Edgar Filing: UNITED MICROELECTRONICS CORP

As of March 31,

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 June 27, 2003

United Microelectronics Corporation

(Translation of Registrant’s Name into English)

No. 3 Li Hsin Road II

Science-Based Industrial 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)

This current report on Form 6-K is hereby incorporated by reference into our Registration Statement on Form F-3 filed with the Commission on January 2, 2002, as amended (File No.333-14256).

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:	June 27, 2003	By:	/s/ Stan Hung
			Stan Hung Chief Financial Officer

UNITED MICROELECTRONICS CORPORATION

UNAUDITED FINANCIAL STATEMENTS

WITH REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

FOR THE THREE-MONTH PERIODS ENDED

MARCH 31, 2003 AND 2002

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.

REVIEW REPORT OF INDEPENDENT ACCOUNTANTS

English Translation of a Report Originally Issued in Chinese

To the Board of Directors and Shareholders of

United Microelectronics Corporation

We have reviewed the accompanying balance sheets of United Microelectronics Corporation as of March 31, 2003 and 2002, and the related statements of income and cash flows for the three-month periods then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to issue a review report on these financial statements based on our reviews. As described in Note 4(6) to the financial statements, certain long-term investments were accounted for under the equity method based on the financial statements of the investees for the three-month periods ended March 31, 2003 and 2002, which were reviewed by other independent accountants. Our reviews insofar as it relates to the investment income amounting to NT$27 million and NT$82 million for the three-month periods ended March 31, 2003 and 2002, respectively, and the related long-term investment balances of NT$4,316 million and NT$4,383 million as of March 31, 2003 and 2002, respectively, is based solely on the review reports of the other independent accountants.

We conducted our reviews in accordance with the Statements of Auditing Standards No. 36, “Review of Financial Statements”, of the Republic of China . A review is limited primarily to applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Based on our reviews, we are not aware of any material modifications or adjustments that should be made to the financial statements referred to above in order for them to be in conformity with accounting principles generally accepted in the Republic of China.

April 16, 2003

Taipei, Taiwan

Republic of China

Notice to Readers

The accompanying unaudited 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 review 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

UNAUDITED BALANCE SHEETS

March 31, 2003 and 2002

(Expressed in Thousands of New Taiwan Dollars)

		As of March 31,
Assets	Notes	2003		2002
Current assets
Cash and cash equivalents	2,4(1)	$	58,570,264	$	60,812,323
Marketable securities, net	2,4(2)		2,840,920		49,900
Notes receivable	4(3)		99,233		98,623
Notes receivable—related parties	5		72,653		97,557
Accounts receivable, net	2,4(4)		4,641,119		2,594,918
Accounts receivable—related parties, net	2,5		7,566,339		4,307,362
Other receivables	2		963,257		551,674
Other receivables—related parties	2,5		193,507		26,865
Inventories, net	2,4(5)		8,147,585		6,532,628
Prepaid expenses			459,754		600,754
Deferred income tax assets	2,4(16)		2,233,659		3,507,296

Total current assets			85,788,290		79,179,900


Funds and long-term investments	2,4(6)
Long-term investments accounted for under the equity method			45,215,567		39,539,277
Long-term investments accounted for under the cost method			15,496,828		18,099,517

Total funds and long-term investments			60,712,395		57,638,794


Property, plant and equipment	2,4(7),5,6,7
Land			1,618,731		1,639,376
Buildings			12,312,057		11,806,322
Machinery and equipment			234,222,275		202,577,053
Transportation equipment			64,667		50,855
Furniture and fixtures			1,996,393		1,369,770
Leased assets			47,783		47,783
Leasehold improvements			44,930		49,530

Total Cost			250,306,836		217,540,689
Less: Accumulated depreciation			(128,719,637)		(96,270,582)
Plus: Construction in progress and prepayments			15,870,299		27,571,315

Property, plant and equipment, net			137,457,498		148,841,422


Intangible assets
Patents	2		15,899		27,823

Total Intangible assets			15,899		27,823


Other assets
Assets leased to others			167,352		221,774
Idle assets	2		14,908		25,716
Deposits out			828,101		521,860
Deferred charges	2		1,836,025		2,226,031
Deferred income tax assets	2,4(16)		5,781,488		4,507,851
Others			122,651		495,975

Total other assets			8,750,525		7,999,207

Total assets		$	292,724,607	$	293,687,146

		As of March 31,
Liabilities and Stockholders' Equity	Notes	2003		2002
Current liabilities
Accounts payable		$	2,557,064	$	1,971,463
Accounts payable—related parties	5		454,542		551,201
Income tax payable	2		63,281		63,281
Accrued expenses			3,907,210		5,368,908
Other payables			5,081,039		9,884,587
Current portion of long-term interest-bearing liabilities	4(9),4(10),5		16,031,764		6,009,410
Other current liabilities	7		1,973,220		1,845,060

Total current liabilities			30,068,120		25,693,910


Long-term interest-bearing liabilities
Bonds payable	2,4(9)		34,890,352		38,476,440
Long-term loans	4(10),5		7,868,940		13,155,198

Total long-term interest-bearing liabilities			42,759,292		51,631,638


Other liabilities
Accrued pension liabilities	2,4(11)		1,919,009		1,628,222
Capacity deposits and other deposits	7		2,718		1,260,453
Deferred credits	2		2,033,610		1,729,313

Total other liabilities			3,955,337		4,617,988


Total liabilities			76,782,749		81,943,536


Capital	4(12)
Common stock			154,748,456		133,356,954
Capital reserve
Premiums			41,729,589		41,729,589
Gain on disposal of property, plant and equipment			—		170,473
Change in equities of long-term investments			23,060,047		23,098,719
Excess from merger			17,152,454		17,152,454
Retained earnings	4(14)
Legal reserve			10,686,225		10,686,225
Special reserve			631,982		2,242,284
Unappropriated earnings			9,088,858		21,439,852
Adjusting items in stockholders’ equity
Unrealized loss on long-term investments	2		(10,957,875)		(9,446,373)
Cumulative translation adjustment	2		707,643		(120,329)
Treasury stock	2,4(13)		(30,905,521)		(28,566,238)

Total stockholders’ equity			215,941,858		211,743,610


Total liabilities and stockholders’ equity		$	292,724,607	$	293,687,146

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

UNAUDITED STATEMENTS OF INCOME

For the three-month periods ended March 31, 2003 and 2002

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

		For the three-month period ended March 31,
	Notes	2003			2002
Operating revenues	2,5
Sales revenues		$	17,122,049		$	11,436,524
Less : Sales returns and discounts			(6,668	)		(71,500	)

Net sales			17,115,381			11,365,024
Other operating revenues			783,255			793,816

Net operating revenues			17,898,636			12,158,840

Operating costs	4(15)
Cost of goods sold	5		(14,460,307	)		(10,909,718	)
Other operating costs			(697,150	)		(608,519	)

Operating costs			(15,157,457	)		(11,518,237	)

Gross profit			2,741,179			640,603
Unrealized intercompany profit	2		(69,339	)		(38,457	)
Realized intercompany profit	2		68,558			71,419

Net			2,740,398			673,565

Operating expenses	4(15)
Selling expenses			(265,654	)		(200,804	)
General and administrative expenses			(510,180	)		(933,220	)
Research and development expenses			(1,265,260	)		(1,991,394	)

Subtotal			(2,041,094	)		(3,125,418	)

Operating income (loss)			699,304			(2,451,853	)

Non-operating income
Interest revenue			270,725			364,629
Investment income accounted for under the equity method	2,4(6)		—			405,183
Gain on disposal of property, plant and equipment	2,5		50,591			1,548
Gain on disposal of investments			112,799			2,125,379
Exchange gain	2		68,954			69,886
Written back of allowance for inventories	2		—			187,113
Other income			39,558			103,993

Subtotal			542,627			3,257,731

Non-operating expenses
Interest expense	4(7),5		(290,268	)		(424,729	)
Investment loss accounted for under the equity method	2,4(6)		(123,998	)		—
Loss on disposal of property, plant and equipment	2		(48,337	)		(4,849	)
Loss on decline in market value and obsolescence of inventories	2		(305,140	)		(75,806	)
Depreciation and loss on idle assets	2		(10,134	)		(16,673	)
Other losses			(59,722	)		(65,513	)

Subtotal			(837,599	)		(587,570	)

Income before income taxes			404,332			218,308
Income tax expenses	2,4(16)		(1,645	)		(2,326	)

Net income		$	402,687		$	215,982

Earnings per share-basic (in New Taiwan Dollars)	2,4(17)
Income before income taxes		$	0.03		$	0.01

Net income		$	0.03		$	0.01

Earnings per share-diluted (in New Taiwan Dollars)	2,4(17)
Income before income taxes		$	0.03		$	0.01

Net income		$	0.03		$	0.01

Pro forma information on earnings as if subsidiaries’ investment in the Company is not treated as treasury stock	2,4(17)
Net income		$	402,687		$	215,982

Earnings per share-basic (in New Taiwan Dollars)		$	0.03		$	0.01

Earnings per share-diluted (in New Taiwan Dollars)		$	0.03		$	0.01

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

UNAUDITED STATEMENTS OF CASH FLOWS

For the three-month periods ended March 31, 2003 and 2002

(Expressed in Thousands of New Taiwan Dollars)

	For the three-month period ended March 31,
	2003			2002
Cash flows from operating activities:
Net income	$	402,687		$	215,982
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		8,845,036			8,066,199
Amortization		318,977			628,739
Bad debts expense		58,249			20,954
Loss on decline in market value and obsolescence of inventories (written back of allowance for inventories)		305,140			(111,307	)
Long-term investment loss (income) accounted for under the equity method		123,998			(405,183	)
Gain on disposal of investments		(112,799	)		(2,125,379	)
(Gain) loss on disposal of property, plant and equipment		(2,254	)		3,301
Depreciation and loss on idle assets		10,134			16,673
Exchange gain on long-term loans		(6,110	)		(131,732	)
Changes in assets and liabilities:
Notes receivable		(86,515	)		19,512
Accounts receivable		(3,040,989	)		95,069
Other receivables		268,565			103,503
Inventories		(760,447	)		(1,231,187	)
Prepaid expenses		267,715			136,620
Accounts payable		350,065			171,120
Accrued expenses		516,473			(293,929	)
Other current liabilities		(13,038	)		(92,144	)
Other payables		—			2,671,762
Compensation interest payable		19,861			19,881
Capacity deposit		(1,070	)		(308,061	)
Accrued pension liabilities		(15,150	)		119,259

Net cash provided by operating activities		7,448,528			7,589,652

Cash flows from investing activities:
(Increase) decrease in marketable securities, net		(370,120	)		1,048,270
Acquisition of long-term investments		(4,861,576	)		(59,296	)
Proceeds from disposal of long-term investments		386,163			2,228,014
Acquisition of property, plant and equipment		(2,826,577	)		(4,569,125	)
Proceeds from disposal of property, plant and equipment		149,526			42,109
Increase in deferred charges		(92,088	)		(97,802	)
(Increase) decrease in deposits-out, net		(6,761	)		3,157

Net cash used in investing activities		(7,621,433	)		(1,404,673	)

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

UNAUDITED STATEMENTS OF CASH FLOWS

For the three-month periods ended March 31, 2003 and 2002

(Expressed in Thousands of New Taiwan Dollars)

	For the three-month period ended March 31,
	2003			2002
(continued)
Cash flows from financing activities:
Decrease in short-term loans, net	$	(100,000	)	$	—
Repayment of long-term loans		(1,858,217	)		(1,712,263	)
Increase in deposits-in, net		20			709
Purchase of treasury stock		(1,777,653	)		(2,178,288	)

Net cash used in financing activities		(3,735,850	)		(3,889,842	)

Net (decrease) increase in cash and cash equivalents		(3,908,755	)		2,295,137
Cash and cash equivalents at beginning of period		62,479,019			58,517,186

Cash and cash equivalents at end of period	$	58,570,264		$	60,812,323

Supplemental disclosures of cash flow information:
Cash paid for interest	$	86,365		$	182,608

Cash paid for income taxes	$	20,128		$	25,931

Investing activities partially paid by cash:
Acquisition of property, plant and equipment	$	891,708		$	1,888,439
Add: Payable at beginning of period		7,015,908			9,893,511
Less: Payable at end of period		(5,081,039	)		(7,212,825	)

Cash paid for acquiring property, plant and equipment	$	2,826,577		$	4,569,125

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

UNITED MICROELECTRONICS CORPORATION

NOTES TO UNAUDITED FINANCIAL STATEMENTS

March 31, 2003 and 2002

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

HISTORY AND ORGANIZATION

United Microelectronics Corporation (“United Microelectronics” or “the Company”) was incorporated in May 1980 and commenced operations in April 1982. The Company’s major business activity is providing dedicated semiconductor wafer foundry services. The Company provides a variety of services to fit individual customer’s needs, including 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 in July 1985 and its American Depositary Shares (“ADSs”) were listed on the New York Stock Exchange in September 2000.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements were prepared in conformity with “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” and accounting principles generally accepted in the Republic of China. Summary of significant accounting policies is as follows:

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.

Marketable Securities

Marketable securities are recorded at cost when acquired and are stated at the lower of aggregate cost or market value at the balance sheet date. The market value of listed equity securities, convertible bonds or closed-end funds is determined by the average closing price during the last month of the fiscal year. The market value for open-end funds is determined by their equity per unit at the balance sheet date. The amount by which aggregate cost exceeds market value is reported as a loss in the current year. In subsequent periods, recoveries of market value are recognized as a gain 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 recorded at cost when acquired and stated at the lower of aggregate cost, based on the weighted average method, 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 on decline in market value and obsolescence is provided, when necessary.

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 five years.

Investments in less than 20% owned listed and unlisted companies where significant influence on operational decisions of the investees does not reside with the Company, are accounted for by the lower of aggregate cost or market value method and the cost method, respectively. The market value is determined by the average closing price during the last month of the fiscal year and the unrealized loss resulting from the decline in market value of investments that are held for long-term investment purposes is deducted from the stockholders’ equity. Impairment losses for the investees will be recognized if an other than temporary impairment is evident.

Investment income or loss from investments in both listed and unlisted companies 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 five years.

Unrealized intercompany gains and losses are eliminated under the equity method. Profit from sales of depreciable assets between the investee and the Company is amortized and recognized based on the assets’ economic service lives. Profit from other types of intercompany transactions is recognized when realized. The increase 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 credited to a capital reserve account. Any decrease in the Company’s proportionate share in the net assets of the investee is debited against the existing balance of the similar capital reserve account, where the credit balance can only be offset to zero. If any excess amount exits, it will be debited against unappropriated retained earnings.

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.

Depreciation is provided on the straight-line basis using the economic service lives of the assets less any salvage value. When the economic service lives are completed, property, plant and equipment, which are still in use, are depreciated over the newly estimated remaining useful lives of the salvage value. The economic service lives of the property, plant and equipment are as follows: buildings—20 to 55 years; leased assets and leasehold improvements—the lease period, or economic service lives, whichever is shorter; others—5 years.

Maintenance and repairs are charged to expense as incurred. Significant renewals and improvements are treated as capital expenditures and are depreciated accordingly. When property, plant and equipment are disposed of, their original cost and accumulated depreciation are written off and the related gain or loss is included 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 charged to non-operating expenses. The corresponding depreciation expenses provided are classified as non-operating expenses also.

Intangible Assets

Patents are stated at cost and amortized over their economic service lives using straight-line method.

Deferred Charges

Deferred charges are stated at cost and amortized on a straight-line basis as follows: intellectual property and technology license fee—the term of contract or economic lives of the related technology; software—3 years; and bonds issuance costs—over the life of the bonds.

Convertible and Exchangeable 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 is credited to common stock at an amount equal to the par value of the common stock and the excess is credited to 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 bonds is to be offset with the book value of the investment in reference shares and the related stockholder’s equities accounts, with the difference recognized as gain or loss on disposal of investments.

Pension Plan

The Company has a funded defined benefit pension plan covering all regular employees and the pension fund is managed by an independently administered pension fund association. The net pension cost is computed based on an actuarial valuation in accordance with the provision of the Statements of Financial Accounting Standards of the Republic of China (“ROC SFAS”) No. 18, which requires consideration of pension cost components such as service cost, interest cost, expected return on plan assets and amortization of net obligation at transition.

Treasury Stock

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

Revenue Recognition

Revenue is recognized when title 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’ complaint and past experience are accrued in the same year of sales. The connected cost is to be deducted from the cost of goods sold.

Capital Expenditures versus Operating Expenditures

An expenditure is treated as an asset when it is probable that future economic benefits associated with the expenditure will flow to the Company, and the total amount exceeds certain level. Otherwise it is charged to expense as incurred.

Translation of Foreign Currency Transactions

The accounts of United Microelectronics are maintained in New Taiwan dollars, the functional currency. Transactions denominated in foreign currencies are translated into New Taiwan dollars at the exchange rates prevailing on 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. The financial statements of foreign subsidiaries and investees 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 and historical exchange rates for equity accounts. The cumulative translation effects for subsidiaries and investees using functional currencies other than the New Taiwan dollars are included in the cumulative translation adjustment in stockholders’ equity.

Income Tax

The Company adopted the ROC SFAS No. 22 “Accounting for Income Taxes” for inter-period and intra-period income tax allocation. Provision for income tax includes deferred tax resulting from temporary differences and investment tax credits. Deferred 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 when the difference is expected to reverse. Valuation allowance on deferred tax assets is provided to the extent that it is more likely than not that the tax benefits will not be realized.

Income taxes (10%) on unappropriated earnings generated from January 1, 1998 are recorded as expense in the year when the shareholders have resolved that the earnings shall be retained.

According to the ROC SFAS No. 12, the Company recognized the tax benefit from the tax credit incurred at the year equipment acquired, or the year the expenditure arises from research and development.

Earnings Per Share

Earnings per share is calculated according to the ROC 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 calculated 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 derived from any underlying dilutive share equivalents. The weighted-average outstanding shares are restated for stock dividends and bonus share issues.

ACCOUNTING CHANGE

None.

4. CONTENTS OF SIGNIFICANT ACCOUNTS

(1) CASH AND CASH EQUIVALENTS

	As of March 31,
	2003		2002
Cash:
Cash on hand	$	1,528	$	1,645
Checking and savings accounts		1,350,962		12,698,223
Certificates of deposit (including credit-linked deposits)		49,328,461		35,780,388

Subtotal		50,680,951		48,480,256

Cash equivalents:
Commercial paper		2,403,957		2,444,366
Repurchase obligations		5,485,356		9,887,701

Subtotal		7,889,313		12,332,067

Total	$	58,570,264	$	60,812,323

Please refer to Note 10 for disclosures on risks of credit-linked deposits.

(2) MARKETABLE SECURITIES

	As of March 31,
	2003		2002
Mutual funds	$	—	$	10,000
Convertible bonds		2,840,920		39,900

Subtotal		2,840,920		49,900
Less: Allowance for loss on decline in market value		—		—

Net	$	2,840,920	$	49,900

(3)

NOTES RECEIVABLE

(4) ACCOUNTS RECEIVABLE, NET

	As of March 31,
	2003			2002
Accounts receivable	$	4,709,947		$	2,665,767
Less: Allowance for sales returns and discounts		(11,357	)		—
Less: Allowance for doubtful accounts		(57,471	)		(70,849	)

Net	$	4,641,119		$	2,594,918

(5) INVENTORIES, NET

	As of March 31,
	2003			2002
Raw materials	$	192,651		$	297,469
Supplies and spare parts		1,289,114			1,146,868
Work in process		6,636,632			4,816,186
Finished goods		491,677			744,476

Subtotal		8,610,074			7,004,999
Less: Allowance for loss on decline in market value and obsolescence		(462,489	)		(472,371	)

Net	$	8,147,585		$	6,532,628

a. The insurance coverage for inventories was sufficient as of March 31, 2003 and 2002.

b. Inventories were not pledged.

(6) LONG-TERM INVESTMENTS

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

(Equity securities refer to common shares unless otherwise stated)

	As of March 31,
	2003			2002
Invested Company	Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights	Amount
Investments accounted for under the equity method:
UMC Group (USA)	100.00	$	469,865	100.00	$	510,106
United Foundry Service, Inc.	100.00		92,596	100.00		89,627
United Microelectronics (Europe) B.V.	100.00		199,830	—		—
UMC Capital Corporation	100.00		1,022,326	100.00		345,766
United Microelectronics Corp. (Samoa)	100.00		4,929	100.00		17,479
Fortune Venture Capital Corporation	99.99		2,990,577	99.99		3,398,573
Hsun Chieh Investment Co., Ltd.	99.97		10,354,482	99.97		11,961,021
United Microdisplay Optronics Corp.	85.00		659,722	—		—
Pacific Venture Capital Co., Ltd.	49.99		307,407	49.99		352,392
UMCi Pte. Ltd.	49.74		7,014,331	49.82		7,401,929
UMC Japan	47.59		8,033,040	47.10		6,623,491
DuPont Photomasks Taiwan Ltd.	45.51		1,126,882	46.26		1,116,231
Unitech Capital Inc.	42.00		732,911	—		—
Novatek Microelectronics Corp.	25.93		1,298,692	26.70		1,081,296
Holtek Semiconductor Inc.	25.61		582,067	28.76		564,520
Integrated Technology Express Inc.	24.58		325,390	28.78		353,096
Unimicron Technology Corp.	23.81		3,063,883	24.20		2,934,283
Applied Component Technology Corp.	22.57		86,541	28.15		144,014
Faraday Technology Corp.	19.71		609,233	20.31		455,805
Integrated Telecom Express, Inc.	16.42		583,482	16.36		740,005
Silicon Integrated Systems Corp. (Note A)	16.18		5,601,339	—		—
AMIC Technology (Taiwan), Inc.	13.62		56,042	13.62		73,251
Archtek Telecom Corporation	13.24		—	—		—
Trecenti Technologies, Inc.	—		—	40.00		1,376,392
Broadmedia, Inc.	—		—	32.60		—

Subtotal			45,215,567			39,539,277

Note A:

The Company’s investment in Silicon Integrated Systems Corp. (“SIS”) includes 14,030 thousand Global Depositary Shares, of which each representing 10 common shares of SIS, and another 76,136 thousand shares of common stock.

	As of March 31,
	2003			2002
Invested Company	Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights	Amount
Investments accounted for under the cost method or the lower of cost or market value method:
Pacific United Technology, L.P. (Fund)	25.00		34,600	25.00		34,600
PixTech, Inc.	17.63		—	17.63		561,080
MediaTek Incorporation	13.13		1,206,670	14.27		1,259,866
AU Optronics Corp. (Note B)	11.37		6,759,855	18.86		8,318,624
Sino-Aerospace Investment Corp.	11.11		—	11.11		25,748
Pacific Technology Partners, L.P. (Fund)	9.85		238,628	9.85		146,301
Aptos Corp.	9.68		30,302	9.68		30,302
Vialta, Inc.	8.90		622,835	—		622,835
United Industrial Gases Co., Ltd.	8.44		146,250	8.52		146,250
TECO Nanotech Co., Ltd.	8.05		—	8.05		145,654
Subtron Technology Co., Ltd.	7.41		240,000	7.41		240,000
Industrial Bank of Taiwan Corp.	5.00		1,150,000	5.00		1,150,000
TECO Electric & Machinery Co., Ltd.	4.02		1,535,099	3.94		1,535,298
Billionton Systems Inc.	3.93		30,948	—		—
Mega Financial Holding Company	0.83		3,108,655	3.07		3,108,655
Premier Image Technology Corporation	0.64		27,964	0.70		27,964
SAMPO Corporation	0.50		65,022	2.94		442,590
National Venture Capital Corp.	—		—	11.09		60,000
Taiwan High Speed Rail Corporation (Preferred shares)	—		300,000	—		—
Tonbu, Inc. (Preferred shares)	—		—	—		243,750

Subtotal			15,496,828			18,099,517

Total		$	60,712,395		$	57,638,794

Note B :

Among the shares held by the Company in AU Optronics Corp., approximately 139,770 thousand shares with the book value of NT$2,075 million were utilized as reference shares for the Company’s zero coupon exchangeable bonds issued in May 2002.

Investment loss or income accounted for under the equity method, which was based on the reviewed financial statements of the investees, were NT$124 million and NT$405 million for the three-month periods ended March 31, 2003 and 2002, respectively. Among which, investment income amounting to NT$27 million and NT$82 million for the three-month periods ended March 31, 2003 and 2002, respectively, and the related long-term investment balances of NT$4,316 million and NT$4,383 million as of March 31, 2003 and 2002, respectively, were determined based on the investees’ financial statements reviewed by other independent accountants.

The long-term equity investments were not pledged.

(7) PROPERTY, PLANT AND EQUIPMENT

Total interest expense before capitalization amounted to NT$431 million and NT$536 million for the three-month periods ended March 31, 2003 and 2002, respectively.

Details of capitalized interest are as follows:

	For the three-month period ended March 31,
	2003		2002
Machinery and equipment	$	137,297	$	111,060
Other property, plant and equipment		3,178		701

Total interest capitalized	$	140,475	$	111,761

Interest rates applied		3.30~3.39%		3.46%~3.83%

The insurance coverage for property, plant and equipment was sufficient as of March 31, 2003 and 2002.

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

(8) SHORT-TERM LOANS

The Company’s unused short-term lines of credits amounted to NT$15,468 million and NT$16,796 million as of March 31, 2003 and 2002, respectively.

(9) BONDS PAYABLE

	As of March 31,
	2003			2002
Secured domestic bonds payable	$	2,850,001		$	3,990,000
Unsecured domestic bonds payable		25,000,000			25,000,000
Euro convertible bonds payable		10,526,544			10,602,144
Exchangeable bonds payable		8,180,350			—
Compensation interest payable		103,253			24,296

Subtotal		46,660,148			39,616,440
Less: Current portion		(11,769,796	)		(1,140,000	)

Net	$	34,890,352		$	38,476,440

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

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, with face value of NT$7,500 million, and stated interest rates of 5.1850% through 5.1195% and 5.2850% through 5.2170%, 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 yearly 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 face value of NT$5,000 million, and with stated interest rates of 3.3912% through 3.420% and 3.4896% through 3.520%, respectively. The three-year bonds and five-year bonds are repayable in October 2004 and October 2006, respectively, upon the maturity of the bonds.

On December 12, 2001, the Company issued zero coupon convertible 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 will 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 New York Stock Exchange or other applicable securities exchange on which the ADSs are listed on any ADS trading day for 20 out of 30 consecutive ADS trading days ending at any time within the period of five 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 Shares, on or after January 22, 2002 up to and including 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 resales of certain ADSs issuable upon conversion of the bonds has been declared effective by the US SEC, up to and including February 20, 2004.

(d)

Conversion Price

The conversion price

In respect of the Shares, will be NT$69.60 per Share, and

ii.

In respect of the ADSs, will be US$10.098 per ADS.

The applicable conversion price will be subject to adjustment for, among other things, subdivision or consolidation of Shares, including Shares represented by ADSs, bonus issues, right issues, distributions of cash and stock dividends and other dilutive events.

On May 10, 2002, the Company issued LSE listed zero coupon exchangeable bonds exchangeable for common shares or ADSs of AU Optronics Corp. (“AU”) 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 will be redeemed at their principal amounts 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 market price of the AU common shares, 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=US$1.00.

The Company may also redeem the bonds, in whole, but not in part, at their principal amount 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 its principal amount.

(d)

Tax Redemption

The Company may redeem all, but not part, of the bonds, at any time at their principal amount in US dollars, in the event of certain changes in the ROC’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, if any, at a rate exceeding 20%.

(e)

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 AU shares or AU ADSs at an exchange price of NT$58.25 per share, determined on the basis of a fixed exchange rate of NT$34.645=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 restriction.

The exchange price will be subject to adjustment upon the occurrence of certain events including free distribution of AU common shares by AU; subdivision, consolidation or reclassification of AU common shares, distribution of stock dividends by AU, right issues and other dilutive events.

(10) LONG-TERM LOANS

	As of March31,
	2003			2002
Secured bank loans	$	12,130,908		$	18,024,608
Less: Current portion		(4,261,968	)		(4,869,410	)

Net	$	7,868,940		$	13,155,198

Interest rates		1.94%~3.35	%		2.69%~4.00	%

The above long-term loans will be repaid in installments with the last payment on May 14, 2009.

The Company’s long-term loans denominated in foreign currency amounted to US$97million and US$154 million as of March 31, 2003 and 2002, respectively.

Please refer to Note 6 for assets pledged for long-term loans.

(11) PENSION FUND

The net pension cost recognized for the three-month periods ended March 31, 2003 and 2002 was NT$6 million and NT$142 million, respectively, and the balances of the pension fund deposited at the Central Trust of China as of March 31, 2003 and 2002 were NT$774 million and NT$670 million, respectively.

(12) CAPITAL STOCK

As of March 31, 2003, 22,000,000,000 common shares were authorized to be issued and 15,474,845,646 common shares were issued, each at par of NT$10.

The Company has issued 173,693 thousand ADSs as of March 31, 2003. The number of common shares represented by the ADSs is 868,467 thousand shares.

On September 11, 2002, the Company was authorized by the relevant government authorities to issue Employee Stock Options. The total number of options to be granted under the plan is one billion units, with each unit entitling the optionee to subscribe for one share of the Company’s common stock. Settlement upon the exercise of the stock options will be made through the issuance of new shares by the Company. The grant period for options is six years and an optionee may exercise his/her options in accordance with certain schedules as prescribed by the plan starting from two years after the 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
(in NTD)

October 7, 2002

939,000

909,157

20.0

January 3, 2003

61,000

55,780

22.5

(13) TREASURY STOCK

The Company bought back its own shares from the open market. Details of the treasury stock transactions are as follows:

(In thousand shares)

Purpose	As of January 1, 2003	Increase	Decrease	As of March 31, 2003
For transfer to employees	86,539	85,450	—	171,989
For conversion of the convertible bonds into shares	149,728	—	—	149,728

Total shares	236,267	85,450	—	321,717

According to Stock Exchange Regulations of Taiwan, total shares of treasury stock shall not exceed 10% of the Company’s stock issued. Total purchase amount shall not exceed sum of retained earnings and capital reserve-premiums and realized capital reserve. As such, the maximum number of shares of treasury stock that the Company can hold as of March 31, 2003 is 1,547,485 thousand shares while the ceiling of the amount is NT$54,125 million. As of March 31, 2003, the Company held 321,717 thousand shares of treasury stock, which amounted to NT$10,596 million.

Treasury stock shall not be pledged, nor does it possess voting rights or receive dividends, in compliance with Stock Exchange Regulations of Taiwan.

As of March 31, 2003, the Company’s subsidiaries, Hsun Chieh Investment Co., Ltd. and Fortune Venture Capital Corporation, held 484,045 thousand shares and 17,633 thousand shares of the Company’s stock, with a book value of NT$20.27 and NT$9.75 per share, respectively. As of March 31, 2003, the market value per share was NT$20.27.

(14) RETAINED EARNINGS

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;

After deducting items a, b, and c above from the current year’s earnings, any portion of the remaining amount together with the prior years’ unappropriated earnings is to be allocated as follows: no less than 5% as employees’ bonus which will be settled through issuance of new shares of the Company; and

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

The Company’s Articles of Incorporation further provides that at least 50% of the dividends to the Company’s shareholders, if any, must be paid in the form of stock dividends. Accordingly, no more than 50% of the dividends can be paid in the form of cash.

Details of the distribution of 2002 dividends and employees’ bonus recommended by the board of directors on March 25, 2003 and the distribution of 2001 dividends and employees’ bonus approved by the shareholders’ meeting on June 3, 2002 were as follows:

	2002		2001
Cash dividends per share (in NTD)	$	—	$	—
Stock dividends per share (in NTD)		0.4		1.5
Employees’ cash bonus (in thousand NTD)		—		—
Employees’ stock bonus (in thousand NTD)		579,727		1,711,320

(15)

OPERATING COSTS AND EXPENSES

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

	For the three-month period ended March 31,
	2003							2002
	Operating costs			Operating expenses		Total		Operating costs		Operating expenses		Total
Personnel expenses
Salaries	$	1,187,587		$	358,100	$	1,545,687	$	964,797	$	375,571	$	1,340,368
Personnel and health insurance		79,568			23,352		102,920		60,901		28,897		89,798
Pension		(32,117	)		37,873		5,756		92,410		49,118		141,528
Other personnel expenses		7,870			2,582		10,452		11,241		4,201		15,442
Depreciation		8,388,050			456,986		8,845,036		7,661,698		404,501		8,066,199
Amortization		40,385			234,636		275,021		51,180		537,362		588,542

The numbers of employees as of March 31, 2003 and 2002 were 8,788 and 8,757, respectively.

(16)

INCOME TAX

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

	For the three-month period ended March 31,
	2003			2002
Tax on pre-tax income at statutory tax rate	$	101,083		$	54,577
Estimated temporary and permanent differences		16,877			(654,018	)
Change in investment tax credit		997,637			(1,767,151	)
Change in valuation allowance for deferred tax assets		(1,115,597	)		2,366,592
Tax on interest revenue separately taxed		1,645			2,326

Income tax expense	$	1,645		$	2,326

Deferred income tax assets and liabilities were as follows:

	As of March 31,
	2003			2002
Deferred income tax assets—current	$	7,649,939		$	6,832,108
Deferred income tax liabilities—current		(246,627	)		(75,280	)
Valuation allowance for deferred tax assets		(5,169,653	)		(3,249,532	)

Net	$	2,233,659		$	3,507,296

Deferred income tax assets—noncurrent	$	18,308,400		$	18,631,746
Deferred income tax liabilities—noncurrent		(5,440,000	)		(4,461,123	)
Valuation allowance for deferred tax assets		(7,086,912	)		(9,662,772	)

Net	$	5,781,488		$	4,507,851

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

	As of March 31,
	2003						2002
	Amount			Tax effect			Amount			Tax effect
Current items:
Temporary difference
Unrealized exchange gain	$	(986,509	)	$	(246,627	)	$	(301,119	)	$	(75,280	)
Amortization of organization cost		412			103			90,866			22,717
Allowance for loss on decline in market value and obsolescence of inventories		462,490			115,622			472,371			118,093
Allowance for sales returns and discounts		356,963			89,241			48,607			12,152
Others		161,407			40,352			38,457			9,614
Loss carryforward		7,821,000			1,955,250			13,666,452			3,420,000
Investment tax credits					5,449,371						3,249,532
Valuation allowance					(5,169,653	)					(3,249,532	)

Net				$	2,233,659					$	3,507,296

Non-current items:
Temporary difference
Depreciation	$	(21,759,998	)	$	(5,440,000	)	$	(17,837,568	)	$	(4,459,392	)
Pension		1,807,268			451,817			1,516,480			379,120
Others		10,830			2,707			16,679			4,169
Loss carryforward		7,224,502			1,806,126			4,422,679			1,102,283
Investment tax credits					16,047,750						17,144,443
Valuation allowance					(7,086,912	)					(9,662,772	)

Net				$	5,781,488					$	4,507,851

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

Pursuant to the “Statute for the Establishment and Administration of Science-Based Industrial Park”, the Company was granted several four-year income tax exemption periods with respect to income derived from expansion of operations located in Hsinchu Science-Based Industrial Park. The starting date of the exemption period attributable to the expansion in 1999 has not yet been decided by the Company. The other exemption periods will expire in December 2007.

An enterprise earns an investment tax credit for the amount invested in production equipment, research and development expenditure, employee training expenditure and other related costs. This credit may be applied over a period of five years.

As of March 31, 2003, the Company’s unused investment tax credit is as follows:

Expiration Year	Investment tax credits
2003	$	3,974,393
2004		5,899,913
2005		3,393,150
2006		5,946,406
2007		2,283,259

	$	21,497,121

Under the rules of Income Tax Law, operating loss can be carried forward for 5 years. As of March 31, 2003, the unutilized accumulative loss brought forward amounted to NT$15,046 million, which will expire in 2006 and 2007.

The new Taiwan imputation tax system requires that any undistributed current earnings, on tax basis of a company derived on or after January 1, 1998, be subject to an additional 10% corporate income tax if the earnings are not distributed before a specific time. This 10% additional tax on undistributed earnings paid by the Company can be used as tax credit by shareholders, including foreign shareholders, against the withholding tax on dividends. In addition, the domestic shareholders can claim a proportionate share in the Company’s corporate income tax as tax credit against its individual income tax liability effective 1998.

The ending balance of unappropriated earnings available for 2003 appropriation amounted to NT$8,686 million, of which NT$64 million was earned prior to January 1, 1998.

As of March 31, 2003, the balance of imputation credit account (“ICA”) was NT$92 million. The expected creditable ratio for the appropriation of 2002 retained earnings was 1.07% while the actual creditable ratio for the appropriation of 2001 retained earnings was 1.79%.

(17)

EARNINGS PER SHARE

The calculation of basic and diluted earnings per share, for the three-month periods ended March 31, 2003 and 2002, is disclosed as follows:

	For the three-month period ended March 31,
	2003		2002 (retroactively adjusted)
	(shares expressed in thousands)
Income before income taxes	$	404,332	$	218,308
Net income		402,687		215,982
Effect of dilution:
Employee stock options		—		—
Adjusted income before income taxes assuming dilution		404,332		218,308
Adjusted net income assuming dilution		402,687		215,982
Weighted average number of shares		14,726,503		14,786,324
Effect of dilution:
Employee stock options		37,449		—
Adjusted weighted average number of shares assuming dilution		14,763,952		14,786,324
Earnings per share-basic and diluted (in NTD)
Income before income taxes	$	0.03	$	0.01

Net income	$	0.03	$	0.01

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 three-month period ended March 31, 2003
	Basic			Diluted
	(shares expressed in thousands)
Net income	$	402,687		$	402,687

Outstanding weighted average shares at beginning		15,238,579			15,238,579
Weighted average treasury stock purchased during the period		(10,397	)		(10,397	)
Weighted average employee stock options accounted for under the treasury stock method		—			37,449

Outstanding weighted average shares		15,228,182			15,265,631

Earnings per share (in NTD)
Net income	$	0.03		$	0.03

	For the three- month period ended March 31, 2002
	Basic and diluted
	(shares expressed in thousands)
Net income	$	215,982

Outstanding weighted average shares at beginning		15,315,821
Weighted average treasury stock purchased during the period		(22,147	)

Outstanding weighted average shares		15,293,674

Earnings per share (in NTD)
Net income	$	0.01

5. RELATED PARTY TRANSACTIONS

(1)

Name and Relationship of Related Parties

Name of related parties		Relationship with the Company
UMC Group (USA) (UMC-USA)		Investee company

UMC Japan (UMCJ)		Investee company

DuPont Photomasks Taiwan Ltd. (DPT)		Investee company

Holtek Semiconductor Inc. (Holtek)		Investee company

Faraday Technology Corp. (Faraday)		Investee company

MediaTek Incorporation (MediaTek)		The Company is its supervisor

Industrial Bank of Taiwan Corp. (IBT)		The Company is its major shareholder

Chiao Tung Bank (Chiao Tung)		The Company is its parent company’s director and supervisor

Shin-Etsu Handotai Taiwan Co., Ltd. (Shin-Etsu)		The Company’s investee is its director

(2)

Significant Related Party Transactions

a. Operating revenues

	For the three-month period ended March 31,
	2003			2002
	Amount		Percentage	Amount		Percentage
UMC-USA	$	7,064,406	39	$	4,020,758	33
MediaTek		1,708,418	10		1,958,637	16
Others		2,931,012	16		1,801,734	15

Total	$	11,703,836	65	$	7,781,129	64

The sales to the above related parties were dealt with in the ordinary course of business with the sales price made in the way similar to the sales to third-party customers. The collection period for overseas sales was net 45 days for the related parties and third-party customers, while the terms for domestic sales were month-end 30~60 days for both the related parties as well as the third-party customers.

Purchases

	For the three-month period ended March 31,
	2003			2002
	Amount		Percentage	Amount		Percentage
Shin-Etsu	$	536,742	13	$	607,758	21
Others		39,861	1		60,982	2

Total	$	576,603	14	$	668,740	23

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 purchase from overseas were net 30~90 days for the related parties and third-party suppliers, while the terms for domestic purchase were month-end 30~90 days for the related parties and third-party suppliers.

Notes receivable

	As of March 31,
	2003			2002
	Amount		Percentage	Amount		Percentage
Holtek	$	71,432	41	$	79,966	41
Others		1,221	1		17,591	9

Total	$	72,653	42	$	97,557	50

Accounts receivable, net

	As of March 31,
	2003				2002
	Amount			Percentage	Amount			Percentage
UMC-USA	$	4,262,395		35	$	1,901,826		28
MediaTek		1,246,706		10		1,286,029		19
Others		2,503,081		21		1,267,968		18

Subtotal		8,012,182		66		4,455,823		65

Less: Allowance for sales returns and discounts		(345,606	)			(48,607	)
Less: Allowance for doubtful accounts		(100,237	)			(99,854	)

Net	$	7,566,339			$	4,307,362

Other accounts receivable, net

	As of March 31,
	2003				2002
	Amount			Percentage	Amount			Percentage
UMCJ	$	140,067		12	$	318		—
Others		55,658		5		26,986		5

Subtotal		195,725		17		27,304		5

Less: Allowance for doubtful accounts		(2,218	)			(439	)

Net	$	193,507			$	26,865

Accounts payable

	As of March 31,
	2003			2002
	Amount		Percentage	Amount		Percentage
Shin-Etsu	$	436,018	14	$	518,333	21
Others		18,524	1		32,868	1

Total	$	454,542	15	$	551,201	22

Loans

	For the three-month period ended March 31, 2003
	Maximum balance			Ending balance		Interest rate	Interest expense
	Amount		Month	Ending balance		Interest rate	Interest expense
Chiao Tung	$	868,195	January	$	827,347	2.07% ~ 3.00%	$	4,288
IBT		783,296	January		467,841	2.54% ~ 2.89%		2,022

				$	1,295,188		$	6,310



	For the three-month period ended March 31, 2002
	Maximum balance			Ending balance		Interest rate	Interest expense
	Amount		Month	Ending balance		Interest rate	Interest expense
Chiao Tung	$	1,224,575	January	$	1,198,417	3.88% ~ 4.00%	$	11,963
IBT		998,750	January		953,295	3.81% ~ 3.94%		9,394

				$	2,151,712		$	21,357

Disposal of property, plant and equipment

	For the three-month period ended March 31, 2003
	Item	Proceeds		Gain
UMCJ	Machinery and equipment	$	140,546	$	1,565

The Company had no significant disposal of property, plant and equipment to related parties for the three-month period ended March 31, 2002.

Other transactions

The Company has made several other transactions, including service charges, joint intellectual property development contracts, processing expenditures and commissions etc., with related parties for an approximate total of NT$56 million and NT$38 million for the three-month periods ended March 31, 2003 and 2002, respectively.

Among the transactions, the Company has entered into joint intellectual property development contracts, amounting to approximately NT$1,229 million, with Faraday. As of March 31, 2003, a total amount of NT$356 million was paid. In addition, the Company has purchased approximately NT$133 million and NT$232 million of supplies from DPT during the three-month periods ended March 31, 2003 and 2002, respectively.

ASSETS PLEDGED AS COLLATERAL

	As of March 31,
	2003		2002		Subject of collateral
Land	$	452,915	$	452,915	Long-term loans
Buildings		2,495,015		3,664,502	Long-term loans
Machinery and equipment		17,360,803		28,815,987	Long-term loans

Total	$	20,308,733	$	32,933,404

COMMITMENTS AND CONTINGENT LIABILITIES

(1)

The Company’s unused letters of credit for imports of machinery and equipment were approximately NT$327 million as of March 31, 2003.

(2)

The Company has entered into contracts, amounting to approximately NT$15.7 billion, with third parties for rights to use patents registered by the third parties. The contract period is from 1995 to 2011. Royalty payables for the consecutive 5 years starting from April 1, 2003 are approximately NT$2.7 billion, NT$1.3 billion, NT$1.3 billion, NT$1.2 billion, and NT$1.3 billion, respectively.

(3)

The Company has signed several construction contracts for the expansion of its factory. As of March 31, 2003, these construction contracts amounted to approximately NT$1.05 billion and the unaccrued portion of the contracts was approximately NT$0.2 billion.

(4)

On October 27, 1997, Oak Technology Inc. (“Oak”) filed a complaint seeking damages of US$750 million in the Northern District of California alleging that the Company breached a Settlement Agreement entered on July 31, 1997 with respect to a settlement of a dispute between the Company and Oak concerning certain CD ROM controller products made by the Company and a patent owned by Oak. The Company denied Oak’s allegations and on December 24, 1997, filed its answer and affirmative defenses refuting Oak’s claims. Based on the allegations that it is Oak which has breached the Settlement, the Company simultaneously filed a counterclaim against Oak, seeking damages and a return of the millions paid to Oak under the Settlement. In addition, the Company further seeks a declaration that the Oak patent is invalid and/or unenforceable. Though Oak filed a complaint later with the International Trade Commission (“ITC”) repeating the allegations made in the District Court, both the ITC and the Court of Appeals for the Federal Circuit issued a ruling affirming that there was no infringement and no violation.

Oak filed enforceable commitments that it would no longer seek recoveries in connection with the Oak patent and accordingly, the District Court concluded there was no longer dispute between Oak and United Microelectronics on the patent and the Company’s claim for a declaration of invalidity and unenforceability will be dismissed. The Company intends to continue to defend these matters vigorously. Furthermore, the management does not believe the Oak complaints will have any material adverse impact on the Company’s operations and/or financial performance.

(5)

The Company entered into several operating lease contracts for land. Future minimum lease payments under those leases with original maturities, which extend for more than one year as of March 31, 2003, are as follows:

For the twelve-month period ended		Amount (in billion NTD)
March 31, 2004		$0.12
March 31, 2005		0.12
March 31, 2006		0.12
March 31, 2007		0.11
March 31, 2008		0.10
April 1, 2008 and thereafter		0.82

Total		$1.39

(6)

The Company entered into several wafer-processing contracts with its main clients. According to the contracts, the Company shall guarantee processing capacity, while the clients make deposits to the Company. In case the clients’ orders do not meet the capacity

guaranteed, the client needs to pay the Company penalties.

(7)

As a condition precedent to the making of the loan contemplated by a US$600 million Amortizing Term Loan Facility Agreement among UMCi Pte. Ltd. (UMCi), a subsidiary of the Company, and several financial institutions, the Company has provided a letter of undertaking to the financial institutions and Citicorp Investment Bank (Singapore) Ltd., the facility agent, to undertake that:

The Company shall continue to own and control, directly or indirectly, a minimum of 40% of the total issued and outstanding shares of UMCi. The Company shall also provide technical support to UMCi and maintain management control with no less than half of the seats of the board of directors.

The Company shall take necessary actions to ensure UMCi to have at least US$600 million of issued and paid-in capital in cash by December 31, 2003, to make investments necessary to complete the 300mm fab plant on time, and to meet all the obligations under the Facility Agreement.

SIGNIFICANT DISASTER LOSS

None.

SIGNIFICANT SUBSEQUENT EVENT

None.

10.

OTHERS

(1)

Certain comparative amounts have been reclassified to conform to the current period’s presentation.

(2)

Financial instruments

	As of March 31,
	2003				2002
Financial Assets	Book Value		Fair Value		Book Value		Fair Value
Cash and cash equivalents	$	58,570,264	$	58,570,264	$	60,812,323	$	60,812,323
Marketable securities		2,840,920		2,854,425		49,900		93,443
Receivables		13,536,108		13,536,108		7,676,999		7,676,999
Long-term investments		60,712,395		71,560,954		57,638,794		140,379,371

Financial Liabilities
Payables		12,063,136		12,063,136		17,839,440		17,839,440
Bonds payable (current portion included)		46,660,148		47,596,581		39,616,440		42,085,339
Long-term loans (current portion included)		12,130,908		12,130,908		18,024,608		18,024,608

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

The carrying amounts of short-term financial assets and liabilities (excluding marketable securities) approximate fair values due to their short maturities.

ii.

The fair values of marketable securities and long-term investments are based on the market value of the securities or, if market value is unavailable, the net equities of the investee companies are used as fair values.

iii.

The fair value of bonds payable is determined by the market value.

iv.

The carrying value of long-term loans approximates the fair value as the loans bear floating rates.

(3)

The Company held several credit-linked deposits principally for the earning of interest income. Details are disclosed as follows:

Principal amount in original currency (in thousands)

	As of March 31,
	2003		2002
Credit-linked deposits referenced to	Principal amount		Principal amount
Domestic bonds (in NTD)	$	200,000	$	—
Euro convertible bonds (in NTD)		100,000		—
Euro convertible bonds (in USD)		147,500		70,000
Euro convertible bonds (in JPY)		2,000,000		1,000,000

Credit Risk

The counter parties of the above investments are major international financial institutions. The repayment in full of these deposits is subject to the non-occurrence of one or more credit events, which are referenced to the entities’ fulfillment of their own obligations as well as repayment of their corporate bonds. Upon the occurrence of one or more of such credit events, the Company may receive nil or less than full amount of these deposits. The Company has undertaken to minimize the credit risk by selecting reference entities with high credit ratings.

Liquidity Risk

Though early withdrawal is not allowed for the above credit-linked deposits unless called by the issuer, the anticipated liquidity risk is low as most of the contracts are mature within one year.

Market Risk

There is no market risk for the above investments except for the fluctuations in the exchange rates of US dollars and Japanese Yen to NT dollars.

11.

ADDITIONAL DISCLOSURES

(1)

The followings are the additional disclosures for United Microelectronics and its affiliates pursuant to ROC Securities and Futures Commission requirements:

Loans to others attributed to financial activities as of March 31, 2003: Please see Attachment-1.

The endorsements and guarantees provided to others as of March 31, 2003: Please see Attachment-2.

The ending balance of securities held as of March 31, 2003: Please see Attachment-3.

The cumulative buying or selling of one specific security exceeding the lower of NT$100 million or 20 percent of the capital stock for the three-month period ended March 31, 2003: Please see Attachment-4.

Acquisition of real estate with an amount exceeding the lower of NT$100 million or 20 percent of capital stock for the three-month period ended March 31, 2003: Please see Attachment-5.

Disposal of real estate with an amount exceeding the lower of NT$100 million or 20 percent of capital stock for the three-month period ended March 31, 2003: Please see Attachment-6.

Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of capital stock for the three-month period ended March 31, 2003: Please see Attachment-7.

Receivables from related parties exceeding the lower of NT$100 million or 20 percent of capital stock as of March 31, 2003: Please see Attachment-8.

Related information on investee companies as of March 31, 2003: Please see Attachment-9.

Financial instruments: Please see Note 10.

(2)

Investment in Mainland China

None.

ATTACHMENT- 1 (Loans to others attributed to financial activities as of March 31, 2003) (Amounts in thousand NTD unless otherwise stated)

No.

Name of the
lending
company

Name of the
borrowers

Accounts
name

The highest balance
during the three-
month period ended

March 31, 2003

Ending
balance

Interest
rate

Nature
of
financing

Yearly amount
of sales to
(purchase from)
the borrower

Reason of
lending

Bad debt
allowance
provided

Collateral

Value of
collateral

Credit limit
set up by
the Company
for its
respective
borrower

Ceiling
of fund
financing

UMC Group (USA)

Employees

Receivable from
employees’ loans

USD 876K

7.00

Note 1

None

Employee loan

—

Securities

Higher than
loan amount

N/A

UMCi Pte. Ltd.

Infineon Technologies,
Asia Pacific Pte Ltd.

Other receivable

USD 55,000K

Note 2

Note 1

None

Company’s loan

—

None

N/A

Note 1: Need for short-term financing.

Note 2: 1.32%, based on 3-month LIBOR.

ATTACHMENT-2 (The endorsements and guarantees provided by the Company to others as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

No.

Guarantor

Guarantee

Relationship
with the
Company

Limit of
guarantee
for such
party

The highest outstanding

guarantee amount during

the three-month period

ended March 31,2003

Outstanding
guarantee amount
at March 31, 2003

Amount of
guarantee with
collateral placed

Ratio of accumulated
guarantee amount to
net value of the Company

Ceiling of the

outstanding
guarantee

for the
respective party

None

ATTACHMENT-3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of
marketable
securities

Name of marketable securities

Relationship of the
issuers with the
Company

General ledger accounts

Number of
shares/
units (in
thousands)

Book value

Percentage

Market
value

Shares as
collateral
(in
thousands)

United Microelectronics Corporation

Convertible bonds

China Development Financial Holding
Corporation

None

Short-term investment

60,000

2,052,000

N/A

2,068,105

None

Convertible bonds

SpringSoft Inc.

None

Short-term investment

12,000

418,800

N/A

416,520

None

Convertible bonds

King Yuan Electronics Co., Ltd.

None

Short-term investment

—

370,120

N/A

369,800

None

Stock

UMC Group (USA)

Investee company

Long-term investment

16,438

469,865

100.00

N/A

None

Stock

United Foundry Service, Inc.

Investee company

Long-term investment

2,005

92,596

100.00

N/A

None

Stock

UMC Capital Corporation

Investee company

Long-term investment

30,000

1,022,326

100.00

N/A

None

Stock

United Microelectronics Corp.
(Samoa)

Investee company

Long-term investment

500

4,929

100.00

N/A

None

Stock

United Microelectronics (Europe)
B.V.

Investee company

Long-term investment

199,830

100.00

N/A

None

Stock

Fortune Venture Capital Corporation

Investee company

Long-term investment

299,994

2,990,577

99.99

N/A

None

Stock

Hsun Chieh Investment Co., Ltd.

Investee company

Long-term investment

1,417,294

10,354,482

99.97

N/A

None

Stock

United Microdisplay Optronics Corp.

Investee company

Long-term investment

76,499

659,722

85.00

N/A

None

Stock

Pacific Venture Capital Co., Ltd.

Investee company

Long-term investment

30,000

307,407

49.99

N/A

None

Stock

UMCi Pte. Ltd.

Investee company

Long-term investment

211,871

7,014,331

49.74

N/A

None

Stock

UMC Japan

Investee company

Long-term investment

484

8,033,040

47.59

8,689,087

None

Stock

DuPont Photomasks Taiwan Ltd.

Investee company

Long-term investment

99,748

1,126,882

45.51

N/A

None

Stock

Unitech Capital Inc.

Investee company

Long-term investment

21,000

732,911

42.00

N/A

None

Stock

Novatek Microelectronics Corp.

Investee company

Long-term investment

74,911

1,298,692

25.93

4,756,823

None

Stock

Holtek Semiconductor Inc.

Investee company

Long-term investment

44,854

582,067

25.61

1,088,244

None

Fund

Pacific United Technology, L.P.

None

Long-term investment

—

34,600

25.00

N/A

None

Stock

Integrated Technology Express Inc.

Investee company

Long-term investment

24,111

325,390

24.58

545,033

None

Stock

Unimicron Technology Corp.

Investee company

Long-term investment

168,930

3,063,883

23.81

2,631,757

None

Stock

Applied Component Technology
Corp.

Investee company

Long-term investment

11,512

86,541

22.57

123,234

None

Stock

Faraday Technology Corp.

Investee company

Long-term investment

33,710

609,233

19.71

2,684,792

None

Stock

PixTech, Inc.

None

Long-term investment

9,883

—

17.63

995

None

Stock

Integrated Telecom Express, Inc.

Investee company

Long-term investment

7,000

583,482

16.42

455,982

None

GDS and stock

Silicon Integrated Systems Corp.

Investee company

Long-term investment

216,435

5,601,339

16.18

5,438,045

None

Stock

AMIC Technology (Taiwan), Inc.

Investee company

Long-term investment

16,200

56,042

13.62

N/A

None

Stock

Archtek Telecom Corporation

Investee company

Long-term investment

7,100

—

13.24

N/A

None

Stock

MediaTek Incorporation

The Company is
its supervisor

Long-term investment

60,456

1,206,670

13.13

16,222,169

None

Stock

AU Optronics Corp.

The Company is
its director and
supervisor

Long-term investment

455,276

6,759,855

11.37

9,565,354

None

Stock

Sino-Aerospace Investment Corp.

None

Long-term investment

28,500

—

11.11

N/A

None

ATTACHMENT-3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of
marketable
securities

Name of marketable securities

Relationship of the issuers
with the Company

General ledger accounts

Number of
shares/
units (in
thousands)

Book
value

Percentage

Market
value

Shares as
collateral
(in
thousands)

United Microelectronics Corporation

Fund

Pacific Technology Partners, L.P.

None

Long-term investment

—

238,628

9.85

N/A

None

Stock

Aptos Corp.

None

Long-term investment

1,772

30,302

9.68

N/A

None

Stock

Vialta, Inc.

None

Long-term investment

8,360

622,835

8.90

116,371

None

Stock

United Industrial Gases Co., Ltd.

None

Long-term investment

13,185

146,250

8.44

N/A

None

Stock

TECO Nanotech Co., Ltd.

None

Long-term investment

19,417

—

8.05

N/A

None

Stock

Subtron Technology Co., Ltd.

None

Long-term investment

16,000

240,000

7.41

N/A

None

Stock

Industrial Bank of Taiwan Corp.

The Company is its major
shareholder

Long-term investment

119,425

1,150,000

5.00

N/A

None

Stock

TECO Electric & Machinery Co.,
Ltd.

The Company is its director
and supervisor

Long-term investment

77,069

1,535,099

4.02

845,217

None

Stock

Billionton Systems Inc.

None

Long-term investment

1,538

30,948

3.93

32,345

None

Stock

Mega Financial Holding
Company

The Company is its director
and supervisor

Long-term investment

91,901

3,108,655

0.83

1,505,886

None

Stock

Premier Image Technology
Corporation

None

Long-term investment

2,940

27,964

0.64

141,867

None

Stock

SAMPO Corporation

None

Long-term investment

5,158

65,022

0.50

60,510

None

Preferred stock

Tonbu, Inc.

None

Long-term investment

938

—

N/A

None

Preferred stock

Taiwan High Speed Rail
Corporation

None

Long-term investment

30,000

300,000

—

N/A

None

Hsun Chieh Investment Co., Ltd.

Stock

Shanghai Fudan Microelectronics
Co., Ltd

None

Short-term investment

7,280

20,530

1.17

20,530

None

Stock

Sigence Inc.

Investee company

Long-term investment

1,880

18,795

94.00

N/A

None

Stock

Chariotek Inc.

Investee company

Long-term investment

2,850

28,500

47.50

N/A

None

Stock

Afa Technology, Inc.

Investee company

Long-term investment

2,365

20,567

47.30

N/A

None

Stock

Star Semiconductor Corp.

Investee company

Long-term investment

2,203

21,659

46.82

N/A

None

Stock

Ubit Technology Inc.

Investee company

Long-term investment

1,990

19,900

39.80

N/A

None

Stock

VistaPoint, Inc.

Investee company

Long-term investment

2,852

18,294

35.65

N/A

None

Stock

UC Fund II

Investee company

Long-term investment

5,000

164,162

35.45

N/A

None

Stock

VastView Technology Inc.

Investee company

Long-term investment

5,210

62,215

34.73

N/A

None

Stock

Accelerated Communications,
Inc.

Investee company

Long-term investment

10,000

99,972

33.33

N/A

None

Stock

RiRa Electronics Inc.

Investee company

Long-term investment

6,499

43,355

32.50

N/A

None

Stock

United Radiotek Incorporation

Investee company

Long-term investment

2,937

21,796

29.37

N/A

None

Stock

Ayuttha Technology Corp.

Investee company

Long-term investment

2,730

40,950

27.30

N/A

None

Stock

Wiseware Technology
Corpporation

Investee company

Long-term investment

3,750

37,500

25.00

N/A

None

Stock

High Bandwidth Access, Inc

Investee company

Long-term investment

7,213

43,710

20.04

N/A

None

Stock

Giga Solution Tech. Co., Ltd.

The Company is its director

Long-term investment

8,750

105,000

19.44

N/A

None

ATTACHMENT - 3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of
marketable
securities

Name of marketable securities

Relationship of the issuers
with the Company

General ledger accounts

Number of
shares/units
(in thousands)

Book value

Percentage

Market value

Shares as
collateral
(in thousands)

Hsun Chieh Investments Co., Ltd.

Stock

Harvatek Corp.

Investee company

Long-term investment

15,774

297,073

21.24

796,152

None

Stock

Patentop, Ltd.

Investee company

Long-term investment

720

11,688

18.00

N/A

None

Stock

Kits On Line Technology Corp.

The Company is its director

Long-term investment

3,200

38,656

16.41

N/A

None

Stock

Aptos Corp.

None

Long-term investment

3,000

81,774

16.39

N/A

None

Stock

InComm Technologies Co., Ltd.

The Company is its director

Long-term investment

3,200

44,480

16.00

N/A

None

Stock

Advance Materials Corporation

Investee company

Long-term investment

14,994

166,443

15.78

N/A

None

Stock

Everglory Resource Technology Co., Ltd.

None

Long-term investment

3,700

74,000

15.14

N/A

None

Stock

Enovation Group Inc.

None

Long-term investment

1,148

11,809

14.34

N/A

None

Stock

Unimicron Technology Corp.

Investee company to UMC

Long-term investment

88,440

1,566,383

12.47

1,377,799

None

Stock

Integrated Photonics, Inc.

None

Long-term investment

300

—

11.46

N/A

None

Stock

SerComm Corporation

Investee company

Long-term investment

8,367

173,513

11.13

236,587

None

Stock

Golden Technology Venture Capital Investment Corp.

The Company is its director

Long-term investment

8,000

80,000

10.67

N/A

None

Stock

PrintTek International Inc.

The Company is its director
and supervisor

Long-term investment

3,000

30,000

10.53

N/A

None

Stock

NCTU Spring I Technology Venture Capital
Investment Corp.

None

Long-term investment

4,284

43,482

10.06

N/A

None

Stock

Archtek Telecom Corporation

Investee company to UMC

Long-term investment

5,300

66,886

9.89

N/A

None

Stock

RF Integration Corporation

The Company is its director

Long-term investment

3,900

98,610

9.76

N/A

None

Stock

Ascend Semiconductor Corp.

The Company is its director
and supervisor

Long-term investment

1,440

14,400

9.00

N/A

None

Stock

Union Technolgy Corporation

None

Long-term investment

1,800

18,000

9.00

N/A

None

Stock

Vialta, Inc.

None

Long-term investment

8,360

625,622

8.90

116,371

None

Stock

Fortune Semiconductor Corporation

The Company is its director

Long-term investment

1,700

71,500

8.72

N/A

None

Stock

ProSys Technology Integration, Inc.

None

Long-term investment

1,200

4,258

6.70

N/A

None

Stock

NCTU Spring Venture Capital Co., Ltd.

The Company is its director

Long-term investment

2,000

20,000

6.28

N/A

None

Stock

Faraday Technology Corp.

Investee company to UMC

Long-term investment

10,085

1,198,849

5.90

803,212

None

Stock

Advanced Microelectronic Products, Inc.

None

Long-term investment

7,420

126,000

5.50

N/A

None

Stock

Cosmos Technology Venture Capital Investment Corp.

The Company is its director

Long-term investment

4,000

40,000

5.03

N/A

None

Stock

Parawin Venture Capital Corp.

The Company is its director

Long-term investment

5,000

50,000

5.00

N/A

None

Stock

Leadtek Resarch Inc.

None

Long-term investment

5,707

99,875

4.78

100,363

None

Stock

Coretronic Corporation

The Company is its director
and supervisor

Long-term investment

14,865

276,192

4.59

378,429

None

Stock

UMC Japan

Investee company to UMC

Long-term investment

777,392

4.41

805,102

None

ATTACHMENT-3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of

marketable

securities

Name of marketable securities

Relationship of the issuers with the

Company

General ledger accounts

Number of

shares/units

(in thousands)

Book
Value

Percentage

Market value

Shares as

collateral

(in
thousands)

Hsun Chieh Investment Co., Ltd.

Fund

Taiwan Asia Pacific Venture Fund

None

Long-term investment

115

29,295

4.15

N/A

None

Stock

IBT Venture Co.

The Company is its director

Long-term investment

9,000

90,000

3.81

N/A

None

Stock

Ultra Chip Inc.

None

Long-term investment

2,000

38,000

3.70

N/A

None

Stock

Subtron Technology Co., Ltd.

The Company is its director and supervisor

Long-term investment

7,800

99,000

3.61

N/A

None

Stock

United Microelectronics Corporation

Investor company

Long-term investment

484,045

29,592,654

3.13

9,810,149

None

Stock

Prokia Technology Co., Ltd.

None

Long-term investment

4,000

48,000

3.13

N/A

None

Stock

Hantek Technology Co., Ltd.

None

Long-term investment

1,623

42,330

2.70

N/A

None

Stock

Integrated Telecom Express, Inc.

Investee company to UMC

Long-term investment

1,113

132,726

2.61

72,501

None

Stock

Sheng-Hua Venture Capital Corp.

None

Long-term investment

5,000

50,000

2.50

N/A

None

Stock

Holtek Semiconductor Inc.

Investee company to UMC

Long-term investment

3,797

93,801

2.17

92,123

None

Stock

Pixart Imaging Inc.

None

Long-term investment

780

10,140

1.95

N/A

None

Stock

Largan Optoelectronics, Co., Ltd.

The Company is its director

Long-term investment

1,235

79,989

1.45

252,006

None

Stock

TECO Nanotech Co., Ltd.

None

Long-term investment

2,926

—

1.21

N/A

None

Stock

Ingenus Corp.

None

Long-term investment

240

29,812

0.62

None

Stock

Novatek Microelectronics Corp.

Investee company to UMC

Long-term investment

1,500

100,066

0.52

95,250

None

Stock

Mega Financial Holding Company

None

Long-term investment

57,249

1,882,974

0.52

938,088

None

Stock

King Yuan Electronics Co., Ltd.

None

Long-term investment

1,600

70,000

0.35

21,128

None

Stock

Lattice Semiconductor Corporation

None

Long-term investment

342

45,704

0.30

88,352

None

Stock

Princeton Technology Corporation

None

Long-term investment

211

9,839

0.23

10,440

None

Stock

Averlogic Corporation

None

Long-term investment

1,391

0.19

2,086

None

Stock

Amkor Technology, Inc.

None

Long-term investment

218

101,696

0.13

37,964

None

Stock

Broadcom Communications

None

Long-term investment

7,092

—

1,505

None

Stock

Chip Express Corporation

None

Long-term investment

2,667

68,198

—

N/A

None

Stock

AEM Technology Inc.

None

Long-term investment

1,760

—

N/A

None

Stock

Alpha & Omega Semiconductor Inc.

None

Long-term investment

1,500

46,883

—

N/A

None

Stock

Aurora Systems, Inc.

None

Long-term investment

550

72,226

—

N/A

None

Stock

ChinaYES InfoMedia (Cayman), Inc.

None

Long-term investment

10,000

63,146

—

N/A

None

Stock

Formerica International Holding, Inc.

The Company is its director

Long-term investment

2,000

30,898

—

N/A

None

Stock

ForteMedia, Inc.

None

Long-term investment

4,000

65,000

—

N/A

None

Stock

LightCross, Inc.

None

Long-term investment

3,896

206,880

—

N/A

None

Stock

Linden Technologies, Inc.

None

Long-term investment

300

92,385

—

N/A

None

Stock

NetEmpower Software Technologies, Inc.

None

Long-term investment

1,500

—

N/A

None

Stock

Netlogic Microsystems, Inc.

None

Long-term investment

100

3,195

—

N/A

None

ATTACHMENT - 3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of marketable
securities

Name of marketable
securities

Relationship of the
issuers with the
Company

General ledger
accounts

Number of
shares/units
(in thousands)

Book value

Percentage

Market value

Shares as collateral
(in thousands)

Hsun Chieh Investment Co., Ltd.

Stock

Primarion, Inc.

None

Long-term investment

500

38,816

—

N/A

None

Stock

SandCraft, Inc.

None

Long-term investment

450

43,063

—

N/A

None

Stock

Tonbu, Inc.

None

Long-term investment

2,000

—

N/A

None

Stock

Triscend Corp.

None

Long-term investment

360

17,409

—

N/A

None

Fund

VenGlobal Capital Fund III, L.P.

None

Long-term investment

—

33,195

—

N/A

None

UMC Capital Corporation

Stock

UMC Capital (USA)

Investee company

Long-term investment

200

USD 234K

100.00

N/A

None

Stock

Corrent Corp.

None

Long-term investment

1,732

USD 1,473K

—

N/A

None

Stock

LightCross, Inc.

None

Long-term investment

649

USD 1,000K

—

N/A

None

Stock

MaXXan Systems, Inc.

None

Long-term investment

1,655

USD 1,000K

—

N/A

None

Stock

Leda Systems, Inc.

None

Long-term investment

1,600

USD 2,506K

—

N/A

None

Stock

Virtual Silicon Technology, Inc.

None

Long-term investment

619

USD 1,000K

—

N/A

None

Stock

Programmable Silicon Solutions

None

Long-term investment

216

USD 540K

—

N/A

None

Stock

Integrated Optics Comm. Corp.

None

Long-term investment

2,000

USD 2,000K

—

N/A

None

Stock

Aicent Technology, Inc.

The Company is its director

Long-term investment

2,000

USD 1,000K

—

N/A

None

Stock

Spreadtrum Communications, Inc.

The Company is its director

Long-term investment

1,333

USD 1,000K

—

N/A

None

Stock

WIS Technologies, Inc.

The Company is its director

Long-term investment

12,399

USD 2,000K

—

N/A

None

Stock

Siscon 7, Inc.

The Company is its director

Long-term investment

1,203

USD 4,000K

—

N/A

None

Stock

GCT Semiconductor, Inc.

None

Long-term investment

1,571

USD 1,000K

—

N/A

None

Fortune Venture Capital Corporation

Stock

Aptos (Taiwan) Corporation

Investee company

Long-term investment

43,705

431,222

26.49

N/A

None

Stock

Davicom Semiconductor, Inc.

Investee company

Long-term investment

12,200

117,206

22.96

N/A

None

Stock

Pixart Imaging Inc.

The Company is its director

Long-term investment

6,530

105,409

16.32

N/A

None

Stock

Thin Film Module, Inc.

The Company is its director and supervisor

Long-term investment

5,287

52,870

13.91

N/A

None

Stock

Advance Materials Corporation

Investee company

Long-term investment

12,800

142,194

13.47

N/A

None

Stock

AMIC Technology (Taiwan), Inc.

Investee company to UMC

Long-term investment

15,259

140,130

12.83

N/A

None

Stock

Urex Precision, Inc.

None

Long-term investment

2,537

—

12.68

N/A

None

Stock

High Bandwidth Access, Inc

Investee company

Long-term investment

4,308

45,017

11.97

N/A

None

Stock

Epitech Corporation

The Company is its director and supervisor

Long-term investment

6,137

73,916

11.16

N/A

None

Stock

Integrated Telecom Express, Inc.

Investee company to UMC

Long-term investment

4,000

334,004

9.38

260,561

None

Stock

Shin-Etsu Handotai Taiwan Co., Ltd.

The Company is its director

Long-term investment

10,500

105,000

7.00

N/A

None

ATTACHMENT - 3 (The ending balance of securities held by the Company as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

March 31, 2003

Types of marketable
securities

Name of marketable
securities

Relationship of the
issuers with the
Company

General ledger
accounts

Number of
shares/units
(in thousands)

Book value

Percentage

Market value

Shares as collateral
(in thousands)

Fortune Venture Capital Corporation

Stock

Trident Technologies, Inc.

The Company is its director and supervisor

Long-term investment

1,350

—

6.75

N/A

None

Stock

ProSys Technology Integration, Inc

None

Long-term investment

1,200

4,258

6.70

N/A

None

Fund

Iglobe Partners Fund, L.P.

None

Long-term investment

—

80,603

6.30

N/A

None

Stock

Programmable Microelectronics (Taiwan) Corp.

None

Long-term investment

3,392

33,920

6.17

N/A

None

Stock

Averlogic Corporation

The Company is its director and supervisor

Long-term investment

1,148

24,820

5.58

59,840

None

Stock

Vialta, Inc.

None

Long-term investment

4,180

313,205

4.45

58,186

None

Stock

Archtek Telecom Corporation

Investee company to UMC

Long-term investment

1,800

22,716

3.36

N/A

None

Stock

CTS Computer Technology System Corp.

None

Long-term investment

1,717

—

2.04

N/A

None

Stock

Monterey Design Systems Inc.

None

Long-term investment

394

34,201

1.23

N/A

None

Fund

Crystal Internet Venture Fund II

None

Long-term investment

—

41,757

0.99

N/A

None

Stock

Cadence Design Systems, Inc.

None

Long-term investment

965

7,342

0.36

24,073

None

Stock

United Microelectronics Corporation

Investor company

Long-term investment

17,633

171,857

0.11

357,375

None

Stock

SpringSoft Inc.

None

Long-term investment

1,621

0.10

6,317

None

Stock

Triscend Corporation

The company is its director

Long-term investment

3,500

469,902

—

N/A

None

Stock

Aurora Systems, Inc.

None

Long-term investment

5,133

308,957

—

N/A

None

Stock

Systematic Designs International Inc.

None

Long-term investment

1,300

—

N/A

None

Stock

SiRF Technology Holdings, Inc.

None

Long-term investment

875

119,436

—

N/A

None

Stock

Alpha & Omega Semiconductor Inc.

None

Long-term investment

1,500

46,313

—

N/A

None

Stock

Velio Communications, Inc.

None

Long-term investment

110

30,817

—

N/A

None

Stock

Arcadia Design Systems, Inc.

None

Long-term investment

162

26,204

—

N/A

None

Stock

EPIC Technologies Inc.

None

Long-term investment

—

N/A

None

Stock

Rise Technology Inc.

None

Long-term investment

500

—

N/A

None

Stock

The 3CX U.S.A.

None

Long-term investment

513

—

N/A

None

UMC Japan

Bond

Morgan Stanley Repackage Bond

None

Long-term investment

—

¥2,000,000K

—

N/A

None

ATTACHMENT-4 (The cumulative buying or selling of one specific security exceeding the lower of NT$100 million or 20 percent of the capital stock for the three-month period ended March 31,2003)

(Amount in thousand NTD unless otherwise stated)

		Beginning balance				Addition			Disposal								Ending balance
Types of marketable securities	Name of the securities	Number of shares (in thousands)	Amount			Number of shares (in thousands)	Amount		Number of shares (in thousands)	Amount			Cost			Gain (Loss) from disposal	Number of shares (in thousands)	Amount

United Microelectronics Corporation

Convertible bonds	King Yuan Electronics Co., Ltd.	—		—		—	370,120		—		—			—		—	—		370,120
Stock	UMC Japan	479		7,857,204		5	120,560		—		—			—		—	484		8,033,040	(Note 1)
GDS and stock	Silicon Integrated Systems Corp.	48,483		1,267,580		167,952	4,392,733		—		—			—		—	216,435		5,601,339	(Note 2)
Stock	Taiwan High Speed Rail Corporation	—		—		30,000	300,000		—		—			—		—	30,000		300,000
Stock	SAMPO Corporation	17,773		224,044		—	—		12,615		179,695			159,022		20,673	5,158		65,022

Hsun Chieh Investment Co., Ltd.

Stock	Novatek Microelelctronics Corp.	—		—		1,500	100,066		—		—			—		—	1,500		100,066
Stock	Smart Idea Holding Limited	6,000		205,069		—	—		6,000		211,226			205,069		6,157	—		—

UMC Japan

Bond	Morgan Stanley Repackage Bond	—	¥	3,000,000	K	—	—		—	¥	1,000,000	K	¥	1,000,000	K	—	—	¥	2,000,000	K

UMC Capital

Stock	Silicon 7, Inc.	—		—		1,203	USD4,000	K	—		—			—		—	1,203		USD4,000	K

Note1:

The ending balance includes long-term equity investment income of NT$77,072K, unrealized loss in long-term investment of NT$(1,945K) and cumulative translation adjustment of NT$(19,851K).

Note2:

The ending balance includes long-term equity investment loss of NT$(111,910K), investment due to unproportionate changes in ownership of NT$54,044K, unrealized loss in long-term investment of NT$(1,107K) and cumulative translation adjustment of NT$(1K).

ATTACHMENT - 5 (Acquisition of real estate with an amount exceeding the lower of NT$100 million or 20 percent of the capital stock for the first quarter of 2003) (Amount in thousand NTD unless otherwise stated)

Name of the properties

Date of transaction

Transaction
amount

Status of
payment

Counter party

Relationship with
the Company

Original owner who
sold the property to
the counter party

Relationship of the
original owner
with the Company

Date of the
original
transaction

Amount of
the original
transaction

Bases or references used
in deciding the price

Other
commitments

United Microelectronics Corporation

Recreation Center

2003.03.04

131,031

not fully
paid

Yih Shin
Constrution
Co.,Ltd.

—

cost

2003.03.04

ATTACHMENT - 6 (Disposal of real estate with an amount exceeding the lower of NT$100 million or 20 percent of the capital stock for the three-month period ended March 31, 2003) (Amount in thousand NTD unless otherwise stated)

Names of the properties

Date of transaction

Acquisition date
of the properties

Book value

Transaction
amount

Status of
payment
receiving

Gain/Loss on
disposal

Counter party

Relationship
with the
Company

Reason of disposal

Bases or references
used in deciding the
price

Other
commitments

None

ATTACHMENT-7( Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of the capital stock for the three-month period ended March 31, 2003) (Amount in thousand NTD unless otherwise stated)

		Transactions				Notes & accounts receivable (payable)
Name of related parties transactions	Relationship with the Company	Purchase (Sales)	Amount	Percentage of purchase (sales)	Term	Balance	Percentage of account

United Microelectronics Corporation

UMC Group (USA)	Investee company	Sales	7,064,406	39.47	45days	4,262,395	33.06
United Microelectronics (Europe) B.V.	Investee company	Sales	1,241,870	6.94	45days	1,195,981	9.28
Integrated Technology Express Inc.	Investee company	Sales	105,017	0.59	45days	70,667	0.55
Novatek Microelectronics Corp.	Investee company	Sales	723,195	4.04	45days	467,700	3.63
Faraday Technology Corp.	Investee company	Sales	259,495	1.45	45days	191,861	1.49
AMIC Technology (Taiwan) Inc.	Investee company	Sales	197,504	1.10	45days	142,752	1.11
MediaTek Incorporation	The Company is its supervisor	Sales	1,708,418	9.54	45days	1,246,706	9.67
Shin—Etsu Handotai Taiwan Co., Ltd.	The Company’s investee is its director	Purchase	536,742	13.49	60 ~ 90 days	436,018	14.48

UMC Group (USA)

United Microelectronics Corporation	Investor company	Purchase	USD 200,919K	100.00	Net 55 Days	USD 122,801K	100.00

ATTACHMENT-8 (Receivable from related parties exceeding the lower of NT$100 million or 20 percent of capital stock as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

		Balance of receivable from related party					Overdue receivable
Name of the counter party	Relationship with the counter party	Notes receivable	Accounts receivable	Other receivables	Amount	Turnover rate (times)	Amount	Collection	Subsequent received amount	Bad debt allowance provided
United Microelectronics Corporation

UMC Group (USA)	Investee company	—	4,262,395	8	4,262,403	7.49	—	Credit Collecting	901,374	42,540
United Microelectronics (Europe) B.V.	Investee company	—	1,195,981	—	1,195,981	5.71	286,002	Credit Collecting	363,822	14,790
UMC Japan	Investee company	—	—	140,067	140,067	—	109	Credit Collecting	—	1,408
Novatek Microelectronics Corp.	Investee company	—	467,700	750	468,450	6.33	—	Credit Collecting	8	4,673
Holtek Semiconductor Inc.	Investee company	71,432	54,204	—	125,636	2.35	—	Credit Collecting	38,952	542
Faraday Technology Corp.	Investee company	—	191,861	6	191,867	5.27	2,070	Credit Collecting	9	1,935
AMIC Technology (Taiwan) Inc.	Investee company	—	142,752	110	142,862	5.76	931	Credit Collecting	71	1,434
MediaTek Incorporation	The Company is its supervisor	—	1,246,706	—	1,246,706	5.10	32,977	Credit Collecting	639,532	12,770

ATTACHMENT - 9 (Related information on invested companies as of March 31, 2003) (Amount in thousand NTD unless otherwise stated)

			Initial Investment		Shares held by the Company			The net income (loss) of the investee company
Invested company	Address	Main business scopes	Ending balance	Beginning balance	Number of shares (in thousands)	Percentage	Book value	The net income (loss) of the investee company		The gain (loss) recognized

United Microelectronics Corporation

UMC Group (USA)	Sunnyvale, California, USA	IC Sales	USD16,438K	USD16,438K	16,438	100.00	469,865	USD(184K	)	(9,505	)
United Foundry Service, Inc.	Sunnyvale, California, USA	Supervising and monitoring group projects	USD2,005K	USD2,005K	2,005	100.00	92,596	USD39K		1,353
UMC Capital Corporation	Cayman, Cayman Islands	Investment	USD30,000K	USD30,000K	30,000	100.00	1,022,326	USD(168K	)	(5,830	)
United Microelectronics Corp. (Samoa)	Apia, Samoa	Investment	USD500K	USD500K	500	100.00	4,929	USD(50K	)	(1,749	)
United Microelectronics (Europe) B.V.	The Netherlands	IC Sales	USD5,421K	USD5,421K	9	100.00	199,830	USD(328K	)	(14,723	)
Fortune Venture Capital Corporation	Taipei, Taiwan	Consulting and planning for investment in new business	2,999,940	2,999,940	299,994	99.99	2,990,577	(63,437	)	(63,430	)
Hsun Chieh Investment Co., Ltd.	Taipei, Taiwan	Investment	14,172,940	14,172,940	1,417,294	99.97	10,354,482	22,635		22,628
United Microdisplay Optronics Corp.	Science-Based Industrial Park, Hsinchu	Sales and manufacturing of LCOS	764,990	764,990	76,499	85.00	659,722	(50,330	)	(42,780	)
Pacific Venture Capital Co., Ltd.	Taipei, Taiwan	Venture capital consultation	300,000	300,000	30,000	49.99	307,407	(17,729	)	(8,863	)
UMCi Pte. Ltd.	Singapore	Sales and manufacturing of integrated circuits	USD211,858K	USD212,250K	211,871	49.74	7,014,331	USD(6,958K	)	(120,131	)
UMC Japan	Chiba, Japan	Sales and manufacturing of integrated circuits	¥20,537,634K	¥20,126,316K	484	47.59	8,033,040	¥(444,657K	)	77,072
DuPont Photomasks Taiwan Ltd.	Science-Based Industrial Park, Hsinchu	Manufacturing of photomasks	773,795	773,795	99,748	45.51	1,126,882	(40,696	)	(18,521	)
Unitech Capital Inc.	British Virgin Islands	Investment	USD21,000K	USD21,000K	21,000	42.00	732,911	USD214K		3,124
Novatek Microelectronics Corp.	Science-Based Industrial Park, Hsinchu	Sales and manufacturing of integrated circuits	155,941	138,030	74,911	25.93	1,298,692	331,772		85,801
Holtek Semiconductor Inc.	Science-Based Industrial Park, Hsinchu	IC design production and sales	357,628	357,628	44,854	25.61	582,067	70,896		18,159
Integrated Technology Express, Inc.	Science-Based Industrial Park, Hsinchu	Sales and manufacturing of integrated circuits	205,025	205,025	24,111	24.58	325,390	75,266		15,945
Unimicron Technology Corp.	Taoyuan, Taiwan	PCB production	2,592,013	2,592,013	168,930	23.81	3,063,883	187,249		32,506
Applied Component Technology Corp.	Taipei, Taiwan	IC production sales	47,013	49,284	11,512	22.57	86,541	(37,532	)	(8,677	)
Faraday Technology Corp.	Science-Based industrial Park, Hsinchu	ASIC design and production	81,032	81,032	33,710	19.71	609,233	198,567		38,339
Integrated Telecom Express, Inc.	Santa Clara, California, USA	Sales and manufacturing of integrated circuits	USD2,000K	USD2,000K	7,000	16.42	583,482	USD(2,601K	)	(14,531	)
Silicon Integrated Systems Corp.	Science-Based Industrial Park, Hsinchu	Sales and manufacturing of integrated circuits	5,660,313	1,267,580	216,435	16.18	5,601,339	(95,952	)	(111,910	)
AMIC Technology (Taiwan) Inc.	Science-Based Industrial Park, Hsinchu	IC design, production and sales	135,000	135,000	16,200	13.62	56,042	(20,302	)	(851	)
Archtek Telecom Corporation	Taipei, Taiwan	Sales and manufacturing of broadband access products	—	—	7,100	13.24	—	(42,068	)	—