APPLIED MATERIALS ASIA PACIFIC LTD; non-related party transaction

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


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Exhibit 99.7

UMC Clarifies Misleading Media Story Regarding Investment Activities

1.	Name of the reporting media: Taiwan Next Magazine

2.	Date of the report: 2005/08/25~2005/08/30

3.	Content of the report: UMC was under serious financial pressure due to the fact that one of its invested companies

4.	Summary of the information provided by investors: None

5.	Company’s explanation of the reportage or provided information:

HSINCHU, Taiwan, August 30, 2005 – UMC responded today to a news story that appeared in Taiwan Next Magazine stating that UMC was under serious financial pressure due to the fact that one of its invested companies, with a paid-in capital of NT$200 million, had closed its operations. To clarify the situation, UMC is in a very robust financial position with assets in excess of NT$100 billion. Furthermore, UMC’s invested companies are numerous and include many extremely successful companies, such as Mediatek, Novatek, and Faraday, to name a few. Taiwan Next Magazine’s reports are completely detached from reality and are intended to mislead the public and stir unwarranted controversy. UMC reserves the right to seek legal action against Taiwan Next Magazine for the misleading reports that appear in their article.

6.	Countermeasures: None

7.	Any other matters that need to be specified: None


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Exhibit 99.8

Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Mega Financial Holding Co., Ltd. securities

1.	Name of the securities: Common shares of Mega Financial Holding Co., Ltd.

2.	Trading date: 2005/08/17~2005/09/06

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 14,000,000 shares; average unit price: $21.56 NTD; total amount: $301,907,200 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Loss of $ 140,852,719 NTD

5.	Relationship with the underlying company of the trade: None

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 16,948,683 shares; amount: 536,014,108 NTD; percentage of holdings: 0.15%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 83.19%; ratio of shareholder’s equity: 83,38%; the operational capital as shown in the most recent financial statement: $852,073 thousand NTD

8.	Concrete purpose/objective of the acquisition or disposal: Financing operation

9.	Do the directors have any objections to the present transaction? None

10.	Any other matters that need to be specified: None


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Exhibit 99.9

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2004/09/30~2005/09/05

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 37; average unit price: $13,688,701 NTD; total transaction price: $506,481,949 NTD

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): AGILENT TECHNOLOGIES SINGAPORE; non-related party transaction

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


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Exhibit 99.10

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2005/09/06

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 1; average unit price: $567,905,690 NTD; total transaction price: $567,905,690 NTD

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): ASML HONG KONG LTD. C/O; non-related party transaction

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


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Exhibit 99.11

United Microelectronics Corporation

September 7, 2005

This is to report the changes or status of 1) Sales volume 2) Funds lent to other parties 3) Endorsements and guarantees 4) Financial derivative transactions for the period of August 2005

1)	Sales volume (NT$ Thousand)


Period	Items	2005	2004	Changes	%
August	Invoice amount	8,220,082	12,354,727	- 4,134,645	-33.47	%
2005	Invoice amount	53,693,930	79,842,399	- 26,148,469	-32.75	%
August	Net sales	8,010,667	11,514,242	- 3,503,575	-30.43	%
2005	Net sales	54,804,546	77,218,871	- 22,414,325	-29.03	%

2)	Funds lent to other parties (NT$ Thousand)


*Balance as of period end*	This Month	Last Month	Limit of lending
UMC	0	0	35,657,091
UMC’s subsidiaries	22,646	22,059	565,680

3)	Endorsements and guarantees (NT$ Thousand)


	Change in This Month	Balance as of period end	Limit of endorsements
UMC	0	0	71,167,928
UMC’s subsidiaries	0	0	8,054,240
UMC endorses for subsidiaries		0	0
UMC’s subsidiaries endorse for UMC		0	0
UMC endorses for PRC companies		0	0
UMC’s subsidiaries endorse for PRC companies		0	0

4)	Financial derivatives transactions

a	Hedging purpose : NT$ thousand


*Financial instruments*	Forwards		Interests SWAP
Deposit Paid	0		0
Royalty Income (Paid)	0		0
Unwritten-off Trading Contracts	4,115,160		15,000,000
Net Profit from Fair Value	(84,589	)	(654,851	)
Written-off Trading Contracts	26,697,665		0
Realized profit (loss)	(235,789	)	0

b	Trading purpose : NT$ thousand


*Financial instruments*		Credit-linked Deposits
Deposit Paid		0
Unwritten-off Trading Contracts		1,227,400
Net Profit from Market Value		7,711
Written-off Trading Contracts		465,465
Realized profit (loss)		27,746


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Exhibit 99.12

The board meeting approved a resolution to change the purpose of the Company’s 8th phase of Share Repurchase Program

1.	Date of the board of directors resolution: 2005/09/09

2.	Purpose of the share repurchase after the change: For issuance of convertible bond

3.	Original types of shares to be repurchased: Common shares

4.	Original ceiling on total monetary amount of the share repurchase: 88,647,166 thousand NTD

5.	Original scheduled period for the repurchase: 2005/05/16~2005/07/15

6.	Original number of shares to be repurchased: 500,000,000 shares

7.	Original repurchase price range: $28.45~$13.75 per share. If the market price of the Company stock is below the above range, the Company will continue to repurchase shares.

8.	Original method for the repurchase: Purchase from Taiwan Stock Exchange

9.	Original ratio of the shares to be repurchased to total issued shares of the Company:2.80%

10.	Number and monetary amount of the Company’s own shares held at the time or reporting: 692,067,000 shares; NTD 18,954,371,121.

11.	Status of repurchases within three years prior to the time of reporting: From 2002/2/20 to 2004/7/15, 861,069,000 Company shares were repurchased.

12.	Status of repurchases that have been reported but not yet completed:

The 1st repurchase is planned at 400,000,000 shares, but actually repurchased 37,425,000 shares. The reason for incomplete repurchase is to consider the stabilization of share price during the repurchase period, and to consider shareholder’s rights, and employee’s willingness to exercise the option in the future.

The 2nd repurchase is planned at 400,000,000 shares, but actually repurchased 0 shares. The reason for incomplete repurchase is to consider the stabilization of share price during the repurchase period, and to consider shareholder’s rights, and employee’s willingness to exercise the option in the future.

The 3rd repurchase is planned at 130,000,000 shares, but actually repurchased 129,035,000 shares. The reason for incomplete repurchase is because on the last repurchase date (9/28), the Company failed to repurchase 965,000 shares out of the 22,023,000 shares planned to repurchase at that date.

The 4th repurchase is planned at 100,000,000 shares, but actually repurchased 49,114,000 shares. The reason for incomplete repurchase is to consider the stabilization of share price during the repurchase period, and to consider shareholder’s rights, and employee’s willingness to exercise the option in the future.

The 6th repurchase is planned at 500,000,000 shares, but actually repurchased 99,195,000 shares. The reason for incomplete repurchase is to consider the stabilization of share price during the repurchase period, and to consider shareholder’s rights, and employee’s willingness to exercise the option in the future.


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The 7th repurchase is planned at 360,000,000 shares, but actually repurchased 192,067,000 shares. The reason for incomplete repurchase is to consider the stabilization of share price during the repurchase period, and to consider shareholder’s rights, and employee’s willingness to exercise the option in the future.

13.	Minutes of the board of directors meeting that passed the resolution to change the purpose of the share repurchase: 9th term, 21th Board Meeting Minutes on 2005/09/09

14.	The rules for transfer of shares set forth in Article 10 of the Guidelines for Repurchase of Shares by Listed and OTC Companies: Not applicable

15.	The rules for conversion or subscription of shares set forth in Article 11 of the Guidelines for Repurchase of Shares by Listed and OTC Companies:

Purpose: To purchase raw materials overseas

Issue Size: Up to US$500 million. Adjustments will be made according to market conditions

Issue Date: Tentatively set during the third quarter 2005. The Securities are expected to be issued within three months after obtaining the approval of the Financial Supervisory Commission, Executive Yuan (“FSC”) of the R.O.C., and if necessary, application will be made with the FSC for extension of another three months.

Maturity Date: The Maturity Date shall be the earlier of thirty months from the Issue Date or February 15, 2008.

Conversion Property: Each bondholder will have the right to convert the Securities into the Issuer’s ADSs supporting by existing shares of the Issuer.

Conversion: Unless previously redeemed, converted, repurchased or cancelled and except during the Closed Period or suspension period (if any) the Securities may be converted at least 30 days after the Issue Date to 10 days prior to the Maturity Date into ADSs.

16.	Declaration that the financial state of the Company has been considered by the board of directors and that its capital maintenance will not be affected: Not applicable

17.	Appraisal by a CPA or securities underwriter of the reasonableness of the share repurchase price: Not applicable

18.	Other particular specified by the Securities and Futures Commission: Not applicable


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Exhibit 99.13

Represent subsidiary Company Hsun Chieh Investment Co., Ltd to announce information on disposal of Unimicron Technology Corp. securities

1.	Name of the securities: Common shares of Unimicron Technology Corp.

2.	Trading date: 2005/08/23~2005/09/12

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 13,405,000 shares; average unit price: $22.52 NTD; total amount: $301,884,100 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Gain of $ 58,494,716 NTD

5.	Relationship with the underlying company of the trade: investee company under equity method

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 65,647,265 shares; amount: 1,191,931,902 NTD; percentage of holdings: 6.86%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 81.98 %; ratio of shareholder’s equity: 82.17 %; the operational capital as shown in the most recent financial statement: $852,073 thousand NTD

8.	Concrete purpose/objective of the acquisition or disposal: Financing operation

9.	Do the directors have any objections to the present transaction? None

10.	Any other matters that need to be specified: None


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Exhibit 99.14

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2005/09/05~2005/09/14

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 3; average unit price: $171,277,400 NTD; total transaction price: $513,832,200 NTD

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): APPLIED MATERIALS ASIA PACIFIC LTD; non-related party transaction

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


		www.umc.com

Exhibit 99.15

To announce related materials on acquisition of machinery and equipment

1.	Name and nature of the subject matter (e.g. land located at Sublot XX, Lot XX, North District, Taichung City): Machinery and equipment

2.	Date of the occurrence of the event: 2005/08/29~2005/09/14

3.	Transaction volume (e.g. XX square meters, equivalent to XX ping), unit price, total transaction price: Transaction volume: 14; average unit price: $91,426,746 NTD; total transaction price: $1,279,974,441 NTD

4.	Counterparty to the trade and its relationship with the company (if the trading counterpart is a natural person and is not an actual related party of the Company, the name of the trading counterpart is not required to be disclosed): TOKYO ELECTRON LIMITED; non-related party transaction

7.	Anticipated loss or profit from the disposal (not applicable in cases of acquisition of assets) (where originally deferred, the status or recognition shall be stated and explained): Not applicable

8.	Terms of delivery or payment (including payment period and monetary amount): 1) 90% paid upon shipment; 10% paid after acceptance 2) 100% paid after acceptance

10.	Name of the professional appraisal institution and its appraisal amount: Not applicable

11.	Reason for any significant discrepancy with the transaction amount, and opinion of the certifying CPA: Not applicable

12.	Is the appraisal report price a limited price or specific price? Not applicable

13.	Has an appraisal report not yet been obtained? Not applicable

14.	Reason an appraisal report has not yet been obtained: Not applicable

15.	Broker and broker’s fee: Not applicable

16.	Concrete purpose or use of the acquisition or disposition: To produce integrated circuits

17.	Do the directors have any objection to the present transaction? No

18.	Any other matters that need to be specified: None


		www.umc.com

Exhibit 99.16

United Microelectronics Corporation

For the month of August, 2005

This is to report 1) the trading of directors, supervisors, executive officers and 10% shareholders of United Microelectronics Corporation (“UMC”) (NYSE: UMC) 2) the pledge and clear of pledge of UMC common shares by directors, supervisors, executive officers and 10% shareholders of UMC 3) the acquisition assets by UMC 4) the disposition of assets by UMC for the month of August, 2005

1)	The trading of directors, supervisors, executive officers and 10% shareholders


*Title*	*Name*	*Number of shares* *held as of* *July 31, 2004*	*Number of shares* *held as of* *August 31, 2005*	*Changes*
President	Peter Chang	8,748,039	10,777,440	2,029,401
Business Group President	Hong-Jen Wu	25,243,501	25,032,937	(210,564)*
Supervisor	Tzyy-Jang Tseng	17,835,959	19,650,715	1,814,756
Vice President	Henry Liu	10,194,148	11,693,391	1,499,243
Vice President	Tai-Sheng Feng	1,054,866	1,543,439	488,573
Vice President	Nick Nee	4,190,306	4,870,568	680,262
Vice President	Ing-Ji Wu	11,413,338	12,817,039	1,403,701
Vice President	Lee Chung	160,000	566,468	406,468

Note: 3,000,000 shares were transferred to trust account; 2,789,436 shares were dividends and bonus.

2)	The pledge and clear of pledge of UMC common shares by directors, supervisors, executive officers and 10% shareholders :

Title

Name

Number of shares

pledge as of

July 31, 2004

Number of shares

pledge as of

August 31, 2005

Changes

Vice President

Nick Nee

4,150,000

4,000,000

(150,000)

3)	The acquisition assets (NT$ Thousand)


*Description of assets*	*August*	*2005*
Semiconductor Manufacturing Equipment	1,416,328	7,044,906
Fixed assets	18,309	207,667

4)	The disposition of assets (NT$ Thousand)


*Description of assets*	*August*	*2005*
Semiconductor Manufacturing Equipment	5,055	78,214
Fixed assets	0	0

Exhibit 99.17

UNITED MICROELECTRONICS CORPORATION

FINANCIAL STATEMENTS

WITH REPORT OF INDEPENDENT AUDITORS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2005 AND 2004

Address: No. 3 Li-Hsin Road II, Hsinchu Science Park, Hsinchu City, Taiwan, R.O.C.

Telephone: 886-3-578-2258

The reader is advised that these financial statements have been prepared originally in Chinese. In the event of a conflict between these financial statements and the original Chinese version or difference in interpretation between the two versions, the Chinese language financial statements shall prevail.

REPORT OF INDEPENDENT AUDITORS

English Translation of a Report Originally Issued in Chinese

To the Board of Directors and Shareholders of

United Microelectronics Corporation

We have audited the accompanying balance sheets of United Microelectronics Corporation as of June 30, 2005 and 2004, and the related statements of income, changes in stockholders’ equity and cash flows for the six-month periods ended June 30, 2005 and 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. As described in Note 4(7) to the financial statements, certain long-term investments were accounted for under the equity method based on financial statements as of June 30, 2005 and 2004, of the investees, which were audited by other auditors. Our opinion insofar as it relates to the investment income amounting to NT$144 million and NT$306 million for the six-month periods ended June 30, 2005 and 2004, respectively, and the related long-term investment balances of NT$5,559 million and NT$5,337 million as of June 30, 2005 and 2004, respectively, is based solely on the reports of the other auditors.

We conducted our audits in accordance with auditing standards generally accepted in the Republic of China and “Guidelines for Certified Public Accountants’ Examination and Reports on Financial Statements”, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of United Microelectronics Corporation as of June 30, 2005 and 2004, and the results of its operations and its cash flows for the six-month periods ended June 30, 2005 and 2004, in conformity with the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” and accounting principles generally accepted in the Republic of China.

As described in Note 3 to the financial statements, effective from January 1, 2005, United Microelectronics Corporation has adopted the R.O.C. Statement of Financial Accounting Standards No.35, “Accounting for Asset Impairment” to account for the impairment of its assets.

We have also reviewed the consolidated financial statements of United Microelectronics Corporation as of and for the six-month period ended June 30, 2005, and have expressed an unqualified review report with explanatory paragraph on such financial statements.

July 19, 2005

Taipei, Taiwan

Republic of China

Notice to Readers

The accompanying financial statements are intended only to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

BALANCE SHEETS

June 30, 2005 and 2004

(Expressed in Thousands of New Taiwan Dollars)


		As of June 30,
	Notes	2005			2004
Assets
Current assets
Cash and cash equivalents	2, 4(1)	$	68,065,457		$	82,488,024
Marketable securities, net	2, 4(2)		3,058,579			3,102,600
Notes receivable	4(3)		288			1,156
Notes receivable - related parties	5		57,853			114,583
Accounts receivable, net	2, 4(4)		3,756,298			5,789,501
Accounts receivable - related parties, net	2, 5		5,832,767			9,795,673
Other receivables	2		611,559			742,537
Other financial assets, current	2, 4(5),10		63,080			180,248
Inventories, net	2, 4(6)		7,898,701			8,617,086
Prepaid expenses			820,875			803,466
Deferred income tax assets, current	2, 4(19)		3,413,529			2,828,940

Total current assets			93,578,986			114,463,814

Funds and long-term investments	2, 4(7)
Long-term investments accounted for under the equity method			37,304,798			66,436,346
Long-term investments accounted for under the cost method			7,715,876			8,306,704

Total funds and long-term investments			45,020,674			74,743,050

Other financial assets, noncurrent	2, 4(5), 10		1,153,028			1,710,788

Property, plant and equipment	2, 4(8), 6, 7
Land			1,132,576			1,132,576
Buildings			15,860,960			12,119,790
Machinery and equipment			348,877,930			256,262,691
Transportation equipment			88,095			80,546
Furniture and fixtures			2,119,552			1,941,066
Leased assets			—			47,783

Total cost			368,079,113			271,584,452
Less : Accumulated depreciation			(228,295,715	)		(169,437,104	)
Add : Construction in progress and prepayments			20,087,650			15,443,534

Property, plant and equipment, net			159,871,048			117,590,882

Intangible assets
Patents	2		—			994
Goodwill	2, 4(21)		4,168,997			—
Technology know-how	2		399,178			—

Total intangible assets			4,568,175			994

Other assets
Deferred charges	2		1,800,209			1,462,493
Deferred income tax assets, noncurrent	2, 4(19)		3,922,375			4,381,964
Other assets - others	2, 4(9)		2,069,695			2,260,227

Total other assets			7,792,279			8,104,684

Total assets		$	311,984,190		$	316,614,212

Liabilities and Stockholders’ Equity
Current liabilities
Short-term loans	4(10)	$	1,645,280		$	2,028,600
Accounts payable			3,797,102			4,883,728
Income tax payable	2		60,389			60,389
Accrued expenses			5,274,099			5,687,428
Dividend payable			1,758,736			—
Payable on equipment			3,413,036			7,266,813
Other payables	10		54,481			—
Current portion of long-term interest-bearing liabilities	4(11), 4(12), 5, 6		5,250,000			8,815,049
Other current liabilities	7		820,413			1,347,220

Total current liabilities			22,073,536			30,089,227

Long-term interest-bearing liabilities
Bonds payable	2, 4(7), 4(11)		28,347,240			33,809,661
Long-term loans	4(12), 6		—			26,372

Total long-term interest-bearing liabilities			28,347,240			33,836,033

Other liabilities
Accrued pension liabilities	2, 4(13)		2,962,723			2,468,281
Deposits-in			20,636			7,478
Deferred credits - intercompany profits	2		9,806			4,084,362
Other liabilities - others			510,637			—

Total other liabilities			3,503,802			6,560,121

Total liabilities			53,924,578			70,485,381

Capital	2, 4(14), 4(15), 4(21)
Common stock			177,794,314			161,407,435
Stock dividends for distribution			19,560,220			13,996,855
Capital reserve	2, 4(7), 4(15), 4(21)
Premiums			64,227,411			58,220,744
Change in equities of long-term investments			20,786,958			20,957,291
Retained earnings	4(17)
Legal reserve			15,996,839			12,812,501
Special reserve			1,744,171			90,871
Unappropriated earnings			3,622,790			20,138,527
Adjusting items in stockholders’ equity	2
Unrealized loss on long-term investments			(9,597,290	)		(9,459,714	)
Cumulative translation adjustment			(1,998,163	)		572,967
Treasury stock	2, 4(16)		(34,077,638	)		(32,608,646	)

Total stockholders’ equity			258,059,612			246,128,831

Total liabilities and stockholders’ equity		$	311,984,190		$	316,614,212

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF INCOME

For the six-month periods ended June 30, 2005 and 2004

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share )


		For the six-month period ended June 30,
	Notes	2005			2004
Operating revenues	2, 5
Sales revenues		$	39,605,151		$	53,416,080
Less : Sales returns and discounts			(729,298	)		(475,846	)

Net sales			38,875,853			52,940,234
Other operating revenues			852,773			1,562,537

Net operating revenues			39,728,626			54,502,771

Operating costs	4(18)
Cost of goods sold	5		(36,279,398	)		(35,741,875	)
Other operating costs			(266,257	)		(1,052,767	)

Operating costs			(36,545,655	)		(36,794,642	)

Gross profit			3,182,971			17,708,129
Unrealized intercompany profit	2		(68,741	)		(145,159	)
Realized intercompany profit	2		154,417			106,702

Gross profit-net			3,268,647			17,669,672

Operating expenses	4(18), 5
Sales and marketing expenses			(1,050,885	)		(959,559	)
General and administrative expenses			(1,298,115	)		(1,137,058	)
Research and development expenses			(3,956,436	)		(2,693,909	)

Subtotal			(6,305,436	)		(4,790,526	)

Operating (loss) income			(3,036,789	)		12,879,146

Non-operating income
Interest revenue			436,914			493,767
Dividend income			36,789			180,726
Gain on disposal of property, plant and equipment	2		33,840			130,254
Gain on disposal of investments	2, 4(11)		6,439,830			8,700,594
Exchange gain, net	2, 10		41,233			—
Gain on recovery of market value of inventory	2		315,151			—
Other income			390,360			95,549

Subtotal			7,694,117			9,600,890

Non-operating expenses
Interest expense	4(8)		(447,071	)		(683,331	)
Investment loss accounted for under the equity method, net	2, 4(7)		(2,144,439	)		(664,616	)
Loss on disposal of property, plant and equipment	2		(63,344	)		(110,525	)
Exchange loss, net	2, 10		—			(377,006	)
Loss on decline in market value and obsolescence of inventories	2		—			(143,212	)
Financial expenses			(149,905	)		(235,042	)
Other losses	2, 4(11)		(34,472	)		(637,038	)

Subtotal			(2,839,231	)		(2,850,770	)

Income before income tax			1,818,097			19,629,266
Income tax expense	2, 4(19)		(397	)		(33,483	)

Net income		$	1,817,700		$	19,595,783

Earnings per share-basic (NTD)	2, 4(20)
Income before income tax		$	0.11		$	1.18

Net income		$	0.11		$	1.17

Earnings per share-diluted (NTD)	2, 4(20)
Income before income tax		$	0.11		$	1.15

Net income		$	0.11		$	1.15

Pro forma information on earnings as if subsidiaries’ investment in the Company is not treated as treasury stock	2, 4(20)
Net income		$	1,817,700		$	19,595,783

Earnings per share-basic (NTD)		$	0.10		$	1.13

Earnings per share-diluted (NTD)		$	0.10		$	1.11

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the six-month periods ended June 30, 2005 and 2004

(Expressed in Thousands of New Taiwan Dollars)


		Capital											Retained Earnings
	Notes	Common Stock			Stock Dividends for Distribution		Collected in Advance			Capital Reserve			Legal Reserve		Special Reserve			Unappropriated Earnings			Unrealized Loss on Long-term Investments			Cumulative Translation Adjustment			Treasury Stock			Total
Balance as of January 1, 2004	4(14)	$	161,407,435		$	—	$	—		$	80,074,184		$	11,410,475	$	1,346,994		$	14,036,822		$	(9,537,237	)	$	913,877		$	(27,410,626	)	$	232,241,924
Appropriation of 2003 retained earnings	4(17)
Legal reserve			—			—		—			—			1,402,026		—			(1,402,026	)		—			—			—			—
Special reserve			—			—		—			—			—		(1,256,123	)		1,256,123			—			—			—			—
Stock dividends			—			12,224,284		—			—			—		—			(12,224,284	)		—			—			—			—
Directors’ and supervisors’ remuneration			—			—		—			—			—		—			(12,618	)		—			—			—			(12,618	)
Employees’ bonus			—			1,111,273		—			—			—		—			(1,111,273	)		—			—			—			—
Transfer of reserved capital to common stock	4(17)		—			661,298		—			(661,298	)		—		—			—			—			—			—			—
Purchase of treasury stock	2, 4(16)		—			—		—			—			—		—			—			—			—			(5,198,020	)		(5,198,020	)
Net income in the first half of 2004			—			—		—			—			—		—			19,595,783			—			—			—			19,595,783
Adjustment of capital reserve accounted for under the equity method	2		—			—		—			(234,851	)		—		—			—			—			—			—			(234,851	)
Changes in unrealized loss on long-term investments of investees	2		—			—		—			—			—		—			—			77,523			—			—			77,523
Changes in cumulative translation adjustment	2		—			—		—			—			—		—			—			—			(340,910	)		—			(340,910	)

Balance as of June 30, 2004		$	161,407,435		$	13,996,855	$	—		$	79,178,035		$	12,812,501	$	90,871		$	20,138,527		$	(9,459,714	)	$	572,967		$	(32,608,646	)	$	246,128,831

Balance as of January 1, 2005	4(14)	$	177,919,819		$	—	$	4,040		$	84,933,195		$	12,812,501	$	90,871		$	29,498,329		$	(9,871,086	)	$	(1,319,452	)	$	(27,685,463	)	$	266,382,754
Appropriation of 2004 retained earnings	4(17)
Legal reserve			—			—		—			—			3,184,338		—			(3,184,338	)		—			—			—			—
Special reserve			—			—		—			—			—		1,653,300			(1,653,300	)		—			—			—			—
Cash dividends			—			—		—			—			—		—			(1,758,736	)		—			—			—			(1,758,736	)
Stock dividends			—			17,587,365		—			—			—		—			(17,587,365	)		—			—			—			—
Directors’ and supervisors’ remuneration			—			—		—			—			—		—			(27,005	)		—			—			—			(27,005	)
Employees’ bonus			—			1,972,855		—			—			—		—			(1,972,855	)		—			—			—			—
Purchase of treasury stock	2, 4(16)		—			—		—			—			—		—			—			—			—			(8,570,374	)		(8,570,374	)
Cancellation of treasury stock	2, 4(16)		(491,140	)		—		—			(177,419	)		—		—			(1,509,640	)		—			—			2,178,199			—
Net income in the first half of 2005			—			—		—			—			—		—			1,817,700			—			—			—			1,817,700
Adjustment of capital reserve accounted for under the equity method	2		—			—		—			(20,055	)		—		—			—			—			—			—			(20,055	)
Changes in unrealized loss on long-term investments of investees	2		—			—		—			—			—		—			—			273,796			—			—			273,796
Exercise of employees’ stock options	2, 4(15)		361,595			—		—			278,648			—		—			—			—			—			—			640,243
Common stock transferred from capital collected in advance			4,040			—		(4,040	)		—			—		—			—			—			—			—			—
Changes in cumulative translation adjustment	2		—			—		—			—			—		—			—			—			(678,711	)		—			(678,711	)

Balance as of June 30, 2005		$	177,794,314		$	19,560,220	$	—		$	85,014,369		$	15,996,839	$	1,744,171		$	3,622,790		$	(9,597,290	)	$	(1,998,163	)	$	(34,077,638	)	$	258,059,612

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CASH FLOWS

For the six-month periods ended June 30, 2005 and 2004

(Expressed in Thousands of New Taiwan Dollars)


	For the six-month period ended June 30,
	2005			2004
Cash flows from operating activities:
Net income	$	1,817,700		$	19,595,783
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		22,080,111			18,279,654
Amortization		1,111,695			524,038
Bad debt expenses (reversal)		(116,245	)		4,626
(Gain) loss on decline in market value and obsolescence of inventories		(315,151	)		143,212
Cash dividends received under the equity method		7,500			—
Investment loss accounted for under the equity method		2,144,439			664,616
Gain on disposal of investments		(6,439,830	)		(8,700,594	)
Loss (gain) on disposal of property, plant and equipment		29,504			(19,729	)
Gain on settlement of exchangeable bonds		(9,789	)		(93,517	)
Amortization of bond premiums		—			(10,050	)
Loss on reacquisition of bonds		—			59
Amortization of deferred income		(26,732	)		—
Changes in assets and liabilities:
Notes and accounts receivable		2,004,339			(1,773,507	)
Other receivables		(46,543	)		(187,662	)
Inventories		1,528,698			(1,392,539	)
Prepaid expenses		(510,188	)		(127,321	)
Other financial assets		101,641			116,840
Accounts payable		(920,209	)		755,433
Income tax payable		—			10,696
Accrued expenses		(3,287,674	)		1,154,462
Other current liabilities		(124,763	)		76,168
Compensation interest payable		—			(126,111	)
Capacity deposits		(201,216	)		(10,909	)
Accrued pension liabilities		272,212			215,790
Other liabilities - others		107,962			—

Net cash provided by operating activities		19,207,461			29,099,438

Cash flows from investing activities:
Increase in marketable securities, net		—			(1,514,788	)
Cash proceeds from merger		943,862			—
Decrease in other financial assets, net		467,216			1,307,966
Acquisition of long-term investments		(2,327,268	)		(8,121,139	)
Proceeds from disposal of long-term investments		7,229,911			1,080,085
Proceeds from liquidation of long-term investments		95,090			—
Acquisition of property, plant and equipment		(7,812,374	)		(17,106,714	)
Proceeds from disposal of property, plant and equipment		78,242			227,505
Increase in deferred charges		(686,340	)		(405,467	)
(Increase) decrease in other assets, net		(129,531	)		629,590
Increase in other receivables		(5,137,760	)		—

Net cash used in investing activities		(7,278,952	)		(23,902,962	)

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CASH FLOWS

For the six-month periods ended June 30, 2005 and 2004

(Expressed in Thousands of New Taiwan Dollars)


	For the six-month period ended June 30,
	2005			2004
(continued)

Cash flows from financing activities:
Increase (decrease) in short-term loans, net		(259,120	)		2,028,600
Repayment of long-term loans		(16,153,714	)		(1,595,888	)
Redemption of bonds		(2,820,004	)		(10,766,941	)
Reacquisition of bonds		—			(41,392	)
Decrease in deposits-in, net		(1,437	)		(368	)
Purchase of treasury stock		(8,570,374	)		(5,198,020	)
Exercise of employees’ stock options		640,243			—

Net cash used in financing activities		(27,164,406	)		(15,574,009	)

Currency exchange		(45,975	)		—

Net decrease in cash and cash equivalents		(15,281,872	)		(10,377,533	)
Cash and cash equivalents at beginning of period		83,347,329			92,865,557

Cash and cash equivalents at end of period	$	68,065,457		$	82,488,024

Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,130,964		$	1,471,245

Cash paid for income tax	$	(27,513	)	$	36,083

Investing activities partially paid by cash:
Acquisition of property, plant and equipment	$	4,947,474		$	20,315,587
Add: Payable at beginning of period		4,704,299			4,057,940
Payable transferred in from the Branch at beginning of period		1,573,637			—
Less: Payable at end of period		(3,413,036	)		(7,266,813	)

Cash paid for acquiring property, plant and equipment	$	7,812,374		$	17,106,714

Investing and financing activities not affecting cash flows:
Principal amount of exchangeable bonds exchanged by bondholders	$	—		$	11,614,141
Book value of reference shares delivered for exchange		—			(3,898,638	)
Elimination of related balance sheet accounts		—			90,983

Recognition of gain on disposal of investments	$	—		$	7,806,486

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

UNITED MICROELECTRONICS CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2005 and 2004

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

1.	HISTORY AND ORGANIZATION

United Microelectronics Corporation (“the Company”) was incorporated in May 1980 and commenced operations in April 1982. The Company is a full service semiconductor wafer foundry, and provides a variety of services to fit individual customer needs. These services include intellectual property, embedded IC design, design verification, mask tooling, wafer fabrication, and testing. The Company’s common shares were publicly listed on the Taiwan Stock Exchange (TSE) in July 1985 and its American Depositary Shares (ADSs) were listed on the New York Stock Exchange (NYSE) in September 2000.

Based on the resolution of the board of directors’ meeting on February 26, 2004, the effective date of the merger with SiS Microelectronics Corp. (SiSMC) was July 1, 2004. The Company was the surviving company, and SiSMC was the dissolved company. The merger was approved by the relevant government authorities. All the assets, liabilities, rights, and obligations of SiSMC have been fully incorporated into the Company since July 1, 2004.

Based on the resolution of the board of directors’ meeting on August 26, 2004, UMCi had transferred its businesses, operations, and assets to newly incorporated Singapore branch (“the Branch”) since April 1, 2005.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in conformity with the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” and accounting principles generally accepted in the Republic of China (R.O.C.).

Summary of significant accounting policies is as follows:

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that will affect the amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. The actual results may differ from those estimates.

Foreign Currency Transactions

Transactions denominated in foreign currencies are translated into New Taiwan Dollars at the exchange rates prevailing at the transaction dates. Receivables, other monetary assets, and liabilities denominated in foreign currencies are translated into New Taiwan Dollars at the exchange rates prevailing at the balance sheet date. Exchange gains or losses are included in the current year’s results. However, exchange gains or losses from investments in foreign entities are recognized as cumulative translation adjustments in stockholders’ equity.

Translation of Foreign Currency Financial Statements

The financial statements of the Branch are translated into New Taiwan Dollars using the spot rates as of each financial statement date for asset and liability accounts, average exchange rates for profit and loss accounts. The cumulative translation effects from the Branch using functional currencies other than the New Taiwan Dollars are included in the cumulative translation adjustment in stockholders’ equity.

Cash Equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and with maturity dates that do not present significant risks on changes in value resulting from changes in interest rates, including commercial paper with original maturities of three months or less.

Marketable Securities

Marketable securities are recorded at cost at acquisition and are stated at the lower of aggregate cost or market value on the balance sheet date. Cash dividends are recognized as dividend income at the point of receipt. Costs of bond funds, equity funds and short-term notes are identified specifically while other marketable securities are determined on the weighted-average method. The market values of listed securities, convertible bonds and closed-end funds are determined by the average closing price during the last month of the fiscal year. The market value of open-end funds is determined by the net asset value at the balance sheet date. The amount for which the aggregate cost exceeds the market value is reported as a loss in the current period. If recovery of the market value occurs in subsequent periods, a gain will be recognized to the extent that the market value does not exceed the original aggregate cost of the investment.

Allowance for Doubtful Accounts

The allowance for doubtful accounts is provided based on management’s judgment and on the evaluation of collectibility and aging analysis of accounts and other receivables.

Inventories

Inventories are accounted for on a perpetual basis. Raw materials are recorded at actual purchase costs, while the work in process and finished goods are recorded at standard costs and adjusted to actual costs using the weighted-average method at the end of each month. Inventories are stated at the lower of aggregate cost or market value at the balance sheet date. The market values of raw materials and supplies are determined on the basis of replacement cost while the work in process and finished goods are determined by net realizable values. An allowance for loss is to be determined for the instances of decline in market value and obsolescence.

Long-term Investments

Long-term investments are recorded at cost when acquired. Investments acquired by contribution of technological know-how are credited to deferred credits among affiliates, which will be amortized to income over a period of 5 years.

Investments of less than 20% of the outstanding voting shares in listed investees, where significant influence on operating decisions of the investees does not reside with the Company, shall be accounted for by the lower of aggregate cost or market value method. The unrealized loss resulting from the decline in market value of investments that are held for long-term investment purpose is deducted from the stockholders’ equity. The market value is determined by the average closing price during the last month of the fiscal year. Investments of less than 20% of the outstanding voting shares in unlisted investees are accounted for under the cost method. Impairment losses for the investees will be recognized if there is significant decrease in the market values of the shares, and where such decrease is deemed irrecoverable. The losses shall be treated in the new cost basis of such investment.

Investment income or loss from investments in both listed and unlisted investees is accounted for under the equity method provided that the Company owns at least 20% of the outstanding voting shares of the investees and has significant influence on operational decisions of the investees. The difference of the acquisition cost and the underlying equity in the investee’s net assets is amortized over 5 years.

The change in the Company’s proportionate share in the net assets of its investee resulting from its subscription to additional shares of stock, issued by such investee, at the rate not proportionate to its existing equity ownership in such investee, is charged to the capital reserve and long-term investments account.

Unrealized intercompany gains and losses arising from downstream transactions with investees accounted for under the equity method are eliminated in proportion to the Company’s ownership percentage while those from transactions with majority-owned (above 50%) subsidiaries are eliminated entirely.

Unrealized intercompany gains and losses arising from upstream transactions with investees accounted for under the equity method are eliminated in proportion to the Company’s ownership percentage. Unrealized intercompany gains and losses arising from transactions between investees accounted for under the equity method are eliminated in proportion to the multiplication of the Company’s ownership percentages; while those arising from transactions between majority-owned subsidiaries are eliminated in proportion to the Company’s ownership percentage in the subsidiary.

In compliance with the Statements of Financial Accounting Standards of the Republic of China (R.O.C. SFAS) No.23 “Interim Financial Reporting and Disclosures”, gain or losses arising from investments accounted for under the equity method have been recognized as of June 30, 2005, in proportion to the Company’s share ownership in the investees.

Investees in which the Company, directly or indirectly, holds more than 50% of voting rights or controls more than half of the members of board of directors, by whom the investee is controlled, are consolidated into the Company’s financial statements in accordance with the R.O.C. SFAS No.7 “Consolidation of Financial Statements.”

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Interest incurred on loans used to finance the construction of property, plant and equipment is capitalized and depreciated accordingly.

Maintenance and repairs are recognized as expense as incurred. Significant renewals and improvements are treated as capital expenditure and are depreciated accordingly. When property, plant and equipment are disposed, their original cost and accumulated depreciation shall be written off and the related gain or loss is classified as non-operating income or expenses. Idle assets are transferred to other assets according to the lower of net book or net realizable value, with the difference recognized as non-operating expenses. The corresponding depreciation expenses provided are also classified as non-operating expenses.

Depreciation is provided on the straight-line basis using the estimated economic life of the assets less salvage value, if any. In the cases where the estimated economic life for property, plant and equipment that are still in use expires, these assets shall be depreciated over the amended estimated useful life using the salvage value. The estimated economic life of the property, plant and equipment is as follows: buildings - 20 to 55 years; machinery and equipment - 5 years; transportation equipment - 5 years; furniture and fixtures - 5 years; leased assets - the lease period, or estimated economic life, whichever is shorter.

Intangible Assets

Patents are stated at cost and amortized over their estimated economic life using the straight-line method. Goodwill arising from the merger is amortized using the straight-line method over 15 years. As a result of the reorganization of UMCi Ltd., the difference between the acquisition cost and net equity is recognized as goodwill and amortized over 5 years. Technology know-how are recorded at cost of acquisition and amortized over their estimated economic life.

Where signs of permanent devaluation of intangible assets exist, with remote likelihood of value recovery, impairment loss shall be recognized in the current period. The carrying value after recognizing the impairment loss shall be recorded as the new cost.

Deferred Charges

Deferred charges are stated at cost and amortized on a straight-line basis as follows: bonds issuance costs - over the life of the bonds, patent license fees - the term of contract or estimated economic life of the related technology, and software - 3 years.

Where signs of permanent devaluation of deferred charges exist, with remote likelihood of value recovery, impairment loss shall be recognized in the current period. The carrying value after recognizing the impairment loss shall be recorded as the new cost.

Convertible and Exchangeable Bonds

The issuance costs of convertible and exchangeable bonds are classified as deferred charges and amortized over the life of the bonds.

The excess of the stated redemption price over the par value is accrued as compensation interest payable over the redemption period, using the effective interest method.

When convertible bondholders exercise their conversion rights, the book value of bonds shall be credited to common stock at an amount equal to the par value of the common stock and the excess is credited to the capital reserve; no gain or loss is recognized on bond conversion.

When exchangeable bondholders exercise their rights to exchange for the reference shares, the book value of the bonds shall be offset against the book value of the investments in reference shares and the related stockholders’ equity accounts, with the difference recognized as gain or loss on disposal of investments.

Pension Plan

All regular employees are covered by a benefit pension plan that is managed by an independently administered pension fund committee within the Company. Pension benefits for employees of the Singapore branch are provided in accordance with the local regulations.

The net pension cost is computed based on an actuarial valuation in accordance with the R.O.C. SFAS No.18, which requires consideration of pension cost components such as service cost, interest cost, expected return on plan assets, and the amortization of net obligation at transition, pension gain or loss, and prior service cost.

The Labor Pension Act of R.O.C. (“the Act”), which adopts a defined contribution scheme, takes effect from July 1, 2005. In accordance with the Act, employees of the Company may elect to follow either the Act, and retain their seniority before the enforcement of the Act, or the pension mechanism of the Labor Standards Law. For employees following the Act, the Company shall make monthly contributions to the employees’ individual pension accounts on a basis no less than 6% of the employees’ monthly wages.

Employee Stock Option Plan

The Company applies intrinsic value method to recognize the difference between the market price of the stock and the exercise price of its employee stock option as compensation cost. Starting January 1, 2004, the Company also discloses pro forma net income and earnings per share under the fair value method only for options granted since January 1, 2004.

Treasury Stock

The Company adopted the R.O.C. SFAS No. 30, which requires that treasury stock held by the Company itself shall be accounted for under the cost method. Cost of treasury stock is shown as a deduction to stockholders’ equity, while gain or loss from selling treasury stock is treated as an adjustment to the capital reserve. The Company’s stock held by its subsidiaries is also treated as treasury stock in the Company’s account.

Revenue Recognition

The main sales term of the Company is Free on Board (FOB) or Free Carrier (FCA). Revenue is recognized at the point where ownership and liability for risk of loss or damage to the products have been transferred to customers, usually upon shipment. Sales returns and discounts taking into consideration customers’ complaints and past experiences are accrued in the same year of sales.

Capital Expenditure versus Operating Expenditure

An expenditure shall be capitalized if it is probable that future economic benefits associated with the expenditure will flow to the Company and the expenditure amount exceeds a predetermined level. Otherwise it is recognized as expense when incurred.

Income Tax

The Company adopted the R.O.C. SFAS No. 22 “Accounting for Income Taxes” for inter-period and intra-period income tax allocation. Provision for income tax includes deferred income tax resulting from temporary differences, loss carry-forward and investment tax credits. Deferred income tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect if the difference is expected to reverse. Valuation allowance on deferred income tax assets is provided to the extent that it is more likely than not that the tax benefits will not be realized.

According to the R.O.C. SFAS No. 12, the Company recognized the tax benefit from the purchase of equipment and technology, research and development expenditure, employee training, and certain equity investments by the flow-through method.

Income tax (10%) on unappropriated earnings is recorded as expense in the year when the shareholders have resolved that the earnings shall be retained.

Earnings Per Share

Earnings per share is computed according to the R.O.C. SFAS No. 24. Basic earnings per share is computed by dividing net income (loss) by weighted-average number of shares outstanding during the year. Diluted earnings per share is computed by taking basic earnings per share into consideration plus additional common shares that would have been outstanding if the dilutive share equivalents had been issued. The net income (loss) would also be adjusted for the interest and other income or expenses derived from any underlying dilutive share equivalents. The weighted-average outstanding shares are adjusted retroactively for stock dividends and bonus share issues.

Derivative Financial Instruments

The interest rate swap agreements entered into for hedging purposes are accounted for on a net accrual basis in accordance with the contractual interest rate as an adjustment to the interest income or expense of the hedged items.

Foreign exchange forward contracts are held to hedge the exchange rate risk arising from net assets or liabilities denominated in foreign currency. These forward contracts are translated and recorded using the spot rate at the inception of the contracts, and the discount or premium of the forward contracts is amortized over their lifespan. The difference between the spot rate at the inception of a forward contract and the spot rate at the balance sheet date is reflected in the statement of income. The receivables and payables of the foreign exchange forward contracts are offset and the resulting balances are recognized as either assets or liabilities. Exchange gains or losses from the settlement of forward contracts are included in the current period’s earnings.

The Company has entered into options contracts and arising exchange differences upon settlement of those contracts are recognized in the statement of income. Received (or paid) premium for the sale (or purchase) of options is amortized over the contract period and recognized as gain or loss.

Merger

The Company merged with SiSMC and recognized the sum of the difference between the acquisition costs, which are the market price of equity stocks issued and other related costs, and the fair value of the identifiable net assets acquired as goodwill in compliance with the R.O.C. SFAS No. 25 “ Enterprise Mergers—Accounting of Purchase Method”. The fair value of identifiable net assets and goodwill deducted from the par value of the equity stocks issued and other related costs is recognized as capital reserve.

Asset Impairment

Pursuant to the R.O.C. SFAS No. 35, the Company assesses indicators of impairment for all its assets within the scope of the standard at each balance sheet date. If impairment is indicated, the Company shall then compare the carrying amount with the recoverable amount of the assets or the cash-generating unit (CGU) and write down the carrying amount to the recoverable amount where applicable. The recoverable amount is defined as the higher of fair values less costs to sell and the values in use.

For previously recognized losses, the Company shall assess, at the balance sheet date, whether there is any indication that the impairment loss may no longer exist or may have decreased. If there is any such indication, the Company has to recalculate the recoverable amount of the asset. If the recoverable amount increases as a result of the increase in the estimated service potential of the assets, the Company shall reverse the impairment loss to the extent that the carrying amount after the reversal would not exceed the carrying amount that would have been determined (net of amortization or depreciation) had no impairment loss been recognized for the assets in prior years.

In addition, a goodwill-allocated CGU or group of CGUs is tested for impairment each year, regardless of whether impairment is indicated. If impairment test reveals that the carrying amount (including goodwill) of CGU or group of CGUs is greater than its recoverable amount, impairment loss shall be recognized. While recognizing impairment losses, the portion of goodwill allocated shall write down at the outset. After goodwill has been written off, the remaining impairment loss shall be shared among the other assets pro rata to their carrying amount.

The write-down in goodwill cannot be reversed under any circumstances in subsequent periods.

Impairment loss (reversal) is classified as non-operating losses/(income).

3.	ACCOUNTING CHANGE

The Company had adopted the R.O.C. SFAS No. 35, “Accounting for Asset Impairment” to account for the impairment of its assets for its financial statements started on and after January 1, 2005. No retroactive adjustment is required under the standard. Such a change in accounting principles does not have any impact on the Company’s net income, earnings per share and total assets as of June 30, 2005.

4.	CONTENTS OF SIGNIFICANT ACCOUNTS

(1)

CASH AND CASH EQUIVALENTS



	As of June 30,
	2005		2004
Cash:
Cash on hand	$	1,617	$	1,417
Checking and savings accounts		1,932,245		838,990
Time deposits		57,396,748		73,171,014

Subtotal		59,330,610		74,011,421

Cash equivalents:
Government bonds acquired under repurchase agreements		8,734,847		8,476,603

Total	$	68,065,457	$	82,488,024

(2)

MARKETABLE SECURITIES, NET


	As of June 30,
	2005		2004
Beneficiary certificate	$	—	$	10,000
Convertible bonds		1,657,323		1,672,748
Listed equity securities		1,401,256		1,419,852

Total	$	3,058,579	$	3,102,600

(3)

NOTES RECEIVABLE

(4)

ACCOUNTS RECEIVABLE, NET


	As of June 30,
	2005			2004
Accounts receivable	$	3,934,878		$	5,888,144
Less: Allowance for sales returns and discounts		(107,062	)		(8,131	)
Less: Allowance for doubtful accounts		(71,518	)		(90,512	)

Net	$	3,756,298		$	5,789,501


(5) OTHER FINANCIAL ASSETS, CURRENT
	As of June 30,
	2005			2004
Credit-linked deposits and repackage bonds	$	1,216,108		$	1,879,338
Interest rate swaps		—			4,594
Forward contracts		—			7,104

Total		1,216,108			1,891,036
Less: Non-current portion		(1,153,028	)		(1,710,788	)

Net	$	63,080		$	180,248

Please refer to Note 10 for disclosures on risks of other financial assets.

(6) INVENTORIES, NET
	As of June 30,
	2005			2004
Raw materials	$	126,994		$	132,323
Supplies and spare parts		1,734,764			1,601,447
Work in process		6,760,326			6,973,813
Finished goods		520,695			363,034

Total		9,142,779			9,070,617
Less: Allowance for loss on decline in market value and obsolescence		(1,244,078	)		(453,531	)

Net	$	7,898,701		$	8,617,086

The insurance coverage for inventories was sufficient as of June 30, 2005 and 2004, respectively.

Inventories were not pledged.

(7)

LONG-TERM INVESTMENTS

Details of long-term investments are as follows:

(Equity securities refer to common shares unless otherwise stated)


	As of June 30,
	2005			2004
Investee Company	Amount		Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights
Investments accounted for under the equity method:
UMC Group (USA)	$	708,829	100.00	$	526,146	100.00
United Microelectronics (Europe) B.V.		283,099	100.00		267,814	100.00
UMC Capital Corporation		1,306,287	100.00		1,277,043	100.00
United Microelectronics Corp. (Samoa)		14,897	100.00		6,364	100.00
UMCi Ltd. (Note A)		14,604	100.00		27,501,698	95.23
Fortune Venture Capital Corporation		3,758,856	99.99		2,575,783	99.99
Hsun Chieh Investment Co., Ltd. (Hsun Chieh)		10,409,009	99.97		10,445,995	99.97


	As of June 30,
	2005			2004
Investee Company	Amount		Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights
United Microdisplay Optronics Corp.		201,914	83.48		543,003	83.48
Pacific Venture Capital Co., Ltd.		300,407	49.99		306,772	49.99
UMC Japan		7,269,416	47.42		9,242,660	47.42
Toppan Photomasks Taiwan Ltd. (formerly DuPont Photomasks Taiwan Ltd.)		1,012,456	45.35		1,085,234	45.35
Unitech Capital Inc.		710,102	42.00		806,885	42.00
Holtek Semiconductor Inc.		797,730	25.23		703,556	25.44
ITE Tech. Inc.		292,828	22.21		276,652	22.23
Unimicron Technology Corp.		3,640,017	20.85		3,402,201	21.70
Faraday Technology Corp. (Note B)		907,782	18.38		816,039	19.10
Silicon Integrated Systems Corp. (Note C)		4,048,689	16.16		4,771,170	16.18
Thintek Optronics Corp. (Note B)		30,383	14.26		—	—
Novatek Microelectronics Corp. (Note C)		1,428,604	13.24		1,620,482	20.14
AMIC Technology Corporation (Note B)		60,134	11.83		114,620	11.83
Aptos (Taiwan) Corporation (Note B)		108,755	9.72		—	—
United Foundry Service, Inc. (Note D)		—	—		102,441	100.00
United Fu Shen Chen Technology Corporation (formerly Applied Component Technology Corp.) (Note E)		—	—		43,788	19.30

Subtotal		37,304,798			66,436,346


Investments accounted for under the cost method or the lower of cost or market value method:
United Fu Shen Chen Technology Corporation (formerly Applied Component Technology Corp.)(Note E)	$	—	16.44	$	—	—
EPITECH Technology Corp.		299,993	10.08		—	—
United Industrial Gases Co., Ltd.		146,250	8.11		146,250	8.27
MediaTek Incorporation		726,309	7.54		1,042,968	11.00
Industrial Bank of Taiwan Corp.		1,139,196	4.95		1,149,230	4.99
Subtron Technology Co., Ltd.		172,800	4.92		172,800	5.47
South Epitaxy Corporation		143,661	4.15		—	—
Chipbond Technology Corporation		174,735	3.20		—	—
Billionton Systems Inc.		30,948	2.71		30,948	2.79
AU Optronics Corp. (Note F)		959,082	1.44		1,931,279	2.89
Mega Financial Holding Company		3,108,656	0.84		3,108,656	0.84
Premier Image Technology Corporation		27,964	0.61		27,964	0.62
Pacific Technology Partners, L.P. (Note G)		359,722	—		299,889	—
Pacific United Technology, L.P. (Note G)		126,560	—		96,720	—
Taiwan High Speed Rail Corporation (Note H)		300,000	—		300,000	—

Subtotal		7,715,876			8,306,704

Total	$	45,020,674		$	74,743,050


Note A:		During 2004, the Company acquired an additional 24.95% of interests in UMCi Ltd., totaling 227,938 thousand shares amounting to NT$10,762 million. Based on the resolution of the board of directors’ meeting on August 26, 2004, UMCi had transferred its businesses, operations, and assets to the Branch since April 1, 2005.

Note B:		The equity method was applied for investees of which the percentage of ownership directly and indirectly held by the Company was greater than 20%.

Note C:		The equity method was applied for investees in which the Company held the highest percentage of the outstanding voting shares and had significant influences on operating decisions.

Note D:		United Foundry Service, Inc. liquidated in April 2005. All businesses, operations, and assets of the company were transferred to UMC Group (USA).

Note E:		Since January 1, 2005, the Company was no longer a majority stockholder of United Fu Shen Chen Technology Corporation. As the Company had no majority voting rights or significant influences, the cost method was applied.

Note F:		As of June 30, 2005 and 2004, 71,215 thousand shares and 66,109 thousand shares with book values of NT$959 million and NT$890 million, respectively, held by the Company in AU Optronics Corp. were utilized as reference shares for the Company’s zero coupon exchangeable bonds.

Note G:		The amount represented the investment in limited partnership without voting rights. As the Company was not able to exercise significant influences, the investments were accounted for under the cost method.

Note H:		The amount represented investment in 30 million preferred shares. As the Company did not possess voting rights or significant influence, the cost method was applied.

Investment loss accounted for under the equity method, which were based on the audited financial statements of the investees were NT$2,144 million and NT$665 million for the six-month periods ended June 30, 2005 and 2004, respectively. Among which, investment income amounting to NT$144 million and NT$306 million for the six-month periods ended June 30, 2005 and 2004, respectively, and the related long-term investment balances of NT$5,559 million and NT$5,337 million as of June 30, 2005 and 2004, respectively, were determined based on the investees’ financial statements audited by other auditors.

The long-term investments were not pledged.

(8)

PROPERTY, PLANT AND EQUIPMENT


	As of June 30, 2005
	Cost		Accumulated Depreciation			Book Value
Land	$	1,132,576	$	—		$	1,132,576
Buildings		15,860,960		(4,298,474	)		11,562,486
Machinery and equipment		348,877,930		(222,554,924	)		126,323,006
Transportation equipment		88,095		(57,657	)		30,438
Furniture and fixtures		2,119,552		(1,384,660	)		734,892
Construction in progress and prepayments		20,087,650		—			20,087,650

Total	$	388,166,763	$	(228,295,715	)	$	159,871,048


	As of June 30, 2004
	Cost		Accumulated Depreciation			Book Value
Land	$	1,132,576	$	—		$	1,132,576
Buildings		12,119,790		(3,361,639	)		8,758,151
Machinery and equipment		256,262,691		(164,866,036	)		91,396,655
Transportation equipment		80,546		(49,003	)		31,543
Furniture and fixtures		1,941,066		(1,120,607	)		820,459
Leased assets		47,783		(39,819	)		7,964
Construction in progress and prepayments		15,443,534		—			15,443,534

Total	$	287,027,986	$	(169,437,104	)	$	117,590,882

Total interest expense before capitalization amounted to NT$643 million and NT$758 million for the six-month periods ended June 30, 2005 and 2004, respectively.

Details of capitalized interest are as follows:


	For the six-month period ended June 30,
	2005		2004
Machinery and equipment	$	192,785	$	72,557
Other property, plant and equipment		2,922		2,457

Total interest capitalized	$	195,707	$	75,014

Interest rates applied		2.88%~4.20%		2.30%~3.38%

The insurance coverage for property, plant and equipment was sufficient as of June 30, 2005 and 2004, respectively.

Please refer to Note 6 for property, plant and equipment pledged as collateral.

(9)

OTHER ASSETS-OTHERS


	As of June 30,
	2005		2004
Leased assets	$	1,363,681	$	1,414,742
Deposits-out		584,339		722,576
Others		121,675		122,909

Total	$	2,069,695	$	2,260,227

The insurance coverage for leased assets was sufficient as of June 30, 2005 and 2004, respectively.

Please refer to Note 6 for deposits-out pledged as collateral.

(10)

SHORT-TERM LOANS


	As of June 30,
	2005		2004
Unsecured bank loans	$	1,645,280	$	2,028,600

Interest rates		3.22%~3.73%		1.38%~1.62%

The Company’s unused short-term lines of credits amounted to NT$8,872 million and NT$9,856 million as of June 30, 2005 and 2004, respectively.

(11)

BONDS PAYABLE


	As of June 30,
	2005			2004
Secured domestic bonds payable	$	—		$	1,140,003
Unsecured domestic bonds payable		30,500,000			37,750,000
Exchangeable bonds payable		3,097,240			3,309,661

Total		33,597,240			42,199,664
Less: Current portion		(5,250,000	)		(8,390,003	)

Net	$	28,347,240		$	33,809,661

On April 27, 2000, the Company issued five-year secured bonds amounting to NT$3,990 million. The interest was paid semi-annually with a stated interest rate of 5.6%. The bonds were repayable in installments every six months from April 27, 2002 to April 27, 2005. On April 27, 2005, the bonds were fully repaid.

During the period from April 16 to April 27, 2001, the Company issued five-year and seven-year unsecured bonds totaling NT$15,000 million, each with a face value of NT$7,500 million. The interest is paid annually with stated interest rates of 5.1195% through 5.1850% and 5.2170% through 5.2850%, respectively. The five-year bonds and seven-year bonds are repayable starting from April 2004 to April 2006 and April 2006 to April 2008, respectively, both in three annual installments at the rates of 30%, 30% and 40%.

During the period from October 2 to October 15, 2001, the Company issued three-year and five-year unsecured bonds totaling NT$10,000 million, each with a face value of NT$5,000 million. The interest is paid annually with stated interest rates of 3.3912% through 3.420% and 3.4896% through 3.520%, respectively. The three-year bonds were repaid at 100% of its principal amount during the period from October 2 to October 15, 2004. The five-year bonds will be repayable in October 2006, upon the maturity of the bonds.

On December 12, 2001, the Company issued zero coupon convertible redeemable bonds amounting to US$302.4 million on the Luxembourg Stock Exchange (LSE). The terms and conditions of the bonds are as follows:

(a)

Final Redemption

Unless previously redeemed, repurchased, cancelled or converted, the bonds can be redeemed at 101.675% of their principal amount on March 1, 2004.

(b)

Redemption at the Option of the Company

The Company may redeem all, but not some only, of the bonds, subject to giving no less than 30 nor more than 60 days’ advance notice, at the early redemption amount, provided that:

On or at any time after June 13, 2003, the closing price of the ADSs on the NYSE or other applicable securities exchange on which the ADSs are listed on any ADSs trading day for 20 out of 30 consecutive ADS trading days ending at any time within the period of 5 ADS trading days prior to the date of the redemption notice shall have been at least 130% of the conversion price or last adjusted conversion price, as the case may be, on each such day, or

ii.

At any time prior to maturity, at least 90% in principal amount of the bonds have already been redeemed, repurchased, cancelled or converted.

(c)

Conversion Period

In respect of the common shares, on or after January 22, 2002 and on or prior to February 20, 2004, or

ii.

In respect of the ADSs, on or after the later of January 22, 2002 and the date on which the shelf registration statement covering the resale of certain ADSs issuable upon conversion of the bonds has been declared effective by the U.S. Securities and Exchange Commission, on or prior to February 20, 2004.

(d)

Conversion Price

In respect of the common shares, will be NT$66.67 per share, and

ii.

In respect of the ADSs, will be US$9.673 per ADS.

The applicable conversion price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

(e)

Reacquisition of the Bonds

As of June 30, 2004, the Company had reacquired a total amount of US$63 million of the bonds from the open market. The corresponding loss on the reacquisition amounting to NT$0.06 million for the six-month period ended June 30, 2004, was recognized as other losses.

(f)

Redemption of the Bonds

On February 27, 2004, the remaining balance of bonds was redeemed.

On May 10, 2002, the Company issued LSE listed zero coupon exchangeable bonds exchangeable for common shares or ADSs of AU Optronics Corp. (AUO) with an aggregate principal amount of US$235 million. The terms and conditions of the bonds are as follows:

(a)

Final Redemption

Unless previously redeemed, exchanged or purchased and cancelled, the bonds must be redeemed at their principal amount in US Dollars on May 10, 2007.

(b)

Redemption at the Option of the Company

The Company may redeem the bonds, in whole or in part, in principal amount thereof, on or after August 10, 2002, and prior to May 10, 2007, at their principal amount, if the closing price of the AUO common shares on the TSE, translated into US Dollars at the prevailing exchange rate, for a period of 20 consecutive trading days, the last of which occurs not more than 10 days prior to the date upon which notice of such redemption is published, is at least 120% of the exchange price then in effect translated into US Dollars at the rate of NT$34.645 to US$1.00.

The Company may also redeem the bonds, in whole, but not in part, if at least 90% in principal amount of the bonds has already been exchanged, redeemed or purchased and cancelled.

(c)

Redemption at the Option of Bondholders

The Company will, at the option of the holders, redeem such bonds on February 10, 2005 at their principal amount.

(d)

Tax Redemption

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

(e)

Terms of Exchange

Subject to prior permitted redemption and as otherwise provided in the offering, the bonds are exchangeable at any time on or after June 19, 2002 and prior to April 10, 2007, into AUO shares or AUO ADSs at an exchange price of NT$51.30 per share, determined on the basis of a fixed exchange rate of NT$34.645 to US$1.00; provided however, that if the exercise date falls within 5 business days from the beginning of, and during, any closed period, the right of the exchanging holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.

The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

(f)

Exchange of the Bonds

As of June 30, 2005 and 2004, certain bondholders have exercised their rights to exchange their bonds with the total principal amount of US$137 million and US$131 million, respectively, into AUO shares. The corresponding gains on the exchange amounting to NT$0 and NT$3,457 million for the six-month periods ended June 30, 2005 and 2004, respectively, were recognized as gain on disposal of investments.

During the period from May 21 to June 24, 2003, the Company issued five-year and seven-year unsecured bonds totaling NT$15,000 million, each with a face value of NT$7,500 million. The interest is paid annually with stated interest rates of 4.0% minus USD 12-Month LIBOR and 4.3% minus USD 12-Month LIBOR, respectively. Stated interest rates are reset annually based on the prevailing USD 12-Month LIBOR. The five-year bonds and seven-year bonds are repayable in 2008 and 2010, respectively, upon the maturity of the bonds.

On July 15, 2003, the Company issued its second LSE listed zero coupon exchangeable bonds exchangeable for common shares of AUO with an aggregate principal amount of US$206 million. The issue price was set at 103.0% of the principal amount. The terms and conditions of the bonds are as follows:

(a)

Final Redemption

Unless previously redeemed, exchanged or purchased and cancelled, the bonds must be redeemed at their principal amount in US Dollars on July 15, 2008.

(b)

Redemption at the Option of the Company

The Company may redeem the bonds, in whole or in part, in principal amount thereof, on or after January 15, 2004 and on or prior to July 15, 2005, at their principal amount plus a certain premium (the “Early Redemption Amount”) and thereafter until July 15, 2008 at their principal amount, if the closing price of the AUO common shares on the TSE, translated into US Dollars at the prevailing exchange rate, for a period of 20 consecutive trading days, the last of which occurs not more than 10 days prior to the date upon which notice of such redemption is published, is at least 125% of the exchange price then in effect translated into US Dollars at the rate of NT$34.390 to US$1.00.

The Company may also redeem the bonds, in whole, but not in part, if at least 90% in principal amount of the bonds has already been exchanged, redeemed or purchased and cancelled.

(c)

Redemption at the Option of Bondholders

The Company will, at the option of any bondholder, redeem such bonds starting on July 15, 2005, at their principal amount.

(d)

Tax Redemption

(e)

Terms of Exchange

Subject to prior permitted redemption and as otherwise provided in the offering, the bonds are exchangeable at any time on or after August 14, 2003 and prior to June 30, 2008, into AUO shares at an exchange price of NT$36.387 per share, determined on the basis of a fixed exchange rate of NT$34.390 to US$1.00; provided however, that if the exercise date falls within five business days from the beginning of, and during, any closed period, the right of the exchanging holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.

The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

(f)

Exchange of the Bonds

As of June 30, 2004, all bondholders have exercised their rights to exchange their bonds into AUO shares. The corresponding gain on the exchange amounting to NT$4,349 million for the six-month period ended June 30, 2004, was recognized as a gain on disposal of investments.

Repayments of the above bonds in the future years are as follows:

(Assuming the convertible bonds and exchangeable bonds are both paid off upon maturity.)


Bonds repayable in	Amount
2005 (3^rd quarter thereafter)	$	—
2006		10,250,000
2007		5,347,240
2008		10,500,000
2009		—
2010 and thereafter		7,500,000

Total	$	33,597,240

(12)

LONG-TERM LOANS


	As of June 30,
	2005		2004
Secured long-term loans	$	—	$	451,418
Less:Current portion		—		(425,046	)

Net	$	—	$	26,372

Interest rates		—		2.20%~2.22%

As of June 30, 2004, the Company’s long-term loans denominated in foreign currency amounted to US$13 million;

Assets pledged as collateral to secure these loans are detailed in Note 6.

(13)

PENSION FUND

Pension costs amounting to NT$344 million and NT$264 million were recognized for the six-month periods ended June 30, 2005 and 2004, respectively. The corresponding totals of the pension fund were NT$1,013 million and NT$902 million as of June 30, 2005 and 2004, respectively.

(14)

CAPITAL STOCK

As of June 30, 2004, 22,000,000 thousand common shares were authorized to be issued and 16,140,744 thousand common shares were issued, each at a par value of NT$10.

Based on the resolution of the board of directors’ meeting on February 26, 2004, the Company merged with SiSMC on July 1, 2004, the effective date, through the issuance of 357,143 thousand new shares at a par value of $10 each. 2.24 shares of SiSMC were exchanged to 1 share of the Company, the surviving company.

As recommended by the board of directors and amended by the shareholders’ meeting on June 1, 2004, the Company issued 1,399,685 thousand new shares from the capitalization of retained earnings that amounted to NT$13,335 million and capital reserve that amounted to NT$661 million, of which NT$12,224 million were stock dividends and NT$1,111 million were employees’ bonus.

On July 22, 2004, the Company wrote off 149,728 thousand shares of treasury stock, which were bought back during the period from August 1 to September 28, 2001 and the period from August 14 to September 25, 2002 for conversion of the convertible bonds.

The employee stock options issued by the Company on October 7, 2002 were exercised into 44,138 thousand shares during 2004. The effective date of issuance of new shares was December 28, 2004.

The employee stock options issued by the Company on October 7, 2002, and January 3, 2003, were exercised into 36,563 thousand shares during the six-month period ended June 30, 2005.

On April 26, 2005, the Company wrote off 49,114 thousand shares of treasury stocks, which were bought back during the period from February 20 to April 19, 2002, for the conversion of convertible bonds.

As recommended by the board of directors and amended by the shareholders’ meeting on June 13, 2005, the Company issued 1,956,022 thousand new shares from capitalization of retained earnings that amounted to NT$19,560 million, of which NT$17,587 million were stock dividends and NT$1,973 million were employees’ bonus.

As of June 30, 2005, 22,000,000 thousand common shares were authorized to be issued and 17,779,431 thousand common shares were issued, each at a par value of NT$10. The limit of share capital was increased to NT$260,000 million based on the resolution of the shareholders’ meeting on June 13, 2005.

The Company has issued a total of 250,987 thousand ADSs which were traded on the NYSE as of June 30, 2005. The total number of common shares represented by all issued ADSs is 1,254,936 thousand shares (one ADS represents five common shares).

(15)

EMPLOYEE STOCK OPTIONS

On September 11, 2002, October 8, 2003, and September 30, 2004, the Company was authorized by the relevant government authorities to issue Employee Stock Options with a total number of 1 billion, 150 million, and 150 million units, respectively. Each unit entitles an optionee to subscribe to 1 share of the Company’s common stock. Settlement upon the exercise of the options will be made through the issuance of new shares by the

Company. The exercise price of options was set at the closing price of the Company’s common stock on the date of grant. The grant period of the options is 6 years and an optionee may exercise the options in accordance with certain schedules as prescribed by the plan starting 2 years from the date of grant. Detailed information relevant to the Employee Stock Options is disclosed as follows:


Date of grant	Total number of options granted (in thousands)	Total number of options outstanding (in thousands)	Exercise price (NTD)
October 7, 2002	939,000	729,311	$	17.7
January 3, 2003	61,000	50,030	$	19.9
November 26, 2003	57,330	50,140	$	27.8
March 23, 2004	33,330	27,640	$	25.7
July 1, 2004	56,590	48,920	$	23.2
October 13, 2004	20,200	17,340	$	20.0
April 29, 2005	23,460	22,310	$	18.4

A summary of the Company’s stock option plans, and related information for the six-month periods ended June 30, 2005 and 2004, are as follows:


	For the six-month period ended June 30,
	2005					2004
	Option (in thousands)			Weighted-average Exercise Price (NTD)		Option (in thousands)			Weighted-average Exercise Price (NTD)
Outstanding at beginning of year		973,858		$	18.9		980,664		$	18.4
Granted		23,460		$	18.4		33,330		$	25.7
Exercised		(36,563	)	$	17.7		—			—
Forfeited		(15,064	)	$	19.9		(23,692	)	$	19.2

Outstanding at end of period		945,691		$	18.9		990,302		$	18.6

Exercisable at end of period		357,276					—

Weighted-average fair value of options granted during the year (NTD)	$	6.0				$	4.5

The information of the Company’s outstanding stock options as of June 30, 2005, is as follows:


			Outstanding Stock Options				Exercisable Stock Options
Authorization Date	Range of Exercise Price		Option (in thousands)	Weighted-average Expected Remaining Years	Weighted-average Exercise Price (NTD)		Option (in thousands)	Weighted-average Exercise Price (NTD)
91.09.11	$	17.7~$19.9	779,341	1.7	$	17.8	357,276	$	17.9
92.10.08	$	23.2~$27.8	126,700	3.1	$	25.6	—		—
93.09.30	$	18.4~$20.0	39,650	4.0	$	19.1	—		—

			945,691	1.9	$	18.9	357,276	$	17.9

The Company has used the intrinsic value method to recognize compensation costs for its employee stock options issued since January 1, 2004. The compensation cost for the six-month period ended June 30, 2005 is NT$0. Pro forma information using the fair value method on net income and earnings per share is as follows:


	For the six-month period ended June 30, 2005
	Basic earnings per share		Diluted earnings per share
Net Income	$	1,817,700	$	1,817,700
Earnings per share (NTD)	$	0.11	$	0.11
Pro forma net income	$	1,741,162	$	1,741,162
Pro forma earnings per share (NTD)	$	0.11	$	0.10

The fair value of the options granted after January 1, 2004, was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the six-month period ended June 30, 2005: expected dividend yields of 1.63%; volatility factors of the expected market price of the Company’s common stock of 42.39%; risk-free interest rate of 2.24%; and a weighted-average expected life of the options of 4.4 years.

(16)

TREASURY STOCK

The Company bought back its own shares from the open market during the six-month periods ended June 30, 2005 and 2004. Details of the treasury stock transactions are as follows:

For the six-month period ended June 30, 2005

(In thousands of shares)


Purpose	As of January 1, 2005	Increase	Decrease		As of June 30, 2005
For transfer to employees	241,181	374,960	(49,114	)	567,027

For the six-month period ended June 30, 2004

(In thousands of shares)


Purpose	As of January 1, 2004	Increase	Decrease	As of June 30, 2004
For transfer to employees	49,114	192,067	—	241,181
For conversion of the convertible bonds into shares	149,728	—	—	149,728

Total shares	198,842	192,067	—	390,909

According to the Securities and Exchange Law of the R.O.C., total shares of treasury stock should not exceed 10% of the Company’s stock issued. Total purchase amount should not exceed the sum of the retained earnings, capital reserve-premiums, and realized capital reserve. As such, the maximum number of shares of treasury stock that the Company could hold as of June 30, 2005 and 2004, was 1,777,943 thousand shares and 1,614,074 thousand shares while the ceiling of the amount was NT$83,442 million and NT$74,019 million, respectively. As of June 30, 2005 and 2004, the Company held 567,027 thousand shares and 390,909 thousand shares of treasury stock that amounted to NT$13,768 million and NT$12,299 million, respectively.

In compliance with Securities and Exchange Law of the R.O.C., treasury stock should not be pledged, nor should it entitle voting rights or receive dividends.

As of June 30, 2005, the Company’s subsidiaries, Hsun Chieh Investment Co., Ltd. and Fortune Venture Capital Corporation, held 543,732 thousand shares and 19,808 thousand shares of the Company’s stock, with a book value of NT$23.19 and NT$8.68 per share, respectively. The average closing price during June 2005 was NT$23.19.

As of June 30, 2004, the Company’s subsidiaries, Hsun Chieh Investment Co., Ltd. and Fortune Venture Capital Corporation, held 503,456 thousand shares and 18,340 thousand shares of the Company’s stock, with a book value of NT$24.83 and NT$9.37 per share, respectively. The average closing price during June 2004 was NT$24.83.

(17)

RETAINED EARNINGS AND DIVIDEND POLICIES

According to the Company’s Articles of Incorporation, current year’s earnings, if any, shall be distributed in the following order:

Payment of all taxes and dues;

Offset prior years’ operation losses;

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

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

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

The distribution of the remaining portion, if any, will be recommended by the board of directors and approved through the shareholders’ meeting.

The Company is currently in its growth stage; the policy for dividend distribution should reflect factors such as the current and future investment environment, fund requirements, domestic and international competition and capital budgets; as well as the benefit of shareholders, share bonus equilibrium, and long-term financial planning. The board of directors makes and presents the distribution proposal annually at the shareholders’ meeting. The Company’s Articles of Incorporation further provide that no more than 80% of the dividends to shareholders, if any, must be paid in the form of stock dividends. Accordingly, at least 20% of the dividends must be paid in the form of cash.

Details of the 2004 and 2003 dividend distribution and directors’ and supervisors’ remuneration are as follows:


	2004		2003
Cash dividend (per share)	$	0.10	$	—
Stock dividend (per share)	$	1.03	$	0.76
Capitalization from reserved capital (per share)	$	—	$	0.04
Employees stock dividend	$	1,973 million	$	1,111 million
Directors’ and supervisors’ remuneration	$	27 million	$	13 million

Pursuant to Article 41 of the Securities and Exchange Law of the R.O.C., a special reserve is set aside from the current net income and prior unappropriated earnings for items that are accounted for as deductions to stockholders’ equity such as unrealized loss on long-term investments and cumulative translation adjustments. However, there are the following exceptions for the Company’s investees’ unrealized loss on long-term investments arising from the merger which was recognized by the Company in proportion to the Company’s ownership percentage:

According to the explanatory letter No. 101801 of the Securities and Futures Commission (SFC), if the Company recognizes the investees’ capital reserve—excess from the merger in proportion to the ownership percentage—then the special reserve is exempted for the amount originated from the acquisition of the long-term investments.

However, if the Company and its investees transfer a portion of the capital reserve to increase capital, a special reserve equal to the amount of the transfer shall be provided according to the explanatory letter No.101801-1 of the SFC.

In accordance with the explanatory letter No.170010 of the SFC applicable to listed companies, in the case where the market value of the Company’s stock held by its subsidiaries at year-end is lower than the book value, a special reserve shall be provided in the Company’s accounts in proportion to its ownership percentage.

For the 2004 appropriations approved by the shareholders’ meeting on June 13, 2005, unrealized loss on long-term investments exempted from the provision of special reserve pursuant to the above regulations amounted to NT$18,667 million.

(18)

OPERATING COSTS AND EXPENSES

The Company’s personnel, depreciation, and amortization expenses are summarized as follows:


	For the six-month period ended June 30,
	2005						2004
	Operating costs		Operating expenses		Total		Operating costs		Operating expenses		Total
Personnel expenses
Salaries	$	1,590,737	$	707,813	$	2,298,550	$	2,820,736	$	884,599	$	3,705,335
Labor and health insurance		202,468		55,159		257,627		177,328		47,710		225,038
Pension		254,043		89,986		344,029		192,236		71,633		263,869
Other personnel expenses		29,028		8,065		37,093		29,328		7,466		36,794
Depreciation		21,159,529		911,915		22,071,444		17,345,727		933,927		18,279,654
Amortization		73,478		968,702		1,042,180		31,812		451,033		482,845

The numbers of employees as of June 30, 2005 and 2004, were 11,588 and 9,662, respectively.

(19)

INCOME TAX

Reconciliation between the income tax expense and the income tax calculated on pre-tax financial statement income based on the statutory tax rate is as follows:


	For the six-month period ended June 30,
	2005			2004
Income tax on pre-tax income at statutory tax rate	$	831,762		$	4,907,307
Permanent differences		(757,916	)		(4,442,722	)
Change in investment tax credit		6,512,323			1,088,110
Change in valuation allowance		(6,586,169	)		(1,523,310	)
Income tax on interest revenue separately taxed		397			4,098

Income tax expense	$	397		$	33,483

Significant components of deferred income tax assets and liabilities are as follows:


	As of June 30,
	2005					2004
	Amount		Tax effect			Amount		Tax effect
Deferred income tax assets
Investment tax credit			$	15,124,463				$	17,416,622
Loss carry-forward	$	14,994,930		3,748,732		$	14,953,722		3,738,431
Pension		2,962,723		740,681			2,356,540		589,135
Allowance on sales returns and discounts		382,310		95,578			638,934		159,733
Allowance for loss on obsolescence of inventories		811,580		202,895			453,531		113,383
Others		282,944		70,736			166,866		41,716

Total deferred income tax assets				19,983,085					22,059,020
Valuation allowance				(8,975,040	)				(10,576,722	)

Net deferred income tax assets				11,008,045					11,482,298


	As of June 30,
	2005					2004
	Amount		Tax effect			Amount		Tax effect
Deferred income tax liabilities
Unrealized exchange gain	(548,978	)		(137,245	)	(1,608,131	)		(402,033	)
Depreciation	(14,139,585	)		(3,534,896	)	(15,477,444	)		(3,869,361	)

Total deferred income tax liabilities				(3,672,141	)				(4,271,394	)

Total net deferred income tax assets			$	7,335,904				$	7,210,904

Deferred income tax assets - current			$	5,255,111				$	7,820,060
Deferred income tax liabilities - current				(137,245	)				(420,033	)
Valuation allowance				(1,704,337	)				(4,589,087	)

Net				3,413,529					2,810,940

Deferred income tax assets - noncurrent				14,727,974					14,238,960
Deferred income tax liabilities - noncurrent				(3,534,896	)				(3,869,361	)
Valuation allowance				(7,270,703	)				(5,987,635	)

Net				3,922,375					4,381,964

Total net deferred income tax assets			$	7,335,904				$	7,210,904

The Company’s income tax returns for all the fiscal years through 1999 and 2002 have been assessed and approved by the Tax Authority.

Pursuant to the “Statutes for the Establishment and Administration of Science Park of R.O.C.”, the Company was granted several four-year income tax exemption periods for income derived from the expansion of operations. The starting date of the exemption granted for the expansions of operations in 2000 and 2001 had not yet been decided. The income tax exemption for other periods will expire on December 31, 2009.

The Company earns investment tax credits for the amount invested in production equipment, research and development, and employee training.

As of June 30, 2005, the Company’s unused investment tax credit was as follows:


Expiration Year	Investment tax credits earned	Balance of unused investment tax credits
2005	$4,323,403	$1,844,524
2006	3,656,565	3,656,565
2007	1,996,790	1,996,790
2008	3,166,290	3,166,290
2009	4,460,294	4,460,294

Total	$17,603,342	$15,124,463

Under the rules of the Income Tax Law of the R.O.C., net loss can be carried forward for 5 years. As of June 30, 2005, the unutilized accumulated loss was as follows:


Expiration Year	Accumulated loss	Unutilized accumulated loss
2006	$11,096,582	$11,096,582
2007	3,857,140	3,857,140
2008 (Transferred in from merger with SiSMC)	2,283	2,283
2009 (Transferred in from merger with SiSMC)	38,925	38,925

Total	$14,994,930	$14,994,930

The balance of the Company’s imputation credit accounts as of June 30, 2005 and 2004 were NT$67 million and NT$76 million, respectively. The actual creditable ratio for 2004 and 2003 was 0.23% and 0.69%, respectively.

The ending balances of unappropriated earnings as of June 30, 2005 and 2004 were as follows:


	As of June 30,
	2005		2004
Prior to January 1, 1998	$	—	$	16,565
After January 1, 1998		3,622,790		20,121,962

Total	$	3,622,790	$	20,138,527

(20)

EARNINGS PER SHARE

The Company held employee stock options during the six-month period ended June 30, 2005, and thus has a complex capital structure. The calculation of basic and diluted earnings per share, for the six-month period ended June 30, 2005 and 2004, is disclosed as follows:


	For the six-month period ended June 30,
*(shares expressed in thousands)*	2005		2004 (retroactively adjusted)
Income before income tax	$	1,818,097	$	19,629,266
Effect of dilution:
Employee stock options		—		—
Convertible bonds		—		39,626

Adjusted income before income tax assuming dilution	$	1,818,097	$	19,668,892


	For the six-month period ended June 30,
*(shares expressed in thousands)*	2005		2004 (retroactively adjusted)
Net income	$	1,817,700	$	19,595,783
Effect of dilution:
Employee stock options		—		—
Convertible bonds		—		29,720

Adjusted net income assuming dilution	$	1,817,700	$	19,625,503

Weighted-average of shares outstanding		16,579,598		16,705,273
Effect of dilution:
Employee stock options		92,221		345,074
Convertible bonds		—		44,910

Adjusted weighted-average of shares outstanding assuming dilution		16,671,819		17,095,257

Earnings per share-basic (NTD)
Income before income tax	$	0.11	$	1.18

Net income	$	0.11	$	1.17

Earnings per share-diluted (NTD)
Income before income tax	$	0.11	$	1.15

Net income	$	0.11	$	1.15

Pro forma information on earnings as if subsidiaries’ investment in the Company is not treated as treasury stock is set out as follows:


	For the six-month period ended June 30, 2005
*(shares expressed in thousands)*	Basic			Diluted
Net income	$	1,817,700		$	1,817,700

Weighted-average of shares outstanding:
Beginning balance		17,550,801			17,550,801
Purchase of 374,960 thousand shares of treasury stock from January 1 to June 30		(39,313	)		(39,313	)
Exercise of 36,563 thousand units of employees’ stock options		20,172			20,172
Dilutive shares of employee stock options accounted for under treasury stock method		—			92,221

Ending balance		17,531,660			17,623,881

Earnings per share
Net income (NTD)	$	0.10		$	0.10


	For the six-month period ended June 30, 2004 (retroactively adjusted)
*(shares expressed in thousands)*	Basic			Diluted
Net income	$	19,595,783		$	19,625,503

Weighted-average of shares outstanding:
Beginning balance		15,941,901			15,941,901
Purchase of 192,067 thousand shares of treasury stock from January 1 to June 30, 2004		(50,445	)		(50,445	)
Stock dividends and employees’ bonus at 8.7% in 2004		1,380,957			1,380,957
Dilutive shares of employee stock options accounted for under treasury stock method		—			345,074
Dilutive shares issued assuming conversion of bonds		—			44,910

Ending balance		17,272,413			17,662,397

Earnings per share
Net income (NTD)	$	1.13		$	1.11

Pro forma information on retroactively adjusted earnings per share as if 2004 earnings are distributed:


	For the period ended June 30, 2005
	Basic		Diluted
Net income	$	1,817,700	$	1,817,700

Weighted-average of shares outstanding:
Shares (capitalization of 2004 earnings ordinary at 11.4%)		18,477,495		18,580,272

Earnings per share (NTD)	$	0.10	$	0.10


	For the period ended June 30, 2004 (retroactively adjusted)
	Basic		Diluted
Net income	$	19,595,783	$	19,625,503

Weighted-average of shares outstanding:
Shares (capitalization of 2004 earnings ordinary at 11.4%)		18,617,557		19,052,183

Earnings per share (NTD)	$	1.05	$	1.03

(21)

MERGER

In order to integrate resources, reduce operating costs, enlarge business scales, and improve its financial structure, profitability and global competitiveness, based on the resolution of the board of directors’ meeting on February 26, 2004, the Company merged with SiSMC, the dissolved company, on July 1, 2004. The merger was approved by the relevant government authorities. All the assets, liabilities, rights, and obligations of SiSMC have been fully incorporated into the Company since July 1, 2004. The accounting treatment regarding the merger is in compliance with the R.O.C. SFAS No. 25 “Enterprise Mergers — Accounting of Purchase Method.”

Relevant information required by R.O.C. SFAS No. 25 is disclosed as follows:

Information of the dissolved company:

SiSMC was split from Silicon Integrated Systems Corp. on December 15, 2003. It was mainly engaged in manufacturing of integrated circuits and components of semiconductors.

Effective date, percentage of acquisition and accounting treatment:

Based on the agreement and the resolution of the board of directors’ meeting, the effective date of the merger was July 1, 2004. All the stocks of the dissolved company were exchanged by the surviving company’s newly issued shares, and the merger was accounted for under the purchase method.

The period of combining the dissolved company’s operating result:

The operating result for the period from July 1, 2004 to December 31, 2004 of the dissolved company was integrated into the operating result of the Company.

Acquisition costs and the types, quantities, and amounts of securities issued for the merger:

According to the agreement, 357,143 thousand common shares, amounting to NT$3,571 million, were newly issued by the Company for the merger. The newly issued shares were allocated to the dissolved company’s shareholders in proportion to their ownership. 2.24 common shares were exchanged for 1 new share. Since SiSMC was not a listed company, there is no market value. Thus, the acquisition cost was determined based on the appraisal report made by China Property Appraising Center Co., Ltd.

Amortization method and useful lives for goodwill or deferred credit:

The difference between the acquisition cost and the fair value of identifiable net assets was recognized as goodwill, which is amortized under the straight-line method for 15 years according to the Article 35 of Enterprise Mergers and Acquisitions Law of the R.O.C.

Contingent price, warrants, or commitments and accounting treatments in the merger contracts:

None.

Decisions of disposal of significant assets from the merger:

None.

Pro forma information on operating results:

The operating result for the period from July 1, 2004 to December 31, 2004 of the dissolved company was consolidated into the financial statements of the Company.

The pro forma operating results from January 1, 2004 to June 30, 2004 of SiSMC are included in the following pro forma information. The pro forma information on the operating results stated below is based on the assumption that the Company merged with SiSMC on January 1, 2004.


*(Shares expressed in thousands)*	For the six-month period ended June 30, 2004
Net operating revenues	$	56,758,278
Net income	$	18,422,384
Weighted-average of shares outstanding		17,093,452
Earnings per share-basic (NTD)	$	1.08

5.	RELATED PARTY TRANSACTIONS

(1)

Name and Relationship of Related Parties


Name of related parties		Relationship with the Company
UMC Group (USA) (UMC-USA)		Equity investee
United Foundry Service, Inc. (liquidated in April 2005)		Equity investee
United Microelectronics (Europe) B.V. (UME BV)		Equity investee
UMC Capital Corporation		Equity investee
United Microelectronics Corp. (Samoa)		Equity investee
Fortune Venture Capital Corporation (Fortune)		Equity investee
Hsun Chieh Investment Co., Ltd. (Hsun Chieh)		Equity investee
UMCi Ltd.		Equity investee
United Microdisplay Optronics Corp. (UMO)		Equity investee
UMC Japan (UMCJ)		Equity investee
Toppan Photomasks Taiwan Ltd. (formerly DuPont Photomasks Taiwan Ltd.) (Toppan)		Equity investee
Unitech Capital Inc.		Equity investee
Holtek Semiconductor Inc. (Holtek)		Equity investee
ITE Tech. Inc.		Equity investee


Name of related parties		Relationship with the Company
Unimicron Technology Corp.		Equity investee
Novatek Microelectronics Corp.		Equity investee
Faraday Technology Corp. (Faraday)		Equity investee
Silicon Integrated Systems Corp.		Equity investee
AMIC Technology Corporation. (AMIC)		Equity investee
Pacific Venture Capital Co., Ltd.		Equity investee
Aptos (Taiwan) Corporation (Aptos)		Equity investee
Thintek Optronics Corporation		Equity investee
Chiao Tung Bank Co., Ltd. (Chiao Tung) (ceded the supervisory role on May 30, 2005)		The Company’s supervisor
Unitruth Investment Corporation. (Unitruth)		Subsidiary’s equity investee
Davicom Semiconductor, Inc.		Subsidiary’s equity investee
Uwave Technology Corp. (formerly United Radiotek Incorporation)		Subsidiary’s equity investee
UCA Technology, Inc.		Subsidiary’s equity investee
Afa Technologies, Inc.		Subsidiary’s equity investee
Star Semiconductor Corp.		Subsidiary’s equity investee
AEVOE Inc.		Subsidiary’s equity investee
USBest Technology Inc.		Subsidiary’s equity investee
U-Media Communications, Inc.		Subsidiary’s equity investee
Chip Advanced Technology Corp.		Subsidiary’s equity investee
Crystal Media Inc.		Subsidiary’s equity investee
Smedia Technology Corp.		Subsidiary’s equity investee
ULi Electronics Inc.		Subsidiary’s equity investee
XGI Technology Inc.		Subsidiary’s equity investee

(2)

Significant Related Party Transactions

Operating revenues


	For the six-month period ended June 30,
	2005			2004
	Amount		Percentage	Amount		Percentage
UMC-USA	$	18,179,163	46	$	24,508,013	45
UME BV		3,818,862	9		8,431,152	15
Others		5,996,113	15		4,139,145	8

Total	$	27,994,138	70	$	37,078,310	68

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

Purchases


	For the six-month period ended June 30,
	2005			2004
	Amount		Percentage	Amount		Percentage
UMCi	$	1,244,347	12	$	65,324	1
Others		—	—		135,435	1

Total	$	1,244,347	12	$	200,759	2

The purchases from the above related parties were dealt with in the ordinary course of business similar to those from third-party suppliers. The payment terms for purchases from overseas were net 60 days for the related parties and net 30~90 days for the third-party suppliers, while the terms for domestic purchases were month-end 60~90 days for the related parties and month-end 30~90 days for the third-party suppliers.

Notes receivable