United Microelectronics Corporation 2019 Annual Report Printed on February 26, 2020 UMC Annual Report Information Can Be Accessed from the Following Websites: http://www.umc.com http://mops.twse.com.tw
Annual Report
TSE Code: 2303 NYSE Symbol: UMC 2019 Spokesperson Fab 8E Securities Dealing Institution Chitung Liu 17 Li-Hsin Rd., Hsinchu Science Park, Horizon Securities Co., Ltd. Senior Vice President and Hsinchu, Taiwan 30078, R.O.C. Stock Registration Department Chief Financial Officer 886 (3) 578 2258 3F, No.236 Hsin-Yi Rd. Sec. 4, Taipei, 886 (2) 2658 9168 Taiwan 10680, R.O.C. [email protected] Fab 8F 886 (2) 2326 8818 3 Li-Hsin 6th Rd., Hsinchu Science Park, http://www.honsec.com.tw Acting Spokesperson(s) Hsinchu, Taiwan 30078, R.O.C. Jinhong Lin 886 (3) 578 2258 ADR Depositary and Registrar Finance Division J.P. Morgan Depositary Receipts Director Fab 8S 383 Madison Avenue, 11th Floor 886 (2) 2658 9168 16 Creation 1st Rd., Hsinchu Science Park, New York, NY 10179, U.S.A. [email protected] Hsinchu, Taiwan 30077, R.O.C. General Contact：1 (800) 990 1135 886 (3) 578 2258 Outside the USA：1 (651) 453 2128 David Wong http://www.adr.com Finance Division Fab 12A Manager 18, 20 Nan-Ke 2nd Rd., & 57 Nan-Ke 3rd Rd., ADR Exchange Marketplace 886 (2) 2658 9168 Southern Taiwan Science Park, Sinshih, NYSE Euronext [email protected] Tainan, Taiwan 74147, R.O.C. 11 Wall Street, 886 (6) 505 4888 New York, NY 10005, U.S.A. Headquarters 1 (212) 656 3000 3 Li-Hsin 2nd Rd., Hsinchu Singapore Branch http://www.nyse.com Science Park, Hsinchu, Taiwan 3 Pasir Ris Drive 12, Singapore 519528 Ticker/Search Code: UMC 30078, R.O.C. 65 6213 0018 886 (3) 578 2258 Euro Convertible Bond Exchange Subsidiary in Mainland China Marketplace Taipei Office HJ Singapore Exchange Securities 8F, 68 Sec. 1, Neihu Rd., Taipei, 333 Xinghua St., Suzhou Industrial Park, Trading Limited Taiwan 11493, R.O.C. Suzhou, Jiangsu Province 215025, P.R.C. 2 Shenton Way 886 (2) 2658 9168 0512 65931299 #02-02 SGX Centre 1 Singapore 068804 Fab 8A Subsidiary in Mainland China 65 6236 8888 3, 5 Li-Hsin 2nd Rd., Hsinchu USCXM http://www.sgx.com Science Park, Hsinchu, Taiwan 899 Wan Jia Chun Road, Xiang’an District, ECB Search Code: ISIN XS1228110000 30078, R.O.C. Xiamen, Fujian Province, P.R.C. 886 (3) 578 2258 0592 7687888 Auditors Ernst & Young, Taiwan Fab 8C & Fab 8D Subsidiary in Japan Wan-Ju Chiu, Hsin-Min Hsu 6, 8 Li-Hsin 3rd Rd., Hsinchu USJC 9F, No. 333, Sec. 1 Keelung Road, Science Park, Hsinchu, Taiwan 3-1 Kinko-cho, Kanagawa-ku, Yokohama, Taipei, Taiwan 11012, R.O.C. 30078, R.O.C. Kanagawa, Japan 886 (2) 2757 8888 886 (3) 578 2258 81 45 620 2682 http://www.ey.com
Wavetek Corporate Website 10 Chuangxin 1st Rd., Hsinchu Science Park, http://www.umc.com Baoshan Township, Hsinchu, Taiwan 30076, R.O.C. 886 (3) 578 1259
NexPower 2 Houke S. Rd., Central Taiwan Science Park, Houli District, Taichung, Taiwan 42152, R.O.C. 886 (4) 2580 8888
United Microelectronics Corporation | Annual Report 2019
Table of Contents
Letter to Shareholders 4 Capital Overview 103 104 Capital and Shares Corporate Profile 8 109 Issuance of Corporate Bonds 9 Corporate Profile and Date of Establishment 115 Preferred Shares 10 Corporate Milestones 116 American Depositary Receipts 118 Employee Stock Option Handling Status 118 Issuance of New Restricted Employee Shares Corporate Governance Report 13 118 Status of New Shares Issuance in Connection with Mergers and Acquisitions 14 Corporate Organization 118 Financing Plans and Execution Status 16 Directors’ and Managers’ Information 38 Corporate Governance Practices 97 Certified Public Accountant (CPA) Fee Information Operations Overview 119 97 Information of CPA Change 120 Business Activities 97 UMC’s Chairman, Presidents, Chief Financial Officer, 127 Overview of Market, Production, and Sales and Managers in Charge of Its Finance and Accounting 133 Employees Operations Did Not Hold Any Positions in UMC’s Independent Auditing Firm or Its Affiliates in the Most 134 Environmental Expenditure Information Recent Year 134 Labor Relations 98 Change in Shareholding of Directors, Managers and 138 Major Contracts Major Shareholders Who Own 10% or More of UMC Shares 100 Relationship Among the Top Ten Shareholders 101 Shares Held by the Company, Directors, Managers and Companies Directly or Indirectly Controlled by the Company, and the Comprehensive Shareholding Ratio Based on Combined Calculation
2 Review of Financial Position, Operating 140 Financial Review 183 Results, Risk Management 184 Condensed Balance Sheets 141 Financial Position 186 Condensed Statements of Comprehensive Income 142 Financial Performance 188 Financial Analysis 143 Cash Flow 192 Audit Committee’s Review Report 143 Major Capital Expenditures from Recent Years and 193 Financial Statements – Consolidated Impact on Company’s Finance and Business 269 Financial Statements – Parent Company 143 Main Reasons and Improvement Plans for Recent Annual Reinvestment Policies and Profit or Loss, and Investment Plans for the Coming Year 144 Risk Management and Evaluation 153 Other Necessary Supplements
Social Responsibility 154 155 Description of Corporate Social Responsibility
157 About Social Charity 163 Environmental Protection, Safety and Health Management Instructions
Special Disclosures 169 170 Summary of Affiliated Enterprises 182 Issuance of Private Placement Securities 182 Acquisition or Disposal of UMC Shares by Subsidiaries 182 Other Necessary Supplements 182 Disclosures of Events Which May Have a Significant Influence on Stockholders’ Equity or Share Price, in Compliance with Item 3, Paragraph 2 in Article 36 of the Securities and Exchange Law of the R.O.C.
3 Dear Shareholders,
In 2019, geopolitical tension and a constantly changing environment surrounding international affairs resulted in a sharp decline in semiconductor demand. Although UMC continued to explore various avenues of growth to continue progressing our technologies, increase production capacity and cultivate new customer engagements, the difficult macro environment led to UMC’s 2019 revenue declining slightly by 2% over the prior year. Our foundry segment shipped a total of 7.2 million 8-inch equivalent wafers for the year, with capacity utilization rate at 89%. From a consolidated basis, UMC’s annual revenue was NT$148.2 billion, gross profit margin was 14.4%, and operating profit Looking towards the future, UMC will proceed with margin was 3.2%. Profit attributable to the parent company the business strategy of strengthening our financial was NT$9.71 billion or an earnings per share of NT$0.82. performance and securing future growth opportunities. UMC’s capital expenditure was US$574 million, mainly UMC management team will focus on: (1) Integrating invested towards new R&D process equipment and capacity organizational effectiveness, developing technology, deployment of Fab 12A in Southern Taiwan Science Park, Fab comprehensively improving quality and productivity, and 12X in Xiamen and Fab 8N in Suzhou. pursuing excellence as the company’s goal; (2) Working UMC is committed to providing customers with an closely with the supply chain to improve product mix and extensive offering of process manufacturing solutions market share to maintain stable profitability; (3) Continuing by collaborating with partners across the supply chain our dedication to customer service, strengthening to develop process technologies and expand capacity. synergies and providing added value, growing with Future semiconductor demand will be driven by artificial customers, and creating win-win situations; (4) Enhancing intelligence (AI), Internet of Things (IoT), 5G communication the competitiveness of sustainable operations to protect (5G) and automotive electronics (AUTO). We will achieve shareholders’ best interests. business expansion by differentiating our logic and specialty technology solutions, with the latter being a core Advanced Technology Development focus of UMC’s continuous investment strategy. In response Research and Development has always been the focus of to market demand, UMC has diversified its 12-inch fabs UMC’s operations. In 2019, UMC invested NT$11.86 billion to diversify risk, highlighted by the recent acquisition of in R&D, continuing to recruit and develop new R&D talent, USJC (United Semiconductor Japan Corporation). This 12- which led to fruitful results in the field of research and inch wafer fab that will bring operating synergies through development within advanced and specialty technologies. enhanced productivity by joining UMC’s network and supply Our 14FFC (14nm FinFET Compact) process technology chain ecosystem while driving our long-term growth in development has fulfilled market requirements and has specialty technology segments. been introduced for 5G and networking applications. The
4 Letter to Shareholders
22nm ultra-low power consumption (22ULP) and ultra- low leakage current (22ULL) process platforms have now completed customer product verification, which can be applied for semiconductor applications including Internet of Things (IoT), mobile devices, automotive electronics, and technologies such as analog, mixed signal, and RF. In addition, our 28nm high-performance computing (28HPC +) process will provide new business opportunities in the field of image signal processors (ISP) found in smartphones; these ICs will be mass-produced in UMC’s Taiwan fab in 2020. We also have a 28-nanometer millimeter-wave (mmWave) process that provides a low-power CMOS solution.
Specialty Technology Development
In specialty technology applications, UMC’s 28nm high- voltage technology entered volume production in 2019. UMC also introduced the industry’s first 40nm high-voltage driver IC process technology designed to complement organic light- emitting displays (AMOLED). In addition, the development of 22nm high-voltage technology (22eHV) is in line with our customers’ expectations. Our world-class Radio Frequency Insulated Semiconductor (RFSOI) process technologies fulfill the stringent requirements of RF switches found in 4G & 5G mobile phones. At present, UMC’s 0.13 micron, 0.11 micron and 90nm RFSOI processes have entered mass production. We have started developing a 55nm RFSOI platform to ensure future growth momentum in this area. Utilizing embedded flash memory technology (eFlash), 55nm MCUs have entered mass production while UMC’s 40nm customer, SST, has completed yield and reliability verification. 28nm SST R&D progress is also in line with expectations, targeted to fulfill IoT applications. In emerging memory, 40nm Resistive Random Access Memory (ReRAM) has entered the small- volume production stage. On our 22nm, Resistive Memory (ReRAM) technology and Embedded Magneto Resistive
5 United Microelectronics Corporation | Annual Report 2019
Random Access Memory (eMRAM) process platforms can be applied to related products such as AI Internet of Things (AIoT). Lastly, UMC is actively investing in the development of gallium nitride (GaN) semiconductors to facilitate entry into high-performance power market segments.
Patents and Intellectual Property Rights
Facing an intensely competitive landscape, UMC has fortified the company’s patent portfolio to protect intellectual property rights. The total number of patents granted to UMC over the years reached 13,507, strengthening UMC strong foundation in process technology knowledge and intellectual property. In 2019, a total of 515 domestic and foreign patents were obtained, including 345 US patents, 94 patents in Taiwan and 76 patents in mainland China. The growing number of technology patents will continue to create additional competitive advantages for UMC to enhance value in the semiconductor supply chain.
Corporate Social Responsibility
Focus, development and continuity are the core beliefs of UMC to ensure corporate sustainability, corporate governance and corporate social responsibility. To preserve the best interests of our shareholders, UMC’s Board of Directors established the “Remuneration Committee, ” “Audit Committee, ” “Capital Budget Committee” and “Nomination Committee” to deliver objective performance evaluations to enhance transparency and operational supervision. In 2019, UMC was recognized through a number of distinguished awards and honors from domestic and foreign institutions and government agencies, highlighting UMC’s continuous commitment in the path of sustainable foundry operations.
6 Letter to Shareholders
Awards and Recognitions received in environmental We have strived to enhance UMC’s financial structure, protection, safety and health: diversify our customer base, and enhance development Selected as a “DJSI-World” constituent on the Dow Jones with world-class manufacturing capabilities. We are Sustainability Indices for the 12th consecutive year convinced that the implementation of the company’s Awarded highest honors in Corporate Governance strategy will elevate UMC’s competitiveness. With the Achieved Leadership Status on CDP’s Climate Change joint effort of all our colleagues, the team will continue to Assessment Program for four consecutive years provide better foundry services to improve the company’s Achieved the highest Platinum honors for the “Top 50 operating performance and maximize benefits for UMC Corporate Sustainability Report Award” and the first shareholders. We would like to express our deepest “English Reportage Award. ” Awarded the “National gratitude to all shareholders and wish everyone happiness Enterprise Environmental Protection Award” by the and health. Environmental Protection Administration of Executive Yuan, R.O.C for seventeen consecutive years Awarded “Energy Saving Leadership Award” by Bureau of Energy, Ministry of Economic Affairs
Chairman: Stan Hung President: SC Chien President: Jason Wang
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Corporate Profile
9 Corporate Profile and Date of Establishment 10 Corporate Milestones
8 Corporate Profile
Corporate Profile and Date of Establishment
UMC is a leading global semiconductor foundry. The UMC has 12 wafer fabs located throughout Asia, including Company provides high quality IC production with a focus four advanced 12-inch fabs. Fab 12A was Taiwan’s first 12- on both logic and specialty technologies to serve every major inch fab, and has been in volume production for customer sector of the electronics industry. UMC’s comprehensive products since 2002. This advanced facility consists of technology and manufacturing solutions include logic/RF, Phases 1-6 and is currently manufacturing customer embedded high voltage, embedded flash, RFSOI/BCD on 8” products using 28-nanometer High-K/Metal gate and & 12” wafers and IATF-16949 automotive manufacturing 14-nanometer FinFET technologies. UMC’s second 12- certification for all wafer fabs. inch fab, Fab 12i, is located in Singapore. This facility is Founded in 1980 as Taiwan’s first semiconductor company, our specialty technologies center that provides highly UMC is a foundry leader. UMC’s comprehensive foundry specialized processes on 12-inch manufacturing to serve a solutions enable chip designers to leverage the strength diverse range of product applications. United Semi, located of the company’s leading-edge processes, which include in Xiamen, China, is southern China’s first 12-inch foundry 28-nanometer High-K/Metal Gate, 14-nanometer FinFET, fab and began volume production in 2016. United Semi mixed signal/RFCMOS, and a wide range of specialty serves China’s vast IC market and provides high quality, technologies. geographically diversified manufacturing for our foundry UMC led the development of the commercial semiconductor customers. Japan-based USJC, fully acquired in October industry in Taiwan. It was the first local company to offer of 2019, is UMC’s fourth 300mm fab. USJC offers foundry foundry services, as well as the first semiconductor company volume production for mature specialty nodes ranging to list on the Taiwan Stock Exchange (1985). UMC has an from 90-nanometer to 40-nanometer. extensive network of service offices in Taiwan, China, Europe, In addition, UMC’s manufacturing expertise and 40years Japan, Korea, Singapore, and the United States to meet the experience ensure industry-leading cycle times and defect needs of its global customer base. UMC will continue to densities. Comprehensive process control systems with provide customers with robust process technologies and advanced methodologies and a strong engineering team comprehensive foundry solutions, enabling customers to support fast product ramp. UMC’s advanced automation, continuously strengthen their competitive advantage in mature defect density, fast cycle times and ample capacity today’s rapidly changing industry. enable UMC to provide the most competitive manufacturing advantages for our foundry customers.
Company establishment date: May 22, 1980.
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Corporate Milestones
May, 1980 Established
July, 1985 Officially listed on the TWSE
July, 1995 Transformed into a Pure-play Foundry Company
July-September, 1995 Formed joint ventures with 11 IC design houses from North America to establish three foundry companies
September, 1995 8-inch fab started mass production
January, 1996 0.35-micron technology process started production
October, 1997 0.25-micron technology process started production
April, 1998 Acquired Holtek Semiconductor fab (now known as Fab 8E)
December, 1998 Acquired Nippon Steel Semiconductor Corp. fab (renamed UMCJ in 2001)
March, 1999 0.18-micron technology process started production
November, 1999 Official construction began for UMC's 12-inch fab in Tainan Science Park
January, 2000 UMC Group 5-in-1 Millennium (Consolidated UMC, United Semiconductor Corp. (USC), United Integrated Circuits Corp. (UICC), United Silicon, Inc. (USIC) and UTEK Semiconductor Corp. into a single UMC)
March, 2000 Manufactured first IC using all-copper interconnects
May, 2000 Manufactured first 0.13-micron process IC
September, 2000 Listed on the New York Stock Exchange
December, 2000 Groundbreaking for the world's most advanced 12-inch fab in Singapore (UMCi)
January, 2003 UMCi announced 12-inch fab equipment move-in
March, 2003 Manufactured the First 90nm Process IC
March, 2004 UMCi started mass production
May, 2004 90nm process was fully verified and started mass production
July, 2004 UMC acquired SiS Microelectronics (now known as Fab 8S)
December, 2004 Acquired its subsidiary UMCi and changed its name to Fab 12i
10 Corporate Profile
June, 2005 Manufactured the first 65nm customer IC
August, 2005 90nm wafer shipments exceeded 100,000
June, 2006 Became the first semiconductor manufacturer in the world to complete QC-080000 IECQ HSPM certification for all company-wide sites
November, 2006 Manufactured the first 45nm IC
January, 2007 Expanded production site and completed a New R&D building in Tainan Science Park
September, 2008 Listed as a constituent stock by Dow Jones Sustainability Indexes
October, 2008 Announced foundry industry's first 28nm SRAMs
April, 2009 Delivered customer ICs produced on its high performance 40nm logic technology
December, 2009 Announced completion of tender offer to UMC Japan
May, 2010 Celebrated 30th Anniversary
December, 2010 12-inch fab Fab 12A Phase 3 began production
October, 2011 28nm process began pilot production
May, 2012 Groundbreaking ceremony for Fab 12A's new Phase 5 & 6 in Tainan Science Park
March, 2013 Acquired HeJian Fab based in Suzhou, China
May, 2013 Established its Specialty Technology Center of Excellence in Singapore
August, 2014 Joined Fujitsu’s new foundry company
March, 2015 Groundbreaking of United Semi (Xiamen) Fab
November, 2016 Held grand opening ceremony for new 12-inch fab in Xiamen, China and the fab started mass production
February, 2017 Entered mass production for 14nm customer ICs
June, 2018 Board approved 100% acquisition of MIFS fab in Japan from Fujitsu
September, 2019 Selected as a DJSI Global Component for 12th Consecutive Year
October, 2019 Acquired 100% of MIFS 300mm fab, renamed USJC
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12 Corporate Governance Report
Corporate Governance Report
14 Corporate Organization 16 Directors’ and Managers’ Information 38 Corporate Governance Practices 97 Certified Public Accountant (CPA) Fee Information 97 Information of CPA Change 97 UMC’s Chairman, Presidents, Chief Financial Officer, and Managers in Charge of Its Finance and Accounting Operations Did Not Hold Any Positions in UMC’s Independent Auditing Firm or Its Affiliates in the Most Recent Year 98 Change in Shareholding of Directors, Managers and Major Shareholders Who Own 10% or More of UMC Shares 100 Relationship Among the Top Ten Shareholders 101 Shares Held by the Company, Directors, Managers and Companies Directly or Indirectly Controlled by the Company, and the Comprehensive Shareholding Ratio Based on Combined Calculation
13 United Microelectronics Corporation | Annual Report 2019
Corporate Organization
Board of Directors Audit Committee Chairman
Remuneration Committee Auditing
Capital Budget Committee President
Nominating Committee
Quality & Foreign Global Sales & Manufacturing Technology Engineering Digital Reliability Subsidiaries Marketing Integration Development Service Assurance
Organizational Functions
Foreign Subsidiaries Engineering Service • Responsible for client and regional market development in the • Responsible for product engineering, malfunction and material Americas, Europe, and Asia, and provide technical support and analysis, product introduction and yield improvement for all services. fabs. • Provide company-wide photomask service, management, quality Global Sales and Marketing control and improvements. • Responsible for global customer and operational management and • Provide company-wide back-end encapsulation testing, quality market development, and provide technical support and services. control and improvements. • Undertake UMC's objectives, analyze market information and integrate UMC's internal resources and external competition. Digital Formulate technical development blueprints, strategic • Through innovative digital technologies, combined IoT, big data recommendations and advanced market development to serve as and artificial intelligence and integrated semiconductor expertise reference for UMC 's future business direction. (OT) and information technology (IT). Construct data-driven advanced semiconductor smart manufacturing systems to improve Manufacturing Integration product quality and yield. Improve and optimize production • Responsible for managing 8-inch and 12-inch operations, product efficiency and production costs to achieve world-class quality manufacturing, manufacturing technology development, and of production services. Ensure information security and service integration of production and services. quality to achieve customer satisfaction, company operational efficiency, and research and development momentum. Technology Development • Design, develop and manage intellectual property core for Quality and Reliability Assurance customer product needs. • Responsible for comprehensive quality management, strengthening • Research and develop advanced process technology platforms, quality awareness and improving product reliability testing to meet and develop and apply advanced material technology platforms. customer demand for quality and improve quality control for mass • Research and develop technologies for various mature and products. special process platforms.
14 Corporate Governance Report
Corporate & Manufacturing Corporate Legal, IP & Human New Business Operation Resource Finance Development Compliance Resources Development Planning Integration
Corporate and Operation Planning Human Resources • Develop capacity plans and operational resource integration, • Responsible for the selection, utilization, cultivation and and assist in production and sales coordination. retention of human resource and ensuring a suitable working environment for employees. Manufacturing Resource Integration • Responsible for ensuring the physical safety of UMC's personnel, • Responsible for company-wide plant operations, plant expansion affairs and objects through tangible actions. planning and environmental safety and risk management. New Business Development Finance • Responsible for developing, assessing and managing new • Responsible for UMC's finances and accounting management, ventures. and serve as spokesperson for UMC. Auditing Corporate Development • Responsible for assisting the Board of Directors and managers to independently and objectively assess the effectiveness of • Responsible for corporate development and strategy planning. designs and implementation of internal control system. Provide timely recommendations for improvement to ensure compliance Legal, Intellectual Property and Compliance with UMC's policies and relevant laws and regulations. • Responsible for domestic and international intellectual property rights management, legal affairs, and compliance with domestic and foreign laws and regulations.
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Directors' and Managers' Information Directors’ Information Title Nationality Name Gender Date Elected Term Shareholding When Present /Place of (Date Assumed) Expires Elected Shareholding Incorporation
Independent R.O.C. Cheng-Li Male 2018.06.12 2021.06.11 0 0 0 0 Director Huang ＜2009.06.10＞
Independent R.O.C. Wenyi Chu Female 2018.06.12 2021.06.11 0 0 0 0 Director ＜2015.06.09＞
Independent R.O.C. Lih J. Chen Male 2018.06.12 2021.06.11 0 0 0 0 Director ＜2018.06.12＞
Independent R.O.C. Jyuo-Min Male 2018.06.12 2021.06.11 0 0 0 0 Director Shyu ＜2018.06.12＞
16 Corporate Governance Report
Spouse & Minor Experience (Education) Selected Current Position at UMC and Other Companies Shareholding Common % Shares 1,269,435 0.01 Chairman, UMC Chairman & Chief Strategic Officer, UMC; Bachelor in Accounting, Chairman, Fortune Venture Capital Corp.; Tamkang University Chairman, TLC Capital Co., Ltd.; Chairman, Faraday Technology Corporation; Director, Triknight Capital Corporation; Chairman, UMC Capital Corp.; Director, United Microelectronics (Europe) B.V.; Director, UMC Capital (USA); Director, UnitedDS Semiconductor (Shandong) Co., Ltd.
0 0 Certified Public Accountant, Zheng Ji None Accounting Firm Professor, Department of Accounting, Tamkang University Ph.D. of Business School, the University of Warwick 0 0 Professor, Department of Business None Administration, National Taiwan University Ph.D. of London Business School 0 0 Academician, Academia Sinica None Distinguished Chair Professor, National Tsing Hua University Ph.D. in Physics, University of California, Berkeley 0 0 Emeritus Professor, National Tsing Hua Independent Director, Inventec Corporation; University Director, Iridium Medical Technology Co., Ltd.; Minister, Ministry of Science and Technology Director, GeoThings, Inc.; President, Industrial Technology Research Director, Modern Classic Limited Institute Ph.D. in Electrical Engineering and Computer Science, University of California, Berkeley
17 United Microelectronics Corporation | Annual Report 2019
Directors’ Information (Continue)
Title Nationality Name Gender Date Elected Term Shareholding When Present /Place of (Date Assumed) Expires Elected Shareholding Incorporation
Director R.O.C. Ting-Yu Lin Male 2018.06.12 2021.06.11 12,547,222 0.10 12,547,222 0.11 ＜2009.06.10＞
Director R.O.C. Hsun Chieh N/A 2018.06.12 2021.06.11 441,371,000 3.50 441,371,000 3.76 Investment Co., ＜1995.06.21＞ Ltd.
R.O.C. Representative: Male 2018.06.12 2021.06.11 1,894,648 0.02 7,894,648 0.07 SC Chien ＜2016.03.01＞
Director R.O.C. Silicon N/A 2018.06.12 2021.06.11 315,380,424 2.50 285,380,424 2.43 Integrated ＜2005.06.13＞ Systems Corp.
U.S.A. Representative: Male 2018.06.12 2021.06.11 0 0 10,200,000 0.09 Jason Wang ＜2015.06.09＞
Note 1: Present shareholding figures are actual number of shares held on January 31, 2020. Note 2: Directors’ election date is the same date they assumed their positions. Note 3: Directors are not spouses or relatives within the second degree of kinship of other managers and directors.
18 Corporate Governance Report
Spouse & Minor Experience (Education) Selected Current Position at UMC and Other Companies Shareholding Common % Shares 0 0 Academician, Academia Sinica Chairman, TrendForce Corp.; Honorary Chair Professor, National Tsing Independent Director, Microelectronics Technology Inc.; Hua University Independent Director, Powerchip Technology Corporation; Sc.D. of Massachusetts Institute of Independent Director, Far EasTone Telecommunications Co., Ltd.; Technology Independent Director, Accton Technology Corporation; Director, Macronix International Co., Ltd.; Director, UBI Pharma Inc.; Director, GeoThings, Inc.
0 0 Chairperson, Sunrox International Inc. None Master in International Finance, Meiji University
N/A N/A N/A N/A
0 0 Director, UMC President, UMC; Bachelor in Chemical Engineering, National Director, Fortune Venture Capital Corp.; Taiwan University Director, TLC Capital Co., Ltd.; Director, Wavetek Microelectronics Corporation; Director, UMC Capital Corp. N/A N/A N/A N/A
0 0 Director, UMC President, UMC; Business Administration, San Jose State Director, Fortune Venture Capital Corp.; University Director, TLC Capital Co., Ltd.; Director, Wavetek Microelectronics Corporation; Director, UMC Group (USA); Director, United Microelectronics (Europe) B.V.; Director, UMC Capital Corp.; Director & President, UMC Capital (USA); Director, United Microtechnology Corporation (New York); Director, United Microtechnology Corporation (California); Director, Sino Paragon Limited
Note 4: Directors did not hold shares through other parties. Note 5: Present Shareholding figures consist of shares under Trust with Discretion Reserved. Note 6: Presidents and Chairman are not the same person, spouses or relatives within the first degree of kinship.
19 United Microelectronics Corporation | Annual Report 2019
Major Shareholders of UMC’s Institutional Shareholders
Name of Institutional Shareholders Major Shareholders (Holding Percentage)
Hsun Chieh Investment Co., Ltd. Shieh Yong Capital Co., Ltd. (63.48%); UMC (36.49%)
Silicon Integrated Systems Corp. UMC (20.20%); Hsun Chieh Investment Co., Ltd. (1.54%); Hsing-Sen Liu (1.43%); JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds (1.13%); Vanguard Emerging Markets Stock Index Fund, a series of Vanguard International Equity Index Funds (0.75%); Liang Xun Investment Co., Ltd. (0.63%); Zhi-Wei Wu (0.59%); De-Chang Wu (0.54%); Hua-Rong Lian (0.54%); Wen-Chi Chen (0.52%)
Major Shareholders of UMC’s Major Institutional Shareholders
Name of Institutional Shareholders Major Shareholders (Holding Percentage)
Shieh Yong Capital Co., Ltd. Unimicron Technology Corp. (16.67%); Silicon Integrated Systems Corp. (16.67%); Novatek Microelectronics Corp. (15.15%); Faraday Technology Corporation (12.12%); King Yuan Electronics Co., Ltd. (7.58%) Liang Xun Investment Co., Ltd. Tsai-Feng Hou (23.42%); Chi-Chuan Huang (23.42%); Liang-Hsun Huang (17.72%); Hsiang-Shu Huang (17.72%); Liang-Hsuan Huang (17.72%)
20 Corporate Governance Report
Directors’ Professional Knowledge and Independence Information
Criteria Five or More Years Experience or Professional Independence Status (Note) Number of Qualification Companies Lecturer or Above Qualification of Experience 1 2 3 4 5 6 7 8 9 10 11 12 also Serves as in Business, Justice, Procurator, in Business, Independent Law, Finance, Attorney, CPA, Law, Finance, Director for Accounting Specialist or Accounting or Corporate Technician or Corporate Business Related of National Business Related Fields Examination in Fields Corporate Business Name Related Fields Stan Hung Yes - - - 0
SC Chien Yes - - - 0
Jason Wang Yes - - - 0
Cheng-Li Huang Yes Yes Yes 0
Wenyi Chu Yes Yes 0
Lih J. Chen Yes Yes 0
Jyuo-Min Shyu Yes Yes 1
Chung Laung Liu Yes Yes 4
Ting-Yu Lin Yes - 0
Note: For those directors who match the condition listed below during and two years before assuming period, “ ” is marked in the appropriate space. (1) Is not an employee of the Company or its affiliates. (2) Is not a director or supervisor of the Company or its affiliates (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). (3) Does not directly or indirectly own more than 1% of the Company’s outstanding shares, nor is one of the top ten non-institutional shareholders of the Company. (4) Is not a spouse, relative within the second degree of kinship or lineal relative within the third degree of kinship of managers specified in the column (1)or any person specified in the column(2)and(3). (5) Is not a director, supervisor or employee of a legal entity which directly owns more than 5% of the Company’s issued shares or are the top five owners of the Company’s issued shares, nor a director, supervisor or employee of a legal entity which designates a representative to serve as a director or supervisor of the Company in accordance with Article 27, paragraph 1 or 2 of the Company Act (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). (6) Is not a director, supervisor or employee of other company, and more than half of directors or voting shares of other company are controlled by the same person (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). (7) Is not a director, supervisor or employee of other company, and Chairman, President or Manager with equivalent position of other company are the same person or spouse (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). (8) Is not a director, supervisor, or manager of a company which has a business relationship with the Company, nor a shareholder who owns more than 5% of such a company (the same does not apply, however, in cases where a company owns more than 20% but less than 50% of the Company’s issued shares and the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). (9) Is not an owner, partner, director, supervisor, manager or spouse of any sole proprietor business, partnership, company or institution which has provided the Company and its affiliates with auditing or services of finance, business consult and legal affairs for which the accumulated remuneration in the past two years does not exceed NTD 500,000, provided that this restriction does not apply to any member of the compensation committee, public tender offer review committee, or special committee on mergers and acquisitions who exercises powers pursuant to related regulation such as the “Securities and Exchange Act” or the “Business Mergers And Acquisitions Act.” (10) Is not a spouse or relative within the second degree of kinship of any of the directors. (11) Is not under any condition pursuant to Article 30 of the Company Act. (12) Is not a legal entity owner or its representative pursuant to Article 27 of the Company Act. 21 United Microelectronics Corporation | Annual Report 2019
Managers’ Information
Title Nationality Name Gender Date Elected Present Shareholding Spouse & (Date Minor Shareholding Assumed) Common ％ Common ％ Shares Shares
Chairman & Chief R.O.C. Stan Hung Male 2008.07.16 39,916,452 0.34 1,269,435 0.01 Strategic Officer
President R.O.C. SC Chien Male 2004.11 .23 7,894,648 0.07 0 0
President U.S.A. Jason Wang Male 201 4.12.24 10,200,000 0.09 0 0
Executive Vice R.O.C. Ming Hsu Male 201 5 . 06.08 1,873,000 0.02 0 0 President
Senior Vice R.O.C. Oliver Chang Male 2 02 0 . 02.26 462,589 0.00 0 0 President
Senior Vice R.O.C. Chitung Liu Male 20 0 5 . 10.20 3,340,217 0.03 0 0 President & Chief Financial Officer
Senior Vice R.O.C. Lucas S Chang Male 2018.01.01 900,000 0.01 0 0 President & General Counsel Vice President R.O.C. TS Wu Male 2013.01.01 1,009,809 0.01 304 0.00
Vice President R.O.C. C C Hsu Male 2013.01.01 1,152,068 0.01 0 0
Vice President R.O.C. M C Lai Male 2015.03.30 1,526,863 0.01 0 0
Vice President R.O.C. G C Hung Male 2015.01.28 1,500,791 0.01 0 0
Vice President R.O.C. Wenchi Ting Male 2017.01.03 1,350,000 0.01 0 0
22 Corporate Governance Report
Experience/Education Selected Current Position at Other Companies
Chairman & Chief Strategic Officer, UMC Chairman, Fortune Venture Capital Corp.; Bachelor in Accounting, Tamkang University Chairman, TLC Capital Co., Ltd.; Chairman, Faraday Technology Corporation; Director, Triknight Capital Corporation; Chairman, UMC Capital Corp.; Director, United Microelectronics (Europe) B.V.; Director, UMC Capital (USA); Director, UnitedDS Semiconductor (Shandong) Co., Ltd.
President, UMC Director, Fortune Venture Capital Corp.; Director, TLC Capital Co., Ltd.; Bachelor in Chemical Engineering, Director, Wavetek Microelectronics Corporation; Director, UMC Capital Corp. National Taiwan University President, UMC Director, Fortune Venture Capital Corp.; Director, TLC Capital Co., Ltd.; Business Administration, Director, Wavetek Microelectronics Corporation; Director, UMC Group (USA); San Jose State University Director, United Microelectronics (Europe) B.V.; Director, UMC Capital Corp.; Director & President, UMC Capital (USA); Director, United Microtechnology Corporation (New York); Director, United Microtechnology Corporation (California); Director, Sino Paragon Limited
Executive Vice President, UMC Director, United Semiconductor Japan Co., Ltd. Master in Science Electrical Engineering, University of Southern California Senior Vice President, UMC None Bachelor in Physics, Chinese Culture University
Senior Vice President & Director, Fortune Venture Capital Corp.; Director, TLC Capital Co., Ltd.; Chief Financial Officer, UMC Director, Unimicron Technology Corp.; Director, Novatek Microelectronics Corp.; EMBA in Business Administration, Director, HeJian Technology (Suzhou) Co., Ltd.; Director, UMC Group (USA); National Taiwan University Director, Green Earth Limited; Director, ECP Vita Pte. Ltd.; Director, Omni Global Limited; Director, UMC Capital Corp.; Director, United Microchip Corporation; Director, Sino Paragon Limited; Director, United Semiconductor Japan Co., Ltd.
Senior Vice President & General Counsel, UMC Director, Alpha and Omega Semiconductor Limited J.D. in Law, University of Santa Clara
Vice President, UMC None Master in Electronic Engineering, National Chiao Tung University Vice President, UMC Vice Chairman, United Semiconductor (Xiamen) Co., Ltd. Master in Materials Science & Engineering, National Tsing Hua University Vice President, UMC Director, HeJian Technology (Suzhou) Co., Ltd. Bachelor in Materials Science & Engineering, National Tsing Hua University Vice President, UMC None Master in Chemical Engineering, National Taiwan University Vice President, UMC Director, Asia Pacific Microsystems, Inc. Ph.D. in Computer Information Science, University of Texas at Austin
23 United Microelectronics Corporation | Annual Report 2019
Managers’ Information (Continue)
Title Nationality Name Gender Date Elected Present Shareholding Spouse & (Date Minor Shareholding Assumed) Common ％ Common ％ Shares Shares
Vice President R.O.C. Jerry CJ Hu Male 20 1 3 .04.02 1,045,000 0.01 0 0
Vice President R.O.C. Y S Shen Male 2014.01.13 975,000 0.01 0 0
Vice President R.O.C. Steven S Liu Male 2017.04.24 900,000 0.01 0 0
Vice President R.O.C. SR Sheu Male 2008.07.16 1,418,892 0.01 786,017 0.01
Vice President R.O.C. M L Liao Male 2008.07.16 3,540,809 0.03 199,138 0.00
Vice President R.O.C. S S Hong Male 2013.01.01 1,066,406 0.01 0 0
Vice President R.O.C. Francia Hsu Female 2016.03.16 960,000 0.01 0 0
Vice President R.O.C. Eric Chen Male 2 0 1 1 . 02.14 1,250,000 0.01 0 0 & Chief Human Resources Officer Associate Vice R.O.C. Johnson Liu Male 2014.11.04 506,413 0.00 1,631 0.00 President
Associate Vice R.O.C. Victor Chuang Male 20 19.03.28 364,671 0.00 13,943 0.00 President
Associate Vice R.O.C. Chuck Chen Male 20 19.03.28 508,201 0.00 0 0 President
Associate Vice R.O.C. S F Tzou Male 2013.01.01 1,879,108 0.02 0 0 President
Associate Vice R.O.C. Le Tien Jung Male 2013.01.01 850,000 0.01 20,000 0.00 President
Associate Vice R.O.C. Yau Kae Sheu Male 2014.01.13 850,000 0.01 0 0 President
24 Corporate Governance Report
Experience/Education Selected Current Position at Other Companies
Vice President, UMC None Ph.D. in Materials Science & Engineering, Stanford University Vice President, UMC Director, Faraday Technology Corporation Bachelor in Electronic Engineering, Feng Chia University Vice President, UMC None Master in Science Electrical Engineering, University of Southern California Vice President, UMC None Master in Electrical Engineering, The University of New Mexico Vice President, UMC None Bachelor in Electronic Engineering, National Taiwan Institute of Technology Vice President, UMC Chairman, United Semiconductor Japan Co., Ltd. Bachelor in Materials Science & Engineering, National Tsing Hua University Vice President, UMC None Master in Industrial Engineering, National Chiao Tung University Vice President & Director, Best Elite International Limited Chief Human Resources Officer, UMC EMBA in Finance, National Taiwan University Associate Vice President, UMC None Bachelor in Physics, Tamkang University
Associate Vice President, UMC None Bachelor in Electrical Engineering, National Cheng Kung University Associate Vice President, UMC None Master in Engineering Science, National Cheng Kung University Associate Vice President, UMC None Master in Materials Science & Engineering, National Tsing Hua University Associate Vice President, UMC None Ph.D. in Electrical Engineering, University of Texas at Austin Associate Vice President, UMC None Master in Electrical Engineering, University of Missouri
25 United Microelectronics Corporation | Annual Report 2019
Managers’ Information (Continue)
Title Nationality Name Gender Date Elected Present Shareholding Spouse & (Date Minor Shareholding Assumed) Common ％ Common ％ Shares Shares
Associate Vice R.O.C. J Y Wu Male 2014.05.01 850,191 0.01 587 0.00 President
Associate Vice R.O.C. Osbert Cheng Male 2014.08.01 850,938 0.01 0 0 President
Associate Vice R.O.C. Steven Hsu Male 2016.03.16 850,000 0.01 2,889 0.00 President
Associate Vice Singapore Purakh Raj Verma Male 2017.08.09 0 0 0 0 President
Associate Vice R.O.C. Yanan Mou Male 2019.07.01 0 0 40,146 0.00 President
Associate Vice R.O.C. C Y Hsu Male 2017.04.17 4,267 0.00 0 0 President
Associate Vice R.O.C. Remi Yu Male 2019.1 1 . 1 5 120,000 0.00 0 0 President
Associate Vice R.O.C. Michael CY Wang Male 2019.12 . 31 0 0 0 0 President
Associate Vice R.O.C. Ji Fu Kung Male 2013.01.01 850,741 0.01 0 0 President
Associate Vice R.O.C. C P Yen Male 2015.09.16 952,645 0.01 0 0 President
Associate Vice R.O.C. Mindy Lin Female 2018.05.14 1,227,925 0.01 781,408 0.01 President
Associate Vice R.O.C. Pang Min Wang Male 2018.09.14 418,126 0.00 16 0.00 President
Former Associate R.O.C. T W Liu Male 2015.09.16 N/A N/A N/A N/A Vice President
Former Associate R.O.C. Chih Chong Male 2018.01.04 N/A N/A N/A N/A Vice President Wang
Note 1: T W Liu and Chih Chong Wang, former managers, were dismissed in 2019. Note 2: Present shareholding figures are actual number of shares held on January 31, 2020. Note 3: Managers did not hold shares through other parties. Note 4: Managers are not spouses or relatives within the second degree of kinship of other managers. Note 5: Managers’ election date is the same date they assumed their positions. Note 6: Present shareholding figures consist of shares under Trust with Discretion Reserved. Note 7: Presidents and Chairman are not the same person, spouses or relatives within the first degree of kinship.
26 Corporate Governance Report
Experience/Education Selected Current Position at Other Companies
Associate Vice President, UMC None Master in Physics, Tamkang University
Associate Vice President, UMC None Ph.D. in Electrical Engineering, National Chiao Tung University Associate Vice President, UMC None Master in Electronic Engineering, National Chiao Tung University Associate Vice President, UMC None Master in Microelectronics, Nanyang Technological University Associate Vice President, UMC None Master in Electrical Engineering, State University of New York at Stony Brook Associate Vice President, UMC None EMBA, National Chiao Tung University
Associate Vice President, UMC None Bachelor in Electrophysics, National Chiao Tung University Associate Vice President, UMC None Master in Chemical Engineering, Cornell University Associate Vice President, UMC None Ph.D. in Materials Science, University of Connecticut Associate Vice President, UMC None Master in Engineering Science, National Cheng Kung University Associate Vice President, UMC None Master in Business Administration, University of Leicester Associate Vice President, UMC None Master in Integrated Manufacturing Systems Engineering, North Carolina State University Former Associate Vice President, UMC N/A Bachelor in Electrical Engineering, National Central University Former Associate Vice President, UMC N/A Ph.D. in Electrical Engineering, National Chiao Tung University
27 United Microelectronics Corporation | Annual Report 2019
Remuneration Paid to Directors (Including Independent Directors), Presidents and Vice Presidents Directors’ Remuneration (Including Independent Directors’)
Title Name Director's Remuneration Ratio of Total Remuneration Base Compensation (A) Severance Pay and Compensation to Business Execution (A+B+C+D) to Net Pensions(B) Directors(C) Expenses(D) Income (%)
The Companies The Companies The Companies The Companies The Companies Company in the Company in the Company in the Company in the Company in the Consolidated Consolidated Consolidated Consolidated Consolidated Financial Financial Financial Financial Financial Statements Statements Statements Statements Statements
Chairman Stan Hung
Independent Cheng-Li Huang Director
Independent Wenyi Chu Director
Independent Lih J. Chen Director
Independent Jyuo-Min Shyu Director
Director Chung Laung Liu 0 1,037 0 0 10,259 21,259 7,080 7,170 0.18 0.30
Director Ting-Yu Lin
Director Hsun Chieh Investment Co., Ltd. Representative: SC Chien
Silicon Integrated Director Systems Corp. Representative: Jason Wang
In addition to the information disclosed in the table above, has any Director of the Company provided services to any of the companies included in the Financial Statements and received compensation for such services (e.g. provided consultation services in a non-employee capacity): None.
28 Corporate Governance Report
In Thousand NTD Compensation Earned by a Director Who Is an Employee of UMC or Ratio of Total Compensation Compensation UMC’s Consolidated Entities (A+B+C+D+E+F+G) to Net from Base Compensation Severance Pay Employees' Profit Sharing Bonus (G) Income (%) Other Non- Bonuses and Consolidated and Special Pensions (F) Entities Expenses etc. (E) Invested by the The Companies The Companies The Companies in the The Companies in Company Company in the Company in the Company Consolidated Company the Consolidated Consolidated Consolidated Financial Statements Financial Financial Financial Statements Cash Stock Cash Stock Statements Statements
39,155 47,959 290 290 9,360 0 9,360 0 0.68 0.90 1,680
29 United Microelectronics Corporation | Annual Report 2019
Remuneration Paid to Directors (Including Independent Directors), Presidents and Vice Presidents (Continue)
Remuneration Range for Each Names of Directors Director in the Sum of the First 4 Items (A+B+C+D) Sum of the First 7 Items (A+B+C+D+E+F+G) Company The Companies The Companies Company in the Company in the Consolidated Consolidated Financial Financial Statements Statements Lower than NTD 1,000,000 Jason Wang SC Chien
NTD 1,000,000 (inclusive)~ Stan Hung Hsun Chieh Hsun Chieh Investment Hsun Chieh Investment NTD 2,000,000 (exclusive) Hsun Chieh Investment Investment Co., Ltd. Co., Ltd. Co., Ltd. Co., Ltd. Silicon Integrated Silicon Integrated Silicon Integrated Silicon Integrated Systems Corp. Systems Corp. Systems Corp. Systems Corp. NTD 2,000,000 (inclusive)~ Cheng-Li Huang Cheng-Li Huang Cheng-Li Huang Cheng-Li Huang NTD 3,500,000 (exclusive) Wenyi Chu Wenyi Chu Wenyi Chu Wenyi Chu Lih J. Chen Lih J. Chen Lih J. Chen Lih J. Chen Jyuo-Min Shyu Jyuo-Min Shyu Jyuo-Min Shyu Jyuo-Min Shyu Chung Laung Liu Chung Laung Liu Chung Laung Liu Chung Laung Liu Ting-Yu Lin Ting-Yu Lin Ting-Yu Lin Ting-Yu Lin Jason Wang SC Chien NTD 3,500,000 (inclusive)~ NTD 5,000,000 (exclusive)
NTD 5,000,000 (inclusive)~ Stan Hung NTD 10,000,000 (exclusive)
NTD 10,000,000 (inclusive)~ Stan Hung NTD 15,000,000 (exclusive)
NTD 15,000,000 (inclusive)~ Jason Wang Stan Hung NTD 30,000,000 (exclusive) SC Chien SC Chien
NTD 30,000,000 (inclusive)~ Jason Wang NTD 50,000,000 (exclusive)
NTD 50,000,000 (inclusive)~ NTD 100,000,000 (exclusive)
NTD 100,000,000 or More
Total 11 11 11 11
30 Corporate Governance Report
31 United Microelectronics Corporation | Annual Report 2019
Remuneration Paid to Directors (Including Independent Directors), Presidents and Vice Presidents (Continue)
Compensation Paid to Presidents and Vice Presidents
Title Name Salary(A) Severance Pay and Pensions(B) Bonuses and Special Expenses etc. (C) The Companies in the The Companies in the The Companies in the Company Consolidated Company Consolidated Company Consolidated Financial Financial Financial Statements Statements Statements
Chairman & Chief Stan Hung Strategic Officer President SC Chien President Jason Wang Executive Vice Ming Hsu President
Senior Vice Oliver Chang President
Senior Vice Chitung Liu President & Chief Financial Officer Senior Vice Lucas S Chang President & General Counsel 71,362 90,924 2,147 2,147 91,494 99,911 Vice President TS Wu Vice President C C Hsu Vice President M C Lai Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President Y S Shen Vice President Steven S Liu Vice President SR Sheu Vice President M L Liao Vice President S S Hong Vice President Francia Hsu
Vice President Eric Chen & Chief Human Resources Officer
32 Corporate Governance Report
In Thousand NTD Employees' Profit Sharing Bonus(D) Ratio of Total Compensation (A+B+C+D) Compensation from Other Non- to Net Income (%) Consolidated Entities Invested by the Company The Companies in the The Companies in the Company Consolidated Company Consolidated Financial Statements Financial Statements
Cash Stock Cash Stock
41,930 0 41,930 0 2.13 2.42 2,995
33 United Microelectronics Corporation | Annual Report 2019
Remuneration Paid to Directors (Including Independent Directors), Presidents and Vice Presidents (Continue)
Compensation Range for Each President Names of Presidents and and Vice President in the Company Vice Presidents
The Company Companies in the Consolidated Financial Statements
Lower than NTD 1,000,000 Oliver Chang Oliver Chang
NTD 1,000,000 (inclusive)~ NTD 2,000,000 (exclusive)
NTD 2,000,000 (inclusive)~ NTD 3,500,000 (exclusive)
NTD 3,500,000 (inclusive)~ NTD 5,000,000 (exclusive)
NTD 5,000,000 (inclusive)~ Lucas S Chang, M C Lai, G C Hung, Wenchi Ting M C Lai, G C Hung, Wenchi Ting, Y S Shen NTD 10,000,000 (exclusive) Y S Shen, SR Sheu, M L Liao, S S Hong SR Sheu, M L Liao, S S Hong Francia Hsu, Eric Chen Francia Hsu, Eric Chen
NTD 10,000,000 (inclusive)~ Stan Hung, Ming Hsu, Chitung Liu, TS Wu Stan Hung, Chitung Liu, TS Wu NTD 15,000,000 (exclusive) C C Hsu, Jerry CJ Hu, Steven S Liu C C Hsu, Jerry CJ Hu, Steven S Liu
NTD 15,000,000 (inclusive)~ SC Chien, Jason Wang SC Chien, Ming Hsu, Lucas S Chang NTD 30,000,000 (exclusive)
NTD 30,000,000 (inclusive)~ Jason Wang NTD 50,000,000 (exclusive)
NTD 50,000,000 (inclusive)~ NTD 100,000,000 (exclusive)
NTD 100,000,000 or More
Total 20 20
34 Corporate Governance Report
Remuneration Paid to Directors (Including Independent Directors), Presidents and Vice Presidents (Continue)
Employees’ Profit Sharing Bonus Paid to Management Team In Thousand NTD Title Name Stock Cash Total Ratio of Total Profit Sharing Bonus to Net Income (%)
Chairman & Chief Strategic Stan Hung Officer
President SC Chien President Jason Wang Executive Vice President Ming Hsu Senior Vice President Oliver Chang Senior Vice President & Chitung Liu Chief Financial Officer Senior Vice President & Lucas S Chang General Counsel Vice President TS Wu Vice President C C Hsu Vice President M C Lai Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President Y S Shen Vice President Steven S Liu Vice President SR Sheu Vice President M L Liao Vice President S S Hong Vice President Francia Hsu Vice President & Chief Eric Chen Human Resources Officer 0 65,626 65,626 0.68 Associate Vice President Johnson Liu Associate Vice President Victor Chuang Associate Vice President Chuck Chen Associate Vice President S F Tzou Associate Vice President Le Tien Jung Associate Vice President Yau Kae Sheu Associate Vice President J Y Wu Associate Vice President Osbert Cheng Associate Vice President Steven Hsu Associate Vice President Purakh Raj Verma Associate Vice President Yanan Mou Associate Vice President C Y Hsu Associate Vice President Remi Yu Associate Vice President Michael CY Wang Associate Vice President Ji Fu Kung Associate Vice President C P Yen Associate Vice President Mindy Lin Associate Vice President Pang Min Wang Former Associate Vice T W Liu President Former Associate Vice Chih Chong Wang President
35 United Microelectronics Corporation | Annual Report 2019
Comparison of Compensation of Directors, Presidents and Vice Presidents in the Past Two Years
2019 2018
The Company Companies in The Company Companies in the Consolidated the Consolidated Financial Statements Financial Statements
Net Income Stated in the Parent Company Only 9,707,614 9,707,614 7,072,990 7,072,990 Financial Reports (In Thousand NTD)
The Percentage of Directors’ Remuneration to Net 0.18 0.30 0.19 0.21 Income (%)
The Percentage of Executive officer’s Compensation 2.13 2.42 8.06 8.52 to Net Income (%)
Note 1: The directors’ remuneration includes Base Compensation, Severance Pay and Pensions, Compensation to Directors and Business Execution Expenses. The managerial officer’s compensation includes Salary, Severance Pay and Pensions, Bonuses and Special Expenses etc., and Employees’ Profit Sharing Bonus. Note 2:Relevant information during 2018 and 2019 were prepared in accordance with International Financial Reporting Standards which are endorsed by Financial Supervisory Commission.
The Company’ s compensation for Directors and Executive officer’s is based on UMC’s Articles of Incorporation and formulations, and is distributed in proper ratios.
The Standards and Policies, and Portfolios for Payment of Emoluments, Procedures for Setting Emoluments, and Correlations with Business Performance and Future Risks. Policy for Directors’ (Including Independent Directors’) UMC shall assess the performance of directors and officers Compensation according to the Rules for Performance Assessment of Pursuant to UMC’s Articles of Incorporation, Article 21-1, the Board of Directors and the Performance Appraisal for the Company shall allocate no more than 0.1% of profit as employees of UMC, in order to decide their compensation. directors’ (including Independent Directors’) compensation An adequate compensation scheme will be calculated for each profitable fiscal year after offsetting any cumulative by referencing the Company’s operation results, future losses. Directors (including Independent Directors) may only risks, corporate strategies, industry trends, and also receive compensation in cash. In accordance with Article individual contribution. The performance assessment 17, remunerations for all directors (including Independent and compensation proposals were reviewed and approved Directors) shall be decided by the Board of Directors authorized by Nominating Committee, Remuneration Committee by a meeting of shareholders according to involvements and and Board of Directors. The Company will review the contributions to the Companies’ operation and at the normal remuneration policy foresaid based on macroeconomics rate adopted by other firms of the same industry. and business strategies to achieve both corporate sustainability and the interests of stakeholders. Policy for Management Team’s Compensation The Company annually evaluates its salary level with similar industries to ensure the Company’s salary is competitive. The Company’s salary structure can be divided into fixed and variable. The compensation is set to fully reflect the achievements for individuals and teams.
36 Corporate Governance Report
37 United Microelectronics Corporation | Annual Report 2019
Corporate Governance Practices Information of Board Meeting Operation Board Meetings were held 6 times in 2019; all independent directors attended each meeting in person; the average attendance rate of all directors was 100%; the attendances of directors were as follows:
Title Name Attendance in By Proxy Attendance Rate (%) Remarks Person Chairman Stan Hung 6 0 100.00
Independent Cheng-Li Huang 6 0 100.00 Director Independent Wenyi Chu 6 0 100.00 Director Independent Lih J. Chen 6 0 100.00 Director Independent Jyuo-Min Shyu 6 0 100.00 Director Director Chung Laung Liu 6 0 100.00
Director Ting-Yu Lin 6 0 100.00
Director Hsun Chieh Investment Co., Ltd.
6 0 100.00 Representative: SC Chien
Director Silicon Integrated Systems Corp. 6 0 100.00 Representative: Jason Wang
Other mentionable items: 1. If any of the following circumstances occur, the dates of the meetings, sessions, contents of motion, all independent directors’ opinions and the company’s response should be specified: (1) Matters referred to in Article 14-3 of the Securities and Exchange Act: The Company has established an Audit Committee, and Article 14-3 of the Securities and Exchange Act is not applicable to the Company. Please refer to Page 41-43 of the Annual Report for related information of the operation status of the Audit Committee. (2) Other matters involving objections or expressed reservations by independent directors that were recorded or stated in writing that require a resolution by the board of directors: None. 2. If there are directors’ avoidance of motions in conflict of interest, the directors’ names, contents of motion, causes for avoidance and voting should be specified: (1) Proposals for retroactive recognition of UMC’s disposal of Machinery and Equipment to United Semiconductor (XIAMEN) Co., Ltd. and UMC's Singapore branch to lend funds to United Semiconductor (XIAMEN) Co., Ltd. on March 6, 2019: Director SC Chien was in conflict of interest and avoided the discussion and vote of the proposal since he also served concurrently as the Director of United Semiconductor (XIAMEN) Co., Ltd. The proposal was approved without dissent by all other Directors in attendance. (2) Proposal for UMC’s donation to UMC Science and Culture Foundation on March 6, 2019: Chairman Stan Hung and Director SC Chien were in conflict of interest and avoided the discussion and vote of the proposal since Chairman Stan Hung and Director SC Chien also served concurrently as the Directors of UMC Science and Culture Foundation. The proposal was approved without dissent by all other Directors in attendance. (3) Proposal for approving the distributable compensation for managerial officers on March 6, 2019, June 19, 2019 and December 18, 2019: Directors who also served concurrently as the Company’s managerial officers were in conflict of interest and avoided the discussion and vote of the proposal. The proposal was approved without dissent by all other Directors in attendance. (4) Proposal for approving to adjust the attendance fee of the Audit Committee on December 18, 2019: Directors who also attended the Audit Committee were in conflict of interest and avoided the discussion and vote of the proposal. The proposal was approved without dissent by all other Directors in attendance.
38 Corporate Governance Report
3. For the information of evaluation cycles, periods, scope, method and content of self-evaluation of the Board of Directors, please refer to the execution status of the self-evaluation of the Board of Directors. 4. Measures taken to strengthen the functionality of the board: To implement corporate governance and enhance the Nomination and Election of the Board, the Company designated a Company Secretary in 2019, and “Policy for Nomination and Election of Directors” and “Skill Matrix of Board Members,” which are references for the composition structure of the Board established by the Nominating Committee. Aside from conducting board performance evaluation every year, the Company also engaged with TAIWAN CORPORATE GOVERNANCE ASSOCIATION to implement performance evaluation of the Board of Directors in 2018, please refer to the Company’s website for the evaluation report: http://www.umc.com/English/investors/Corp_Gov.asp
Note : Attendance rate is calculated by using the number of meetings each board member actually attends and the total number of board meetings held within his or her service period.
39 United Microelectronics Corporation | Annual Report 2019
Execution Status of the Board Evaluation
Evaluation Cycle Evaluation Period Evaluation Scope Evaluation Method Evaluation Content
Annually 2019/1/1~2019/12/31 The Company’s board Self-evaluation of the 1. The self-evaluation of the board of self-evaluation scope board, its functional directors includes the following covers the evaluation committees and of the board, functional individual board aspects: committees and members’ performance (1) Participation in the operation of the individual board company; members. (2) Improvement of the quality of the board of directors’ decision making; (3) Composition and structure of the board of directors; (4) Election and continuing education of the directors; and (5) Internal control. 2. The self-evaluation of the functional committees includes the following aspects: (1) Participation in the operation of the company; (2) Awareness of the duties of the functional committee; (3) Improvement of quality of decisions made by the functional committee; (4) Composition of the functional committee and election of its members; and (5) Internal control. 3. The self-evaluation of board members includes the following aspects: (1) Familiarity with the goals and missions of the company; (2) Awareness of the duties of a director; (3) Participation in the operation of the company; (4) Management of internal relationships and communication; (5) The director’s professionalism and continuing education; and (6) Internal control.
40 Corporate Governance Report
Operation of the Audit Committee
The Audit Committee assists the Board of Directors in The Audit Committee is responsible for periodic review of performing its supervision functions. It is also responsible for the following important annual matters： tasks defined by the Company Act, Securities and Exchange • Financial statements Act and other relevant regulations. Since UMC is listed on • Internal control system the NYSE, it also has to comply with the U.S. regulations • Material transactions of assets, derivatives, loans, regarding foreign issuers. The Audit Committee is comprised endorsements, guarantees of all independent directors, with 2 financial experts and • Audit plans of internal and external auditors and their operating according to the Audit Committee Charter (please execution status refer to the Company’s website at http://www.umc.com/ • Engaging and removing the Company’s independent English/pdf/Audit_Committee_Charter_Eng.pdf). auditors and accessing such auditors’ remuneration and According to the relevant regulations, the Audit Committee independence shall convene at least four regular meetings per year. In 2019 • Risks and control procedures of compliance with a total of five meetings were convened; it shall also maintain government law good communication channels with the Company’s internal • Execution of documentation that involves government auditors, independent auditors, and management. agencies • Implementation of Whistleblower Program and Code of Conduct Information of Audit Committee Operation There were five Audit Committee meetings in 2019, and the attendance status is shown in the following table:
Title Name Attendance Proxy Attendance Actual Attendance Note Rate (%)
Independent Cheng-Li Huang 5 0 100.00 Audit Committee convener Director
Independent Wenyi Chu 5 0 100.00 Director
Independent Lih J. Chen 5 0 100.00 Director
Independent Jyuo-Min Shyu 5 0 100.00 Director
41 United Microelectronics Corporation | Annual Report 2019
Operation of the Audit Committee (Continue)
Other Matters to Be Recorded: 1. If the Audit Committee operates in any of the following circumstances, the date and session of the Board meeting, the content of motion, the resolution of Audit Committee, and the company’s response to the opinion of the Audit Committee should be specified: (1) Items listed in Article 14-5 of Securities and Exchange Act Date/Session of Board Content of Motion Resolution of the Company’s Response Meeting Audit Committee to the Opinion of the Audit Committee
March 6, 2019, the 7th 1. Approved the 2018 Consolidated Financial Statements Approved by Approved th meeting of the 14 (including Parent Company only Financial Statements). all members by directors session present in the participating in 2. Approved the 2018 Statement of Internal Control System. meeting. the discussion and 3. Approved the content of appointed service and fee for the voting in the board independent auditor appointed in 2019. meeting. 4. Approved the Company’s donation to UMC Science and Culture Foundation. 5. Approved amendment of the UMC Acquisition or Disposal of Assets Procedure. 6. Approved amendment of the UMC Financial Derivatives Transaction Procedure. 7. Approved for UMC’s Singapore branch to lend funds to United Semiconductor (Xiamen) Co., Ltd. 8. Approved termination of the issuance plan for private placement, which was approved at the 2018 Annual General Meeting.
April 24, 2019, the 8th 1. Approved the Q1 2019 Consolidated Financial Statements. Approved by Approved th meeting of the 14 2. Approved amendment of the UMC Loan Procedure. all members by directors session present in the participating in 3. Approved amendment of the UMC Endorsements and meeting. the discussion and Guarantees Procedure. voting in the board meeting. July 24, 2019, the 10th 1. Approved the Q2 2019 Consolidated Financial Statements. Approved by Approved th meeting of the 14 2. Approved to decrease the endorsement and guarantee of all members by directors session present in the participating in the syndication loan for United Semiconductor (Xiamen) meeting. the discussion and Co., Ltd. voting in the board meeting.
42 Corporate Governance Report
Operation of the Audit Committee (Continue)
Date/Session of Board Content of Motion Resolution of the Company’s Response Meeting Audit Committee to the Opinion of the Audit Committee
October 30, 2019, the 1. Approved the Q3 2019 Consolidated Financial Statements. Approved by Approved 11th meeting of the all members by directors 14th session present in the participating in meeting. the discussion and voting in the board meeting. December 18, 2019, 1. Approved the revision of the internal control system and Approved by Approved th the 12 meeting of internal audit implementation rules. all members by directors the 14th session present in the participating in 2. Approved to decrease the endorsement and guarantee of meeting. the discussion and the syndication loan for United Semiconductor (Xiamen) voting in the board Co., Ltd. meeting. 3. Approved the content of appointed service and fee of independent auditor appointed.
February 26, 2020, 1. Approved the 2019 Consolidated Financial Statements Approved by Approved th the 13 meeting of (including Parent Company only Financial Statements). all members by directors the 14th session present in the participating in 2. Approved the 2019 Statement of Internal Control System. meeting. the discussion and 3. Approved for UMC’s Singapore branch to lend funds to voting in the board United Semiconductor (Xiamen) Co., Ltd. meeting. 4. Approved issuing restricted stock awards for employees. 5. Approved the content of appointed service and fee for the independent auditor appointed in 2020. 6. Approved the Company’s donation to UMC Science and Culture Foundation.
(2) There were no other resolutions that were not approved by the Audit Committee but were approved by two thirds or more of all directors in 2019.
2. Implementation of avoidance of independent director with respect to motion of stake: there was no such situation in the Audit Committee in 2019. 3. The communication channels between the independent directors, internal auditors, and independent auditors: (1) The Company’s Audit Division sends the audit reports and follow-up reports on deficiencies to independent directors monthly. Besides these measures, the Internal Audit head presents the findings of all audit reports and communicates follow-up reports with independent directors during the Audit Committee’s quarterly meetings. (2) Each quarter, the Company’s independent auditors present the findings of their review or audit reports regarding the financial results and internal control of the Company and its subsidiaries. The independent auditors are also required to communicate to the Audit Committee the impact of IFRSs updates and announcements, any issues under applicable laws and regulations that might affect the financial reports, as well as whether to adjust the entries. (3) The Internal Audit head, the independent auditors and independent directors can contact each other as needed. The communication channels are seamless.
For the communication between independent directors, internal audit head, and independent auditors, please refer to the Company’s website: http://www.umc.com/English/investors/audit_committee/2019_communication.asp
43 United Microelectronics Corporation | Annual Report 2019
Corporate Governance Implementation Status and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”
Evaluation Item
Yes No
1. Does the company establish and disclose the Corporate Governance Best-Practice Principles based on “Corporate Governance Practice Principles for TWSE/TPEx Listed Companies?”
2. Shareholding Structure & Shareholders’ Rights (1) Does the company establish an internal operating procedure to deal with shareholders’ suggestions, doubts, disputes and litigations, and implement based on the procedure?
(2) Does the company possess the list of its major shareholders as well as the ultimate owners of those shares?
(3) Does the company establish and execute the risk management and firewall system within its conglomerate structure?
(4) Does the company establish internal rules against insiders trading with undisclosed information?
3. Composition and Responsibilities of the Board of Directors
(1) Does the Board develop and implement a diversified policy for the composition of its members?
(2) Does the company voluntarily establish other functional committees in addition to the Remuneration Committee and the Audit Committee?
44 Corporate Governance Report
Implementation Status Deviations from “The Corporate Governance Best-Practice Abstract Explanation Principles for TWSE/TPEx Listed Companies” and Reasons The UMC Corporate Governance Practice Principles is posted on the Corporate Governance section None of UMC’s website for stakeholders to download. Please refer to: http://www.umc.com/English/pdf/ UMC_Corporate_Governance_Practice_Principles_20191030_eng.pdf
UMC has designated a specific contact window ([email protected]) and included a Investor Relations UMC deals with shareholders’ section on the Stakeholder Contacts of the Company’s website to deal with shareholders’ suggestions, suggestions, doubts, disputes and doubts, disputes and litigation. Please refer to the Company’s website for stakeholders’ contact: litigation based on “the Corporate http://www.umc.com/English/CSR/c_2.asp Governance Best-Practice Principles for TWSE/TPEx Listed Companies.” UMC does not establish an internal operating procedure.
UMC possesses the list of its major shareholders as well as the ultimate owners of those shares. None
UMC has established relevant control mechanisms within its internal regulations and internal None control systems in accordance with laws and regulations (including “Rules for Regulating Related Party Transactions”). UMC has formulated the Provisions on Insider Trading Prevention Policies and Control Procedures None and is committed to advocating policies against insider trading.
UMC has established the Policy for Nomination and Election of Directors that takes into account None the Company’s organizational culture, business model and long-term development, and has also established criteria to ensure the diversity of the Board members. The UMC Board of Directors comprises of 9 members from different professional backgrounds, and is responsible for company operation and supervision. The diverse academic and industrial experiences of the Board members are an asset to corporate decision-making and long-term strategic planning. Currently, the Board has 4 seats for independent directors and 2 for outside directors, while 3 serve as administrative directors. Two thirds of the director seats are filled by members of outside companies. There is 1 female director seat, and based on our policy of gender equality, UMC will increase the seats of female directors progressively. The Board of UMC is composed of members with diversified backgrounds of industry, government and academia; board members' experiences include the president of a national university, academician of Academia Sinica, the Minister of Science and Technology, president of ITRI, financial experts of finance, accounting and strategy management fields, and professionals from semiconductor and ICT businesses. The directors are qualified on the basic criteria, and professionalism requirements can also contribute to supervising and governing the issues on corporate governance, environmental sustainability, corporate social responsibility, legal compliance and human rights protection through the sub-committees. Please refer to UMC’s Policy for Nomination and Election of Directors for UMC Board diversification criteria, the Directors’ Information and the Skill Matrix of Board members for implementation of Board diversification on the Company’s website: http://www.umc.com/English/investors/Corp_Gov.asp
To meet the needs of industrial characteristics and operations, UMC has established the Capital None Budget Committee. The Committee currently comprises of four independent directors and two external directors responsible for assisting UMC with its long-term development strategy, financial planning and business performance. For the sustainable development of UMC and assisting the Board with enhancing its management mechanism and improving corporate governance, UMC established the Nominating Committee. The Committee comprises of all independent directors who are responsible for searching and reviewing the candidate list of the directors and executives accordingly, executing the performance assessment of the directors and executives, and supervision of corporate governance. For information on the Capital Budget Committee and the Nominating Committee, please refer to the UMC’s website at http://www.umc.com/English/investors/Corp_Gov. asp
45 United Microelectronics Corporation | Annual Report 2019
Corporate Governance Implementation Status and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (Continue)
Evaluation Item
Yes No
(3) Does the company establish a standard to measure the performance of the Board, and implement it annually? Are the implemented results reported to the Board, and used as a reference for individual directors’ compensation and nomination renewal?
(4) Does the company regularly evaluate the independence of CPAs?
46 Corporate Governance Report
Implementation Status Deviations from “The Corporate Governance Best-Practice Abstract Explanation Principles for TWSE/TPEx Listed Companies” and Reasons UMC has formulated Rules for Performance Evaluation of the Board of Directors and implemented None it accordingly. A. The Company conducted annual self-evaluation of the BOD, its functional committees and individual board members’ performance. In 2019, the Nominating Committee conducted the self-evaluation of the Board of Directors, functional committees and individual board members and reported the result to the Nominating Committee and Board of Directors on February 26, 2020. The performance result was "Excellent". B. The performance of the Board is also implemented by an external independent professional institution or a panel of external experts and scholars at least once every three years. The Company engaged with an external assessment institution to implement performance evaluation of the Board of Directors in 2018. Please refer to the Company’s website for “The Rules for Performance Evaluation of the Board of Directors”: http://www.umc.com/English/ pdf/The_Rules_for_Performance_Evaluation_of_the_Board_of_Directors_eng.pdf. The Company’s Directors’ Compensation is regulated in the Company’s Articles of Incorporation. The Company shall allocate no more than 0.1% of profit as directors’ compensation for each profitable fiscal year, so Directors’ Compensation is linked to the performance of the Company’s operation and the Board. According to the Policy for Nomination and Election of Directors, performance assessment of the board is used as a reference for nomination and election of Directors.
UMC’s Audit Committee regularly evaluates the internal quality control procedures and independence None of independent auditors, and reports to the Board of Directors for approval: A. Auditor Independence Declaration. B. Alll audit and non-audit services provided by independent auditors are first reviewed by the Audit Committee to ensure that non-audit services do not influence audit outcome. C. The same independent auditor has not performed audit services for more than five consecutive years. D. UMC evaluates the independence and competence of the external auditor annually, including the size and reputation of the accounting firm, the nature and extent of providing non-audit services, peer review, quality of audit services, whether there are any legal proceedings, etc.
47 United Microelectronics Corporation | Annual Report 2019
Corporate Governance Implementation Status and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (Continue)
Evaluation Item
Yes No
4. Does the company have an adequate number of corporate governance personnel with appropriate qualifications and appoint a chief corporate governance officer to be in charge of corporate governance affairs (including but not limited to providing information for directors and supervisors to perform their functions, assisting directors and supervisors with legal compliance, handling matters relating to board meetings and shareholders meetings according to laws, producing minutes of board meetings and shareholders meetings)?
5. Does the company establish a communication channel and build a designated section on its website for stakeholders (including but not limited to shareholders, employees, customers, and suppliers), as well as handle all the issues they care for in terms of corporate social responsibilities?
48 Corporate Governance Report
Implementation Status Deviations from “The Corporate Governance Best-Practice Abstract Explanation Principles for TWSE/TPEx Listed Companies” and Reasons UMC has established the Nominating Committee to strengthen the functions of the Board of Directors, None ensure shareholders’ rights, and supervise relevant departments in the formulation of corporate governance rules and systems. The appointment of the Chief Corporate Governance Officer was approved by the Nominating Committee and Board of Directors on March 6, 2019. The Chief Corporate Governance Officer is the CFO who has been in a managerial position for at least three years in a public company in handling financial and stock affairs. The Chief Corporate Governance Officer had already completed 15 hours of training in 2019, and will complete professional training in accordance with laws and regulations. The key task of the Chief Corporate Governance Officer is supervising finance division’s convening of Board meetings and shareholders meetings, producing meeting agendas, minutes and information disclosures, providing business information required by the directors, assisting the directors with legal compliance, and assisting the directors with their responsibilities and in-service training. In addition, every year the Chief Corporate Governance Officer communicates with the independent directors on corporate governance-related affairs on a regular basis. The following are the 2019 Corporate Governance tasks, and a report has been submitted to the Nominating Committee and Board of Directors: 1. Ensure that Board members are promptly informed of key company information, and immediately notified after the company has issued a press release. 2. Institute a Nominating Committee under the Board of Directors to supervise corporate governance plans and implementation by UMC and its subsidiaries. Regularly report UMC’s key operational and governance issues or legal amendments to the Board. 3. Arrange the required number of hours of in-service education for members of the Board, evaluate and purchase appropriate Directors’ and Officers’ Liability Insurance and report its contents to the Board of Directors. 4. Convene communication meetings on an as needed basis for independent directors, independent auditors and the head of auditing, finance and accounting to implement internal control. 5. Notify Board of Directors members of the agenda seven days before Board meetings, convene meetings and provide meeting materials. Avoid presence during discussion and voting where a motion presents a conflict of interest. Complete and submit minutes of the Board of Directors meeting to each Board member within 20 days after the meeting. 6. To fulfill corporate governance, evaluate the performance of the Board of Directors, functional committees and individual board members according to the Rules for Performance Evaluation of the Board of Directors, and accept external evaluation at least once every three years. 7. Conduct investor briefings on quarterly business performance, participate in periodic investment forums, designate specialists to service shareholders and establish multi communication channels for investors. 8. Schedule shareholders’ meeting in accordance with the law, complete and post meeting notifications, issue the meeting handbook and minutes within the legally mandated time frame, record changes such as Articles of Incorporation of UMC or Board re-election within the legally mandated time frame.
UMC’s Corporate Sustainability Committee is responsible for stakeholders and identifying issues across None the Company. The Committee is also responsible for establishing consultation and communication channels with stakeholders in accordance with internal operational mechanisms, designating specialists to receive, record and respond to messages and input from various stakeholders. The Corporate Sustainability Committee conducts annual review of key corporate social responsibility issues and contingency plans to determine appropriate responses and publicly disclose relevant stakeholder communication information through the annual Corporate Social Responsibility Report and UMC’s website, and at the same time reports key stakeholder concerns and countermeasures at Board meetings.
49 United Microelectronics Corporation | Annual Report 2019
Corporate Governance Implementation Status and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (Continue)
Evaluation Item
Yes No
6. Does the company appoint a professional shareholder service agency to deal with shareholder affairs?
7. Information Disclosure
(1) Does the company have a corporate website to disclose both financial standings and the status of corporate governance?
(2) Does the company have other information disclosure channels (e.g. building an English website, appointing designated people to handle information collection and disclosure, creating a spokesman system, webcasting investor conferences)?
(3) Does the company announce the annual financial report within 2 months after the end of the fiscal year, and announce the Q1, Q2, Q3 financial reports and monthly operation status before the deadlines?
8 Is there any other important information to facilitate a better understanding of the company’s corporate governance practices (e.g., including but not limited to employee rights, employee wellness, investor relations, supplier relations, rights of stakeholders, directors’ and supervisors’ training records, the implementation of risk management policies and risk evaluation measures, the implementation of customer relations policies, and purchasing insurance for directors and supervisors)?
9. Please explain the improvements which have been made in accordance with the results of the Corporate Governance Evaluation System released by the Corporate Governance Center, Taiwan Stock Exchange, and provide the priority enhancement measures.
50 Corporate Governance Report
Implementation Status Deviations from “The Corporate Governance Best-Practice Abstract Explanation Principles for TWSE/TPEx Listed Companies” and Reasons UMC has appointed Horizon Securities Co., Ltd., a professional shareholder service agency, to deal with None shareholder affairs.
The Company has built a corporate website and exclusive webpage to publish up-to-date information None for both financial standings and the status of corporate governance at all times for investors’ reference. Please refer to the Company’s website for related information: http://www.umc.com/English/investors/ index.asp
The Company has built Chinese and English websites and appointed a designated person to handle None information collection and disclosure, including the information of investor conferences. The Company also has designated a spokesperson, acting spokesperson(s), and a specific contact window (ir@umc. com) to deal with shareholders’ suggestions as per regulation. Please refer to the Company’s website for related information: http://www.umc.com
The Company announces its monthly operation status within the prescribed deadlines and announces None the annual and the quarterly financial reports before the deadlines. The Company’s announcement of the 2019 annual financial report was completed on February 26, 2020.
(1) Continuing Education/Training of Directors: To strengthen the competency of the Board, UMC None informs its directors periodically of professional courses held by relevant organizations. For Continuing Education/Training of Director, please refer to pages 52-54 of this annual report. (2) Board meeting attendance: Please refer to Page 38-43 on Board of Directors Operations and Audit Committee Operations, and Page 62 on Remuneration Committee Operations in this annual report. (3) Risk management policies and risk measurement standards implementation: Please refer to Risk Matters in this annual report. (4) Customer policy implementation: Please refer to Page 127 on Market, Production and Sales Overview in this annual report and the Corporate Social Responsibility Report on the UMC website at http://www.umc.com/English /CSR/b.asp. (5) Employee Rights, Employment Care, Investor Relations, Supplier Relationships and Stakeholders Rights Implementation: Please refer to the Corporate Social Responsibility Report on the UMC website at http://www.umc.com/English/CSR/b.asp, and the Stakeholder Engagement - communication of stakeholders at http://www.umc.com/English/CSR/c_2_2.asp (6) The status of liability insurance for directors and supervisors purchased by the Company: UMC has purchased liability insurance for directors since 2000. The renewal of liability insurance for directors was completed in 2019 and was reported during the last Board Meeting. (7) UMC website for corporate governance policies and implementation: http://www.umc.com/English/ investors/Corp_Gov.asp.
UMC was in the top 5% of rankings in “Corporate Governance Evaluation” for five consecutive years since 2015. To implement corporate governance and enhance the Company’s board functions, the Company designated Company Secretary in 2019, and “Policy for Nomination and Election of Directors” and “Skill Matrix of Board Members” which are references for composition structure of the Board are established by the Nominating Committee.
51 United Microelectronics Corporation | Annual Report 2019
Continuing Education/Training of Directors in 2019:
Title Name Study Period Sponsoring Course Training Compliance Organization Hours with From To Regulations （Note）
Chairman Stan Hung 2019.07.23 2019.07.23 TAIWAN CORPORATE Global Trends for 3 Yes GOVERNANCE Sustainable Development ASSOCIATION of Corporate Social Responsibility & Adaptive Planning of Management 2019.10.29 2019.10.29 TAIWAN CORPORATE International Anti-Tax 3 Yes GOVERNANCE Avoidance Development ASSOCIATION Independent Cheng-Li 2019.07.31 2019.07.31 SECURITIES & FUTURES The Compliance of Insider 3 Yes Director Huang INSTITUTE Equity Trading Regulations of Listed Companies Advocacy Meeting in 2019
2019.10.04 2019.10.04 TAIWAN STOCK ESG Investment Forum 2 Yes EXCHANGE CORPORATION
2019.11.21 2019.11.21 TAIWAN STOCK 2019 Board Functions 3 Yes EXCHANGE Enhancement Seminars CORPORATION
2019.12.13 2019.12.13 SECURITIES & FUTURES The Hedging Practice 3 Yes INSTITUTE of Derivatives of Listed Companies Seminar in 2019 2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for Technology 3 Yes GOVERNANCE Risk & the Governance of ASSOCIATION Information Security
Independent Wenyi Chu 2019.04.26 2019.04.26 SECURITIES & FUTURES Insider Trading Prevention 3 Yes Director INSTITUTE Advocacy Meeting in 2019
2019.05.07 2019.05.07 TAIWAN STOCK ESG Investment Forum 3 Yes EXCHANGE CORPORATION
2019.11.06 2019.11.06 TAIWAN STOCK 2019 Board Functions 3 Yes EXCHANGE Enhancement Seminars CORPORATION
2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for Technology 3 Yes GOVERNANCE Risk & the Governance of ASSOCIATION Information Security
Independent Lih J. Chen 2019.11.27 2019.11.27 TAIWAN CORPORATE 15th International 3 Yes Director GOVERNANCE Corporate Governance ASSOCIATION Forum
2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for Technology 3 Yes GOVERNANCE Risk & the Governance of ASSOCIATION Information Security
52 Corporate Governance Report
Continuing Education/Training of Directors in 2019:
Title Name Study Period Sponsoring Course Training Compliance Organization Hours with From To Regulations （Note）
Independent Jyuo-Min 2019.03.26 2019.03.26 TAIWAN CORPORATE The New Regulation 1.5 Yes Director Shyu GOVERNANCE of Cayman & ASSOCIATION BVI Government Legislation about Economic Substance Activities 2019.05.03 2019.05.03 SECURITIES & FUTURES Insider Trading 3 Yes INSTITUTE Prevention Advocacy Meeting in 2019
2019.05.15 2019.05.15 TAIWAN CORPORATE The Impact of 1.5 Yes GOVERNANCE Statute for Industrial ASSOCIATION Innovation Drafts to Corporate’s Tax Planning in the Future 2019.08.13 2019.08.13 TAIWAN CORPORATE Internet Security & 1.5 Yes GOVERNANCE Emergency Response ASSOCIATION 2019.11.12 2019.11.12 TAIWAN CORPORATE Introduction of 1.5 Yes GOVERNANCE Corporate Governance ASSOCIATION Evaluation 2019.11.21 2019.11.21 TAIWAN STOCK 2019 Board Functions 3 Yes EXCHANGE Enhancement CORPORATION Seminars 2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for 3 Yes GOVERNANCE Technology Risk & ASSOCIATION the Governance of Information Security Director Chung 2019.08.02 2019.08.02 TAIWAN CORPORATE Digital Transformation 3 Yes Laung Liu GOVERNANCE and Cloud Computing ASSOCIATION
2019.09.03 2019.09.03 SECURITIES & FUTURES Directors & 3 Yes INSTITUTE Supervisors’ Principles of Performing Duties of Business Judgment 2019.09.03 2019.09.03 SECURITIES & FUTURES The Discussion of 3 Yes INSTITUTE International and Taiwan’s Anti-Tax Avoidance Development & Enterprise Response 2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for 3 Yes GOVERNANCE Technology Risk & ASSOCIATION the Governance of Information Security
53 United Microelectronics Corporation | Annual Report 2019
Continuing Education/Training of Directors in 2019:
Title Name Study Period Sponsoring Course Training Compliance Organization Hours with From To Regulations （Note）
Director Ting-Yu 2019.07.17 2019.07.17 SECURITIES & FUTURES The Compliance of 3 Yes Lin INSTITUTE Insider Equity Trading Regulations of Listed Companies Advocacy Meeting in 2019
2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for 3 Yes GOVERNANCE Technology Risk & ASSOCIATION the Governance of Information Security Representative SC Chien 2019.05.03 2019.05.03 SECURITIES & FUTURES Insider Trading 3 Yes of Juristic-Person INSTITUTE Prevention Advocacy Director Meeting in 2019 2019.08.02 2019.08.02 SECURITIES & FUTURES The Compliance of 3 Yes INSTITUTE Insider Equity Trading Regulations of Listed Companies Advocacy Meeting in 2019 2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for 3 Yes GOVERNANCE Technology Risk & ASSOCIATION the Governance of Information Security Representative Jason 2019.07.31 2019.07.31 SECURITIES & FUTURES The Compliance of 3 Yes of Juristic-Person Wang INSTITUTE Insider Equity Trading Director Regulations of Listed Companies Advocacy Meeting in 2019 2019.10.29 2019.10.29 TAIWAN CORPORATE International 3 Yes GOVERNANCE Anti-Tax Avoidance ASSOCIATION Development 2019.12.18 2019.12.18 TAIWAN CORPORATE The Trends for 3 Yes GOVERNANCE Technology Risk & ASSOCIATION the Governance of Information Security
Note: Regulations are Applicable Subjects, Continuing Education Hours, Continuing Education Scope, Continuing Education System and Continuing Education Arrangements and Information Disclosure specified in “Directions for the Implementation of Continuing Education for Directors and Supervisors of TWSE Listed and TPEx Listed Companies.”
54 Corporate Governance Report
Continuing Education/Training of Managers in 2019: Title Name Course Date Organizer Course Title Course Hours
Vice President M C Lai Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President SR Sheu Vice President Francia Hsu Vice President Eric Chen 2019.01.18 UNITED The Impact of the Sino-US Trade War 2 & Chief Human MICROELECTRONICS on Taiwan-funded Enterprises and the Resources Officer CORP. Countermeasures Associate Victor Chuang Vice President Associate Le Tien Jung Vice President Associate Mindy Lin Vice President Senior Chitung Liu 2019.03.25 ACCOUNTING Consolidated Financial Statement 6 Vice President & RESEARCH AND Preparation Practice Workshop Chief Financial DEVELOPMENT Officer FOUNDATION Vice President TS Wu Vice President Wenchi Ting Vice President SR Sheu 2019.04.12 UNITED 【2019 Master Forum】Strategy of Talent 2 Vice President Eric Chen MICROELECTRONICS and Organizational Capability & Chief Human CORP. Resources Officer Associate Victor Chuang Vice President Associate Mindy Lin Vice President Senior Chitung Liu 2019.05.16 ACCOUNTING The Practices of Corporate Governance: 3 Vice President & RESEARCH AND The Latest Amendments to the “Company Chief Financial DEVELOPMENT Act” and Corporate Correspondence Officer FOUNDATION
Senior Chitung Liu 2019.05.17 ACCOUNTING Analysis of Illegal Cases of Corporate 3 Vice President & RESEARCH AND “Securities Fraud” and Related Legal Chief Financial DEVELOPMENT Liabilities Officer FOUNDATION
55 United Microelectronics Corporation | Annual Report 2019
Continuing Education/Training of Managers in 2019: Title Name Course Date Organizer Course Title Course Hours
President SC Chien President Jason Wang Executive Vice Ming Hsu President Senior Chitung Liu Vice President & Chief Financial Officer Senior Lucas S Chang Vice President & General Counsel Vice President TS Wu Vice President C C Hsu Vice President M C Lai Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President Y S Sheng Vice President Steven S Liu Vice President SR Sheu Vice President M L Liao 2019.05.27 UNITED 【Legal Course】 Introduction of Trade 2 Vice President S S Hong 2019.05.30 MICROELECTRONICS Secrets Act 2019.06.05 CORP. Vice President Francia Hsu
Vice President Eric Chen & Chief Human Resources Officer Associate Victor Chuang Vice President Associate Chuck Chen Vice President Associate S F Tzou Vice President Associate Le Tien Jung Vice President Associate Yau Kae Sheu Vice President Associate J Y Wu Vice President Associate Osbert Cheng Vice President Associate Steven Hsu Vice President Associate Yanan Mou Vice President Associate Remi Yu Vice President Associate Ji Fu Kung Vice President Associate C P Yen Vice President Associate Mindy Lin Vice President Associate Pang Min Wang Vice President
56 Corporate Governance Report
Continuing Education/Training of Managers in 2019: Title Name Course Date Organizer Course Title Course Hours
Vice President TS Wu Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President Francia Hsu Vice President Eric Chen & Chief Human Resources Officer 2019.06.1 1 UNITED 【Executive Program】Innovation, Value 3 2019.06.25 MICROELECTRONICS Creation and Sustainable Development Associate Victor Chuang CORP. Vice President Associate Chuck Chen Vice President Associate S F Tzou Vice President Associate Osbert Cheng Vice President Associate Mindy Lin Vice President Associate S F Tzou Vice President Associate Le Tien Jung Vice President 【 】 Associate J Y Wu 2019.08.29 UNITED Legal Course Strengthen the 1 Vice President MICROELECTRONICS Introduction of the Legal Effect of Associate Osbert Cheng CORP. Violation of Laws Related to Trade Secrets Vice President Associate Steven Hsu Vice President Vice President TS Wu Vice President M C Lai Vice President Jerry CJ Hu 2019.09.24 UNITED 【Executive Program】Strategic Marketing 3 Vice President Steven S Liu 2019.1 0 . 1 7 MICROELECTRONICS Analysis Associate Chuck Chen CORP. Vice President Associate Remi Yu Vice President Associate Mindy Lin Vice President
57 United Microelectronics Corporation | Annual Report 2019
Continuing Education/Training of Managers in 2019: Title Name Course Date Organizer Course Title Course Hours
President SC Chien Vice President TS Wu Vice President M C Lai Vice President G C Hung Vice President Wenchi Ting Vice President Jerry CJ Hu Vice President Y S Shen Vice President SR Sheu 2019.09.26 UNITED 【Legal Course】Foreign Corrupt 1 Vice President M L Liao MICROELECTRONICS Practices Act Vice President S S Hong CORP. Vice President Francia Hsu
Vice President Eric Chen & Chief Human Resources Officer Associate Victor Chuang Vice President Associate Steven Hsu Vice President Associate Mindy Lin Vice President Vice President M C Lai 2019.10.24 UNITED The Wavelength of 5G (5th Generation 2 Vice President Y S Shen MICROELECTRONICS Mobile Networks) Vice President M L Liao CORP. Vice President TS Wu Vice President Steven S Liu Vice President Francia Hsu Associate Victor Chuang Vice President Associate Chuck Chen Vice President Associate Le Tien Jung Vice President Associate Yau Kae Sheu 2019.11.07 UNITED Process Analysis for Executives 2 Vice President 2019.11.08 MICROELECTRONICS Associate J Y Wu CORP. Vice President Associate Yanan Mou Vice President Associate Remi Yu Vice President Associate Ji Fu Kung Vice President Associate Mindy Lin Vice President Associate Pang Min Wang Vice President
58 Corporate Governance Report
Continuing Education/Training of Managers in 2019: Title Name Course Date Organizer Course Title Course Hours
Vice President TS Wu Vice President M C Lai Vice President Steven S Liu Vice President SR Sheu Associate Victor Chuang Vice President Associate Chuck Chen Vice President 2019.11.28 UNITED Objectives & Key Results 2 Associate S F Tzou 2019.12.03 MICROELECTRONICS “Measure What Matters” Vice President CORP. Associate J Y Wu Vice President Associate Osbert Cheng Vice President Associate Steven Hsu Vice President Associate C Y Hsu Vice President Associate Remi Yu Vice President Associate C P Yen Vice President Associate Mindy Lin Vice President Associate Pang Min Wang Vice President Vice President TS Wu Vice President G C Hung Vice President Jerry CJ Hu Vice President Steven S Liu Vice President SR Sheu Vice President Eric Chen & Chief Human Resources Officer 2019.12.10 UNITED 【2019 Master Forum】Understanding the 2 Associate Victor Chuang MICROELECTRONICS Essence of Business from the Financial Vice President CORP. Statements Associate Chuck Chen Vice President Associate S F Tzou Vice President Associate C Y Hsu Vice President Associate C P Yen Vice President Associate Mindy Lin Vice President Senior Chitung Liu 2019.12.18 TAIWAN The Trends for Technology Risk & the 3 Vice President & CORPORATE Governance of Information Security Chief Financial GOVERNANCE Officer ASSOCIATION
Note: The implementation of the development plan for senior executives of each department was carried out, and the senior management training program planning will be based on the results in 2019. The senior executive course are as follows： 【2019 Master Forum】A total of two sessions were held, with a total of 115 supervisors participating, and a course satisfaction rating of 90%. 【Executive Program】A total of four sessions were held, with a total of 111 supervisors participating, and a course satisfaction rating of 94%.
59 United Microelectronics Corporation | Annual Report 2019
If the Company Has Adopted Corporate Governance Best-Practice Principles and Related Bylaws, Disclose How These Are to Be Searched UMC’s website has established a “Corporate Governance” section to explain the corporate governance policies and implementation. Investors could inquire about and download Corporate Governance related information from: http://www. umc.com/English/investors/Corp_Gov.asp. For corporate governance implementation status, please refer to pages 38-96 of this annual report.
Procedures for Handling Proprietary/Strictly Confidential Information
These procedures were established to create an effective system for the handling and disclosure of proprietary/strictly confidential information to prevent inappropriate disclosure, ensure the consistency and accuracy of all information publicly released by the company and provide timely education for all directors, managers and employees to follow. Please refer to the Company’s website for related information: http://www.umc.com/English/pdf/Handling_Proprietary_Strictly_Confidential_Information_eng.pdf.
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Information on the Members of the Remuneration Committee
Status Name／Condition Has at Least 5 years of Work Experience and the Following Meet Criteria of Independence Number of Note Professional Qualifications (Note) Other Public An Instructor A Judge, Work Experience 1 2 3 4 5 6 7 8 9 10 Companies or Higher Prosecutor, Necessary for Where the Position in Lawyer, CPA or Business Member a Private Other Specialist Administration, Concurrently or Public or Technical Legal Affairs, Serves as a College or Professional Who Finance, Member in University Is Necessary for Accounting, or Remuneration in the Field the Company's Business Committee of Business, Business and Has Sector of the Law, Finance, Been Certified Company Accounting, by National or the Examinations Business and Licensed by Sector of the the Competent Company Authorities
Independent Cheng-Li Huang Yes Yes Yes 0 Director Independent Wenyi Chu Yes Yes 0 Director Independent Lih J. Chen Yes Yes 0 Director Independent Jyuo-Min Shyu Yes Yes 1 Director Note: For those members who match the condition listed below during and two years before assuming period, “ ” is marked in the appropriate space. （1）Is not an employee of the Company or its affiliates. （2）Is not a director or supervisor of the Company or its affiliates (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). （3）Does not directly or indirectly own more than 1% of the Company’s outstanding shares, nor is one of the top ten non-institutional shareholders of the Company. （4）Is not a spouse, relative within the second degree of kinship or lineal relative within the third degree of kinship of managers specified in the column (1) or any person specified in the column (2) and (3). （5）Is not a director, supervisor or employee of a legal entity which directly owns more than 5% of the Company’s issued shares or are the top five owners of the Company’s issued shares, nor a director, supervisor or employee of a legal entity which designates a representative to serve as a director or supervisor of the Company in accordance with Article 27, paragraph 1 or 2 of the Company Act (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). （6）Is not a director, supervisor or employee of other company, and more than half of directors or voting shares of other company are controlled by the same person (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). （7）Is not a director, supervisor or employee of other company, and Chairman, President or Manager with equivalent position of other company are the same person or spouse (the same does not apply, however, in cases where the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). （8）Is not a director, supervisor, or manager of a company which has a business relationship with the Company, nor a shareholder who owns more than 5% of such a company (the same does not apply, however, in cases where a company owns more than 20% but less than 50% of the Company’s issued shares and the person is an independent director of the Company who serves concurrently as an independent director of its parent company, subsidiary, or subsidiary of the same parent company in accordance with the laws of Taiwan or with the laws of the country of the parent company, subsidiary or subsidiary of the same parent company). （9）Is not an owner, partner, director, supervisor, manager or spouse of any sole proprietor business, partnership, company or institution which has provided the Company and its affiliates with auditing or services of finance, business consultation and legal affairs for which the accumulated remuneration in the past two years does not exceed NTD 500,000, provided that this restriction does not apply to any member of the compensation committee, public tender offer review committee, or special committee on mergers and acquisitions who exercises powers pursuant to related regulation such as the “Securities and Exchange Act” or the “Business Mergers And Acquisitions Act.” （10）Is not under any condition pursuant to Article 30 of the Company Act.
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Operation of the Remuneration Committee: The goal of the Remuneration Committee’s operation is to strengthen corporate governance and risk control, and to evaluate and monitor the Company’s remuneration system for its directors and executive officers while considering the provision of incentives to facilitate talent retention. The main functions are to periodically review the policies and regulations for performance appraisal and remuneration of directors and executive officers, and to evaluate and prescribe the remuneration of directors and executive officers.
Annual Focus of the Remuneration Committee: • Approval of directors’ remuneration • Manager performance and compensation structure review • Approval of manager’s salary and reward
Information of the Remuneration Committee Operation 1. The Company has a Remuneration Committee composed of four members. 2. Term of the current Committee: From June 12, 2018 to June 11, 2021. The Company had convened three Remuneration Committee meetings in 2019 with the following attendance:
Title Name Number of Number of Proxy Rate of Actual Note Actual Attendance Attendance (%) Attendance
Independent Wenyi Chu 3 0 100.00 Remuneration Committee convener Director Independent Cheng-Li 3 0 100.00 Director Huang Independent Lih J. Chen 3 0 100.00 Director Independent Jyuo-Min Shyu 3 0 100.00 Director Other Items That Shall Be Recorded: 1. If the Board of Directors chooses not to adopt or revise recommendations proposed by the Remuneration Committee, the date of the Directors’ Meeting, session, contents of proposals, results of meeting resolutions, and the Company’s disposition of opinions provided by the Remuneration Committee shall be described in detail (also, where the salary and compensation approved by the Directors’ Meeting is better than that recommended by the Remuneration Committee, the differences and the reason for the approval shall be described in detail): None. 2. For the decisions made by the Remuneration Committee, if there are members who hold objection or reservation to a resolution and such objection or reservation is on record or raised through a written statement, the date, session, contents of proposals, all members’ opinions, and ways in handling these opinions should be elaborated: None. 3. Major resolutions of the Remuneration Committee in 2019:
Date/ Meeting Proposal Resolution Any Independent Director with a Dissenting Opinion or Qualified Opinion
March 6, 2019, 1. Directors’ 2018 remuneration Approved by all Approved by directors participating in the the 3rd meeting of 2. Review the structure of management members present discussion and voting in the board meeting. the 4th session team’s compensation and performance in the meeting. evaluation system, and also propose the management team’s compensation
June 19, 2019, 1. Management team’s 2019 salary review Approved by all Approved by directors participating in the the 4th meeting of 2. Proposal of the management team’s members present discussion and voting in the board meeting. the 4th session compensation in the meeting. December 18, 2019, 1. Proposed adjustment of attendance Approved by all Approved by directors participating in the the 5th meeting of fees for Audit Committee meetings members present discussion and voting in the board meeting. the 4th session 2. Proposal of management team’s in the meeting. compensation structure
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Nominating Committee The Nominating Committee, comprised of independent directors, shall assist the Board to enhance the management mechanism and to improve corporate governance with regard to the Company’s sustainable development. The objectives of the Committee includes: 1. To incorporate the nomination policy and succession plans of the directors and the executives and then search for, review and propose the candidate list of the directors and executives accordingly; 2. To construct and develop the operation of the Board and the sub-committees, as well as to plan and execute the performance assessment of the Board, the sub-committees and the executive(s); 3. To enhance the corporate governance system and practices in order to protect the interests of stakeholders.
Information of Nominating Committee Operation 1. There are 4 members in the Nominating Committee. 2. The term for elected committee members is 3 years, starting from June 12, 2018 to June 11, 2021. A total of 2 Nominating Committee meetings were held in 2019. The attendance of the committee members was as follows:
Title Name Attendance By Proxy Attendance Rate Remarks in Person (%)
Convener Lih J. Chen 2 0 100.00
Committee Cheng-Li Huang 2 0 100.00 Member
Committee Wenyi Chu 2 0 100.00 Member
Committee Jyuo-Min Shyu 2 0 100.00 Member
Other mentionable items: 1. If the Board of Directors declines to adopt or modifies a recommendation of the Nominating Committee, it should specify the date of the meeting, session, content of the motion, resolution by the Board of Directors, and the Company’s response to the Nominating Committee’s opinion: None. 2. Resolutions of the Nominating Committee objected to by members or expressed reservations and recorded or declared in writing, the date of the meeting, session, content of the motion, all members’ opinions and the response to members’ opinion should be specified: None. 3. Major resolutions of the Nominating Committee in 2019: Meeting on March 6, 2019 (1) Nominated the Company Secretary of the Company (2) Approved the Company’s Policy for Nomination and Election of Directors (3) Approved the Company’s Skill Matrix of Board Members Meeting on October 30, 2019 (1) Amended the Company’s Corporate Governance Practice Principles (2) Amended the Company’s Rules for Performance Evaluations of the Board of Directors
Note: Attendance Rate (%) is based on the committee member’s attendance during her/his term of service.
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Corporate Social Responsibility and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”
Evaluation Item
Yes No
1. Does the company identify environmental, social and corporate governance issues related to the company’s operations in accordance with the materiality principle?
2. Does the company establish exclusively (or concurrently) dedicated first-line managers authorized by the board to be in charge of proposing the corporate social responsibility policies and reporting to the board?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons Through the Corporate Sustainability Committee, the Company keeps abreast of the development None of domestic and foreign corporate social responsibility standards and changes in the corporate environment, reviews and improves the corporate social responsibility system of UMC, and identifies environmental, social and corporate governance issues related to the Company’s operations in accordance with the materiality principle. In addition, the Enterprise Risk Management Committee has also formulated enterprise risk management policies. Through risk management methods and organizations, the committee effectively prevents and controls enterprise risks, comprehensively implements them in daily operations, shapes and deepens the risk culture, and establishes complete and transparent risk communication to maintain steady operations. It also develops response strategies for major risk issues, regularly submits them to the Board of Directors for approval, reviews and updates relevant standard operating procedures to ensure the effectiveness of risk management. For related risk (including environmental, social and corporate governance issues), please refer to the section “Risk Management and Evaluation” of this annual report and UMC Corporate Social Responsibility Report.
The Corporate Sustainability Committee is the highest-level corporate sustainability organization None within UMC. With the Co-President as Chair, the Committee coordinates UMC’s sustainable development and formulates corporate social responsibility strategies and objectives. The Committee conducts semi-annual reviews to improve performance and goal achievement. The Chair of the Committee reports promotion outcome and plans, and key stakeholders issues and countermeasures to the Board of Directors annually. The Corporate Sustainability Committee comprises of seven sub-committees, namely the Corporate Governance Committee, Customer Relationship Management Committee, Supplier Management Committee, Innovation Technology Committee, Human Rights and Social Participation Committee, Environment Committee and Green Manufacturing Committee. The functions of each sub-committee are briefly described below: • Corporate Governance Committee Helps strengthen the function of the Board and shareholder equity, integrates related regulations and policies of relevant departments, and helps complete and implement the Company’s internal control system to ensure information transparency and disclosure, and compliance with regulations. • Customer Relationship Management Committee Refines customer service and quality control, improves service quality and customer satisfaction, and protects customer interests and relevant trade secrets. • Supplier Management Committee To establish a protective environment and emphasize the obligation to society, labor rights, security and health while pursuing the goal of a continuously evolving supply chain, this sub-committee develops long-term partnerships with vendors for quality, cost leadership, delivery, service/ response, and sustainability. • Innovation Technology Committee Promotes green product research and development and innovations, and leads in cutting-edge green technology. • Human Rights and Social Participation Committee Responsible for protecting the basic rights of employees and promoting communication with outside communities and society. Integrates the UMC Cultural and Educational Foundation, and with focus on education, arts, sports, public service and environmental protection, strives to promote technological research and development cooperation, long-term educational assistance, arts and sports activities and other social welfare events. • Environment Committee Promotes company-wide environmental, safety and health, energy, water and greenhouse gas emission management. Establishes sustainable supply chains and long-term partnerships with suppliers to enhance sustainable competitiveness. • Green Manufacturing Committee Promotes company-wide green processes, such as hazardous materials management and increases in resource productivity.
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Evaluation Item
Yes No
3. Environmental Issues (1) Doest the company establish proper environmental management systems based on the characteristics of their industries?
(2) Does the company endeavor to utilize all resources more efficiently and use renewable materials which have low impact on the environment?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons
To promote its environmental safety and health management system, UMC combines daily None management and comprehensive quality management activities, and incorporates environmental safety management plans into actual plant operations to achieve implementation goals. In terms of environmental safety and health risks in its operations, UMC systematically assesses the possible impact of all process activities from raw material use to waste production on the environment and employees. Projects with potentially significant environmental impact are managed and controlled through raw material assessment, substitution and reduction, process pollution source control and reduction, effective treatment of end-of-pipe pollution, and reuse of surplus by-products. Employee safety and health are fundamentally managed through equipment safety, chemical safety and operational safety. To achieve sustainable operations, UMC adopts a clean production and zero disasters approach to environmental protection and safety and health, and sets environmental health and safety management system goals every year. By promoting programs that reduce environmental impact and strengthen safety and health, UMC continuously improves its performance in environmental protection and safety and health management. In 2001, UMC became the first company in Taiwan’s semiconductor industry to pass integrated None environmental protection, safety and health management system certifications. Please refer to the Environmental Protection, Safety and Health Management chapters in this annual report for details on greenhouse gas reduction and management, energy conservation management, water conservation management, waste and resource recovery management, and pollution discharge and control. For more detailed descriptions of various energy efficiency measures, please refer to UMC’s Corporate Social Responsibility Report, which is summarized below: • Green building UMC has incorporated energy conservation, carbon reduction and green building into its operational guidelines and goals, and introduced green building certification into all its new fabs. • Green production To achieve the goal of zero pollution, UMC has established a comprehensive new material evaluation process to effectively screen and control new materials introduced into the development of new processes so as to avoid or reduce the use of raw materials with environmental impact. • Green process The semiconductor process uses a wide variety of raw materials and requires high purity and high quality. Through improving process design and technology, UMC reduces raw material consumption, which not only reduces pollution emissions at the source, but also reduces operating costs. UMC has established a comprehensive information database to manage the incoming and requisition of raw materials for processing. In addition, in special projects to promote carbon credit, source reduction is achieved through process optimization, workflow improvement and target management. • Green design As a leader in semiconductor wafer technology, UMC not only ensures that its output wafers meet the low toxicity requirements of customers, but is also committed to reducing the environmental impact of manufacturing and developing numerous high-performance and low- cost chip design processes. • Green products Although UMC does not produce its own brands through its wafer process manufacturing, it continues to develop and incorporate numerous low-toxicity, low-energy green product technoogies to provide customers with the most complete service for meeting the arrival of the green energy era. In 2006, UMC led global semiconductor manufacturers in completing third-party verification and audit of the Hazardous Substance Process Management (HSPM) system, becoming the first semiconductor manufacturer company in the world to obtain QC-080000 IECQ HSPM certification for all its fabs. • Packaging material management The materials used for shipping UMC products are in full compliance with the requirements of the European RoHS (Restriction of the use of certain Hazardous Substances in electrical and electronic equipment). All packaging materials are supplied by raw material suppliers, and are verified by impartial laboratory reports. As much as possible, packaging materials with low environmental impact are used. • Resource recycling and reuse research UMC prioritizes the reuse of recycled output waste, and continuously evaluates and introduces new technologies for reuse. UMC collaborates with qualified recycling vendors in applying for numerous recycling projects, and makes on-site improvements (such as changing liquid waste pipelines and segregated collection) to increase the types of recyclable waste.
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Evaluation Item
Yes No
(3) Does the company evaluate the potential risk and oppertunities of climate change on its operations and take actions?
(4) Does the company conduct inspections about greenhouse gas, water consumption, and total weight of waste for last two years, as well as establish company strategies for energy conservation, carbon reduction, management of water consumption, and total weight of waste?
4. Social Issues (1) Does the company formulate appropriate management policies and procedures according to relevant regulations and the International Bill of Human Rights?
(2) Does the company declare a reasonable employee welfare measures (including salary remuneration policy, regulations for leaves and others) and integrate the company’s performance with employees’ reward?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons In the face of climate change, UMC has formulated the UMC Climate Change Policy as the Company’s None highest guiding principle for responding to climate change. UMC has also formulated the UMC Low Carbon Commitment as a guide for future carbon reduction projects. • Climate Change Policy Expectations to reach carbon neutral To be the low carbon solutions provider To promote the development of a low carbon economy • Low Carbon Commitment Low-carbon design process Energy efficiency optimization Installing high efficiency FCs abatement in new tools Adopting green building standard for new buildings Carbon partnerships with customers and suppliers Complete carbon footprint inventory for all fabs Investing in green technology industry • Greenhouse gas emission reduction goals 1. (2013-2020) Reduce fluorinated greenhouse gas emissions intensity by 36%. Note: With 2010 as base year. 2. (2016-2020) Reduce electricity consumption intensity 10% in five years. Note: With 2015 as base year. In addition to the disclosure of greenhouse gas emissions, potential risks and opportunities of climate change, and related management and responding measures in the Corporate Social Responsibility Report, UMC also disclosed relevant information through involvement in international CDP organization initiatives. From 2016 to 2019, UMC has been awarded “Leadership Level” in the annual evaluation of the CDP Climate Change Program for four consecutive years. The environmental information of UMC in the past five years, such as greenhouse gas emissions, None water consumption, and total weight of waste, will be disclosed in the “UMC Corporate Social Responsibility Report” every year, and verified by a third party. UMC has also formulated the environmental protection policy, climate change policy and water resources management policy, and promoted the reduction plans and targets at various stages as a guideline for continuous improvement.
UMC supports and respects international initiatives such as the International Labor Office Tripartite None Declaration of Principles, the OECD Guidelines for Multinational Enterprises, the UN Universal Declaration of Human Rights, the UN Global Compact, the Responsible Business Alliance (RBA) and other labor and gender equality laws for the workplace, and formulates relevant policies to protect human and labor rights. The UMC Human Rights and Social Participation Committee is responsible for promoting and overseeing human rights polices and specific management plans. For related information, please refer to the UMC website at http://www.umc.com/English/CSR/c_4.asp.
UMC conducts and implements a reasonable employee welfare system; please refer to the employee None benefits of operations overview in this annual report. The factors that decide the salaries of employees include educational background, work performance and market value. No employee will be discriminated against because of their gender, race, religious beliefs, political stance or marital status. UMC complies with local statutory regulations and systems related to leave, minimum wage, and pension and other mandatory benefits to safeguard the rights of our employees. In order to achieve personal, departmental and company performance goals as well as understand the job performance of employees, UMC conducts a performance evaluation of all employees every year. The information obtained can be used as a reference during employee promotions, training and when distributing compensation.
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Evaluation Item
Yes No
(3) Does the company provide a healthy and safe working environment and organize training on health and safety for its employees on a regular basis?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons UMC has three categories of safety and health education based on job characteristics: None • Company-wide safety and health education. • Plant safety and health education organized by each fab. • Safety and health related training formulated by each division according to divisional characteristics. Employee contingency response and safety awareness are cultivated and their cognitive competence strengthened through continuous training and education to reduce accidents caused by unsafe conduct. UMC’s contingency response, legally required certifications, safety and health management system maintenance, special operation safety protection and supervisory staff are included in the Company’s annual training plans. In addition to planned training courses, other education and training are conducted as appropriate according to specific incident or major failure. In 2019, the「Awareness of hazardous chemicals」Course was held. To date, 2,099 classes have been offered, attracting a total of 82,225 participants. The courses include e-learning courses so that employees can learn safety and health knowledge without being limited by the schedule of physical courses. In the spirit of Benefit from Society, Give Back to Society, UMC actively promotes healthy workplace-related activities. In 2019, UMC promoted a healthy workplace lifestyle themed “My UMC Health Diary" 1. The themed health promoting activities attracted 64,055 participants, and overall satisfaction rate was 95%. Specifically, Q1 My Stress Relief Diary - Stress Relief for Well-Being. Courses on aromatherapy and self-hypnosis relaxation skills were organized to help employees manage stress on their own, and alleviate stress-related physical and emotional problems (such as insomnia, negative emotions, etc.). A total of 1,337 individuals participated, and the average overall satisfaction rate was 92%. Q2 My Happiness Diary - Mommy Care for Well-Being Women has a very important role in families and society. On every Women and Children’s Day, we organize activities such as sharing good news, sharing parenting articles, e-Check lucky draws, lectures on women’s cancers and 3-in-1 cancer screening for women. A total of 4,424 individuals participated, and the average overall satisfaction rate was 95.6%. Q3 My Health Diary - Fight Fat and Reclaim Fitness Adopt self-managed exercise and weight loss, and report the APP data to the nursing staff. In addition, a physical therapist is hired to teach employees how to strengthen their necks, pectoral and psoas muscles, as well as daily health care. 191 people participated in the weight loss activity, losing a total of 353.4 kg. A total of 482 individuals participated, and the average overall satisfaction rate was 97.1%. Q4 My Downshifting Diary - Beat Danger Index for Health Blood pressure self-measurement and self-care health passbooks are promoted for employees with high blood pressure and abnormal lab test results. In addition, healthy blood pressure contests and lectures on blood pressure related autonomic nerves are organized to enhance employees’ sensitivity toward possible health hazards caused by hypertension. To achieve early diagnosis and early treatment, and reduce the incidence of increased infection due to chronic diseases, employee abdominal ultrasound and flu vaccination are conducted for early detection of disease risks and for increasing immunity. A total of 3,766 individuals participated, and the average overall satisfaction rate was 95.9%. 2. 31,400 utilized massage services by visually impaired masseurs. 3. 2,218 consulted with in-house physicians. 4. 1,024 donated blood, totaling 1,609 bags of blood. 5. 1,057 received abdominal ultrasound exam, and satisfaction rate was 95.1%. 6. 994 women were screened for cancer, and satisfaction rate was 96.4% (Note: The number is included in the number of Q2 health promotion activities). 7. 292 received flu vaccination. 8. A total of 407 training courses for emergency personnel were conducted, and the training rate was 100%. 9. There were 349 injuries and illnesses and emergency notifications.
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Evaluation Item
Yes No
(4) Does the company provide its employees with career development and training sessions?
(5) Does the company comply with relevant regulations and international standards about customers’ health, safty, privacy, advertise and label of goods and services and establish consumer protection policy?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons 10. There were 520 new medical examinations. 11. There were 323 high-level health examinations. 12. Administrative services (group health insurance) totaled 3,828 occasions. • Protecting the health of employees and their families The Company provides physical and health checkups for employees, and based on the results, organizes health promotion activities for heath management. Special operation inspectors are classified for case management, and doctors are hired to provide on-site health consultation services for employees. Effective health risk management and case management are implemented for all employees with abnormal test results. They are also included into the information system for monitoring, thereby achieving 100% care rate. 1. In 2019, a total of 12,105 employees in the Company received physical checkup. 2. Health examination reports and questionnaire outcome were classified according to the risks. Health management and consultation by on-site doctors are then arranged accordingly to achieve 100% follow-up care. • Employee consulting and assistance program To assist employees with physical, mental and spiritual issues, the Company provides each employee with 6 free sessions of individual counseling per year. Appointments for individual counseling are arranged through a one-on-one privacy protection mechanism. In 2019, a total of 398 individuals received the free counseling service and 125 individuals received paid services. In 2019, the UMC Health Center continued to implement health promotion activities that were well- received and supported by employees. UMC’s promotion and cultivation of a healthy workplace is deeply recognized by enterprises. In 2019, Fab 8D, Fab 8E, Fab 8F and Fab 12A received the Excellent Self-Managed Healthy Workplace certification and obtained the health promotion badge. This award symbolizes the hard work that UMC put into cultivating a healthy workplace. It demonstrates UMC’s active protection of employee health and concern for their physical and psychological rights. The UMC training blueprints are based on different job categories and ranks. In addition, to None encourage ongoing learning and career development, company-wide education and training plans for the following year are formulated according to the outcome of the annual executive and employee training needs survey.
UMC is committed to strengthening its world-class process technology, manufacturing capability None and excellent service to enhance customer service value. Since the beginning, UMC has regarded its customers as partners, and has created with them an exceptional business philosophy that is based on the spirit of United for Excellence. To achieve a win-win situation in its mission and goals, UMC integrates closely with its customers, hence rendering customer satisfaction a core company value. Specific customer-oriented behaviors involve providing total solutions from the customers’ perspective to meet customer demand for product and service quality. To this end, UMC has introduced the My UMC, My HJTC (for HJ only) and My USC (for USCXM only) online service platforms for customers to easily check product status such as order production status, shipping date and product quality data. In addition, the website also provides an Engineering Data Analysis function for customers to more easily analyze product data as needed. In addition to providing customers with information on the process materials for their products through the My UMC, My HJTC, My USC and My USJC online service platforms, UMC has also incorporated the Voice of Customer (VOC) instant online complaint system within the My UMC, My HJTC, My USC and My USJC service platforms for easy customer access. This interface allows customers to make requests, comments or suggestions about the Company’s products or services at any time. The system responds to customers within one working day regarding the processing of their request by relevant divisions. A specialist then assigns the customer input to the appropriate division for handling and response, and customers can check the progress at any time on the website.
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Evaluation Item
Yes No
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons UMC’s measures for responding to customer complaints must meet customer demand for product and service quality. To this end, there is a regular review for customer complaints, handling progress and the quality of response to ensure that each division not only offers corresponding measures but also provides subsequent series of related solutions to enhance overall customer satisfaction. UMC collects customer voice feedback in the VOC system and translates them into specific improvement actions for ongoing and comprehensive improvement of the Company’s product competitiveness and service quality. MyUMC
MyHJTC (For HJ only)
MyUSC (For USCXM only)
My USJC (For USJC only)
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Evaluation Item
Yes No
(6) Does the company establish supplier’s management policy and ask to comply with regulations about environmental protection, labor and human rights, safety, health?
5. Does the company prepare a Social Responsibility Report that complies with international guidlines and is verified by a third party?
6. If the company has established the corporate social responsibility principles based on “the Corporate Social Responsibility Best-Practice Principles for TWSE/TPEx Listed Companies,” please describe any discrepancy between the Principles and their implementation:
7. Other important information to facilitate better understanding of the company’s corporate social responsibility practices:
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons For consumer protection mechanisms, in order to strictly protect customer-related information, UMC has established an external document management procedure. All specifications and technical documents from customers are strictly controlled by UMC’s internal system. Therefore, we can prevent leakage of customer documents and ensure the document is utilized and proceeded appropriately. In the future, UMC will continue to accumulate smart assets, provide better products and services, work with customers to take on bigger challenges in technology development and production, and share win-win results with customers. UMC is ISO 9001 & IATF-16949 & QC-080000 IECQ HSPM international standards certified. The Company’s quality policies are based on these standards to provide customers with excellent product quality, reasonable price and excellent and timely service to enhance customer competitiveness. UMC adheres to the principle of continuous improvement. Through cultivating awareness in all employees, and control and technical improvement in design and production, UMC offers products that meet regulatory and customer demand for no harmful substance management, thereby fulfilling the Company’s responsibility as a global citizens to ensure environmental protection and human health and safety. Certificates
Based on UMC’s GG-026-004-C sustainable supply chain management review guidelines for None achieving supply chains that fulfill environmental protection, social responsibility, labor and human rights, safety, health and sustainable development, UMC has formulated evaluations for reviewing the sustainable development of supply chains. The evaluation comprises of a set of assessments to rate the sustainability of suppliers, and includes indicators such as delivery time, quality, finance and operations. Suppliers with unfavorable review outcomes are offered audit counseling for improvement, and in the case of severe issues, procurement or status as qualified suppliers are terminated. As of 2019, UMC has publicly issued a non-financial related sustainability annual report for 19 None consecutive years. At the same time, the 2018 UMC Corporate Social Responsibility Report is the 14th annual report disclosing UMC’s corporate sustainable development. This report is compiled according to the GRI Standards of the Global Reporting Initiative, and is verified by a third party (certification body) in accordance with the Account Ability 1000 Assurance Standard. In 2020, UMC will compile the 2019 UMC Corporate Social Responsibility Report that will address major corporate social responsibility issues and stakeholder concerns, and will commission a third party to verify the report. UMC will remain transparent to the public and continue to demonstrate its commitment and determination in pursuing sustainable development.
For details of the Corporate Social Responsibility Practice Principles formulated by UMC, please refer to http://www.umc.com/English/ investors/Corp_Gov.asp on the UMC website. The UMC corporate sustainable operations found on the UMC website shows no significance inconsistency from the Corporate Social Responsibility Best Practice Principles for TWSE/TPEx for Listed Companies. For other details, please refer to the “Corporate Social Responsibility” of this Annual Report and UMC Corporate Social Responsibility Report on the UMC website.
UMC is a current member of Business Council for Sustainable Development of Taiwan (BCSD-Taiwan), Taiwan Corporate Sustainability Forum (TCSF), The Allied Association for Science Park Industries (ASIP) and Taiwan Semiconductor Industry Association (TSIA). In addition to actively promoting environmental safety and health and corporate sustainability activities, UMC also serves as a representative to provide recommendations to government and academic institutions in their formulation and development of corporate social responsibility policies. For other details, please refer to the UMC Corporate Social Responsibility Report and the Corporate Sustainability webpage at http://www. umc.com/English/CSR/index.asp on the UMC website.
77 United Microelectronics Corporation | Annual Report 2019
Ethical Corporate Management and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies”
Evaluation Item
Yes No
1. Establishment of ethical corporate management policies and programs (1) Does the company declare its ethical corporate management policies and procedures approved by the Board of Directors, in its guidelines and external documents, implement the policies?
(2) Does the company establish policies to prevent unethical conduct, analyze and evaluate the risk of unethical conduct in operating scope periodically, at least including appropriate precautions against high-potential unethical conduct or listed activities stated in Article 2, Paragraph 7 of the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies?
(3) Does the company establish policies to prevent unethical conduct with clear statements regarding relevant procedures, guidelines of conduct, punishment for violation, rules of appeal, and the commitment to implement the policies and recheck the policies periodically? 2. Fulfill operations integrity policy (1) Does the company evaluate business partners’ ethical records and include ethics-related clauses in business contracts?
(2) Does the company establish an exclusively (or concurrently) dedicated unit supervised by the Board to be in charge of corporate integrity, implementation, and regularly report to the Board of Directors, at least one time a year?
(3) Does the company establish policies to prevent conflicts of interest and provide appropriate communication channels, and implement it?
(4) Has the company established effective systems for both accounting and internal control to facilitate ethical corporate management, and are they audited by Audit Division based on the results of assessment of the risk of involvement in unethical conduct to examine accordingly the compliance with the prevention programs? or engage CPAs to carry out the audit?
(5) Does the company regularly hold internal and external educational trainings on operational integrity?
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons
UMC has formulated the Code of Ethics for Directors and Officers, the Employee Code of Conduct, and None the Ethical Corporate Management Best Practice Principles with approval by the Board of Directors, and the UMC Code of Conduct as regulatory guidelines for all directors, managers and employees of the Company. Please refer to the UMC websites at http://www.umc.com/English/investors/Corp_ Gov.asp and http://www.umc.com/English/CSR/c_4.asp for details.
The UMC Ethical Corporate Management Best Practice Principles and the Employee Code of None Conduct are provisions for addressing moral integrity, conflict of interest avoidance and business entertainment. The Company also establishes a risk assessment mechanism against unethical conduct. Other relevant education, training or tests are conducted from time to time for employee education.
All suppliers have signed the Employment Ethics Terms and Conditions Agreement in which policies None and reporting channels are clearly stated. Furthermore, to strengthen and implement policies on quality, penalties for violating the above Process Change Notification (PCN) are clearly stated in the purchase order in accordance with the UMC Raw Material Supplier PCN Application Management Method (GG-Q12-008-E). The Corporate Sustainability Committee is the highest-level corporate social responsibility None organization within UMC. The Committee formulates the direction and objectives of the Company’s corporate social responsibility and sustainable development, and reports to the Board of Directors annually. Ethical management is only one part of corporate sustainability. For further information, please refer to UMC website at http://www.umc.com/English/CSR/c_4.asp Please refer to Pages 85-89 of the Employee Code of Conduct for policies and reporting channels. None
The UMC Audit Division is directly under the Board of Directors/Audit Committee to ensure the None independence and objectivity of audits. Each year, the Audit Division develops an annual audit plan based on risk evaluation results, including the involvement of unethical conduct, implements audit, issues audit report and tracks improvement accordingly, and conducts control self- assessment annually. The head of the audit division regularly communicates with members of the Audit Committee regarding audit results and follow-up, and presents audit affairs and discusses with independent directors during Audit Committee and Board of Directors meetings to fully communicate audit content and performance. UMC regularly revises its internal control system to respond promptly to environmental changes and to improve the effectiveness of design and operating. Amendments are reported to the Audit Committee and Board of Directors for approval. In addition, UMC is also listed on the New York Stock Exchange (NYSE) and subject to US regulations for foreign issuers. Since 2006, UMC has complied with the SOX 404 Act and has been audited by the independent auditors annually. To date, the independent auditors have issued unqualified audit reports for UMC’s internal control design and implementation performance.
In accordance with the philosophy of ethical management, UMC has formulated the Code of Ethics None for Directors and Officers, the Employee Code of Conduct, and the Ethical Corporate Management Best Practice Principles as regulatory guidelines for all its directors, managers and employees. From top down, these regulations enhance the quality of conduct and professional ethics of the Company and its entire staff. The abovementioned Employee code of conduct is implemented in the daily tasks and businesses of all employees through physical and on-line training courses and online self-tests. In 2019, UMC fabs in Taiwan and Singapore have completed the training courses and passed relevant tests.
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Ethical Corporate Management and Deviations from “The Corporate Governance Best-Practice Principles for TWSE/TPEx Listed Companies” (Continue)
Evaluation Item
Yes No
3. Operation of the integrity channel (1) Does the company establish both a reward/punishment system and an integrity hotline? Can the accused be reached by an appropriate person for follow-up?
(2) Does the company establish standard operating procedures for confidential reporting on investigating accusation cases and follow-up?
(3) Does the company provide proper whistleblower protection?
4. Strengthening information disclosure Does the company disclose its ethical corporate management policies and the results of its implementation on the company’s website and MOPS?
5. The company has established the ethical corporate management policies based on the Ethical Corporate Management Best-Practice Principles for TWSE/TPEx Listed Companies, please describe any discrepancy between the policies and their implementation.
6. Other important information to facilitate a better understanding of the company’s ethical corporate management policies (e.g., review and amend its policies).
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Implementation Status Deviations from “The Corporate Governance Best-Practice Principles Abstract Explanation for TWSE/TPEx Listed Companies” and Reasons
Article 6 of the Employee code of conduct describes measures against ethics and fraud violations, None and protective and anti-retaliation measures for reporting. Employees may report violations to relevant management and supervisory units through e-mail or hotlines, and the head of the Audit Division is promptly notified of the report.
After receiving a fraud report, UMC will convene an investigative team to investigate the suspected None fraud described in the report. Once investigation confirm, those found violating or breaching the Code of Conduct are to face adequate corrective action by the Company depending on the severity of the incident. The Company will protect any employee reporting ethics violation or fraud and members of the investigative team from unfair treatment or retaliation. For details, please refer to Pages 85-89 of the Employee code of conduct.
The Company will protect any employee reporting ethics violation or fraud and members of the None investigative team from unfair treatment or retaliation. For details, please refer to Pages 85-89 of the Employee code of conduct.
UMC discloses its principles on ethical corporate management and relevant regulations on its None website and MOPS. In addition, UMC discloses relevant information in its CSR Report.
UMC has formulated the Code of Ethics for Directors and Officers, the Employee Code of Conduct and the Ethical Corporate Management Best Practice Principles. All directors, managers and employees of the Company shall abide by the provisions of these Codes and related regulations. For employee compliance with the Employee Code of Conduct, please refer to Pages 85-89 of the Employee Code of Conduct in this annual report. For other relevant communications such as employee rights, employee care, investor relations, supplier relationships and stakeholder rights, please refer to the UMC Corporate Social Responsibility Report and the Corporate Sustainability webpage at http://www.umc.com/English/ CSR/index.asp on the UMC website.
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Specific Measures for Ethical Management in 2018-2019
Item Implementation Status
Legal Compliance • Inter-division regulatory compliance is coordinated by the Legal Division, and other regulations are regularly reviewed by relevant divisions. • In 2019, the Legal Division coordinated overall regulatory compliance with the EU General Data Protection Regulation.
UMC Code of Conduct • The content of the Codes is reviewed biennial: Implementation 1. Review of the Employee Code of Conduct was completed in April 2019. 2. Relevant penal provisions were added to the Employee Code of Conduct in December 2017. • Major violations of employee ethics are reported to the Audit Committee on a quarterly basis. In 2019, no major ethical violations were reported. • Employee Code of Conduct education and testing were conducted in August 2019, with 100% completion rate. • Employee Code of Conduct training course for new employees: 625 participants and a total of 937.5 hours in 2018; and 224 participants and a total of 336 hours in 2019. UMC fair competition, • Litigation cases in each quarter of 2019 were reported to the Audit Committee. intellectual property rights • The UMC Antitrust Policy for promoting fair competition can be found on the UMC website, and online violations testing is conducted regularly. Online testing for the Fair Trade Law (i.e. the Antitrust Law) was conducted in September 2019. • For intellectual property rights education, three weekly training courses are offered to new employees: Introduction to UMC Intellectual Property Rights, Trade Secrets & Basic Legal and Risk Awareness for Incoming Data. In the first half of 2019, we continued to focus on training via the eUMC website, maintaining the frequency of announcement every six months. • Introduction to UMC Intellectual Property Rights training course for new employees: 1,333 participants and a total of 653 hours in 2018; 285 participants and a total of 71.3 hours in 2019. • Trade Secrets training course for new employees: separate from UMC Intellectual Property Rights as an individual course since December 2018 with 54 participants and a total of 8.6 hours in 2018; and 285 participants and a total of 45.6 hours in 2019. • Basic Legal and Risk Awareness for Incoming Data training course for new employees: implemented since April 2018. A total of 837 participants and a total of 209.3 hours in 2018; 285 participants and a total of 71.3 hours in 2019. Financial reporting related • Annual audit by external auditors and internal Audit Division. internal control • Results of internal audits for 2019 were reported at the Audit Committee/Board of Directors meetings on a quarterly basis.
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Code of Ethics for Directors and Officers
The Board of Directors (the “Board”) of United Microelectronics • Gifts. Directors or officers and members of their immediate Corporation (the “Company”) has adopted the following families may not accept gifts from persons or entities who Code of Ethics (the “Code”) for directors and officers of the deal with the Company in those cases where any such gift Company. This Code applies to all directors and officers. has more than a nominal value or where acceptance of the No code or policy can anticipate every situation that may gifts could create the appearance of a conflict of interest. arise. Accordingly, this Code is intended to serve as a source • Personal use of Company assets. Directors or officers may of guiding principles for directors and officers. Directors and not use Company assets, labor or information for personal officers are encouraged to bring questions about particular use unless approved by the Chairman of the Board or as part circumstances that may involve one or more of the provisions of an approved compensation or expense reimbursement of this Code to the attention of the Chairman of the Board, program. who may consult with inside or outside legal counsel as 2. Corporate opportunities. appropriate. Directors and officers are prohibited from: (a) taking for Directors who also serve as officers of the Company should themselves personal opportunities that are discovered read this Code in conjunction with the Code of Ethics for through the use of the Company’s property, information or employees governing the business conduct of Company position; (b) using the Company’s property, information, employees. or position for personal gain; or (c) competing with the 1. Conflict of Interest. Company. Directors and officers must avoid any conflicts of interest 3. Corporate assets; confidentiality. between the director or officer and the Company. Any Directors and officers are expected to protect the assets situation that involves, or may reasonably be expected to of the Company and use them efficiently to advance the involve, a conflict of interest with the Company should be interests of the Company. Those assets include tangible and disclosed promptly to the Chairman of the Board, such as intangible assets, such as confidential Company information. extending a loan to, providing a guarantee of the obligations Directors and officers should maintain the confidentiality of of, conducting a material transaction with, selling products information entrusted to them by the Company and any other to or purchasing products from a director or officer (or a confidential information about the Company that comes to member of his or her immediate family1). them, from whatever source in the course of the Company’s A “conflict of interest” can occur when a director or officer’s business, in their capacity as director or officer except when personal interest is adverse to - or may appear to be adverse disclosure is authorized or legally mandated. For purposes to - the interests of the Company as a whole. Conflicts of of this Code, “confidential information” includes all non- interest also arise when a director or officer, or a member public information relating to the Company, its customers or of his or her immediate family, receives improper personal suppliers. benefits as a result of his or her position as a director or 4. Compliance with laws, rules and regulations; fair dealing. officer of the Company. Appropriate policies and procedures are in place for This Code does not attempt to describe all possible conflicts compliance by directors and officers, with laws, rules and of interest that could develop. Some of the more common regulations applicable to the Company, including insider conflicts from which directors or officers must refrain are set trading laws. Transactions in the Company’s securities are out below: governed by the Company's policies with respect to trading • Relationship of Company with third parties. Directors or such securities. officers may not engage in any conduct or activities that Directors and officers shall endeavor to deal fairly with the are inconsistent with the Company’s best interests or Company’s customers, suppliers, competitors and employees. that disrupt or impair the Company’s relationship with any No director or officer should take unfair advantage of anyone person or entity with which the Company has or proposes through manipulation, concealment, abuse of privileged to enter into a business or contractual relationship. information, misrepresentation of material facts, or any • Compensation from non-Company sources. Directors or other intentional unfair-dealing influence. officers may not accept compensation (in any form) for 5. Accurate Reports and other Public Communications. services performed for the Company from any source other It is crucial that all books of accounts, financial statements and than the Company. records of the Company reflect the underlying transactions and any disposition of assets in a full, fair, accurate and
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Code of Ethics for Directors and Officers (Continue)
timely manner. All officers and directors who are involved in Committee or other personnel as appropriate, or in the case the Company’s disclosure process are required to know and of an officer in accordance with the procedures set forth in understand the disclosure requirements applicable to the the Code of Ethics for employees. No one will be subject to Company that are within the scope of their responsibilities, retaliation because of a good faith report of a suspected and must endeavor to ensure that information in documents violation. Violations will be investigated by the Board or by a that the Company files with or submits to the ROC Securities person or persons designated by the Board. Any waiver of this and Futures Bureau and the U.S. Securities and Exchange Code may be made only by the Board and the details of the Commission, or otherwise disclosed to the public, is presented waiver, including name and title of the receiving party of the in a full, fair, accurate, timely and understandable manner. waiver, date of the board meeting when the waiver is granted, Additionally, each individual involved in the preparation the validity period of waiver, reason to grant the waiver and of the Company’s financial statements must prepare those principle for granting waiver, will be promptly disclosed to statements in accordance with our internal accounting shareholders and others, as required by applicable law and policies, which take into account generally accepted the Taiwan Stock Exchange listing standards. All requests for accounting policies set forth by the IFRSs, IASs, IFRIC and SIC, waivers or review by the Board should be made to one of the which are endorsed by Financial Supervisory Commission Company’s independent directors. (TIFRSs) and relevant laws and regulations applicable to the 8. Enforcement of this Code of Ethics Company, ensure they are consistently applied, and follow The Board shall determine appropriate actions to be taken in any other applicable accounting standards and rules so that the event of violations of this Code and set forth procedure the financial statements materially, fairly and completely for the person who is determined to have violated to Code reflect the business transactions and financial condition of in the event of disagreement with the determination. Such the Company. actions shall be reasonably designed to deter wrongdoing 6. Encouraging the reporting of any illegal or unethical and to promote accountability for adherence to this Code. In behavior. determining the proper course of action in a particular case, Directors and officers should promote ethical behavior and the Board shall take into account all relevant information, take steps to ensure the Company: including the nature and severity of the violation, whether (a) encourages employees to talk to managers and other the violation appears to have been intentional or inadvertent appropriate personnel when in doubt about the best and whether the individual in question had been advised course of action in a particular situation; (b) encourages prior to the violation. employees to report violations of laws, rules, regulations, the Company’s internal rules, or the Code of Ethics for employees 1. "Immediate family" shall include a person's spouse, parents, children, to appropriate personnel; and (c) informs employees that the and relatives within three degrees of kinship. Company will not allow retaliation for reports made in good faith. 7. Compliance Procedures. Please refer to the website http://www.umc.com/English/ Any suspected violations of this Code should be reported pdf/UMC_Ethical_Corporate_Management_Best_Practice_ promptly to managers, the internal auditor, the Audit Principles_eng.pdf for the presentation shown above.
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Employee Code of Conduct
I. Objective: The company’s objective in establishing this “Code of Conduct” is to promote ethics, honesty and professionalism within the company and among its employees. The company believes in being an integrated organization and that the action of every employee affects its entire organization and reputation. Any employee is obligated to strive for the extension of the Company’s interests within legal limits, and is responsible for preventing damages or loss to the Company’s interests. The company expects all employees to abide by this Code in carrying out their duties and functions so as to preserve public trust and to ensure the company’s sustainable growth and development. II. Scope: This policy and its related procedures and measures are applicable to all employees (including senior executives and officers). III. Content: 1. Morality and integrity 1-1. The company dedicates itself to abide by commercial ethics and firmly believes in the values of an integrated organization. This guideline has been introduced to outline applicable legal requirements and company policy required of the company and all employees. Any company employee with any query concerning ethics or legal matters is advised to consult with his or her division head or the company’s legal division for guidance. 1-2. Ethical standards shall not be confined to legal compliance. Each individual shall be obligated to conduct all businesses ethically and to avoid any activity that would lead to a conflict of interest. 1-3. The principles governing ethics and integrity are comprised of: 1-3-1. Conducting all business with integrity and truthfully recording the process of all business dealings. 1-3-2. Ensuring proper confidentiality of all commercial information when executing a mission and retaining complete commercial and operational records, as well as respecting the commercial assets and intellectual properties of the company, each client and each strategic partner of the company. 1-3-3. All company accounting ledgers, invoices, records, accounting entries, capital and assets must be securely cataloged and safeguarded to ensure that all company transactions and business dealings can be fairly and accurately reflected. It is strictly forbidden to fabricate, falsify or create misleading claims or to fabricate or falsify any accounting entries, records, financial reports or any other related documents, or to make any misleading claims or records, or intentionally hide or cover the state of the company’s transactions; nor it is permitted to open, maintain or access any illegitimate accounts with any bank or a third party institution with which to conduct account transactions related to the company. 1-3-4. It is forbidden to destroy, alter or forge any pertinent records that may likely be linked to an investigation, litigation or legal related settlement proceeding. 1-3-5. When coming across incidents involving alleged unethical conduct or suspicions of violation to this rule, all personnel are obligated to inform the company’s management. 2. Respect for individuals and customers: 2-1. The company respects the privacy and integrity of every employee and upholds strict standards of privacy and confidentiality for individual personal data. Treatment of customers and commercial data concerning other individuals shall also be bound by this principle of confidentiality. 2-2. Each employee should endeavor to deal fairly with the company’s customers, suppliers, competitors and other employees. No employee should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair-dealing practice. 2-3. The company is to maintain open communication channels that would encourage all employees to participate in company affairs and to express their opinions to supervisors of all levels.
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Employee Code of Conduct (Continue)
3. Avoidance of conflict of interest: 3-1. Prior to engaging in any business, investment or related activity that may lead to a conflict of interest between personal and professional relationships, the employee must fully disclose such conflict of interest to, and the potential conflict must be subject to review by, the chairman & president’s office. More detailed guidelines on conflicts of interest are set forth in the company’s Rules of Integrity for the employees (as appendix I). All company personnel are obligated to file a report with the Human Resources Division of the company citing any probable conflict of interest that might concern the individual or the company. 3-2. Employees should avoid incidents that may involve a probable conflict of interest - for instance, an employee moonlighting at a non-affiliated company, or an employee negotiating or conducting business transactions with the company which would benefit such employee or the employee’s family or relatives personally. Employees are prohibited to (a) take for themselves personal opportunities that are discovered through the use of corporate property, information or position, (b) use corporate property, information or position for personal gain and (c) compete with the company. 3-3. Any action that may possibly transfer the Company’s resources or interests to employees, their relatives or friends is, in principle, prohibited. If such action is considered as beneficial for both the individual and the Company, it may be exceptionally permitted and proceeds only after obtaining the Chairman’s approval. Please file a report with Appendix II. 3-4. All employees are prohibited to provide or disclose openly company confidential information without securing proper authorization from the company. It is strictly forbidden to trade confidential or insider information for individual gain, or to benefit others or put the company’ s interest in jeopardy. 3-5. All employees are forbidden to engage in any of the aforesaid activities through an agent, partner or any representative only to circumvent this guideline. 3-6. All personnel that participate in the review, evaluation and selection of vendors should avoid any circumstance that has the potential to bias a fair decision. 3-7. Unless otherwise approved by the board of directors in advance and in compliance with all applicable laws, employees are not permitted to take out or accept company loans on behalf of oneself or one’s relative, or demand the company to issue a liability guarantee. 3-8. Unless for company business, advanced authorization shall be sought prior to accessing any of the company’s services, equipment, facilities, properties or any other form of resources. All employees should protect the company’s assets and ensure their efficient use. The company’s assets, whether tangible or intangible, are to be used only by authorized employees or their designees and only for the legitimate business purposes of the company. 3-9. We request employees who have specific business and selected positions for management’s needs and employees of designated departments to make an annual declaration of interests. If employees themselves or their relatives (up to the third degree) have investments in and/or are currently employed by UMC customers, distributors, distributors’ customers, suppliers, or competitors, the status of such investments and/or employment should be reported in the "declaration of interests" system. The Human Resources Division will then be responsible for data collection and summarization in order to report results to senior executives, the President and the Chairman. However, in the case where such investment is made on firms that the Company invests in, have openly agreed to be invested in, or are of publicly listed companies, the report to superiors is not required. 3-10. All employees shall not exploit opportunities for information access (including but not limited to attendance at meetings related to sales and production, annual planning, policy launching) to disclose the Company's confidential information to any external parties (including but not limited to the Company's customers, suppliers, or any other parties who are not obliged to know). 4. Gratuity and business reception: 4-1. All employees are prohibited to accept from or give to any customer, supplier or contingent party related to the company any kickbacks or any other form of illicit gain. 4-2. All employees are strictly forbidden to accept gifts from the company’s vendors valued at over one thousand N.T. dollars (NT$1,000), or any cash, or any equivalent in monetary goods, i.e. gift certificates, check, stock certificate and the like. 86 Corporate Governance Report
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4-3. All employees are forbidden to accept lavish entertainment or reception. 4-4. For the purpose of maintaining a normal business relationship, gifts that are to be presented to business counterparts should be imprinted with the company’s logo. 4-5. It is prudent to conform to the general practice of common business decorum when accepting or arranging any type of business reception, and all employees shall refrain from being excessively lavish and refrain from incurring significant or unnecessary expenses. 5. Full, fair, accurate, timely and understandable disclosure: 5-1. It is crucial that all books of account, financial statements and records of the company reflect the underlying transactions and any disposition of assets in a full, fair, accurate and timely manner. 5-2. All employees who are involved in the company’s disclosure process are required to know and understand the disclosure requirements applicable to the company that are within the scope of their responsibilities, and must endeavor to ensure that information in documents that the company files with or submits to the Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan, ROC and the U.S. Securities and Exchange Commission, or that is otherwise disclosed to the public, is presented in a full, fair, accurate, timely and understandable manner. 5-3. It is critically important that financial statements and related disclosures be free of material errors. Employees are prohibited from knowingly making or causing others to make a materially misleading, incomplete or false statement to an accountant or an attorney in connection with an audit or any filing with any governmental or regulatory entity (such as the ROC Securities and Futures Bureau, Financial Supervisory Commission, Executive Yuan, ROC, the U.S. Securities and Exchange Commission or the New York Stock Exchange). 5-4. No individual, or any person acting under his or her direction, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any of the company’s auditors if he or she knows (or should know) that his or her actions, if successful, could result in rendering the company’s financial statements materially misleading. 6. Safeguard Associated with the Implementation of Code of Conduct and Reporting of Fraudulent Act: 6-1. All employees are to comply with applicable governmental laws, rules and regulations, and the company’s regulations and procedures. 6-2. Employees, suppliers, customers or other related stakeholders can report illegal activity or major misconduct by UMC managers or staff (“whistleblowing report”) through any of the following channels: 6-2-1. Send an email report to the email address [email protected] which will then automatically forward a copy of the report to the Audit Committee, ADT Level 1 Manager, HR Level 1 Manager, and LA&C Level 1 Manager. 6-2-2. Send an email report directly to any of the following: ADT Level 1 Manager: [email protected]; HR Level 1 Manager: [email protected]; LA&C Level 1 Manager: [email protected]; or the Audit Committee: [email protected]). 6-2-3. Report the issue by calling the whistleblowing direct phone line at: 0800-024-399 (toll free) or 03-5782258 ext 31425. 6-2-4. Report the issue directly to a manager in HR or any other appropriate department/division. Once the manager receives the report, they will immediately notify the ADT Level 1 Manager. Once a whistleblowing report has been received, the Company will assemble an investigation team to conduct a thorough inquiry into the allegations made in the report. More detailed guidelines on reporting processes are set forth in the company’s Whistleblower Program. 6-3. For the person reporting a violation of the Code of Conduct or engagement in fraud as well as any other related employee involved in all subsequent investigations of the violation, the company will provide safeguard measures ensuring them against any unfair retaliation or treatment. 6-4. Those found violating or breaching the Code of Conduct are to face adequate corrective action by the company depending on the severity of the incident. It is the responsibility of each employee to carefully read, understand and comply with this Code of Conduct and, as needed, to seek clarification on any point. Questions regarding any legal or ethical requirements should be directed to the director of the Human Resources or the company’s legal division.
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7. Waivers and amendments: 7-1. The company may waive application of this Code of Conduct to employees in certain limited situations. Any waivers of the provisions of this Code of Conduct for executive officers may be granted only in exceptional circumstances by the board of directors. The company will promptly disclose to its shareholders any such waivers granted to any of its executive officers and the reason for such waiver. 7-2. Amendments to this Code of Conduct shall be promptly disclosed by the company. It is each individual’s responsibility to maintain familiarity with this Code of Conduct as the company reviews and revises its content from time to time.
(Appendix) Rules of Employee Integrity 1. Objective: To maintain the common practice of integrity and business efficiency, the Rules of Employee Integrity has been specially stipulated. 2. While employees of the Company are engaged in all sorts of business practices, they should conform to the following principles: 2-1. Any employee is obligated to strive for the extension of the Company’s interests within legal limits. 2-2. Any employee is responsible of preventing damages or loss of the Company’s interests. 3. Rules of Integrity: 3-1. Employees undertaking the business with vendors should adhere to the following principles: 3-1-1. Be honest and fair while selecting vendors. Select those who present products/services with the most competitive quality, prices, and delivery. 3-1-2. No accepting of rake-offs or other illegitimate interests from vendors. 3-1-3. Employees and relatives are strictly forbidden to accept any gifts, cash, or other valuables worth of NTD 1,000 or above from vendors. 3-1-4. In principle, employees are prohibited from accepting entertainment reception apart from simple meals. For any question regarding this principle, ask a direct superior. 3-2. Employees in marketing or sales-related departments should adhere to the following principles when dealing with customers: 3-2-1. Be honest and fair while transacting with customers. 3-2-2. Customers’ offer of gifts, cash, or other valuables should be courteously declined. In the case where such offer cannot be declined or returned and its value exceeds USD 100.00, please turn the item to the Employee Welfare Committee to be handled on a case-by-case basis. 3-3. All employees should prevent any of the following from occurring and affecting the Company’s interests: 3-3-1. Through access to one’s own duties, directly or indirectly seeking illegitimate interests or engaging in fraudulent activities. 3-3-2. Seeking illegitimate interests through one’s authority or identity to access duties not run or supervised by oneself. 3-3-3. Defrauding others through access to one’s own duties. 3-3-4. Invading or stealing equipment or property from the company. 3-3-5. Engaging in fraudulent activities such as over-filing for traveling expenses or overtime compensations or applying for inaccurate expenses.
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Employee Code of Conduct (Continue)
3-4. All employees have the responsibility of maintaining a clean image of the Company, which includes no gossiping about colleagues or superiors outside of the office. 3-5. All supervisors must possess the ability of judging the rights and wrongs on integrity issues and should never use not regulated as excuses for any debatable conduct. Besides being honest themselves, they should lead subordinates in establishing a work environment practicing integrity. 3-6. Acceptance inspectors or authenticator of each business operation as well as accounting examiners have the responsibility of reporting upon discover of those violating the Rules of Integrity. 4. Rewards and Punishment: 4-1. Rewards for reporting: Correcting or reporting on violations of integrity rules is an action of protecting the rights of employees, shareholders, and the Company. Once found to be factual, suitable rewards will be given to the reporter. 4-2. Punishment: 4-2-1. Punishment will be administered under any of the following occurrences: A. When an employee violates the Rules of Integrity. B. When a direct supervisor: a. Causes his subordinate’s violation of the integrity rules due to his improper supervision and guidance. b. Shelters a violator of the integrity rules with knowledge of the incident. C. When an acceptance inspector, authenticator, or examiner of each business operation: a. Overlooks a violation of the integrity rules due to his negligence on the job. b. Fails to report on any violation of the integrity rules found during acceptance inspecting, authenticating, or examining. 4-2-2. Provisions on Punishment: In addition to recovering and returning the illegitimate benefits to the original owner or company, violators of the integrity rules will be inflicted, in proportion to the weight of the incident, with the following different punishments or the combination of them. A. According to internal punishment regulations B. Withholding of the performance cash award, year-end award and bonus C. Demotion of job grade D. Removal from post E. Legal action 4-3. Confession 4-3-1. In the case where the violator of the integrity rules makes the confession afterwards, his punishment may be reduced or waived. 4-3-2. In the case of a group violation of the integrity rules, the first one making the confession may be waived from his punishment.
Please refer to the website http://www.umc.com/English/pdf/Employee_Code_of_Conduct-e.pdf for the presentation shown above.
89 United Microelectronics Corporation | Annual Report 2019
UMC Ethical Corporate Management Best Practice Principles
Article 1 Article 6 In order to foster a corporate culture of ethical According to its preceding policy, the company shall management and sound development, the company prescribe specific ethical management practices is advised to adopt these principles applicable to its and programs to deter unethical conduct ("prevention subsidiaries and other institutions or juridical persons programs"), including operational procedures, guidelines, which are substantially controlled by such company. and training. Article 2 Article 7 When engaging in its commercial activities, directors, Company shall establish a risk assessment mechanism managers, employees, and agents or persons having against unethical conduct, analyze and assess on a substantial control over such companies (“company regular basis business activities within their business personnel”) shall not directly or indirectly offer, promise scope which are at a higher risk of being involved in to offer, request or accept any improper benefits, nor unethical conduct, and establish prevention programs commit unethical acts including breach of ethics, illegal accordingly and review their adequacy and effectiveness acts, or breach of fiduciary duty (“unethical conduct”) for on a regular basis. purposes of acquiring or maintaining benefits. Article 8 Article 3 The company shall request their directors and senior “Benefits” in these Principles means any element of value, management to issue a statement of compliance with including money, endowments, commission, positions, the ethical management policy and require in the terms services, preferential treatment or rebates of any type of employment that employees comply with such policy. or in any name. Benefits received or given occasionally The company clearly specifies in its rules and external in accordance with accepted social customs and that do documents the ethical corporate management policies not adversely affect specific rights and obligations shall and the commitment by the board of directors and the be excluded. management on rigorous and thorough implementation Article 4 of such policies, and carries out the policies in The company shall comply with the Company Act, internal management and in commercial activities. Securities and Exchange Act, Business Entity Accounting The company shall compile documented information on Act, Political Donations Act, Anti-Corruption Statute, the ethical management policy, statement, commitment Government Procurement Act, Act on Recusal of Public and implementation mentioned in the first and second Servants Due to Conflicts of Interest, TWSE/GTSM listing paragraphs and retain said information properly. rules, or other laws or regulations regarding commercial Article 9 activities, as the underlying basic premise to facilitate The company engages in commercial activities in a fair ethical corporate management. and transparent manner based on the principle of ethical Article 5 management. The company shall abide by the operational philosophies Prior to any commercial transactions, the company will of honesty, transparency and responsibility, base take into consideration the legality of their agents, policies on the principle of good faith and establish suppliers, clients, or other trading counterparties and good corporate governance, risk control and whether any of them are involved in unethical conduct, management mechanisms to create an operational and will avoid any dealings with persons so involved. environment for sustainable development.
90 Corporate Governance Report
UMC Ethical Corporate Management Best Practice Principles (Continue)
Article 10 Article 16 When conducting business, the company and its In the course of research and development, procurement, personnel may not directly or indirectly offer, promise to manufacture, provision, or sale of products and services, offer, request, or accept any improper benefits in whatever the company and its personnel observe applicable laws form to or from clients, agents, contractors, suppliers, and regulations and international standards to ensure public servants, or other stakeholders. the transparency of information about, and safety of, Article 11 their products and services. They shall also adopt and When directly or indirectly offering a donation to political publish a policy on the protection of the rights and parties, organizations or individuals participating in interests of consumers or other stakeholders, and carry political activities, the company and its personnel shall out the policy in their operations, with a view to prevent comply with the Political Donations Act and their own their products and services from directly or indirectly relevant internal operational procedures, and shall not damaging the rights and interests, health, and safety of make such donations in exchange for commercial gains or consumers or other stakeholders. business advantages. Article 17 Article 12 The personnel of the company shall exercise the due When making or offering donations and sponsorship, the care of good administrators to urge the company to company and its personnel shall comply with relevant prevent unethical conduct, while always reviewing the laws and regulations and internal operational procedures, results of the preventive measures and continually and shall not surreptitiously engage in bribery. making adjustments so as to ensure thorough Article 13 implementation of its ethical corporate management The company and its personnel shall not directly or policies. indirectly offer or accept any unreasonable gifts, To achieve sound ethical corporate management, the hospitality or other improper benefits to establish relevant competent authority shall be responsible business relationship or influence commercial for establishing and supervising the implementation transactions. of the ethical corporate management policies and Article 14 prevention programs, and report to the board of The company and its personnel shall observe applicable directors annually. laws and regulations, internal operational procedures, Article 18 and contractual provisions concerning intellectual The personnel of the company shall comply with laws and property, and may not use, disclose, dispose, or damage regulations and the prevention programs when intellectual property or otherwise infringe intellectual conducting business. property rights without the prior consent of the Article 19 intellectual property rights holder. The company shall adopt policies for preventing conflicts Article 15 of interest to identify, monitor, and manage risks The company shall engage in business activities possibly resulting from unethical conduct, and shall also in accordance with applicable competition laws and offer appropriate means for directors, managers, and regulations, and may not make rigged bids, establish other stakeholders attending or present at board output restrictions or quotas, or share or divide markets meetings to voluntarily explain whether their interests by allocating customers, suppliers, territories, or lines of would potentially conflict with those of the company. commerce.
91 United Microelectronics Corporation | Annual Report 2019
UMC Ethical Corporate Management Best Practice Principles (Continue)
Article 20 Article 24 The company shall establish effective accounting The company shall adopt and publish a well-defined systems and internal control systems for business disciplinary and appeal system for handling violations of activities that may possibly be at higher risk of being the ethical corporate management rules, and shall involved in unethical conduct, not have under-the-table properly make the announcement on the company's or secret accounts, and conduct reviews regularly so internal website including the title and details of the as to ensure that the design and enforcement violation, and the actions taken in response. of the systems are showing results. Article 25 The internal audit unit of the company shall devise The company shall continuously assess the promotional relevant audit plans based on the results of assessment effectiveness promotion of its ethical management of the risk of involvement in unethical conduct, which policy. The company shall also disclose the measures taken plans shall include parties to audit and audit scope, for implementing ethical corporate management, the items and frequency etc., and examine accordingly the status of implementation, and the effectiveness compliance with the prevention programs. The internal of promotion on company websites, annual reports, audit unit may engage a certified public accountant and prospectuses, and shall disclose ethical corporate to carry out the audit, and may engage professionals management best practice principles on the Market to assist if necessary. The results of examination in the Observation Post System (MOPS). preceding paragraph shall be reported to senior Article 26 management and the ethical management team The company shall at all times monitor the development and reduced to writing in the form of an audit report of relevant local and international regulations to be submitted to the board of directors. concerning ethical corporate management and Article 21 encourage their directors, managers, and employees The company establishes "UMC Code of Conduct", to make suggestions, which the company will base its "UMC Board of Directors and Managers Code of Ethics", review and improvements for its adopted ethical and "UMC Employee Code of Conduct" to guide directors, corporate management policies and measures in supervisors, managers, employees, and substantial order to achieve better implementation of ethical controllers on how to conduct business. management. Article 22 Article 27 The company shall periodically organize training The principles shall be implemented after the board and awareness programs for company personnel, and of directors grants approval. The same procedure shall should execute reward and discipline systems according be followed when the principles have been amended. to the relevant rules of the company, so they understand the companies' resolve to implement ethical corporate Please refer to the website http://www.umc.com/English/ management, related policies, prevention programs, and pdf/UMC_Ethical_Corporate_Management_Best_Practice_ the consequences of engaging in unethical conduct. Principles_eng.pdf for the presentation shown above. Article 23 The company shall establish a whistle-blowing system and guarantee the confidentiality of the identity of whistle-blowers and the content of reported cases.
92 Corporate Governance Report
Internal Control System Execution Status Statement of Internal Control System during the assessing period: effectiveness and efficiency Based on the findings of self-assessment, UMC states the of operations, reliability, timeliness, transparency of our following with regard to its internal control system during reporting, and compliance with applicable rulings, laws the year 2019. and regulations. 1. UMC acknowledges and understands that establishing, 6. This Statement is an integral part of the UMC’s annual operating and maintaining an internal control system report and prospectus, and will be made public. Any are the responsibilities of its Board of Directors and falsehood, concealment, or other illegality in the content management, and such a system has been established. made public will entail legal liability under Articles 20, 32, The purpose of establishing the internal control system 171 and 174 of the Securities and Exchange Act. is to reasonably assure the following objectives: The 7. This Statement was passed by the Board of Directors effectiveness and efficiency of operations (including in their meeting held on Feb. 26, 2020, with none of nine profitability, performance and the safeguarding assets); attending directors expressing dissenting opinions, and reliability, timeliness, transparency of our reporting, and the remainder all affirming the content of this Statement. compliance with applicable rulings, laws and regulations. 2. The internal control system has inherent limitations. No matter how perfectly designed, an effective internal control system can only provide reasonable assurance of accomplishing the aforementioned three objectives. United Microelectronics Corporation Moreover, the effectiveness of an internal control system may be subject to changes of environmental or circumstances. Nevertheless, our internal control system contains self-monitoring mechanism and UMC takes corrective actions whenever a deficiency is identified. 3. UMC evaluates the design and operating effectiveness of its internal control system based on the criteria Chairman: Stan Hung provided in the Regulations Governing Establishment of Internal Control Systems by Public Companies (herein below, the “Regulations”). The criteria adopted by the Regulations identify five components of internal control based on the process of management control: (1) control President: S C Chien environment, (2) risk assessment, (3) control activities, (4) information and communication, and (5) monitoring activities. Each component further contains several items. Please refer to the Regulations for details. 4. UMC has evaluated the design and operating effectiveness President: Jason S Wang of its internal control system according to the aforesaid Regulations. 5. Base on the findings of the assessment mentioned in the preceding paragraph, UMC believes that, on December 31, 2019, its internal control system (including its supervision and management of subsidiaries), had effectively assured that the following objectives had been reasonably achieved Feb. 26, 2020
If a Certified Public Accountant (CPA) was Engaged to Conduct a Special Audit of the Internal Control System, Provide its Audit Report: According to “Regulations Governing Establishment of Internal Control Systems by Public Companies,” the Company was not required to engage a certified public accountant (CPA) to conduct a special audit of internal control system in 2019.
93 United Microelectronics Corporation | Annual Report 2019
Legal Liabilities of Company and Employees, Company Penalties Toward Employee Violation of Company Regulations, Key Oversights and Improvement
None.
Major Resolutions and Implementation Status of the Shareholders’ Meetings and the Board of Directors’ Meetings The Major Resolutions from the Shareholders’ Meetings The Company’s 2019 Annual General Meeting was held at UMC’s Fab 8S Conference Hall, No.16, Creation Rd. 1, Hsinchu Science Park on June 12, 2019. The resolutions approved by the shareholders present in person or by proxy and its implementation status were as follows: Items Resolutions from the Annual General Meeting Implementation Status
1. Acceptance of the 2018 business report and • In 2018, UMC’s sales revenue was NTD 151,252,571 thousand, and full-year net financial statements income reached NTD 7,072,990 thousand, leading to an earnings per share of NTD 0.58. 2. Acceptance of the 2018 Earnings Distribution • Distribution of 2018 earnings with cash dividend of NTD 6,916,104,855. Chart • The ex-dividend record date was set for July 22, 2019, and cash dividend for common shares was paid on August 6, 2019.
3. Approval of the amendment of the Company’s • Implemented in accordance with resolution “Acquisition or Disposal of Assets Procedure.”
4. Approval of the amendment of the Company’s • Implemented in accordance with resolution “Financial Derivatives Transaction Procedure.”
5. Approval of the amendment of the Company’s • Implemented in accordance with resolution “Loan Procedure.”
6. Approval of the amendment of the Company’s • Implemented in accordance with resolution “Endorsements and Guarantees Procedure.”
94 Corporate Governance Report
Major Resolutions and Implementation Status of the Shareholders’ Meetings and the Board of Directors’ Meetings (Continue)
The Major Resolutions from the Board of Directors’ Meeting
Meeting Date Major Resolutions
2019.03.06 • Approved the 2018 Business Report and Financial Statements. • Approved the 2018 distributable compensation for employees and directors. • Approved the 2018 Dividend Distribution. • Approved termination of the issuance plan for private placement, which was approved at the 2018 Annual General Meeting. • Approved the date of convening the 2019 Annual General Shareholders’ Meeting, meeting agenda and submission period for shareholder proposals. • Approved for UMC’s Singapore branch to lend funds to UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. • Approved the capital reduction for the cancellation of treasury shares. • Approved UMC's donation to UMC Science and Culture Foundation. • Approved to designate a Company Secretary.
2019.04.24 • Approved the Q1, 2019 Consolidated Financial Statements. • Approved capital budget execution. • Approved addition of proposals of the 2019 Annual General Shareholders’ Meeting. • Approved the Company’s 20th share repurchase program.
2019.06.19 • Approved the adjustment of 2018 cash dividend ratio. • Approved the record date for 2018 cash dividend. • Approved the capital reduction for the cancellation of treasury shares.
2019.07.24 • Approved the Q2, 2019 Consolidated Financial Statements. • Approved capital budget execution.
2019.10.30 • Approved the Q3, 2019 Consolidated Financial Statements.
2019.12.18 • Approved capital budget execution.
2020.02.26 • Approved the 2019 Business Report and Financial Statements. • Approved the 2019 distributable compensation for employees and directors. • Approved the 2019 Dividend Distribution. • Approved capital budget execution. • Approved issuing Restricted Stock Awards for employees. • Approved the date of convening the 2020 Annual General Meeting, meeting agenda and submission period for shareholder proposals. • Approved for UMC’s Singapore branch to lend funds to UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. • Approved UMC’s donation to UMC Science and Culture Foundation.
95 United Microelectronics Corporation | Annual Report 2019
Major Issues of Record or Written Statements Made by Any Director Dissenting to Important Resolutions Passed by the Board of Directors during 2019 and as of the Annual Report Printing Date: None.
Resignation or Dismissal of Chairman, President, and Heads of Accounting, Finance, Internal Audit and R&D during 2019 and as of the Annual Report Printing Date: None.
Certification of Employees Whose Jobs Are Related to the Release of the Company's Financial Information Number of Employees Certification Name Audit Accounting Finance
Certified Public Accountants (CPA) 2 15 1
US Certified Public Accountants (US CPA) 4 1
Association of Chartered Certified Accountants Singapore (ACCA Singapore) 1
Certified Internal Auditor (CIA) 1 3
CABIAV Certificate of Certified Business Valuator 2 1
96 Corporate Governance Report Certified Public Accountant (CPA) Fee Information For the Non-Audit Fee Paid to CPA, CPA Firm, and Its Affiliate Greater than 1/4 of the Audit Fee, the Amount of Audit and Non-Audit Fee and Content of Non-Audit Service Should Be Disclosed If there is no such thing, please refer to the following table. In Thousand NTD Name of CPA Firm Name of CPA Audit Non-Audit Fees CPA Audit Remark Fee Period System Business Human Others Subtotal Design Registration Resources （Note）
Ernst & Young, Wan-Ju Chiu, 65,983 23 30 1,042 1,095 2019.01.01~ - Taiwan Hsin-Min Hsu 2019.12.31 Note: The “Others” category within the non-audit fees mainly includes fees paid for services to review the checklist of public disclosure and filing and reading of the annual report and Prospectuses.
If the CPA Firm Changes, and the Audit Fee Paid in the Year of such Change Is Reduced from the Audit Fee of the Previous Year, the Amounts of the Audit Fees Before and After such Change and the Reason of such Change Should Be Disclosed None.
If the Audit Fee Is Reduced by More than 15% from Last Year, the Amount, Ratio, and Reason for the Reduction of the Audit Fee Should Be Disclosed In 2019, the audit fee was around NTD 9 million more than the audit fee from 2018, which is an increase of around 16%. This is mainly due to the acquisition of new subsidiaries that generate audit fees.
Information of CPA Change None.
UMC’s Chairman, Presidents, Chief Financial Officer, and Managers in Charge of Its Finance and Accounting Operations Did Not Hold Any Positions in UMC’s Independent Auditing Firm or Its Affiliates in the Most Recent Year.
97 United Microelectronics Corporation | Annual Report 2019
Change in Shareholding of Directors, Managers and Major Shareholders Who Own 10% or More of UMC Shares Unit: Shares Title Name 2020 2019
Holding Pledged Holding Pledged Increase Holding Increase Holding (Decrease) Increase (Decrease) Increase (Decrease) (Decrease) Chairman, CSO Stan Hung 0 0 0 0 Director Hsun Chieh Investment Co., Ltd. 0 0 0 0 Director Silicon Integrated Systems Corp. 0 0 0 0 Independent Director Cheng-Li Huang 0 0 0 0 Independent Director Wenyi Chu 0 0 0 0 Independent Director Lih J. Chen 0 0 0 0 Independent Director Jyuo-Min Shyu 0 0 0 0 Director Chung Laung Liu 0 0 0 0 Director Ting-Yu Lin 0 0 0 0 President SC Chien 0 0 1,800,000 0 President Jason Wang 0 0 3,600,000 0 Executive Vice President Ming Hsu 0 0 1,290,000 0 Senior Vice President Oliver Chang 0 0 N/A N/A Senior Vice President, CFO Chitung Liu 0 0 900,000 0 Senior Vice President, General Lucas S Chang 0 0 300,000 0 Counsel
Vice President TS Wu 0 0 710,000 0 Vice President C C Hsu 0 0 0 0 Vice President M C Lai 0 0 900,000 450,000 Vice President G C Hung 0 0 900,000 0 Vice President Wenchi Ting 0 0 750,000 0 Vice President Jerry CJ Hu 0 0 440,000 0 Vice President Y S Shen 0 0 900,000 0 Vice President Steven S Liu 0 0 300,000 0 Vice President SR Sheu 0 0 0 0 Vice President M L Liao 0 0 900,000 0
98 Corporate Governance Report
Change in Shareholding of Directors, Managers and Major Shareholders Who Own 10% or More of UMC Shares (Continue)
Unit: Shares Title Name 2020 2019
Holding Pledged Holding Pledged Increase Holding Increase Holding (Decrease) Increase (Decrease) Increase (Decrease) (Decrease) Vice President S S Hong 0 0 650,000 0
Vice President Francia Hsu 0 0 680,000 0 Vice President, Chief Human Eric Chen 0 0 650,000 0 Resources Officer
Associate Vice President Johnson Liu 0 0 0 0 Associate Vice President Victor Chuang 0 0 240,000 0 Associate Vice President Chuck Chen 0 0 240,000 0 Associate Vice President S F Tzou 0 0 600,000 0 Associate Vice President Le Tien Jung 0 0 600,000 0 Associate Vice President Yau Kae Sheu 0 0 600,000 0 Associate Vice President J Y Wu 0 0 600,000 0 Associate Vice President Osbert Cheng 0 0 600,000 0 Associate Vice President Steven Hsu 0 0 600,000 0 Associate Vice President Purakh Raj Verma 0 0 0 0 Associate Vice President Yanan Mou 0 0 0 0 Associate Vice President C Y Hsu 0 0 0 0 Associate Vice President Remi Yu 0 0 120,000 0 Associate Vice President Michael CY Wang 0 0 0 0 Associate Vice President Ji Fu Kung 0 0 600,000 0 Associate Vice President C P Yen 0 0 600,000 0 Associate Vice President Mindy Lin 0 0 600,000 0 Associate Vice President Pang Min Wang 0 0 240,000 0 Former Associate Vice President T W Liu N/A N/A 0 0 Former Associate Vice President Chih Chong Wang N/A N/A 90,000 0
Note 1: No shareholder owns 10% or more of UMC shares. Note 2: The data presented for 2020 was gathered until January 31, 2020. Note 3: Counterparts of the shareholding transferred or pledged are not related parties. Note 4: The shares changes for Oliver Chang, Victor Chuang, Chuck Chen, Yanan Mou, Remi Yu and Michael CY Wang are calculated starting from the assumed date. Note 5: The shares changes for T W Liu and Chih Chong Wang are reported up until their resignation. Note 6: The Holding Increase (Decrease) data consists of shares under Trust with Discretion Reserved.
99 United Microelectronics Corporation | Annual Report 2019
Relationship Among the Top Ten Shareholders
Name Shares Held Shares Held Total Shares Relationship Between Remarks by Spouse Held in the the Company’s TopTen or Underage Name of Other Shareholders Who Are Either Children Persons Related Parties, Spouses, or Relatives Within the Second Degree of Kinship, His/ Her/Its Title (or Name) and Relationship
Shares % Shares % Shares % Title Relationships (or Name)
JPMorgan Chase Bank, N.A. acting 695,338,445 5.93 N/A N/A N/A N/A None None in its capacity as depositary and representative to the holders of ADRs
Hsun Chieh Investment Co., Ltd. 441,371,000 3.76 N/A N/A N/A N/A None None
Representative: 0 0 0 0 0 0 None None Ping Kun Hung
Nan Shan Life Insurance Company, Ltd. 317,538,000 2.71 N/A N/A N/A N/A None None
Representative: Data unavailable Ying Tsung Tu
Silicon Integrated Systems Corp. 285,380,424 2.43 N/A N/A N/A N/A None None
Representative: 1,858 0.00 0 0 0 0 None None Cheng Chien Chien
Silchester International Investors 280,293,000 2.39 N/A N/A N/A N/A None None International Value Equity Trust
Yann Yuan Investment Co., Ltd. 200,000,000 1.71 N/A N/A N/A N/A None None Representative: Data unavailable Wen Ching Lin
Prudential Assurance Company Ltd. 188,525,000 1.61 N/A N/A N/A N/A None None
Dimensional Emerging Markets Value 1 69,727,682 1.45 N/A N/A N/A N/A None None Fund
JPMorgan Chase Bank N.A. Taipei 1 6 1 , 801,905 1.38 N/A N/A N/A N/A None None Branch in custody for Vanguard Total International Stock Index Fund, a series of Vanguard Star Funds Silchester International Investors 1 43,946,000 1.23 N/A N/A N/A N/A None None International Value Equity Group Trust
Note: The data shown above was recorded on July 22, 2019, which was the record date for the distribution of 2019 cash dividend.
100 Corporate Governance Report
Shares Held by the Company, Directors, Managers and Companies Directly or Indirectly Controlled by the Company, and the Comprehensive Shareholding Ratio Based on Combined Calculation
Investee Companies UMC Shares Held by Directors, Comprehensive Shareholding Managers and Companies Directly or Indirectly Controlled by the Company
Number of Percentage of Number of Percentage of Number of Percentage of Shares Ownership Shares Ownership Shares Ownership （％） （％） （％）
UMC Group (USA) 16,437,500 100.00 0 0 16,437,500 100.00
United Microelectronics (Europe) B.V. 9,000 100.00 0 0 9,000 100.00
UMC Capital Corp. 71,662,977 100.00 0 0 71,662,977 100.00
TLC Capital Co., Ltd. 397,956,300 100.00 0 0 397,956,300 100.00
Green Earth Limited 977,000,000 100.00 0 0 977,000,000 100.00
Fortune Venture Capital Corp. 401,734,448 100.00 0 0 401,734,448 100.00
UMC Investment (Samoa) Limited 1,520,000 100.00 0 0 1,520,000 100.00
MTIC Holdings Pte. Ltd. 12,000,000 45.44 0 0 12,000,000 45.44
NexPower Technology Corp. 33,998,269 47.75 32,668, 0 1 3 45.88 66,666,282 93.63
Unitech Capital Inc. 21 ,000,000 42.00 2,500,000 5.00 23,500,000 47.00
Hsun Chieh Investment Co., Ltd. 277,280,380 36.49 0 0 277,280,380 36.49
Best Elite International Limited 664,966, 2 7 5 100.00 0 0 664,966, 275 100.00
Wavetek Microelectronics Corporation 144,948,118 79.83 3,705,414 2.04 148,653,532 81.87
UMC Group Japan 1,000 100.00 0 0 1,000 100.00
UMC Korea Co., Ltd. 110,000 100.00 0 0 110,000 100.00
Omni Global Limited 4,300,000 100.00 0 0 4,300,000 100.00
United Semiconductor (Xiamen) Co., Ltd. 0 0 N/A 65.22 N/A 65.22
Faraday Technology Corporation 34,240, 2 1 3 13.78 102,973 0.04 34,343,186 1 3.82
Yann Yuan Investment Co., Ltd. 46,000,000 30.87 0 0 46,000,000 30.87
Sino Paragon Limited 2,600,000 100.00 0 0 2,600,000 100.00
Triknight Capital Corporation 237,000,000 40.00 0 0 237,000,000 40.00
United Semiconductor Japan Co., Ltd. 116,246,616 100.00 0 0 116,246,616 100.00
Note 1: The investee companies are the investees under equity method and funds. Note 2: The number of shares is based on the actual number of shares held on December 31, 2019.
101 United Microelectronics Corporation | Annual Report 2019
102 Capital Overview
Capital Overview 104 Capital and Shares 109 Issuance of Corporate Bonds 115 Preferred Shares 116 American Depositary Receipts 118 Employee Stock Option Handling Status 118 Issuance of New Restricted Employee Shares 118 Status of New Shares Issuance in Connection with Mergers and Acquisitions 118 Financing Plans and Execution Status
103 United Microelectronics Corporation | Annual Report 2019
Capital and Shares Source of Capital
Month/Year Issue Price Authorized Paid-in Capital Remarks (Per Share) Capital
Shares Amount Shares Amount Source of Capital Other (In Thousand) (In Thousand (In Thousand) (In Thousand Capital Increased by NTD) NTD) Assets Other than Cash March, 2019 NTD 10 26,000,000 260,000,000 12,124,319 121,243,187 Note 1 - -
July, 2019 NTD 10 26,000,000 260,000,000 11,724,319 117,243,187 Note 2 - -
Note 1: On March 21, 2019, the Hsinchu Science Park Bureau, Ministry of Science and Technology approved the capital reduction of NTD 3,000,000 thousand due to cancellation of treasury shares. The Company’s paid-in capital was decreased to NTD 121,243,187 thousand. Note 2: On July 8, 2019, the Hsinchu Science Park Bureau, Ministry of Science and Technology approved the capital reduction of NTD 4,000,000 thousand due to cancellation of treasury shares. The Company’s paid-in capital was decreased to NTD 117,243,187 thousand. Note 3: The data shown above was gathered until February 26, 2020.
Type of Stock Unit: Shares
Share Type Authorized Capital Allotment for Stock Option Certificate Issued Shares(Note 1) Un-Issued Shares Total Shares (Units) Common Stock 11,724,318,715 14,275,681,285 26,000,000,000 2,000,000,000
Note 1: The Company’s issued shares are listed stock. Note 2: The data shown above was gathered until February 26, 2020.
Information for Shelf Registration
Not Applicable.
Status of Shareholders Common Shares
Item Government Financial Other Juridical Natural Persons Foreign Total Agencies Institutions Persons Institutions and Natural Persons Number of 15 59 725 520,631 1,579 523,009 Shareholders
Shareh0lding 161,934,388 806,451,345 1,327,982,228 3,416,733,132 6,011,217,622 11,724,318,715 (Shares)
Percentage (%) 1.38 6.88 11.33 29.14 51.27 100.00
Note: The data shown above was recorded on July 22, 2019, which was the record date for the distribution of 2019 cash dividend.
104 Capital Overview
Capital and Shares (Continue)
Shareholding Distribution Status Common Shares Class of Shareholding Number of Shareholders Shareholding Percentage (%) (Unit: Shares) (Shares)
1~ 999 191,993 58,329,906 0.50
1,000~ 5,000 217,981 506,223,174 4.32
5,001~ 10,000 54,459 405,300,074 3.46
10,001~ 15,000 20,046 246,151,792 2.10
15,001~ 20,000 11,201 200,466,954 1.71
20,001~ 30,000 10,678 263,008,540 2.24
30,001~ 50,000 7,657 298,595, 251 2.55
50,001~ 100,000 4,898 342,512,921 2.92
100,001~ 200,000 2,086 288,376,568 2.46
200,001~ 400,000 909 249,166,256 2.12
400,001~ 600,000 272 134,558,264 1.15
600,001~ 800,000 140 96,442,978 0.82
800,001~ 1,000,000 91 81,549,522 0.69
Over 1,000,001 598 8,553,636,515 72.96
Total 523,009 11,724,318,7 15 100.00
Note: The data shown above was recorded on July 22, 2019, which was the record date for the distribution of 2019 cash dividend.
Preferred Shares
None.
List of Major Shareholders Shareholder's Name Shareholding
Shares Percentage (%)
JPMorgan Chase Bank, N.A. acting in its capacity as depositary and 695,338,445 5.93 representative to the holders of ADRs
Hsun Chieh Investment Co., Ltd. 441,371,000 3.76
Nan Shan Life Insurance Company, Ltd. 317,538,000 2.71
Silicon Integrated Systems Corp. 285,380,424 2.43
Silchester International Investors International Value Equity Trust 280,293,000 2.39
Yann Yuan Investment Co., Ltd. 200,000,000 1.71
Prudential Assurance Company Ltd. 188,525,000 1.61
Dimensional Emerging Markets Value Fund 169,727,682 1.45
JPMorgan Chase Bank N.A., Taipei Branch in custody for Vanguard Total 161 ,801,905 1.38 International Stock Index Fund, a series of Vanguard Star Funds
Silchester International Investors International Value Equity Group Trust 143,946,000 1.23
Note: The data shown above was recorded on July 22, 2019, which was the record date for the distribution of 2019 cash dividend.
105 United Microelectronics Corporation | Annual Report 2019
Capital and Shares (Continue)
Market Price, Net Worth, Earnings, and Dividends Per Common
Share In NTD Item 2020 (Note 7) 2019 2018
Market Price Per Highest 17.15 17.05 18.65 Share Lowest 14.15 10.55 10.40 (Note 1) Average 15.98 13.63 14.92
Net Worth Per Before Distribution - 17.61 17.28 Share After Distribution - * 16.70
Earnings Per Weighted Average Shares - 11,785,108,150 12,103,879,632 Share (shares)
Earnings Per Share (Note 2) - 0.82 0.58
Earnings Per Share (Note 3) - * 0.58
Dividends Per Cash Dividends - * 0.58989396 Share Stock Dividends Earning Distribution - * -
Capital Distribution - * -
Accumulated - - - Undistributed Dividend
Return on Price/Earnings Ratio - 16.24 25.83 Investment (Note 4)
Price/Dividend Ratio - * 25.39 (Note 5)
Cash Dividend Yield - * 0.04 (Note 6)
*Subject to change based on resolutions of the 2020 shareholders’ meeting.
Note 1: Referred to TWSE website. Note 2: EPS calculation was based on weighted average shares outstanding for the year. Note 3: EPS calculation was based on retroactive adjustment for capitalization of unappropriated earnings, additional paid-in capital and employees’ compensation - stock. Note 4: Price/Earnings Ratio = Average Market Price/Earnings Per Share. Note 5: Price/Dividend Ratio = Average Market Price/Cash Dividends Per Share. Note 6: Cash Dividend Yield = Cash Dividends Per Share/Average Market Price. Note 7: The data represented for 2020 was gathered until February 26, 2020. Note 8: The average closing prices for years 2018, 2019 and 2020 were NTD 14.98, NTD 13.32, and NTD 16.04, respectively.
106 Capital Overview
Capital and Shares (Continue)
Dividend Policy and Status
Dividend Policy in Company’s Articles of Incorporation funding requirements, domestic and overseas competitive According to the Company’s Articles of Incorporation, current landscape and its capital expenditure forecast, as well as year’s earning, if any, shall be distributed in the following shareholders’ interest, balancing dividends and UMC’s long- order: term financial planning. The Board of Directors shall propose 1. Payment of taxes. the distribution plan and submit it to the shareholders’ 2. Making up for loss in preceding years. meeting every year. The distribution of shareholders 3. Setting aside 10% for legal reserve, except for when dividend shall be allocated as cash dividend in the range of accumulated legal reserve has reached the Company’s 20% to 100%, and stock dividend in the range of 0% to 80%. paid-in capital. 4. Appropriating or reversing special reserve by government Proposed Distribution of Dividend officials or other regulations. The Company’s proposal for 2019 earnings distribution was 5. The remaining, plus the previous year’s unappropriated passed during the 14th board meeting of the 14th term. This earnings, shall be distributed according to the distribution proposal, a cash dividend of NTD 9,765,154,720 from retained plan proposed by the Board of Directors according to earnings (NTD 0.75 per share), will be discussed at the Annual the dividend policy in paragraph two of this clause and General Meeting. submitted to the shareholders’ meeting for approval. The dividend policy of the Company shall be determined pursuant to factors such as the investment environment, its
Effect of Share Dividends to Operating Performance and EPS Not applicable.
107 United Microelectronics Corporation | Annual Report 2019
Capital and Shares (Continue)
Employees’ and Directors’ Compensation
Related Information of Employees’ and Directors’ earned. The Board of Directors estimates the amount by Compensation in the Company’s Articles of Incorporation taking into consideration the Articles of Incorporation, Employees’ and Directors’ Compensation Policy in the government regulations and industry averages. If the Board Company’s Articles of Incorporation is as follows: of Directors resolves to distribute employee compensation The Company shall allocate no less than 5% of profit as through stock, the number of stock distributed is calculated employees’ compensation and no more than 0.1% of profit as based on total employee compensation divided by the closing directors’ compensation for each profitable fiscal year after price of the day before the Board of Directors meeting. If offsetting any cumulative losses. the Board of Directors subsequently modifies the estimates The aforementioned employees’ compensation will be significantly, the Company will recognize the change as an distributed in shares or cash. The employees of the Company’s adjustment in the profit or loss in the subsequent period. subsidiaries who fulfill specific requirements stipulated by Information relevant to the aforementioned employees and the Board of Directors may be granted such compensation. directors’ compensation can be obtained from the “Market Directors may only receive compensation in cash. Observation Post System” on the website of the TWSE. The Company may, by a resolution adopted by a majority vote at a meeting of the Board of Directors attended by The Distributable Compensation for Employees and two-thirds of the total number of directors, distribute the Directors Passed during the Board Meeting. aforementioned employees’ and directors’ compensation The Company’s 2019 distributable compensation for and report to the shareholders’ meeting for such distribution. employees and directors was passed during the 13th board meeting of the 14th term. The distribution status is as The Basis for Estimating the Amount of Employees follows: and Directors’ Compensation, the Basis for Calculating The Company is to distribute NTD 1,132,952,365 as employee the Number of Shares to be Distributed as Employees’ cash compensation and NTD 10,258,577 as directors’ Compensation, and the Accounting Treatment of the compensation. Discrepancy between the Actual Distributed and the There is no difference between the amount passed during the Estimated Amount. Board meeting and the recognized amount during 2019 of the The Company recognizes the employees and directors’ aforementioned employees’ and directors’ compensation. compensation in the profit or loss during the periods when
The Amount of Employees’ Compensation Distributed in Stocks, and such Amount as a Percentage of the Sum of Net Income Stated in the Parent Company Only Financial Reports and Total Employees’ Compensation: None.
Distribution of Employees and Directors’ Compensation for 2018: In Thousand NTD Item Board Resolution (March 6, 2019)
Employees’ compensation distributed in Cash 1,400,835
Directors’ compensation 7,624
Note: The actual distribution of employees and directors’ compensation for 2018 were consistent with the resolutions of the Board of Directors meeting held on March 6, 2019.
108 Capital Overview
Issuance of Corporate Bonds
Name of Bond United Microelectronics Corporation 4th Round of Unsecured Straight Bonds Issue date June 7, 2012 Denomination NTD 1 million Listing and trading Taipei Exchange Issue price NTD 1 million Total amount NTD 10,000 million; 5-year bond for NTD 7,500 million and 7-year bond for NTD 2,500 million Coupon rate Fixed rate; 1.43% p.a. and 1.63% p.a. for 5-year and 7-year bonds, respectively Tenor and maturity date 5-year bond: June 7, 2017 7-year bond: June 7, 2019 Guarantor None Trustee Taiwan Cooperative Bank Underwriter None Transferring, paying or conversion agent None Legal counsel Chen & Lin Attorneys-at-Law Independent auditor Ernst & Young, Taiwan Repayment The principal of 5-year and 7-year bonds will be repaid respectively in June 2017 and June 2019 upon maturity. Interest will be paid annually for both 5-year and 7-year bonds. Outstanding amount None (Note) Redemption clause None Restrictive clause None Name of credit rating agency, rating date and Taiwan Ratings Corporation result of rating May 14, 2012 twAA Other rights of bondholders None Dilution effect or other adverse impact on None existing shareholders’ equity, if conversion, exchange, or subscription rights are attached Custodian None
Note: NTD 7,500 million for the 5-year bond was repaid on June 7, 2017. NTD 2,500 million for the 7-year bond was repaid on June 7, 2019.
Buyback of Treasury Stock (1) Completed Share Buyback Programs Instance 20th round 19th round
Purpose For cancellation For cancellation Buyback period 2019.04.25～2019.06.24 2018.11.06～2019.01.05 Price range （NTD） 8.40～18.10 7.55～20.80 Classification and executed volume（Shares） 200,000,000 Common shares 300,000,000 Common shares Executed amount（NTD） 2,641,387,106 3,349,946,428 Ratio of executed volume to the volume to be 100 100 repurchased (%)
Cancellation and transfer volume（Shares） 200,000,000 300,000,000 Cumulative holding（Shares） 0 0 Cumulative holding as a percentage of total issued 0 0 shares（%）
Note: The data shown above was gathered until February 26, 2020.
(2) Uncompleted Share Buyback Programs: None.
109 United Microelectronics Corporation | Annual Report 2019
Issuance of Corporate Bonds (Continue)
Name of Bond United Microelectronics Corporation 1st Unsecured Straight Corporate Bond Issuance in 2013
Issue date March 15, 2013
Denomination NTD 1 million
Listing and trading Taipei Exchange
Issue price NTD 1 million
Total amount NTD 10,000 million; 5-year bond for NTD 7,500 million and 7-year bond for NTD 2,500 million Coupon rate Fixed rate; 1.35% p.a. and 1.50% p.a. for 5-year and 7-year bonds, respectively
Tenor and maturity date 5-year bond: March 15, 2018 7-year bond: March 15, 2020 Guarantor None
Trustee Taiwan Cooperative Bank
Underwriter None
Transferring, paying or conversion agent None
Legal counsel Chen & Lin Attorneys-at-Law
Independent auditor Ernst & Young, Taiwan
Repayment The principal of 5-year and 7-year bonds will be repaid respectively in March 2018 and March 2020 upon maturity. Interest will be paid annually for both 5-year and 7-year bonds.
Outstanding amount NTD 2,500 million for the 7-year bond (Note)
Redemption clause None
Restrictive clause None
Name of credit rating agency, rating date and Taiwan Ratings Corporation result of rating November 30, 2012 twAA Other rights of bondholders None
Dilution effect or other adverse impact on None existing shareholders’ equity, if conversion, exchange, or subscription rights are attached
Custodian None
Note: NTD 7,500 million for the 5-year bond was repaid on March 15, 2018.
110 Capital Overview
Issuance of Corporate Bonds (Continue)
Name of Bond United Microelectronics Corporation 1st Unsecured Straight Corporate Bond Issuance in 2014
Issue date June 18, 2014
Denomination NTD 1 million
Listing and trading Taipei Exchange
Issue price NTD 1 million
Total amount NTD 5,000 million; 7-year bond for NTD 2,000 million and 10-year bond for NTD 3,000 million Coupon rate Fixed rate; 1.70% p.a. and 1.95% p.a. for 7-year and 10-year bonds, respectively
Tenor and maturity date 7-year bond: June 18, 2021 10-year bond: June 18, 2024 Guarantor None
Trustee Taiwan Cooperative Bank
Underwriter None
Transferring, paying or conversion agent None
Legal counsel Chen & Lin Attorneys-at-Law
Independent auditor Ernst & Young, Taiwan
Repayment The principal of 7-year and 10-year bonds will be repaid respectively in June 2021 and June 2024 upon maturity. Interest will be paid annually for both 7-year and 10-year bonds.
Outstanding amount NTD 5,000 million
Redemption clause None
Restrictive clause None
Name of credit rating agency, rating date and Not applicable result of rating
Other rights of bondholders None
Dilution effect or other adverse impact on None existing shareholders’ equity, if conversion, exchange, or subscription rights are attached Custodian None
111 United Microelectronics Corporation | Annual Report 2019
Issuance of Corporate Bonds (Continue)
Name of Bond United Microelectronics Corporation 1st Unsecured Straight Corporate Bond Issuance in 2017
Issue date March 24, 2017 Denomination NTD 1 million Listing and trading Taipei Exchange Issue price NTD 1 million Total amount NTD 8,300 million; 5-year bond for NTD 6,200 million and 7-year bond for NTD 2,100 million Coupon rate Fixed rate; 1.15% p.a. and 1.43% p.a. for 5-year and 7-year bonds, respectively
Tenor and maturity date 5-year bond: March 24, 2022 7-year bond: March 24, 2024 Guarantor None Trustee CTBC Bank Co., Ltd. Underwriter MasterLink Securities Corp. as the lead underwriter Transferring, paying or conversion agent None Legal counsel Chen & Lin Attorneys-at-Law Independent auditor Ernst & Young, Taiwan Repayment The principal of 5-year and 7-year bonds will be repaid respectively in March 2022 and March 2024 upon maturity. Interest will be paid annually for both 5-year and 7-year bonds.
Outstanding amount NTD 8,300 million Redemption clause None Restrictive clause None Name of credit rating agency, rating date and Not applicable result of rating
Other rights of bondholders None Dilution effect or other adverse impact on None existing shareholders’ equity, if conversion, exchange, or subscription rights are attached
Custodian None
112 Capital Overview
Issuance of Corporate Bonds (Continue)
Name of Bond United Microelectronics Corporation 2nd Unsecured Straight Corporate Bond Issuance in 2017
Issue date October 3, 2017 Denomination NTD 1 million Listing and trading Taipei Exchange Issue price NTD 1 million Total amount NTD 5,400 million; 5-year bond for NTD 2,000 million and 7-year bond for NTD 3,400 million Coupon rate Fixed rate; 0.94% p.a. and 1.13% p.a. for 5-year and 7-year bonds, respectively
Tenor and maturity date 5-year bond: October 3, 2022 7-year bond: October 3, 2024 Guarantor None Trustee CTBC Bank Co., Ltd. Underwriter MasterLink Securities Corp. as the lead underwriter Transferring, paying or conversion agent None Legal counsel Chen & Lin Attorneys-at-Law Independent auditor Ernst & Young, Taiwan Repayment The principal of 5-year and 7-year bonds will be repaid respectively in October 2022 and October 2024 upon maturity. Interest will be paid annually for both 5-year and 7-year bonds.
Outstanding amount NTD 5,400 million Redemption clause None Restrictive clause None Name of credit rating agency, rating date and Not applicable result of rating
Other rights of bondholders None Dilution effect or other adverse impact on None existing shareholders’ equity, if conversion, exchange, or subscription rights are attached
Custodian None
113 United Microelectronics Corporation | Annual Report 2019
Issuance of Corporate Bonds (Continue)
Type Currency Linked Zero Coupon Convertible Bonds due 2020 Issue date May 18, 2015 Face amount USD 200,000 Listing exchange Singapore Exchange Securities Trading Limited Issue amount USD 200,000 Issue size USD 600,000,000 Coupon rate 0% Maturity 5 years; May 18, 2020 Guarantor - Trustee Citicorp International Limited Underwriter Credit Suisse(Hong Kong)Limited, Morgan Stanley Service Pty Limited, The Hong Kong and Shanghai Banking Corporation Limited.
Legal counsel Chen & Lin Attorneys-at-law Auditor Ernst & Young, Taiwan Redemption Unless previously redeemed, converted, or repurchased and canceled, the Company will redeem the Bonds at the principal amount of the Bonds with an interest calculated (calculated semiannually) at the rate of -0.25% per annum on the maturity date (the Redemption Amount). The Redemption amount will be converted into NTD based in the Fixed Exchange Rate, and this fixed NTD amount will be converted using the Prevailing Rate for payment in USD. Principal payable USD 573,600,000 as of February 26, 2020 Redemption or early redemption clause (a) The Company will, at the option of bondholder, redeem such holder’s Bonds in whole or in part at the principal amount of the Bonds with an interest calculated (calculated semiannually) at the rate of -0.25% per annum on the date which is 3 years from the date of issue. The actual rates per annum are decided according to market conditions by the Company and joint underwriters overseas together on the pricing date. (b) Bondholders have the right to require the Company to redeem the bonds, in whole but not in part, at the principal amount of the Bonds with an interest calculated (calculated semiannually) at the rate of -0.25% per annum (Early Redemption Amount) if the Company’s common shares cease to be listed on the Taiwan Stock Exchange. The actual rates per annum are decided according to market conditions by the Company and joint underwriters overseas together on the pricing date. (c) In the event that a change of control (as defined in the indenture of the bonds) occurs to the Company, the bondholders shall have the right to require the Company to redeem the bonds, in whole but not in part, at the Early Redemption Amount. (d) The Redemption procedures of the exercise of the put right by the Bondholder and repurchase by the Company are all set in the Indenture. The Redemption Amount and The Early Redemption Amount will be paid in cash by the Company on the payment date set in the Indenture. (e) The Company may redeem the bonds, in whole or in part, after 3 years of the issuance and prior to the maturity date, at the Early Redemption Amount if the closing price of the Company’s common shares on the Taiwan Stock Exchange, for a period of 20 out of 30 consecutive trading days, is at least 125% of the conversion price. (f) The Company may redeem the bonds, in whole, but not in part, at the Early Redemption Amount if at least 90% in principal amount of the bonds has already been redeemed, repurchased and cancelled or converted. (g) The Company may redeem all, but not part, of the bonds, at the Early Redemption Amount at any time, 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. Bondholders may elect not to have their bonds redeemed by the Company in such event, in which case the bondholders shall not be entitled to receive payments of such additional amounts. The Redemption Amount/The Early Redemption Amount will be converted into NTD based on the Fixed Exchange Rate, and this fixed NTD amount will be converted using the Prevailing Rate for payment in USD. 114 Capital Overview
Issuance of Corporate Bonds (Continue)
Type Currency Linked Zero Coupon Convertible Bonds due 2020 Covenant - Name of credit rating agency, rating date and - result of rating Other obligation Balance of amount converted - to (exchangeable or warrant) shares, ADSs, or other types of securities as of the Annual Report Printing Date
Policy of issuing or converting The bondholders may from June 28, 2015 to May 8, 2020 covert the bonds into (exchangeable or warrant) the Company’s common shares as a substitute for the issuer’s cash redemption. In addition, the bondholders will not be able to effect conversion into common shares during any closed period.
Effect on the current shareholders due to dilution The underlying conversion for ECB is newly issued shares. If the ECB is fully converted, the dilution ratio to original shareholders is 8.63%. The impact to the dilution is minimal. Name of custodian Citibank, N.A., London Branch
Exchangeable Bonds Information None.
Euro Convertible Bonds Information Type Currency Linked Zero Coupon Convertible Bonds due 2020
Item Year
2020 2019 2018 2017 2016 2015 2015.05.18 (Issue Date) Convertible Price NTD 14.2179 NTD 14.2179 NTD 14.8157 NTD 15.4320 NTD 15.9895 NTD 16.7408 NTD 17.50
Market High USD 121.726 USD 121.802 USD 124.583 USD 114.894 USD 95.625 USD 100.864 - Price Low USD 107.981 USD 95.185 USD 95.662 USD 92.255 USD 88.052 USD 87.579 -
Average USD 115.616 USD 101.385 USD 110.480 USD 104.396 USD 92.453 USD 93.145 -
Issue Date May 18, 2015
Reference Shares Common shares
Note: The date presented for 2020 was gathered until February 26, 2020
Shelf Registration for Issuing Bonds
None.
Corporate Bonds with Warrants
None.
Preferred Shares None.
115 United Microelectronics Corporation | Annual Report 2019
American Depositary Receipts
Issue Date 2008.09.19 2007.10.09 2006.11.06 2006.09.01 2005.09.01 2005.01.20 2004.11.16
Listing Exchange New York Stock New York Stock New York Stock New York Stock New York Stock New York Stock New York Stock Exchange Exchange Exchange Exchange Exchange Exchange Exchange
Issue Amount Stock dividend Capital USD 108.2 Stock dividend Stock dividend USD 84.2 million USD 76.3 million Reduction million
Listing Price/Unit - - USD 3.05 - - USD 3.33 USD 3.47
Issue Units 9,885,719 -95,425,183 35,456,000 2,831,465 25,833,137 25,290,000 22,000,000
Underlying UMC common UMC common UMC common UMC common UMC common UMC common UMC common Representing Shares shares shares shares shares shares shares shares
Number of Equivalent 5 shares 5 shares 5 shares 5 shares 5 shares 5 shares 5 shares Local Shares per ADS
Rights and Obligations Same as the Same as the Same as the Same as the Same as the Same as the Same as the of ADS Holders common common common common common common common shareholder shareholder shareholder shareholder shareholder shareholder shareholder
Trustee N/A N/A N/A N/A N/A N/A N/A
Depositary Bank Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A.
Custodian Bank Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch
Outstanding Balance The total outstanding balance is 137,725,632 units. (Units)
Issuing Expenses and Except for IPO and dividends, the issuing expense will be borne by the selling shareholders. The maintenance fees Maintenance Fees will be borne by the Company.
Important Terms ------and Conditions of Depositary Agreement and Custodian Agreement
Note 1: The data shown above was gathered until February 26, 2020. Note 2: On October 21, 2009, the depositary bank was changed to JPMorgan Chase Bank, N.A., and the custodian bank was changed to JPMorgan Chase Bank, N.A. Taipei Branch.
American Depositary Receipt Trading Data
Closing Price per Share (USD) 2020 2019
High Low Average High Low Average
2.81 2.42 2.63 2.80 1.69 2.11
Note: The data represented for 2020 was gathered until February 26, 2020.
116 Capital Overview
American Depositary Receipts (Continue)
2004.08.19 2004.01.02 2003.12.23 2003.08.15 2002.09.09 2002.03.19 2001.08.17 2000.09.19
New York Stock New York Stock New York Stock New York Stock New York Stock New York Stock New York Stock New York Stock Exchange Exchange Exchange Exchange Exchange Exchange Exchange Exchange
Stock dividend USD 13.8 million USD 24.4 million Stock dividend Stock dividend USD 439.7 million Stock dividend USD 1,291.5 million
- USD 4.92 USD 4.75 - - USD 9.25 - USD 14.35
15,088,684 2,804,000 5,146,000 6,965,107 22,655,667 47,537,780 13,500,000 90,000,000
UMC common UMC common UMC common UMC common UMC common UMC common UMC common UMC common shares shares shares shares shares shares shares shares
5 shares 5 shares 5 shares 5 shares 5 shares 5 shares 5 shares 5 shares
Same as the Same as the Same as the Same as the Same as the Same as the Same as the Same as the common common common common common common common common shareholder shareholder shareholder shareholder shareholder shareholder shareholder shareholder
N/A N/A N/A N/A N/A N/A N/A N/A
Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A.
Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Citibank, N.A. Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch Taipei Branch
------
117 United Microelectronics Corporation | Annual Report 2019
Employee Stock Option Handling Status The processing situation and impact on shareholders’ rights from employee stock options that have not matured yet: None.
Issuance of New Restricted Employee Shares The Company did not issue Restricted Stock Awards during 2019 and as of the Annual Report Printing Date.
Status of New Shares Issuance in Connection with Mergers and Acquisitions The Company has not completed any merger or acquisition of another corporation to issue new shares according to the Company Act or Enterprises Mergers and Acquisition Act, nor has the Board of Directors approved any merger or acquisition of another corporation to issue new shares according to the Company Act or Enterprises Mergers and Acquisition Act during 2019 and as of the Annual Report Printing Date.
Financing Plans and Execution Status Not Applicable.
118 Operations Overview
Operations Overview
120 Business Activities 127 Overview of Market, Production, and Sales 133 Employees 134 Environmental Expenditure Information 134 Labor Relations 138 Major Contracts
119 United Microelectronics Corporation | Annual Report 2019
Business Activities Business Scope
UMC provides wafer fabrication services through state-of- voltage, integrated bipolar/CMOS/depleted CMOS, MEMS the-art manufacturing processes and produces chips for sensor and mixed-signal/RF CMOS. UMC strives to provide various applications within the IC industry. The Company comprehensive services, delivering customized platforms to provides logic and mixed-signal process technologies from 0.5 meet the system-on-chip (SoC) needs of different customers. micron to 14nm. UMC continuously introduces competitive process technologies and complete solutions to enable chips In 2019, revenue contribution from UMC’s wafer fabrication to be designed according to specific customer requirements. accounted for the vast majority of the Company’s total sales Customers can select different processes according to their revenue, with the remainder generated from new R&D product application, such as embedded memory, high ventures and manufacturing of solar energy.
Industry Overview
Current Status and Development of the Semiconductor or increase capacity due to cost vs. benefit considerations. Industry Instead, they have increased the proportion of wafer The development of electronic products has been trending manufacturing to foundry outsourcing. Some makers of towards enhanced functionality, light weight, energy system products have also designed ICs (such as cellphone saving and carbon reduction. The incorporation of artificial chips) by themselves and outsourced to wafer foundry. These intelligence (AI) concepts, deep learning and voice control in industrial trends all have a positive impact on the sustainable recent years has also affected the direction of chip design. development of the professional wafer foundry industry. Therefore, the complexity of chip designs has significantly For 2019, worldwide semiconductor revenue declined 12.9% increased due to the considerations of functional integration, due to the U.S. - China Trade War, and demand saturation for performance enhancement, and low power consumption. PC and smart phone, etc. The worldwide memory industry In addition, in response to the constant miniaturization of declined over 30%, due to over-capacity, inventory correction semiconductor fabrication processes and cost considerations, and demand weakness. Non-memory semiconductor development is heading towards larger diameter wafers. declined 3%, while worldwide foundry business showed This trend has caused the entry barrier into semiconductor a slight decline. The applications of IoT, automotive fabrication process technology to continuously increase, and electronics, AR/VR and artificial intelligence have created a the investment has also been growing exponentially. major forward catalyst for the semiconductor market, which With the constantly rising entry barriers of various is going to be the primary driving force for the future growth semiconductor sectors from design, fabrication, packaging, of the semiconductor industry. and test, it is extremely difficult for semiconductor Summarizing the views from all major forecast agencies, companies to have total control over every single sector. continuous and steady growth of domestic and international Under the considerations of professional division of labor economies can be expected in 2020, due to steady demand and production efficiency, the semiconductor industry’s increase from 5G, AI, IoT and automotive electronics, and move towards a vertical division of labor system is becoming a rebound of the memory industry; however, the global more and more obvious. The development cost of advanced economy and semiconductor market will also be negatively process technologies and the capital expenditure of new impacted by COVID-19. The worldwide semiconductor market tools and equipment have risen significantly, such that the is expected to grow more than 7%, the non-memory segment industrial structure of professional division of labor has should grow around 5%, and foundry revenue should grow been formed. This phenomenon and the effect on the overall around 5%. However, there are still some uncertainties which environment has resulted in many existing Integrated Device could affect future economic development. The most crucial Manufacturers (IDMs) to announce that they will no longer keys are how the industry will navigate U.S. President Donald actively invest in the development of advanced processes Trump’s economic decisions and the U.S. - China Trade War,
120 Operations Overview
Industry Overview (Continue)
the slowdown of economic growth in China, conflicts in The Development Trend and Competition of Electronic End regional politics, decisions by the US Fed, degrees of inflation Products in various countries, and international energy price trends. Conventional electronic products can be divided into four Therefore, all major global wafer foundries should be prudent categories: Computer, Communication, Consumer, and with their capital expenditures when expanding production Automotive. Electronic products have been developed capacity. The impact of COVID-19 to semiconductor and towards compact size and light weight, low power foundry in 2020 is great and crucial. consumption, interconnection, artificial intelligence, and Within this context, UMC is cautiously expanding capacity deep learning. For example, notebooks and tablets can while also increasing its 12-inch wafer foundry footprint operate longer, and cellphones can be wirelessly connected by acquiring 100% of Mie Fujitsu Semiconductor Limited to notebooks and tablets. In addition, the greatly enhanced (MIFS), to make MIFS a wholly-owned subsidiary. The name bandwidth of broadband networks has contributed to the was changed to United Semiconductor Japan Co., Ltd. (USJC), development of networked and smart TVs. By linking all and technology is mainly from 90nm to 40nm. UMC has also things via the access, delivery, and processing of information dedicated R&D resources to advanced manufacturing and to form a large network, many breakthrough applications specialty process technologies to continuously differentiate and enormous business opportunities in the fields of smart itself, thus enhancing the Company’s competitiveness home, health care system, and urban facilities become through better product mix that will help strengthen available. Looking towards the future, the key technologies profitability. of smartphones, wearable electronics, AR/VR, autonomous/ electrical vehicle, AI/deep learning, voice control products, Correlation Among Upstream, Midstream, and Downstream and IoT will be constantly adopted and commercialized. Industries As such, professional wafer fabrication services should The semiconductor industrial chain can be divided into IC complete corresponding process development and silicon design, mask, wafer fabrication, testing and packaging. IC intellectual properties as soon as possible in order to meet design is mainly the design according to the specifications the needs of different customers of products resulting from and applications required by end products. Different IC chips the Internet of Things (IoT) generation. and products will have emphasis on different characteristics, thus leading to different process requirements. Therefore, professional wafer foundries must provide the most current technical design support services and adequate silicon intellectual property (IP) as early as possible, and continuously optimize process technology to help IC design customers in their chip development. In the end, testing and packaging companies will perform IC packaging and pre- shipment testing to ensure customer chips are meeting their respective design specifications.
121 United Microelectronics Corporation | Annual Report 2019
Overview of Technology and R&D
R&D Expenses for the Past 5 Years In Thousand NTD
2019 2018 2017 2016 2015
Operating Revenues 148,201,641 151,252,571 149,284,706 147,870,124 144,830,421
Research and Development Expenses 11,860,244 13,025,139 13,669,589 13,532,356 12,174,824
Research and Development Expenses as 8.00% 8.61% 9.16% 9.15% 8.41% a Percentage of Operating Revenues
Note : The R&D expense for 2020 was calculated up until the publication date of February 26, 2020, which amounted to NTD 1,764,946 thousand.
Technologies or Products Successfully Developed within the Past 5 Years
Year R&D Achievements
2015 ‧ Successful development of 14nm FinFET device with performance reaching leading industry levels. ‧ Successful development of 28nm HPC+ (High Performance Compact Plus) process technology, which can provide lower leakage current and power consumption. It has been incorporated into customer pilot production. ‧ Successful development of 55nm embedded flash memory technology, which has been qualified by product verification and has entered mass production. ‧ Successful development of TSV (Through-Silicon Via) for mass production, which can drive the outstanding performance of customer GPU products.
2016 ‧ Successful development of 28HPCU process technology, which was provided to an IP provider to introduce a 12.5 Gbps SerDes PHY IP programmable design solution for high speed I/O. ‧ Successful development of 40nm embedded charge trap (eCT) flash memory, which was provided to customers for mass production of MCU products. ‧ Successful development of 55nm ultra-low power (55ULP) process, which was provided to an IP provider to introduce PowerSlashTM fundamental IP solutions to meet the long-term battery life-time requirements of wireless IoT products.
2017 ‧ Successful development of a customized 14nm FinFET process technology, which entered mass production for customer ICs. UMC’s 14nm wafer yields reached industry competitive levels, with products delivered to the Company’s primary customer. ‧ Successful pilot production of 28HPCU+ process technology for customers to meet the demand for faster chips with better power saving features. ‧ Introduced a 40nm non-volatile memory technology platform, which incorporated Silicon Storage Technology’s (SST’s) embedded SuperFlash® non-volatile memory that features low power consumption, high reliability, outstanding data retention, and high durability, which can be used for automobile, industry, consumer products, and IoT applications.
2018 ‧ Successful development of 22nm ultra-low power (ULP)/ultra-low leakage (ULL) HK/MG process to provide customers chips with faster speed, better cost efficiency and improved power saving to meet future demands from IoT, automotive electronics, industrial electronics, and various wearable products applications. ‧ 14nm FinFET customized process has entered mass production. In addition, UMC developed a new 14nm FinFET platform process (14FFC), with yield for the 128Mb SRAM on this process having reached industry competitive levels. 14FFC also passed process and product reliability verification to officially enter the pilot production stage for customer chips. ‧ UMC partnered with the leader in next generation STT-MRAM, USA-based Avalanche, to jointly develop and produce eMRAM.
2019 ‧ 14nm FinFET Plus customized process has entered mass production. In addition, UMC developed a new 14nm FinFET platform compact process (14FFC), with yield for the 128Mb SRAM on this process having reached industry competitive levels. 14FFC also passed process and product reliability verification to officially enter the pilot production stage for customer chips. ‧ 40nm ReRAM was co-developed with Panasonic and is already at risk production stage. This high performance ReRAM is fully compatible with UMC’s CMOS logic process.
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UMC’s R&D team has always been dedicated to promoting UMC’s 14FFC platform and have entered the pilot production the development of advanced process technology. With the stage, with cooperation with other customers ongoing. adherence to the belief of “Customer’s Demand Comes First,” UMC’s 14FFC is expected to be ready for customer mass the Company has been providing pure-play wafer foundry production in 2020. solutions to meet market trends and customer needs, which include world-class technology, customer support services, Embedded MRAM and state-of-the-art manufacturing. With the expansion of For future market demands related to advanced IoT, UMC’s Tainan Science Park site, the Company continues to automotive electronics, wearable products, and cloud recruit and train a large number of R&D talent. In 2019, UMC applications, conventional embedded non-volatile flash continued to significantly invest in R&D resources with total memory based on eFlash is gradually showing an imbalance annual R&D expense reaching NTD 11.86 billion, which has between cost and performance. In light of this, UMC invested led to fruitful R&D achievements in advanced and specialty in the R&D of eMRAM in 2018. For this R&D plan, UMC plans technologies. to verify a macro test chip in 2020 and expects that this technology can be incorporated into its 22nm platform in 22nm ultra-low power/ultra-low leakage Process Technology 2021 for potential customers. UMC has developed its 22nm process technology and 28nm high performance compact low power process technology ReRAM platform (HPCU+). With the same number of mask layers ReRAM is a novel NVM with a simple structure, low operation and compatible design criteria as 28nm, the performance of voltage, low read current, fast program/erase speed and very 22nm process technology has been enhanced by 10%, power good reliability. The ReRAM process is fully logic compatible consumption has been reduced by 20%, and area has been with fewer add-on masks and low extra cost. UMC started to reduced by 10%. Therefore, the cost competitiveness of 22nm co-develop ReRAM with Panasonic in 2017 and was already in technology has been greatly improved to provide customers risk production in 2019. UMC plans to make this novel NVM with more process options. 22nm ultra-low power/ultra- technology widely available. low leakage technologies are suitable for IoT, automotive electronics, industrial applications, and various wearable Display Driver IC Process Technology products that utilize analog, mixed signal, RF, and other The Display Driver IC market has demonstrated potential relevant technologies. The introduction of 22nm by UMC for rapid growth and possibilities in numerous applications, has maximized the value of the Company’s 28nm process, including smartphone, portable phone/PDA, computer with IP verification from 28nm directly converting to 22nm screen, touch screen, Tablet PC, e-book, TV, digital camera, being relatively easy due to the use of compatible design on-board screen, and wearable display. UMC’s High Voltage specifications. UMC’s 22nm process has been introduced Technology has led the development of various voltages to to customers and has completed pilot production. Mass meet the specifications requirements of various application production is expected in 2020. markets. UMC was the first in the foundry industry to introduce a 40nm High Voltage Process, and mass 14nm Process Technology production has been achieved for high-end LCD Display and UMC reached the mass production milestone for its high-end OLED Display markets. Meanwhile, the 28nm High customized 14nm FinFET process in early 2017, and the Voltage Platform has entered pilot production. In addition, competitiveness of device performance and yield has UMC has begun developing a 22nm High Voltage Platform to reached leading industry standards. In 2019, UMC’s other provide smaller SRAM with higher capacity in order to meet 14nm project (14FFC FinFET process platform) was completed the demand of the 2K/4K high-end display market. and has a 50% performance improvement and double the gate density compared to 28nm. 128Mb SRAM yield reached Power Management Process Technology mass production quality levels for product yield and has As for the demands for various power management passed process and product reliability verification. Currently applications (PMIC), UMC’s super high voltage (5V and 30V several customers have already designed products using in coordination with 300V, 500V or 700V) processes have
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entered the mass production stage. This technology is embedded flash technology. In addition to the successful suitable for special applications such as power charger, LED mass production of 0.18um and 0.11um technologies, 55nm bulb, power amplifier, AC/DC converter, and motor driver embedded flash memory has successfully entered the mass and can meet industry demand for higher voltage and production stage. The MCU products equipped with 40nm reduce the energy consumption during voltage conversion embedded charge trap (eCT) flash memory is also in mass in order to save energy. As for customers with demands for production, and the 40nm technology platform with SST highly integrated power management, UMC can provide a (Silicon Storage Technology) embedded SuperFlash® non- complete silicon IP platform compatible with the standard volatile memory has entered small volume pilot production logic process, and various 0.5, 0.35, 0.25, 0.18, 0.11 micron in order to provide customers with better performance and and 55nm process technologies that integrate world-class, higher density memory. UMC has begun developing a 28nm third generation low conduction resistance/high sustained SST embedded SuperFlash® non-volatile memory platform voltage (5V~200V) devices that can be used for cell phone, and researching new materials for flash memory such as Tablet PC, appliance, vehicle applications, etc. UMC has ReRAM in order to meet customer demands for higher also begun developing a BCD+NVM technology platform, specifications. Embedded flash memory is embedded on and adopted a 12-inch 55nm copper process for PMIC as a UMC’s logic technology platform, such that the silicon IP on complete SoC solution for energy-saving demands. all logic technology platforms can support the SoC design of our customers to further enhance industry competitiveness. CMOS Image Sensor (CIS), MEMS, and RFSOI Technologies For CMOS image sensor technology development, UMC’s Mixed Signal/RF Foundry Design Kit 65nm process has been verified to enter the mass production Foundry design kits can provide IC design houses with an stage. Other new processes, such as back-illuminated sensor automated design environment to eliminate unnecessary (BIS) and 55nm CIS process technologies, have entered the human manipulation to ensure the success of their chip verification stage. This technology is expected to provide design. UMC’s complete mixed signal/RF design flows for higher sensing resolution to meet product upgrade different processes cover both the frontend and backend requirements. With the rising popularity of MEMS sensor of RF IC Design, which can provide channels to obtain the applications, the demand for CMOS-MEMS pure-play foundry design and simulation of circuit level, circuit layout, layout service has also increased. For UMC’s MEMS microphone verification, and precise RF device mode. In the frontend process platform, in 2019, several customers taped out flow, UMC’s fundamental devices of its mixed signal/RF multiple new products using UMC’s MEMS microphone process are executed using a general design environment reference process, and the volume continued to grow steadily. and simulation tools. In the backend flow, it covers The second generation of CMOS-MEMS gas sensors has also parameterized cell (P Cell), including image-oriented layout, entered the verification phase. Regarding RFSOI process in order to provide an automated and complete design flow. technology, its unique substrate characteristics can prevent Meanwhile, a callback function is provided during the design high-frequency signal harmonic frequency distortion and flow to reduce the data input. Design houses can enhance reduce power loss. At present, UMC’s 0.13um and 0.11um the productivity and reduce the risk of error via this flow. processes have been widely adopted by smart phones for UMC has worked with EDA vendors to provide its customers mass production. UMC also started to develop 90nm and with a parameterized spiral inductor design kit based on 55nm RFSOI technology platforms to catch subsequent full-wave simulation – VIL (Virtual Inductor Library). VIL can growth momentum. allow RF CMOS design houses to create and simulate the customized inductors compatible with UMC’s process. VIL is Non-Volatile Flash Memory established based on UMC’s EMDM (Electromagnetic Design UMC has always been dedicated to providing customers with Methodology) such that engineers can easily and precisely complete SoC solutions, among which the non-volatile flash create any RF structure. EMDM allows design houses to have memory device is the essential device for most applications. more flexibility to create new geometric modes via editing Auto chips, MCU applications and consumer products such parameters such as diameter, turn, width, and track pitch. as touch control applications all require the support of
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In addition, UMC’s foundry design kit provides the Optimum successfully and mass produced products using UMC’s I/O Inductor Finder (OIF). OIF allows design houses to quickly and library on 110, 90, 65, 55, 40, and 28nm processes. UMC also precisely create a large amount of calibrated inductor design provides customized embedded flash memory (eFlash) IP on libraries with respect to UMC’s process. Meanwhile, OIF various process generations according to customer needs also allows users to use software to execute the optimized and has successfully helped customers with quick market inductor via several simple steps. For example, customers entry for their products. In addition to UMC making IPs, the can define desired inductance coefficients to reach the Company has also established partnerships with industry- balance between quality factor and area. OIF can select a leading IP vendors in order to provide physical library, non- design that best fits the specifications from the inductor volatile memory IPs, and diversified analog/mixed signal design library within the shortest amount of time. IPs that support industrial standard interfaces (such as USB, DDR, and HDMI). This year UMC has extended its long-term Silicon IP Support IP cooperation with all leading IP vendors to 22nm and 14nm Along with the design trends toward more precise deep processes in order to provide customers with a competitive sub-micron generation processes and increasing design design support environment. complexity, foundry can no longer only focus on process yield improvement, but must also help customers shorten Intellectual Property their design flow and reduce design cost. In terms of library Facing increasing technological competition, UMC has design kits, UMC strengthens its design support capability significantly strengthened patent filings to protect by constantly providing optimized library design kits closely intellectual property in addition to greatly enhancing integrated with the Company’s process technology in order technological capabilities in critical fields. Following the to help designers accelerate the completion of their chip Company’s operation and development planning, UMC’s design. From mature to advanced process technologies to IP division has formulated strategies and plans for the specialty processes, UMC can provide complete Standard protection and development of intellectual property to Cell, I/O and customized libraries to meet customers’ chip promote the steady growth of the number of patent rights. design needs. In terms of logic process, UMC’s standard Status on the implementations is reported to the board of cell library for advanced processes can provide devices of directors at least once a year. The Company was granted a various operating and threshold voltages (Vt). Along with total of 515 domestic and foreign patents in 2019, 345 of which low power library kits, they can meet various customer are US patents, 94 ROC patents, and 76 China patents. The needs for design flexibility and high performance/low total accumulated number of UMC’s patents is 13,507, which power applications. UMC’s I/O library has an extremely small can provide a thorough and strong IP foundation for UMC’s area, and it is qualified through a stringent Electrostatic technologies. To keep this competitive edge, UMC has greatly Discharge (ESD) test to help customers design competitive increased the quality and quantity of critical technology products that can pass the ESD test with voltage as high patents in order further strengthen customer service and as 4kV. So far, numerous customers have taped-out competitiveness while helping them to create profits.
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Long-Term and Short-Term Business Plans UMC is committed to delivering comprehensive wafer fabs which are for sale, and will evaluate the possibility fabrication solutions to its customers based on cooperation to acquire it, because acquiring an existing fab is more with partners in the entire supply chain, including suppliers effective to meet UMC growth strategy -- to expand cost- of equipment, automated electronic design tools, wafer effective capacity for competitiveness. design service, silicon IP, and packaging and testing. The Company provides customers with verified reference Facing market requirements for continuously advancing flows, broad silicon IP combinations, free design cell library semiconductor technology, in addition to UMC’s own databases, and diversified options for packaging and testing. technology R&D, the Company will work with strategic With advanced process technologies and world-class 12-inch partners and supply chain vendors to jointly develop 3D wafer fabrication technology, UMC can assure accelerated chip integration technologies. UMC will also continue time-to-market for its customers’ SoC designs. raising environmental protection awareness and care for the environment. In addition to establishing a low carbon Short-Term Objectives supply chain, UMC is dedicated to the support of various UMC’s short-term objectives are to expand the production environmental protection activities and the promotion of capacity of 8-inch and 12-inch specialty technologies and environmental protection education. advanced processes, enhance capacity utilization rate, and strengthen profitability. Currently, UMC owns four 12-inch Outstanding UMC Achievements in 2019 fabs. In addition to the mass production of 14nm products, • UMC led the industry by implementing the “2018 Climate UMC’s rich technology platforms at various process Change Program” as its highest guiding principle. nodes and diversified specialty technologies can meet • UMC earned its first “Green Chemical Application and all requirements of primary market applications. At the Innovation Award”. same time, we continue to conduct structural productivity • UMC was among the highest ranked in “Corporate enhancements and manufacturing capacity optimization of Governance Evaluation” for the 5th consecutive year. 8-inch and 12-inch fabs to embrace new opportunities and • UMC was named as a “FTSE4 Good Index Series improve revenue. Constituent” for the second consecutive year. • UMC was selected as a “DJSI Global Component” for 12th Medium-to-Long-Term Objectives consecutive year. Advanced and specialty process technology R&D and • UMC received final approval for 100% acquisition of Mie investment has always been a primary focus of UMC. Fujitsu Semiconductor. The advanced processes equipment procurement will be • UMC earned its first “National Enterprise Environmental managed more efficiently, and all important R&D work Protection Gold Award”. will be implemented according to plan. UMC will work to • UMC was named as 2019 “Taiwan Enterprise Sustainability reduce expenditures and enhance operational efficiency Platinum Award” for the second consecutive year. to effectively control costs, while providing customized • UMC earned the “2019 Energy Saving Gold Award by advanced and specialty process technology platforms to Ministry of Economic Affairs”. meet customers’ needs. UMC’s capital expenditure for • UMC was awarded with “Corporate Continuous 2020 is expected to be approximately USD 1 billion. In Improvement Activity” honors for the 16th consecutive order to expand business scale, UMC is looking for existing year.
126 Operations Overview
Overview of Market, Production, and Sales Market Analysis Primary Product Sales Regions Niche of Competition UMC’s products have been well recognized by its important • There has been prosperous development of IC design customers covering all global regions. The sales regions of houses in China in recent years. Geographical proximity, the Company’s products are mainly Asia Pacific and North similar culture, the acquisition of HJTC, and the operation America, which account for 57% and 32% of UMC’s total sales of a 12-inch fab in Xiamen have all helped UMC to take revenues, respectively. Europe and Japan accounted for 11% advantage of the China’s IC industry growth. In order to of total sales revenues. In the future, UMC will continue to expand capacity globally, UMC acquired 100% of Mie strengthen its cooperation with world-class customers in all Fujitsu Semiconductor Limited (MIFS), to make MIFS a regions and focus on the development of high-end products wholly-owned subsidiary. It has been renamed as United for customers in order to ensure consistent medium and Semiconductor Japan Co., Ltd. (USJC), and mainly utilizes long-term company growth. 90nm to 40nm technology. All of these have all helped UMC gain a good position in the global semiconductor Market Share market and increase market share. It has also enabled UMC is a world leading semiconductor wafer foundry. The UMC to conduct integration of products, orders, and total revenue of the global pure-play wafer foundry market process technologies in response to customers’ needs in 2019 was approximately USD 62.2 billion. According to in order to pursue the relative competitive advantages the estimation by market survey institution Gartner, UMC of China’s market expansion and operational scale; it is has a 7.9% share of the pure-play wafer foundry market, and expected that UMC can benefit from the rapid growth in its main competitors are TSMC, Globalfoundries and SMIC. this regional market. In 2019, the total operating income of these four companies • UMC is optimistic about the demand for high-end accounted for 84.0% of the total pure-play wafer foundry chips in the future market of mobile communication market. and computation; thus proper and cautious capital expenditure to promote the R&D of related processes Future Supply-Demand Status and Market Growth and the establishment of advanced production capacity • According to the market survey of Semiconductor Industry has been conducted. The Company has also actively Association (SIA), the total sales revenue of the deployed its specialty technology solutions, such as high semiconductor industry in 2019 was close to USD 418.3 billion, voltage, embedded flash memory, advanced packaging, which has declined by 12.9% from 2018. The semiconductor RFSOI, etc., to continue working with leading customers sales revenue in 2020 is expected to rebound with over 7% to pursue more flagship products. UMC is committed to growth. providing sufficient production capacity and to establish • According to the market survey of Semiconductor Industry an open technical platform with our back-end packaging Association (SIA), the sales revenue breakdown of the and testing partners to provide proper services. semiconductor industry by area in 2019 was as follows: • The overall structure of Taiwan’s semiconductor industry China led with 34%, followed by North America at 22%, is complete, exhibiting world-leading competitiveness Europe at 9.2%, Japan at 8.5%, and Asia others (excluded in terms of both operational efficiency and cost. Taiwan’s China, Japan) totaling 26.3%. semiconductor industry competitiveness combined with • Looking forward to the driving force behind pure-play UMC’s technical edge results in a positive multiplier effect foundry market growth, the growth momentum of fabless for the company. design companies typically outpaces the semiconductor industry, and IDMs have adopted or raised the ratio of wafer fabrication outsourcing to save costs and reduce market risk. Both of these factors have contributed to the high growth of the pure-play wafer foundry market; thus the performance of the pure-play wafer foundry industry is expected to be better than the overall semiconductor industry.
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Favorable Factors for Development Outlook • UMC developed an advanced 28nm eHV (embedded Considering the continuous growth of the IC industry, High-Voltage) process, and mass-produced AMOLED the ideal position of pure-play wafer foundry, and the display driver ICs successfully. Compared to previous- company’s competitiveness, the favorable factors of long- generation technology, Display drivers designed using term company development are summarized as follows: 28nm eHV could improve power efficiency of smart • Under the trend of IC design and fabrication vertical phone screens. Looking forward, the rising demand of division of labor, there has been prosperous development 5G smart phones is expected to bring considerable of the pure-play wafer foundry market and rapid growth revenue growth. of global demand for pure-play wafer foundry services. • UMC developed advanced 28nm technology, including • IDMs have adopted the strategy of outsourcing to wafer Poly-SiON and high-K metal gate processes, which foundry, thus contributing to the growth of the pure-play have already been mass-produced successfully for wafer foundry market. many logic/RF products. Besides these, an automotive- • Forming strategic alliances with major international grade process was also qualified and related IP is companies to acquire long-term stable orders. ready, with many customers designing-in now. • A strong management team, advanced process R&D, • UMC’s 22nm technology process provides customers and superior business development capability can result further advantage for cost-saving and improved device in outstanding operational performance. efficiency. The process design kit has been released to • UMC is one of the most active companies in the foundry customers; we expect this process will extend our long- industry in developing 12-inch wafer fab manufacturing term competiveness. capabilities, owning a 12-inch fab in the Tainan Science • UMC’s 14nm (FinFET) process technology already Park, one in Singapore, and another in Xiamen, China, successfully entered mass production for customer and the latest one in Japan. As for the future investment chips in early 2017. The yield for shipments to primary in 12-inch fabs, the production capacity will be further customers has reached industry competitive levels for expanded according to customer needs and market this highly advanced process. Being one of the few application trends. foundries in the world to achieve 14nm production • In response to the ongoing trends of electronic products, capabilities, UMC has fully demonstrated the UMC has developed specialty technologies including advantages of 14nm FinFET in terms of efficiency, embedded memory, mixed signal, RF, MEMS sensor, power, and gate density in order to drive next and high voltage to meet customer demand for process generation ICs in the fields of communication, AI, technologies and to establish a leading position for UMC and various consumer products. UMC’s 14nm FinFET technology development. is 55% faster with twice the gate density of 28nm, while • UMC has established the most powerful IoT specialized power consumption is reduced by around 50%. platform solution in the industry and provided an • UMC developed a mmWave process technology -- ranging ultra-low-power (ULP) process with extremely low from 55nm to 40nm ultra low power, and a 28nm high current leakage design suitable for all kinds of hybrid performance/low power platform. We are developing process technologies. IoT chip designers can integrate 22nm ultra low power/ultra low leakage process various process schematics to the customized platform technology, which offers customers more choices based on UMC’s low power consumption technology for their product planning, to meet reliable, low in order to meet the specific requirements to enter power and cost-effective requirements. the IoT and wearable electronic device markets.
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• UMC RFSOI technology is based on a CMOS process to • Among political economic tension between international meet cost effective and strict technology requirements society, countries sanction competing countries for for the smart phone market. The RFSOI technology their market expansion and technology development. platform provides RF N-gate/P-gate MOS and scalable This impacts the company’s investment and operation advanced RF modeling to precisely predict the circuit activities. The U.S.-China trade war was caused by a characteristics of the process. High-density and high- long-term trade deficit between U.S. and China, and voltage MIM, scalable inductor and high-precision U.S. concerns about infringement of intellectual property resistors will provide our customers with the best design rights and business secrets. This trade war is not and cost advantage. expected to conclude in the near future and will even • The process platform of 40nm integrated with Silicon become a long-term confrontation. Intervention includes Storage Technology (SST) embedded SuperFlash® tariffs, closed sales, policy intervention and government non-volatile memory is 20% smaller than the mass subsidy, etc. The impacts to UMC, including a production 55nm unit, and the total memory area has tariff barrier between the U.S. and China will lower been reduced by 20-30%. There have been more than 20 semiconductor demand of the U.S., China and even customers and products manufactured at all stages worldwide, with customers reducing orders and a based on UMC’s 55nm SST embedded flash memory weakening global semiconductor market. U.S. regulation process, including SIM card, financial transaction, to stop foreign shipments of products containing U.S. automobile, IoT, MCU, and other product applications. technology to China’s companies will possibly impact • The MEMS gas flow sensor process platform jointly UMC’s shipment to China’s customers. High-tech material developed by UMC and one of its customers is in export bans bring uncertainty to our production and successful mass production and has been provided to time-to-delivery. end customers in various fields, including medical products and automobile gas flow sensors. Currently the Countermeasures customer has successfully sent samples to major mobile • Continuous cost saving and efficiency enhancements phone makers to be tested. to effectively reduce costs, and cautiously and effectively • UMC has provided Through Silicon Via (TSV) 2.5D/3D IC expanding the production capacity of advanced technology to customers requiring advanced packaging processes; strengthening the competitive edge of the technology under the environment of an open supply company by increasing the ratio and product mix chain cooperative development. With top-notch TSV towards high-end processes. and front-end wafer processes provided by foundry fabs, • Expanding the footprint of 12-inch fabs through highly innovative mid-to-back-end 3D IC stacking, and investment participation and strategic alliances to packaging and testing from back-end service providers, reduce the time, risk, and cost of construction of new a complementary and complete platform can be fabs and to serve local markets. formed to provide a reliable 2.5D/3D IC solution for the • Diversification of customer area and products can semiconductor market. lower the impact of the trade war. Besides existing strong business from China and the U.S., UMC plans to Unfavorable Factors for Development Outlook expand more business from Europe, Japan, Korea, etc. • Due to the optimism of future long-term annual growth To avoid the uncertainty of originally high growth for semiconductor demand, all major global pure-play business from server, automotive and industrial markets, wafer foundries and China have increased their capital UMC plans to gain more business opportunity from 5G, expenditures for expansion of production capacity based IoT, AI, etc. on advanced processes, which could lead to an imbalance of supply and demand in the future market.
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• Avoiding blind expansion of production capacity; all Important Purposes and Production investment plans have been carefully evaluated with Processes of Main Products complete consideration of UMC’s maturity of high-end Main Process Technologies and Corresponding Products processes and customer’s production capacity demands • CMOS Logic: for fabricating chips that execute logic at various stages. computing functions, such as programmable gate array, • In response to the addition of new competitors, UMC multimedia processor, and application processor chips. continues to enhance development of advanced • Mixed-Signal: for fabricating chips which can processes, and maintains the existing advantages of simultaneously process analog/digital mixed signal, such stable high yield and complete services. The benefits of as ICs for broadband access communication and optical these are twofold: UMC can increase its lead against new storage. competitors while also creating differentiation such that • RF CMOS: for fabricating high frequency wireless UMC can continue to be the best option for its customers. communication chips, such as ICs for cellphone RF • Providing the most advanced and proper process services transceiver, Wireless Local Area Network (WLAN) and with respect to IC product characteristics in all Bluetooth. application fields in order to help customers achieve • Embedded Memory: for fabricating integrated logic the goals of lowest cost, high efficiency, and low power and memory chips for high performance with low power consumption. consumption, such as chips for micro-controller, touch • Strengthening marketing effectiveness and the customer controller, and smart card. service mechanism in order to continuously improve • High Voltage: for fabricating driver ICs for LCD TV, customer satisfaction. cellphone, and tablet, e-paper screen driver IC, and power • Strengthening the development of long-term management IC. partnerships with customers, providing competitive • CMOS Image Sensor: for fabricating CMOS image sensors advanced processes and production capacity, helping used in digital camera, cellphone, and webcam. customers expand their market share, and growing • MEMS: for making application products such as together with customers in order to seize the opportunity microphone, inertia sensor, and pressure sensor. of new growth waves. • 3D FinFET: for fabricating high performance chips and • Taking countermeasures at all times to respond to chips for executing fast logic computation, such as constant market variations while facing global recession. mobile phone baseband processor, application processor, Expanding customer bases, improving product mix, and and memory controller. further enhancing the flexibility of production capacity • RFSOI process: for fabricating wireless front-end chips, allocation in order to mitigate the impact of periodic such as wireless switch, tuner used by mobile phones, demand fluctuation. WLAN, and wireless base station.
Production and Fabrication Process A complete IC chip fabrication process can be divided into five processes, including IC design, mask fabrication, wafer fabrication, packaging, and testing. UMC has been dedicated to the R&D of advanced IC processes and specialty technologies in order to provide customers with technologies, materials, and equipment required by their IC designs.
130 Operations Overview
Status of Supply of Primary Raw Material Type of Primary Suppliers Market Status of Suppliers Procurement Strategy Primary Raw Material Silicon Wafer ˙S.E.H. Taiwan (manufacturing sites: These five makers are the 1. The Company has been in long-term US, Japan, Taiwan, and Malaysia) world’s primary silicon wafer procurement relationships with the world’s ˙SILTRONIC Singapore suppliers with production primary suppliers in order to ensure the (Manufacturing sites: Germany, sites in the US, Japan, Germany, steady access to production material. US, and Singapore) Italy, Korea, Taiwan, and 2. In recent years the ratio of procurement from Southeast Asia. They can offer local makers has increased, which can reduce ˙Global Wafers (Manufacturing steady and high quality silicon the risk of international transportation and sites: US, Taiwan, Italy, and Japan) wafers. procurement costs. ˙SUMCO Group (Manufacturing 3. The Company will convene a supplier sites: Japan and Taiwan) management committee meeting every quarter ˙SK Siltron (Manufacturing site: Korea) to evaluate suppliers’ performance in order to adjust the ratio of procurement from these suppliers.
Major Suppliers In Thousand NTD
2019 2018
Name Amount Percentage of Relation to UMC Amount Percentage of Relation to UMC Net Purchase Net Purchase
Supplier “ A” 5,675,751 14 None 5,277,316 12 None
Others 35,982,480 86 37,620,283 88
Net Purchase 41,658, 2 3 1 100 42,897,599 100
Note: As of the Annual Report printing date, if there is any financial data of the publicly listed company (or company with stocks transaction in securities firm’s premises) certified or approved by CPA audit, it should be disclosed: None.
Reasons for changes in procurement amount: No major changes.
Major Customers In Thousand NTD 2019 2018
Name Amount Percentage Relation to UMC Amount Percentage Relation to UMC of Operating of Operating Revenues Revenues Customer “A” 17,576,293 12 None 15,357,470 10 None
Others 130,625,348 88 135,895,101 90
Operating Revenues 148,201,641 100 151,252,571 100
Note: As of the Annual Report printing date, if there is any financial data of the publicly listed company (or company with stock transactions in securities firm’s premises) certified or approved by CPA audit, it should be disclosed: None.
Reasons for changes in sales amount: Due to the increased demand of communication products, the contribution of customer “A” slightly increased.
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Production Figures 2019 2018
Segments Unit Capacity Production Production Value Capacity Production Production Value Quantity (In Thousand NTD) Quantity (In Thousand NTD)
Wafer In Thousands 8,148 7,229 123,055,291 7,673 7,145 122,845,827 Fabrication of 8-inch Wafer Equivalents
New Business 227,873 413,129
Total 123,283,164 123,258,956
Sales Figures 2019 2018
Segments Unit Shipments Amount Shipments Amount (In Thousand NTD) (In Thousand NTD)
Wafer In Thousands Domestic 2,977 53,190,058 3,077 54,034,510 Fabrication of 8-inch Wafer Export 4,212 89,434,961 4,031 88,515,794 Equivalents New Business Domestic 17,627 82,118
Export 26,118 73,581
Total Domestic 53,207,685 54,116,628
Export 89,461,079 88,589,375
Note: Net Sales.
Industry Specific Key Performance Indicators
2019
KPI Target Actual Difference
Utilization Rate 94.7% 88.7% -6.0ppts
Wafer Sales Contributed from 40nm and 36.5% 34.4% -2. 1 ppts below Technologies
132 Operations Overview
Employees
Number of Workers
2020 2019 2018
Engineer 11,206 11,328 11,651
Administrator 810 809 753
Clerk 23 24 31 Technician 7,387 7,416 7,494
Total 19,426 19,577 19,929
Average Age
2020 2019 2018
Average Age 37.2 37.1 35.4
Average Service Years
2020 2019 2018
Average Service Years 10.7 10.5 8.7
Educational Distribution Ratio (%)
2020 2019 2018
Ph.D 1.6 1.6 1.7
Master 27.9 28.1 29.4
Bachelor/Associate/Diploma 48.1 47.6 48.5
High School and Below 22.4 22.7 20.4
Note: The data represented for 2020 was gathered until February 26, 2020.
133 United Microelectronics Corporation | Annual Report 2019
Environmental Expenditure Information
By the publication date of the 2019 annual report, all audits technology and preventive equipment, totaling NTD 860 on UMC by environmental protection agencies showed million. The monthly pollution prevention expenses and results in compliance with regulatory requirements with no O&M of pollution prevention equipment exceeded NTD 89.5 environmental protection violations or any penalty or loss million, while the monthly waste disposal cost exceeded NTD resulting from environmental pollution. 19 million. Meanwhile, NTD 8.7 million has been spent on UMC has identified environmental risks during the annual environment monitoring to track the overall emission operational process according to the spirit of international of pollutants. In addition, in response to RoHS (Restriction of environmental management system (ISO 14001) standards, Hazardous Substances), around NTD 700,000 has been spent based on which corrective and preventive measures can be on continuous certification of the QC-080000 IECQ HSPM continuously conducted, including equipment hardware system, product inspection, and educational training. improvement, enhancement of personal educational In the future, the Company’s primary environmental protection training, and strengthening of operating system expenditures and items will include: 1. Costs of replacement, management. renewal, and upgrade of existing pollution prevention In 2019, the total environmental protection related equipment; 2. Operational costs of pollution prevention expenditures for all UMC fabs have exceeded NTD 2.27 equipment; 3. Waste disposal costs, and 4. Environmental billion. The environmental related expenditures include monitoring costs. investment in highly efficient pollution prevention
Labor Relations
UMC has consistently valued employee benefits and welfare, UMC is committed to providing employees with a safe and and has actively cultivated talent, implemented labor laws friendly working environment. Through continuous efforts, and regulations, protected employee rights and interests, UMC has received numerous awards from the Ministry and created a bright and pleasant working environment. of Labor and other organizations for excellence in labor UMC complies with various local laws and regulations, and welfare, labor education, labor relations and human resource strengthens employee awareness to prevent labor disputes. innovation, and the national excellence award for friendly Through channels such as labor-management meetings, workplace. Among these awards, the Special Distinction divisional meetings, forums, suggestion boxes, grievance Award was given by the Hsinchu Science Park Bureau and hotlines staffed by complaint specialists, and communication Southern Taiwan Science Park Bureau for Excellent Workplace management units, the Company has achieved competent Equality. communication and effective problem-solving. At the same time, UMC also won various corporate In addition to effectively maintaining harmonious labor sustainability awards in 2019. For corporate sustainability, relations, UMC respects and promotes international human UMC ranked in the top 5% for corporate self-governance, rights by providing employees with a quality employment and has won the Taiwan Corporate Sustainability Platinum environment. Moreover, in UMC and all its subsidiaries, Award, Ministry of Economic Affairs Energy Saving the management and implementation of labor relations Benchmark Award and National Enterprise Environmental such as employee welfare measures, in-service education, Protection Award. In addition, UMC has been listed on the training and retirement systems are planned and conducted Dow Jones Sustainability Index (DJSI) for 12 consecutive years. in accordance with or above and beyond the requirements From recent years to the publication of this annual report, of law. UMC has also set up in-house physicians to provide UMC has not suffered any loss arising from labor disputes. medical services and quality counseling services for the In view of the abovementioned comprehensive system and physical and mental health needs of employees, thereby diligent management, UMC can continue to effectively avoid promoting harmonious labor relations. labor disputes or losses.
134 Operations Overview
Education and Training
High-quality talent is the cornerstone of UMC’s • Management Skills Training: Management skills competitiveness, and comprehensive talent development development is an important task for supervisors at and cultivation are the keys to improving human resource all levels. To this end, UMC provides a series of courses quality. targeting competencies relevant to supervisors, such as UMC’s human resource cultivation policies are tailored management behavior, skills, knowledge and corporate according to the career development needs of employees culture integration. To assist supervisors with achieving in their particular job type and rank. The policies provide cooperation in their work and management, learning systematic training for all employees, such as new employee, resources such as foreman/sectional chief, grassroots technical, management, quality control and language supervisor, middle-level supervisor and senior executive courses. In addition, a wide range of learning resources training courses are conducted. such as online learning courses, on the job training (OJT) • Quality Training: Training courses relevant to UMC quality and in-service training are also offered to provide all policies and quality requirements are conducted, such as employees with a working environment that is conducive knowledge management, proposal improvement, project for continuing development. In 2019, UMC conducted a total management, problem analysis techniques, statistical of 7,733 training sessions totaling 13,740 hours of training, process control and experimental design. with 176,398 participants and total training expenses of NTD • Language Training: Employee language proficiency is 48,335,306. determined through language testing. Training programs The following is a summary of training courses provided by targeting specific learning needs are then provided UMC: accordingly to strengthen employee language skills and • New Employee Orientation: To help new employees workplace competitiveness. quickly adapt to the work environment, orientation • E-Learning: UMC has established a learning webpage for training is provided for new employees to give them employees that integrates all course information, training a basic understanding of semiconductor processes and systems and data enquiries. The online platform enables establish a common language. In addition to basic courses employees to easily access needed information for on company organization, remuneration and benefits, planning and learning without schedule constraints. basic daily necessities and industrial safety, U-Camp • On the Job Training: Each fab has an Training Committee courses on workplace stress management and adopting a to provide training for employees in the various divisions. positive attitude also help new employees understand The training is based on skills required by specific jobs the spirit and values of UMC. To help new employees and professional skills assessment to ensure that quickly develop professionalism and an appropriate job employees have the required job competencies. attitude, they are paired with a mentor to help them Additional training based on individual differences quickly integrate into the corporate culture. is also provided to improve the quality of work. • Technical Training: To help engineers quickly master the The Human Resources Division conducts an annual review overall technologies and continue to advance of training outcome to determine and direct the technologically, UMC has a comprehensive training operations of the Training Committee in each fab, and blueprint for engineers that is specific to divisional convenes a training outcome meeting so that the fabs can attributes. The curriculum includes basic courses share their experience. (General to Level 2 courses) and advanced, technology- • In-service Training: UMC provides information on in- specific themed seminars (Level 3 - 4 courses) to enhance service courses offered by outside colleges and the technical capability of the engineers and develop a universities, promotes educational resources and offers system of internal experts. subsidies for in-service training to encourage employees In addition, to equip employees with multiple skills to develop the professional competencies or management and promote cross-divisional cooperation, UMC began skills required at each stage of their career. promoting inter-divisional training courses in 2008 to • Business Ethics Training: To enhance the behavioral increase the depth and breadth of professional and literacy, professional ethics and professional competence technical training for employees. Furthermore, curriculum of UMC and all its employees, courses on employee content is continuously improved to meet the rapid ethics, insider trading prevention and conflict of interest changes and progress of technology. are conducted within the Company and promoted in the
135 United Microelectronics Corporation | Annual Report 2019
Planning Section of the UMC intranet site. To gain public and company-wide survey of training needs. The projects trust, all employees (including high-level executives and include company-wide, cross-divisional and divisional other managers in the operation team) are expected to training programs. Program implementation is reviewed abide by the ethical spirit of the Company in their daily each quarter, and corrective and improvement measures are tasks and businesses, thereby ensuring the sustainable proposed for unachieved goals to ensure the effectiveness of growth and development of the Company. specific employee training. To ensure effective training direction and implementation, UMC believes that creating a high-quality work and the Human Resources Division develops education and learning environment can increase employee performance training projects in the fourth quarter of each year output and retention, and that high-quality employees according to annual company-wide policies, the General who continue to develop are the key foundation to the Manager’s directives for training focus and direction, sustainable development of UMC.
Employee Benefits
Employee Welfare System UMC believes that employees are the most important assets • Club Recreation: UMC has five major categories of clubs, of the Company, and that a company can continue to develop such as sports, arts and community service. Whether and progress only with appropriate and sufficient talent. To active or more sedentary, employees can choose from a this end, UMC is committed to creating a healthy workplace variety of content. In 2019, UMC had a total of 30 clubs and environment. In addition to providing competitive salaries about 2,347 participants. and dividends, a comprehensive education and training • Accommodation and transportation assistance: UMC system, diverse benefits and a safe and healthy working provides safe and comfortable accommodations for both environment, UMC has also developed a comprehensive direct labor and indirect labor. Free scheduled employee welfare system in accordance with local laws and transportation and shuttle services are also provided for regulations and regional needs. convenient and quick connections. UMC provides a variety of welfare measures as follow: At the same time, the UMC Welfare information platform • Nutritionally balanced and delicious meals: Each fab has was optimized in 2018 with the introduction of the Welfare its independently operated cafeteria and a variety of meal Club APP; through GPS, employees can instantly find options. By combining the cafeteria, cafe and convenience contract stores, thereby further enhancing their after-work store into an integrated dining area, employees can enjoy life. healthy and balanced meals. UMC also holds employee health in high regard, and plans • Fitness Sports Center: UMC operates its own recreation and implements benefits in accordance with or above and center in the Hsinchu science park, and Tainan Fab 12A beyond the requirements of the law. For example, UMC has the UMC Park Activity Center, a multi-purpose sports complies with the Act of Gender Equality in Employment, center gym and the LM Dormitory gym. In addition, other the Regulations for Establishing Measures of Prevention, facilities such as gyms and aerobic classrooms are located Correction, Complaint and Punishment of Sexual in appropriate areas of UMC fabs to reflect the concept of Harassment at Workplace, and regulations for leave such a healthy workplace. as personal, sick, maternity, paternity, menstrual, family • Welfare Events: The Welfare Committee routinely care, marital, bereavement, occupational sickness, annual, organizes events (such as Family Day, art activities, movies, parental and nursing leaves. trips), and in coordination with company celebrations, In particular, UMC is the first private enterprise in the organizes inter-fab competitions to cultivate team unity. country to promote a 12-hour rotating shift for its direct labor. At the same time, other inter-divisional and inter-fab Further worth mentioning is the Company’s comprehensive activities are held during holidays to enhance employee insurance system where from the day of their employment, work-life balance. employees are provided with numerous insurance services. 136 Operations Overview
Employee Benefits (Continue)
In addition to labor, health and free group insurance (NT 2 activities and education are then organized for employees million group insurance and cancer insurance), the spouse accordingly to give them further knowledge and skills for and children of employees can enjoy life insurance, accident self-managing their health and the health of their families. insurance and group medical insurance, and their parents Furthermore, through occupational safety and health can enjoy accident and medical insurance, thereby freeing project management, UMC's Health Center has installed them of worry and enabling them to work their best for the an internal reporting system for potential occupational company and society. chronic injury and disease, with regular hearing inspections and vision care programs to effectively prevent occupational Employee Health injuries. Moreover, as of 2019, UMC's IT divisions UMC has a longstanding commitment to creating a have integrated their existing systems to construct a workplace environment that is physically, mentally and customized personal Health Care System for employees. spiritually healthy. UMC is convinced that only employees In addition to allowing employees to instantly access their who are physically and mentally healthy can be highly health check report and consult with medical staff online, efficient and produce excellent work performance. In the system increases the daily follow-up rate by the medical addition to assisting employees in all aspects of health care team. In addition to regulatory annual checkups, UMC management and health promotion, UMC also reaches also offers a variety of preventive screening and health out to their families in the hope of boosting employee promoting activities such as cancer screening for women (PAP work morale and improving the quality of their work. smear, gynecological ultrasound, breast ultrasound), other While valuing the physical condition of employees, UMC cancer screening, flu vaccination, abdominal ultrasound also spares no effort in their mental health management. and other out-of-pocket items so that employees can choose Through a confidential agreement mechanism, employees appropriate health checks according to their needs. are also provided with free professional psychological Risk control identifies and mitigates risks before they can counseling. Moreover, employees and their families are cause harm, and to minimize the probability of occurrence given new health knowledge through online platforms, and degree of damage, the Health Center must naturally lectures, conference and publicity materials to help them assume frontline duty. The above-mentioned health maintain good physical and mental health. management methods and health promotion activities are To help employees balance their physical and mental health intended to ensure that employees sufficiently understand and that of their families in their busy work life, UMC and actively participate in improving their own health provides free counseling services to ensure the mental condition, so that the purpose of early diagnosis and health of employees. Through confidential professional treatment can be achieved. It is hoped that every employee counseling, employees are assisted in addressing their can support and grow with the Company, and can work psychological and spiritual issues. In addition, through the together for the sustainable development of UMC. Internet, brochures and lectures, employees are given the knowledge and skills for healthy living, thus enabling them Labor Pension System to meet the multiple challenges of work and family. In terms of labor pension system, UMC allocates the In 2019, UMC adopted the “My UMC Health Diary” as the worker’s retirement reserve funds to the Labor Pension main focus of health promotion activities for each quarter, Reserve Supervisory Committees in compliance with and integrated occupational safety and health laws such as regulations, and processes the employee labor pension maternal protection, overwork prevention, human factors payment in accordance with the Labor Standards Law. Since engineering and healthy body posture regulations to July 1, 2005, for employees who opt for the retirement system protect employee health. At the same time, medical checks under the Labor Pension Act, 6% of their monthly salary is for employees and hospital check-ups for their families paid into their individual labor pension account to secure are provided annually. A variety of health promoting their rights and interests.
137 United Microelectronics Corporation | Annual Report 2019
Major Contracts Supply and Marketing The Company has signed sales and service contracts with the global market. In addition, UMC maintains a long-term the following companies to grasp the current situation of business relationship with major wafer material suppliers. The main supply and sales contracts are as follows:
Contract Type Contracted Party Contract Period Key Content Restrictive Clause Sales UMC Group（USA） Jan. 1, 2019～Dec. 31, 2024 Sales and related service for None semiconductor products Service United Microelectronics （Europe） Jan. 1,2018～Dec. 31, 2022 Marketing support service for None B.V. semiconductor products Sales UMC Group Japan Co., Ltd. Jan. 1, 2018～Dec. 31, 2022 Sales and related service for None semiconductor products Service UMC Korea Co., Ltd. Jan. 1,2019～Dec. 31,2019 Marketing support service for None semiconductor products Purchase Shin-Etsu Handotai Taiwan Co., Ltd. Indefinite wafer material supply None
Patent and Technology License UMC values and protects intellectual property rights. technology patent holders to ensure that UMC’s customers With nearly 40 years dedication in earning semiconductor are not subject to the risk of wafer process infringement. The patents, UMC has achieved a predominant position in the following are patent licensing contracts received and given semiconductor industry. UMC also enters into patent or by UMC: technology licensing contracts with major semiconductor or
Contract Type Contracted Party Contract Period Key Content Restrictive Clause
Patent International Business Jun. 25, 2009～Jun. 30, 2029 Patent cross-licensing for None Cross-license Machines Corporation semiconductor process, semiconductor device and semiconductor design.
Technology International Business From Jun. 29, 2012 IBM licensed its 20nm None License Machines Corporation CMOS and FinFET technology to UMC. Patent License Conversant Intellectual Feb. 8, 2018～Dec. 31, 2021 Patent license for None Property Management semiconductor process. Inc. & Conversant IP (Taiwan) Inc. Patent International Business Jun. 13, 2013～Dec. 30, 2035 Patent cross-license for None Cross-license Machines Corporation semiconductor process, semiconductor device and semiconductor design. Technology HeJian Technology Jul. 11, 2013～Jul. 10, 2028 UMC licensed its 0.13um UMC signed and implemented the License (Suzhou) Co., Ltd. process technology to contract in accordance with the HeJian Technology (Suzhou) scope approved by the Investment Co., Ltd. Commission, Ministry of Economic Affairs.
Technology Mie Fujitsu From Aug. 29, 2014 UMC licensed its 40nm None License Semiconductor Limited process technology to Mie Fujitsu Semiconductor Limited.
138 Operations Overview
Major Contracts (Continue)
Contract Type Contracted Party Contract Period Key Content Restrictive Clause
Patent Cross- Avago Technologies Sep. 29, 2019～Dec .31, 2023 Patent cross-license for None license General IP Pte. Ltd. semiconductor component related patents.
Patent License NXP B.V. Sep. 30, 2015～Sep. 29, 2020 Patent license and None assignment of right for patent application. Patent Cross- Katana Silicon From Nov. 05, 2019 Cross license for specific None license Technologies, LLC patents.
Technology United Semiconductor Dec. 1, 2015～Dec. 31, 2019 UMC licensed its 55/40nm UMC signed and implemented the License (Xiamen) Co., Ltd. process technology to contract in accordance with the United Semiconductor scope approved by the Investment (Xiamen) Co., Ltd. Commission, Ministry of Economic Affairs.
Technology United Semiconductor Apr. 1, 2017～Mar. 31, 2022 UMC licensed its 28nm UMC signed and implemented the License (Xiamen) Co., Ltd. process technology to contract in accordance with the United Semiconductor scope approved by the Investment (Xiamen) Co., Ltd. Commission, Ministry of Economic Affairs.
Technology United Semiconductor Nov. 23, 2018～Nov. 22, 2028 UMC licensed its 80/90nm UMC signed and implemented the License (Xiamen) Co., Ltd. process technology to contract in accordance with the United Semiconductor scope approved by the Investment (Xiamen) Co., Ltd. Commission, Ministry of Economic Affairs.
Technology Collaboration Contract Type Contracted Party Contract Period Key Content Restrictive Clause
Technology Fujian Jinhua Integrated May 13, 2016～May 12, 2021 Collaborative development None Development Circuit, Co., Ltd. of DRAM process technology
Construction Contract Type Contracted Party Contract Date Key Content Restrictive Clause
Construction Nomura Micro Science Engineering From Jan. 2019 For building the facilities of Fab 12A in None Co., Ltd., Wholetech System Hitech the Tainan Science Park, UMC signed Limited, Sumitronics Taiwan Co., Ltd., construction contracts with the vendors K. J. Filtration Technologies Ltd., listed in the second column. The total Organo Technology Co., Ltd., and Taiyo contracted amount exceeded NT$1.4 billion. Nippon Sanso Engineering Taiwan Co., Ltd. and others.
Construction Anhui 3S Mechanical and Electrical From Jan. 2019 United Semiconductor (Xiamen) Co., Ltd. None Engineering Co. Ltd., entered into construction contracts with Nova Technology Corp., the vendors listed in the second column for L&K Engineering (Suzhou) Co., Ltd., building fab facilities. The total contracted Shanghai Hantech Co. Ltd., amount exceeded US$3.12 million. Wholetech Group (Shanghai) Trading Co. Ltd. and others.
139 United Microelectronics Corporation | Annual Report 2019
Review of Financial Position, Operating Results, Risk Management
141 Financial Position 142 Financial Performance 143 Cash Flow 143 Major Capital Expenditures from Recent Years and Impact on Company’s Finance and Business 143 Main Reasons and Improvement Plans for Recent Annual Reinvestment Policies and Profit or Loss, and Investment Plans for the Coming Year 144 Risk Management and Evaluation 153 Other Necessary Supplements
140 Review of Financial Position, Operating Results, Risk Management
Financial Position
In Thousand NTD
2019 2018 Differences Differences（%）
Current assets 153,757,141 141,193,432 12,563,709 9
Property, plant and equipment 150,374,096 172,846,595 (22,472,499) (13)
Intangible assets 5 ,198,247 2,991,804 2,206,443 74
Other assets 60,857,881 47,573,075 13,284,806 28
Total assets 370,187,365 364,604,906 5,582,459 2
Current liabilities 72,714,322 49,899,337 22,814,985 46
Non-current liabilities 90,258,621 108,169,078 ( 17,910,457) (17)
Total liabilities 162,972,943 158,068,415 4,904,528 3
Capital 117,575,798 124,243,187 (6,667,389) (5)
Additional paid-in capital 39,550,394 40,399,363 (848,969) (2)
Retained earnings 60,820,280 61,588,543 (768,263) (1)
Total equity 207,214,422 206,536,491 677,931 0
Analysis of deviation of over 20% between 2019 and 2018: 1. Intangible assets: Due to United Semiconductor Japan Co., Ltd. becoming a subsidiary of the Company this year. 2. Other assets: Due to the Company adopting IFRS 16 this year and recognizing right-of-use assets. 3. Current liabilities: Due to the increase in current portion of long-term liabilities.
141 United Microelectronics Corporation | Annual Report 2019
Financial Performance In Thousand NTD
Items Years 2019 2018 Differences Differences (％)
Operating revenues 148,201,641 151,252,571 (3,050,930) (2)
Operating costs (126,886,669) (128,412,544) 1,525,875 (1)
Gross profit 21,314,972 22,840,027 (1,525,055) (7)
Operating expenses (21,807,284) (22,159,679) 352,395 (2)
Net other operating income and 5,182,162 5,116,884 65,278 1 expenses
Operating income 4,689,850 5,797,232 (1,107,382) (19)
Non-operating income and expenses 1,045,787 (3,612,833) 4,658,620 (129)
Income from continuing operations 5,735,637 2,184,399 3,551,238 163 before income tax
Income tax benefit (expense) 393,130 458,653 (65,523) (14)
Net income 6,128,767 2,643,052 3,485,715 132
Analysis of deviation of over 20% between 2019 and 2018: 1. Non-operating income and expenses Due to an increase in net gain of financial assets and liabilities at fair value through profit or loss and share of profit of associates and joint ventures. 2. Income from continuing operations before income tax Due to an increase in net gain of financial assets and liabilities at fair value through profit or loss caused by stock market volatility and an increase in share of profit of associates and joint ventures.
142 Review of Financial Position, Operating Results, Risk Management Cash Flow
Analysis of Cash Flow for the Year Ended December 31, 2019 In Thousand NTD
Cash at Beginning of Net Cash Flow from Net Cash Flow from Cash at End of Year Remedial Measures for Cash Flow Year Operating Activities Investing and Financing Shortfalls Activities Investment Plans Financing Plans
83,661,739 54,904,148 (43,073,410) 95,492,477 - -
Note: Net cash flow from investing and financing activities includes the effect of exchange rate changes of NT$(1,524,847). Analysis of Cash Flow 3. Financing activities: 1. Operating activities: Net cash flow from financing activities is mainly from Net cash flow from operating activities is mainly from repayments of long-term and short-term loans and bonds, adding back depreciation expense to net income. distribution of cash dividends and acquisition of treasury 2. Investing activities: stock, which are partially offset by borrowing long-term Net cash flow from investing activities is mainly from loans. acquisition of subsidiary, acquisition of property, plant and 4. Remedial measures for cash flow shortfalls: equipment and acquisition of intangible assets. Not applicable.
Analysis of Cash Flow in the Coming Year In Thousand NTD
Cash at Beginning of Estimated Net Cash Estimated Net Cash Estimated Cash at End Estimated Remedial Measures for Year Flow from Operating Flow from Investing and of Year Cash Flow Shortfalls Activities Financing Activities Investment Plans Financing Plans
95,492,477 55,581,978 (58,396,603) 92,677,852 - -
Major Capital Expenditures from Recent Years and Impact on Company’s Finance and Business
Execution Status of Major Capital Expenditures and Sources of Funding In Thousand NTD Operating Project Actual and Expected Sources of Completion Status Total Amount Capital Expenditures Plan Segment Funding (Up To 2019) (Up To 2019) 2019 2018
Wafer Production Cash flows generated from Completed 34,225,028 15,874,483 18,350,545 Fabrication Equipment operations, bank loans and issuance of bonds R&D Cash flows generated from Completed 3,106,514 1,867,289 1,239,225 Equipment operations, bank loans and issuance of bonds New Production Cash flows generated from Completed 18,993 18,688 305 Business and R&D operations and bank loans Equipment Expected Benefit from Capital Expenditures Based on aforementioned capital expenditures, in 2019 the ratio of production capacity from high-end processes of 40nm or below is above 30%, of which the production capacity for high-end 28nm or below has grown by 11% from the previous year. Main Reasons and Improvement Plans for Recent Annual Reinvestment Policies and Profit or Loss, and Investment Plans for the Coming Year China’s domestic market demand for semiconductors now further growth of the Company. The Company mitigates risk ranks No. 1 in the world, and the Chinese government has by building capacity in different countries and also increases recently adopted a multi-pronged approach to support its operation efficiency. The Company completed the its semiconductor industry. To be more aligned with the acquisition of Mie Fujitsu Semiconductor Limited on October market and better meet the needs of IC design companies 1, 2019 to closely serve the Japanese market. By doing so, the in China, UMC and its subsidiaries have invested about USD Company attributes its capacity to different production 1.35 billion into United Semiconductor (Xiamen) Co., Ltd. sites and effectively penetrates into Japanese niche markets over a period of five years since 2015 in accordance with (automotive and IoT). Moreover, the acquisition can help to the projected plan. As of December 31, 2019, a total capital elevate the Group’s operational efficiency. of USD 1.22 billion has been invested into the Company’s UMC’s investment policies are based on long-term strategic Xiamen 12-inch fab for 28-90nm wafer service to pursue investments to match the Company’s operations and development.
143 United Microelectronics Corporation | Annual Report 2019
Risk Management and Evaluation
Enterprise Risk Management Policies Enterprise Risk Management Architecture Through risk management methods and organizations, BOD/Chairman Audit Committee UMC effectively prevents and controls enterprise risks; comprehensively implements them in daily operations; Enterprise Risk Management Internal Audit & Control shapes and deepens risk culture; and establishes transparent Committee and smooth risk communication to maintain steady operations. Divisions Under the guidance of the risk management policy, the Enterprise Risk Management Committee coordinates relevant departments of the Company to jointly review the internal and external risks that the Company faces, facilitates risk response measures for company-wide major risks, and reports regularly to the board of directors. It also incorporates internal audit and internal control functions to ensure that the risks associated with operations have been effectively controlled. Risk event impacts and measures include important risks related to environmental, social or corporate governance issues of the company's operations. Future R&D Projects and the Estimated R&D Expenses Estimated annual R&D expenses for the next three years Item/Year 2020 2021 2022 R&D expenses Not applicable Not applicable Not applicable Operating revenue Not applicable Not applicable Not applicable (undisclosed financial forecast of the Company) The share of R&D expenses to operating revenue 7% to 10% 7% to 10% 7% to 10%
Major R&D Projects in the Future Latest Annual Current Progress R&D Expenses Time of Mass Key Success Factors for Future R&D Project Which Should Be Production Invested for the Next Two Years
22nm process 22nm ultra-low power/ultra-low leakage NTD 900 million 2020 Customer circuit design verification technology technology development by securing strategic and product yield have been qualified customers, determining device specifications and to mass production standards. starting new process technology development. The process development is expected to be completed with customer product pilot production starting in 2020.
28nm HPC+ Relevant process development and verification NTD 400 million 2021 Customer circuit design verification image signal should be conducted according to the project and product yield have been qualified processor schedule of 28nm HPC+ image signal processor. to mass production standards. technology
14nm process UMC finished 14nm FinFET process platform NTD 1.4 billion 2020 The lead customer has verified UMC’s technology development and also passed process & product 14nm FinFET process platform for qualification. Currently passed customer product production. assessment and will enter risk production by 2020.
Embedded Relevant process development and verification NTD 1.2 billion 2021 Customer’s circuit design verification and magneto- should be conducted according to the product yield have been qualified to mass resistive development project schedule for embedded production standards. memory magneto-resistive memory.
Special Development and verification of 90/55/40/28/22nm NTD 1.7 billion 2021 • Cooperating with customers to technology specialty technology platform (including HV, CIS, create a win-win situation. R&D eFlash, RFSOI, etc.) • Completing IP verification on time. • Quality verification is in compliance with customer requirements.
Note: The R&D expenses for the next three years will account for around 60% to 75% of the total annual R&D expenses. 144 Review of Financial Position, Operating Results, Risk Management
Risk Management and Evaluation (Continue)
In 2019, UMC has been constantly strengthening its external R&D resources. The Company will also accelerate independent R&D capabilities and fabrication; in the future, R&D, expand production capacity and enhance revenue UMC will continue to be dedicated to the R&D of advanced mix of key processes so that higher profits can be created in and specialty processes. The Company will adhere to its R&D order to respond to the challenges resulting from constant strategy to establish independent R&D capabilities and will technology evolvement. work with important partners, such as IDMs and Fabless, to develop key process technologies through technology licensing. UMC will also work with suppliers of photomask, The Impacts of Interest Rates, Foreign packaging, equipment, material, and EDA to speed up the Exchange Rates and Inflation on Corporate market launch schedule in order to fulfill the Company’s promise to provide customers with R&D of key processes. Profitability and Future Countermeasures In terms of independent R&D capabilities, UMC’s focus is on Interest Rate Fluctuation recruitment and cultivation of R&D talent in order to build The bank loans of the Company are floating rate debts. an outstanding R&D team. The 12-inch R&D production line Therefore, changes in market interest rates will result in will continue to be expanded in the R&D Center located in fluctuations in future cash flows. Based on the bank loans as Tainan Science Park with sufficient funds for enriching the of December 31, 2019, if the interest rate increases/decreases overall R&D resources. In 2019, UMC’s R&D led to fruitful by 10 basis points, the Company’s net profit for 2019 will achievement. Mass production optimization has been decrease/increase by NTD 45,917 thousand. In order to ongoing for 28nm. The development of a 22nm ultra- reduce interest rate risk, the Company continues to monitor low power/ultra-low leakage shrink process technology changes in market interest rates. Besides bank loans, the can be provided as a planar process technology solution Company also utilizes various financing instruments. To with lower cost and better cost efficiency for customers. support operating needs, the Company will take advantage UMC is offering a 22ULP (ultra Low Power) version that has of long-term debts with favorable fixed rates depending on compatible design rules and the same mask count as the market conditions. foundry’s 28nm technology, and also a 22ULL (ultra Low Foreign Exchange Rate Fluctuation Leakage) version. UMC’s 22ULP and 22ULL form a super set The Company’s exposure to the risk of changes in foreign to support a voltage domain from 1.0V to 0.6V, allowing exchange rates relates primarily to the Company’s operating customers to enjoy the benefits of both technologies activities (when revenue or expense is denominated in a on system-on-chip (SoC) designs. The 22nm platform is different currency from the Company’s functional currency) supported by foundation IP and is ideal for a wide variety of and the Company’s net investments in foreign subsidiaries. semiconductor applications including consumer ICs for set Based on the assets and liabilities of risk-avoiding top box, digital TV, surveillance, power or leakage sensitive management denominated in foreign currencies as of IoT chips (with Bluetooth or WiFi) and wearable products December 31, 2019, when the NT dollar strengthens/weakens that require longer battery life. by 10 percent against the US dollar, the Company’s net profit In terms of 14nm process technology, UMC finished 14nm FFC for 2019 will decrease/ increase by NTD 1,009,197 thousand. platform development and pass process qualification, which On the other hand, when the Chinese Yuan strengthens/ has entered the customer chip mass production stage. weakens by 10 percent against the US dollar, the Company’s UMC’s R&D team will continue with the optimization of net profit for 2019 will increase/decrease by NTD 2,200,266 14nm to take the full advantages of the performance, power thousand. consumption, and gate density of 14nm FinFET in order to drive next generation Internet, AI, and consumer product The Company applies natural hedges on the foreign currency applications. For embedded magneto-resistive memory, this risk arising from purchases or sales denominated in foreign year’s scheduled development milestone was completed currencies, which means balancing the assets and liabilities with high test chip yields. UMC will provide the embedded denominated in foreign currencies to reduce the impact MRAM macro IP for potential customers on the Company’s from fluctuation in foreign exchange rates. The Company 22ULL platform next year. For specialty technologies, UMC may use derivatives, such as currency forward contracts, has launched the development of “More than Moore” to partially hedge foreign currency risks associated with processes and successfully provided comprehensive certain highly probable forecast transactions. These hedges solutions such as ultra-low power platform (ULP), CMOS will offset only a portion of, but do not eliminate, the image sensor (CIS), MEMS, eFlash, embedded high voltage financial impact from changes in foreign exchange rates. (eHV), power management IC (PMIC), and RFSOI. Furthermore, as net investments in foreign subsidiaries In order to control the technology and development are for strategic purposes, they are not hedged by the schedule to fulfill the promise of customer market launch, Company. The Company continues to monitor the changes UMC will continue with the independent R&D strategy, in foreign exchange rates in order to respond promptly to adhere to a customer-first philosophy and integrate any significant fluctuation.
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Inflation and continuously enhance its technical advantages, The inflation status in 2019: Due to lower-than-expected UMC invested a total of NTD 11.86 billion in research and international oil prices and prices of raw materials in the development in 2019. At the same time, the Company is also first half of 2019, the annual growth rate of the Taiwan actively working with external academic and government Consumer Price Index (CPI) was below that of 2018. However, institutions to develop new process technologies for next the average consumer price index (CPI) in Taiwan still grew generation product applications to diversify the Company’s by about 2.55%. Overall prices remain stable and there is no process technology offerings. The Company invested concern regarding inflation. approximately USD 574 million in capital expenditure during 2019. UMC will continue to invest in existing logic Policies for High-Risk and Highly Leveraged and specialty technologies, expanding 8” and 12” capacity to penetrate emerging applications and driving internal Investments, Lending, Endorsements, operational efficiencies. The Company believes that these Guarantees for Other Parties, and Financial efforts will create higher customer adoption of its logic and Derivatives Transactions, Main Reasons for specialty technologies and expand UMC’s market share to fuel growth. UMC will strive to enhance its operations and Profit and Loss, and Future Countermeasures preserve the best interests of its shareholders.
The Company has not engaged in any transaction of high-risk or highly leveraged investments. Any financial The Impact of Corporate Image Change on derivatives transaction is to enhance the Company’s Corporate Crisis Management and Response operating performance and reduce operating and financial risks. Measures
The Company has established its “Loan Procedure,” The Company's business philosophy is based on the “Endorsements and Guarantees Procedure,” and “Financial Company's sustainable operation and long-term partnership Derivatives Transaction Procedure” in compliance with the with customers and social groups. The Company regularly relevant rules and regulations issued by Financial Supervisory holds shareholders' meetings and legal person briefings to Commission. These internal procedures serve as the basis increase financial transparency. The Company also actively for the Company to enter into transactions mentioned participates in community and public welfare activities, above. The Company has announced and reported these and effectively fulfills its responsibility as a member of transactions, and also established a registration book in society. For a variety of different emergencies, there are order to review these transactions regularly. If necessary, special personnel responsible for planning and responding measures will be taken to control financial risks. to minimize the uncertainty of business operations.
Impact and Corresponding Measures of Major Expected Benefits, Possible Risks and Domestic and International Policy and Legal Response Measures for Mergers and Changes on UMC's Finances and Business Acquisitions UMC complies with national policies and laws. The With UMC’s customers located all over the world and Company’s relevant divisions keep abreast of major policy given the Company’s business philosophy of continuously and legal changes at all times. UMC adjusts its internal improving the service quality to its customers, UMC systems and business activities accordingly to ensure the understands the importance of satisfying customer needs smooth operation of the Company. and providing local services. At the same time, UMC also recognizes that with expansion through mergers and Impact on the Company’s Financial Results acquisitions, the Company can take advantage of the increased economies of scale and operational efficiency. and Corresponding Contingency Plans in Based on this concept, UMC’s Board of Directors approved Response to Changes in Technology and the the acquisition of the entire share capital of Mie Fujitsu Industry Semiconductor Limited in June, 2018. The transaction was completed on October 1, 2019 and it was renamed as UNITED The Company places significant importance on the SEMICONDUCTOR JAPAN CO., LTD. upon completion of the dynamics of the semiconductor industry and continues to acquisition. The acquired company is UMC’s production base invest and develop semiconductor manufacturing process in Japan for 12-inch wafer services. In addition, UMC will technology and know-how. In order to accelerate the also continue to invest in United Semiconductor (Xiamen) development of logic and specialty technologies, optimize Co., Ltd. to provide 12-inch wafer services in China. UMC’s transistor performance, reduce power consumption, global operational capabilities can be strengthened, and
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customers are given more competitive foundry solutions. according to the four subjects of “Risk Assessment On the other hand, UMC’s overall value can be increased and Operation,” “Operational Impact Analysis Operation,” shareholder interests can be enhanced. “Accident Response and Operation Sustainability Plan” and The main risk of cross-border merger and acquisition “Emergency Material Procurement Operation.” involves integration and compliance with the regulations In addition, UMC has established alternative suppliers and and compliance of various countries. To comply with the regularly implements evaluations of supplier capabilities, regulations of related authorities for equity purchase or flexibilities and natural disaster risk mechanisms that merger and acquisition, UMC conducts careful planning correspond to the production site. Currently, there are no and consultation with professionals from the respective high risk incidents. In case of emergency, the emergency countries. The goal is to not only complete equity purchases response mechanism will be activated, and it will be or mergers, but also to strategically plan to sustain future managed according to the “Accident Response and business and maximize shareholders’ interest. Operation Sustainability Plan” and “Emergency Material Procurement Operation.” Risk of Excess Capacity from Fluctuating Economic Conditions Risks of Sales Concentration and Response Measures The Company increases its production capabilities through fab expansion in order to accommodate more customer UMC has established long-term steady cooperation with orders, thus providing the means to increase revenue, multiple world-class customers, and the long-term steady profits and market share. When production capacity growth of the Company can be ensured by combining the reaches economies of scale, manufacturing costs can be competitive edges of UMC and these customers. In 2019, the dramatically reduced. However, the significant potential for total sales revenues of UMC’s top 10 customers accounted for fluctuations in the semiconductor industry economic cycle approximately 51% of UMC’s total sales revenues. UMC will creates financial risk, as any excess capacity still must be continue to closely cooperate with customers who require accounted for under depreciation of plants and equipment advanced and specialty processes, and provide customized during demand softening caused by economic conditions. solutions for specific products and applications. UMC will This risk would be considered a burden to the Company. continue to provide comprehensive customer oriented pure- The Company’s capacity expansion is under deliberate play wafer foundry solutions in order to expand its customer capital expenditure plans, which focus on satisfying base and improve product mix. The Company will further customers’ needs while optimizing capital utilization. enhance the flexibility of production capacity allocation to Disciplined capital expenditure can help to develop a reduce the impact of periodic demand fluctuations with the healthy industry environment. goal of mitigating risk. The Company has set forth the Capital Budget Committee from 2013, which comprises of members from the Company’s Risk of Change of Control and Stock Price Independent directors and non-executive directors. The Committee’s goal includes review of the Company’s capital Fluctuation from Large Scale Transfer of expenditure budget, with the intent to strengthen long- Shares term corporate strategy, financial planning and business performance. If the Company’s directors or major shareholders holding more than 10% of issued and outstanding shares transfer a significant portion of their shareholding in the Company, Risk and Response Measures to then a change of control may occur. Furthermore, such Procurement Concentration transfer may give rise to investors’ concerns on the operation of the Company and may cause the market price Risk of material shortage: for example, insufficient of the Company’s shares to fluctuate. production capacity, accidents in the fab, or natural disaster The share withholding status of the Company’s directors and could result in material shortage. managers have been reported based on official regulations Risk avoidance approach: currently, UMC adopts a supplier and laws. Meanwhile, there has been no significant share self-management mode, in that these materials are stored transfer activity. in the Company’s and suppliers’ warehouses near UMC fabs. The safety inventory level is increased to meet emergency demand and to shorten the emergency response time in order to effectively reduce material shortage risk, and the Company’s operation regulations are formulated
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Risk of the Company Losing One or More Key former employees of UMC, alleging that UMC and others conspired to steal trade secrets of MICRON, and used that Personnel without Adequate Replacement information to develop technology that was subsequently Due to any Change of Company Control transferred to JINHUA. On the same day, the DOJ filed a civil complaint enjoining the aforementioned defendants from UMC’s future success depends to a large extent on the exporting to the United States any products containing continued service of the Company’s chairman and key DRAM manufactured by UMC or JINHUA and preventing the executive officers. If the chairman or key executive officers defendants from transferring the trade secrets to anyone leave their positions as a result of a change in Company else. UMC has appointed counsels to prepare answers control, and qualified replacement personnel cannot be against these charges. Besides, UMC has suspended the joint found and integrated in a short period of time, operations technology development activities with JINHUA. Currently may be adversely affected. the civil complaint has been stayed by the court and the The Company’s management focuses its operations with the criminal proceeding is ongoing. Given these litigations are intent to maximize value for its shareholders, thus gaining still in the preliminary stages, UMC cannot assess the legal their trust and recognition. If there were a replacement proceeding and probable outcome or impact. of management, the succeeding personnel would have On March 14, 2019, a putative class action styled Meyer v. to recognize corporate culture, be qualified to assume United Microelectronics Corporation and several executives, professional duties, and be able to execute the Company’s was filed under Securities Exchange Act of 1934 and Rule policy. 10b-5 in the United States District Court for the Southern District of New York. The court appointed a lead plaintiff and approved lead plaintiff counsels on May 23, 2019. On Litigation and Non-Litigation Incidents September 27, 2019, UMC received the service of plaintiffs’ On August 31, 2017, the Taichung District Prosecutors Office amended complaint and appointed counsels to prepare the indicted UMC based on the Trade Secret Act of R.O.C., relevant procedures. Currently the mediation process is alleging that employees of UMC misappropriated the ongoing. The Company does not expect material financial trade secrets of MICRON TECHNOLOGY, INC. (“MICRON”). impact resulting from this claim. On December 5, 2017, MICRON filed a civil action with similar cause against UMC with the United States District Risks Relevant to Intellectual Property Court, Northern District of California. MICRON claimed entitlement to the actual damages, treble damages and UMC values technology development and respects relevant fees and requested the court to issue an order that intellectual property rights, hence UMC develops enjoins UMC from using its trade secrets in question. UMC independently to acquire intellectual property rights has appointed counsels to prepare answers against these actively and devotes itself to protecting its and its business charges. Currently the civil complaint has been stayed by partners’ intellectual property rights. Although UMC the court and the criminal proceeding is ongoing. dedicates itself to enforcing and protecting intellectual On January 12, 2018, UMC filed three patent infringement property rights, it cannot completely prevent its intellectual actions with the Fuzhou Intermediate People’s Court property rights which strongly related to UMC’s business, against, among others, MICRON (XI’AN) CO., LTD. and such as process, technology, software, trade secrets, or MICRON (SHANGHAI) TRADING CO., LTD., requesting the know-how from being infringed or misused by third parties. court to order the defendants to stop manufacturing, In addition, responsibilities for some of the infringements of processing, importing, selling, and committing to sell the intellectual property rights are strict liability and require no products deploying the infringing patents in questions, and finding of mens rea or intent, so when UMC independently also to destroy all inventories and related molds and tools. develops the process, technology, software, trade secrets or On July 3, 2018, the Fuzhou Intermediate People’s Court know-how required to engage in business, it may infringe granted preliminary injunction against the aforementioned on third parties’ intellectual property rights unknowingly. two defendants, holding that the two defendants must Therefore, UMC may need to obtain technology or patent immediately cease to manufacture, sell, and import licenses from third parties on reasonable terms. However, products that infringe the patent rights of UMC. The court if UMC cannot obtain the technology or licenses on has approved withdrawal of one of the patent infringement reasonable terms, it may be accused of intellectual property actions on our motion while the other two actions are still infringement by third parties or even receive an injunction on trial. granted by the court on third parties’ motion for injunctive On November 1, 2018, the Department of Justice of the relief, thereby jeopardizing UMC’s abilities to perform United States (“DOJ”) unsealed an indictment against UMC, business contracts and eventually leading to breach of FUJIAN JINHUA INTEGRATED CIRCUIT CO., LTD. (“JINHUA”), and contracts. three individuals, including one current employee and two
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UMC’s ability to compete also depends on its ability to two-phase fluorinated greenhouse gases replacement plan
operate without infringing on third parties’ intellectual for all its fabs (by replacing C2F6 with C3F8 and C3F8 with C4F8) property rights. As is the case for many companies in in order to greatly reduce greenhouse gas emission and the the semiconductor industry, UMC from time to time impact of global warming. In the meantime, UMC supported receives letters from third parties asserting and alleging the EPA early reduction project and acquired a carbon infringement of some intellectual property rights of their reduction allowance, thus successfully turning risk into technology. Due to the rising of active Non-Practicing Entity competitiveness. Facing the issues of global climate change (NPE), UMC expects to receive similar letters in the future. and the management of energy and greenhouse gases, in Irrespective of the validity or the successful assertion of such recent years UMC has been actively drafting environmental claims, UMC could incur significant costs and management protection objectives through various stages and aspects resources for defending these claims, which in turn could and developed specific implementation plans for gradual seriously impair UMC’s business and operation. promotion. In order to minimize the liabilities arising from third parties’ claims alleging UMC’s manufacturing of semiconductor Disaster Risk Management devices or designs of UMC’s customers’ end products infringe on third parties’ intellectual property rights, As a leader in the semiconductor fabrication industry, UMC generally, UMC accepts orders only from companies with is fully aware of the impacts of natural disasters and man- satisfactory reputation and for products without potential made accidents on production and operation. Therefore, infringement risks. Furthermore, UMC also obtains UMC has always faced disaster risk management with an indemnification rights from customers and equipment active attitude of prevention management, and pursues vendors to hold UMC harmless from any damages resulting the highest safety standards within the semiconductor from any suits or proceedings brought against UMC alleging industry through stringent risk engineering control and UMC infringes third parties’ intellectual property rights by implementation management of safety regulations and manufacturing products for customers or using equipment standards. supplied by vendors. Fire Safety UMC has applied international standards, such as Risk of Climate Change Factory Mutual (FM) Insurance Company, Underwriters Laboratories Inc. (UL), National Fire Protection Association The Risk of Climate Change May Negatively Affect UMC’s (NFPA), and Semiconductor Equipment and Materials Business Operation International (SEMI) to building structure, equipment, UMC actively focuses on the new business operational and risk engineering control and assessment, and the concern of climate change. UMC has developed the UMC company regulations have been formulated to serve as Climate Change Risk Assessment methodology based on definite requirements. UMC is also the only company in the Fifth Assessment Report (AR5), which is published by the semiconductor industry with its own fire brigade. In the Intergovernmental Panel on Climate Change (IPCC), addition to being equipped with professional fire engines and the government’s downscaling scenario projection for and fire rescue equipment, the fire brigade normally identifying potential physical hazards under climate change conducts professional training to teach emergency response situation, and the ISO 14090: Adaptation to Climate Change capabilities to employees, while having the ability to and the assessment procedure in the UK Climate Impact respond on¬site in case of disaster. Programme (UKCIP). The assessment concluded that UMC’s Protection Against Natural Disaster top 3 climate change risks in the most recent 5 years were “electricity price rising and imposition of carbon tax caused UMC has actively planned and established a complete and by energy policy,” “a dramatic rise in green investment” sound disaster risk management response procedure. It and “super typhoon influences on water supply continuity.” has worked with world-renowned structure consultation The inevitable global carbon risk will not only bring rising companies specialized in responding to earthquake disaster, manufacturing and transportation costs due to increased such as EQE (EQE International Inc.) and JENSEN HUGHES prices for petroleum and electricity, but will also directly to include seismic safety of buildings, factory facilities, impact the economy and the operation of enterprises from pipelines, and production machines into the design criteria the perspectives of energy tax, carbon tax, border carbon at the preliminary stage of fab construction. There are tariff, and stringent environmental laws and regulations, plans for continuous improvement of older fabs built prior and lead to additional investment costs. UMC has actively to 1999. In February 2016, an earthquake of Richter scale implemented measures in response to mitigate the impact magnitude 6.6 took place in southern Taiwan, registering caused by climate change. For example, to reduce the close to 6 at UMC’s Fab 12A in Tainan Science Park. However, emissions from fluorinated greenhouse gases used in wafer hardware loss was rather moderate compared to other foundries, UMC was the first in the industry to complete a companies in the industry, which was an indication of the effectiveness of UMC’s seismic design. In addition, UMC has
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continued to introduce new seismic protection technologies, Business Continuity Management (BCM) including anti-earthquake damper for buildings and seismic UMC recognizes that pursuing the sustainable operation isolation platforms for reticle stocker and furnace and the of its organization actually means providing strategic establishment of an onsite earthquake early warning system customers and important stakeholders with continuous for further enhancement of personal safety and reduction services. Therefore, the highest mission of the Company of risks associated with losses of machine and equipment is to provide customers with diversified, high quality, and due to earthquake. uninterrupted wafer foundry services. Responses to Climate Change Risk In 2013, UMC was the first in the industry to be granted the ISO22301 Business Continuity Management System UMC has always cared about the possible impacts from Certificate issued by SGS Taiwan Ltd., for both its Hsinchu extreme weather. The Company has completed flood HQ and Fab 12A. In 2016, Fab 12i in Singapore was granted potential simulations for fabs in Taiwan since 2014, and ISO22301 Business Continuity Management System conducted hardware improvement to strengthen the Certificate after only its first evaluation. In 2019, Hsinchu flood control capacity of Fab 12A. UMC was also the first HQ, Tainan Fab 12A, and Singapore Fab 12i passed the 3-year in this industry to develop an early warning system to review cycle by BSI (British Standard Institution) to extend detect water shortage that is integrated with quarterly the validity of certification. long-term weather forecast data to provide the prediction Under such operation and maintenance mechanism, of water conditions in the coming three months so that UMC will continue to review, refine, and ensure the water saving measures can be conducted, and water truck maintenance and recovery of the highest operational contract and rehearsals can be prepared in advance to objectives upon occurrence of disaster or impact in order reduce any risk to operations. Furthermore, UMC climate to protect the rights and interests of customers and change risk and opportunity assessment was accomplished stakeholders. by referring to the fifth assessment report published by the intergovernmental panel on climate change (IPCC AR5) Business Continuity Policies and the assessment procedure in the UK Climate Impact • The highest purpose of the Company’s sustainable Programme (UKCIP) in 2019, and related results will be operation and management is to provide customers with disclosed to stakeholders in the CSR report during the diversified, high quality, and uninterrupted wafer foundry following year. services while continuously pursuing partnerships with Safety Protection of Process Equipment its customers. • UMC will implement the operation of the business Safety, Health, and Environmental Protection Standards continuity management organization and conduct of Semiconductor Manufacturing Equipment (SEMI S2) is business impact analysis and risk assessment when the primary international standard for UMC to establish the business environment changes, so that sustainable the mechanism for review of new machines and company operation strategies and objectives can be formulated and regulations. The “UMC Process Equipment ESH Procurement secure resources can be obtained for such implementation Specifications” has been introduced at the procurement with continuous review and refinement. stage. The safety of machines can be under effective control • In case of disaster or impact, UMC will invest sufficient with the machine specifications compliance review before resources according to its business continuity strategies machines are moved in and machine installation inspection in order to maintain and restore optimal operations. The after they are moved in. Company will keep good communication with, fight for International Risk Rating (Triple-Star Rating System) and protect the rights and interests of its customers and UMC introduced the Triple-Star Rating System in 1998, and stakeholders. the Company has since invited international insurance company AIG (American International Group) to conduct risk audits so that UMC could continuously enhance Enterprise Information Security Risk fab protection level in order to be in compliance with Management international standards and to maintain the commitment level of Highly Protected Risk (HPR) for our customers and Risk Management Organization the insurance market. Aside from some items in older fabs, In 2018, UMC established the “Enterprise Risk Management the ratings of all other fabs are maintained at the highest Committee” to collaborate with key organizations in the level. Company’s risk management and control to jointly examine and manage internal and external risks, and prioritize risk response strategies for major risk issues across the Company. It is combined with internal audit functions to
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ensure that the operational risks associated with operations management procedure and penetration testing, etc. In 2019, are properly managed. In the same year, UMC established we also leveraged an international professional security the “Corporate Security Division” responsible for the company’s resources to help on inspecting the robustness Company’s information security and physical security of overall security as a trusted third party verifier and a planning and related audit matters, which works together basis for further improvement. The summary of the annual with the “Information Technology Division” to further information security assessment is as follows: “Overall, UMC strengthen information security. has implemented an information security management Information Security Policy system. According to this system and control measures, conventional malicious programs such as attacks by viruses, UMC’s information security policy is based on the guiding Trojans, worms and external hackers will not easily damage principle: “To establish Information Security Management UMC’s information system.” rules in accordance to customer requirements, to reach a consensus that information security is everyone’s Information Security Management System responsibility through full awareness, to protect information UMC is listed on NYSE and complies with the Sarbanes- Confidentiality, Integrity, Availability for the Company and Oxley Act (SOX 404) for internal key financial processes. The Customer, and to provide a safe production environment to Company intends to strengthen information security by ensure sustainable operation of the Company’s business.” introducing ISO27001 information security management The major information security objectives are aimed at system certification, so that information systems can be antivirus, anti-intrusion and anti-leakage through the operated under standard management procedures to building of multiple internal controls such as firewall, reduce security risk and production anomalies that may be intrusion detection and antivirus systems to enhance the caused by human error. Continuous improvement of PDCA Company’s ability to defend against external attacks. Also, is then carried out through annual recertification. with the support of top management and through regular In 2014, a cross-division security committee was established. education and training programs, security operation/ Based on the need to produce secure products like smart awareness is tightly involved and seamlessly integrated into card ICs, the Company decided to introduce ISO15408 every employee’s daily work. (CC, Common Criteria) certification. The certification is Establish Enterprise Risk Management System specifically designed for secure production procedures not only in data receiving, processing and destroying but also The Enterprise Risk Management Committee integrates the higher physical access control request for securing entire identified various risk items, including strategy, operations, production line purposes. Continuous improvement of finance, disasters, etc., assesses the likelihood and severity PDCA is then carried out through biennial recertification. of the occurrence, defines the priority order and risk level of the risk items, and takes response actions. The management The Arrangement of the Security Insurance plan periodically reviews the potential occurrence of risks In view of recent reports about data leakage, virus infection and the potential for changes in severity over time to grasp and hacking events in Taiwan and the world, together the effectiveness of risk management plans and related with the ransomware incident of a peer semiconductor control operations. manufacturer’s information system in August 2018 which UMC complies with multiple ISO certification standards caused billions of NT dollars in operational disruption (BI, as a means of achieving risk-oriented management and Business Interruption), the worldwide security threat has inspection purposes in the areas of quality, environment, been drastically intensified. There is no guarantee that water resources, carbon footprint, green energy, etc. Related enterprises will not become the target of being attacked information security certifications include ISO15408, even if they already have good security protection in ISO22301 and ISO27001. The Company has also established place. UMC’s strategy is to adopt cyber security insurance corresponding risk management committees to promote as a new option for partly transferring and mitigating standardization processes and reduce the risk to business the risk. This insurance has been in effect since Jan. 2019 operations. Please refer to the Company website for related with a retroactive option that can trace back stealth certification information. http://www.umc.com/English/ threats existing in the enterprise before the effective CSR/b_5.asp. implementation date. Initial insurance amount is set to be $10 million US and covers all UMC fabs in Taiwan and Assessment of Information Security and Cyber Risks Singapore. In the future, they will be reviewed annually to UMC puts particular emphasis on preventing Information protect the Company from potential losses in the event of a security and cyber risks, and builds a complete multi- cyber attack. layer defense mechanism including firewall, intrusion detection, antivirus system, vulnerability scanning, patch
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The Impact of Occurred Major Security Incidents and to penalize specific entities or even trigger a trade war. The Corresponding Response Measures main methods include raising tariffs, embargoes, policy UMC had a major WannaCry ransomware incident in interventions, government subsidies, etc., which may have 2016, causing 42 Servers/PCs/NBs used in the OA area an impact on the company’s investment and operations. It to be infected and needing to be re-built. Fortunately, also affects revenue, delivery, and goodwill. For example, a due to early detection and proper handling, it did not sharp increase in tariffs in importing countries may drive spread to production line computers. This is considered up end-market prices, thereby reducing consumer purchase a relatively serious virus incident within recent years. demand and further reducing UMC customer orders; The In addition to immediately upgrading to a new version United States Export Control Act regulates that if those of antivirus software with behavior-based detection whose content originating from the United States exceeds a capability and implementing strict information device in/ certain ratio, their products may not be exported to specific out management, the Company policy also requires that countries. This may affect UMC’s direct or indirect supply to production line computers update critical patches to defend specific customers; restrictions on the export of high-tech against such worm-type viruses that may attack system materials may affect UMC’s production, resulting in failure vulnerabilities. Another countermeasure is to set the Access to deliver on time and damage to goodwill. Control List (ACL) in production line networks to grant UMC’s countermeasures include: necessary access between equipment tools, which can block 1) Increasing the diversification of customers’ region and viruses from spreading and limiting them to a small extent product application. Besides cautiously facing existing of impact. After the virus incident in August, SEMICON business in North America and the Asia Pacific, UMC also TAIWAN formed a task force that included UMC to co-study aggressively expands its business from other regions such equipment information security standards and responsibly as Europe and Japan. In response to business uncertainty contribute as a local enterprise. for server, automotive and industrial applications that In short, the current security risks disclosed by UMC in this originally enjoyed high growth, UMC also tries to expand its annual report should be supplemented with a famous opportunities in IoT, AI, etc. quote from the information security industry: “There is no 2) Monitoring and evaluating the impact of external such thing as 100% security.” While new attack techniques changes (including global regulations, politics, economic are constantly introduced, defense systems are faced with conditions, etc.) on the Company's business (raw materials, a zero-day attack limitation. Past defense achievements do customer demand, etc.) and taking necessary risk response not necessarily mean or guarantee that anomalies will not plans. In practice, a raw material supply chain tracking happen in the future. mechanism is established, and the legal compliance Enterprises must keep pace with the times to face the response system is strengthened. Through a more accurate ever-changing and growing information security threat. grasp of the country’s component ratio of raw materials, Information security has a long way to go and requires UMC can analyze the possible impacts and respond in a continuous improvement. UMC will uphold the values of timely manner. “Customer-orientation, Integrity, Innovation, Accountability, Efficiency” as its corporate culture and will fulfill “due The Impact of Talent Retention and Training & care/due diligence” management responsibility to provide Development on the Company’s Operations customers with a secure production environment to reduce operational risk and reward shareholders with the highest and Corresponding Practices. possible investment value. At UMC, employees are considered the most important asset and the foundation of sustainable operations. Facing Tension in Political or Economic Relations external labor market competition and the attractiveness of between Major International Countries; The salary conditions have caused staff turnover, so the failure Impact on The Investment and Operation to effectively maintain and extend experience has potential risks to the company’s operations. of The Company’s Foundry Industry and Regarding talent retention and training & development Corresponding Measures practices, UMC provides a comprehensive learning environment for employees to improve the skills and Internationally, due to political or economic tensions expertise of their colleagues. The Company focuses on between major countries, national power has been exerted “talent attraction, cultivation, and retention” as the key
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goals of training & development, while continuously or diagnosed with an infectious disease, we may need to improving the quality and effectiveness of training, quarantine these employees or close the relevant workplace cultivating talent to meet the needs of the organization, to temporarily suspend some or all production operations. and ensuring the continuation of experience. Meanwhile, UMC established its coronavirus epidemic control and we also pay attention to external market salary information response center in January 2020 to coordinate relevant and provide competitive salary and welfare conditions to information and resources usage, such as: achieve the Company’s sustainable operation goals. 1). Daily review for conditions of production impact, supply chain management, epidemic prevention strategies and Any Outbreak of Contagious Diseases, action preparation, etc. 2). Defined clear stages of infectious disease disaster Such as the Recent Coronavirus Pandemic, management and prepared response measures in advance may Materially and Adversely Affect our according to the situation of each stage, and launched Staff Attendance and Operation, and it’s corresponding activities in accordance with epidemic development. For example: reduce human infection and Countermeasures production impact (for detailed related measures, please refer to “4-3. Health and Safety Workplace” in the CSR Any outbreak of infectious diseases, such as coronavirus, report); reduce material shortages by increasing inventory, Ebola virus, bird flu, swine flu, or severe acute respiratory find and expedite the verification of second suppliers; syndrome (SARS), can affect staff attendance and even affect reduce the operation impact of specific fabs by cross-plant company operations. For example, the recent outbreak of products and order adjustment and transfer. the coronavirus pandemic is spreading globally and has an Up until February 2020, the epidemic has not had a adverse effect on the world’s economic conditions, which significant impact on the Company’s operations. The has impacted both the demand within the semiconductor Company will maintain a positive and cautious attitude and market and the stability of the supply chain. If the epidemic continue to pay close attention and respond to it. cannot be effectively controlled in the short term, the impact of emergency control measures taken by governments to curb the spread of the epidemic will be expanded, which Other Significant Risks may expose us to relevant risks, including: reduced sales None. activities and customer orders, reduced plant operations and labor, international travel and communication difficulties, Note: The analysis and valuation of Risk Items shown above include and limited transnational cooperation in research and the data during 2019 and as of the Annual Report Printing Date. development. In addition, if any employee is suspected
Other Necessary Supplements None.
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Social Responsibility
155 Description of Corporate Social Responsibility 157 About Social Charity 163 Environmental Protection, Safety and Health Management Instructions
154 Social Responsibility
Description of Corporate Social Responsibility To fulfill corporate social responsibility and facilitate Policy” and “UMC’s Low Carbon Commitment” as the highest economic, environmental and social progress for the guidelines in response to climate change. purpose of achieving sustainable development, UMC In 2013, UMC started an early reduction project for carbon has formulated and complies with its Corporate Social reduction allowance approved by the EPA, which was Responsibility Practice Principles. based on the company’s carbon reduction achievements Currently, through the Corporate Sustainability for more than a decade. UMC completed the first carbon Committee, UMC keeps abreast of relevant domestic and trade recognized by Taiwan’s EPA in 2014, which can be international standards in corporate social responsibility regarded as an important milestone for the domestic carbon and changes in the corporate environment. UMC regularly trading market. The income from this carbon trade was reviews and improves its corporate social responsibility used for the environmental protection fund. Meanwhile, practices, systems and management policies to improve the “UMC Eco-Echo Ecology Preservation Hope Project” the effectiveness of its corporate social responsibility was activated to work with The Society of Wilderness to implementations. promote the Sauter’s frog habitat preservation action In 2019, UMC was awarded with multiple honors related in Hsinchu, where UMC’s HQ is located, as an effort for to corporate social responsibility, including being listed as contributing to environmental sustainability. In 2016, UMC a FTSE4Good Emerging Index component and FTSE4Good extended the spirit of this project and launched the UMC TIP Taiwan ESG Index component, and earning the Eco Echo Award. It has collected outstanding projects and Taiwan Corporate Sustainability Report Award, Green creative ideas for a friendly environment via the execution Procurement Award, Occupational Safety and Health and selection of the Eco Echo Award in order to urge more Award, and Enterprises Environmental Protection Award. people to join this environmental protection effort. By Meanwhile, UMC has been listed as one of the DJSI-World 2019, more and more enterprises were participating in the constituent stocks of DJSI (Dow Jones Sustainability Indices) care for local Taiwan ecology; in terms of society, UMC also for 12 consecutive years. DJSI is one of the most credible provides disadvantaged organizations with energy saving international corporate sustainability evaluation tools, so and carbon reduction services through its energy saving this is an indication that UMC’s sustainability performance service team in the three aspects of energy conservation has been recognized by the international investor sector as a and safety counseling, technical information on energy global leading enterprise. resources and engineering improvement in order to fully utilize corporate resources in response to global warming. UMC has also actively promoted clean production and green product management. In 2006, the Company was the first among all semiconductor makers in the world to complete the third party verification audit of Hazardous Substance Process Management (HSPM) system, and UMC became the first company in the world to acquire QC-080000 IECQ HSPM certification for all fabs. In 2009, it completed the first “product carbon footprint” verification of IC wafers according to the International Carbon Footprint Standard PAS2050. In 2010, UMC completed the “product water footprint” verification of IC wafers according to the Business Water Footprint Accounting criteria of the non-profit international organization “Water Footprint Network.” As an important milestone for development of green production, these results can also provide complete, scientific, and reliable product information as the basis for self-review In addition to continuous dedication to this industry, the and continuous improvement. In 2017, UMC took the self-expectation of UMC is to become a green giant within initiative to launch the Triple R Major League project. UMC the semiconductor industry. Energy saving and carbon expects to cooperate with suppliers to promote measures reduction is a long-term undertaking, in which UMC is an for energy and resource reuse, recycling and reducing to advocator of low carbon innovation and provider of low achieve green products with lower environmental impact. carbon solution as well as an implementer of low carbon On the other hand, UMC has also established a supplier actions. UMC established the Fluorinated Greenhouse Gases management strategy to strengthen the economic, social Reduction Work Group as early as 1999 in response to global and environmental performance by implementing supplier warming, and it achieved its 2000 voluntary reduction goal sustainability assessments, on-site audits, and coaching outlined by Taiwan Semiconductor Industry Association improvements and tracking to create a positive influence ahead of schedule. On Earth Day (April 22) in 2000, UMC and enhance sustainable competitiveness of the overall was the first in the industry to announce a “Climate Change supply chain.
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Furthermore, UMC referenced the nature of its businesses Technology Committee, Human Rights and Social as well as the 5 key principles of AA1000 SES (Stakeholder Participation Committee, Environment Committee, and Engagement Standard) to identify the major stakeholders Green Manufacturing Committee. Their functions are as and formulated a management system for the identification described below: of and communication with various stakeholders. In Corporate Governance Committee accordance with the materiality principle, UMC conducts Helps strengthen the function of the Board and shareholder impact assessments of environmental, social and corporate equity, integrates related regulations and policies of governance issues related to the company’s operations every relevant departments, and helps complete and implement year, and formulates corresponding improvement measures the Company’s internal control system to ensure and plans. At the same time, the results were disclosed information transparency and disclosure, and compliance through the corporate social responsibility reports and with regulations. Company websites. Customer Relationship Management Committee UMC’s Corporate Social Responsibility Report issued in Refines customer service and quality control, improves 2019 was composed by referring to the Global Reporting service quality and customer satisfaction, and protects Initiative (GRI) Standards, and the content of this report customer interests and relevant trade secrets. was verified by a third party according to “Account Ability Supplier Management Committee 1000 Assurance Standard.” In the same year, the Corporate To establish a protective environment and emphasize Social Responsibility Report published by UMC was awarded the obligation to society, labor rights, security and health the Taiwan Corporate Sustainability Report Award for while pursuing the goal of a continuously evolving supply the 12th consecutive year. These honors and recognitions chain, this sub-committee develops long-term partnerships indicate that, after long-term dedication to corporate with vendors for quality, cost leadership, delivery, service/ social responsibility, UMC’s actions, transparency and response, and sustainability. completeness of information disclosure have all reached Innovation Technology Committee the international level, such that it has become a global benchmark enterprise. Promotes green product research and development and innovations, and leads in cutting-edge green technology. Structure of UMC’s Corporate Social Responsibility Human Rights and Social Participation Committee Organization Responsible for protecting the basic rights of employees UMC’s Corporate Sustainability Committee was established and promoting communication with outside communities in April 2008. This is an important milestone of UMC’s and society. Integrates the UMC Cultural and Educational implementation of social responsibility and direction Foundation, and with focus on education, arts, sports, public towards the road to sustainability, and it also represent service and environmental protection, strives to promote UMC’s focus on corporate social responsibility and technological research and development cooperation, long- resolution of promoting relevant measures. This committee term educational assistance, arts and sports activities and is the highest level organization within UMC in charge of other social welfare events. sustainable development and formulation of directions and Environment Committee objectives of corporate social responsibility for the entire company. The performance and objective achievement Promotes company-wide environmental, safety and health, will be reviewed regularly by the chairman and committee energy, water and greenhouse gas emission management. members, and the director general of this committee will Establishes sustainable supply chains and long-term report to the board of directors annually on the effectiveness partnerships with suppliers to enhance sustainable and plan of promotion, and important issues and response competitiveness. measures that stakeholders are concerned about. Green Manufacturing Committee There are seven sub-committees under the Corporate Promotes company-wide green processes, such as Sustainability Committee, which are Corporate Governance hazardous materials management and increases in resource Committee, Customer Relationship Management productivity. Committee, Supplier Management Committee, Innovation The organizational structure of Corporate Sustainability Committee is as shown below:
Board of Directors
Corporate Sustainability Committee
Sustainability Office
Green Environment Human Rights and Innovation Supplier Customer Corporate Manufacturing Committee Social Participation Technology Management Relationship Governance Committee Committee Committee Committee Management Committee Committee 156 Social Responsibility About Social Charity
UMC Science and Culture Foundation Key Items Description Outcome Established in 1996, the UMC Science and Culture Letter Writing Through letters, the Sponsored a total Foundation has been promoting social charity for many Volunteers volunteers reach out to of 110 children years. Currently, the focus is long-term educational their sponsored school from the Fund assistance, and the Spreading the Seeds of Hope Project was children to encourage for Children and launched in 2005 to help disadvantaged families through them, which is the simplest Families. tutoring. Collaborating with agencies in Hsinchu and way of offering friendship, Tainan, the Foundation funds classrooms and the hourly care and hope. wages of teacher trainees from universities to provide free tutoring to disadvantaged students needing academic For more information on charity events, please refer to assistance. the UMC Science and Culture Foundation webpage at http:// Summary of key implementations in 2019： foundation.umc.com/ Key Items Description Outcome Donations for 2019 are as follow: Education During its 25th anniversary In 2019, 110 children In NTD for the celebration in 2005, UMC received a total Social Participation Amount Disadvantaged launched the Spreading of 750 hours of UMC Spreading the Seeds of Hope Project 4,305,779 the Seeds of Hope Project, tutoring. Science and Tutoring Program an educational program Culture Sponsored 110 children from the 1,321,883 that provides after-school Foundation Fund for Children and Families. tutoring for children from Sponsored the Nantou Karate 2,000,000 disadvantaged families in Association. Hsinchu and Tainan. Sponsored art and cultural events. 1,288,395 Life Education Formed in 2009, the Love Over the last 10 Life education promotion and other 1,704,847 Storyteller Club has given years, the Club sponsorships. drama performances in has given 68 Subtotal 10,620,904 Pingtung, Hsinchu and performances to Tainan. a total audience UMC LOHAS Sponsored the Hsinchu City 135,200 of more than Education Government's 2019 Special Learning 20,000 people. Foundation Programs for Foreign Residence. Provided free admissions for charity/ 100,000 UMC Drum Organized by the former Over the last visitations (a total of 700 students Club Executive Director, the 7 years, the visited the UMC Recreation Center, UMC Drum Club was group has given and 300 free admissions to the launched in the Hsinchu 40 inspiring recreational facilities were given to and Tainan Science Park in performances to charity groups. July 2013. The group hopes a total audience to give back to society of more than Sponsored events organized by 100,000 with "friendships through 25,000 people. the Hsinchu City Department of drums and inspiration Education in 2019. through love. " Moreover, Sponsored Science Park Cup sports 60,000 through executive competitions. participation, a culture of volunteering is promoted. Sponsored the sites for Taiwan 120,000 Learning and Development Parent Exclusively sponsored the Continued to Association and Taiwan Toy Library Education Whatever Makes Sense for sponsor the Association. Voice of IC Teacher Hung program in 2019. Lan. Discussions are based Subtotal 515,200 on brain science research Total 11,136,104 and audience opinion on parent education, and the Promoting UMC Volunteer Culture vast influence of media is Under the leadership of UMC Science and Culture used to jointly create smart Foundation, the volunteer culture at UMC has gradually living with the audience. expanded to include volunteers from throughout the Story-telling Employees volunteering In 2019, the Company. At present, a large group of eager UMC volunteers Volunteers for story-telling led reading volunteers has spontaneously formed the Candlelight Club for activities in Baoshi Elementary provided 24 community services. The volunteer climate has gradually School in Hsinchu County to sessions of expanded to various clubs, and in 2019, 8 clubs participated motivate children to read on activities to a in charity services. their own. total of about 400 children.
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UMC is passionate about public charity. The Company UMC Social Charity Units recognizes the limited resources of organizations for the The UMC Science and Culture Foundation and the disadvantaged and their great need for energy conservation UMC LOHAS Education Foundation are two major UMC and carbon reduction. Therefore, in 2015, UMC began foundations. The series of social participation events by forming the Energy Conservation Service Team, which was the Spreading the Seeds of Hope Project, which started officially launched in 2016. The volunteer team comprises out as education assistance for the disadvantaged, the of experts in energy conservation, water conservation, air UMC Love Storyteller Club for life education and the Voice conditioning, lighting and fire prevention, and focuses of IC Teacher Hung Lan for parent education, consistently on prioritizing the disadvantaged, energy conservation convey love and hope, bringing warmth to every needed and safety, feedback and improvement. Based on these corner. In addition to the two major foundations, UMC positions, the volunteer team provides organizations for is the only electronics corporation in Taiwan to establish disadvantaged groups with energy and safety diagnostics, an independent fire brigade to assist with disaster relief and funding for immediate improvement projects. in the Science Park and surrounding communities, and Charity services provided by clubs and the Energy further provide fire prevention education by promoting Conservation Service Team in 2019: fire safety in elementary schools. The various integral social participations are key forces in UMC social citizenship and Clubs Services outreach to the disadvantaged. The combination of UMC’s Candlelight Charity bazaars (Holiday Bazaar, Rebirth internal resources allows UMC employees to contribute Club Bazaar and Concert, St. Joseph Social Welfare wholeheartedly to society and create a safer and warmer Foundation, Eden Social Welfare Foundation) society through their caring conviction and social outreach. Fundraisers (World Vision, St. Joseph Social Welfare Foundation, Joy Welfare Foundation) 2019 Outcome for Spreading the Seeds of Hope-Educational Organization events (Joy Kindergarten) Assistance for Children from Disadvantaged Families Ukelele Club Teaching (Nan-he Elementary School, Fu-sing Project Elementary School and Xin-xing Elementary In view of the huge gap in Taiwan’s educational resources, School in Hsinchu County) UMC began implementing the Spreading the Seeds of Hope Free performances (Hsinchu Where! Youth - Educational Assistance for Children from Disadvantaged Services Thanksgiving Dinner, Ukulele Parent- Families Project in 2005. Through corporate strength, Child Competition, Ukulele Carnival in Taiwan, UMC strives to improve education for children from Hsinchu Museum of Imagery, Rebirth Concert disadvantaged families by providing them with afterschool at 16th Children's Park, Hsinchu Science Park tutoring, and fulfilling the “spreading hope” stage of the 39th Anniversary Garden Reception, Wavetek, project. Candlelight Club Love Bazaar) In 2019, UMC continued to invest in the Seeds of Hope to UMC Drum Charity performances (Catholic Social Service help disadvantaged school children, and is committed to Club Center fair, St. Joseph Social Welfare Foundation cultivating four key areas, namely life education, reading, Garden Party, Hsinchu Science Park 39th environmental protection and green energy, and basic Anniversary Garden Reception) technology talents. Based on these spiritual, educational, Taichi Club Huakuang Social Welfare Foundation- Huaguang environmental and basic technology dimensions, a new Outreach, Chang-an Nursing home Charitable series of cultivation activities were implemented. donations Music Fellow Free performances (L’arc Hotel Second-hand Strengthening educational foundation-- "Let Hope Sprout Club Market Activities, STSP Bureau Love-month - Cultivate New Energy for the Future" Activity, Fab 12A Valentine’s Day and Moon Festival Activities) Hsinchu Kansai Huakuang Welfare Foundation, Hsinchu Energy City Intellectual Disability Welfare Association, Conservation Hsinchu County Special Education School, Service Team Goodshepherd Foundation Tainan Energy Nan Jeon University of Science and Technology, Conservation Deguang Catholic Senior High School, Tainan Service Team Municipal An-Nan Hospital, St. Teresa Opportunity Center I-Ching Club St. Joseph Social Welfare Foundation Garden Party
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In 2010, UMC launched five key programs around the theme II. Promoting National Reading Culture Through Me 2 We "Let Hope Sprout - Cultivate New Energy for the Future." The Reading Club program is summarized below: To promote the National Reading Culture, UMC employees I. Spreading the Seeds of Hope—Educational Assistance for formed the Me 2 We Reading Club to not only share the Children from Disadvantaged Families joy of reading within the Company, but also to train UMC The UMC Science and Culture Foundation continues employees for volunteer storytelling. The storytelling skills to sponsor the tutoring costs for school children, and not only allow employees to experience the pleasure of provides comprehensive education through reading and storytelling, but also enhance the quality of their reading character education activities by volunteers. It is hoped time with their children. that with the launch of the program, tutoring centers can In addition to sharing reading with their colleagues and be established in Hsinchu Science Park and Tainan Science children, UMC employees went beyond their personal Park to provide long - term educational assistance to scope and participated in the Spreading the Seeds of Hope children from disadvantaged families. In 2010, key tasks Tutoring Program to promote reading in remote rural in Stage 1 of the Spreading the Seeds of Hope-Educational elementary schools. Assistance for Children from Disadvantaged Families Project were extended. In addition, long-term outreach III. Promoting Life Education Through Life Education such as reading and character education helped cultivate Volunteer Club positive values and a learning attitude in children from The Life Education Volunteer Club recruits members from disadvantaged families. To further incorporate the strength UMC’s employees and their families to help disadvantaged of UMC employees and their families into the program for youths avoid delinquency and discover their personal helping children from disadvantaged families, the UMC strengths. After receiving former training and certification, volunteer tutoring team, formed in 2005, was integrated the volunteers visit indigenous students and marginal with the UMC Science and Culture Foundation and the UMC youths in Hsinchu and Nantou to help them understand the Candlelight Club. In addition to collaborating on activities true meaning of living and personal growth. such as collecting gift donations for Christmas and other In addition, the UMC Love Storyteller Club was formed, holidays, camps and visitations are also organized at various where volunteers worked in teams to choreograph, times each year where volunteer teams comprising of UMC rehearse, construct props and costumes and perform. In employees and their families interact with children from the addition to public performances in the 88 Flood disaster Spreading the Seeds of Hope Tutoring Program. It is hoped areas, the club was also invited by the Ministry of Justice to that more passionate like-minded educators and companies perform in Cheng Jheng High School so that given limited can be recruited into the program. Moreover, the Company educational resources, those in remote rural areas and those hopes that by giving long-term and sustained attention, on probation can still enjoy a rich spiritual feast. Through it can inspire human care and love so that children with these experiences, UMC volunteers were also inspired to limited educational resources can also access educational reflect on their own lives and cherish their blessings. resources through professional tutoring, and learn and grow confidently and happily like other children. Furthermore, Summary of achievements in 2019: it is hoped that the program can sprout, grow and thrive in Key Items Outcome even more places. Sponsored the Whatever A total of 52 episodes were The outcome of UMC's Seeds of Hope long-term projects are Makes Sense for Voice of IC broadcasted in 2019. as follow: Teacher Hung Lan program 1. Through close collaboration between academic counseling and families/schools, children from disadvantaged Candlelight Club- A total of 73 bazaars, totaling families regained confidence and growth in their learning. Community outreach and 4,370 participants. 342 volunteers 2. Volunteer outreach helped prevent deviant behaviors in fundraising bazaar participated, totaling 1,148 hours. children by allowing them to feel understood and cared Ukelele Club-Volunteer A total of 11 sessions, totaling for, and helped them begin to break out of poverty performance and teaching 3,142 participants. 113 volunteers through the power of education. participated, totaling 528 hours. 3. In 2019, 110 children received a total of 750 hours of tutoring. 4. Through sponsoring the Nantou Karate Association, disadvantaged students gained confidence and discovered their strength through karate training.
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IV. Eco Green Energy Programs for Promoting Environmental Summary of key implementation outcomes in 2019: Education and Green Energy Technology Talent Cultivation Key Items Outcome In view of the growing problem of global warming, Industry- National Central Offered semiconductor processing environmental issues have become a responsibility for University University, practicum courses in 2019. About 193 everyone. In addition to its commitment to establishing Chung Yuan students enrolled. a low-carbon supply chain and green energy industry, Christian UMC is passionate about supporting environmental University, events and promoting environmental education. Through industry- various environmental programs, eco concepts are university further promoted to students, friends and families so that courses on environmental protection becomes a responsibility and life semiconductors standard for everyone. Nano Offered an introductory course Generation on Semiconductor Processing in V. Semiconductor Programs for Cultivating Taiwan's High- course at the Nano Generation at National Tech Talent National Cheng Cheng Kung University in 2019. With the mission of cultivating Taiwan’s high-tech talent, Kung University About 269 students enrolled. UMC not only invests in developing and improving the Campus Domestic Provide a specific number of Company’s existing talent, but also in cultivating seed Cultivation and Overseas internship opportunities each talent for Taiwan’s semiconductor technology through early Summer summer vacation. In 2019, a total contact. The semiconductor process practicum courses in Internship of 21 interns were recruited. National Cheng Kung University, National Central University Equipment Collaborated with National and Chung Yuan Christian University are taught by experts Intern Taiwan University of Science from UMC for early cultivation of semiconductor seed talent and Technology, National Taipei at the university stage so that young students can acquire University of Technology, Chung deeper semiconductor knowledge and skills in their studies. Hua University, Southern Furthermore, they can better dovetail into their subsequent Taiwan University of Science and workplace development and actively integrate into their Technology, National Chin-Yi career, thereby achieving talent cultivation for Taiwan’s University of Technology, National semiconductor technology. United University, Da-Yeh University, In addition, UMC collaborates with National Cheng Kung National Kaohsiung University University, National Tsing Hua University, National Chiao of Science and Technology and National Formosa University Tung University and National Sun Yat-sen University on to provide student internship advanced technology R&D and projects. The research scope opportunities at UMC. In 2019, a includes artificial intelligence algorithms, micro-sensors and total of 29 interns were accepted. actuators, machine learning algorithms, deep learning and wafer defect detection, etc., to achieve the most effective industry-university cooperation for integrating theory and practice.
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Key Items Outcome Key Items Outcome Enterprise Provide enterprise visitation National Cheng In its collaboration with key Visitations opportunity for schools. In 2019, Kung University schools in recent years, UMC the Company received a total Career Advisor offers career seminars and of 822 visitors from National Program career coaching programs to Cheng Kung University, National help students understand the Kaohsiung University of Science future pulse from the perspective and Technology, National Central of industrial professionals. University, Chung Yuan Christian Moreover, based on student University, National Tsing Hua traits and learning, the career University, National Chiao Tung coaches provide career plan University, National Quemoy suggestions to help students find University and National Formosa career paths that are appropriate University. for them. With National Cheng Kung University as an example, Campus Employed students who are UMC has been providing career Ambassador disabled for work study. coaching for 8 years, with more for disabled Strengthened campus talent than 200 students from the students recruitment and encouraged university participating each disadvantaged students to year, and the program is still actively learn. Since the program being implemented. In addition, began in 2013, a total of 128 students are assisted with resume students with physical disabilities writing to help them discover their were provided with work study strengths, sell themselves in their opportunities, and in 2019, 22 resume and capture the attention students were still employed. of companies and executives. At the same time, colleagues from Campus Helped arranged a series of National Taiwan University, relationship brand image cultivation activities, National Tsing Hua University and development including book discussion, career National Chiao Tung University (Including sharing, internship cooperation, and have their colleagues serve as technical career exhibits for semiconductor display. career counselors to provide lectures) In 2019, 21 book discussion sessions professional counseling to their were held, with a total of more students. than 2,151 participants. PTP Prospective The early contact and Talent Program agreement with prospective talent on campus enhances connection and interaction with targeted talent. The broadening UMC PTP also expands the image and influence of UMC. Since UMC began recruiting outstanding talent in 2013, 4,435 students have been recruited and 856 prospects are still in school.
Advanced To acquire higher quality employees, Intelligent Elite campus relationships and the Development connection and interaction with (AIED) outstanding equipment talents are systematically established. Recruitment for outstanding talent began in 2018, and 2,409 students have attended in AIED campus briefings, recruiting a total of 749 members.
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UMC Social Participation In the days to come, UMC will remain dedicated to its Committed to the core philosophy of “people-orientation philosophy of receiving from society and giving back to and co-prosperity with society,” UMC fulfills its corporate society by supporting social charity. social responsibility according to the concept of LOHAS Summary of donations in 2019: (Lifestyle of Health and Sustainability). UMC believes that the In NTD success of a company not only requires personal diligence, Social Participation Amount but also the support of a harmonious society for it to flourish and develop robustly. Therefore, since its establishment, UMC Donated to UMC Science and Culture 10,000,000 UMC has declared itself a public instrument in its long- Foundation term management policy, and is committed to giving back Donated to the 9th UMC Operation 2,801,459 to society. Therefore, in addition to their commitment to Management Thesis Award the Company’s business growth, the “Happy Employees” of Donated to the National Cheng Kung 3,000,000 UMC are also enthusiastic about social charity. To encourage University academic funding for Nano- employee participation in charity, UMC provides Charity IC Engineering Leave for employees to participate in volunteer services. Loan transfer to feedback fund for 530,000 UMC has always been wholehearted in social charity, and management talent continues to donate money to cultural, and educational and Donated to Taiwan Semiconductor 512,021 academic units. Recipients include groups such as National Industry Association Environmental Tsing Hua University, UMC Science and Culture Foundation, Protection Fund UMC Operation Management Thesis Award, National Cheng Donated to the Global Views 610,000 Kung University academic funding for Nano-IC Engineering, Educational Foundation Green Award loan transfer to feedback fund for management talent, prizes Taiwan Semiconductor Industry Association Environmental Donated to VLSI Design/CAD 100,000 Protection Fund, Global Views Educational Foundation Green Symposium Award prizes, VLSI Design/CAD Symposium, GLO Leadership Donated to National Tsing Hua 35,000,000 Training Summit and ASUS Foundation, as well as charity University events. Donated to GLO Leadership Training 62,500 Summit Donated to ASUS Foundation 37,800 Donated to Taipei Awakening 500,000 Association Total 53,153,780
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Environmental Protection, Safety and Health Management Instructions In terms of environmental protection, safety and ESH risks of company operation, the possible impacts of health, UMC has set the objectives of zero pollution and various activities (from the use of raw materials to the zero incidents to become an enterprise of sustainable generation of waste) on the environment and all company development; in addition to being in compliance with employees will be evaluated via a systematic approach. As and exceeding the requirements of environmental safety for the items which could result in major environmental and health laws and regulations, the Company utilizes impact, the management and reduction will be applied advanced environmental protection, safety and health, via the assessment/replacement/reduction approach for risk and disaster rescue technologies to actively enhance raw materials, control and reduction of process pollution environmental protection and safety aspects based on source, effective treatment of end-of-the-pipe pollution, a forward-looking vision. UMC has also continued with and residual by-product reclamation. In terms of safety and environmental safety and health education and advocacy health, UMC will start with management of equipment, for all its employees and encouraged active participation chemical, and operation safety in order to maintain the in related activities to strengthen the environmental safety safety and health of all employees. and health belief and habits of all employees through subtle In order to achieve the objective of sustainable development, influence. the Company has set clean production and zero incident as the promotion direction of environmental protection and ESH Management System safety and health. Every year UMC will set the objectives and targets of the ESH management system in coordination with UMC’s ESH management system is established according to the Company’s operation direction, and each fab will launch ISO 14001 and ISO 45001 standards. It is intended to integrate various plans for reducing environmental impact and daily management with total quality management (TQM) strengthening safety and health in order to continuously activities such that the ESH management plan can be improve company performance of environmental protection integrated with actual fab operation in order to achieve and safety and health management. the effectiveness of implementation. As for various Achievement status of UMC’s Important ESH Objectives/Targets in 2019:
Objective Target Achievement Status
Eliminating major accidents and 1. Zero Major / Serious occupational safety Zero occupational safety incident throughout continuously promoting self- incident the year management of safety and care and 2. Fewer than 11 minor (or above) accidents A total of 11 incidents throughout the year individual occupational safety Promoting green management Green To reduce water, electricity, and waste by 10% The milestone of 2019 was achieved 2020 project to reduce the Company’s over the base year by 2020. impact on the environment 1. Water Usage: 10% reduction (Intensity) 2. Electricity Usage: 10% reduction (Intensity) 3. Waste Generation: 10% reduction (Intensity)
Note: the base year is 2015
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Environmental Protection of the greenhouse effect, UMC has set annual goals and Greenhouse Gas Reduction and Management plans to reduce greenhouse gas emission. In addition to Facing the issues of climate change and worsening global constant evaluation and introduction of various energy warming, UMC has already prepared and implemented saving technologies, UMC will carry out energy saving plans response strategies. It set up the “Fluorinated Greenhouse for relevant facilities in order to directly and effectively Gases Reduction Work Group” in 1999 to be dedicated to reduce the Company’s energy consumption. In addition, the research and promotion of reduction of fluorinated UMC has promoted the implementation of energy saving greenhouse gases. It formulated the “UMC Climate Change management plans for offices and public areas together Policy” in 2010 as the highest guiding principle of the with advocacy activities and educational training in order Company in response to climate change. to enhance the concepts and habits of all employees with The major reduction plans with respect to fluorinated regard to energy saving and greenhouse gas reduction. greenhouse gases to be promoted include: • Measuring the utilization rates of process tools using Water Resources Saving and Management fluorinated greenhouse gas and the destruction and For more effective utilization of limited water resources, removal efficiency of its emissions control technologies to UMC formulated its “Water Management Policy and be fully aware of the machine performance and to Commitment” in 2015. From the perspectives of introduction improve those with poor performance. of water resources risk management system, development • Implementing survey and assessment of the consumption and application of diversified water resources, supply amount for fluorinated greenhouse gases in order to chain cooperation, and strengthening of water resources understand the greenhouse gas emission volume of each education, UMC will continue to promote various water process tool. saving measures, actively enhance water efficiency, and • Carrying out a research project on alternative gas to introduce new water saving technology in order to promote reduce the consumption of process gasses that contribute the emphasis and saving of water resources. According to to global warming potential (GWP) via source improvement. the fab construction schedule, the fab water recycling rate • As for the new fluorinated greenhouse gas emissions and process water recycling rate of all fabs are superior to control technologies, the selection, assessment, and the standard set by Science Park Bureau. The water saving investment have been applied for installation of high measures for general water consumption include the performance fluorinated greenhouse gas abatement adoption of water-efficient taps, rainwater interception systems in order to reduce the emission of fluorinated for landscape watering, and water conservation of air greenhouse gases year by year. conditioners and kitchens. In addition to internal water In 2007 and 2011, UMC led the industry in completing the resource assessment and management and active 2-Phase fluorinated greenhouse gases replacement plan promotion of water conservation, the Company also serves as a representative in industrial unions & associations. The (replacing C2F6 with C3F8 and replacing C3F8 with C4F8) for the entire company, thus greatly reducing greenhouse gas Company cooperates with the government and industrial emissions and its impact on global warming. After years peers in water resources communication and exchange of effort, UMC has achieved the objectives of the “Carbon counseling. Reduction 333” project and the “369+ Energy and Resources Productivity Enhancement Project” in 2012 and 2015, Waste Management and Resource Recycling Management respectively. The company has also formulated the “Green UMC’s waste management is established on an economic 2020” project to commit to goals of 10% water saving, 10% and effective waste management mechanism to achieve the power saving, and 10% waste reduction in the future based objectives of safe, healthy and harmless resource utilization. on more stringent self-requirement standards and more The strategies include total amount reduction, recycling active spontaneous actions. At this stage, UMC has also and reuse of resources, and waste management. UMC has applied for GHG Offset Project in 2019, according to Taiwan’s always adhered to the belief of green production while voluntary GHG reduction incentive program to apply for promoting waste and resource recycling management. On carbon credits. UMC estimates it can build 10 years of carbon one hand, it has reduced the generation of waste through assets totaling more than 1.5 million tons. process improvement, raw material reduction and source management; on the other hand, it has actively promoted Energy Saving Management waste recycling and reuse to replace the existing end-of-the- The use of energy will consume the Earth's resources, pipe treatment mode and to convert garbage into useful and it will also generate carbon dioxide resulting in the resources. In addition to reducing the resources and cost greenhouse effect. To reduce the environmental impact of waste treatment, the company hopes to help alleviate increasingly serious environmental problems. Finally, in
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terms of waste management, manpower will be dedicated management approach, and spontaenous and continuous to regular auditing of the Company’s waste disposal service improvement. provider and tight control of waste destination while UMC was aware of the green wave coming from the selecting the optimal waste disposal approach. international environmental protection trend and customer demand as early as 2003, and it began the promotion of Pollution Emission and Control the green supply chain management system and became a End-of-the-pipe treatment has been regarded as the member of SONY Green Partner in the same year. To date, the last resort in recent years. In terms of pollution control, Company has continuously passed re-verification, indicating in addition to development of required technologies in UMC’s hazardous substance management effectiveness response to new environmental protection laws and has been recognized by customers. In 2006, UMC was regulations or standards, UMC has also considered the the first among global semiconductor manufacturers to tolerance and interaction of the overall environment complete the hazardous substance process management to apply self-control and constantly introduces high (HSPM) system audit and to be granted the recommended performance pollution prevention technologies and registration. UMC has also become the first semiconductor equipment. All pollution prevention equipment are manufacturer in the world to have all fabs granted with the operated and maintained by professional work teams, and QC-080000 IECQ HSPM certificate. the operation status of all pollution prevention equipment In addition, for laying the foundation of green product, is monitored by a central system with shifts covering process and design, UMC has actively implemented 24-hours to ensure emission quality. comprehensive carbon/water management plans. In September 2009, it completed the world’s first “Product Carbon Footprint” and EPD (Environmental Product Environment-related Data Disclosure Declaration) verification of IC wafer, and obtained the UMC is committed to the spirit of initiative, openness, independent verification statement issued by a third party transparency and quality, and publicly discloses its to become the first semiconductor company in Taiwan to management of environment-related information. At independently and completely calculate and verify the present, UMC has set 2025 management targets for product carbon emission information. In 2000, it was important indicators such as greenhouse gas emissions, the first in the industry to complete the water footprint electricity consumption, water consumption, waste verification of 8-inch and 12-inch fabs. With the important generation and volatile organic compound emissions. At the operational belief of symbiosis with a sustainable same time, UMC also disclosed the data of the last 5 years environment, UMC has provided its comprehensive in the corporate social responsibility report and through green production system plans to help its customers third-party verification to confirm the latest information produce environmental friendly, high quality products. and verify the reduction outcome every year. The annual The completion of carbon footprint, water footprint, and information for 2019 will be verified by third party environmental product declaration indicates that UMC inspection and publicly disclosed before June 2020. has tracked and monitored the information of various On the other hand, UMC was also invited to participate environmental impacts during the IC wafer manufacturing in the international CDP organization’s climate change process through rigorous systems with international and water disclosure project, and further disclosed the certification, and helped customers completely construct identification results of risks and opportunities and related the environmental information of green product and supply management information. In 2019, UMC’s climate change chain. This also specifically demonstrates UMC’s active disclosure was awarded the Level 4 Leadership (A-) score; undertaking of social responsibility. and water disclosure was awarded the highest rating for In the future, UMC will more aggressively promote the Taiwan’s enterprises with a (B) rating. It shows that UMC has green supply chain project based on carbon footprint, been recognized by international investment institutions water footprint, and Environmental Product Declaration for its sustainable information disclosure. to help customers produce green products with lower environmental impact and to enhance the sustainable Other Environmental Management Plans competitiveness of the entire supply chain. Over the years, UMC has continued with its effort in environmental protection by constantly introducing various Safety and Health environmental management tools such as environmental Promoting the Culture of Individual Occupational Safety management system, product life cycle assessment, and The analysis of the causes of domestic and foreign environmental accounting. The hope is to achieve the accidents has revealed that 90% of them are due to “Human substantial objectives of environmental improvement and Factors,” such that the safety of personal behavior has a reduction of environmental impact via the environmental more profound impact on the safety of the organization.
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Therefore, UMC is dedicated to promoting the safety and manufacturing equipment safety, health, and health culture of “Individual Occupational Safety.” Starting environmental protection standard (SEMI S2) formulated from “Pay attention to your own safety and care about by international semiconductor equipment and material other’s safety” and “Occupational safety is everyone’s organization. If there is any non-conforming item, it must responsibility” and under the declaration and leadership be improved before entry into the fab. After fab entry, the of the chairman, UMC has introduced the safety thinking water, electrical, gas, and chemical use safety inspection mode, and established complete communication and must be conducted according to different stages of machine proposal channels so that employees can express their installation before these machines can be used. opinions and receive professional response and assistance, During machine operation and maintenance, employees implement safety and health protection work, and should receive the educational training of the machine continuously enhance the quality of the work environment. operation and be in compliance with the operation rule. It is expected that UMC can become the global role model of Unless there is approved application and adoption of safety and health. alternative safety measures, it is prohibited to disable the safety interlock device of the machine in order to avoid any Safety and Health Management significant occupational incident. By law, all UMC fabs have formulated labor safety and health • Management of Hazardous Chemicals management plans every year, and the contents include: UMC has a hazardous chemical management strategy. All • ESH Risk Assessment chemicals entering UMC must comply with the strategy and strict safety review mechanisms before they can be used in Ever since the founding of Company, UMC has been UMC. introducing various methods for risk assessment of the UMC’s sound chemical management process meets company’s processes, equipment, and chemicals. UMC regulatory requirements. In addition to labeling and has also tried to reduce the occurrence of accidents and training by law, the exposure risk assessment method environmental pollution caused by process and equipment should be introduced and the chemical risk level and though engineering improvement and process replacement. classification management measures should be established As for the safety and health risk, UMC has divided them into in order to reduce the exposure hazard risks to workers. preliminary review, change review, and regular review. As The working environment monitoring should be conducted for the execution of preliminary review, in addition to using every six months according to the Rules for Implementation a simple risk matrix for selecting operating activities with of Working Environment Monitoring. The effective sampling higher risks to carry out improvement and management, strategy should be formulated, and the monitoring results UMC has also conducted the review and risk reduction of should be verified by statistical analysis tool to ensure the hazardous workplace with respect to the items listed in the exposure situation of every similar exposure group and to Hazardous Workplace Review and Inspection Rules. protect the health of employees. As for the environmental and safety and health risks caused There are toxic gas detectors distributed in the working by change of equipment, and introduction of new chemicals environment in the fab for early control of trace gas leaks and new machines, the assessment should be carried out with timely warning and automatic broadcasts to notify according to the rules of change review. In addition to employees to evacuate to designated safe areas. managing these according to domestic laws and regulations, the specification requirements of safety facilities and • Procurement Management and Contractor Management environmental protection of equipment and chemicals UMC has specified the safety and health rule of procurement should be specified according to international standards, so in the operation regulation of the Company's procurement that the ESH impacts can be minimized at the beginning of department. The raw materials suppliers will be requested such change. to conduct labeling, production, and transportation In addition to the aforementioned preliminary review and according to domestic laws and regulations, and there will change review, the ESH risk assessment will be conducted be regular audit of suppliers to ensure that there will not be again for all operations ever three years, and the operation any safety or health or environmental protection accidents items with increased risk levels must be examined to see if that would cause abnormal supply. there is a need for improvement. As for the contractor management, the active and effective management approach should be adopted to prevent • Management of Machine, Equipment, or Appliance contractors from accidents. In addition to carrying out In addition to being in compliance with domestic standards, qualified contractor evaluation and formulating “Notices of such as CNS (Chinese National Standards) and machine ESH Contractor” to be signed by the person in charge of the equipment appliance safety standard, the machines contractor, all workers entering the fab should receive UMC’s used by UMC must come with the reports (provided by “Contractor ESH Educational Training.” In addition, the the equipment supplier) meeting the semiconductor “Contractor Work Place Hazard Notification and Agreement
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Environmental Protection, Safety and Health Management Instructions (Continue)
Meeting” should be completed for all contractors entering protection of special operation, and construction the fab. A complete online application system should be supervision personnel in the annual training plan. In established for effective control of construction application addition to the training courses in the plan, educational and the management before, during, and after the training should be arranged from time to time with respect construction. In addition to requesting the contractor to to any specific incident or major deficiency if necessary. In assign onsite supervisory personnel, a safety agreement 2019, the Awareness of Hazardous Chemicals course was meeting should be convened every day before construction. held. To date, 2,099 classes have been offered, attracting During the construction period, occupational safety a total of 82,225 participants. It contained e-learning and personnel should conduct frequent audits in addition to the physical courses so that employees could learn about safety onsite supervision by the responsible department in order and health knowledge without being limited by time and to ensure that all operations are in compliance with safety venue. regulations. • Management of Personal Protective Equipment • Formulation of Safety and Health Operational Standard UMC establishes management procedures based on the type UMC has formulated the safety and health protection of the hazards and provides adequate personal protective standard which is applicable to the entire company, and equipment (PPE) for workers to use. The condition of PPE each operational department should formulate operational is regularly checked, and the supervisors and occupational standards for different operations according to company safety personnel also occasionally inspect the use of PPE. regulation. The content should include: operating • Health Examination, Health Management, and Health procedure, operation inspection and regular inspection Promotion Matters items, protective equipment to be used, and operation UMC believes that employees are the most important asset frequency. of an enterprise. Only employees that are healthy both In addition to being in compliance with the operational physically and mentally can provide highly efficient and standard, all employees should pay attention to the unsafe high quality work performance. Therefore, over the years behaviors of others and offer reminders at the work place UMC has been dedicated to creating a work place that according to the spirit of individual occupational safety in can contribute to physical, mental, and spiritual health. order to achieve the optimal effect of personal discipline In addition to helping employees with comprehensive control. health management and health promotion, care has been • Regular Inspection, Key Points Inspection, Operation extended to employees’ families, hoping to achieve the Inspection, and Onsite Walkthrough goals of work moral and work quality enhancement. Regular and key points inspections should be arranged • Collection, Sharing, and Utilization of Safety and Health for various facilities and operations according to laws and Information regulations, and operation inspections should be conducted The collection and sharing of company safety and health regularly by employees in charge of facilities and operations. information are conducted via diversified modes. Domestic In addition to the matters specified by laws and regulations, and foreign safety and health regulations are collected and supervisors at all levels and occupational safety personnel reviewed by the Division of Risk Management and Safety should arrange regular and irregular onsite walkthroughs and Health, which will suggest to carry out the proposal and audits. The deficiencies of audits should be tracked by within the Company to be approved by the ESH Committee. computer system, and these cases can only be closed after The external major accidents and safety and health news the improvement is completed. will be advocated to employees via CSR newsletter or • Safety and Health Educational Training BBS within the Company. The safety and health advocacy By nature, UMC’s ESH educational trainings can be divided posters will be put on occupational safety bulletin boards into three categories: in all fabs frequently. In addition, communication channels - Company-wide safety and health educational training such as ESH mailbox and ESH proposal systems have been - Fab-wide safety and health educational training arranged established on the Company’s intranet website for our by each fab employees to reflect opinions or problems related to safety - ESH trainings formulated by each department according and health management. to the nature of each department • Emergency Response Measures The continuous educational training and advocacy can develop employees’ emergency response capability and In order to allow employees to be equipped with the safety concept, strengthen employees’ perception, and knowledge and skills of immediate disaster relief upon reduce the occurrence of accidents caused by unsafe occurrence of any accident, all employees must take basic conduct. UMC has included the emergency response, fire-fighting, safety and emergency response courses licenses required by laws and regulations, maintenance arranged by the Company every 5 years. These courses of the safety and health management system, safety cover fire safety, disaster response, and actual operation
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Environmental Protection, Safety and Health Management Instructions (Continue)
of fire extinguishers, and all employees are expected to Granted Awards of Safety and Health and Environmental be equipped with such skills. In addition, an emergency Protection response team (ERT) is formed in every fab, and the members UMC has been devoted to the promotion of environmental of this team should receive various emergency response protection and labor safety and health. In addition to trainings and regular rehearsals with respect to various being dedicated to achieving the international level of accidents in order to strength the disaster response skills risk control and environmental protection and safety and of ERT members and to achieve the objectives of protection health management performance, UMC's various ESH and control at the initial stage of disaster. management behaviors have also been well received by • Statistical Analysis of Occupational Incidents competent authorities and among peers. As for occupational incidents that take place at the work The awards granted to UMC in 2019 are as shown below: place, in addition to regular summaries and reports, • “The Best Participation of Green Procurement for Enterprises” every accident must be registered in the accident report by the Environmental Protection Administration of Executive and investigation system to be tracked. In addition to the Yuan, R.O.C. investigation of accident causes and improvement and • “The 1st Green Chemical Application and Innovation prevention, accident prevention should be included as Award” by the Environmental Protection Administration of the Company’s objectives and targets of safety and health Executive Yuan, R.O.C. management. Various activities must be promoted in order • “National Enterprise Environmental Protection Award” by to achieve the accident reduction and safety enhancement. the Environmental Protection Administration of Executive • Safety and Health Management Record, Performance Yuan, R.O.C. (Fab 12A) Review, and Rewards • “Energy Saving Leadership Award” by the Bureau of For facilitating management, in addition to written records, Energy, Ministry of Economic Affairs, R.O.C. (Fab 12A) UMC has established multiple computer systems as an • “Science Park Water Saving Outstanding Achievement aid for safety and health management, such as automatic Prize” by the Hsinchu Science Park Bureau, Ministry of inspection system, ISO 14001 & ISO 45001 management Science and Technology, R.O.C. (Fab 8F) systems, accident report and investigation system, and • “Award of Enterprise with Outstanding Waste Reduction walkthrough report system. In addition to facilitating and Resources Circulation” by the Hsinchu Science Park data inquiry by employees, the tracking of preventive Bureau, Ministry of Science and Technology, R.O.C. (Fab 8S) management measures should also be strengthened. • “Business with Outstanding Environmental Protection For the performance of safety and health management, Performance” by the Southern Taiwan Science Park Bureau, in addition to management review meetings regularly Ministry of Science and Technology, R.O.C. ( Fab 12A II) convened in each fab and for the entire company to review • “Outstanding Occupational Safety and Health Unit” by the the objectives and targets, occupational competitions Occupational Safety and Health Administration, Ministry will be arranged in each fab, and all active occupational of Labor (Fab 8A) management indicators should be included as the • “Outstanding Occupational Safety and Health Unit” by evaluation items for individuals and departments. The the Southern Taiwan Science Park Bureau (Fab 12A II) departments with outstanding performances should be • “Outstanding Occupational Safety and Health Unit” by rewarded, and the selection of outstanding occupational the Hsinchu Science Park Bureau, Ministry of Science and safety achievement will be arranged every year in the Technology, R.O.C. (Fab 8F) Company to encourage the active improvement of safety and health in the work environment and the exchange of safety and health improvement matters among different fabs. These will also contribute to the promotion of individual occupational safety and reduction of accidents.
168 Special Disclosures
Special Disclosures
170 Summary of Affiliated Enterprises 182 Issuance of Private Placement Securities 182 Acquisition or Disposal of UMC Shares by Subsidiaries 182 Other Necessary Supplements 182 Disclosures of Events Which May Have a Significant Influence on Stockholders’ Equity or Share Price, in Compliance with Item 3, Paragraph 2 in Article 36 of the Securities and Exchange Law of the R.O.C.
169 United Microelectronics Corporation | Annual Report 2019
Summary of Affiliated Enterprises Affliated Organization Chart
United Microelectronics Corp.
UMC Group（USA） 100.00%
United 100.00% Microelectronics （Europe）B.V.
UMC Capital Corp. 100.00% UMC Capital（USA） 100.00%
TLC Capital Co., Ltd. 100.00% Soaring Capital Corp. 100.00% Unitruth Advisor 100.00% (Shanghai) Co., Ltd.
Fortune Venture 100.00% Tera Energy 100.00% Everrich Energy 100.00% Everrich 100.00% Development Co., Investment (HK) (Shandong) Energy Capital Corp. Ltd. Limited Co., Ltd.
UMC Group Japan 100.00%
UMC Korea Co., Ltd. 100.00%
Green Earth Limited 100.00% United Microchip 100.00% United 50.73% Semiconductor Corporation (Xiamen) Co., Ltd.
UMC Investment 100.00% （Samoa）Limited
NexPower 93.36% Technology Corp.
Wavetek 80.49% Wavetek 100.00% Wavetek 100.00% Microelectronics Microelectronics Microelectronics Investment (Samoa) （ ） Corporation Limited Corporation USA
Best Elite 100.00% Infoshine Technology 100.00% Oakwood Associates 100.00% HeJian Technology 99.9985% UnitedDS 100.00% International Limited Limited Limited (Suzhou) Co., Ltd. Semiconductor (Shandong) Co., Ltd.
United 14.49% Semiconductor (Xiamen) Co., Ltd.
Omni Global Limited 100.00% United 100.00% Microtechnology Corporation （New York）
United 100.00% Microtechnology Corporation （California）
ECP Vita Pte. Ltd. 100.00%
UMC Technology 100.00% Japan Co., Ltd.
Sino Paragon Limited 100.00%
United 100.00% Semiconductor Japan Co., Ltd.
Note 1: UMC holds 47.75% of NexPower Technology Corp.(NexPower); Fortune Venture Capital Corp. holds 33.47% of NexPower, and TLC Capital Co., Ltd. holds 12.14% of NexPower, and the comprehensive shareholding ratio is 93.36%. Note 2: UMC holds 79.83% of Wavetek Microelectronics Corporation (Wavetek); Fortune Venture Capital Corp. holds 0.66% of Wavetek, and the comprehensive shareholding ratio is 80.49%.
170 Special Disclosures
Summary of Affiliated Enterprises (Continue)
Basic Data of Affiliated Enterprises In NTD
Name of Corporation Date of Address Capital Major Business / Establishment Production Items
UMC Group（USA） 1997.08.11 488 De Guigne Drive, Sunnyvale, 508,231,063 IC Sales CA 94085, USA
United Microelectronics 1989.05.23 De Entree77, 1101BH, 119,820,688 Marketing support （Europe）B.V. Amsterdam Zuidoost, activities The Netherlands UMC Capital Corp. 2001.01.16 190 Elgin Avenue, George Town, Grand 2,215,747,586 Investment holding Cayman, Cayman Islands UMC Group Japan 2013.02.08 15F Akihabara Centerplace Bldg., 8,505,000 IC Sales 1 Kanda Aioi-cho, Chiyoda-ku, Tokyo 101-0029, Japan UMC Korea Co., Ltd. 2013.04.12 1117, Hanshin Intervally 24, 14,575,000 Marketing support 322, Teheran-ro, Gangnam-gu, activities Seoul, Korea TLC Capital Co., Ltd. 2005.10.14 5F, No.17, Lane 120, Neihu Road Section 1, 3,979,563,000 Venture capital Taipei, Taiwan 114, R.O.C.
Fortune Venture Capital Corp. 1993.09.21 5F, No.17, Lane 120, Neihu Road Section 1, 4,017,344,480 Consulting and Taipei, Taiwan 114, R.O.C. planning for venture capital Green Earth Limited 2009.09.09 Maystar Chambers, P.O. Box 3269, 29,988,444,000 Investment holding Apia, Samoa
UMC Investment（Samoa） 2011.03.30 Maystar Chambers, P.O. Box 3269, 43,519,120 Investment holding Limited Apia, Samoa
NexPower Technology Corp. 2005.11.25 No.2, Houke S. Rd., Houli Dist., 711,986,480 Sales and Taichung, Taiwan 42152, R.O.C. manufacturing of solar power batteries UMC Capital（USA） 2001.02.13 488 De Guigne Drive, Sunnyvale, 6,183,800 Investment holding CA 94085, USA
ECP Vita Pte. Ltd. 2012.05.10 138 Market Street, #07-02 278,271,000 Insurance CapitaGreen, Singapore 048946
Soaring Capital Corp. 2008.03.25 Level 2, Lotemau Centre, 27,351,000 Investment holding Vaea Street, Apia, Samoa
Unitruth Advisor 2008.10.16 No.1468,Nanjing Road West,Suite 2908 24,735,200 Investment holding (Shanghai) Co., Ltd. Shanghai,China and advisory
Tera Energy Development 2011.07.19 1F., No.1, Jinshan 8th St., Hsinchu, 186,550,910 Energy technical Co., Ltd. Taiwan 30080, R.O.C. services
Everrich Energy Investment 2009.12.16 Room 2702-03, CC Wu Building,302-8 25,988,211 Investment holding (HK) Limited Hennessy Road, Wanchai, Hong Kong
Everrich (Shandong) 2009.11.02 Entrepreneurship Service Center, 23,189,250 Solar engineering Energy Co., Ltd. Building 4, Torch City, High-tech Zone, integrated design Jining City, Shandong Province, China services
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Summary of Affiliated Enterprises (Continue)
In NTD
Name of Corporation Date of Address Capital Major Business / Establishmen Production Items
Wavetek Microelectronics 2010.10.18 3F., No.10, Chuangxin 1st Rd., 1,813,771,110 Sales and Corporation Baoshan Township, Hsinchu, Taiwan manufacturing of 30076, R.O.C. integrated circuits Wavetek Microelectronics 2013.08.28 Le Sanalele Complex, Ground Floor, 46,275,000 Investment holding Investment Vaea Street, Saleufi, Apia, Samoa (Samoa) Limited Wavetek Microelectronics 2013.09.26 488 De Guigne Drive, Sunnyvale, 1,855,140 Sales and marketing Corporation（USA） CA 94085, USA service
Best Elite International 2001.07.12 P.O. Box 957, Offshore Incorporations 7,388,888,122 Investment holding Limited Centre, Road Town, Tortola, B.V.I.
Infoshine Technology Limited 2002.02.12 P.O. Box 957, Offshore Incorporations 10,945,326,000 Investment holding Centre, Road Town, Tortola, B.V.I.
Oakwood Associates Limited 2002.02.12 P.O. Box 957, Offshore Incorporations 10,945,326,000 Investment holding Centre, Road Town, Tortola, B.V.I.
HeJian Technology 2001.11.23 No. 333, Xinghua Street, Suzhou 14,342,758,387 Sales and (Suzhou) Co., Ltd. Industrial Park, Suzhou,Jiangsu manufacturing of Province 215025, China integrated circuits UnitedDS Semiconductor 2014.03.25 17th Floor, Building3, Aosheng 134,253,000 Design support of (Shandong) Co., Ltd. Plaza,1166 Xinluo Ave., Jinan High-Tech integrated circuits Development Zone, Shandong Province, China Omni Global Limited 2013.07.02 Maystar Chambers, P.O. Box 3269, 130,160,000 Investment holding Apia, Samoa
United Microtechnology 2013.07.08 488 Deguigne Drive, Sunnyvale, 29,373,050 Research & Corporation（New York） CA 94085, USA development
United Microtechnology 2014.12.10 488 Deguigne Drive, Sunnyvale, 30,919,000 Research & Corporation（California） CA 94085, USA development
United Semiconductor 2014.10.01 No. 899, Wan Jia Chun Road, Xiang An, 56,823,897,929 Sales and (Xiamen) Co., Ltd. Xiamen, Fujian Province, China manufacturing of integrated circuits United Microchip Corporation 2015.02.04 Suite 102, Cannon Place, P.O. Box 712 29,874,878,250 Investment holding North Sound Rd., George Town, Grand Cayman, KY1-9006
UMC Technology Japan Co., 2016.04.01 15F Akihabara Centerplace Bldg., 4,961,250 Semiconductor Ltd. 1 Kanda Aioi-cho, Chiyoda-ku, manufacturing Tokyo 101-0029, Japan technology development and consulting services
Sino Paragon Limited 2016.06.06 Maystar Chambers, P.O. Box 3269, 83,204,400 Investment holding Apia, Samoa
United Semiconductor 2014.09.18 2000, Mizono, Tado-cho, Kuwana-shi, 2,835,000,000 Sales and Japan Co., Ltd. Mie, Japan manufacturing of integrated circuits
Note: The data is dated December 31, 2019.
172 Special Disclosures
Summary of Affiliated Enterprises (Continue)
Data for Common Shareholders of Treated-as Controlled Companies and Affiliates None.
Business of United Microelectronics Corporation (UMC) and Its Affiliated Enterprises The business of UMC and its affiliated enterprises includes semiconductor wafer manufacturing, electronics, optronics, investment activities, insurance, and trade.
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Directors, Supervisors and Presidents of Affiliated Enterprises
Name of Corporation Title Name or Representative Shareholding
Shares %
UMC Group （USA） Director Jason Wang － －
Director Chitung Liu － －
United Microelectronics Director Stan Hung － － （Europe）B.V. Director Jason Wang － －
UMC Capital Corp. Chairman Stan Hung － －
Director SC Chien － －
Director Jason Wang － －
Director Chitung Liu － －
Director Chih Chiang Peng － －
UMC Group Japan Director Yen Huang － －
Director Jinhong Lin － －
UMC Korea Co., Ltd. Director Carissa Tseng － －
TLC Capital Co., Ltd. Chairman United Microelectronics 397,956,300 100.00 Corporation Representative:Stan Hung － －
Director United Microelectronics 397,956,300 100.00 Corporation Representative: SC Chien － －
Director United Microelectronics 397,956,300 100.00 Corporation Representative: Jason Wang － －
Director United Microelectronics 397,956,300 100.00 Corporation Representative: Chitung Liu － －
Director United Microelectronics 397,956,300 100.00 Corporation Representative: Chih Chiang Peng － －
Supervisor United Microelectronics 397,956,300 100.00 Corporation Representative: Jinhong Lin － －
174 Special Disclosures
Summary of Affiliated Enterprises (Continue)
Name of Corporation Title Name or Representative Shareholding
Shares %
Fortune Venture Capital Corp. Chairman United Microelectronics 401,734,448 100.00 Corporation Representative: Stan Hung － －
Director United Microelectronics 401,734,448 100.00 Corporation Representative: SC Chien － －
Director United Microelectronics 401,734,448 100.00 Corporation Representative: Jason Wang － －
Director United Microelectronics 401,734,448 100.00 Corporation Representative: Chitung Liu － －
Director and United Microelectronics 401,734,448 100.00 President Corporation Representative: Chih Chiang Peng － －
Supervisor United Microelectronics 401,734,448 100.00 Corporation Representative: Bellona Chen － －
Green Earth Limited Director Chitung Liu － －
UMC Investment（Samoa）Limited Director United Microelectronics 1,520,000 100.00 Corporation NexPower Technology Corp. Chairman United Microelectronics 33,998,269 47.75 Corporation Representative: Jinhong Lin － －
Director United Microelectronics 33,998,269 47.75 Corporation Representative: Eric Zhou － －
Director United Microelectronics 33,998,269 47.75 Corporation Representative: Watson Tsai － －
Supervisor Fortune Venture Capital Corp. 23,826,545 33.46
Representative: Tachih Lung － －
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Summary of Affiliated Enterprises (Continue)
Name of Corporation Title Name or Representative Shareholding
Shares %
UMC Capital（USA） Director and Jason Wang － － President
Director Stan Hung － －
ECP Vita Pte. Ltd. Director Chitung Liu － －
Director Bellona Chen － －
Director Vic Yen － －
Director Sofia Wang － －
Soaring Capital Corp. Director TLC Capital Co., Ltd. 900,000 100.00
Unitruth Advisor (Shanghai) Director Chih Chiang Peng － － Co., Ltd.
Tera Energy Development Co., Ltd. Chairman Fortune Venture Capital Corp. 18,655,091 100.00
Representative: Steven Sheng － －
Director Fortune Venture Capital Corp. 18,655,091 100.00
Representative: Su Ying Shih － －
Director Fortune Venture Capital Corp. 18,655,091 100.00
Representative: Jinhong Lin － －
Supervisor Fortune Venture Capital Corp. 18,655,091 100.00
Representative: Tachih Lung － －
Everrich Energy Investment (HK) Director Tera Energy Development Co., Ltd. 750,000 100.00 Limited
Director Jinhong Lin － －
Everrich (Shandong) Executive Steven Sheng － － Energy Co., Ltd. Director
Supervisor Su Ying Shih － －
176 Special Disclosures
Summary of Affiliated Enterprises (Continue)
Name of Corporation Title Name or Representative Shareholding
Shares %
Wavetek Microelectronics Chairman United Microelectronics 144,948,118 79.83 Corporation Corporation
Representative: Wen-Yang － － Chen
Director United Microelectronics 144,948,118 79.83 Corporation
Representative:SC Chien － －
Director United Microelectronics 144,948,118 79.83 Corporation
Representative:Jason Wang － －
Supervisor Chih Chiang Peng 15,001 0.00
Wavetek Microelectronics Director Wen-Yang Chen － － Investment (Samoa) Limited
Wavetek Microelectronics Director Chian Gauh Shih － － Corporation （USA）
Best Elite International Limited Director Chau-Shen Yu － －
Director Jeremy Wang － －
Director Eric Chen － －
Director Jinhong Lin － －
Infoshine Technology Limited Director Best Elite International － － Limited
Oakwood Associates Limited Director Infoshine Technology － － Limited
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Summary of Affiliated Enterprises (Continue)
Name of Corporation Title Name or Representative Shareholding
Shares %
HeJian Technology (Suzhou) Chairman Stan Hung － － Co., Ltd.
Director Chau-Shen Yu － －
Director Ming-Cheng Kao － －
Director Chitung Liu － －
Director Wan Ling Cheng － －
Director Jinhong Lin － －
Independent Qingheng An － － Director
Independent Feng-I Lin － － Director
Independent Wenli Zhang － － Director
Supervisor Jeremy Wang － －
Supervisor Ming-Chun Chu － －
Supervisor I-Cheng Lu － －
UnitedDS Executive Steven Sheng － － Semiconductor(Shandong) Co., Ltd. Director
Supervisor Archi Chen － －
Omni Global Limited Director Chitung Liu － －
United Microtechnology Director Jason Wang － － Corporation （New York）
Director Chitung Liu － －
United Microtechnology Director Jason Wang － － Corporation （California）
Director Chitung Liu － －
178 Special Disclosures
Summary of Affiliated Enterprises (Continue)
Name of Corporation Title Name or Representative Shareholding
Shares %
United Semiconductor (Xiamen) Chairman Chau-Shen Yu － － Co., Ltd. Vice Chairman Chih-Ching Hsu － －
Director Jinhong Lin － －
Director Wayne Tan － －
Director T C Chen － －
Director I Cheng Lu － －
Director Yi Yan Hong － －
Director Guo Dong Di － －
Director Tao Yang － －
Supervisor Rong Fang Li － －
Supervisor Angel Sun － －
United Microchip Corporation Director Chitung Liu － －
UMC Technology Japan Co., Ltd. Director Chitung Liu － －
Director Jinhong Lin － －
Sino Paragon Limited Director Jason Wang － －
Director Chitung Liu － －
United Semiconductor Chairman S S Hong － － Japan Co., Ltd. Director Ming Hsu － －
Director Chitung Liu － －
Director James Wang － －
Director Michiari Kawano － －
Director Koichi Onomura － －
Director Tatsuya Deguchi － －
Supervisor Yen Huang － －
Note: The data is dated December 31, 2019.
179 United Microelectronics Corporation | Annual Report 2019
Summary of Affiliated Enterprises (Continue)
Summarized Operating Results of UMC Subsidiaries In Thousand NTD
Company Capital Assets Liabilities Net Worth Operating Operating Net Income Earnings (Loss) Revenues Income (Loss) Per Share (Loss) (NTD) UMC Group (USA) 508,231 8,663,813 6,834,067 1,829,746 49,228,134 66,001 77, 1 3 5 4.69
United Microelectronics 119,821 166,334 27,489 138,845 48,625 3,648 2,803 311.45 (Europe) B.V. UMC Capital Corp. 2,215,748 3,882,222 879 3,881,343 507,496 342,966 342,966 4.79
UMC Group Japan 8,505 883,795 774,236 109,559 4,329,195 73,065 47,467 47,466.78
UMC Korea Co., Ltd. 14,575 24,520 3,532 20,988 15,001 1,496 979 8.90
TLC Capital Co., Ltd. 3,979,563 4,325,652 51,740 4,273,912 311,587 22,513 24,565 0.06
Fortune Venture Capital Corp. 4,017,344 4,738,118 21,7 73 4,716,345 84,417 (136,390) (119,265) (0.26)
Green Earth Limited 29,988,444 11,643,953 - 11,643,953 - - (5,124,276) (5.24)
UMC Investment (Samoa) 43,519 42,022 - 42,022 - - (886) (0.58) Limited NexPower Technology Corp. 711,986 847,694 1,142,660 (294,966) 27,225 (301,265) (420,302) (5.90)
UMC Capital (USA) 6,184 17,222 151 17,071 922 44 191 0.96
ECP Vita Pte. Ltd. 278,271 583,465 30,829 552,636 32,646 30,054 29,580 3.29
Soaring Capital Corp. 27,351 10,264 - 10,264 1 (3,556) (3,560) (3.96)
Unitruth Advisor (Shanghai) 24,735 14,279 3,758 10,521 5,314 (3,404) (3,529) NA Co., Ltd. Tera Energy Development Co., 186,551 65,700 4,462 61,238 5,537 1,141 (22,063) (1.18) Ltd. Everrich Energy Investment (HK) 25,988 38,509 40 38,469 - (52) 7,443 9.92 Limited Everrich (Shandong) Energy Co., 23,189 50,723 11,033 39,690 40,417 2,816 7,505 NA Ltd.
180 Special Disclosures
Summary of Affiliated Enterprises (Continue)
In Thousand NTD
Company Capital Assets Liabilities Net Worth Operating Operating Net Income Earnings (Loss) Revenues Income (Loss) Per Share (Loss) (NTD) Wavetek Microelectronics 1,813,771 1,639,434 1,118, 591 520,843 1,631,401 (257,507) (279,115) (1.55) Corporation Wavetek Microelectronics 46, 27 5 3,680 1,556 2,124 - (7,307) (6,920) (4.61) Investment (Samoa) Limited Wavetek Microelectronics 1,855 3,187 327 2,860 7,244 348 237 3.94 Corporation (USA) Best Elite International 7,388,888 23,186,048 3,043 23,183,005 - (5,422) 870,821 1.31 Limited Infoshine Technology Limited 10,945,326 23,113,468 - 23,113,468 - - 877,676 NA
Oakwood Associates Limited 10,945,326 23,113,468 - 23,113,468 - (8,738) 877,676 NA
HeJian Technology (Suzhou) 14,342,758 26,544,484 2,821,231 23,723,253 10,422,268 2,269,111 908,836 0.28 Co., Ltd.
UnitedDS Semiconductor 134, 253 281,440 48,828 232,612 194,709 38,042 36,889 NA (Shandong) Co., Ltd. Omni Global Limited 130,160 611,890 21,188 590,702 - (87) 31,312 7.28
United Microtechnology 29,373 31, 213 62 3 1 ,151 66 4 20 521.55 Corporation (New York) United Microtechnology 30,919 37,229 1,020 36,209 25,984 1,471 1,583 39,595.79 Corporation (California) United Semiconductor 56,823,898 83,294,064 59,319,295 23,974,769 8,572,759 (7,609,390) (10,098,778) NA (Xiamen) Co., Ltd. United Microchip Corporation 29,874,878 11,617,342 - 11,617,342 - (20) (5,124,089) (5.26)
UMC Technology Japan 4,961 9,232 51 9,181 774 45 (169) (48.25) Co., Ltd. Sino Paragon Limited 83,204 121,840 - 121,840 - (27) 940 0.36
United Semiconductor 2,835,000 23,676,772 5,544,096 18,132,676 4,277,323 270,518 270,787 2.33 Japan Co., Ltd.
Note 1: USD:NTD=1:30.919, JPY:NTD=1:0.2835, EUR:NTD=1:34.615, RMB:NTD=1:4.4751, KRW:NTD=1:0.02650. Note 2: United Semiconductor Japan Co., Ltd. became consolidated entity on October 1, 2019.
181 United Microelectronics Corporation | Annual Report 2019
Issuance of Private Placement Securities None.
Acquisition or Disposal of UMC Shares by Subsidiaries In Thousand NTD, Shares
Subsidiary Paid-in Source Holding % Acquisition Shares Disposal Profit/ As of Annual Report Capital of Capital by the or Disposal Acquired Shares and Loss Printing Date Company Date and Amount Amount Shares Amount
Fortune Venture Capital 4,017,344 New 100.00 2020 None None None 16,078,737 105,114 Corp. shares for cash 2019 None None None 16,078,737 105,114
Note: (1) The data is dated February 26, 2020. (2) None of the above companies pledged UMC shares as collateral. (3) The Company did not provide endorsements or guarantees to these subsidiaries. (4) The Company did not provide loans to these subsidiaries.
Other Necessary Supplements None.
Disclosures of Events Which May Have a Significant Influence on Stockholders’ Equity or Share Price, in Compliance with Item 3, Paragraph 2 In Article 36 of the Securities and Exchange Law of the R.O.C. during 2019 and as of the Annual Report Printing Date None.
182 Financial Review
Financial Review
184 Condensed Balance Sheets 186 Condensed Statements of Comprehensive Income 188 Financial Analysis 192 Audit Committee’s Review Report 193 Financial Statements – Consolidated 269 Financial Statements – Parent Company
183 United Microelectronics Corporation | Annual Report 2019 Condensed Balance Sheets Condensed Balance Sheets-Consolidated In Thousand NTD
Item 2019 2018 2017 2016 2015 Current assets 153,757,141 141,193,432 139,160,486 110,469,594 94,816,521 Property, plant and 150,374,096 172,846,595 205,741,681 224,983,404 186,433,395 equipment Intangible assets 5,198,247 2,991,804 3,787,509 4,088,303 4,504,088 Other assets 60,857,881 47,573,075 45,409,486 47, 113,881 51,612,806 Total assets 370,187,365 364,604,906 394,099,162 386,655,182 337,366,810 Current liabilities Before 72,714,322 49,899,337 88,061,070 71,978,462 48,245,518 distribution
After * 56,815,442 96,618,093 78,090,621 55,152,491 distribution
Non-current liabilities 90,258,621 108,169,078 92,000,508 95,935,096 60,303,889 Total liabilities Before 162,972,943 15 8,068,415 180,061,578 167,913,558 108,549,407 distribution
After * 164,984,520 188,618,601 174,025,717 115,456,380 distribution
Equity attributable to the 206,804,357 206,069,723 213,080,776 216,579,895 226,790,338 parent company Capital 117,575,798 124,243,187 126,243,187 126,243,187 127,581,329 Additional paid-in capital 39,550,394 40,399,363 40,858,350 40,997,092 41,651,569 Retained earnings Before 60,820,280 61,588,543 48,065,899 47,655,176 50,707,642 distribution
After * 54,672,438 39,508,876 41,543,017 43,800,669 distribution
Other components of equity (11,022,314)(14,513,940) 2,632,377 6,403,477 10,675,404 Treasury stock (119,801) (5,647,430) (4,719,037) (4,719,037) (3,825,606) Non-controlling interests 410,065 466,768 956,808 2,161,729 2,027,065 Total equity Before 207,214,422 206,536,491 214,037,584 218,741,624 228,817,403 distribution
After * 199,620,386 205,480,561 212,629,465 221,910,430 distribution
Note 1 : * Subject to change based on resolutions of the 2020 shareholders’ meeting. Note 2 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
184 Financial Review
Condensed Balance Sheets-Parent Company In Thousand NTD
Item 2019 2018 2017 2016 2015 Current assets 107,866,299 101,335,770 106,676,034 82,558,263 72,211,211 Property, plant and 79,486,445 101,115,727 127,101,974 157,573,131 169,031,687 equipment Intangible assets 4,082,826 2,886,159 3,459,829 4,015,370 4,399,963 Other assets 111,315,394 93,849,564 84,756,630 82,908,196 80,159,888 Total assets 302,750,964 299,187,220 32 1 ,994,467 327,054,960 325,802,749 Current liabilities Before 43,764,772 26,797,263 58,655,702 47,397,892 41,441,501 distribution
After * 33,713,368 67,212,725 53,510,051 48,348,474 distribution
Non-current liabilities 52,181,835 66,320,234 50,257,989 63,077,173 57,570,910 Total liabilities Before 95,946,607 93,117,497 108,913,691 110,475,065 99,012,411 distribution
After * 100,033,602 117,470,714 116,587,224 105,919,384 distribution
Equity 206,804,357 206,069,723 213,080,776 216,579,895 226,790,338 Capital 117,575,798 124,243,187 126,243,187 126,243,187 127,581,329 Additional paid-in capital 39,550,394 40,399,363 40,858,350 40,997,092 41,651,569 Retained earnings Before 60,820,280 61,588,543 48,065,899 47,655,176 50,707,642 distribution
After * 54,672,438 39,508,876 41,543,017 43,800,669 distribution
Other components of equity (11,022,314) (14,513,940) 2,632,377 6,403,477 10,675,404 Treasury stock (119,801) (5,647,430) (4,719,037) (4,719,037) (3,825,606) Total equity Before 206,804,357 206,069,723 213,080,776 216,579,895 226,790,338 distribution
After * 199,153,618 204,523,753 210,467,736 219,883,365 distribution
Note 1 : * Subject to change based on resolutions of the 2020 shareholders’ meeting. Note 2 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
185 United Microelectronics Corporation | Annual Report 2019 Condensed Statements of Comprehensive Income
Condensed Statements of Comprehensive Income-Consolidated In Thousand NTD
Item 2019 2018 2017 2016 2015 Operating revenues 148,201,641 151,252,571 149,284,706 147,870,124 144,830,421 Gross profit 21,314,972 22,840,027 27,057,758 30,379,430 31,768,527 Operating income 4,689,850 5,797,232 6,568,321 6,193,576 10,835,657 Non-operating income and expenses 1,045,787 (3,612,833) 1,230,101 (1,346,938) 2,876,488 Income from continuing operations 5,735,637 2,184,399 7,798,422 4,846,638 13,712,145 before income tax Net income 6,128,767 2,643,052 6,631,265 3,863,075 12,835,651 Other comprehensive income (loss), 3,408,785 949,944 (4,034,355) (4,364,780) (1,794,644) net of tax Total comprehensive income (loss) 9,537,552 3,592,996 2,596,910 (501,705) 11,041,007 Net income attributable to 9,707,614 7,072,990 9,628,734 8,315,660 13,448,624 stockholders of the parent Net income attributable to non- (3,578,847) (4,429,938) (2,997,469) (4,452,585)(612,973) controlling interests Comprehensive income attributable 13,131,612 8,126,828 5,705,980 3,983,198 11,716,094 to stockholders of the parent Comprehensive income attributable (3,594,060) (4,533,832) (3,109,070) (4,484,903) (675,087) to non-controlling interests Earnings per share (NTD) 0.82 0.58 0.79 0.68 1.08
Note 1 : EPS was calculated based on weighted average shares outstanding for the period. Note 2 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
186 Financial Review
Condensed Statements of Comprehensive Income-Parent Company In Thousand NTD Item 2019 2018 2017 2016 2015 Operating revenues 123,622,436 132,834,602 132,179,198 135,592,136 130,685,516 Gross profit 27,161,230 30,548,191 29,718,771 28,358,887 28,686,022 Operating income 10,281,974 12,790,237 1 1,538,896 9,605,769 10,913,811 Non-operating income and expenses (1,148,875) (6,581,581)(1,114,125)(594,179) 3,032,406 Income from continuing operations 9,133,099 6,208,656 10,424,771 9,011,590 13,946,217 before income tax Net income 9,707,614 7,072,990 9,628,734 8,315,660 13,448,624 Other comprehensive income (loss), 3,423,998 1,053,838 (3,922,754)(4,332,462) (1,732,530) net of tax Total comprehensive income 13,131,612 8,126,828 5,705,980 3,983,198 11,716,094 Earnings per share (NTD) 0.82 0.58 0.79 0.68 1.08
Note 1 : EPS was calculated based on weighted average shares outstanding for the period. Note 2 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
Auditors’ Opinions from 2015 to 2019
Year CPA Audit Opinion
2015 Shao-Pin Kuo, Meng-Lin Song Unqualified-Modified Opinion
2016 Shao-Pin Kuo, Meng-Lin Song Unqualified Opinion with Emphasis of Matter Paragraphs or Other Matter Paragraphs
2017 Shao-Pin Kuo, Wan-Ju Chiu Unqualified Opinion with Emphasis of Matter Paragraphs or Other Matter Paragraphs
2018 Wan-Ju Chiu, Hsin-Min Hsu Unqualified Opinion with Emphasis of Matter Paragraphs or Other Matter Paragraphs
2019 Wan-Ju Chiu, Hsin-Min Hsu Unqualified Opinion with Emphasis of Matter Paragraphs or Other Matter Paragraphs
187 United Microelectronics Corporation | Annual Report 2019 Financial Analysis
Financial Analysis- Consolidated Item 2019 2018 2017 2016 2015 Capital Debt ratio (%) 44.02 43.35 45.69 43.43 32.18 structure Long-term funds to property, plant and 169.65 158.30 129.95 124.22 148.23 equipment (%)
Liquidity Current ratio (%) 211.45 282.96 158.03 153.48 196.53 Quick ratio (%) 172.13 222.80 121.72 114.73 155.43 Times interest earned (times) 2.96 1.79 4.24 4.33 16.35 Operating Average receivables turnover (times) 5.98 6.75 6.78 6.98 6.95 performance Days sales outstanding 61 54 54 52 53 Average inventory turnover (times) 6.36 7.04 6.93 6.78 6.88 Average payables turnover (times) 16.19 19.26 18.26 18.34 18.65 Average inventory turnover days 57 52 53 54 53 Property, plant and equipment turnover 0.92 0.80 0.69 0.72 0.82 (times)
Total assets turnover (times) 0.40 0.40 0.38 0.41 0.45 Profitability Return on assets (%) 2.31 1.28 2.2 1 1.35 4.07 Return on stockholders' equity attributable 4.70 3.37 4.48 3.75 6.00 to the parent company (%)
Pre-tax income to paid-in capital (%) 7.92 5.32 8.54 7.35 11.20 Net profit margin (%) 4.14 1.75 4.44 2.61 8.86 Earnings per share (NTD) 0.82 0.58 0.79 0.68 1.08 Cash Flow Cash flow ratio (%) 75.51 102.08 59.59 64.53 123.92 Cash flow adequacy ratio (%) 96.56 86.78 81.49 75.74 89.02 Cash flow reinvestment ratio (%) 4.54 4.03 4.68 4. 1 1 5.93 Leverage Operating leverage 23.16 19.11 16.86 17.77 9.78 Financial leverage 2.67 1.91 1.58 1.25 1.05
Analysis of changes of over 20% between 2018 and 2019: 1. Current ratio: Due to increase in current portion of long-term liabilities. 2. Quick ratio: Due to increase in current portion of long-term liabilities. 3. Times interest earned: Due to increase in income before income tax. 4. Return on assets: Due to increase in net income. 5. Return on stockholders' equity attributable to the parent company: Due to increase in net income attributable to stockholders of the parent. 6. Pre-tax income to paid-in capital: Due to increase in income before income tax attributable to stockholders of the parent. 7. Net profit margin: Due to increase in net income. 8. Earnings per share: Due to increase in net income attributable to stockholders of the parent. 9. Cash flow reinvestment ratio: Due to increase in current portion of long-term liabilities. 10. Operating leverage: Due to decrease in operating income. 11. Financial leverage: Due to decrease in operating income.
188 Financial Review
Financial Analysis (Continue)
Note 1 : The calculation of EPS was based on weighted average shares outstanding for the year. Note 2 : The calculation formulas of financial analysis are listed as follows: 1. Capital structure (1) Debt ratio = total liabilities / total assets (2) Long-term funds to property, plant and equipment = (total equity + bonds payable +long-term loans) / net worth of property, plant and equipment 2. Liquidity (1) Current ratio = current assets / current liabilities (2) Quick ratio = (current assets – inventory – prepaid expenses – non-current assets held for sale – other current assets) / current liabilities (3) Times interest earned = income before interest and tax / interest expenses 3. Operating performance (1) Average receivables (including accounts receivable and notes receivable arising from business operations) turnover = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period (2) Days sales outstanding = 365 / average receivables turnover (3) Average inventory turnover = cost of sales / average inventory (4) Average payables (including accounts payable and notes payable arising from business operations) turnover = cost of sale / average payables (including accounts payable and notes payable arising from business operations) for each period (5) Average inventory turnover days = 365 / average inventory turnover (6) Property, plant and equipment turnover = net sales / average net worth of property, plant and equipment (7) Total assets turnover = net sales / average total assets 4. Profitability (1) Return on assets = [net income + interest expenses (1- tax rate)] / average total assets (2) Return on stockholders' equity attributable to the parent company = net income attributable to stockholders of the parent / average total equity attributable to the parent company (3) Pre-tax income to paid-in capital = income before tax attributable to stockholders of the parent / paid-in capital (4) Net profit margin = net income / net sales (5) Earnings per share = (net income attributable to stockholders of the parent – preferred shares dividends) / weighted average number of outstanding shares 5. Cash flow (1) Cash flow ratio = net cash provided by operating activities / current liabilities (2) Cash flow adequacy ratio = five-year sum of net cash provided by operating activities / five-year sum of capital expenditures, inventory increase and cash dividend (3) Cash flow reinvestment ratio = (net cash provided by operating activities – cash dividend) / (gross property, plant and equipment + long-term investments + other non-current assets + working capital) 6. Leverage (1) Operating leverage = (net operating revenue – variable operating costs and expenses) / operating income (2) Financial leverage = operating income / (operating income – interest expenses) Note 3 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
189 United Microelectronics Corporation | Annual Report 2019
Financial Analysis (Continue)
Financial Analysis- Parent Company
Item 2019 2018 2017 2016 2015 Capital Debt ratio (%) 31.69 31. 12 33.82 33.78 30.39 structure Long-term funds to property, plant and 288.59 242.91 186. 5 1 160.90 161. 3 1 equipment (%)
Liquidity Current ratio (%) 246.47 378. 16 181.87 174. 18 174. 25 Quick ratio (%) 204.33 313.86 150.22 139.84 131.82 Times interest earned (times) 1 2.16 9. 14 12. 13 1 1.00 18.45 Operating Average receivables turnover (times) 5.95 6.02 5.69 6.50 6.99 performance Days sales outstanding 6 1 6 1 64 56 52 Average inventory turnover (times) 6.12 6. 73 6.90 7.00 6.77 Average payables turnover (times) 16.41 18.60 18.47 19.18 18.83 Average inventory turnover days 60 54 53 52 54 Property, plant and equipment turnover 1. 37 1. 16 0.93 0.83 0.81 (times)
Total assets turnover (times) 0.41 0.43 0.41 0.42 0.42 Profitability Return on assets (%) 3.44 2.47 3. 21 2. 73 4. 4 1 Return on equity (%) 4.70 3. 37 4.48 3. 75 6.00 Pre-tax income to paid-in capital (%) 7.77 5.00 8.26 7. 14 10.93 Net profit margin (%) 7.85 5. 32 7.28 6. 13 10.29 Earnings per share (NTD) 0.82 0.58 0.79 0.68 1.08 Cash Flow Cash flow ratio (%) 106.12 182. 12 102.75 119.78 132.17 Cash flow adequacy ratio (%) 155.16 135.24 121.08 97.08 92.02 Cash flow reinvestment ratio (%) 4.09 4.20 5.95 5.56 5. 55 Leverage Operating leverage 8.88 7.82 8.70 10.55 8.99 Financial leverage 1.09 1.06 1.09 1.08 1.04 Analysis of changes of over 20% between 2018 and 2019: 1. Current ratio, Quick ratio and Cash flow ratio: Due to increase in current liabilities. 2. Times interest earned, Return on assets, Return on equity, Pre-tax income to paid-in capital, Net profit margin and Earnings per share: Due to increase in income before tax and net income.
190 Financial Review
Financial Analysis (Continue)
Note 1 : The calculation of EPS was based on weighted average shares outstanding for the year. Note 2 : The calculation formulas of financial analysis are listed as follows: 1. Capital structure (1) Debt ratio = total liabilities / total assets (2) Long-term funds to property, plant and equipment = (total equity + bonds payable +long-term loans) / net worth of property, plant and equipment 2. Liquidity (1) Current ratio = current assets / current liabilities (2) Quick ratio = (current assets – inventory – prepaid expenses – non-current assets held for sale – other current assets) / current liabilities (3) Times interest earned = income before interest and tax / interest expenses 3. Operating performance (1) Average receivables (including accounts receivable and notes receivable arising from business operations) turnover = net sales / average receivables (including accounts receivable and notes receivable arising from business operations) for each period (2) Days sales outstanding = 365 / average receivables turnover (3) Average inventory turnover = cost of sales / average inventory (4) Average payables (including accounts payable and notes payable arising from business operations) turnover = cost of sale / average payables (including accounts payable and notes payable arising from business operations) for each period (5) Average inventory turnover days = 365 / average inventory turnover (6) Property, plant and equipment turnover = net sales / average net worth of property, plant and equipment (7) Total asset turnover = net sales / average total assets 4. Profitability (1) Return on assets = [net income + interest expenses (1- tax rate)] / average total assets (2) Return on equity = net income / average total equity (3) Pre-tax income to paid-in capital = income before tax / paid-in capital (4) Net profit margin = net income / net sales (5) Earnings per share = (net income – preferred shares dividends) / weighted average number of outstanding shares 5. Cash flow (1) Cash flow ratio = net cash provided by operating activities / current liabilities (2) Cash flow adequacy ratio = five-year sum of net cash provided by operating activities / five-year sum of capital expenditures, inventory increase and cash dividend (3) Cash flow reinvestment ratio = (net cash provided by operating activities – cash dividend) / (gross property, plant and equipment + long-term investments + other non-current assets + working capital) 6. Leverage (1) Operating leverage = (net operating revenue – variable operating costs and expenses) / operating income (2) Financial leverage = operating income / (operating income – interest expenses) Note 3 : The company listed on the TWSE or traded on the TPEx shall include in its analysis the updated financial data which are audited or reviewed by a CPA for the most recent period up to the publication date of the annual report: None.
191 United Microelectronics Corporation | Annual Report 2019
Audit Committee’s Review Report The Board of Directors has prepared and submitted to us the Company’s 2019 Business Report, Financial Statements, and proposal for earnings distribution. Financial Statements were audited by Ernst & Young and they issued an audited report accordingly. We, as the Audit Committee of the Company, have reviewed the Business Report, Financial Statements, and proposal for earnings distribution and do not find any discrepancies. According to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act, we hereby submit this report.
To United Microelectronics Corporation 2020 Annual General Shareholders’ Meeting
Chairman of the Audit Committee: Cheng-Li Huang
April 27, 2020
192 Financial Review Other ting and Attestation ofting and section of our report), the our the report), of section the International Financial International the s to the consolidated financial statements, s to the consolidated financial e present fairly, in all material respects, the the respects, all material in fairly, epresent Regulations Governing Audi y Commission of the Republic of China. section of our our of section Statements Financial the Consolidated s, Interpretations developed by Republic of China (the “Norm”), and we have fulfilled our other other our fulfilled we have “Norm”), and (the China of Republic sponsibilities under those standards are further described in the the in described are further standards those under sponsibilities report. We are independent of the Company in accordance with the Norm of Professional Ethics for for Ethics Professional of Norm the with accordance in Company the of independent are We report. the of Certified Accountant Public other of reports the and audits onour Based Norm. the with accordance in responsibilities ethical appropriate to and is sufficient obtained we have audit the that evidence we believe auditors, opinion. our for basis a provide Auditors’ Responsibilities forthe Audit of Independent Auditors’ Report Auditors’ Independent Corporation Microelectronics United To Opinion sheets of United Microelectronics balance consolidated the accompanying have audited We the and 2018, and 2019 31, December of as “Company”) (the and subsidiaries its Corporation and the flows cash for in equity changes income, comprehensive of statements consolidated related note and 2018, and 2019 31, December ended years includingthe summary of significant accounting policies (together“the consolidated financial statements”). to the refer (please other auditors of the reports and audits our on based opinion, our In Auditors of Component to the Audits Reference – Making Matter in accepted generally standards Accountants and auditing Public by Certified Statements Financial Our re China. Republic the of consolidated financial statements referred to to abov referred statements financial consolidated consolidated financial position of the Company as of December 31, 2019 and 2018, and their their and 2018, and 2019 31, December of as Company the of position financial consolidated and 31, 2019 December years ended the for and cash flows financial performance consolidated of Preparation Governing the of the Regulations requirements the with conformity in 2018, FinancialReports Securitiesby Issuersand International Financial ReportingStandards, International Accounting Standard Reporting Interpretations Committee or as Interpretations Committee the former endorsed or Committee Interpretations Reporting Standing and becameeffective by FinancialSupervisor forBasis Opinion the with accordance in audits our conducted We ge financial statements shall prevail. AND SUBSIDIARIES SUBSIDIARIES AND FOR FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 AND 2018 2019 31, DECEMBER CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS FINANCIAL CONSOLIDATED WITH REPORT OF INDEPENDENT AUDITORS AUDITORS INDEPENDENT OF REPORT WITH UNITED MICROELECTRONICS CORPORATION CORPORATION MICROELECTRONICS UNITED Address: R.O.C. Taiwan, 3 Li-Hsin No. Road II,Hsinchu City, Park, Science Hsinchu 886-3-578-2258 Telephone: the In Chinese. in originally prepared been have statements financial consolidated these that is advised reader The interpretation in or difference version Chinese original the and statements financial these between a conflict of event langua Chinese the two versions, the between 193 United Microelectronics Corporation | Annual Report 2019 the International Financial International the audit procedures responsive to those risks, and risks, and to those responsive procedures audit ssary to enable the preparation of consolidated any, disclosing, as applicable, mattersas applicable, disclosing, related to any, arged with Governance for the Consolidated forwith the arged Governance maintain professional skepticism throughout the the throughout skepticism professional maintain s, Interpretations developed by icient and appropriate to provide a basis for our opinion. The our for opinion. basis a provide to and appropriate icient material misstatement of the co nsolidated financial statements, whether due to fraud or error, design and perform and perform design or error, due to whether fraud auditobtain suff is that evidence risk of not detecting a material misstatement resulting from fraud is higher than for one resulting resulting one for than is higher fraud from resulting misstatement a detecting material not risk of or omissions, misrepresentations, y, intentional forger collusion, involve may error, as fraud from internal control. of the override Identify and assess the risks of and Identify risks of assess the Responsibilities of Management and Those Ch Financial Statements financial consolidated the of presentation fair and preparation the for responsible is Management of Preparation of Governing the the Regulations the requirements with accordance in statements FinancialReports Securitiesby Issuersand International Financial Reporting Standards, International Accounting Standard going concern and using the going concern basis of accounting unless management either intends to intends either management unless of accounting basis going concern the using and concern going so. do to but alternative no realistic has or cease operations, to or Company the liquidate for responsible are supervisors, or audit committee including governance, with charged Those of the Company. process reporting the financial overseeing Auditor’sAuditResponsibilitiesthe of Consolidated the for Financial Statements financial consolidated about whether the assurance are reasonable to obtain Our objectives to and error, or fraud to due whether misstatement, material from are free awhole as statements of level a high is assurance Reasonable opinion. our includes that report an auditor’s issue standards auditing with accordance in conducted audit an that guarantee a not is but assurance, it when material misstatement a detect always Chinawill of inthe Republic accepted generally exists. canfrom areif, or error material Misstatements and fraud arise considered or individually in users taken decisions of economic the to influence be expected they reasonably could the aggregate, statements. financial these consolidated of basis on the in the Republic of accepted generally standards with auditing in accordance As part of an audit and judgment we China, exercise professional also:audit. We 1. Reporting Interpretations Committee or the former Standing Interpretations Committee as endorsed as Committee endorsed Interpretations Standing former the or Committee Interpretations Reporting and such becameFinancial by and for Supervisory effective China of the Republic Comm of ission internal control as is determines necemanagement error. or due fraud to whether misstatement, material from free are that statements financial the assessing for responsible is management statements, financial consolidated the preparing In the Comp of concern as going a continue to ability -moving inventories was hod amounted to NT$11,704 to NT$11,704 amounted hod Please refer to Notes 5 and 6 Notes to Please refer in forming our opinion in forming thereon, 1 million and NT$(751)and million 1 million, ventories reserve process. For example, we we example, For process. reserve ventories nd 2.39% of consolidated total assets as of related shares of other comprehensive income income comprehensive other of shares related ies reserve percentages. We also recalculated recalculated also We percentages. reserve ies s including historical usage, write-off activities write-off usage, historical including s These matters were addressed in of in the context These matters were addressed ts were audited by other auditors, whose reports reports whose auditors, other by were ts audited ntures under equity met equity ntures under ting the valuation slow ting for consider this is a matter.key audit ncial statements as a whole, and and a whole, ncial statements as and we do not provide a separate opinion on these matters. matters. these on opinion separate a provide not do we and Valuation for slow-moving inventories our audit of the consolidated fina our audit Key Audit Matters Matters Key Audit in significance most of were judgment, professional our in that, matters those are matters audit Key statements. financial consolidated 2019 of our audit complex due to judgement involved in the Company’s estimation of the appropriate amount of the of the amount of the appropriate Company’s estimation in the involved judgement due to complex input key utilizing reserve, inventories slow-moving we Therefore, aging. inventory and As of December 31, 2019, the Company’s net inventories amounted to NT$21,715 million. As the As the million. to NT$21,715 amounted inventories Company’s net the 31, 2019, December As of to had management technology, in changes rapid by is characterized industry semiconductor or be to written-off expected are that inventories slow-moving for reserve a estimate and evaluate Audi date. future at a of disposed otherwise We obtained an understanding, evaluated the design and tested the operating effectiveness of effectiveness operating the tested and design the evaluated an understanding, We obtained controlsinternal over the Company’s slow-moving in tested the control over management’s review of the reserve method and the key inputs used in the used in the and the key inputs method the reserve of review management’s over tested the control included, procedures audit our reserve, inventories slow-moving the test To process. valuation inventory of determination management’s of of appropriateness the others, an evaluation amongst and usage as such historical data underlying the of completeness and accuracy the testing and aging inventor activitiesused in determining the write-off categories. aging inventory the to percentages reserve the of application the for reserve inventory In addition, inventories.we evaluated the adequacydisclosures of of ed financial statements. financial statements. ed consolidat Company’s the to Auditors Component of Audits the to Reference Making – Matter Other for accounted ventures joint and associates certain of statements the financial audit not did We statemen Those method. financial the equity under based solely on the reports are herein expressed opinions to our us, and been furnished thereon have ve joint and These associates auditors. other of million and NT$8,714 million, representing 3.16% a associates the profits (loss) from of shares related The respectively. 2018, and 2019 31, December NT$1,23 to amounted method ventures equity the under joint and representing 21.46% and (34.37)% of the consolidated income before tax for the years ended ended years the tax for before income consolidated the of (34.37)% and 21.46% representing the and respectively, 2018, and 2019 31, December NT$1,184 to amounted method equity the under ventures joint and associates the from (loss) total the consolidated of (6.27)% and 12.41% representing million, and NT$(225) million respectively. 2018, and 31, 2019 December d the ende years (loss) for income comprehensive 194 Financial Review ents and report of independent auditors are not intended intended are not auditors independent of report ents and principlesauditingor standards generally accepted inthe Other the on Paragraph Matter Other an including opinion unqualified an expressed and audited have We December ended as ofyears andthe for of Company the statements financial only company parent and 2018. 31, 2019 /s/Chiu,Wan-Ju /s/Hsu, Hsin-Min Taiwan Ernst & Young, 2020 26, February Notice to Readers financial the consolidated position, to present only financial are intended consolidatedstatements The accompanying resultsof operations and cash flows in accordance with accounting principlesand practices generally accepted in the such toaudit practices and procedures standards, The jurisdictions. other of any not those and China of Republic consolidated financial statements are those generally accepted and appliedin the Republic of China. the accompanyingfinancial consolidated statem Accordingly, for use by those who not are informed about the accounting practice. in applications their and China, of Republic nsolidated financial to draw attention in nancial statements or, such if r, future events or conditions conditions or r, events future any significant deficiencies in in deficiencies significant any e audit in order to design audit audit design in order to e audit consolidated financial statements represent represent statements financial consolidated a material uncertainty exists related events a uncertainty to material ty exists, we arerequired ntent of the consolidated financial statements, statements, financial the consolidated of ntent ess an opinion on the co opinion ess an be thought to bear on our independence, and and independence, our on to bear be thought e matters in our auditor’s report unless law or law or unless report inourauditor’s e matters ances, but not for the purpose of expressing an an expressing of purpose the for not but ances, ion, supervision and performance of the group group the of and performance ion, supervision 2019 consolidated financial statements and are are and statements financial consolidated 2019 a manner that achieves fair presentation. fair achieves a that manner internal control of the Company.control of internal disclosures in the consolidated fi the in consolidated disclosures of of our auditor’s report. Howeve gnificant audit findings, including including findings, audit gnificant dit evidence regarding the financial information ordit of the entities evidence regarding the financial onsible for our audit opinion. for our audit opinion. onsible of internal control relevant to th identify during our audit. audit. during our identify Obtain sufficient appropriate au appropriate sufficient Obtain within the Company to expr business activities statements. We are responsible for the direct the for responsible are We statements. audit. remainWe solely resp may cause the Company to cease to continue as a going concern. concern. as a going to cease continue the Company cause may Evaluate the overall presentation, structure and co the whether notes, and the accompanying including the underlying transactions and events in Obtain an understanding understanding an Obtain the in circumst that are appropriate procedures the of on opinion the effectiveness the of concern as a going to continue on the ability significant doubt cast may that or conditions uncertain material a that conclude we If Company. our auditor’s report to the related audit the on based are conclusions Our opinion. our modify to inadequate, are disclosures evidence obtained up to the date Evaluate the appropriateness of accounting policies used and the reasonableness of accounting accounting of reasonableness the used and policies accounting of appropriateness the Evaluate by management. made disclosures and related estimates accounting of basis concern going the of use management’s of appropriateness on the Conclude whether obtained, evidence audit the on and, based 6. We communicate with those charged with governance regarding, among other matters, the planned planned the matters, other among regarding, governance with charged those with communicate We scope and timing of the audit and si internal control that we that control internal We also provide those charged with governance with a statement that we have complied with complied we have that with a statement governance with charged those We also provide with all them to communicate and independence, regarding requirements ethical relevant reasonably may that matters and other relationships where applicable, related safeguards. related safeguards. where applicable, matters those we determine governance, with charged those with communicated the matters From of audit the in most significance of that were thes describe matters. We the audit key therefore circumstances, rare in extremely or when, matter the about public disclosure precludes regulation because the adverse in our report that a matter not be we determine should communicated of benefits interest public the to outweigh expected be reasonably so would doing of consequences communication. such 5. 2. 3. 4.
195 United Microelectronics Corporation | Annual Report 2019 - 118 20,856 92,210 708,432 138,912 661,402 528,450 2,878,285 2,991,804 6,387,909 2,757,399 4,261,064 11,225,322 18,203,119 23,735,989 11,555,847 11,585,477 10,363,977 83,661,739 141,193,432 364,604,906 223,411,474 172,846,595 2018 $
$
98 26,220 As of December 31, 289,945 654,466 214,243 596,088 217,906 722,794 2,912,875 6,290,518 5,198,247 8,291,517 7,807,583 2,600,733 21,714,802 25,438,703 14,723,232 13,298,679 13,322,143 95,492,477 153,757,141 150,374,096 370,187,365 216,430,224 2019 $
$
Notes 4, 5, 6(5), 12(7) 4, 5, 6(2), 7, 12(7) 4, 6(6), 7 4, 5, 6(7), 6(26), 6(27), 8 4, 6(9), 6(26), 7 4, 6(8), 6(26), 8 4, 5, 6(23), 6(26) 8 8 6(18) 4, 7 4 4 4, 5, 6(4), 6(26), 6(27) 4, 6(3), 6(26), 6(27) 4 4, 5, 6(2), 12(7) 4, 6(18) 4, 6(1), 6(26), 6(27) (continued) December 31, 2019 and 2018 CONSOLIDATED BALANCE SHEETS (Expressed in Thousands of New Taiwan Dollars) UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES English Translation of Consolidated Financial Statements Originally Issued in Chinese Assets Intangible assets Total assets Right-of-use assets Property, plant and equipment Non-current assets Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through other comprehensive income, noncurrent Investments accounted for under the equity method Deferred tax assets Prepayment for equipment Refundable deposits Other noncurrent assets-others Total non-current assets Other current assets Total current assets Prepayments Current tax assets Inventories, net Accounts receivable-related parties, net Other receivables Accounts receivable, net Notes receivable Contract assets, current Financial assets at fair value through profit or loss, current Current assets Cash and cash equivalents 196 Financial Review - - - - - 39 8,181 (2,058) 932,371 573,336 108,613 612,903 466,768 178,401 6,801,745 4,008,142 2,059,172 5,121,396 5,416,842 1,965,693 1,737,113 4,167,174 1,515,297 (5,647,430) (8,819,556) (5,692,326) 13,103,808 12,455,861 49,899,337 38,878,947 28,204,054 50,723,263 34,340,307 36,278,383 10,865,280 364,604,906 108,169,078 206,069,723 206,536,491 158,068,415 124,243,187 2018
$
$
- 1,218 13,211 As of December 31, 988,115 939,207 569,957 482,080 573,336 332,611 123,268 214,455 196,110 410,065 (119,801) 8,877,065 3,031,184 6,262,604 2,087,366 5,461,068 4,025,373 2,744,391 1,476,405 (2,073,977) (8,948,337) 12,015,206 15,235,384 24,795,600 72,714,322 29,200,299 18,687,591 90,258,621 14,513,940 34,733,761 34,404,110 30,118,734 11,572,579 206,804,357 370,187,365 162,972,943 207,214,422 117,243,187 2019
$
$
Notes 6(10), 6(25), 6(27) 6(26) 4, 6(18) 6(26), 7 6(26) 4 4, 6(8), 6(25), 6(26) 4, 6(11), 6(12), 6(25), 6(27), 8, 12(7) 6(14), 6(15), 6(25), 7 4, 6(18) 6(12), 6(25), 6(27), 8, 12(7) 4, 5, 6(23) 4, 6(11), 6(25), 12(7) 4, 6(8), 6(25), 6(26) 4, 5, 6(13) 4, 6(16), 6(17) 4, 6(26) 4, 6(14), 6(25), 9(5) 6(25) 6(16), 6(27) 4, 6(11), 6(16), 6(17) 4, 6(11), 6(16) 6(16), 6(26) December 31, 2019 and 2018 CONSOLIDATED BALANCE SHEETS (Expressed in Thousands of New Taiwan Dollars) UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES The accompanying notes are an integral part of the consolidated financial statements. English Translation of Consolidated Financial Statements Originally Issued in Chinese Liabilities and Equity Current liabilities Short-term loans Notes and accounts payable Contract liabilities, current Other payables Payables on equipment Current tax liabilities Lease liabilities, current Current portion of long-term liabilities Other current liabilities Non-current liabilities Contract liabilities, noncurrent Long-term loans Deferred tax liabilities Bonds payable Total current liabilities Lease liabilities, noncurrent Net defined benefit liabilities, noncurrent The differences between the fair value of consideration paid or received from acquiring Total equity attributable to the parent company Total liabilities and equity Gains or losses on hedging instruments Treasury stock Unrealized gains or losses on financial assets measured at fair value through other comprehensive income Other components of equity Exchange differences on translation of foreign operations Total non-current liabilities Total liabilities Treasury stock transactions disposing subsidiaries and the carrying amounts of Recognition of changes in subsidiaries’ ownership Other noncurrent liabilities-others Capital collected in advance Share of changes in net assets associates and joint ventures accounted for using equity method Guarantee deposits Total equity Non-controlling interests Special reserve Unappropriated earnings Additional paid-in capital Premiums Employee stock options Other Equity attributable to the parent company Capital Common stock Stock options Retained earnings Legal reserve 197 United Microelectronics Corporation | Annual Report 2019
English Translation of Consolidated Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)
For the years ended December 31, Notes 2019 2018 Operating revenues 4, 6(18), 7, 14 $ 148,201,641 $ 151,252,571 Operating costs 4, 6(4), 6(9), 6(13), (126,886,669) (128,412,544) 6(17), 6(19), 7, 14 Gross profit 21,314,972 22,840,027 Operating expenses 4, 6(3), 6(9), 6(13), 6(17), 6(18), 6(19), 7, 14 Sales and marketing expenses (3,807,610) (3,901,912) General and administrative expenses (5,436,091) (4,823,391) Research and development expenses (11,860,244) (13,025,139) Expected credit losses (703,339) (409,237) Subtotal (21,807,284) (22,159,679) Net other operating income and expenses 4, 6(7), 6(14), 6(20), 14 5,182,162 5,116,884 Operating income 4,689,850 5,797,232 Non-operating income and expenses Other income 4 1,705,675 1,391,376 Other gains and losses 4, 6(21), 6(27) 1,257,299 (1,128,290) Finance costs 6(21) (2,997,643) (2,851,225) Share of profit or loss of associates and joint ventures 4, 6(6), 14 1,147,495 (667,701) Bargain purchase gain 4, 6(26) 171,585 - Exchange loss, net 4, 12 (238,624) (356,993) Subtotal 1,045,787 (3,612,833) Income from continuing operations before income tax 5,735,637 2,184,399 Income tax benefit 4, 5, 6(23), 14 393,130 458,653 Net income 6,128,767 2,643,052 Other comprehensive income (loss) 6(22) Items that will not be reclassified subsequently to profit or loss Remeasurements of defined benefit pension plans 4, 5, 6(13) 106,403 (55,060) Unrealized gains or losses from equity instruments investments measured at 5,486,209 1,454,018 fair value through other comprehensive income Gains or losses on hedging instruments which will not be reclassified 4 - (2,572) subsequently to profit or loss Share of other comprehensive income (loss) of associates and joint ventures 1,231,722 (475,139) which will not be reclassified subsequently to profit or loss Income tax related to items that will not be reclassified subsequently 4, 5, 6(23) (158,260) 112,384 Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations (3,277,938) (47,009) Share of other comprehensive income (loss) of associates and joint ventures 15,348 (23,942) which may be reclassified subsequently to profit or loss Income tax related to items that may be reclassified subsequently 4, 5, 6(23) 5,301 (12,736) Total other comprehensive income (loss), net of tax 3,408,785 949,944 Total comprehensive income (loss) $ 9,537,552 $ 3,592,996
Net income (loss) attributable to: Stockholders of the parent $ 9,707,614 $ 7,072,990 Non-controlling interests (3,578,847) (4,429,938) $ 6,128,767 $ 2,643,052
Comprehensive income (loss) attributable to: Stockholders of the parent $ 13,131,612 $ 8,126,828 Non-controlling interests (3,594,060) (4,533,832) $ 9,537,552 $ 3,592,996
Earnings per share (NTD) 4, 6(24) Earnings per share-basic $ 0.82 $ 0.58 Earnings per share-diluted $ 0.76 $ 0.55
The accompanying notes are an integral part of the consolidated financial statements.
198 Financial Review - 9,485 3,639 207,214,422 213,796,964 $ $ - - - 14,655 - (2,859,498) - 463,415 - 377,004 - 11,442 (6,916,105) - - 11,131 - (6,261,018) - 2,899,669 - - (8,557,023) - (0) (24,362) (7,074) (7,074) 410,065 958,405 Non- Interests Total Equity Controlling $ $ $ $ - - 9,485 206,804,357 212,838,559 $ $ - - (21,101)- (3,440,471) 24,740 3,512,617 72,146 - 463,415 - 377,004 - 11,442 - 9,707,614 (3,578,847) 6,128,767 - 3,423,998 (15,213) 3,408,785 - (475,272) (278,613) (753,885) - 8,126,828(4,533,832)- 3,592,996 - 1,053,838 (103,894) 949,944 - $ $ (24,362) $ $ - - - - 8,387,127 - 14,655 - - (2,859,498) (2,859,498) ------13,131,612(3,594,060)- 9,537,552 - - - - 11,131 - (6,261,018) (6,261,018) - - - (2,058) (2,058) on Hedging Instruments Treasury Stock Total $ $ (119,801)
$ $ (4,719,037) Gains or Losses ------,030 (2,073,977) (9,867,013) Income Unrealized on Financial at Fair Value through Other Comprehensive $ $
$ $ Gains or Losses Assets Measured - - - - 2,058 - (387,654) - 551,903 ------(6,916,105) ------(2,524,593)4,327,882- 1,803,289 - - (10,573) ------(8,557,023) 7,072,990(4,429,938)- - - 2,643,052 Other Components of Equity (8,948,337) (5,712,533) Foreign Exchange Operations Translation of Differences on $ $ $ $ - - - - - (13,935) - - - 34,733,761 Earnings Unappropriated $ $ $ $ - - (22,280) - - - - - 50,723,263 (5,706,261) (8,819,556) (2,058) (5,647,430) 206,045,361 466,768 206,512,129 - - (707,299) - - - 50,723,263 (5,692,326) (8,819,556)- (2,058) 9,707,614 (5,647,430) 206,069,723 466,768 206,536,491 - 84,744 (3,242,076) 6,581,330 - (475,311) - (22,341)- 20,207 1,058 - (962,873) - - 14,513,940 Equity Attributable to the Parent Company $ $ $ $ 56,133,198 Retained Earnings - - - - (3,457,987) - - 387,654 ------(2,475,950) ------3,129,182 - - - 10,573 ------2,203,4432,899,669 - 9,902,407 11,572,579 $ $ $ $ - - - - - 39 9,485 1,179 39,550,394 Additional Paid-in Capital Legal Reserve Special Reserve $ $ $ $ - - - (1,387,127) - - (10,427) - 40,388,936 10,865,280 - 377,004 - 40,399,363 10,865,280 - 11,442 - - (1,129,182) ------For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars) 332,611 The accompanying notes are an integral part of the consolidated financial statements. Advance Collected in CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY $ $
$ $ 40,858,350 - - - - 15,458 - (551,903) - 14,655 - - - - 332,611 130,804 - - - - 707,299 14,513,940(14,513,940)(6,916,105) ------9,792,358(3,242,076)- - 6,581,330 - - - (48,643) ------11,131 ------7,050,649696,226 - - 20,207- - 1,058,030 - - - 962,873 ------(8,557,023) 7,072,990 ------Capital UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES English Translation of Consolidated Financial Statements Originally Issued in Chinese (7,000,000) (2,000,000) 117,243,187 124,243,187 124,243,187 126,243,187 $
$ Notes Common Stock 6(26) 6(16) 6(16) 4, 6(16) 6(16) 4, 6(16) 6(5), 4, 6(16) 6(16) 6(16) 6(11), 6(16) 3, 6(16) 6(16) 4, 6(17) 6(16) 6(16) 4, 6(16) 4, 4, 6(16) 6(16) 6(16) 4, 6(17) 6(16) Special reserve Cash dividends Legal reserve Legal reserve Cash dividends Net income (loss) for the year ended December 31, 2019 Others Treasury stock cancelled Net income (loss) for the year ended December 31, 2018
Balance as of December 31, 2019 Changes in subsidiaries' ownership Adjustments for dividends subsidiaries received from parent company Others Share of changes in net assets associates and joint ventures accounted for using equity method Disposal of equity instruments investments measured at fair value through other comprehensive income Treasury stock cancelled Treasury stock acquired Adjusted balance as of January 1, 2019 Conversion of convertible bonds Appropriation and distribution of 2018 retained earnings
Other comprehensive income (loss), net of tax for the year ended December 31, 2019 6(16), 6(22) Balance as of December 31, 2018 Total comprehensive income (loss) Impact of retroactive applications Share-based payment transaction
Adjustments for dividends subsidiaries received from parent company Disposal of subsidiary Changes in subsidiaries' ownership Share of changes in net assets associates and joint ventures accounted for using equity method Treasury stock acquired Total comprehensive income (loss) Share-based payment transaction Adjusted balance as of January 1, 2018 Appropriation and distribution of 2017 retained earnings Other comprehensive income (loss), net of tax for the year ended December 31, 2018 6(16), 6(22) 199 United Microelectronics Corporation | Annual Report 2019
English Translation of Consolidated Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)
For the years ended December 31, 2019 2018 Cash flows from operating activities: Net income before tax $ 5,735,637 $ 2,184,399 Adjustments to reconcile net income before tax to net cash provided by operating activities: Depreciation 47,172,881 49,948,589 Amortization 2,216,654 2,100,130 Expected credit losses 703,339 409,237 Net (gain) loss of financial assets and liabilities at fair value through profit or loss (1,279,931) 1,167,735 Interest expense 2,933,815 2,768,672 Interest income (994,061) (789,001) Dividend income (711,614) (602,375) Share-based payment 366,186 695,669 Share of (profit) loss of associates and joint ventures (1,147,495) 667,701 Gain on disposal of property, plant and equipment (43,036) (136,743) Loss on disposal of investments 16,293 19,286 Impairment loss on non-financial assets 118,134 46,225 Exchange loss on financial assets and liabilities 206,612 1,217,590 Bargain purchase gain (171,585) - Amortization of deferred government grants (4,062,148) (3,885,722) Income and expense adjustments 45,324,044 53,626,993 Changes in operating assets and liabilities: Financial assets and liabilities at fair value through profit or loss (594,847) 789,666 Contract assets (126,340) (357,515) Notes receivable and accounts receivable 439,400 (1,382,668) Other receivables 67,347 618,317 Inventories (1,370,249) (46,497) Prepayments 5,833,773 409,962 Other current assets (64,732) 333,557 Contract fulfillment costs 8,054 (448,933) Contract liabilities 69,329 (3,020,517) Notes and accounts payable (739,066) 257,044 Other payables 514,686 (426,302) Other current liabilities 819,746 191,559 Net defined benefit liabilities (35,398) (26,405) Other noncurrent liabilities-others (3,240) - Cash generated from operations 55,878,144 52,702,660 Interest received 973,241 666,774 Dividend received 818,691 782,157 Interest paid (2,147,320) (2,221,301) Income tax paid (618,608) (995,314) Net cash provided by operating activities 54,904,148 50,934,976
(continued)
200 Financial Review
English Translation of Consolidated Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)
For the years ended December 31, 2019 2018 Cash flows from investing activities: Acquisition of financial assets at fair value through profit or loss $ (354,249) $ (593,563) Proceeds from disposal of financial assets at fair value through profit or loss 229,553 1,061 Proceeds from disposal of equity instruments investments measured at fair value 44,466 - through other comprehensive income or loss Acquisition of investments accounted for under the equity method (730,000) (840,000) Proceeds from disposal of investments accounted for under the equity method 5,970 - Increase in prepayment for investments (17,974) - Proceeds from capital reduction and liquidation of investments 32,214 61,800 Acquisition of subsidiary (net of cash acquired) (12,800,981) - Disposal of subsidiary 32,017 (9,813) Derecognition of hedging financial assets and liabilities - (2,572) Acquisition of property, plant and equipment (16,518,483) (19,590,075) Proceeds from disposal of property, plant and equipment 45,042 200,991 Increase in refundable deposits (257,909) (1,674,984) Decrease in refundable deposits 441,013 691,807 Acquisition of intangible assets (2,443,593) (838,675) Government grants related to assets acquisition 617,685 7,129,770 Increase in other noncurrent assets-others (15,074) (36,440) Decrease in other noncurrent assets-others 8,786 1,090 Net cash used in investing activities (31,681,517) (15,499,603) Cash flows from financing activities: Increase in short-term loans 25,732,933 22,021,005 Decrease in short-term loans (26,726,656) (34,309,253) Cash payments for the principal portion of the lease liability (633,488) - Redemption of bonds (2,500,000) (7,500,000) Proceeds from long-term loans 11,449,930 758,500 Repayments of long-term loans (7,572,939) (2,638,697) Increase in guarantee deposits 269,415 213,432 Decrease in guarantee deposits (17,146) (125,301) Cash dividends (6,911,058) (8,557,684) Treasury stock acquired (2,972,243) (6,148,273) Treasury stock sold to employees - 2,204,000 Change in non-controlling interests 3,388 597,385 Others 10,818 - Net cash used in financing activities (9,867,046) (33,484,886) Effect of exchange rate changes on cash and cash equivalents (1,524,847) 36,680 Net increase in cash and cash equivalents 11,830,738 1,987,167 Cash and cash equivalents at beginning of year 83,661,739 81,674,572 Cash and cash equivalents at end of year $ 95,492,477 $ 83,661,739
The accompanying notes are an integral part of the consolidated financial statements.
201 United Microelectronics Corporation | Annual Report 2019 8,906 8,906 $6,006,457 $7,408,369 $7,408,369 $5,997,551 on; a decrease in other payables payables other in decrease a on; e lease term if the contract contains contains contract the if e term lease lio of similar leases with reasonably lio of plied the standardthe plied retrospectively only to S 17 and IFRIC 4. 4. IFRIC 17and S elected The Company n capital-other amountingn million; NT$10 to Company recognized the cumulative effect of effect cumulative the recognized Company ary 1, 2019 is explained as below: is explained ary 1, 2019
s permitted to apply IFRS 16 to contracts that were that contracts to 16 IFRS to apply permitted s t lease exemptions, as lease liabilities at the present te of 2.64% on January 1, 2019. 1, te of 2.64% on January 2019. basis, On a lease-by-lease others amounting to NT$2,621 to NT$2,621 milli amounting others - Apply a single discount portfo discount rate to a a single Apply characteristics. characteristics. the which for leases to leases as short-term way same the in account to Elect of ends within 121, 2019. January lease term months th determining as in such hindsight, Use options to extend or terminate the lease. 2018 2018 January 1, 2019 to certain be exercised extensionreasonably option An Add: (i) 31, as 17 of December IAS under lease commitments Operating Lease liabilities as Januaryof 1, 2019 (ii) (iii) rate on borrowing at the incremental value discounted Present
and a decrease in other components of equity amounting to NT$14 million. million. NT$14 to amounting equity of components other in decrease a and amounting to NT$40 million; an increase in lease liabilities liabilities amounting to lease increase in NT$40 an to million; amounting NT$6,006 paid-i additional in decrease a million; previously leases to basis a lease-by-lease on expedients practical following leases: as operating classified 17 as of December 31, 2018 discounted at the lessee’s incremental borrowing rate rate borrowing incremental at the lessee’s discounted 31, 2018 December 17 as of on Janu recognized liabilities and lease the right-of-use asset was measured and recognized at an amount equal to the to the lease equal amount at an and recognized was measured asset the right-of-use payments). lease of prepaid any amount the by (adjusted liability Company The was primarily application date initial the of at effect cumulative assessed the in increase an million; NT$15 to amounting prepayments in decrease a of consisted noncurrent other in a decrease million; NT$8,578 to amounting assets right-of-use assets were recognized as expenses on a straight-line basis over the lease terms. terms. lease the over basis straight-line a on expenses as recognized were Upon for except leases, those recognized and measured 16, the Company IFRS of adoption short-term or low-value asse using its weighted average discounted lease payments, value the remaining of incremental borrowing ra not to restate comparative information and ap information comparative restate to not with accordance in application of initial date at the completed were not that contracts transition provisionthe inIFRS 16. The IFRS initially applying 16 on January 1, 2019. As the Company only has operating as follows: 16 are summarized of adoption IFRS the arising leases, impact from the i. lease payments 17, IAS leases applying as operating classified leases that were For The Company elected not to reassess whether a contract was, or contained, a lease at a lease the was, or contained, a contract not to reassess whether elected The Company provision transition the with accordance in 2019) 1, (January application initial of date 16. IFRS in wa Company The IA as identified leases previously applying ii. In accordance with the transition provision in IFRS 16, the Company used the the used Company the 16, IFRS in provision transition the with accordance In ii. under IAS lease commitments operating of value the present between The difference iii.
k Exchange (NYSE) in ting Standards, International pal operating activities of UMC and UMC of activities operating pal 17”), IFRIC 4 “Determining whether an an whether 4 17”), IFRIC “Determining on the New York Stoc on the New York Dollars unless Specified) Otherwise Stock Exchange (TWSE) in July and its July 1985 in (TWSE) Exchange Stock
e of Transactions in the Legal Form of a Lease” for a Lease” for of the Legal Form in Transactions of e s financial position and performance. bed below, all other standards and interpretations have no no have interpretations and standards other all below, bed , Hsinchu City, Taiwan. The princi For the Years Ended December 31, 2019 and 2018 Years For the NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STATEMENTS FINANCIAL CONSOLIDATED TO NOTES IFRS 16 “Leases” (“IFRS 16”) 16”) “Leases” 16 (“IFRS IFRS IFRS 16 replaces IAS 17 “Leases” (“IAS (“IAS 17 “Leases” IAS replaces 16 IFRS Arrangement contains a Lease” (“IFRIC 4”), SIC 15 “Operating Leases-Incentives” and and Leases-Incentives” SIC 15 “Operating 4”), a Lease” (“IFRIC contains Arrangement Substanc the “Evaluating 27 SIC annual periods beginning on or after January 1, 2019. 1, 2019. January on or after periods beginning annual (Expressed Thousands in of Taiwan New material impact on the Company’ a. Accounting Standards, and Interpretations issued, revised or amended which are endorsed endorsed are which amended or revised issued, Interpretations and Standards, Accounting periods annual for effective become and (“FSC”) Commission Supervisory by Financial and the standards of impact the from Apart 2019. 1, January after on or beginning is interpretations which descri UNITED MICROELECTRONICS CORPORATION AND SUBSIDIARIES SUBSIDIARIES AND CORPORATION MICROELECTRONICS UNITED its subsidiaries (“the Company”) are described in Notes 4(3) and 14. Notes 4(3) and 14. described in Company”) are (“the its subsidiaries September 2000. 2000. September Road II, Li-Hsin 3, business is No. of place principal and office its registered of The address Hsinchu Science Park (R.O.C.) China of in Republic incorporated was (UMC) Corporation Microelectronics United 1982. in April operations commenced and 1980 in May semiconductor service a UMC is full needs. customer services to satisfy a variety of provides and foundry, wafer ordinary UMC’s the Taiwan were publicly listed on shares Depositary SharesAmerican were listed (ADSs) ISSUE issue in accordance for were authorized the Company of statements financial The consolidated 26, 2020. February on meeting of Directors’ Board of the with a resolution (1) The Company applied International Financial Repor (1) 2. FOR STATEMENTS OF FINANCIAL AND PROCEDURES OF AUTHORIZATION DATE
3. INTERPRETATIONS AND REVISED ISSUED OR STANDARDS NEWLY 1. AND ORGANIZATION HISTORY 202 Financial Review beginning on or after on or after beginning Effective periods annual for Effective To be determined by IASB by IASB be determined To 1 January, 2021 2021 1 January, 1 January, 2022 2022 1 January, , an entity shall apply the separately the separately apply entity shall an , prospective assessments, an prospective entity shall 9”), IAS 39 “Financial Instruments: rest rate benchmark reform gives rise to rise gives reform benchmark rate rest interest rate benchmark reform. reform. benchmark interest rate hedging A inception of such hedging relationships. such hedging inception of
the actual results of the hedge are within a range of of range a are within actual the hedge of resultsthe sed when the evaluation is completed. completed. is evaluation the sed when rate benchmark on which the hedged item, hedged risk risk item, which the hedged hedged on rate benchmark evaluating the potential impact of the aforementioned standards standards aforementioned the of impact potential the evaluating Rate Benchmark Reform res requirements of the amendments. amendments. the of requirements res Investor and its Associate or Joint Ventures Joint or Associate its and Investor Non-current Non-current Sale or Contribution of Assets Assets between an Sale or Contribution of hedged cash flows are based is not altered as a result of the interest rate benchmark benchmark the interest rate of result altered as a is not are based flows cash hedged reform. prospective assessments: performing When assume that the interest assume rate interest the of result a as is not altered are based instrument hedging and/or reform. benchmark 39 IAS the undertake to not required is entity An assessment: retrospective 39 IAS retrospective assessment (i.e. 80~125%) for hedging relationships directly affected by the interest rate benchmark benchmark rate by the interest affected directly relationships hedging for 80~125%) reform. specified non-contractually a of hedges For components: risk identifiable separately risk interest rate of component benchmark identifiable requirement only at the highly probable requirement: When determining whether a forecast transaction is is transaction forecast a whether When determining requirement: probable highly probable,highly an entity assumeshall rate benchmark on that the interest which the No. or Standards Interpretations of The projects The amendments also include the end of application of the exceptions requirements and and requirements exceptions the of application of end the include also amendments The the related disclosu ii. iii. iv.
uncertainties about the timing and or amount of benchmark-based cash flows of the of flows cash benchmark-based of amount or and timing the about uncertainties instrument. hedging or the item hedged to exceptions the shall apply entity the Hence, by the interest rate benchmark reform. affected hedging relationshipsall directly relationship is directly affected if the inte the if affected directly is relationship Recognition and Measurement” (“IAS 39”) and IFRS 7 “Financial Instruments: Instruments: “Financial 7 IFRS and 39”) (“IAS Measurement” and Recognition - Disclosures” Interest all hedging to apply which exceptions, of a number include The amendments by affected directly are that relationships include: The amendments i. IAS 28 IFRS 10 and IFRS 17 IFRS IAS 1 Contracts Insurance Classification of Liabilities as Current or d. IFRS 9 “Financial Instruments” (“IFRS Instruments” 9 IFRS “Financial d. and the related impact will be disclo arebelow: determined by FSC) listed mpany’s financial position and performance, and performance, position financial mpany’s Co (b) the listed to (d) ~ interpretations and The Company is currently (3) (3) be are to dates effective (the by FSC endorsed yet but not by IASB issued Standards
It states that beginning on or after on or after beginning Effective periods annual for Effective January 1, 2020 1, 2020 January January 1, 2020 1, January 2020 January 1, 2020 1, 2020 January e amendments that clarify materiality ant’s perspective to determine whether an an whether determine to perspective ant’s etherdetermine wh tities to a transaction business in IFRS 3 Business Combinations. Combinations. 3 Business IFRS business in a business. The amendments clarify the clarify a business. The amendments unting Standards Board (“IASB”) which are which are Board (“IASB”) Standards unting
Definition of a Business Business a of Definition Definition of Material of Material Definition Interest Rate Benchmark Reform Reform Rate Benchmark Interest
No. or Standards Interpretations of projects The
IFRSadopt a market 3 continues to particip will depend on the nature or magnitude of information. information. of or magnitude nature the on depend will assess to need will entity An or in combination individually the information, either whether with other information, is statements. financial the of context the in material The amendments clarify the definition of a a of definition the clarify amendments The to en assist intended are amendments The or acquisition. as an asset combination as a business accounted for be should of Material Definition - Errors” and Estimates Accounting in Changes Policies, (Amendment) of material. definition new clarify to is amendment main The acquired set of activities and assets is assets and activities of set acquired assess an whether entities to help guidance add a business; for requirements minimum outputs; of of and and a business narrow the definitions substantive; process is acquired etc. be reasonably it could omitting, misstating if or obscuring is material “information financial general purpose users of primary the that decisions influence to expected financial provide statements, which financial on thethose basis of make statements entity.” reporting specific a about information Th to IFRS 3 to IAS 1 and 8 to IFRS 9, IAS 39 and 7 IFRS Amendments Amendments Amendments Amendments Amendments Amendments
c. IAS 1 “Presentation of Financial Statements” (“IAS 1”) and IAS 8 “Accounting “Accounting and IAS 8 1”) (“IAS Statements” of Financial 1“Presentation IAS c. endorsed by FSC, but not yet adopted by the Company are listed below: are listed below: by the Company adopted but not yet FSC, by endorsed b. 3”) a Business (Amendment) of - Definition (“IFRS 3 “BusinessCombina tions” IFRS
(2) Standards Internationalby issued (2) Acco
203 United Microelectronics Corporation | Annual Report 2019 2018
December 31, December
and has the ability to As of As tions, unrealized gains gains unrealized tions, 100.00 100.00 2019 Percentage ownership (%) of is profitin recognized or loss isand iary, the Company derecognizes the assets the assets derecognizes Company the iary, and to the non-controlling interests even if if even interests the and to non-controlling oup balances, transac balances, oup ts (including goodwill), and liabilities of the of the goodwill), and liabilities ts (including tal comprehensive subsidiaries is income of lvement with the entity with entity the lvement Business nature
Marketing supportMarketing activities 100.00 100.00 IC Sales IC interests having a deficit balance. a deficit interests having
Subsidiary (EUROPE) B.V. B.V. (EUROPE) UNITED MICROELECTRONICS MICROELECTRONICS UNITED UMC GROUP (USA) UMC GROUP date (the on which the acquisition date of consolidatedthe from are Subsidiaries fully such that date the until be consolidated to and continue control), obtains Company ceases. control to, or is exposed when Company the an entity controls The Company has rights to, variable returns from its invo affect those returns through its power over the entity. the entity. power over through its those returns affect the statements of The financial using company, as the parent rting period the same are prepared repo for subsidiaries consistent accounting policies. intra-gr All in are and losses dividends full. eliminated transactions resulting from intra-group is control, of a change without a subsidiary, interest of ownership in the change A transaction. equity as an for accounted To the parent of stockholders the to attributed resultsthis in the non-controlling subsid a over control loses Company the If previously interests non-controlling any as as well subsidiary, the of liabilities and loss or gain A Company. the by recorded consideration of value the fair of aggregate (a) the between: difference the as calculated and is lost; control when date the interest at retained any of value the fair and received the asse of amount previous (b) the carrying interests. non-controlling any and subsidiary recognized previously loss or gain Any or transferred loss or to profit be reclassified would income other comprehensive the in any of by value other fair The TIFRSs. required if to earnings retained directly is regarded is lost the date when control subsidiary at retained in the former investment initial reco gnition of anasthe cost on investment. and 2018 December 31, 2019 of As
a. of consolidation Principles b. entities are as follows: The consolidated Investor (3) (3) Description of General Reporting Entity UMC UMC
ts in future periods are ts in periods are future l ReportsSecuritiesby Issuers of a subsidiary that is contributed to an an to contributed is that subsidiary a of ribution of Assets between an Investor and and an Investor between of Assets ribution d in IFRS 3 between an investor and its
Company’s statemen financial Company’s lities aslities Current orNon-current e other equity holders in the associate or joint venture. joint or associate in the holders e other equity en the evaluation is completed. completed. is evaluation the en g the Preparation ofg the Financia Preparation associate or a joint venture. IAS 28 restricts gains and losses arising from arising losses gains and restricts 28 IAS venture. joint a or associate of to the extent or venture associate a joint an to assets non-monetary of contributions interestthe attributable to th a subsidiary. control of of the loss on or profit loss recognition full 10 requires IFRS of contribution or sale the from resulting loss or gain the that so amended 28 was IAS define constitute a business as assetsthat in full. is recognized venture or joint associate so that the 10 amended was also IFRS not aresultingthat does gain orloss of subsidiary from the sale or c ontribution or joint its associate and investor an 3 between in IFRS defined as business a constitute in the interests investors’ the unrelated toof only the extent is recognized venture or joint venture. associate The amendments address the inconsistency between the requirements in IFRS 10 10 and in IFRS the requirements between inconsistency address the The amendments control of loss the with 28, in dealing IAS financial of 1 presentation IAS of 69-76 paragraphs to amendments are the These of liabilitiesrela ted to the classification paragraphs as and the amended statements current or non-current. Associates and Joint Ventures” - Sale or Cont Ventures” Associates and Joint 28”) (“IAS (Amendment) Ventures or Associate Joint its summarized as below: as below: summarized e. in “Investments 28 IAS and 10”) (“IFRS Statements” Financial “Consolidated 10 IFRS The potential effects of adopting the standards or interpretations issued by by IASB but not issued the or interpretations adopting of standards effects The potential yet endorsed by FSC on the (Regulations), IFRSs, IASs, IFRIC and SIC, which are endorsed by FSC (TIFRSs). with accordance in prepared were statements financial consolidated Company’s The RegulationsGovernin f. f. of Liabi - Classification 1 IAS The consolidated financial statements have been prepared on a historical cost basis, except except cost basis, a historical on prepared have been statements financial consolidated The value. at fair instruments measured for financial
(1) (1) of Compliance Statement (2) (2) Preparation Basis of
The Company is currently evaluating the potential impact of the aforementioned standards and and standards aforementioned of the impact potential the evaluating currently is The Company the and performance, and position financial the Company’s to ~ (f) (e) listed interpretations impact related will be disclosed wh
4. OF SUMMARY ACCOUNTING SIGNIFICANT POLICIES
204 Financial Review 2018
December 31, December
- 100.00 As of As 65.22 65.22 98.14 98.14 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 2019 Percentage (%) ownership of the acquisition method. method. acquisition the consideration The and entitle their holders to a proportionate proportionate a to their holders entitle and assessesassets acquired and the liabilities Business nature and liabilities assumed are measured at the at the are measured liabilities assumed and
services integrated circuits technology developmenttechnology and servicesconsulting integrated circuits Investment holdingInvestment holdingInvestment Integrated circuits design Sales and marketing serviceSales and marketing 100.00 holdingInvestment 100.00 Sales and manufacturing of Semiconductor manufacturingSemiconductor Sales and manufacturing of Insurance Subsidiary INVESTMENT (SAMOA) (WAVETEK-SAMOA) LIMITED (OAKWOOD) LIMITED CO., LTD. (SHANDONG) CORPORATION (USA) (USA) CORPORATION (INFOSHINE) LIMITED LTD. CO., (XIAMEN) LTD. LTD. (SUZHOU) CO., LTD. (HEJIAN) LTD. CO., (SUZHOU) INFOSHINE TECHNOLOGY TECHNOLOGY INFOSHINE WAVETEK MICROELECTRONICS WAVETEK UNITED SEMICONDUCTOR SEMICONDUCTOR UNITED UNITEDDS SEMICONDUCTOR SEMICONDUCTOR UNITEDDS UMC TECHNOLOGY JAPAN CO., CO., JAPAN TECHNOLOGY UMC OAKWOOD ASSOCIATES ASSOCIATES OAKWOOD HEJIAN TECHNOLOGY TECHNOLOGY HEJIAN ECP VITA PTE. LTD. PTE. LTD. VITA ECP
acquisition date fair value. For the components of non-controlling interests in the the in non-controlling of interests the components value. For acquisition date fair that are ownership interests acquiree present Business combinations are accounted for using using for combinations are accounted Business transferred, the identifiable assets acquired either at measures acquirer the liquidation, of event the net assets in entity’s the of share acquiree’s the of share proportionate interest’s non-controlling or at value fair the are and incurred as expensed are costs net assets. Acquisition-related identifiable expenses. administrative under classified When the Company acquires a business, it the contractual with accordance in designation and classification appropriate for assumed and economic circumstances pertinent terms, conditions as at the acquisition date. Investor (4) (4) Business Combinations and Goodwill CORPORATION and CORPORATION HEJIAN NEXPOWER NEXPOWER 1 S.R.L. ITALIA SOCIALNEX Photovoltaic power plant WAVETEK WAVETEK WAVETEK- SAMOA SAMOA WAVETEK- MICROELECTRONICS WAVETEK OMNI OMNI UNITED MICROCHIP BE BE INFOSHINE INFOSHINE OAKWOOD HEJIAN
2018
December 31, December
As of As 93.36 80.49 78.47 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 100.00 100.00 2019 Percentage ownership (%) of
venture capital integrated circuits solar power batteriessolar integrated circuits advisory design services Investment holdingInvestment holdingInvestment Venture capital Investment holdingInvestment Consulting and planning for IC Sales Marketing supportMarketing activities 100.00 100.00 Investment holdingInvestment Investment holdingInvestment Investment holdingInvestment Sales and manufacturing of Sales and manufacturing of Sales and manufacturing of Investment holdingInvestment Investment holdingInvestment Investment holdingInvestment and holdingInvestment Energy technicalEnergy services holdingInvestment 100.00 100.00 Solar engineering integrated Research and development Research and development 100.00 100.00 100.00 100.00
Business nature
Subsidiary LIMITED LIMITED CORP. (FORTUNE) (FORTUNE) CORP. LIMITED (BE) (BE) LIMITED JAPAN CO., LTD. LTD. CO., JAPAN CORP. (NEXPOWER) (NEXPOWER) CORP. CORPORATION (WAVETEK) (WAVETEK) CORPORATION (SHANGHAI) CO., LTD. LTD. CO., (SHANGHAI) CORPORATION CORPORATION CO., LTD. (TERA ENERGY) ENERGY) (TERA LTD. CO., INVESTMENT (HK) LIMITED (EVERRICH-HK) ENERGY CO., LTD. ENERGY CO., LTD. CORPORATION (NEW YORK) YORK) (NEW CORPORATION (CALIFORNIA) CORPORATION UMC CAPITAL CORP. CORP. UMC CAPITAL (GE) LIMITED EARTH GREEN TLC CAPITAL CO., LTD. (TLC) (TLC) LTD. CO., CAPITAL TLC UMC INVESTMENT (SAMOA) (SAMOA) INVESTMENT UMC UMC GROUP JAPAN JAPAN GROUP UMC FORTUNE VENTURE CAPITAL CAPITAL VENTURE FORTUNE UMC KOREA CO., LTD. LTD. CO., KOREA UMC OMNI GLOBAL LIMITED (OMNI) (OMNI) LIMITED GLOBAL OMNI SINO PARAGON LIMITED LIMITED SINO PARAGON BEST ELITE INTERNATIONAL INTERNATIONAL ELITE BEST UNITED SEMICONDUCTOR SEMICONDUCTOR UNITED NEXPOWER TECHNOLOGY TECHNOLOGY NEXPOWER WAVETEK MICROELECTRONICS MICROELECTRONICS WAVETEK UMC CAPITAL (USA) (USA) UMC CAPITAL SOARING CAPITAL CORP. CORP. CAPITAL SOARING UNITRUTH ADVISOR ADVISOR UNITRUTH UNITED MICROCHIP MICROCHIP UNITED TERA ENERGY DEVELOPMENT DEVELOPMENT ENERGY TERA EVERRICH ENERGY ENERGY EVERRICH EVERRICH (SHANDONG) (SHANDONG) EVERRICH UNITED MICROTECHNOLOGY MICROTECHNOLOGY UNITED MICROTECHNOLOGY UNITED
Investor TLC TLC CORP. CORP. UMC UMC UMC UMC UMC UMC UMC UMC UMC UMC UMC UMC, FORTUNE and UMC, FORTUNE UMC and FORTUNE and FORTUNE UMC UMC CAPITAL CORP. CORP. CAPITAL UMC TLC TLC SOARING CAPITAL CAPITAL SOARING GE FORTUNE FORTUNE TERA ENERGY ENERGY TERA EVERRICH-HK EVERRICH-HK OMNI OMNI
205 United Microelectronics Corporation | Annual Report 2019 the closing rate of of rate closing the historical cost in foreign foreign in cost historical rt of a reporting entity’s net net entity’s reporting a of rt the Company’s entities at their the Company’s rded as an adjustment to interest costs are are interest costs to an adjustment as rded gnized initially in other comprehensive are translated into functional currency at currency functional into translated are ement of monetary items or on translating items on or ementtranslating monetary of the period in which they arise except for the
at are eligible forcapitalization. ry items that are measured at measured are that items ry a monetary item monetary a pa is that income and reclassified from equity to profit or loss upon disposal of such investment. investment. such of disposal loss upon or profit equity to from and reclassified income investment in a foreign operation are are reco operation in a investment foreign Foreign currency derivatives within the scope of IFRS 9 are accounted for based the based on for 9 are accounted IFRS of within the scope derivatives currency Foreign instruments. financial for policy accounting on arising differences Exchange included in the borrowing costs th Exchange differences arising from foreign currency borrowings for an acquisition of a an acquisition for borrowings currency foreign arising from differences Exchange theyrega assetqualifying to the extent that are b. c. The assets and liabilities operations foreign ar e translated into NTD at of at translated are expenses and income their and date reporting the at prevailing exchange the on arising differences exchange The theperiod. for rate exchange average an a foreign of disposal income. On in other comprehensive are recognized translation to that foreign relating differences exchange the of amount the cumulative operation, the separate in and accumulated income comprehensive in other recognized operation, gain or loss on the when or loss equity to profit from is reclassified equity, of component is recognized. disposal a. monetary items are taken to profit or loss in loss or itemstaken profit are to monetary following: respective functional currency rates prevailing at the transaction date. at the date. rates prevailing transaction currency respective functional assets Monetary currencies foreign in denominated liabilities and date. reporting the at exchange of rates closing the at fair measured items Non-monetary the fair when date rates at the using the exchange are translated currencies in foreign value is determined. value Non-moneta transactions. the initial as at the dates rates of exchange the using translated are currencies item income, a gain or on acomprehensive When is recognized in loss other non-monetary income. comprehensive other in recognized is loss or gain that of component exchange any exchange any or loss, profit in item is recognized non-monetary a on or loss a gain When loss. or profit in is recognized loss gain or that of component
the settl arising on differences All exchange currenciesinitially recorded by foreign in are Transactions (6) (6) Statements Financial Currency Foreign of Translation Each entity in the Each measured at fair value as at at as value at fair measured ized for non-controlling interest over the operation within that unit is disposed, disposed, unit is that within operation the functional currency. functional currency. ency and items included in the financial financial included in the items and ency fair value of the acquirer’s previously held acquirer’s the of value fair ose units. units. ose or to unit groups units of Each rcumstancerelativethe on based is measured enerating cash-g unit each to (“CGU”) llocated e consideration transferred and non-controlling non-controlling and transferred e consideration her comprehensive income. income. her comprehensive contingent the If
e and the amount recogn amount e and the
of the value fair date acquisition the stages, in achieved is combination business the If interest equity held in the previously acquiree is re acquirer’s
the acquisition date through profit or loss. profit date through acquisition the consideration contingent to be Any transferred by the acquirer will be recognized at fair date. the acquisition at value contingent value the of to the fair changes Subsequent will be in accordance recognized to be which is an deemed asset or liability, consideration IFRS with 9, or either in profit loss or ot settled it should not be remeasured until it finally is equity, as is classified consideration equity. within the of aggregate the of excess the being cost, at measured initially is Goodwill date the acquisition transferred, consideration equity interest in the acquire the net identifiable liabilities assets acquired and assumed. ofIf the net the value fair aggregat the of excess in is acquired assets purchase. bargain on a gain as is recognized the difference interests, After initial impairment at cost less any recognition, goodwill accumulated is measured in a business acquired goodwill testing, impairment of the purpose For losses. the acquisition date, a combination is, from or assets other whether of irrespective combination, the from benefit to is expected that to th assigned are acquiree the of liabilities at which Company within the level lowest represents the is so allocated goodwill the which an than larger be cannot and purposes management internal for is monitored goodwill the aggregation. before segment operating of part and a CGU part of forms goodwill Where of amount in carrying the is included disposed operation the with associated goodwill the operation.the disposed Goodwill this ci in of the CGU retained. the portion and disposed the of operation values Company determines its own functional currCompany determines its own functional currency. that using functional are measured each entity of statements (NTD), which is also the parent company’s (NTD), whichparent is also the company’s Dollars Taiwan New in presented are statements financial consolidated Company’s The (5) (5) Transactions Foreign Currency
206 Financial Review jective is achieved value and subsequently subsequently value and itially at fair value plus, in the case of loss but are transferred directly to the directly loss but are transferred ortized cost or at fair value through other other through value at ortized cost or fair asset give rise on specified dates to cash rise dates to on specified asset give ading. ading. such of is there a disposal When or loss, financial assets at fair value through at fair assets or loss, financial business modelwhose ob liabilities aretradedate recognized using
cognized initially fair at cognized rough other comprehensive income income comprehensive other rough e statement of comprehensive income. income. of comprehensive e statement nancial liabilities are recognized when the Company becomes a party a party becomes Company the when recognized are liabilities nancial ines the classification of classification assets its the at ines recognition. initial financial In flows that are solely paymen ts of principal and interest on amount the principal outstanding. by both collecting contractual cash flows and selling financial assets and assets and financial and selling cash flows collecting contractual by both
(ii) financial of the contractual terms the Financial assets at valueor through profit fair loss value assets at th fair Financial At initial recognition, the Company an irrevocablemay make to present election in in an investment of value the fair in changes subsequent income comprehensive other instrument held equity thatnot an for tr is income in other comprehensive presented accumulated amounts instrument, equity or to profit transferred subsequently not are earnings. retained income comprehensive other through value at fair measured are instruments debt The conditions are thefollowing of met: both if (i) within a asset is held the financial Financial assets that are not measured at am at assets not that are measured Financial comprehensive income are re measured at fair value with changes in fair value recognized in profit or loss. in profit value recognized in at with changes fair value fair measured measurement subsequent and Classification i. ii.
Financial assets and fi Financial assets to the contractual provisions of the instrument. the instrument. of provisions contractual to the The Company determ
a. accordance with IFRS 9 and the Regulations, financial assets of the Company are classified classified are Company the of assets financial Regulations, the and 9 IFRS with accordance profit value through at fair assets as financial cost. amortized at assets measured financial and income, comprehensive other assets and financial sale of or Purchase accounting. in recognized are assets All financial attributable loss,costs. directly or investments not at fair value through profit Financial value, and recognized at fair initially are or value through profit loss assets at fair in th transaction costs are expensed Assets Financial (9) (9) Instruments Financial nts of assets and and assets of nts at does not result in a cluding time deposits with with deposits time cluding ter the period; or reporting ght to defer settlement of the liability for for liability the of settlement defer to ght . of a liability that could, the at Terms investments that are readily convertible to convertible are readily that investments s to the carrying amou foreign operation are treated as assets and assets and as treated are operation foreign the cumulative amount of the exchange exchange of the amount the cumulative and repurchase agreements repurchase and by collateralized
t twelve months after the reporting period. the reporting twelve monthst after expressed in its functional currency. currency. its functional in expressed liability in normaloperating cycle; lt in its settlement equity instrumentslt by the issueof do changes in interest rates, in changes in interest rates, foreign operation. foreign or a of an associate disposal On partial reign operation that does not result in a loss of significant significant of a loss in result not does that operation reign settled within twelve months af months twelve within settled operating cycle; cycle; operating or period; leas at liability or a settle for used to at least twelve months after the reporting date after the reporting twelve months least at resu option of the counterparty, itsclassification. not affect otherAll liabilities are classified as non-current. government bonds and corporate bonds. bonds. and corporate bonds government liabilities liabilities arising from the acquisition of a operation and the foreign of liabilities partialOn disposal a subsidiary that includes of operation a foreign th of share proportionate the loss of control, the to re-attributed is income comprehensive other in recognized differences non-controlling interests in that joint ventureincludesa fo that the of the cumulative amount control, share of joint only the proportionate or influence or profit to reclassified is income comprehensive other in recognized differences exchange loss. value adjustment fair any and goodwill Any An asset An is classified as current when: a. normal init, its sell consume to or or the intends asset, realize to expects Company the b. trading; of purpose the for primarily asset the holds Company the theafter to realize months asset within twelve expects the c. reporting Company the d. exchanged being from is restricted the asset unless equivalent cash or a asset is the liquid highly short-term, are equivalents Cash of risks significant present do not that dates with maturity and cash of amounts known from resulting value in changes originalof maturities months three orless as non-current. assets are classified other All ascurrent when: is classified liability A a. the expects to settle Company the b. trading; of the purpose for primarily liability the holds Company the d. ri not have an unconditional does the Company c. the liability is due to be (8) Cash Equivalents (7) Current and Non-Current Distinction
207 United Microelectronics Corporation | Annual Report 2019 antly since initial initial since antly carrying amount of carrying cognized and the part part the and cognized as a financial liability or an equity liability equity an or financial a as ofit or ofit loss financialliabilities include allocates the previous cantly cantly initial since signifi increased not s inues to be recognized and the part that part that and is the recognized to be inues signated upon initial recognition as at fair at continuesat to be re
information including forward-looking information. information. information forward-looking including investments measured at fair value through other other through value at fair measured investments lity and an equity instrument. instrument. and equity lity an
Financial liabilitiesFinancial pr through value fair at trading and financial liabilitiesheld de for orloss. value through profit losses or gainsrisk, credit in own Excluding changes or in profit recognized paid interest are including measurement on the subsequent loss. For notes, accounts receivable and contract assets, the Company applies a simplified simplified a applies Company the assets, contract and receivable accounts notes, For i. or loss liabilities profit Financial at through fair value The Company classifies the instrument issued instrument the classifies Company The the and arrangement contractual the of the substance with in accordance instrument liabi a financial of definitions If the transferred asset is part of a larger financial asset and the part transferred qualifies qualifies part transferred asset and the financial a larger of asset is transferred part the If the Company derecognitionfor in its entirety, the larger asset between the financial part larger th the the of date those parts on the of values fair the relative on based derecognized, is that transfer. comprehensive other in been recognized loss that had or gain cumulative Any cont that part the between is allocated income derecognized, based on the relative fair values of those parts. of those values fair the relative based on derecognized, between difference The consideration the of sum the and derecognized part to the allocated amount carrying the that had gain or loss allocated any cumulative and derecognized the part for received loss or profit in is recognized income, comprehensive in other recognized been in earnings. retained directly policy Impairment losses credit expected for allowance date, an reporting each at measures, Company The (ECLs) for debt instrument comprehensive income and financial assets measured at amortized cost by assessing assessing by cost amortized at assets measured financial and income comprehensive and supportable reasonable asset ha financial the crediton a risk Where ECLs. to 12-month equal amount at an is loss allowance measured the recognition, signific has asset increased on a financial credit risk the Where ECLs. equallifetime to the amount an at is measured allowance loss the recognition, in calculating ECLs. approach in does changes not track the Therefore, Company ECLs at each lifetime on based a loss allowance recognizes but instead risk, credit date. reporting historical credit loss ECLs base d on the are measured Company’s forward-looking for adjusted condition, financial current and customers’ experience environment. economic as customers’ such factors, a. a. measurement subsequent and Classification Financial Liabilities c.
all all the risks and rculation period. rculation Gains and losses are sset give rise on specified dates to cash dates to cash rise on specified sset give ch financial assets at fair valueat fair through assets ch financial interest method amortization process, and interest method s and rewards of the s risk and rewards of the all ubstantially in retained earnings(for equity instruments).
ment gains or losses,ment inte rest revenue and foreign ansferred control of the asset. of control ansferred ed at amortized cost cost amortized at ed
financial assets in order to collect contractual cash flows; and cash contractual flows; financial assets in order to collect ts of principal and interest on the principal amount amount and on principal ts of interest the principal paymen are that solely flows outstanding.
other comprehensive income are recognized in other comprehensive income. income. comprehensive in other are recognized income comprehensive other derecognition,Before impair exchange gains and losses are recognized in and losses or loss.profit gains are recognized exchange When the financial other in recognized or loss previously gain cumulative the are derecognized assets or profit to income comprehensive other from reclassified is income comprehensive adjustment. reclassification a as loss Financial assets measur equivalent, notes, accounts and other receivables and other financial assets) if both of of both assets) if financial other and other receivables and notes, accounts equivalent, met. conditions are following the interest income, measured by the effective effective the by measured income, interest ci during losses are recognized impairment assets derecognized. are financial or lossthe profit when in recognized Subsequent changes in the fair value of su value in the fair of changes Subsequent The financial assets are measured at amortized cost (including cash and cash cash and (including amortized cost at measured assets are The financial (i) to is hold objective a business model whose within is held asset the financial (ii) (ii) a financial of the terms contractual the at amortized cost, assets measured Subsequent to initialfor recognition financial asset have been transferred; or transferred; asset been have rewards tr has asset, but the of i. expired; asset have the from flows cash receive to rights contractual the ii. the Company has transferred assets and s iii. the Company has neither transferred substantially the Company has neither nor retained transferred iii. iii. Derecognition of financial assets financial of Derecognition asset is derecognized when:financial A On derecognition of a financial asset in its entirety, the difference between the carrying the carrying between difference the a of asset financial in its entirety, derecognition On gain cumulative any including be received to received or and the consideration amount profit in recognized is income comprehensive other in recognized been had that loss or or directly instruments) debt (for or loss b.
208 Financial Review ition cost, after reassessing . Inventories at are valued the carrying amount of of the carrying amountthe of an entity, but is not controlof or joint t fair value of the identifiable assets and the identifiable t fair value of mpany’s shareof the net fair value of the mpany’s of the joint venture. joint the venture. of the is control Joint finished goods are stated at standard costs costs at standard are stated goods finished ciates and joint ventures is accounted for as as for is accounted ventures joint and ciates
acity is expensed as incurred as acity expensed is , terminated or exercised. r Under the Equity Method identifiable assets and liabilities of an associate or a joint venture at the date of of date the at venture joint a or liabilities associate an of assets and identifiable goodwillin as and is included acquisition is recognized investment. permitted. not is goodwill of Amortization liabilities of an associate or a joint venture overacquis the or liabilitiesof an associate in profit or or profit in loss the date. on acquisition as a gain is recognized the value, fair
control over those policies. Company that has joint control the arrangementwhereby joint type of a joint venture is A the net assets has rights to arrangement the of controls party single no where arrangement an of control of sharing agreed contractually activities relevant the decisions about only when exists which on its own, arrangement the parties sharing control. of the consent unanimous require value net fair the of share Company’s and the cost acquisition the between difference Any assets and liabilities the identifiable of of asso Inventories are accounted for on a perpetual basis. basis. on a perpetual for accounted are Inventories at actual stated are materials Raw the costs, while and work purchase process in by item. item value realizable net realizable is Net value the and cost of lower the costs of estimated less the business of course ordinary in the price selling estimated sale. the make to costs necessary estimated the and completion using the for are accounted ventures joint and associates in investments Company’s The assets non-current as classified be to criteria the that meet those than other method equity sale. for held is and that influence Company has significant which the over associate an entity is An venture. neither a subsidiary nora joint power to the participate is influence gnificant Si decisions policy operating and financial the in follows: a. Co cost over the acquisition the excess of Any and subsequently adjusted to weighted-average costs at the end of each month. month. each of end at the costs to weighted-average adjusted subsequently and The cost s raw materials, goods comprise direct and finished other work progress in of direct labor, overheads. production related and costs the to overheads production fixed of Allocation theproduction of facilities. the normal capacity is based on conversion costs of Cost associated with underutilized cap The Company prospectively discontinues hedge accounting only when the hedging the hedging when only hedge accounting discontinues prospectively The Company hedging the when instance criteria; for qualifying the meet to ceases relationship instrument expires or is sold b. Any excess of the Company’s share of the ne the of share b. the Company’s of excess Any
Inventories (11) Investments (12) Accounted Fo al liability and the al liability and r from the same lender on same lender the from r using the effective interest method after method after interest effective using the reign currency exchange risk. exchange currency reign the With through the effective interest method method interest effective the through financial difficulty of the debtor), such an an such debtor), the of difficulty financial en the obligation under the liability is recognition of the origin the of recognition e hedging instrument is recognized directly in directly recognized is instrument hedging e subsequently results saction in the recognition
ing any non-cash assets transferred orassumed,ing any non-cash liabilities em with the existence of an economic relationship and relationship an economic em of with the existence ured at amortized cost financial liabilities liabilities financial
Financialliabilities costamortized at and bearing include interest measured loans measured subsequently are that borrowings initial recognition. Gainsprofit or and the losslosses are r ecognized in when as liabilities are derecognized as well process. amortization on or premium any discount by taking into account cost is calculated Amortized costs. transaction or and fees acquisition ii. Financial liabilities meas discharged, cancelled or expires. expires. or cancelled discharged, an existing financial liabilityWhen is replaced by anothe A financial liability is derecognizedwh financial A substantially different terms, or the terms of an existing liability are substantially of an existing liability or the terms terms, different substantially (whethermodified or not attributable to the modification exchange or is treated as a de and amounts carrying in the respective and the difference a new liability, of recognition consideration paid,the includ recognized in profit orisloss. the hedged item from inception of of the hedged item inception hedge. from b. of Derecognition Cash flow hedges hedges flow Cash profit or loss. of a a hedge forecast If tran were gains or losses that the associated liability, asset or a non-financial a non-financial of assetthe cost of or in the initial are included income in other comprehensive recognized liability. The portion of the gain or loss on the hedging instrument that is determined to be an an be to determined that is instrument hedging the loss on or gain the of portion The the ineffective whereas hedge income, is in other recognized comprehensive effective th of fairvalue the in change ofthe portion fo from arising exposures manages Company The hedging the between relationship a designateshedging the Company of 9, IFRS adoption instrument and the hedged it effectiveness. hedge ratio the to meet the hedge determines designates The Company risks rate exchange currency the foreign hedge partially to instruments hedging certain transactions. probable forecast certain highly with associated of component The separate (in following the of the lower to is adjusted item hedged the with associated equity amounts): absolute a. and hedge; the of inception from the instrument cumulative hedging gain or the losson b. on flows cash future expected the of value) (present value fair in change cumulative the (10) Hedge Hedge (10) Accounting
209 United Microelectronics Corporation | Annual Report 2019 change of consideration,change of and to obtain meeting the recognition criteria are treated are treated criteria the recognition meeting ecognition criteria are met. Significant met. are Significant criteria ecognition e previous estimation are recorded as changes as changes are recorded estimation e previous lease and separates the lease and non-lease lease the and separates lease and non-lease d in other operating income and expenses. expenses. and income operating d in other
ht-line basis over the estimated useful estimated the ht-line basis over lives. A The shorter of lease terms or useful lives or useful lease terms of The shorter 7~56 years
Buildings equipment and Machinery equipment Transportation years 6~9 fixtures and Furniture years 5~7 improvement Leasehold years 1~9 in accounting estimates. estimates. in accounting useful estimated the depreciated, not is which land, for Except as assets are the of lives follows: Property, plant and equipment are stated at cost, net of accumulated depreciation and and depreciation accumulated are cost, stated net of at equipment plant and Property, long-term for costs incurred borrowing any, and any if losses, impairment accumulated the r if are capitalized projects construction renewals, improvements and major inspections a straig on is calculated Depreciation life useful different a has which equipment and plant property, of item an part of significant the remainder from of the is depreciateditem separately. at reviewed assets are for the values residual lives and useful methods, depreciation The th from the changes year and end, fiscal each follows: as is 2019 in applying policies accounting significant of summary The an use of the control to right the conveys act contr the if lease a contains, or is, contract A time ex of in period a asset for identified as capital expenditures, and the carrying amounts of those replaced parts are derecognized. parts are derecognized. replaced those of amounts carrying the and expenditures, as capital as incurred. inexpenses are recognized repairs and Maintenance or loss arising gain Any the of derecognition assets is recognize from Company asset. The the identified use of from benefits all economic substantially a single as contract a lease for accounts in the contract. included components as a lessor The Company income a on leases as rental operating from lease payments recognizes The Company lease. the of term the over basis straight-line Lease (14)
Equipment and Plant Property, (13) t influence over an an over t influence ply the equity method method equity the ply . Accordingly, upon . Accordingly, as an acquisition of an additional equity equity an additional of acquisition an as pon loss of significan of loss pon e income is reclassified to profit and loss. profit and to is reclassified income e ount of the associate or joint venture and venture and or joint the associate of ount associate or a joint venture reduce the the reduce venture joint a or associate ining its significant influence over that ventures ventures are impaired. loss, An impairment Company continues to ap on changes in the Company’s share of profit or profit of share Company’s in the on changes
the associate or the joint venture. venture. joint the or associate the y and the associate or the joint venture are eliminated to are eliminated venture joint the or associate the and y stment. Any unrealized gains and losses resulting from t influence over that associate, a proportionate share of gain share a the of or associate, proportionate that over t influence
loss and other comprehensive income of associates and joint ventures. joint associates and ventures. income of other loss and comprehensive The Company’s comprehensive other or and loss profit ventures’ and joint associates’ in changes of share income, directly in or loss and other comprehensive profit are recognized income an from received Distributions respectively. inve amount of the carrying transactionsbetween the Compan interest in the extent of the Company’s Under the equity method, the investments in associates and joint ventures are carried on on carried are ventures joint and associates in investments the method, equity the Under plus post acquisiti at cost sheet the balance Financial statements of associates and joint ventures are prepared for the same reporting reporting same the for prepared are ventures joint and associates of statements Financial as the Company. period the accounting bring to are made adjustments necessary, Where Company. the thoseof line with policies in its than shares more takes up Company the if new shares, of issuance associate’s an Upon mainta while holding proportionate original associate, such increase would be accounted for for be accounted would such associate, increase associate. the in interest Company the if shares, new of issuance associate’s an Upon while percentage stockholding its reduces shares and proportionate up take not does significan its maintaining comprehensiv other in recognized previously loss capital. paid-in a dditional to charged be will difference remaining Any in a change When income, comprehensive or other or loss its profit from result not does an associate of equity Company the percentage, ownership the Company’s not affect do and such changes all re lated changes in equity of share its proportionate recognizes disposal of disposal of the associate, the Company reclassifies the additional paid-inaforementioned basis. a proon rata capital to profit orloss The Company ceases to use the equity method u associate. associate. in an associate investment of the amount the carrying between difference Any plus investment retained the of value fair the and influence significant of loss upon in an in or an investment will be recognized profit loss. If disposal from proceeds venture joint a in investment an or venture joint a in investment an becomes associate the associate, in an investment an becomes and does not remeasure the interest.retained evidence objective there is whether any date at each reporting determines The Company that the investments in associates and joint am recoverable the between difference the being carrying amount, its is profitin recognized or loss in the statementcomprehensive of of investments. the of the carrying amount part forms and income
210 Financial Review loss is recognized. from indefinite to from finite is ecognition at cost. cost. ecognition at The cost thod for an intangible asset with a finite a finite an intangible asset with thod for ination is its fair value as at the date of value as at the date ination fair is its paired, an impairment impairment an paired, or estimated useful life (3~6 years) on a that the intangible assets may be impaired. may the intangible assets that an intangible in other asset ar e recognized ions is not and is amortized, tested not ions is for ion of economicfuture benefits embodied in determine whether the indefinite useful life life useful indefinite the whether determine e amortized over the useful lives and assessed assessed lives and over the useful e amortized
assessed as either finite or indefinite. or indefinite. as finite either assessed not, the change in useful life life useful in change the not, any’s intangible assets are summarized as follows: assets intangible summarized are any’s tely are measuredinitial on r recognition, intangible any less assets arecarriedcost at ich fail to meet the recognition criteria are not capitalized to ich criteria arethe recognition meet not capitalized fail nite useful lives are not amortized, but are tested for for tested are but amortized, not are lives nite useful impairment annually or more frequently if events or changes in circumstances suggest suggest circumstances in or changes events if frequently or more annually impairment be recoverable. not may amount the carrying that circumstances or occurs an event If is im goodwill the that indicates which change basis. straight-line Goodwill impairment losses cannot be reversed once recognized. recognized. once reversed be cannot losses impairment Goodwill and the expenditures are reflected in profit or loss in the period incurred. period incurred. the in loss or profit in reflected are expenditures the and are intangible The lives of assets useful Intangible assets acquired separa comb a business in assets acquired intangible of Internally any. if losses, impairment accumulated and amortization accumulated generated intangible assets wh assets with finite useful Intangible lives ar indication an is there whenever impairment for The amortization period and the amortization me appropriate, as method, or period amortization the changing by for accounted is asset the estimates. in accounting as changes is and treated Intangible assets with indefi supportable. to be continues If a prospective on basis. made orlosses arisingGains from derecognition of and expenses. income operating Accounting policies of the Comp acquisition. Following initial at life areuseful least at reviewed year. the each of end fiscal in the expected Changes of consumpt life orpattern useful the expected of assessment The level. CGU the or at either individually impairment annually, life annually indefinite useful to is reviewed a. Goodwill arising from business combinat business from arising Goodwill a. b. term contract over the is amortized Software
(15) Intangible Assets ght-line basis over the basis over ght-line should be recognized and measured at the at the measured and shouldrecognized be lease liabilities on the balance sheets, and and sheets, the balance on lease liabilities ere is a modification which is not accounted accounted not is which modification a ereis as expenses on a strai a on as expenses
urement of of lease liabilities; urement the borrowing rate. The paymentscomprise: ect costs incurred. incurred. costs ect exercise; and and exercise; not occur. termination will present value of the lease payments that have not been paid at that date, using the the using date, that at paid been not have that payments lease the of value present incremental Company’s comprise: comprise: i. initial the the amount of meas ii. date; and commencement the at before or made payments lease any iii. any initial dir i. i. less lease incentives any payments receivable; fixed ii. rate; or index an on depend that payments lease variable guarantees; value under residual by the Company to be payable expected amounts iii. to certain reasonably is Company the if option purchase a of price exercise the iv. it is reasonably certain that early payments terminating the lease unless for v. as a lessee The Company depreciation expenses and interest expenses are separately presented in the statements of of statements in the presented are separately expenses interest and expenses depreciation with associated payments lease the income. recognizes comprehensive Company The leases asset low-value leases and short-term terms. lease cost using model. assets are measured right-of-use the to initial recognition, Subsequent the from depreciated are model cost the under measured assets Right-of-use or assets right-of-use the of life useful the of end the of earlier the to date commencement a results in liabilities lease the of remeasurement Any terms. lease the of end the assets. right-of-use the of adjustment corresponding assets and presents right-of-use Company The assets right-of-use recognize to is required a lessee a lease, of date commencement At the and lease liabilities, except short-te rm leases and low-valuefor asset leases. a. liabilitieslease At the commencement date, method, interest the effective periods using in subsequent are measured Lease liabilities terms. lease the over recognized are expenses interest the and carrying the addition, In th remeasuredis if liabilities lease of amount (e.g., the lease payments in a change lease term, in the a change lease, separate as a to determine used an index or rate in a change resulting from payments to future changes underlying the to purchase option of an in the assessment change a or lease payments) such asset. which cost, at b. be measured should assets right-of-use the date, commencement At the
211 United Microelectronics Corporation | Annual Report 2019 s and risk of the host contract before before contract host the of risk and s ntly measured at measured ntly value fair through profit ontribution payable to the plan in exchange payable to the plan in exchange ontribution a non-current liability in all other respects. respects. other all liability in a non-current assified as a financial liability measured at assified at as a financial liability measured mponent. mponent. of amount carrying adjusted The ods. does not bond issued the convertible If ertible bonds is classified as a current liability current liability as a ertible bondsis classified the economic UMC assesses if Furthermore,
ing the derivatives, its fairvalue is determined based on lied at that time by the market to instruments of comparable comparable of instruments to by the market time that at lied bility component of conv
Under defined contribution pension plans, the c the pension plans, contribution defined Under for the service rendered by an employee during a period shall be recognized as an expense. expense. an as recognized be shall period a during employee an by rendered service the for a as recognized is paid, already amount any deducting after payable, contribution The liability. Convertible bonds bonds Convertible it contains whether determine to issued bonds convertible the of terms the evaluates UMC both a and an liability component. equity with in accordance instrument as a for hybrid it is accounted component, equity an have 9. IFRS under requirements the shall UMC maturity, before right conversion their exercise bondholders convertible the If co liability the of amount carrying the adjust are component equity of amount carrying the and at conversion liability component the paid-in capital-premiums. additional stock and common to credited is or loss gain No conversion. bond upon recognized lia the addition, In characteristics and risks of the put and call options embedded in the convertible bonds are are bonds convertible the in embedded options call and put the of risks and characteristics to characteristic the related economic closely element. equity the separating For the liability component exclud rateinterest the app effective status. credit is cl The liability component or is converted instrument the before interest method cost the effective using amortized settled. is notcloselyrelatedis that derivative it to the host contract, the embedded For subseque and component asliability a classified or loss unless as it qualifies component. an equity is component recognized The equity a as instrument financial compound the of value fair the between at the difference initially is not amount Its carrying component. the liability value of fair and the whole peri accounting subsequent in the remeasured right. put right the put exercise the After may the bondholders months 12 within if as a be reclassified bonds should convertible of the component liability the expires, of the definition it liability if meets non-current Bonds (17) (18) Post-Employment Benefits eviously recognized previously recognized recognized previously of the of the intangible asset is not revalued to non-cancellable and mutually agreed agreed mutually and non-cancellable to es the recoverable amount since last since the amount recoverable es the gning of contract and obtaining the right to to the right obtaining and contract of gning overable amount. amount. overable A pr first allocated to reduce the carrying amount of of amount carrying to the reduce allocated first
nt testing for the CGU to which the assets individual U units),(group then of to the other the assets of unit intellectual property, any portion attributable portion any property, intellectual an as recognized and discounted, is technology and patent for fees license future fixed liability. asset and related intangible The cost life (5~10 useful over the on and amortized initial recognition, is once determined years) on a related liability straight-line from the are expenses basis. Interest method. interest effective the on based calculated and recognized timing the on Based non-current. and as current is classified the liability payments, of contractterm or estimated useful(3 years) life of the related technologyona basis. straight-line impairment losses may no longer exist or may have decreased at each reporting date, the the date, reporting each at decreased have may or exist longer no may losses impairment re-assessesCompany the asset’s rec or CGU’s service estimated the in increase an been has there if reversedonly is loss impairment potential which in turn of an asset increas loss was recognized. impairment of amount carrying is limited so reversal the that The that amount carrying the exceed nor amount, recoverable its exceed not does asset the loss had no impairment amortization, or of depreciation net determined, have been would years. prior in the asset for recognized been impairment for is tested allocated has been goodwill which CGUs, to of group CGU, or A of indication is any of whether there year, irrespective time every at same the annually impairment. of amount the carrying (including a CGU of amount carrying the Where an If impaired. considered is CGU the amount, recoverable its exceeds goodwill) is it recognized, to be loss is impairment to the CG goodwill allocated any unit (group asset in the each of amount the carrying basis of on the pro rata units) of (group units). of periods. future in reversed be cannot ill to goodw losses relating Impairment The recognition or reversal of impairment is classified losses as other operating income expenses. and belong. belong. amount, recoverable its exceeds CGU or asset an of amount carrying the Where the asset is considered impaired and is down written to its recoverable amount. The of asset or an individual amount a CGU its of is the higher fair less costs recoverable value value in use. disposal and its of that indicate circumstances If The Company assesses at each reporting date whether there is an indication that an asset in an asset in that is an indication there date whether reporting at each assesses The Company impaired. be may Assets” of “Impairment 36 IAS of scope the exists, indication any If the Company completes impairme c. Upon si license fee: and technology Patent d. amortized over the shorter of property license fees, the are Others intellectual mainly Impairment (16) of Non-Financial Assets
212 Financial Review granted, the cancelled granted, the cancelled ltimately vest.ltimately to The charge for the award is recognized immediately. immediately. award is recognized the for treated as if it fully vests on the date of of date the on vests fully it if as treated nditions within the nditions either the control of on the date that it is if a new if award a new substitutes the cancelled for r performance and/or service conditions are are conditions service and/or performance r spective of whether the market or non-vesting non-vesting or market the whether of spective ng is conditional upon a market or non-vesting non-vesting or market a upon conditional is ng
rformance obligations in the contract; and and contract; the in obligations rformance equity instruments that will u e-based payment transaction, or is otherwise beneficial to the or is otherwise transaction, beneficial payment e-based
e. revenue when recognize satisfies(or as) the entity its obligations performance a. customer; a with contract the identify b. contract; in the obligations the performance identify c. price; the transaction determine d. pe the to price transaction the allocate The Company recognizes revenue from contracts with customers by applying the applying by customers with contracts from revenue recognizes Company The with Customers”: Contracts from “Revenue IFRS 15 of steps following Revenue from Contracts with Customers Customers Contracts with from Revenue entity or the employee are met. not employee the or entity However, award replacement a as designated is and award award. of original the were a they modification as if treated new awards are and This includes any award where non-vesting co where non-vesting any award includes This condition is satisfied, provided that all othe all that provided satisfied, is condition satisfied. expense the minimum are modified, award transaction an equity-settled of the terms Where the of terms the original if been modified, not had terms the if as expense the is recognized met. are award increases that modification any for recognized An additional expense is the total fair value of the shar of at the as date modification. measured employee it is is cancelled, award equity-settled an Where yet recognized not expense any and cancellation, condition. condition. irre vested as treated are These The cost of equity-settled transactions is recognized, together with a corresponding corresponding a with together recognized, is transactions equity-settled of cost The are conditions service and/or performance the which in periods the over equity, in increase fulfilled. being each at transactions equity-settled for recognized expense cumulative The the Company’s and passed has period vesting the to which reflects the extent date reporting quantity of the best estimate of profit or loss for a period represents recognized expense in cumulative the movement that period. and the end of the beginning between for except vest, ultimately not do that awards for recognized be will expense No equity-settled which vesti transactions for
(22) Revenue Revenue (22) Recognition sis over the periods in rest, is recognized in other d benefit d liability (asset),benefit which asury stocks) are recognized at repurchase repurchase at recognized are stocks) asury t defined benefit liability be benefit (asset) shall defined t ss shall be recognized in profit or loss on the profit or loss ssshall be recognized in ul lives of the assets. ofthe assets. ullives related expense An e of the defined benefit obligation, deducting deducting obligation, benefit defined of e the ate pricing model by reference to the market market to the reference by model pricing ate g of the asset ceiling. for any effect Service fit fit liability (asset) are recognized as expenses losssystematica on ba
y amounts in net included inte Remeasurement of the net define ruments on the grant date. date. the on grant ruments comprises actuarial gains and losses, the return on plan assets and any change in the effect effect the in change any assets and plan on return losses, the and gains actuarial comprises excluding an the asset ceiling, of occur. they which in period the in income comprehensive in recognized Remeasurement be not shall and earnings retained in immediately reflected is income comprehensive other period. or loss to profit in a subsequent reclassified Under defined pension plans, the ne benefit of present valu as the amount recognized any plan assets and adjustin the value of fair bene defined net interest on the cost and net in the period service. of In accordance with IAS 20 “Accounting for Government Grants and Disclosure of of Disclosure and Grants Government for “Accounting 20 IAS with accordance In is there when grants government the recognizes Company the Assistance”, Government to attaching them the and conditions be received will such grants that assurance reasonable be complied with. will in profit and recognized deferred income as grant is recorded government asset related An or loss on a straight-line basis over the usef or is grant profit in recognized government own equity instruments repurchased (tre UMC’s equity. from deducted and cost lo or gain No instruments. equity own UMC’s of cancellation or issue sale, purchase, difference Any equity. in recognized is consideration the and amount carrying the between of equity-settled transactions The cost between the Company and its employees is appropri an value using fair the at measured price the equity inst of which the Company recognizes as expenses the related costs for which the grant which is the grant related the costs as expenses for recognizes the Company which losses or expenses for compensate. to compensates that intended grant government A Company the to support financial immediate giving of purpose the for or incurred already profit is costs in no recognized orfuture losswith related when it becomes receivable. (19) Government Grants
Share-Based (21) Payment Transactions (20) Treasury Treasury (20) Stock
213 United Microelectronics Corporation | Annual Report 2019 income tax expense e profit or loss; e profit od on temporary differences differences on temporary od in a transaction a business is in that not ferred tax assets are recognized only to the the to only recognized are assets tax ferred nings as is recognized erences associated with investments in with investments erences associated s and their carrying amounts in financial in financial amounts their s and carrying the initial recognition of goodwill or of an of an or goodwill of recognition initial the y differences will will the reverse in foreseeable differences y r the current period and prior periods are against which the temporary differences can can differences temporary the which against g to items recognized nt income tax recognized items relatin g to ing profit nor taxabl nor ing profit l taxable temporary differences, except: except: differences, temporary l taxable
ined using the liabilityined meth e income or equity is recognized in other comprehensive in other or equity is comprehensive recognized e income In respect of deductible temporary diff temporary deductible of respect In de ventures, joint and associates subsidiaries, the temporar that probable that it is extent profit available be and taxable will future be utilized. combination and, at the time of the transaction, affects neither the accounting profit nor nor profit accounting the neither affects the transaction, of the time at and, combination loss; or profit taxable Where the deferred tax asset relating to the deductible temporary difference arises from arises from difference temporary deductible the to relating asset tax deferred the Where the initial recognition of an asset or liability In respect of taxable temporary differences associated with investments in subsidiaries, in investments with associated differences temporary taxable of respect In temporary the reversal of the of timing the when ventures, joint and associates not will differences the that temporary probable it and is controlled be can differences future. in the foreseeable reverse When the deferred tax liability arises from arises liability from tax the deferred When asset or liability in a transaction that is not a business combination a business thatand, is not of time in a transaction at the or asset liability neither the account affects transaction, the
Current income Current income tax Deferred income tax b. a. b. a. Deferred tax assets are recognized for all deductible temporary differences, the differences, temporary all deductible for recognized are assets Deferred tax that probable it is to the extent credits, tax unused and losses tax unused of carryforward temporary which the deductible against that profit will be available future taxable be credits can unused tax tax losses unused and of the carryforward and differences except: utilized, measured using the tax rates and tax laws that have been enacted or substantively enacted enacted substantively or enacted been have laws tax that and rates tax the using measured period. the reporting of end by the Curre liabilitiesassets and fo Current tax income directly in othercomprehensiv is tax determ income Deferred income or equity rather than profit or loss.than profit rather income orequity The additional tax income undistributedear for the stockholders’ by approved is proposal distribution the when year subsequent the in meeting. between the tax bases of assets and liabilitie between the tax bases of statements at the reporting date. date. reporting at the statements Deferred tax liabilities are recognized for al d are expected to be to be expected are d of control of the goods or the goods or of control of ice that are determined using contractual contractual using determined are that ice gations in the in future, an gations ior to the Companyior having satisfied its ntrol of promised goods and services. services. and goods promised of ntrol The at a significant reversal in the amount of of amount the in reversal significant a at rn and allowances based on the customer customer the on based allowances and rn nces which the Company estimates based on
tion of profit or loss for the period. ideration, and the transfer ce, and other known factors. factors. known other ce, and s contracts with customers for the sales of wafers and joint joint and wafers of sales the for customers with contracts s ’ the Company recognizes contract assets and revenues. assets and revenues. contract recognizes the Company
Revenues on the Company The Company recognizes accounts receivable when the Company transfers control of the control of transfers Company the when receivable accounts recognizes Company The For financial assets measured at amortized cost and financial assets at fair value through through assets at fair value and financial cost at amortized assets measured financial For interest recorded is using the effective income income, interest other comprehensive is established, the dividends to receive right the when Company’s is Revenue recognized dividend. the approve stockholders is generally when which Company recognizes revenue at transaction pr transaction at revenue recognizes Company prices reduced by sales returns and allowa technology development are recognized as the Company satisfies its performance performance its satisfies Company as the are recognized development technology co of transfer upon to customers obligations Income tax expense (benefit) is the aggregate amount of current income tax and deferred deferred and tax income current of amount aggregate the is (benefit) tax expense Income determina the in included tax income method and recognized in profit or loss. in profit and recognized method Dividends historical experience having determined th determined having experience historical recognizes The Company occur. to probable not are recognized revenue cumulative estimated sales retu for liabilities refund experien historical complaints, is that consideration of an amount has a right to and to customers services or goods unconditional. are and do not contain a significant short receivable term accounts Such Company the provide do not that contracts certain For component. financing unconditional rights to the cons Consideration received from pr customers from received Consideration to are which transferred liabilities as contract for obligations are accounted performance satisfied. are obligations performance the after revenue to costs recognizes The Company enhance generate or contract, to the relate directly costs the when a contract fulfill obli performance satisfy to used be to resources services has been satisfied, its satisfies Company the when recognized are revenues and costs The recovered. and goods of promised of control customers upon transfer to obligations performance services. income Interest (23) Income (23) Income Tax
214 Financial Review outstanding of The weighted-average e markets, they are determined the by determined are they e markets, value of the financial assets. value Please refer sclosuresand the disclo sure contingent of tion multiples, etc. Changes in assumptions terest and other income or expenses derived derived or expenses income other and terest e assumptionsinand estimates could result ared. Existing circumstances and assumptions and assumptions circumstances Existing ared.
s consolidated financial statements requires management to to requires management statements financial s consolidated l 3 Financial Instrumentsl 3 Financial about these factors could affect the reported fair could affect these factors about Earnings per share is computed according to IAS 33, “Earnings per Share”. Basic Basic 33, Share”. “Earnings per to IAS according is computed per share Earnings of number by the weighted-average income dividing net by share is computed per earnings period. reporting current during the per outstanding Diluted earnings shares ordinary additional plus consideration into share per earnings basic taking by is computed share had been equivalents share if the dilutive been outstanding would have that shares ordinary issued. is income adjustedNet also in for Where the fair values of the level 3 financial assets and liabilities recordedfinancial on the activ from be derived cannot sheet balance market and approach the income including method valuation an appropriate of application approach. in the judgment significant involves assets these financial of valuation The equity or companies comparable of selection a cash forecasts, flow of preparation rates, discount as such assumptions of application the as well prices, as transaction and valua marketability, discounts lack of for details. more to Note 12 for from any underlying dilutive share equivalents. any underlying from shares is adjusted retroactively for stock dividends and employee stock compensation compensation stock and employee stock dividends for retroactively is adjusted shares issues. Earnings per Share (24) about future developments, however, may change due to market changes or circumstances or circumstances changes market to due change may however, developments, future about Company. the of the control beyond arising the assumptions in are reflected changes Such occur. they when (1) Leve of Value Fair The make judgments, estimates and assumptions that affect the reported amounts of revenues, revenues, of amounts reported the that affect assumptions and estimates judgments, make di liabilities, the accompanying assets, expenses, about thes uncertainty However, liabilities. assets or liabilities of amount carrying adjustment to the a material require that outcomes periods. in future affected at uncertainty estimating of sources key and other the future concerning assumptions key The to the carrying adjustment a material for risk significant a have would that date reporting the of assets or liabilities within the amounts next discussed year are fiscal below. the when available information on estimates and assumptions its bases Company The prep were statements financial consolidated The preparation of the Company’
5. ACCOUNTING SIGNIFICANT ASSUMPTIONS AND JUDGMENTS, ESTIMATES ssesses a judgement or or judgement ssesses a If the Company concludes that that concludes Company the If lized shall be recognized in profit or loss, or loss, profit in recognized be shall lized the tax consequences that would the follow that would tax consequences the ty. The Company rea Company The ty.
tity and the same taxation authority. authority. taxation same the and tity profit, tax bases, unused tax losses, unused tax credits or tax credits losses, unused tax unused tax bases, profit, rred tax assets to be recovered.rred tax ctly in equity. Deferred tax assets are reassessed and assets are tax Deferred ctly in equity. tax treatments used to be tax used or planned used in treatments its income tax other comprehensive income or equity. or equity. income comprehensive other from new information about facts and circumstances that existed at the acquisition date date at the acquisition existed that circumstances and facts about new information from that to related goodwill any of amount carrying the reduce to applied be shall acquisition. the carrying amount If of that goodwill deferred tax is nil, any remaining or loss; in profit shall benefits be recognized
tax rates consistently with the tax uncertain an accept will authority taxation that the probable not it is If filings. or the amount likely most the either using estimates makes Company the treatment, to expects Company the method which on depending treatment, tax the of value expected uncertain the resolutionthe predict of better it thatwillis probable it the authority taxation accept an uncertain taxthe treatment, the determines taxable Company accept will authority a that taxation it is probable whether considered has Company The its income in tax filings. the uncertain tax treatments used Deferred tax assets and liabilities offset each other, if a legally enforceable right exists to right enforceable legally a if other, each offset liabilities tax assets and Deferred current income tax currentasse ts against taxincome set off liabilities, and the deferred taxes relate to the same taxable en for criteria the satisfying not but combination, business a of part as acquired benefits Tax subsequently recognized and realized be date, might acquisition at the recognition separate as follows: result period that a. measurement the within recognized tax benefits deferred Acquired rea benefits tax b. deferred acquired other All estimate if the facts and circumstance change. change. circumstance and facts the if estimate recognized at each reporting date. at each reporting recognized at tax assets are reassessed deferred Unrecognized future that probable become that has it extent to the recognized are and date reporting each taxable profits will allow the defe manner in which the Company expects, at the end of the reporting period, to recover or to recover period, the reporting of end the expects, at the Company in which manner and liabilities. of its assetscarrying the amount settle tax relating to items Deferred recognized outside in other profit or loss but rather or in profit loss is not rec ognized comprehensive income or dire Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in apply to that are expected rates the tax at are measured liabilities assets and Deferred tax tax laws rates and settled, based on tax is is realized or the liability asset the year the when date. the reporting at enacted or substantively enacted been have that The measurement reflects tax assets and liabilities deferred of
215 United Microelectronics Corporation | Annual Report 2019
- - 3,561 $6,074 $6,074 $6,091 As of Decemberof 31, As As of Decemberof 31, As 145,445 145,445 236,905 2019 2019 2018 2019 2019 2018 3,299,419 3,299,419 2,998,228 9,134,997 9,494,834 9,494,834 9,134,997 2,195,524 2,030,688 2,030,688 2,195,524 26,384,925 26,384,925 25,021,265 $8,381,085 $8,381,085 $6,814,915 59,966,481 59,966,481 49,139,549 $14,021,473 $12,084,297 $12,084,297 $14,021,473 $95,492,477 $95,492,477 $83,661,739 e domicile of the Company. the of Company. domicile e it is probable that future taxable profit profit taxable future that probable is it tible temporary differences can be utilized. be utilized. can differences temporary tible tion may ariseona wide variety of issues tation of complex tax regulations, changes in in changes regulations, tax complex of tation which it operates. The amountof such it operates. The which xable temporary differences against which the against differences xable temporary
teralized by government by government teralized measuredat fair value Option Forward contracts Preferred stocks Preferred Funds Bonds Convertible bonds and corporate notes notes corporate and bonds Common stocks stocks Common through profit or loss profit through Total Total Time deposits deposits Time Cash on hand and petty cash cash petty and hand on Cash accounts savings and Checking Total Total Repurchase agreements agreements colla Repurchase assets Financial mandatorily
Uncertainties exist with respect the interpre to respect exist with Uncertainties income. taxable future of timing and the amount and laws, tax establishes The Company by the tax audits of consequences possible for estimates, reasonable on based provisions, countries in the respective authorities of in the respectiv prevailing conditions the on depending provisions is based on various factors, such as experience of previous tax audits and tax previous of experience such as various factors, on is based provisions responsible and the entity taxable the by made regulations tax of interpretations different authority. tax interpreta of differences Such losses, credits and tax tax unused of carryforward all for assets are recognized tax Deferred that extent the to differences temporary deductible ta or there are available be sufficient will deduc or credits tax unused tax losses, unused likely the upon is based to be recognized determined assets tax deferred of amount The temporary differences. taxable and profits taxable future of level and the timing Please assets. tax deferred unrecognized on to Notedetails more for 6(23) refer (1) Equivalents Cash and (2) or Loss Profit through Value at Fair Assets Financial (5) Tax Income 6. ACCOUNTS CONTENTS SIGNIFICANT OF nce, based on historical experience and experience historical on nce, based s to derive from derive to s asset the or CGU. Cash ment bonds extrapolated from maturity from bonds extrapolated ment s value in use. costs of The value less fair on, inflation and the discount rate. on, inflation Due to and net realizable value item by item.by item value realizable net and Net y rate, etc., and may differ from actual actual from differ y may and rate, etc., ble to reflect the amount that an entity could could entity an that amount the reflect to ble ce in the ordinary course of business less the less the of business course ordinary ce in the orderly transaction between market participants, orderly transaction between
In determining the appropriate discount rate, management management rate, discount appropriate the determining In realizable value is the estimated selling pri realizable value is the estimated selling sale. the to make necessary costs the estimated and completion of costs estimated Please 6(4). including to Note refer overhead, labor and include direct completion Costs of labor costs, indirect indirect e quipment, production of and maintenance depreciation thatmaterial costs,supplies,royalties is expected utilities and tobe incurred at normal level. production account into taking level production normal estimates Company The planned maintena capacity resulting from loss of capacity. production current developmentsin future.the considers the interest rates of the govern obligation. benefit the defined of duration expected to the corresponding rate the As for comparisons past of experiences, takes account management salary increase, future of regi geographical the and industry the within benefit nature, a defined and its long-term valuation the of actuarial complexity the in these assumptions. to changes sensitive highly is obligation are used The assumptions 6(13). disclosed in Note Inventories are valued at are cost the of lower Inventories valued a pension for obligation benefit of the defined value costs and the present benefit Defined valuation actuarial An method. projected unit credit the using determined are plan the discount of the determination include which assumptions, various making involves mortalit increase rate, salary rate, future or declined has value the asset’s that indicate events date or reporting whenever each At Company the place, taken have effect an adverse with the market changes in significant 36 may be IAS that there is an asset in the scope of assesses whether an indication impaired. any If completes exists, testingindication Company the impairment for the CGU to which the individual assets belong. assets belong. individual the which to CGU or asset an of amount carrying the Where down written and is impaired is considered the asset amount, recoverable its exceeds CGU amount. its recoverable to asset or is the CGU an individual of amount The recoverable it and disposal less costs of value fair of higher availa information best on is based disposal an the asset in disposal of the obtain from disposal. of costs the deducting present after net the at measured is use in value The expect entity the flows cash future the of value and the estimated estimates judgments which include involves subjective projection flow that future cash flows, and equipment, capacity generates plant property, lives of useful the and industry the in cycle economic of fluctuations potential output, physical of capacity situation. operating Company’s (2) Inventories (2) (3) Benefits Post-Employment (4) Plant and Equipment Impairment of Property,
216 Financial Review
As of Decemberof 31, As Decemberof 31, As 175,494 175,494 184,026 in operating cost, of which in operating cost, of 2019 2019 2018 2019 2018 ’s operating situation and situation operating ’s 1,754,137 1,754,137 1,268,838 3,548,376 3,133,737 3,133,737 3,548,376 11,309,718 11,309,718 10,034,488 $5,102,571 $5,102,571 $3,766,056 $21,714,802 $18,203,119 $18,203,119 $21,714,802 $14,723,232 $11,585,477 $11,585,477 $14,723,232 $14,547,738 $14,547,738 $11,401,451 reporting date to measure expected credit credit expected date to measure reporting individually assesses whether to recognize to recognize assesses whether individually on rate to calculate ECLs. calculate to rate on rate provision A eceivable past due within 60 days, including due 60past within including days, eceivable
sses by considering customer sses considering by s None of the aforementioned inventories were pledged. pledged. were inventories the None aforementioned of For the years ended December 31, 2019 and 2018, the Company recognized recognized Company the 2018, and 2019 31, December years ended the For NT$123,795 million, respectively, and NT$122,999 million of inventories. write-down were to related million and NT$1,698 NT$820 million Preferred stocks Preferred Common stocks stocks Common Work in process process in Work Total Finished goods goods Finished Raw materials Raw materials and spare part Supplies Total Total Equity instruments
were sales overseas party sales third and for third party domestic periods The collection respectively. days, 30~60 net and days 30~60 month-end each at performed is analysis impairment An receivable. accounts of (ECLs) losses r For a provisi estimates the Company past due, not is determined based on the Company’s historical credit loss experience and customers’ customers’ and experience loss credit historical Company’s the on based determined is customers’ as such factors, forward-looking for adjusted condition, financial current environment. economic applies the Company 60 days, over past due receivable For the also and rate provision aforementioned the additional expected credit additional expected lo debt-paying ability. ability. debt-paying b. a. (5) (5) Non-Current Income, Comprehensive through Other Value Assets at Fair Financial (4) (4) Inventories, Net
December 31, December 3,906 5,464,685 85,131 545,366 For the years ended the years ended For As of Decemberof 31, As As of Decemberof 31, As Decemberof 31, As $48,152 $39,578 649,438 8,574 204,791 739,054 138,788 365,007 720,885 407,568 2019 2018 2018 2019 2019 2018 2018 2019 2018 2019 2019 2018 2018 2019 (697,590) (48,152) $697,590 $48,152 2,364,311 3,407,690 completed the acquisition on on acquisition the completed $21,924,797 $18,271,304 $26,136,293 $23,784,141 ich was measured at fair value and and value fair at measured ich was ofit or loss. Board 29, 2018, the of On June call option, and
121 days days 121 30 30 days Subtotal 3,51 Subtotal 91 to 120 days to 120 91 ≥ 31 to 60 to 60 days 31 to 90 days 61 ≤
Ending balance Ending Accounts receivable receivable Accounts allowance loss Less: impaired past due nor Neither Past due but not impaired: $25,438,703Total $23,735,989 balance Beginning period the for Net charge Net $25,438,703 $23,735,989 Total $14,021,473Total $12,084,297
Current $722,794Current 13,298,679Noncurrent $528,450 11,555,847
Aging analysis of accounts receivable, net: net: receivable, accounts of analysis Aging receivable: accounts of loss for allowance Movement The Company had a call option of a joint venture agreement between FUJITSU FUJITSU between agreement a joint venture of call option a had Company The LIMITEDSEMICONDUCTOR and UMC, (FSL) wh pr in recorded was value fair the in change the Directors of UMC resolved to exercise the 1, 2019. October to Note 6(26). refer Please
(3) Net Receivable, Accounts
217 United Microelectronics Corporation | Annual Report 2019
- - voting rights ownership or Percentage of
- 44.78 - - - 50.00 $10,363,977 $10,363,977 these value of The fair
- 2,213 45.16 - As of December 31, that thethe Company obtained ability voting rights Amount ownership or Percentage of ed to NT$1,747 million and NT$1,727 NT$1,727 and million to NT$1,747 ed $1,621 million, as of December 31, 2019 31, 2019 December as of million, $1,621 2019 2018 2018 2019 - 44.78 - - 592 25.90 31,544 26.89 7,164 44.45 642,660 42.00 568,005 42.00 122,060 30.00 161,319 30.00 $18,157 45.44 $3,026 45.44 121,973 25.14 167,953 25.14
2,281,631 40.00 1,520,575 40.00 3,829,934 30.87 2,642,543 30.87 4,378,193 36.49 3,419,430 36.49 Amount Amount $13,322,143 019 and 2018, respectively. 019 and 2018, respectively. to exercise significant influence over FARADAY through representation on its on its representation through FARADAY over influence exercise significant to Board Directors. of GMBH are joint ventures to the Company. these for account to method equity the uses and partnerships limited for investees. FARADAY as an associate given the fact given as an associate FARADAY Investee companies 1 WINAICO SOLAR GMBHPROJEKT IMMOBILIEN and WINAICO B: Note C: accounting practices in equity accounting international The Company follows Note which for method equity the using for accounted of investments amount carrying The amount quotations price published are there 31, 2 December as of million, its in accounts investment for the Company June 2015, from Beginning A: Note NT and million NT$2,244 were investments and 2018, respectively. respectively. 2018, and LIMITED MTIC HOLDINGS PTE. LTD. LTD. PTE. MTIC HOLDINGS B) (Note GMBH IMMOBILIEN WINAICO INC. PURIUMFIL TRANSLINK CAPITAL PARTNERS I, L.P. (Note C) (Note L.P. I, PARTNERS CAPITAL TRANSLINK B) (Note GMBH 1 PROJEKT WINAICO SOLAR 172,414 10.38 120,440 10.38 YANN YUAN INVESTMENT CO., LTD. LTD. CO., INVESTMENT YUAN YANN CORP. CHIEH CAPITAL HSUN CO., LTD. VSENSE HONG KONG UNITED LED CORPORATION INC. INVESTMENTS, LI YUNG HSUN CHIEH INVESTMENT CO., LTD. CHIEH CO.,HSUN LTD. INVESTMENT Total UNITECH CAPITAL INC. UNITECH CAPITAL CORPORATION CAPITAL TRIKNIGHT
Unlisted companies $- $-
2018 voting rights ownership or Percentage of 2018 2018 in relation to the --
For the years years the For For the years years the For ended December 31, December ended ended December 31, December ended 2019 2018 2018 2019 $365,052 $268,406 $365,052 $268,406 $(551,903) ed at fair value through other other through value at fair ed $2,348,454 As of December 31, voting rightsvoting Amount ownership or Percentage of
the equity method are as follows: method follows: as equity the are her comprehensive income are listed below: listed her comprehensive are income
Amount
2019 2019
$276,866 21.90 $249,762 22.39 1,470,499 13.78 1,477,167 13.78
eclassified to retained to retained eclassified r Under the Equity Method uity instrument investments measur
earnings due to derecognition derecognition to due earnings Held at end of period at end of Held period the during Derecognized Investee companies Cumulative (losses) r Cumulative gains Total or loss in profit recognized income Dividend
2019 Fair value on the date of of sale date the on value Fair
These investments in equity instruments are held for medium to long-term purposes and and purposes to long-term medium for are held instruments in equity These investments income. comprehensive other through value as fair for are accounted therefore income ot her comprehensive and or loss in profit recognized Amounts financial assets at value through ot fair Details of investments accounted for under for accounted investments Details of In consideration of the Company’s investment strategy, the Company disposed and disposed the Company strategy, investment of the Company’s consideration In eq derecognized partial income. comprehensive the years for such of investments on derecognition Details are as follow: 2018 and 31, 2019 December end a. b. a. c.
(6) (6) Accounted Investments Fo
(Note A) (Note CLIENTRON CORP. CORP. CLIENTRON FARADAY TECHNOLOGY CORP. (FARADAY) (FARADAY) CORP. TECHNOLOGY FARADAY
Listed companies 218 Financial Review
1,055,821
- - (4,949,305) - 66,871- - - 84,974 - 46,347,551 - (161,781) - (127,455) $- $770,150,860 awaiting awaiting inspection Total inspection Total equipment equipment Construction Construction in progress and in progress in progress and progress in - 14,579,988 14,579,988 - - - Leasehold Leasehold Leasehold Leasehold improvement improvement - - - - Furniture Furniture and fixtures and fixtures - - - (325) 514 - - 9 54,978 8,372 739,663 11,466,543 equipment equipment Transportation Transportation Transportation Transportation
- Machinery Machinery and equipment and equipment - - (161,781) - 66,682 - 84,974 - (127,455) - 211,285 20,723,346 3,557 285,891 11,712 (20,179,970) - - - (4,637) (8,122,361) (3,563) (196,487) (6,180) (27,758) (8,360,986) - (136,976) (4,789,755) (182) (21,375) (1,017) - - - 1,542,864 44,307,925 6,105 488,216 2,441 - - (4,624) (8,105,713) (3,563) (195,766) (5,371) (5,949) (8,320,986) $- $18,950,520 $745,722,965 $47,794 $5,383,434 $46,147 $- $17,549,256 $714,286,307 $45,434 $5,112,684 $49,580 $5,949 $737,049,210
(41,064) (538,378) (7,077,088) (449) (39,174) (1,470) (79,170) (7,776,793) Land Buildings Land BuildingsLand Assets Used by the Company(Note): Cost: Accumulated Depreciation and Impairment: and Impairment: Depreciation Accumulated 2019 a.
(7) (7) Equipment and Plant Property,
reclassifications reclassifications reclassifications reclassifications Exchange effect Exchange effect As of December 31,As of December 2019 Transfers and and Transfers Acquisition subsidiary of a 871,700 3,087,585 6,704,236 Exchange effect Exchange effect 31,As of December 2019 $1,692,123 $38,437,588 $865,547,572 $65,909 $6,842,124 $65,883 $5,583,516 $918,234,715 Transfers and and Transfers Disposal of a subsidiary Disposal of a subsidiary Impairment loss Disposals Disposal of a subsidiary Depreciation Net carrying amount: 31,As of December 2019 $1,692,123 $19,487,068 $119,824,607 $18,115 $1,458,690 $19,736 $5,583,516 $148,083,855
As of January 1, 2019 As of January $861,487 $35,681,733 $853,481,220 $66,355 $6,736,916 $53,449 $10,550,763 $907,431,923 As of January 1, 2019 As of January Disposals Additions e income (loss) in mprehensive income tional the currency of December 31, December For the years ended the years ended For 2019 2018 2018 2019 1,256,622 (476,326) $2,404,117 $2,404,117 $(1,144,027) $1,147,495 $1,147,495 $(667,701) respectively. respectively. ion shares and 172 sharesion million of million for the years ended December 31, d in other comprehensiv d in other any, an exchange difference arising from from arising difference an exchange any, e or joint venture for the Company. e or joint venture the for Company. When operation, and the func NT$1,184 million and NT$(225) million for million for NT$(225) and million NT$1,184
31, 2019 and 2018, ciates and joint ventures: ventures: joint and ciates
Total comprehensive income (loss) income comprehensive Total
Income (loss) from continuing operations operations continuing from (loss) Income (loss) income comprehensive Other for using the equity method were both nil for the years ended December 31, 2019 31, 2019 nil December ended were both the years for equity for using method the and 2018. using the equity method was as follows: follows: as was method equity the using the financial statements for the years ended December 31, 2019 and 2018 were NT$(18) NT$(18) were 2018 and 31, 2019 December ended years the for statements financial the in the following were not included which respectively, million million, and NT$18 an associate or a joint venture is a foreign a is venture foreign or joint a associate an the Comp from entityforeign different is translation the of foreign be recognized in other co entity will (loss). recognize differences exchange Such associat significant is no individually There pledged. were joint ventures and associates the aforementioned of None of asso Financial information other by were audited method equity the under for accounted investments Certain accountants. independent of joint Shares or lossprofit and ventures these associates of NT$(751) and million to NT$1,231 amounted 2019 and 2018, respectively. these (loss) of respectively. income comprehensive 2018, and other 2019 of Share to amounted joint ventures and associates of The balances respectively. 2018, and 2019 31, December ended years the and million were NT$11,704 method the equity under for accounted investments December of million as NT$8,714 ii. ii. its are joint ventures that accounted share of the Company’s of amount The aggregate held441 million CO.,HSUN CHIEH INVESTMENT LTD., associates, UMC’s of One and 2018. 31, 2019 December stock as of UMC’s shares of associate, YANN Another held 200 mill LTD., CO., YUAN INVESTMENT 2018. 31, 2019 and as December stock of UMC’s table. table. i. for are accounted that of its associates share Company’s of the amount The aggregate b. c.
219 United Microelectronics Corporation | Annual Report 2019
-
- - - 3,336,339 - 49,948,589 - (2,387,601) - (188,121) awaiting inspection Total equipment Construction in progress and progress in - - Leasehold Leasehold improvement Furniture and fixtures - 2,867 - (5,264) (2,014) 286 5,941 1,092 e impairment test revealed the recoverable the recoverable test revealed e impairment ny reclassified 1 S.R.L SOCIALNEXITALIA equipment
Transportation Transportation expenses an impairment an million NT$85 year expenses for of the loss Machinery and equipment - (180,843) - 26,497 3,302,523 - 297 (3,164) - 1,535,409 47,871,174 6,080 533,628 2,298 - (57,812) (2,286,359) (17,963) (25,467) - $- $18,465,244 $714,475,188 $45,434 $6,148,687 $49,580 $5,949 $739,190,082 $- $16,960,853 $665,771,857 $57,031 $5,636,982 $48,204 $5,949 $688,480,876
Land BuildingsLand
Impairment: and Depreciation Accumulated The Company leases various properties, such as land (including land use right), buildings, land use buildings, right), as (including land properties, such leases various The Company lease terms with equipment other and equipment transportation equipment, and machinery of years. 50 lease term 1 the with 30 years,use to of land for rights except lease Most on the lease paymentsstatebased that R.O.C will be adjusted in of land located contracts value. land announced land at leased of options have purchase does not The Company the lease terms. end of the Compa the 2019, quarter of the second In sale. for held group disposal a as subsidiary, a (SOCIALNEX), Company the such, As property, test on the cash -generating(CGU) composed unit of an impairment performed sale. for held group disposal single a as CGU the before reclassifying equipment and plant net selling on the the of CGU based amount the recoverable determined The Company, th and 3 to Level categorized was which price amount. its carrying less than be to of the CGU amount in recorded the Company Thus, the other operating income and segment. the new from business of 2019, on the CGU to be disposed 31, December ended 2019. in November SOCIALNEX disposed The Company pledged collateral. as equipment and plant to Note 8 property, for refer Please
(8) Leases Leases (8) reclassifications reclassifications Depreciation and Transfers Net carrying amount: 31,As of December 2018 $1,314,402 $19,841,058 $139,213,317 $20,921 $1,908,214 $3,869 $10,544,814 $172,846,595 31,As of December 2018 Exchange effect Exchange effect As of January 1, 2018 As of January Disposal of a Disposal of a subsidiary Disposals (651) (940) (6,463) 31,075 (18,731) (67,285) (78,659) 180,785
$2,290,241 $2,247,258 $4,537,499 $4,604,754 $2,140,872 Total Total Total - (233,636) - (2,453,877) - awaiting 10 inspection Total inspectionTotal equipment Construction (317) (317) in progress and in progress 3,213 (7,701) (3,595) 70,708 - 17,579,689 17,579,689 - $212,371
$1,102,809 $1,315,180 $1,319,985 $1,036,003 Furniture Furniture and fixtures and fixtures Leasehold Leasehold improvement - - - - $- 433,665 2,049 (27,693,591) 573,884 3,827 Furniture (81,872) and fixtures $125,413 $125,413 $207,285 $188,881
- (6,515) (2,226) ith the transition provision in IFRS 16. Machinery Machinery Machinery 8,884 and equipment and equipment equipment
Transportation Transportation
- (67,295) - - - - - (334) - (623) (2,868) 24,024 (10,699) 106,250 $915,988 $1,019,036 $1,618,235 $2,637,271 $2,624,569 Machinery and equipment and equipment - - (224,895) - - - $- $- (331) 7,051 $459,635 $459,635 $452,915 - (78,334) 2,527,895 52 (5,848) 1,069 (96,774) 2,348,060 - - (64,878) (2,330,437) (18,363) (40,199) Land Buildings Land Buildings Land Buildings to restate prior w periods accordance in
- 375,854 27,447,023 - - -
Assets Subject to Operating Leases(Note): Leases(Note): Operating to Subject Assets Cost: Accumulated Depreciation and Impairment: and Impairment: Depreciation Accumulated Note: Note: 2019. 1, on January 16 IFRS adopted The Company not elected The Company b. 2018 Cost:
reclassifications reclassifications reclassifications reclassifications reclassifications reclassifications Exchange effect As of December 31,As of December 2019 Disposals and Transfers - Acquisition of a subsidiary subsidiary a of Acquisition Disposal of a Disposal of a subsidiary and Transfers Exchange effect 31,As of December 2018 $1,314,402 $38,306,302 $853,688,505 $66,355 $8,056,901 $53,449 $10,550,763 $912,036,677 As of January 1, 2018 As of January $1,314,402 $38,073,660 $826,268,919 $75,782 $7,675,798 $52,557 $20,761,439 $894,222,557 Depreciation Net carrying amount: 31,As of December 2019 As of December 31,As of December 2019 Exchange effect Transfers and and Transfers
As of January 1, 2019 As of January 1, 2019 As of January Disposals Disposals Additions 220 Financial Review - - 53,661 - - 414 - 7,398 - - (93) (93) - - (93) (93) - technology technology Patents and Patents technology technology license fees Others Total Patents and and Patents license fees Others Total transfer substantially all transfer the of risks and - - -
$951,176 $517,996 $4,114,197 $2,637,627 - 1,666,599 806,915 851,679 3,325,193 - (383,745) (2,734,355) (638,815) (3,756,915) - 53,661 - - 964,903 198,181 155,670 1,318,754 - (80,074) (380,092) (10,551) (470,717) - (383,745) (2,734,355) (638,815) (3,756,915) - 760,010 531,790 874,810 2,166,610 - 414 - (27,152) (122,850) (3,972) (153,974) - $- $601,649 $2,843,411 $2,405,697 $5,850,757 7,398 $7,614 $2,395,972 $1,884,282 $5,198,247 $910,379 $15,012 $3,347,148 $2,402,278 $3,548,006 $9,312,444 Goodwill Software Goodwill Software Software Goodwill The Company as The Company a lessor rewards incidental assets. of the underlying to ownership incidental rewards The are to main contracts clauses. cancellation with employees to the dormitory the lease Note to refer Please leases under operating for and equipment plant property, of disclosure relevant for 6(7) 16. IFRS are which and equipment plant property, on certain leases entered into Company The not did they as leases operating as classified
subsidiary subsidiary subsidiary 2019 $7,398 2019 2019 2019 2019 Reclassifications Reclassifications effect Exchange As of December As of 31, As of January 1, 2019 1, January of As Write-off Write-off Disposal of a Disposal 2019 1, January of As Additions $15,012 of a Disposal $1,125,804 $4,511,629 $3,190,116 $8,842,561 Amortization amount: carrying Net ofDecemberAs 31, Write-off Write-off loss Impairment Acquisition of a Acquisition Reclassifications Exchange effect effect Exchange December As of 31, b. 2019 Cost: Amortization and Accumulated Impairment: (9) (9) Intangible Assets 4,030 6,001 12,880 12,019 180,115 2019 2019 2019 2019 2019 As of As of ended ended $366,827 5,461,068 2,092,924 $5,700,136 For the year the For December 31, December December 31, December December 31, December nce with the transitionwith the nce in provision st expenses on the lease liabilities. liabilities. lease the on expenses st
t not to restate prior periods in accordance with the transition provision in provision transition the with accordance in periods prior restate to not IFRS 16. not to restate prior periods in accorda in periods prior restate to not IFRS 16. IFRS Please refer to Note 8 assets for right-of-use pledged as collateral. For the year ended December 31, 2019, the Company’s addition to right-of-use to right-of-use addition Company’s the 2019, 31, December ended year the For million. NT$264 to amounted assets et $8,291,517 oncurren
Lease Liabilities Lease Liabilities Current $569,957 to Note 6(21) for the refer Please intere Right-of-use Assets Depreciation Depreciation Total $6,031,025 Total ii. Buildings 473,558 Buildings equipment and Machinery equipment Transportation equipment Other N land use right) Land (including Buildings 87,572 equipment and Machinery equipment Transportation equipment Other $644,545 Total N Note: Note: 1, 2019. January on 16 IFRS adopted The Company elected Company The Land (including land land use right) Land (including i. Note: 2019. 1, on January 16 IFRS adopted Company The elected Company The The Company as a The Company lessee (b) (a)
a.
221 United Microelectronics Corporation | Annual Report 2019 Repayment December 31,December principal will be repayable in Marchupon maturity. 2020 principal was repaid fully in June 2019. principal was repaid fully in March 2018. For the years ended ended years the For As of December 31 of As As of December 31, 31, December of As 2019 2018 2019 2019 2018 2018 2019 2019 2019 2018 Interest will and the be paid annually (147,877) (518,150) 3,935,006 3,935,006 5,323,256 $8,080,200 $8,080,200 $7,780,552 17,729,293 17,729,293 18,196,332 41,378,182 38,781,416 (20,093,825) (20,093,825) (2,499,235) $12,015,206 $13,103,808 $13,103,808 $12,015,206 $18,687,591 $38,878,947 $38,878,947 $18,687,591 $21,200,000 $23,700,000 0.00%~4.55% 0.00%~4.55% 0.00%~4.55% 1.35%and Interest the annually was paid 1.50% 1.63% Interestand the annually was paid
Term Issuance date Issued amount Coupon rate
Seven-year mid-March In 2013 NT$2,500 million Seven-year June 2012 early In NT$2,500 million Five-year mid-March In 2013 NT$7,500 million UMC issued domestic unsecured corporate bonds. bonds. corporate unsecured UMC issued domestic of and conditions the The terms were as follows: bonds t e
Less:Discounts bonds on payable Total Unsecured bank loans loans bank Unsecured loans other Unsecured Total applied rates Interest Unsecureddomestic payablebonds payable bonds convertible Unsecured portion Current Less: N
a.
NT$77,658 million as of December 31, 2019 and 2018, respectively. respectively. and 2018, 31, 2019 as of December million NT$77,658 The Company’s unused short-term lines of credit amounted to NT$64,169 million and million and NT$64,169 to credit amounted of lines short-term unused Company’s The
(10) Short-Term Short-Term (10) Loans (11) Bonds Bonds (11) Payable - 474,127 - (176) December 31, December For the years ended the years ended For 2019 2018 $827,596 $758,050 $1,339,014 $1,154,752 - technology technology technology technology Patents and and Patents license fees license Others Total Patents and and Patents license fees Others Total
- -
$601,649 $601,649 $2,843,411 $2,405,697 $5,850,757
- (422,591) (179,418) (987,841) (1,589,850) - 474,127 - - (6,458) (210,982) (1) (217,441) - - 214,278 612,253 826,531 - 357,624 468,296 1,086,882 1,912,802 - (422,591) (179,418) (987,841) (1,589,850) - (3,398) (30,657) (1) (34,056) $- $670,014 $2,585,190 $2,306,657 $5,561,861 $- (176) $15,012 $15,012 $1,125,804 $4,511,629 $3,190,116 $8,842,561 $15,012 $15,012 $524,155 $1,668,218 $784,419 $2,991,804 Goodwill Software Goodwill Software Goodwill subsidiary 2018 2018 2018 Operating costs Operating expenses Operating Exchange effect effect Exchange December As of 31, Reclassifications Reclassifications Disposal of a Disposal Write-off effect Exchange December As of 31, Additions Write-off 2018 1, January of As Amortization amount: carrying Net AsofDecember 31,
As of January 1, 2018 1, January of As $15,188 $1,080,726 $4,687,751 $3,565,705 $9,349,370 2018 Cost: Amortization Accumulated and Impairment: assets are as follows: of intangible amounts The amortization
222 Financial Review rest rate on the tain changes in the R.O.C.’s tax rules tain changes in the R.O.C.’s . The effective inte . The effective ve the right to require UMC to redeemright require to UMC the to ve ice will be subject to adjustments upon adjustments to subject be ice will UMC to redeem all the bonds at the all of UMC to redeem e registration procedures have not been , of the bonds, at the Early Redemption bonds, the , of tible bonds totaling US$15 million into 33 totaling tible bonds t: The conversion price was originally t: The conversion price e maturity date, UMC will redeeme maturityUMC date,will the bonds
which would require UMC to gross up for payments of principal, or to gross up or to principal, of gross up to gross payments for up UMC require which would interest or premium. of for payments principal the of 99.25% at 2018 18, May on bondholders of option the at amount. be listed on the to shares cease ordinary if UMC’s Amount Early Redemption Exchange. Stock Taiwan occurs to UMC, the bondholders shall ha Amount. Redemption but in part, not the bonds, in whole at the Early however, shares; provided, intoordinary to prior and 2020, UMC May 2015 8, and of, beginning the from days business within 5 falls date exercise the if that the bonds to vote holder of the converting of the right closed period, any during, restrictions. certain to subject be will receives shares it the to respect with Amount at any time, in the event of cer of in event at any time, the Amount have been redeemed at option of the bondholder; of the at option bondholder; redeemed have been NT$17.50 per share. share. per NT$17.50 pr The conversion inthe indenture. set out certain events of the occurrence price The conversion 31, 2019. on December share per was NT$14.2179 (iv) All or any portion of the bonds will be redeemable at Early Redemption Amount Amount Redemption at Early redeemable be (iv) will theof bonds portion or any All (v) to require right have the Bondholders the bonds of the in indenture as defined control of change a that event the In (vi) (i) UMC Ordinary shares of Securities: Underlying (ii) 28, June or after any time on at tible The are conver Period: bonds Conversion Adjustmen and Price Conversion (iii) but not partall, UMC redeem may (iii) (i) (i) shall or the bonds UMC, of option at the bonds the redeemed have shall UMC (ii) before maturity; or right the conversion exercised shall have The bondholders cancelled. and UMC by repurchased or redeemed been have shall (iii) bonds The
at 98.76% of the principal amount unless, prior to such date: date: such to prior unless, amount principal the of 98.76% at
liability component of the convertible bonds was determined to be 2.03%. 2.03%. be to determined was bonds convertible the of component liability the converted had bondholders certain 31, 2019, December ended year the During the conver outstanding principal amount of advance. collected in as capital and were classified completed million shares, of which capital increase shar increase capital million shares, which of In accordance with IAS 32 “Financial Instruments Presentation”, the value of the of the value Instruments Presentation”, “Financial 32 with IAS In accordance in recognized and issuance at determined was bonds convertible the of right conversion reduction after to NT$1,894 million, amounting options capital-stock paid-in additional to NT$9 millionissuance costs amounting of iv. Terms of Conversion: of Conversion: Terms iv. v. v. Maturity on the Date: On th Redemption
Repayment rincipal in June will be repayable principal will be repayable in upon maturity. October 2024 principal will be repayable in upon maturity. October 2022 p 2021 upon maturity. principal will be repayable in June 2024 upon maturity. principal will be repayable in Marchupon maturity. 2022 principal will be repayable in Marchupon maturity. 2024 Interest will and the be paid annually Interest will and the be paid annually Interest will be paid annually and the Interest will and the be paid annually Interest will and the be paid annually Interest will and the be paid annually but not in part, at the Early Redemption nary shares of UMC on the TWSE, for a UMC the TWSE, shares of on for nary nversion price. nversion Redemption Early The .25% per annum (the Early Redemption Redemption Early (the annum per .25%
the bonds were as follows: redemption paymentin for USD. the date upon which notice of such redemption is redemption such of notice which upon the date NT$3,400 million 1.13% NT$2,000 million 0.94% 2017 2017 Amount if at least 90% in principal amount of the bonds has already been been has already the bonds of in principal amount if least 90% at Amount cancelled. and or repurchased redeemed converted, and prior to the maturity date, at the principal amount of the bonds with an of the bonds amount date, at the principal the maturity to and prior at calculated interest ratethe -0 of ordi the of price closing the if Amount) occurs not which of last days, the trading consecutive 30 of 20 out of period more than 5 days prior to is published, at least 125% of co the Exchange Rate (NTD based into on Fixed NTD Price will converted the be 30.708=USD 1.00), NTD amount and this willfixed be converted using the of time rate at the prevailing
Term Issuance date Issued amount Coupon rate (ii) (ii) bonds, in whole, the UMC redeem may (i) (i) issuance the years of part, after 3 or in whole in bonds, the redeem UMC may Seven-year In early October Seven-year mid-June In 2014 NT$2,000 million 1.70% Ten-year mid-June In 2014 NT$3,000 million 1.95% Five-year late In March 2017 NT$6,200 million Seven-year late In March 2017 1.15% NT$2,100 million Five-year In early October 1.43% On May 18, 2015, UMC issued SGX-ST listed currency linked zero coupon convertible convertible coupon zero linked currency listed SGX-ST issued UMC 2015, 18, On May bonds. and conditions of The terms i. million US$600 Amount: Issue ii. date) (Maturity 2020 18, May ~ 2015 18, May Period: Redemption: iii.
b.
223 United Microelectronics Corporation | Annual Report 2019
collateral for long-for collateral Mega International edit will be reduced reduced be will edit Chang Hwa CommercialChang Hwa 2020 to September 9, 2021 with quarterly2020 to September 9, 2021 interest payments. 2020 to April 16, 2022 with monthly with monthly 2022 April 16, 2020 to interest payments. interest monthly with 2022 October 26, to payments. billion. This line of credit will be -quarterly Repayable January 26, 2021 from -semi-annually Repayable from October 16, $-semi-annually Repayable from March 10, n. cr This line of stments. The expiration date of the the of date stments. The expiration (1,842) an agreement with an agreement and equipment pledged as pledged equipment and an agreement with an agreement
of credit were NT$0.5 billion and NT$3 billion,of - As of December 31, 2,000,000 2,400,000 2019 2018 $1,744,975 For the endedDecember 31, For years
Commercial Bank, effective from October 17, 2016. 2016. 17, October from Bank, effective Commercial offered The agreement of NT$3 credit revolving line of UMC a use the first after six months years and the two of the end from starting reduced The adjustments. of six a with total thereafter, six months every and 2022. 16, is April agreement the of date expiration 31, 2019 As of December and 2018, the unused line respectively. UMC a offered agreement The 2, November 2016. Bank, from effective billio NT$3 credit of of line revolving months every three and use the first after third year of the the end starting from nine totalthereafter, a with of adju the 27, 2022. 2018, and 2019 is October 31, December agreement As of unused line of credit were and billion, NT$0.6 billion NT$3 respectively. (4,701,775) (2,622,161)
d 0.55%~5.56% 0.99%~5.56%
Lenders Lenders 2019 2018 Redemption Please refer to Note 8 for property, plant plant 8 Note to for property, Please refer term loans.
Note A: UMC entered into a 5-year lo A: Note UMC entered into a 5-year lo B: Note
b.
syndicated loans syndicated Bank International Commercial Bank (Note A) Hwa Commercial BankB) (Note otal $29,200,299 $28,204,054 Interest rates applie
Less: Current portion Unsecured Long-Term Loan from ICBC ICBC from Loan Long-Term Unsecured Loan from MegaUnsecured Revolving Loan Chang from Revolving Unsecured Subtotal 33,902,074AdministrativeLess: expenses from 30,828,057
T
r 19, 2015 to October 19, to Octoberr 19, 2015 Redemption ober 20, 2016 to October 20, to Octoberober 20, 2016 2024. 2024. payment Interest-only first the for year. Principal is repaid17 quarterly in payments with monthly interest payments. 2020. 2020. payment Interest-only first the for year. Principal is repaid17 quarterly in payments with monthly interest payments. Interest-only payment for the first year. Interest-onlypaymentthe for first year. Principal is repaidquarterly in 17 payments with monthly interest payments. 2025. 2025. payment Interest-only first the for year. Principal is repaid37 quarterly in payments with monthly interest payments. 2023 with monthly interest 31, May payments. 2024. 2024. payment Interest-only first the for and the second year. Principalis repaid in 13 semi-annual payments with semi-annual interest payments. 2017 to February 6, 2020 with monthly 6, 2020 with monthly 2017 to February interest payments. December 23, 2021 with monthly interest with monthly December 23, 2021 payments. 2021. 2021. payment Interest-only first the for and nine months. Principal is repaid in full at theend with the term of monthly interest payments. - October Effective 24, 2019 to October 24, - to from May 31, 2019 Repayable monthly - 30, 10, 2019 to September January Effective 3,006 10, August August 10, 2015 to Effective
- 747,900semi-annually Repayable from 6, February - 1,000,000 to Marchquarterly 2019 23, from Repayable 1,288 $3,827 $6,013 5, 2021. 3, 2017 to July July Effective 10,380 71,351 83,243 Octobe Effective 29,896 As of December 31, 747,900 2019 2018 26,892,457 28,987,895 Oct Effective
Lenders Lenders Details of long-term loans as of December 31, 2019 and 2018 are as follows: are as 2018 and 2019 31, December as of loans long-term Details of a. (12) Long-Term (12) Long-Term Loans Cooperative Bank (1) (1) Bank Cooperative International Commercial Bank (1) International Commercial Bank (2) Cooperative Bank (2) (2) Bank Cooperative Cooperative Bank (3) (3) Bank Cooperative 6 others Bank andDevelopment of Taiwan and others 7 Taiwan of of Taiwan of Taiwan Bank Bank Secured Long-Term Loan from Taiwan Loan Taiwan from Secured Long-Term Secured Long-Term Loan from Mega Secured Long-Term Loan from Mega Secured Long-Term Secured Long-Term Loan from Taiwan Loan Taiwan from Secured Long-Term Secured Long-Term Loan from Taiwan Loan Taiwan from Secured Long-Term Secured Syndicated Loans from China Unsecured Syndicated Loans from Bank Loans from Unsecured Syndicated Unsecured Long-Term Bank Loan from Unsecured Long-Term Unsecured Long-Term Loan from CTBC CTBC from Loan Long-Term Unsecured
224 Financial Review
373) 373) (4,167,174) December 31, December December 31, 31, December 65,119 65,119 (97,257) 13,225 13,225 16,552 94,362 94,362 95,577 41,284 41,284 42,197 As of December 31, December of As 216,510 216,510 233,530 180,095 180,095 (5,907) For the years ended years ended the For For the years ended years ended the For 2019 2018 2019 2019 2019 2018 2019 2019 2018 (216,510) (216,510) (233,530) 1,385,696 1,385,696 1,453,335 (4,025, $1,385,696 $1,385,696 $1,453,335 $(5,411,069) $(5,411,069) $(5,620,509) the consolidated balance sheets are balance sheets as the consolidated
$55 million and NT$59 million,respectively. and $55 million in interestin income Interest income on on plan assets income Interest Arising from changes in financial assumptions assumptions financial in changes from Arising adjustments Experience $(114,976) $(91,350) income (loss): income (loss): Return on plan assets, excluding amounts includedassets, planexcluding Return on recognized on the consolidated balance sheets sheets balance consolidated on the recognized $(4,025,373) $(4,167,174) Fair value of plan assets at end of year assets at end of of value plan Fair Contribution by employer employer by Contribution paid Benefits Remeasurements recognized in other comprehensive Subtotal Subtotal
Funded status status Funded Remeasurements recognized in othercomprehensive paid Benefits at end year of obligation benefit Defined assets plan of value fair of balance Beginning or loss: as profit recognized Items $1,453,335 $1,532,539 obligation benefit the defined value of Present assets of plan value Fair $(5,411,069) $(5,620,509) definedNet benefit liabilities, noncurrent
follows: follows:
year: assets during the value plan in of fair Movements 31, December ended years the for Company the of assets plan on returns actual The 2019 and 2018 were NT
iii. The defined benefit plan recognized on recognized plan benefit defined The iii. recognized by the recognized by December 31, 31, December (51,146) (61,247) (21,043) (24,477) For the years ended years ended the For 2019 2018 2018 2019 for employees of the Singapore branch branch the Singapore of employees for in the Company’s consolidated financial financial consolidated Company’s the in e completion of the 15th year and the total and of year 15th the e completion UMC and its domesticUMC subsidiaries make d benefit obligation during the year: year: during the obligation benefit d
Interest cost Service cost cost Service
Subtotal (72,189)Subtotal (85,724) Defined benefit obligation at beginning of year of at beginning obligation benefit Defined or loss: as profit recognized Items $(5,620,509) $(5,671,058) assets are as follows: follows: as are assets Movements in present value of define defined benefit plan. The pension benefits are disbursed based on the units of of the units on plan. based are disbursed benefit benefits The pension defined Labor the to according retirement to prior salary monthly average and years service Standards Act. units peryear are awardedTwo forthe first 15 yearsof services per is unit yearawarded one th while after units. 45 units will not exceed to equivalent amount an contributes The Company fund the pension basis to a on monthly wages salaries and total employees’ of the 2% supervisory fund pension a of name the under Taiwan of Bank with the deposited designated the government’s by managed is fund The pension committee. authoritiesand thereforenot included is pension total 2018, and 2019 31, December ended the years statements. For were NT$59 respectively, millionexpenses of and NT$69 million, Company. Company.
the R.O.C. Act of is the Labor Pension a defined under plan pension The employee plan, the to Pursuant plan. contribution monthly contributions of 6% based on each individual employee’s salary or wage to to wage or salary employee’s individual on each 6% based of contributions monthly accounts. pension employees’ benefits Pension regulations. the local with in accordance are provided overseas subsidiaries and Total pension expenses NT$1,369 of million and NT$1,339 million by the are contributed respectively. and 2018, 2019 31, December the years ended for Company i. the R.O.C. is a of Act Labor Standards the by plan mandated pension The employee ii. Movements in present value of defined benefit obligation and fair value of plan plan of value fair and obligation benefit defined of value in present Movements ii. a. plan contribution Defined b. Defined benefit plan (13) Post-Employment Benefits
225 United Microelectronics Corporation | Annual Report 2019
0.5% 0.5% 0.5% decrease decrease decrease
0.5% 0.5% increase increase increase As of Decemberof 31, As 551,553 $17,480,904 $17,480,904 551,553 617,685 7,129,770 7,129,770 617,685 2019 2019 2018 (484,888) (484,888) (358,690) 9,770,974 13,648,780 13,648,780 9,770,974 (4,062,148) (4,062,148) (3,885,722) $3,780,579 $3,832,124 $3,832,124 $3,780,579 $17,480,904 $17,480,904 $14,595,546 $13, $13,551,553 $17,480,904 $17,480,904 $13,551,553 0.5% 0.5% 0.5% decrease decrease decrease As of December 31, 2018 2018 31, December As of As of December 31, 2019 2019 31, December As of ul lives of related equipment, and recorded recorded and equipment, related of lives ul
Discount rate salary future increase of Rate Discount rate salary future increase of Rate 0.5% 0.5% 0.5% increase increase od defined benefit obligation benefit defined $235,666 $(251,131) $(215,694) $205,388 obligation benefit defined $262,909 $(281,037) $(244,120) $231,751 Decrease (increase) in Decrease (increase) in
method on thatThe sensitivity based a analyses determined above have been as result reasonable of benefit obligation a on the net defined the impact extrapolates period. the reporting of the end at occurring in key assumptions changes
Other operating income income operating Other vii. Sensitivity analysis:
Exchange effect effect Exchange balance Ending Total Total Noncurrent Noncurrent Beginning balance balance Beginning peri the during Arising Current Recorded profit in or loss: the by received acquisitions to equipment grants related government significant The usef the over income as are amortized Company expenses. and income operating in the net other
(14) Deferred Government Grants Deferred Government (14) 8% 17% 51% 24% 252,969 298,483 328,958 377,022 4,263,427 in the market over 45% 24% 24% As of December 31, December of As As of December 31, December of As 2019 2018 2018 2019 2019 2018 2018 2019 0.67% 0.67% 0.91% 3.50% 3.50% 3.50% As of December 31, 2019 31, 2019 December of As turn on assets is determined based on based determined turnis assets on on the assets’ returns on the assets’ inable from interest rates offered by local by interest rates offered inable from
Year Year 2021 2021 2022 2022 2023 2024 2020 2020 $230,468 Total Total $5,751,327 2025 and thereafter thereafter and 2025
rate Discount increase salary future Rate of Cash 21% 21% Cash Equity instruments Debt instruments Debt instruments Others 10% assets are as follows: follows: as are assets of Bank by the a trust administered under is deposited pension fund Employee of re rate overall expected The Taiwan. expectations actuaries’ and trend historical in 2020. million of NT$93 contribution pension fund make to expects The Company years 10 are 9 and obligation benefit the defined of durations weighted-average The 2018, respectively. 31, and 2019 December as of years the obligation period. period. obligation the the by determined is fund the of utilization the Furthermore, minimum the also guarantees which committee, supervisory fund pension labor atta the earnings less than be no to earnings deposits. time two-year for banks
v. v. are as follows: actuarial assumptions underlying The principal vi. Expected future benefit payments payments are as follows: benefit future Expected vi. iv. The major categories of plan assets as a percentage of the fair value of the total plan total the plan of value the fair of assets as a percentage categoriesplan of The major iv.
226 Financial Review 2018 2018 2019 2019 As of December 31, December December 31, December As of additional paid-in additional e repurchase and such, the number of of number such, the - 200,000 200,000 - - 200,000 retained earnings, retained id-in capital. As The purpose for th
- 480,000 280,000 200,000 400,000 480,000 480,000 400,000 280,000 220,000 - 500,000 400,000 200,000 2019 2019 Decrease Increase 2018 Increase Decrease As of As of January 1, January 1, January Purpose Purpose credit and and its credit stockholders’ rights and interests and its credit stockholders’ rights and interests employees employees employees employees
To maintain UMC’s maintain UMC’s To 480,000 220,000 - 700,000 maintain UMC’s To For transfer transfer to For For transfer transfer to For For the year ended December 31, 2019 2019 31, December the year ended For (In thousands of shares) of (In thousands shares) of (In thousands For the year ended December 31, 2018 2018 31, December the year ended For centralized securities exchange market. centralized were 2018 and 31, 2019 December ended the years during stock in treasury changes as follows: treasury stock shall not exceed 10% of UMC’s issued stock, and the total purchase purchase total the and stock, issued UMC’s of 10% exceed not shall stock treasury not shall sumthe exceed of amount capital-premiums and realized additional pa additional and realized capital-premiums not did 2018, and 2019 31, December of as held UMC that treasury stock of shares limit. the exceed
ii. According to the Securities and Exchange Law of the R.O.C., the total shares of of shares total R.O.C., the the of Law Exchange and Securities the to According ii. i. the from its shares and repurchased program stock UMC carried out a treasury b. stock: Treasury
As of Decemberof 31, As 2019 2018 2018 2019 $2,078,075 $1,213,476 ized to be issued as of December 31, December to be issued as of ized , which were traded on the NYSE as of ely. ely. ADS represents five common One d its stockholders’ rights and interests. interests. and rights stockholders’ its d 692 million shares and 717 million shares ockholders’ rights and interests. and rights ockholders’
under other current liabilities) liabilities) under other current convertible bonds into ordinary shares of UMC for the year ended December 31, 31, December ended year the for UMC of shares into ordinary bonds convertible 2019. 2019 and 2018, of which 11,724 million shares and 12,424 million shares were were shares million 12,424 shares and million which 11,724 of 2018, and 2019 value of at a par each respectively, and 2018, 31, 2019 December issued as of NT$10. of the purpose for 4, 2018 to May 12 March period from the during were repurchased and its st credit maintaining UMC’s December 31, 2019 and 2018, respectively. and 2018, respectively. 31, 2019 December The total number common of shares were ADSs all by issued represented UMC respectiv and 2018, 2019 31, December as of shares. of the purpose for 13, 2016 June 13 to May the period from during repurchased June 26 to April from period the during repurchased and employees, to transferring rights its stockholders’ and credit UMC’s maintaining of the purpose for 2019 13, interests. and for 4, 2019 January to 2018 7, November from the period during were repurchased credit an the purpose of maintaining UMC’s unsecured overseas of conversion Company’s the for 6(11) Note to refer Please vi. i. i. author shares common million 26,000 had UMC ii. UMC had 138 million and 143 million ADSs treasury stock, which shares of v. million cancelled 200 2018, UMC On August 27, treasury were stock, which shares of 400 million cancelled UMC 2019, 28, On June iii. which stock, treasury shares of million 300 UMC cancelled 2019, 11, March On iv. Refund liabilities liabilities Refund
a. stock: Capital
(16) Equity (15) Refund (15) Refund Liabilities (classified
227 United Microelectronics Corporation | Annual Report 2019
- (7,074) (NT dollars) dollars) (NT 31, December 24,740 24,740 (278,613) For the years ended ended the years For (15,213) (15,213) (103,894) 2019 2019 2018 Cash dividend per share share per Cash dividend $410,065 $410,065 $466,768 $466,768 $466,768 $958,405 3,512,617 3,512,617 4,327,882 (3,578,847) (3,578,847) (4,429,938) and stockholders’ meeting approval can can approval meeting stockholders’ and 2020. 2020. are as of distribution The details porting date. relevantInformation to the
55 6,916,105 $0.58 $0.75 2019 2019 2018 2019 2018 $614,784 $707,299 (in thousand NT dollars) dollars) NT thousand (in Appropriation of earnings earnings of Appropriation
Other comprehensive income (loss) (loss) income Other comprehensive Net loss
Changes in subsidiaries’ ownership ownership in subsidiaries’ Changes Others balance Ending Adjusted balance as of January 1 January as of balance Adjusted interests: non-controlling to Attributable a subsidiary of Disposal Cash dividends Cash dividends 9,765,1 Legal reserve Legal reserve reserve Special (3,491,626) 14,513,940 was meeting stockholders’ by approved distribution 2018 aforementioned The 2019. 6, March held on BoardDirectors of of of meeting with the resolutions consistent share per to NT$0.58989396 adjusted was 2018 for share per dividend cash The 2019. 19, June on meeting Directors’ the Board of of resolution the to according The share to the shares due common outstanding decrease in the for was made adjustment repurchase program. held meeting stockholders’ the by approved was 2018 for earnings of distribution The the by approved was 2019 for earnings of the distribution 2019, while June 12, on 26, on February meeting Directors’ Board of follows: Board of Directors’ meeting recommendations meeting Directors’ Board of TWSE. the of website the on System” Post Observation the “Market from obtained be approved been yet not has earnings retained 2019unappropriated of appropriation The re as the of meeting the stockholder’s by directors’ and employees the on information for 6(19) Note to refer Please compensation. d. Non-controlling interests: , such as as such , uity shall be shall be distributed it be entitled to voting it bsidiaries is treated as treasury stock. UMC’s stock. UMC’s closing price on The by the Board of Directors according to to according Directors of Board the by nge Law of the R.O.C., treasury stock held ear-end. ear-end. is prohibited special reserve Such
not be pledged, nor should of stockholders’ dividend shall be allocated as cash cash allocated as be shall dividend of stockholders’ shares of UNITED UNITED SILICON of INC. these shares shares in 1997, and and dividend policies: policies: dividend and according to the distribution plan proposed to the distribution plan proposed according approval. for meeting stockholders’ the to submitted and policy dividend the reached UMC’s paid-in capital. paid-in reached UMC’s regulations. stock through acquiring respectively. and NT$11.25, were and 2018, NT$16.45 31, 2019 December were converted to UMC’s stock in 2000 as a result of the Company’s 5 in 1 merger. 5 in 1 merger. of the Company’s as a result 2000 in stock to UMC’s were converted VENTURE FORTUNE subsidiary, 2018, UMC’s and 31, 2019 As of December held 16 million shares of CORP., CAPITAL rights or receiving dividends. receiving or rights su by held Stock subscription for except stockholders other as rights same the have subsidiaries These rights. voting and stockto new issuance by the parent company should
operate to continues and industry intensive capital a in business conducts UMC Because to factors pursuant determined UMC shall be of policy dividend the its growth phase, in overseas and domestic its requirements, funding environment, as investment such the as well stockholders’ forecast, its expenditure and capital landscape competitive interest, balancinglong-term dividends financial and UMC’s planning. The Board of meeting it stockholders’ to and plan submit the the distribution propose shall Directors distribution The year. every 80%. to 0% of range the in dividend stock and 100%, to 20% of range the in dividend special a appropriate to required is UMC FSC, to the regulations of Taiwan According of under debit elements eq to the sum equal in the amount reserve shall be any, if earnings, year’s current Incorporation, Articles of to UMC’s According distributedin the following order: unrealized loss on financial instruments and debit balance of exchange differences on on differences exchange of balance debit and instruments financial loss on unrealized y at every operations, of foreign translation the special elements is reversed, the debit any of if However, distribution. from distribution or earnings for be released may equal reversal to the in the amount reserve deficits. accumulated offsetting i. of Payment taxes. ii. years. preceding up loss for Making has reserve legal accumulated when for except reserve, legal for 10% aside Setting iii. or other officials government by reserve special reversing or Appropriating iv. v. earnings, unappropriated year’s previous the plus The remaining, iv. UMC’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held shares of UMC’s held shares UMC’s of CORP., VENTURE CAPITAL FORTUNE subsidiary, UMC’s iv. iii. In compliance with Securities and Excha In compliance with iii. c. Retained earnings
228 Financial Review
Total Total
- 4,776,582 and Adjustment Adjustment Elimination Elimination Consolidated
- 4,776,582
New For the year ended December 31, 2018 2018 Decemberended 31, year the For Business Subtotal Business Subtotal For the year ended December 31, ended For December 2019 the year 31, ended For December 2018 the year China China (includes (includes Hong Kong) Kong) Hong Japan USA Europe Others Kong) Hong Japan USA Europe Others 4,776,582 Wafer Wafer Fabrication Fabrication $151,023,932 $247,929 $151,271,861$146,247,350 $151,252,571 $(19,290) $247,929 $146,495,279$151,023,932 $146,475,989 $(19,290) $247,929 $151,271,861 $151,252,571 $(19,290) 61,058 2,557 127,340 171,586 11,329 761,527 9,209 1,144,606 time time contracts with contracts customers At a point in At a point Over time Over time Taiwan Singapore Singapore Taiwan Singapore Taiwan recognition: of revenue timing The Total Revenue from from Revenue The geographic breakdown of the Company’s operating revenues was based on the the on was based revenues operating the Company’s of breakdown The geographic customers. of the Company’s location $53,966,435 $23,979,343 $19,115,188 $9,855,772 $19,957,615 $6,900,339 $14,426,949$148,201,641 ii. By geography
time $53,905,377 $23,976,786 $18,987,848 $9,684,186 $19,946,286 $6,138,812 $14,417,740$147,057,035 time $54,963,771 $24,791,908 $14,889,672 $5,889,277 $23,536,756 $11,551,052 $10,853,553 $146,475,989 contracts with with contracts customers $53,966,435 $23,979,343 $19,115,188 $9,855,772 $19,957,615 $6,900,339 $14,426,949 $148,201,641 with contracts customers $55,092,681 $24,820,196 $18,504,881 $5,896,313 $23,555,105 $12,527,894 $10,855,501 $151,252,571 At a point in Over time At a point in Over time 128,910 28,288 3,615,209 7,036 18,349 976,842 1,948 4,776,582 The timing of revenue recognition: Total The timing of revenue recognition: Total $55,092,681 $24,820,196 $18,504,881 $5,896,313 $23,555,105 $12,527,894 $10,855,501 $151,252,571 Revenue from Revenue from Revenue
1,144,607 - $- $148,201,641 $- $147,057,034 $- $148,201,641 and Adjustment Adjustment Elimination Consolidated Elimination 1,144,607 $148,201,641 $147,057,034 $148,201,641 sted on grant, the Company the date of e grant date, whereas for the stocks with stocks the for whereas date, grant e
- of one or two-years from the date of grant, date the grant, of two-years or one of from recognized in expense the difference between between difference the expense in recognized $78,335 $78,335 $78,335
New For the year ended December the For 2019year 31, Business Subtotal
talents and reward the employees for their productivity and their productivity for the employees reward talents and 1,144,607 Wafer Fabrication Fabrication $148,123,306 $146,978,699 $148,123,306 time time contracts with contracts customers At a point in At a point Over time Over time recognition: of revenue timing The Total Revenue from from Revenue i. By operating segments
loyalty, the Company carried out a compensation plan to offer 200 million shares of shares of million 200 plan to offer a compensation out carried the Company loyalty, August 2018. in to employees treasury stock the shared-based cost for The compensation having value, fair at measured was payment from received cash the and date grant the at shares the of price market quoted closing the employees. grant date on the shares Company’s the of price market closing quoted The ve stocks the For share. per NT$16.95 was th on cost compensation entire the recognized end at the vest to conditions service requisite in period the over basis straight-line a cost on compensation the recognizes Company the with a corresponding increase in the servicesfulfilled, together which conditions are equity. As such, for the years ended December 31, 2019 and 2018, total compensation the by recognized were respectively, million, NT$696 and million NT$366 of cost Company. In order attract, retain to
a. a. revenue of Disaggregation
(17) Share-Based Share-Based (17) Payment (18) Operating Operating (18) Revenues
229 United Microelectronics Corporation | Annual Report 2019
The estimate of the expenses Total Operating Operating costs Operating 6,654 880,967 1,219,163 2,100,130 e Company recognized costs to fulfill sed in Note 9(6). te, the progress cannot be reliably estimated estimated reliably be cannot te, the progress igns with progress toward completion of a For the years ended December 31, 31, December ended years the For
fulfill a contract with customer with customer a contract fulfill expenses Total Total expenses Operating 848,214 1,368,440 2,21 911,037 395,571 1,306,608303,358 882,671 124,631 376,556 427,989 1,259,227 289,395 111,734 401,129 costs 1,066,877 361,281 1,428,158 1,065,176 342,565 1,407,741 Operating Operating $17,109,432 $7,712,792 $24,822,224 $17,694,175 $7,780,063 $25,474,238
The Company recognized NT$616 million and NT$3,815 million, respectively, in respectively, million, and NT$3,815 million NT$616 recognized The Company as period ofthe beginning the at liabilities contract the balance revenues from 31, and 2019 December ended the for years were satisfied obligations performance 2018. benefit expenses insurance insurance As of December 31,As of 2019 and 2018, th amounted to NT$2,987 million and NT$3,148 million as of December 31, 2019 and and 31, 2019 December as of million and NT$3,148 million to NT$2,987 amounted respectively. 2018, its satisfies Company as the revenue recognize will Company The that al time over obligations performance future. the in contract report da the As of disclo as suspension the to due primarily transaction price does not include any estimated amounts of variable consideration that consideration of variable amounts any estimated include not does price transaction are constrained. which assets current as other capitalization eligible for contracts service engineering the Subsequently, respectively. amounted to NT$560 million and NT$567 million, to a Company willcosts fulfill operating costs when the to contract expense from related obligations are satisfied.
expenses expenses Pension Pension Other employee Labor and health Salaries Salaries mortization mortization epreciation epreciation 45,068,673 1,841,954 46,910,627 47,086,993 2,689,314 49,776,307 mployee benefit 2018 2019
summarized are expenses amortization and depreciation benefit, employee Company’s The as follows: c. The Company’s transaction price allocated to unsatisfied performance obligations obligations performance unsatisfied to price allocated transaction The Company’s c. d. d. to costs from recognized Asset E D A Costs and Expenses Operating (19) - 2018 2018 2018 2018 January 1, January January 1, January - - December 31, December For the years ended years ended the For 2018 2018 2018 2018 As of As of 20192018 December 31, December December 31, December n and the consideration received from from received consideration the and n partment of Justice (DOJ) against UMCagainst (DOJ) Justice partment of allowance was mainly resulted from the from mainly resulted was allowance 2019 2019 2019 2019
$988,115 $932,371 $3,951,414 $1,470,195 $932,371 $3,951,414 482,080
31, December $214,243 (385,248) (393,974) $92,210 $129,042
31, December
Less: Loss allowance allowance Loss Less: Net Current Noncurrent Total Total
$142,625,019Wafer $142,550,304 5,576,622Others $148,201,641Total $151,252,571 8,702,267 goods and services Sales of $599,491 $486,184 $129,042 goods and services Sales of $1,470,195 $932,371 $3,951,414
customers. customers. The movement of contract liabilities is mainly caused by the timing difference of the of difference timing the by caused mainly is liabilities contract of The movement obligatio of performance a of satisfaction to equal amount an at primarily Company the by assessed was allowance The loss losses. credit expected lifetime The loss indictment filed by the United States De States by the United filed indictment agreement. development to the joint technology related to Note 9(6). refer Please iii. By Product
i. Contract assets, current
ii. Contract liabilities b. Contract balances
230 Financial Review
- -
December 31, December December 31, December December 31, December (7,398) (7,398) - 19,423 19,423 104,956 63,828 63,828 82,553 43,036 43,036 136,743 For the years ended ended the years For For the years ended ended the years For For the years ended ended the years For (16,293) (16,293) (19,286) (84,974) (84,974) 178,112 178,112 274,168 275,465 275,465 274,168 2019 2018 2018 2019 2019 2018 2018 2019 2019 2019 2018 (335,760) (440,110) $672,902 $672,902 $710,663 $200,351 $200,351 $199,505 1,808,633 1,808,633 1,782,544 5,366,907 5,366,907 5,220,746 $1,257,299 $1,257,299 $(1,128,290) $1,279,931 $1,279,931 $(1,167,735) $2,997,643 $2,997,643 $2,851,225 $5,182,162 $5,182,162 $5,116,884
stments stments to restate prior periods in accordance with the transition provision in IFRS 16. IFRS in provision transition the with in accordance periods to restate prior liabilitiesthrough profit value orat fair loss Investments accounted for under the equity method the equity under for accounted Investments (25,762) (46,225) Bonds payable payable Bonds Others Bank loans Bank loans Lease liabilities (Note)
Interest expenses expenses Interest Financial expenses expenses Financial Total Others Others Total Loss on disposal of inve of on disposal Loss
Gain (loss) on valuation of financial assets and assets and financial of valuation (loss) on Gain loss Impairment Note: Note: 1, 2019. January 16 on IFRS adopted Company The not elected The Company Property, plant and equipment plant and equipment Property, Goodwill Government grants Government Impairment loss Rental income from property from income Rental and equipment plant property, disposal of Gain on Others Total
b. costs Finance
a. and losses Othergains and Expenses Income Non-Operating (21) (20) Net OtherOperating Incomeand Expenses (20) 10,259 7,624 2019 2018 2018 2019 $1,132,952 $1,400,835 are as follows: are as follows: ectors’ compensation in the profit or loss or loss profit the in compensation ectors’ stry averages. stry averages. Directors Board of the If of UMC’s subsidiaries who subsidiaries specificfulfill who of UMC’s Directors attended by two-thirds of the total compensation for 2018 were reported to the the to reported were 2018 for compensation sation for each profitable fiscal year after after year fiscal profitable each for sation
s of distribution distribution s of
Directors’ compensation compensation Directors’ Employees’ compensation – Cash Cash – compensation Employees’ According to UMC’s Articles of Incorporation, the employees and directors’ compensation compensation directors’ and the employees Incorporation, of Articles UMC’s to According shall be distributed in the following order: the during reported 2018 for compensation directors’ and employees aforementioned The Directors of Board the of the resolutions with were consistent meeting stockholders’ 6, 2019. held March on meeting can be compensation directors’ and employees the aforementioned to relevant Information TWSE. the of website on the Post System” Observation the “Market from obtained
no more and compensation as employees’ profit of 5% no less than allocate shall UMC compen as 0.1% directors’ than profit of losses. cumulative any offsetting will be compensation employees’ aforementioned The shares or cash. in distributed The employees compensation. Directorsbe granted such may of by the Board stipulated requirements in cash. compensation only receive may Directors adopted by by a resolution UMC may, of the a meeting votea majorityBoard of at compensation and directors’ employees the aforementioned distribute directors, of number such distribution. for meeting to the stockholders’ report and dir and employees the recognizes The Company 2018. and 2019 31, December ended years the for earned when periods the during The by ta king into consideration the Articles of the amount estimates Directors of Board and indu regulations government Incorporation, stock of number stock, the through compensation employee to distribute resolves by the closing divided price compensation employee on total is calculated based distributed meeting. Directors of Board the day before the of subsequently Directors the Board of If the change as an Company will recognize the modifies the estimates significantly, adjustment in the profit or loss in the subsequent period. directors’ and employees of distributions The and of employees distributions the while 2019, 12, June on meeting stockholders’ meeting the Board of Directors through were 2019 approved for compensation directors’ 2020. 26, February on The detail
231 United Microelectronics Corporation | Annual Report 2019
Other net of tax net tax of income (loss), income comprehensive
effect effect Income tax Other before tax income (loss), (loss), income comprehensive comprehensive - 1,454,018 44,526 1,498,544 - (2,572) 514 (2,058) - (475,139) 34,697 (440,442) $- $(55,060) $32,647 $(22,413) 408 (47,009) (18,884) (65,893)
For the year ended December ended 31, 2018 For the year adjustments adjustments Reclassification during period the during (2,572) (11,045) (12,897) (23,942) 6,148 (17,794) (47,417) $(55,060) (475,139) $862,785 $(12,489) $850,296 $99,648 $949,944 1,454,018 the period the Arising during Arising during e reclassifiedto subsequently income (loss) (loss) income profit or loss loss or profit equity instruments instruments equity fair at measured investments other through value comprehensive income subsequently to profit or loss: or profit to subsequently benefit pension plans not be which will instruments reclassified to subsequently loss or profit income (loss) of associates income (loss) and joint ventureswhich may b income (loss) of associates income (loss) and joint ventureswhich will be reclassifiednot loss or profit to subsequently loss: or profit to subsequently translation of foreign foreign of translation operations Total otherTotal comprehensive Unrealized gains or losses from from losses or gains Unrealized Items that will not be that be not reclassified will Items ofRemeasurements defined on hedging Gains or losses Share of comprehensive other Share Share of comprehensive other Share be reclassifiedthat may Items Exchange differences on
7,247 Other 1,231,722 5,349,230 (3,264,536) net of tax income (loss), (loss), income comprehensive comprehensive
-
(8,101) 13,402 effect Income tax 15,348 $106,403 $(21,281) $85,122 Other 5,486,209 (136,979) 1,231,722 (3,277,938) $3,561,744 $(152,959) $3,408,785 before tax income (loss), income comprehensive
- - $- 6,594 14,085 $20,679
For the year ended December 31, 2019 ended December 31, 2019 For the year adjustments adjustments Reclassification Reclassification during the period
8,754 mprehensive Income mprehensive Income (Loss) $106,403 5,486,209 1,231,722 (3,292,023) $3,541,065 the period the Arising during Arising during
(22) Components of Other Co (22) translation of foreign foreign of translation operations benefit pension plans instruments equity from fair at measured investments other through value comprehensive income of associates income (loss) and joint ventureswhich will be reclassifiednot loss or profit to subsequently of associates income (loss) which joint ventures and may be reclassified loss or profit to subsequently Exchange differences on differences Exchange Remeasurements of defined or losses gains Unrealized comprehensive other of Share comprehensive other of Share subsequently to profit or loss: or profit to subsequently loss: or profit to subsequently (loss) income Items that not be will reclassified Items be reclassifiedthat may Items otherTotal comprehensive
232 Financial Review - 7,235 7,235
- (56,759) - - (514) (514) $(45) $(45) $- December 31, December December 31,December December 31, December $(559) $(559) $(56,759) (8,101) (8,101) 1,701 $5,301 $5,301 $(12,736) For the years ended the years ended For For the years ended ended years the For For the years ended ended years the For $13,402 $13,402 $(21,672) 2019 2018 2019 2019 2018 2018 2019 2019 2018 2018 2019 (146,067) (146,067) 26,122 1,911,970 1,911,970 2,239,058 1,147,128 1,147,128 436,880 (1,033,780) (1,033,780) (1,111,893) $5,735,637 $5,735,637 $2,184,399
anges in tax rates anges equity component of rrent income tax of priorrrent income tax of reclassified subsequently subsequently reclassified operations operations may which ventures joint and associates of or profit loss to subsequently be reclassified rates Deferred income tax related to changes in tax tax in changes to related tax income Deferred tax relatedIncome to that items may be
Exchange differences on translation of foreign foreign of translation on differences Exchange (loss) income other comprehensive of Share Items that may be reclassified subsequently to profitor loss: that Items may be reclassified initial the recognition of to profit be reclassified subsequently orlossnot the compound financial instrument instrument financial the compound
Deferred income tax related to ch Total Reversal of temporary difference arising from from arising difference temporary of Reversal instruments orlosseshedging Gains on will which
(ii)
write-downs/reversals and different jurisdictional and different write-downs/reversals tax rates credits periods periods et changes in loss carry-forward and investment tax tax and investment carry-forward in loss changes et
Income before tax tax before Income income tax rate statutory At UMC’s cu of Adjustments in respect N Adjustment of deferred tax assets/liabilities for for tax assets/liabilities deferred Adjustment of applicable tax rate was as follows: rate was follows: tax as applicable iii. Deferred income to equitytax charged directly iii.
tax before at UMC’s and income tax expense between income A reconciliation b. 514 - -- 39,742 29,118 - (848,223) December 31, December December 31, December For the years ended the years ended For For the years ended ended the years For 468,407 1,390,698 2019 2018 2018 2019 2019 2018 2018 2019 $(21,281) $11,012 (136,979) 31,998 (243,981) (335,367) (327,359) (135,543) $622,394 $584,419 (1,033,780) (1,111,893) profit loss: or other comprehensive income (loss) income other comprehensive
ntures which which will not ntures ted to originationted and ted to changes in tax items that will not be not items that will losses from equity equity losses from rofit or loss lans p reclassified subsequently to profit or loss or profit to subsequently reclassified $(158,260) $112,384 will not be reclassified subsequently to subsequently reclassified be not will p instruments investments measured at fair fair at measured investments instruments income comprehensive other through value associates and joint ve and joint associates to be reclassified subsequently or profit loss rates
Remeasurements of defined benefit pension Unrealized gains or Deferred income tax related to changes in tax tax in changes to related tax income Deferred related to tax Income Share of other comprehensive income (loss) of of (loss) income comprehensive other of Share Gains or losses on hedging instruments which subsequently to subsequently reclassified be not will that Items prior periods prior periods reversal of temporary differences differences temporary of reversal tax tax losses and unused of derecognition credits rates reversal of write-down of deferred assets tax deferred of of write-down reversal
Current income tax charge charge tax income Current tax of of current income respect in Adjustments Deferred income tax rela Deferred income Deferred tax related to income recognition and tax rela Deferred income Adjustment of prior year’s deferred income tax income deferred prior year’s of Adjustment write-down arising from tax income Deferred or 121,189 (2,744) Deferred income tax expense (benefit): (benefit): tax expense Deferred income Current income tax expense (benefit): (benefit): tax expense income Current
Income tax benefit recorded in profit or loss or loss profit in recorded benefit tax Income $(393,130) $(458,653) (i)
and 2018 were as follows: i. or loss in profit recorded (benefit) tax expense Income
ii. ii. Income tax related to components of
a. The major components of income tax expense for the years ended December 31, 2019 a. 2019 31, December ended years the for expense tax income of components major The (23) Income (23) Income Tax
233 United Microelectronics Corporation | Annual Report 2019
-
- 5,043 93 93 17,843 (559) (559) (56,759) December 31, December For the years ended ended the years For (73,213) (73,213) (9,572) As of December 31, December of As other foreign jurisdictions, jurisdictions, other foreign thorities of the respective thoritiesthe respective of 2019 2018 2018 2019 2019 2018 2018 2019 (152,959) (152,959) 99,648 9,588,002 9,588,002 10,799,310 4,422,309 4,422,309 4,457,720 1,542,895 $5,720,217 $5,720,217 $4,422,216 $4,422,216 $4,422,216 $4,439,877 $38,708,327 $38,708,327 $27,072,604 $48,296,329 $37,876,957 an and other foreign jurisdictions.other an and foreign As of ificant accounting judgments, estimates and and estimates judgments, accounting ificant The income tax exemption will expire on
during the period period the during (18,256) (68,821) be accepted by the tax au x exemption withx exemption for several periods respect to income horities through 2016,in while completed the examination through 2012. 2012. through examination the completed an is There more than 10 years 10 years than more 1~5 years years 1~5 years 6~10 (loss) (loss) Balance as of December 31 December as Balance of
Balance as of January 1 1 January of as Balance applications of retroactive Impact Acquisition from business combinations Amounts recognized in profitor loss period Expiry Adjusted balance as of January 1 1 January balance as of Adjusted income comprehensive other in recognized Amounts Amounts recognized in equity equity in recognized Amounts adjustments Exchange Total Total
C and its subsidiaries in Taiwan have UM C and its tax returns of income subsidiaries 31, in2019, Taiwan December aut the tax by been examined authoritiestax relevant have companiescertain of returns tax income ofthe the outcomeposition that tax uncertain within the Company may not operations. of countries tax income deferred of and measurement recognition the For sign involved which tax income current and 5(5). to Note refer please assumptions, derived from operations.the expansion of December 31, 2020. 2020. 31, December assets have been recognized was as follows: was as follows: recognized been assets have d. Movement of deferred tax e. The Company is subject to taxation in Taiw f. UMC was granted income ta g. g. tax income deferred no which for carry-forward loss tax of unused the information The
-
- (848,223) December 31, December 3,215 19,749 48,291 For the years ended ended years the For (69,484) (139,693) As of December 31, December of As 628,725 416,270 257,689 341,096 339,185 232,854 475,952 336,869 2019 2018 2018 2019 2019 2018 2018 2019 (321,459) (342,607) (477,043) (835,669) (568,683) (499,506) (139,093) (112,810) (565,175) (535,595) (102,608) (118,404) 1,310,300 502,331 7,807,583 6,387,909 1,568,645 1,703,942 $(393,130) $(458,653) $5,720,217 $4,422,216 $(1,778,820) $(451,589)
lities (2,087,366) (1,965,693) Investment tax tax credits Investment 767,665Others 98,367 Depreciation $1,658,688Depreciation Loss carry-forward $1,930,388 Pension 800,734 Pension liabilitiesRefund 825,792 Amortizable assets Amortizable (11,793)Others (7,768) Depreciation (550,772)Depreciation gain Investment option bond Convertible (440,524) Unrealized exchange gain gain exchange Unrealized Allowance for inventory valuation valuation losses inventory for Allowance loss Investment sales on intercompany profit Unrealized Dividend income Dividend Investment gain gain Investment 110,991Others 140,278 Tax exempt income income exempt Tax subsidiaries expenses: Net deferred income tax income assets deferred Net
Deferred income tax assets Total deferred income tax liabi tax income deferred Total
Deferred income tax liabilities tax Deferred income Others 91,228Others or loss profit in recorded benefit tax Income 129,306 Taxes withheld in other jurisdictions jurisdictions in other withheld Taxes Total deferred income tax assets income deferred Total Basic tax tax ratesapplicable of different to UMC and its Effect Deferred income tax related to changes in tax rates tax in changes to related tax income Deferred Tax effect of non-taxable incomeTax and non-deductible c. c. were assets income liabilities tax follows: and deferred as Significantof components
234 Financial Review
2019 2018 As of As of December 31, December 31, December
6,031,025 6,031,025
- - 665,793
Others Others Others Others (Note C) C) (Note (Note A) (Note A)
507) $273,628 $12,015,206 466) $238,982 $13,103,808 975) 1,843 33,902,074 777 (15,701) 30,826,215 Non-cash changes Non-cash changes Non-cash Foreign Foreign Foreign Foreign exchange exchange - (456,551) 380,787 20,410,355 - (698,127) 381,213 20,093,441
Cash Flows Cash Flows sing from Financing Activities Activities Financing from sing
665,793 252,269 (2,021) (619,347) 296,694 564,576 88,131 13,086 2019 2018 As of As of 6,006,457 (633,488) (78,432) 736,488 20,486,119 30,826,215 3,876,99141,378,182 (802, (2,500,000) - (96,766) 38,781,416 32,165,336 (1,880,197) 556, 48,517,631 (7,500,000) - 360,551 41,378,182 20,410,355 January 1, January 1, January $13,103,808 $(993,723) $(368, $25,445,540 $(12,288,248) $(292,
Items Items Items
For the year ended December 31, 2019: 2019: 31, December the year ended For 2018: 31, December the year ended For (25) Reconciliation of Liabilities Ari
(current portion portion (current included) portion (current included) (current portion portion (current included) portion (current included) liabilities-noncurrent portion included) portion included) portion liabilities-noncurrent
Short-term loans Short-term loans Short-term Guarantee deposits deposits Guarantee deposits Guarantee Long-term loans Long-term loans Long-term Lease liabilities Lease liabilities financial Other Bonds payable (current payable Bonds (current payable Bonds Other financial financial Other NT$2,881 million and December 31, December December 31, December $0.82 $0.58 $0.76 $0.55 90,047 137,511 For the years ended the years ended For For the years ended the years ended For 289,121 283,349 2019 2018 2018 2019 2019 2018 2018 2019 1,295,729 1,243,599 11,785,108 12,103,880 11,785,108 12,103,880 13,170,884 13,484,990 Tax Act, effective from 2018, the the 2018, from effective Act, Tax om 17% to 20%, and the 10% undistributed undistributed and the 10% to 20%, 17% om recognized to amounted recognized
and shares) shares) and parent company company parent $9,707,614 $7,072,990 endments to the R.O.C. Income dilution (thousand shares) (thousand shares) dilution Unsecured convertible bonds bonds convertible Unsecured Unsecured convertible bonds bonds convertible Unsecured compensation Employees’ basic earnings per share (thousand shares) (thousand per share basic earnings basic earnings per share (thous share per earnings basic et income attributable to the Income attributable to stockholders of the parent the of stockholders to attributable Income $9,996,735 $7,356,339 Net income attributable to the parent company company parent the to attributable income Net of dilution Effect $9,707,614 $7,072,990 of dilution Effect (NTD) share-diluted per Earnings
Weighted-average number of stocks after common of number Weighted-average Weighted-average number of common stocks for for stocks common of number Weighted-average
N shares for ordinary of number Weighted-average (NTD) per share-basic Earnings deferred income tax assets have been assets deferred income tax NT$5,964 million, respectively. to amounted subsidiaries in investments with associated liabilities tax deferred million,respectively. million and NT$11,036 NT$11,389 corporate income tax rate is raised fr tax is lowered to 5%. earnings whichfor no temporary differences deductible 2018, and 31, of As 2019 h. December i. unrecognized of differences temporary taxable the and 2018, 2019 31, December As of j. am the to According
a. Earnings share-basic per b. Earnings share-diluted per (24) Earnings Earnings (24) Per Share
235 United Microelectronics Corporation | Annual Report 2019
479,547 479,547
(479,547) (479,547) 3,561,827 3,561,827 1,318,754 1,318,754 1,563,553 1,563,553 $(171,585) $(171,585) 11,497,618 11,497,618 $2,910,389 $2,910,389 (1,962,119) (1,962,119) (3,170,323) (3,170,323) $18,189,515 $18,189,515 $18,017,930 $18,017,930 (18,189,515) (18,189,515) Fair value acquisition date recognized on the on recognized st was reclassified reclassified st was heldownership intere nd the difference was recognized as bargain as bargain was recognized the difference nd acquired and liabilities assumed was in excess excess assumed in was acquired and liabilities
le net assets
Cash and cash equivalents equivalents cash Cash and receivable Accounts 2,428,616 Inventories equipment and plant Property, assets Right-of-use 230,431 Others 23,990,735 Liabilities payable Accounts (189,231) Others (5,801,220) assets net identifiable Total purchase: on bargain Gain transferred Consideration Intangible assets Intangible on equipment payables and payables Other Lease liabilities Less: Fair value of identifiab Deferred tax assets Deferred Assets
Bargain purchase gain purchase gain Bargain The fair value of the identifiable assets and liabilities of USJC as of the date of acquisition acquisition of date the of as USJC of liabilities and assets identifiable the of value fair The were: purchase gain. The previously held ownership interest of 15.9% in USJC was previously income, comprehensive other through value at fair assets financial as for accounted non-current. a for consideration with value the at fair remeasured It was subsequently gain. purchase bargain the in resulting date the on acquisition discount interest minority and the NT375 million of disposal loss on a recognized the Company acquisition, the Upon previously the losses on unrealized accumulated The the net valueoffair identifiable assets of ownership interest held previously the and transferred consideration aggregate the of 15.9% in USJC at the acquisition date,a earnings. retained to income comprehensive other from
2,572 2,303,988 (2,910,389) $15,711,370 $12,800,981 r JPY 54.4 billion on October 1, on October 1, 54.4 billion r JPY tails on other financial liabilities-noncurrent. on other financial tails
the effective interest method. interest effective the
acquisition acquisition
Cash $15,711,370 Cash before interest immediately equity held of previously Fair value instruments hedging on or losses Gains $18,017,930 Total Consideration Transferred: Transferred: Consideration Cash flows analysis of acquisition: Consideration Cash Net cash acquired from the subsidiary subsidiary the from acquired cash Net outflows acquisitionNet cash from UNITED SEMICONDUCTOR JAPAN CO., LTD. (USJC) CO.,LTD. JAPAN UNITED SEMICONDUCTOR Note A: Other non-cash changes mainly consisted of discount amortization measured by by measured amortization discount of consisted mainly changes non-cash A: Other Note
Note B: Please refer to Note 9(5) for more de Note C: Including of a subsidiary. acquisition the impact from The Company exercised the call option of a joint venture agreement between FUJI FUJI between venture agreement of a joint call the option exercised Company The MIE in LIMITED interest SEMICONDUCTOR (FSL)acquir ownership to e 84.1% FUJITSU LIMITEDSEMICONDUCTOR (MIFS) fo 2019. The Company previously held 15.9% of ownership interest in MIFS. MIFS MIFS MIFS. in interest ownership of 15.9% held previously Company The 2019. as USJC upon and was renamed Company the of a subsidiary wholly-owned became is currently that Japan fab in a 300mm is USJC acquisition. the of completion products. 40nm and 65nm 90nm, manufacturing specialty Company’s the fits The fab growth projections. and long-term focus technology Company’s the increase will USJC scale of economies from benefit and synergies business provide share, market foundry to serve e and logic technologies specialty comprehensiv Company’s the broadening while customers. international and Japanese (26) Business Combinations
236 Financial Review (14,430) $(9,813) $4,617 - 4,277 December 31, 31, December 2,339 $1,291,398 45,523 27,881 For the years ended years ended the For 2019 2019 2018 $1,577,862 $1,323,556 Relationship Relationship Company the with her related her parties Other relatedOther parties Other relatedOther parties Ot Associate Associate Subsidiary’s director director Subsidiary’s The Company’s director Company’s The tween the Company and related parties during Associate from deconsolidation of the subsidiary: of subsidiary: the deconsolidation from ATION ATION Namerelatedof parties
Associates $1,53 Associates Others Cash received Cash received Net cash of subsidiary derecognized derecognized Net cash of subsidiary Net cash outflow from deconsolidation deconsolidation Net cash outflow from ventures Joint Total Operating revenues revenues Operating
UNITEDVISION SEMICONDUCTOR CO., LTD. UNITEDVISION SEMICONDUCTORCO., LTD. CORPORATION UNISTARS Otherrelated parties UPI SEMICONDUCTOR CORP. SEMICONDUCTORCORP. UPI ZHUAN CHUAN-FANG FARADAY TECHNOLOGY CORP. and its Subsidiaries and its Subsidiaries CORP. TECHNOLOGY FARADAY Associate HSUN CHIEH CAPITAL CORP. CORP. HSUNCHIEH CAPITAL CORPORATION TRIKNIGHTCAPITAL CHIEHHSUN CO., INVESTMENT LTD. JINING SUNRICH SOLARENERGY CORPORATION CORPORATION SOLARENERGY SUNRICH JINING subsidiary venture’s Joint CORP. SYSTEMS INTEGRATED SILICON PHOTRONICSMASK CORPOR DNP Significant Related Party Transactions Transactions Related Party Significant Name and Relationship of Related Parties Parties Related of Relationship and Name c. Analysis of net cash outflow arising a. transactions Operating
(2) The following is a summarytransactions a be of The following is periods: reporting the financial (1)
7. TRANSACTIONS PARTY RELATED (176) 7,074 (5,502) 18,239 45,515 $4,617 (11,899) (34,313) (43,371) $14,430 $43,371 $(31,856) continuing operations of the Company, Company, the continuing operations of
bilities consisted of: mainly erm liabilities liabilities erm 127,266 Net assets of the subsidiary deconsolidated the subsidiarydeconsolidated assets of Net Less: Net assets of the subsidiary deconsolidated deconsolidated subsidiary Less: Net assetsthe of interests Non-controlling Add: Less: Goodwill subsidiary of on disposal Loss Assets equivalents cash and Cash Cash received Notes and accounts receivable receivable and accounts Notes 46,717 Inventories equipment and plant Property, 2,365 Others Payables (29,309) Payables long-t of portion Current loans Long-term (2,872) Others (83,895) Liabilities loans Short-term Loss on disposal of subsidiary for the year ended December 31, 2018 was recognized as as 31, recognized was December 2018 the subsidiary for year ended of on Loss disposal income. comprehensive statement of the consolidated losses gains and in other
$4,277 million of operating revenues and and Upon the acquisition, revenues USJC operating contributedof $4,277 million NT UNISTARS CORP. (UNISTARS) the 2018, in December UNISTARS shares of allof its of disposed subsidiary UMC’s As of derecognizing the relevant assets and liabilities Company lost control of UNISTARS, the whenat date the control is lost. UNISTARS a. lia and assets Derecognized b. transaction: the from recognized loss and received Consideration respectively. respectively. operating year, the of beginning at the place had taken combination the If the and million NT$160,767 been have would operations continuing the from revenues have been NT$6,535 would the Company for operations continuing before tax from profit million, respectively. NT$305 million to profit before tax before from to million profit NT$305 (27) Deconsolidation of Subsidiaries Subsidiaries of Deconsolidation (27)
237 United Microelectronics Corporation | Annual Report 2019 $720,000 $720,000 $840,000 $840,000 Disposal (loss) gain (loss) gain December 31, December December 31, December Purchase price Purchase Purchase price Purchase Purchase price Purchase For the year ended ended year the For For the year ended ended year the For For the year ended year ended the For For the years ended the years ended For December 31, 2019 31, 2019 December December 31, 2018 December For the years ended ended years the For December 31, 2018 December 2019 2018 2019 2018 2018 2019 $339,463 $339,463 $200,610 $2,346,263 $2,346,263 $1,750,088 underlying Proceeds Proceeds underlying UNISTARS UNISTARS underlying underlying underlying underlying
Transaction Transaction Transaction Transaction CORPORATION $4,617 $(31,856)
46,168 46,168 of Stock shares) shares) shares) shares) shares) shares) (In thousands of of (In thousands Trading Volume (In thousands of of (In thousands (In thousands of of (In thousands Trading Volume Trading Volume
Associates 72,000 72,000 Associates Stock 84,000 Associates Stock Associates Others Others
Transaction Transaction
assets intangible of Acquisition None. 2019: 31, December ended year the For Others expenditure Mask
Disposal of subsidiary of subsidiary Disposal Acquisition of investments accounted for under the equity method the equity method under for accounted investments of Acquisition c.
71 37,211 37,211 $70,134 $70,134 $32,923 $32,923 mutual agreement in in agreement mutual Purchase price For the year ended ended year the For December 31, 2019 December As of December 31, December of As 31, December of As 2019 2018 2018 2019 2018 2019 ion period for domestic sales to related domestic ion period for INC. underlying underlying
Transaction Transaction value through profit or loss – noncurrent RADIO LTD. LTD. RADIO MATERIALS MATERIALS TECHNOLOGY TECHNOLOGY
er other current liabilities)
ANALYSIS 500 500 of Stock 1,900 1,900 GEAR of Stock of shares) shares) of (In thousands Trading Volume Trading Volume Associates Associates Total Total Associates Associates
Associates $278,702Others 11,243$289,945 $134,646 Total 4,266 $138,912 Associates $7,880Others 48 $1,287 Total $7,928Total $1,358
Significant asset transactions at fair assets of financial Acquisition reference to market conditions. conditions. market to reference The collect sales was overseas for the collection period days, while 30~60 were month-end parties days. 30~60 net liabilitiesRefund (classified und was determined through related parties above the to price sales The None. 2018: 31, December ended year the For net receivable, Accounts
b.
238 Financial Review long-term loans long-term loans long-term long-term loans long-term long-term loans long-term
Collateral for for Collateral for Collateral Collateral for for Collateral Collateral for for Collateral
pledge of Purpose a a ly NT$10.8 billion. ly NT$10.8 billion. As of institutes to open performance to open performance institutes was pledged pledged was Party to which asset(s) which to Party Development Bank and 6 others 6 others and Bank Development 6 others and Bank Development Secured Syndicated from Loans China DevelopmentBank and 6 others International Commercial Bank and Bank and Commercial International Secured Syndicated from Loans China DevelopmentBank and 6 others
- Chin from Loans Syndicated Secured contract amount of approximate of amount contract the Company entrusted financial
portion of royalties and development fees not androyalties of fees was recognized yet portion development - 309,108 Chin Loans from Syndicated Secured d to the litigations and customs tax guarantee, amounting to NT$1.7 to NT$1.7 amounting guarantee, tax and customs the litigations d to Carrying Amount Carrying As of DecemberAs of 31, 19,029,077 25,762,086 Bank, Mega Cooperative Taiwan $5,381,590 $5,823,938 Bank and Cooperative Taiwan December 31, 2019, the 2019, 31, December billion.NT$1.4 its of expansion the for contracts construction several into entered Company The to amounted contracts construction these 2019, 31, December of As operations. was yet recognized not contracts the of and the portion billion NT$2.0 approximately billion. NT$0.4 approximately guarantee, mainly relate billion. of contracts and development license agreements several patent into entered The Company property for a total intellectual As of December 31, 2019, amounts available under unused letters of credit for importing for credit letters of unused under available amounts 2019, 31, December of As and equipment weremachinery NT$0.1 billion. 2019, 31, December of As Items Items 2018 2019
(4) (3) (1) (2) equipment equipment assets 9. AND UNRECOGNIZED COMMITMENTS CONTRACT CONTINGENCIES SIGNIFICANT Buildings Buildings Machinery and Other noncurrent Other noncurrent $26,923,234 Total $34,150,351 Right-of-use assets assets Right-of-use 292,120 - 435 lease guarantee dormitory lease dormitory guarantee guarantee Purpose of pledge of Purpose Customs Customs duty
Bank performance performance Bank
Energy resources Energy December 31, December 3,415 2,406 4,660 62,203 293,857 For the years ended ended years the For As of December 31, December of As 2019 2018 2018 2019 2019 2018 2018 2019 $271,135 $387,294 was pledged was pledged Party to which asset(s) which to Party Division, CPC Corporation, Taiwan
37,084 37,084 Business Gas Natural Liquefied 19,579 19,579 Science Park Administration Collateral for the Company pledged as collateral: as pledged Company the
Carrying Amount Carrying 19,510 41,785 As of DecemberAs of 31, 348,117 237,358 Administration Science Park for Collateral land $811,035 $961,198 Customs 1,000,000 1,000,000 China of Bank $683,892 $571,036 Termination benefits benefits Termination Others benefits employee Short-term benefits Post-employment Share-based payment payment Share-based 578 Others $339,737Total $686,246
compensation personnel Key management expenditure mask of payables Other d. Items Items 2019 2018 The table following lists assets of As of December 31, 2019 and 2018 2018 and 2019 31, December of As Time deposit) deposit) Time (Time deposit) deposit) (Time (Time deposit) (Time (Time deposit) (Time (Time deposit) (Time (Bank deposit and Refundable Deposits Deposits Refundable
8. AS COLLATERAL PLEDGED ASSETS Deposits Refundable
Refundable Deposits Deposits Refundable Refundable Deposits Deposits Refundable Refundable Deposits Deposits Refundable 239 United Microelectronics Corporation | Annual Report 2019
3,212 24,583,451 24,583,451 3,212 As of Decemberof 31, As 2019 2019 2018 2,353,066 2,353,066 2,320,037 2,600,733 2,600,733 2,757,399 14,723,232 11,585,477 11,585,477 14,723,232 $155,568,119 $136,986,309 $136,986,309 $155,568,119 e litigationsarestill the preliminary in
profit or loss profit $14,021,473 $12,084,297 District Court for the Southern District of New York. York. of New SouthernDistrict the Court for District The at amortized cost cost amortized at ate in the capital injection of UNITED SEMICONDUCTOR of in UNITED SEMICONDUCTOR ate injection the capital prepareprocedures. the relevant Given this litigation is still in the Other financial assets Other financial Refundable deposits deposits Refundable comprehensive income income comprehensive Cash and cash equivalents (excludes cash on hand) hand) cash on (excludes equivalents Cash and cash 26,38 Receivables 95,486,403 83,655,648 Total Total Financial Assets Financial Financial assets measured Financial assets at value through fair Financial assets at value through otherfair
Microelectronics United Meyer v. styled class action a 2019, putative 14, March On Corporation several executives, was and Securities under filed ofAct Exchange 1934and States United the in 10b-5 Rule court appointed a lead plaintiff and approved lead plaintiff counsel on May 23, 2019. 2019. 23, on May counsel plaintiff lead and approved a lead plaintiff appointed court On and complaint amended plaintiffs’ of service the received UMC 2019, 27, September appointed counsel to preliminary stages, UMC cannot assess the legal proceeding and probable outcome or outcome and probable proceeding assess the legal cannot UMC stages, preliminary impact. and civil complaintThe indictment on trial. are still counsel UMC has appointed to these charges. against answers prepare technology joint the suspended has UMC Besides, activities with JINHUA. development thes Given or impact. outcome and probable proceeding assessstages, UMC cannot the legal
None. None. (SUZHOU) CO., HEJIAN TECHNOLOGY Board of Directors of the 2020, 11, February On resolved to particip LTD. (1) instruments financial of Categories (XIAMEN) CO., LTD. in stages at a total investment amount of amount at a in stages RMB investment total 3.5 billion. (XIAMEN) CO., LTD. (7) 11. 11. EVENTS SUBSEQUENT SIGNIFICANT 12. OTHERS OTHERS 12. 10. DISASTER SIGNIFICANT LOSS stroy all inventories employee former and two recognizes a financial liability financial a recognizes hers conspired to steal trade secrets of hers of to steal trade secrets conspired stions, also to de and use against UMC with the United States States United the with UMC against use velop technology that was subsequently was subsequently that technology velop CXM at their original investment cost plus cost plus investment original their at CXM as required by IFRS 10 during the reporting reporting the 10 during IFRS by required as importing, selling, and committing sellto the e Company obtained R.O.C. government government R.O.C. obtained Company e question. question. in progress Thecurrently is case osecutors Office indicted UMC based on the on the UMC based indicted Office osecutors liability the between financial difference Any employees of UMC misappropriated the trade and invested RMB 8.3 USCXM, billion in
e lawsuit filed by UMC is still on trial. lance is recognized in equity. in equity. lance is recognized als, including one current reporting period,reporting Companythe employees of UMC, alleging that UMC and and ot UMC that UMC, alleging of employees MICRON, and used to de that information to JINHUA. transferred the enjoining the filed a civil complaint DOJ On the same day, containing products any States United the to exporting from defendants aforementioned transferring the defendants from and preventing by UMC or JINHUA DRAM manufactured else. to secrets anyone the trade October 2014 to participate in in a 3-way resolved UMC of Directors of Board The and FUJIAN Government ELECTRONIC& agreement Xiamenwith Municipal People’s foundry wafer 12’’ on will focus which company a to form GROUP INFORMATION 2019, th 31, December of As services. approval for the investment authority’s 65.22%. of interest ownership representing UMC agreement, on the based Furthermore, liabilitya recognized in other financial liabilities-others noncurrent for the purchase from in US their investors of the other investments (2022) year seventh the from beginning 4.9 billion, RMB to totally amounting interest the Accordingly, investors. following the by theother last instalmentmade payment recognizes non-controlling interests Company period. At the end of each same IFRS the with at time 9, investors accordance in other the to commitment its for the non-controlling derecognizing interests. ba interests and non-controlling the Pr District Taichung 31, 2017, the On August alleging that of Act R.O.C., Secret Trade 5, 2017, INC. (“MICRON”). On December MICRON TECHNOLOGY, secrets of MICRON filed a civil action with similar ca California. of District Court, Northern District claimed MICRON the entitlementactual to that an order issue court to the requested and fees relevant and damages treble damages, enjoins UMC using its from trade secrets in these charges. against answers to prepare counsels has and appointed UMC the Fuzhou actions with infringement patent three UMC filed 12, 2018, On January and Court against,others, among MICRON (XI’AN) LTD. CO., Intermediate People’s requestingthe courttoorder the MICRON (SHANGHAI) CO., LTD., TRADING tostop manufacturing,defendants processing, que in patents infringing the deploying products tools. and Court related molds and People’s Intermediate the Fuzhou 2018, 3, July On the that holding two defendants, the aforementioned against injunction granted preliminary that products import and sell, cease to manufacture, immediately two defendants must UMC. rightsof infringe the patent Th an (“DOJ”) unsealed the United States of Justice of the Department 1, On November 2018, CO., LTD. CIRCUIT INTEGRATED JINHUA UMC, indictment FUJIAN against (“JINHUA”), and three individu
(5) (6)
240 Financial Review ising from purchases d NT$2,589 million, rm and long-term bank bank long-term and rm as net investments in investments net as foreign subsidiaries NT$1,367 million, respectively. When When million, respectively. NT$1,367 d 6(12) for the range of interest rates of the d 6(12) the interest rates of for range of gnificant monetary items denominated in in denominated items monetary gnificant tary financial assets and liabilities is minor. tary financial assets liabilities and is minor.
st rate risk floating arising interest bo rrowing at from terest rates would affect the future cash flows but not the but not flows the cash future affect would rates terest racts designated by the Company to hedge foreign currency currency foreign hedge to Company by the racts designated ral hedges on the foreign currency risk ar
loans are floating, changes in in in changes floating, are loans fair value. value. fair an 6(11) 6(10), Note to refer Please loans. bank and bonds Company’s foreign currencies as of the end of the reporting period. period. of reporting the end the of as currencies foreign strengthens/weakens NTD When 2018 and 31, 2019 December profit ended USD by 10%, the for years against NT$1,009 milliondecreases/increases and by The Company natu applies the of amount as the same are the contracts currency foreign of the amounts notional The exchange forward any out carry not does Company the principle, In items. hedged commitments. uncertain for contracts currency forward certain designates Company The risk exchange to foreign currency exposure its to hedge hedges as cash flow contracts transactions. forecast probable highly certain with associated assessment, basis of the On value the and contracts exchange currency forward of value that the expects Company the in opposite directions given thefor change systematically of hedged transactions will rates. exchange foreign in changes relationships hedging in these ineffectiveness Hedge of movements value fair the impacting risk, credit the counterparties’ arises from mainly items. hedged and instruments hedging the emerged ineffectiveness of sources other No relationships. these hedging from Furthermore, the Company. by hedged they not are purposes, strategic are for cont exchange Certain forward in JPY, USJC of shares additional with purchase of the rate risks associated exchange 2018. 31, December to prior expired billion, 23 JPY to amounting hedge flow cash The as was recognized million, NT$(3) to amounting of equity, other components in reserve 2019. 1, October on USJC in 84.1% of interest ownership the for consideration Please to Noterefer 6(26). rates exchange foreign in change possible the of analysis sensitivity currency foreign The on si performed profit is Company’s the on December ended the years for the profit by 10%, USD against RMB strengthens/weakens NT$2,200 million2018 increases/decreases by an 31, 2019 and or sales, and utilizes spot or forward exchange contracts to manage foreign currency risk risk currency foreign to manage contracts exchange or forward utilizes spot or sales, and mone to of related risks the effect net the and The Company is exposed to intere at are measured and rates interest fixed have bonds Company’s the of rates. All cost. amortized cash flows. the future not affect rates would interest in changes such, As short-te Company’s the hand, as the interest rates of the other On respectively. Interest rate risk - tes relates primarily ial activities, approval approval activities, ial As of Decemberof 31, As 296,694 665,793 2019 2019 2018 6,031,025 20,093,441 20,523,099 33,902,074 30,826,215 38,781,416 41,378,182 $12,015,206 $13,103,808 s, procedures and internal controls for for controls internal and procedures s, venue or expense is denominated in a venue or denominated expense is into significant financ ies. ies. and measures identifies, Company The ocedures. The Company complies with its with complies Company The ocedures. future cash flows of a cash instrument future financial flows will
ion included) ion included) ed at amortized cost restate prior periods in accordance with the transition provision in IFRS 16. in IFRS the transition provision with restate prior in accordance periods Short-term loans loans Short-term Payables 27,342,495Payables 23,465,536 Guarantee deposits (current portion portion included) deposits (current Guarantee Bonds payable (current portion included) included) portion (current payable Bonds Long-term loans (current port Lease (Note)liabilities liabilities Other financial
Financial Liabilities Liabilities Financial Financial liabilities measur Financial Total $138,462,351Total $129,962,633 Note: 2019. 1, January on 16 IFRS adopted Company The to not elected Company The to the Company’s operating activities operating (when re to the Company’s net Company’s the and currency) functional Company’s the from currency different investments in subsidiaries. foreign risk and credit risk, market the are to manage objectives risk management Company’s The risk related liquidity to its operating activit preference. risk and on policy risks based the aforementioned manages policie appropriate established has The Company risk management. financial Before entering or value fair the that risk the is risk Market risk, currency comprise risks prices. Market in market changes because of fluctuate and other price (suchas equity pricerisk risk).interest rate risk risk currency Foreign ra exchange in foreign changes the risk of to exposure The Company’s process by the Board of Directors and Audit Committee must be carried out based on on based out carried be must Committee Audit and Directors of Board the by process pr control internal and protocols related times. all at policies risk management financial
(2) Financial risk management objectivesand policies (3) (3) risk Market
241 United Microelectronics Corporation | Annual Report 2019
- 21,114,113 - 21,114,113 - 27,106,617 27,106,617 - - 39,939,843 - 23,193,847 23,193,847 - $- $- $12,211,621 $- $13,171,811 mpany’s financial liabilities liabilities financial mpany’s - 296,694 99,002 - $- $- 7,611 $139,237,748 $18,141,201
429,758 $146,643,664 $3,903,194 years > 5 years Total years > 5 years Total 4 to 5 4 to 5 - 17,477,984 21,960,458 4,369,730 As of December 31, 2019 2019 31, of December As As of December 31, 2018 2018 31, of December As $- $- equivalents, bank loans, bonds and lease. lease. bonds and bank loans, equivalents,
years years 2 to 3 2 to 3 2 to 3 2 to 3 maturity profile of the Co - 12,668,287 8,445,826 52,890 154,787 15,385 665,793 442,731 112,744 1 year 1 year year 1 Less than than Less Less than than Less deposits liabilities deposits deposits 100,584 97,108 liabilities Short-term loansShort-term $13,171,811 Bonds payable payable Bonds loans Long-term 3,000,855 4,036,260 23,187,913 10,997,829 8,484,393 17,209,849 8,563,021 4,765,719 43,236,182 37,009,657 Payables Payables 22,994,059 199,788 Guarantee Guarantee Other financial financial liabilities financial Payables Payables Guarantee 26,490,911 payable Bonds 600,686 loans Long-term 20,659,607 liabilities Lease 6,104,795Other financial 10,590,265 15,020 19,631,931 740,939 8,689,971 13,097,986 1,413,978 1,180,955 12,000 38,846,712 3,792,192 7,128,064 Short-term loansShort-term $12,211,621 financial liabilities financial on-derivative Non-derivative Total $43,368,619Total $34,540,317 $43,18 based on the contractual undiscounted payments and contractual maturity: maturity: contractual and payments undiscounted on the contractual based Total $66,308,457Total $45,002,255 $31, The Company’s objectives are to maintain a balance between continuity of funding and and of funding continuity a between maintain balance are to objectives The Company’s cash and the use of through flexibility the The table below summarizes N
(5) Liquidity ri management sk
e change in value in change fair asofe million, respectively. respectively. million, institutions with good credit with good institutions credit financial institutions. The Company’s Company’s The institutions. financial creditworthythird parties. Wherethe ties are susceptible ties are susceptible to market price risk less credit, it will request collateral from of counter-parties is limitedcounter-parties to of the carrying financial institutions by institutions financial limiting its counter omers who wish to trade on credit are terms credit totrade on wish who omers ive income of listedive income of companies could In addition, notes and accounts receivable e price of the aforementioned financial assets assets aforementioned e the financial price of mpanies could increase/decrease the Company’s Company’s the increase/decrease could mpanies
ic or international financial financial international or ic dings among various by NT$671 million and NT$408
rate in a reporting period of a10 basis of interest points change dates, the reporting At to 2018 and 2019 31, December ended the years for profit the cause could million by NT$46 decrease/increase NT$44 million,and respectively. Equity price risk Company trades with third parties which have them. all cust policy that It is the Company’s procedures. verification subject to credit to credit exposure the Company’s basis to decrease ongoing on an are monitored balances risk. risksThe Company mitigates the credit from only reputable domest to parties The Company’s listed and unlistedsecuri equity listed The Company’s and approved with trades only Company The arising from uncertainties about future performance of equity markets. markets. equity of performance future about uncertainties from arising Company’s The a ssets at fair value through profit oras financial loss are classified and investments equity income. other comprehensive assets at value fair financial through on th The sensitivity analysis for the equitybased instruments is the reporting date. date. reporting the at assets financial aforementioned the of price in the 5% of change A fair value through profit or loss of listed co and NT$171 million by NT$252 2018 and 2019 31, December ended years the profit for million, respectively. 5% in th change of A comprehens other value through fair at years ended the for income comprehensive other Company’s the increase/decrease 31, 2019 and 2018 December standing and spreading its hol default the arising from credit to risk exposure of these instruments. amount the top ten customers from receivable accounts 31, and 2018, December of 2019 As respectively. Company, of the receivable accounts the total of 54% and 44% represent insignificant. is receivable accounts other of risk concentration credit The (4) (4) risk management Credit
242 Financial Review
$- $528,450 $528,450 $- on a recurring basis, basis, recurring a on any’s development, development, market any’s restrictions or sale the on - 14,723,232 1,305,924 - 11,585,477 3,419,200 $- $722,794 $54,318 As of December 31, 2018 31, 2018 December of As As of December 31, 2019 2019 31, December of As st level input that is significant to fair the e restrictions. e restrictions. if values, fair measure To cash flow forecast, recent fund raising raising fund recent forecast, flow cash but unrestricted financial assets’ quoted but unrestricted financial assets’ occurred between levels in the hierarchy hierarchy the in levels occurred between the valuation techniques (income approach approach (income techniques valuation the through profit or loss and financial assets at assets at financial or loss and profit through rded at fair value on a recurring basis: basis: on a recurring value rded at fair
Level 1 1 Level 2 Level 3 Level Total Level 1 1 Level 2 Level 3 Level Total $668,476 $493,481 $34,969 4,737,027 340,255 13,298,679 8,221,397 3,612,243 44,5978,166,277 11,555,847 7,899,007 13,417,308 onomic indicators. If there are If there indicators. onomic
through profit or loss, current throughprofitloss, or noncurrent other through income, comprehensive noncurrent through profit or loss, current throughprofitloss, or noncurrent other through income, comprehensive noncurrent Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets: Financial assets: market price with appropriate discounts for th for discounts appropriate price with market levelthat is significant input to lowest thethe directly or value measurement fair is value the fair of 2 as Level are classified assets financial the then observable, indirectly as Level 3. otherwise hierarchy, transfer of a financial asset, which are a characteristic of the asset, the fair value of the the of value fair the the of asset, a characteristic are which asset, a of financial transfer asset bewill determined based on similar fair value assets at financial of values Fair level 1 are into are categorized that income comprehensive other through value fair prices in active markets. market quoted on the based the If there is no active market, Company estimates the value fair by using of consideration in approach) market and comp individual companies, similar of valuation activities, conditions other ec and statements the financial in recognized are liabilitiesassets and that For have transfers whether determines Company the the lowe (based on categorization by re-assessing value measurement as a whole) at the end of each reporting period. period. each reporting as a at the end of whole) value measurement a. reco and measured liabilities and Assets
Contract Period paid to transfer a liability in west level input that tothe west is significant level input that tothe west is significant liability, assuming that market participants liability, on that the transaction to sell the asset orasset the sell to transaction the that on sset takes into account a market participant’s sset takes into account marketa participant’s uld use the asset in its highest and best use. best and its in highest asset the use uld measured using the assumptions that market that the assumptions using measured nominated in foreign currency. currency. in foreign nominated of details The rket must be accessible by the Company. the Company. by accessible be rket must
by UMC are summarized as follows: to the fair value measurement as a whole: whole: a as measurement value fair the to Notional Amount Amount Notional d be received to sell an asset asset or an sell to d received be liabilities; fair value measurement is directly or indirectly observable; observable; indirectly or directly is measurement value fair is unobservable. value measurement fair Type Type Forward exchange contracts exchange Forward 28 Sell USD million 7, 2019 10, 2018~January December arising rate risk the exchange hedging contracts for UMC entered into forward exchange de the net monetary assets or liabilities from into entered contracts exchange forward December 31, 2019 As of None. December 31, 2018 As of Fair value is the that woul price an orderly transaction between market participants at the date. at participants measurement the market between transaction an orderly The fair is the presumpti based on value measurement or in orthe asset liability, market for either in the principal transfer the liability takesplace asset liability. the or for market advantageous most the in market, principal a of absence the ma advantageous the or most principal The assetan liability The a or of is fairvalue or participants would use when pricing the asset interest. best economic their in act a non-financial a of measurement value fair A ability to generate economic benefits by using the asset in its highest and best use or by wo that participantmarket another to it selling for and circumstances the in appropriate are that techniques valuation uses Company The relevant use of the value, fair maximizing to data are available measure sufficient which inputs. unobservable of the use minimizing and inputs observable the in financial is measured or disclosed which fair value liabilities and for assets All based on follows, as described the value within hierarchy, fair are categorized statements the lowest level input that is significant — 1 Level assets or identical markets for in active prices market (unadjusted) Quoted — 2 Level techniques which the lo for Valuation — 3 Level techniques which the lo for Valuation (6) (6) risk management currency Foreign (7) (7) instruments of financial value Fair
243 United Microelectronics Corporation | Annual Report 2019
inputs and fair value and inputs fair value and inputs discount for lack of of the marketability fairaforementioned unlisted of values stocks could decrease/increase the profit (loss) Company’s discount for lack of of the marketability fairaforementioned unlisted of values stocks could decrease/increase the profit(loss) Company’s and other comprehensive income (loss) for the year ended December 31, NT$309 by 2018 NT$241 by and million respectively. million, for the ended year December 31, by 2019 and NT$267 million million, NT$191 Other respectively. comprehensive income (loss) for the year ended December 31, NT$87 by 2019 million. Sensitivity analysis of Sensitivity analysis of interrelationship between between interrelationship between interrelationship A change of 5% in the the in of 5% change A A change of 5% in the the in of 5% change A degree degree of lack of marketability, the the lower fair estimated is value determined. degree degree of lack of marketability, the the lower fair estimated is value determined. and fair value and fair value between inputs inputs between inputs between Interrelationship Interrelationship Interrelationship value measurement value fair 3 in Level information information Quantitative Quantitative Quantitative 15%~50% 15%~50% The greater 0%~50% 0%~50% greater The
As of December 31, 2019 31, December of As 2018 31, December of As inputs inputs Significant Significant Significant lack of of lack marketability of lack marketability iscount for iscount for iscount unobservable unobservable unobservable D D Approach Approach Valuation Valuation Valuation technique technique Market Market Market equity equity equity stock stock securities securities securities Category of Category of Category Unlisted Unlisted
of fair inputs unobservable Significant as follow: were hierarchy ------$3,419,200 ------(2,303,988) - - - stock Total stock Total stock Total Total stock Preferred Preferred ------other comprehensive income other comprehensive income stock stock Financial assets at fair value through through value fair at assets Financial Financial assets at fair value through Common Common Common bonds Total bondsTotal Option Total OptionTotal
Convertible - - - 199,244 (8,532) 190,712 - - 49,706 - - - (14,954) - - (53,300) - - - (329,846) (2,303,988) - - (115,520) (49,300) (164,820) - - 22,050 - - - (22,954) - - (442,138) - - - (778,362) ize the transfer into and out of fair value hierarchy value hierarchy out fair into and of transfer the ize lue through profit or loss oss) above, the profit (loss) from financial held assets still ------stock Funds Funds stock stock Funds Preferred Preferred Financial assets at fair va fair at assets Financial Financial assets at fair value through profit or loss assets profitfair loss or atFinancial value through - - - (3,356) (394,931) 69,827 (31,605) (360,065) (1,475) (328,371) 22,050 19,551 51,564 18,674 - 89,789 (22,954) (14,954) (53,300) (14,451) (33,800) (28,821) (3,099) (80,171) 140,338 630,626 577,347 1,348,311 - 159,476 396,890 204,082 51,956 812,404 (468,337) (310,025) (442,138) (272,299) 273,047 (14,024) 6,145 (7,131) stock stock $3,832,537 $2,994,294 $1,183,940 $31,605 $8,042,376 $3,350,694 $233,326 $3,584,020 $3,077,691 $2,971,528 $1,849,788 $- $7,899,007 $3,235,174 $184,026 $3,419,200 $3,077,691 $2,971,528 $1,849,788 $7,899,007 $- $3,235,174 $184,026 $2,880,688 $3,279,294 $2,011,025 $104,708$8,275,715 $1,130,430 $175,494 $1,305,924
Common
Common
there were no significant and 2018, December 31, the2019 years During ended measurements. value 2 fair Level and 1 Level between transfers as were hierarchy value 3 fair in Level measurement value fair for Reconciliations follows: Recognized as part of profit (l Recognized as part of and million NT$(113) were and 2018 2019 31, December of as Company the by NT$(203) million, respectively. recognto policy The Company’s transfer. caused that the circumstances in changes or event on based the is levels
comprehensive loss 2019 2018 comprehensive income (loss) As of January 1, 2019 (loss) in profit Recognized Recognized in other Acquisition Disposal Return of capital Transfer to Level 3 Transfer out of Level 3 Exchange effect 31, As of December 1, 2018 As of January (loss) profit in Recognized Recognized in other Acquisition Disposal Return of capital 3 Transfer to Level Level Transfer 3 out of Exchange effect 31, As of December
244 Financial Review NTD (thousand) (thousand)
4,473 39,116 635,992 8,133 205
(1,044,912)
Rate Rate Exchange Exchange Foreign Foreign Currency (thousand) 6,208 1,681 (22,530) 568,061 NTD As of December 31, 31, December of As (417,725) (374,319) (thousand) ities denominated in foreign currencies in foreign denominated ities Rate Rate Exchange Exchange 7,877 22.28 175,494 8,212 22.41 184,025 4,720 33.94 160,193 13,721 35.41 485,880 3,795 33.54 127,266 2,669 35.01 93,450 82,303 22.46 1,848,507 39,650 22.59 895,677 66,197 22.28 1,474,870 34,325 22.41 769,217 38,533 4.30 165,537 49,506 220,152 4.45 441,322 0.2751 121,408 8,466,263 2,340,075 0.2764 239,131 30.03 7,181,098 215,146 30.67 6,598,528 312,437 30.13 9,413,712 322,705 30.77 9,929,626 5,262,546 4.30 22,607,898 4,089,229 18,184,800 4.45 Currency 29,531,053 0.2751 8,123,993 19,954,240 0.2764 5,515,352 21,495,694 0.2792 6,001,598 3,875,144 1,086,978 0.2805 14,816,473 4.35 64,392,390 14,332,554 64,453,497 4.50 $1,692,380 30.03 $50,822,171 $1,536,283 30.67 $47,117,775 (thousand) 2019 2018
r
onetary items onetary items onetary financial SD SD items on-Monetary SD SD SD MB MB MB MB MB UR UR UR UR inancial Assets inancial Liabilities PY PY PY PY Foreign Foreign Significant financial assets Significant and liabil financial SGD SGD SGD Othe SGD F M U J E R N U J R F M U J E R or loss from m andassets liabilities U J E R The exchange The exchange gain SGD (8) amount amount Carrying Carrying Carrying
- 33,902,074 - 30,826,215 $- $38,781,416 $- $41,378,182 ich fair is value disclosed: servable inputs share price, including servable inputs reporting period using using period reporting using period reporting financial instruments including cash and rates. is loans long-term of value The fair Fair value measurements during during measurements value Fair during measurements value Fair
rded at fair value but for wh for but value fair at rded Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 33,902,074 33,902,074 33,902,074 - 30,826,215 30,826,215 - $39,571,920 $21,347,047 $18,224,873 $39,571,920 $21,347,047 $17,785,349 $41,714,368 $23,929,019 Items Items portion included) included) portion included) portion included) portion included) portion The fair value of bonds payable is estimated by the market price or using a valuation a valuation byprice or using is estimated the market payable bonds of value The fair ob market-based uses model The model. interest risk-free and spread credit volatility, current Company’s the on based model, cash flow discounted using determined rates of similarincremental borrowing loans. short-term The fair the values Company’s of assets-current, financial other deposits, refundable receivables, equivalents, cash amount carrying their approximate deposits and guarantee payables loans, short-term due to their within one maturities year. December 31, 2019 of As Bonds payables (current (current loans Long-term December 31, 2018 of As Bonds payables (current (current loans Long-term b. Assets and liabilities not reco
245 United Microelectronics Corporation | Annual Report 2019 ment income (loss), e capital stock for the year ended December ended December stock for the year capital e ear ended December 31, 2019: Please refer to to refer Please 2019: 31, December ear ended ounts exceeding the lower of NT$100 million million NT$100 of the lower exceeding ounts ed of with accumulated amount exceeding the the exceeding amount accumulated with ed of
ina): Please refer to Attachment 10.
Please refer to Attachment 11. to Attachment refer Please
Mainland China Attachment 7. Attachment 31, December the year ended stock for the capital or 20 percent of million NT$100 8. Attachment to refer Please 2019: million or 20 percent of the capital stock for the year ended December 31, 2019: Please Please 2019: 31, December ended year the for stock capital the of percent 20 or million Attachment 6.refer to y the stock for of capital the percent 20 or Please refer to Attachment 3. to Attachment refer Please of investment, accumulated inflow and outflow of investments from Taiwan, net income net income Taiwan, from investments of and outflow inflow accumulated investment, of invest of ownership, percentage (loss) of investee company, on limits and earnings of inward remittance cumulated investments, of amount carrying investment in Mainland China: venture): Please refer to Attachment 4. Attachment to refer Please venture): 9. Attachment to refer Please 2019: 31, December of as stock capital of percent 20 or (excludinginvestment in Mainland Ch lower of NT$300 million or 20 percent of th percent 20 or NT$300 million of lower 31, 2019: Please refer to Attachment 5. Attachment 2. 2. Attachment
the R.O.C. Securities and Futures Bureau: refer to Please 31, 2019: a. December ended for the year to provided others Financing g. Related party transactions for purchases and sales amounts exceeding the lower of lower of the exceeding amounts sales and purchases transactions for party Related g. h. am with related from parties Receivables c. joint and associates subsidiaries, 31, 2019 (excluding December held as of Securities d. Individual securities acquired or dispos NT$300 of the lower exceeding estate with amount real individual of Acquisition e. f. million NT$300 of lower the exceeding amount with estate real individual of Disposal b. Endorsement/Guarantee provided to others for the year ended December 31, 2019: 31, 2019: December ended year the for to others provided Endorsement/Guarantee b. a. of method totalcapital, amount and products, name, businesses main company Investee i. 2019 31, of December as of investees information and related locations Names, j. 12. Note to refer Please transactions: derivative and instruments Financial (1) arefollowing The disclosuresadditional asrequiredaffiliates and its Company the by for
(2) in Investment 13. ADDITIONAL DISCLOSURES that it maintains 24.57% 24.57% 26.48% As of Decemberof 31, As 2019 2018 2018 2019 67,480,466 74,406,676 62,972,943 $158,068,415 (95,492,477) (83,661,739) 207,214,422 206,536,491 $274,694,888 $280,943,167 $1 r related parties, while maintaining nagementensure is to total equity (including capital, additional capital, additional (including equity total vided by its total capital. capital. its total by vided is debt net The for the reporting periods, reporting is to maintain a for the ong consolidated entities for the years ended the Company adjust the payment the Company may dividend
any’s capital ma any’s y monitors its capital based on debt to capital ratio. ratio. capital to debt on based capital its y monitors The stockholders and the interests of interestsothe of and the stockholders et debt et debt
Total liabilities Total cash equivalents Cash and Less: N equity Total capital Total ratios capital to Debt December 31, 2019 and 2018 are disclosed in Attachment 1. Attachment in disclosed are and 2018 31, 2019 December the optimal capital structure to reduce costs of capital. costs of reduce optimal structure the capital to structure, the capital adjust or maintain To redeem to assets dispose or shares new issue stockholders, to capital return stockholders, to liabilities. Similar to its peers, the Compan net debt di ratio as is calculated the Company’s and cash sheets minus balance consolidated the on total liabilities the taking by derived cash equivalents. The total capital consists of paid-in capital, and of equity retainedcomponents non-controlling other earnings, plus net debt. interests) is unchanged which strategy, Company’s The cost. reasonable with capital raise to in order ratio reasonable as ratios capital to debt The were as 2018 follows: and December 31, 2019 of Comp of the objective primary The a strong credit rating and healthy capital ratios to support its business and maximize the the and maximize business to support its ratios capital healthy rating and credit strong a to value. continuously ability to operate its also ensures The Company stockholders’ provide returns to (9) (9) am transactions intercompany Significant (10) Capital management
246 Financial Review - 49,948,589 - 19,590,075 - (458,653) - (458,653) $- $151,252,571 $- $151,252,571 (Note) Consolidated (Note) Consolidated Elimination Elimination Elimination Elimination Elimination Consolidated Adjustment and Adjustment and Adjustment Adjustment and and Adjustment As of December 31, 2019 As of December 31, 2018 305 19,590,075
For the year ended December 31, 2018 2018 31, December ended year the For - 19,290 19,290 - (19,290) onsisted of elimination entries for wafer fabrication segment’s segment’s fabrication wafer for entries elimination of onsisted (456,058) (2,595) (458,653) Wafer Wafer 2,688,331 (602,809) 2,085,522 2,643,052 557,530 Wafer (1,201,986) (23,245) (1,225,231) (667,701) 557,530 49,777,242 171,347 49,948,589 19,589,770 Fabrication Fabrication New Business Subtotal Fabrication New Business Subtotal Fabrication Fabrication Business New Subtotal $151,023,932 $228,639 $151,252,571 $369,189,983 $924,149 $370,114,132 $73,233 $370,187,365 $363,529,040 $1,263,368 $364,792,408 $(187,502) $364,604,906 investments in new business segment that was accounted for under the equity method. method. the equity under was accounted for that in new business segment investments external customers external customers sales among intersegments (loss), net tax (loss), of plant and equipment associates joint and ventures (benefit)
Operating revenues from from revenues Operating from revenues Operating adjustment primarilyThe c Note: Segment net income income net Segment property, of Acquisition loss of or of profit Share Depreciation Income tax expense Segment assets assets Segment liabilities Segment $161,955,970 $1,157,878 $163,113,848 $(140,905) $162,972,943 assets Segment liabilities Segment $157,000,054 $1,068,722 $158,068,776 $(361) $158,068,415
- 118,134 - 633,488 - 47,172,881 - (393,130) - 2,443,593 - 16,518,483 $- $148,201,641 Elimination Consolidated Elimination Adjustment and and Adjustment , internet, multimedia, PCs and and PCs multimedia, internet, , based on business activities with discrete ting results and financial condition: Please and ting results activity of the wafer fabrication segment is activity of the wafer fabrication Company maintains a diversified customer ns through third regions with the investees in in investees the regions with ns through third
For the year ended December 31, 2019 ended December 31, 2019 the year For ice, payment terms, unrealized gain or loss, and other other and or loss, gain unrealized terms, payment ice, ing communication, consumer electronics, computer, memory computer, electronics, consumer communication, ing 33,160 118,134 84,974 733,044 733,044 - 733,044 414,451 1,147,495 614,845 614,845 633,488 18,643 (414,104) (414,104) (393,130) 20,974 Wafer 2,443,593 2,443,593 - 2,443,593 6,156,681 6,156,681 5,714,316 (442,365) 414,451 6,128,767 g g networking, telecommunications 16,518,483 16,518,483 16,518,483 - Fabrication Fabrication Business New Subtotal $148,123,306 $148,123,306 $78,335 $148,201,641 Mainland China, including pr 1, 2, 3, 9. 8 and Attachment to refer events with significant effects on on the effects opera with events significant
The Company determined its operating segments segments operating its determined Company The financial information regularly reported through the Company’s internal reporting reporting internal the Company’s through reported regularly information financial maker. decision operating chief Company’s to the protocols is organized Company The services. and products its on based business units into the 31, 2019, December As of The business. and new segments: had the fabrication wafer following Company policies accounting the to according prepared was information segment operating describedin Note 4. The primary operating own our using by our customers of specifications design the to chips of manufacture the techniques. processes and proprietary The base across industries, includ volume large growth, high for on manufacturing to focus others, while continuing and applications, includin developing, includes researching, primarily New business segment graphics. solar energy. and providing manufacturing, as were 2018 and 2019 31, December ended years the for information segment Reportable follows: b. or indirectly Directly transactio significant non-financial assets non-financial (benefit) assets assets associates joint and ventures external customers external customers net tax (loss), of plant and equipment ofprincipal portion the liability lease
Impairment loss of Income tax expense Acquisition of intangible intangible of Acquisition Depreciation loss of or of profit Share 47,038,876 47,172,881 134,005 (1) from revenues Operating net income Segment Acquisition of property, property, of Acquisition for the payments Cash 14. INFORMATION SEGMENT OPERATING 247 United Microelectronics Corporation | Annual Report 2019 - 232 December 31, December As of Decemberof 31, As For the years ended years ended the For 2019 2018 2018 2019 2019 2018 2018 2019 63,622,327 73,627,957 $17,576,293 $15,357,470
ion segment segment ion Total $164,659,880Total $180,743,533
Others 3,309 Others USA 70,498USA 24,383Europe 12,265,769 Japan 31,919 155,489 Taiwan $73,481,714Taiwan $90,046,190 fabricat wafer from A Customer
Singapore 15,191,880Singapore Kong) (includes Hong China 16,881,746 Geographic non-current assets information assets information non-current Geographic Non-current assets include property, plant and equipment, right-of-use assets, intangible intangible assets, right-of-use equipment, and plant property, include assets Non-current assets. noncurrent and other equipment for prepayment assets, years ended the for revenues operating of 10% least at for customers accounting Individual follows: as were and 2018 31, 2019 December
(2) (3) (3) customers Major
248 Financial Review 2% 3% 0% 1% 0% 0% 0% 0% 2% 3% 0% 1% 0% 0% 0% 0% 1% 0% 0% 0% 0% 0% 32% 38% (Note 4) (Note 4) revenues or consolidated total assets revenues or consolidated total assets Percentage of consolidated operating Percentage of consolidated operating ------(Note 3) (Note 3) Net 30 days Net 30 days Transactions Transactions Collection periods Collection periods 31,334 33,242 21,138 51,150 48,163 35,161 61,971 608,622 905,048 120,678 745,226152,012 Net 60 days 250,736 Net 60 days Net 60 days 698,988307,471 Net 60 days 272,218 Net 60 days Net 60 days (Note 5) (Note 5) 5,937,706 7,312,272 3,933,9641,209,310 Net 60 days 4,159,6371,356,567 Net 60 days $47,736,335 Net 60 days $57,107,585 Net 60 days Amount Amount Account Account Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable Sales Accounts receivable 1 1 1 1 1 1 3 3 3 3 3 3 1 1 1 1 1 1 3 3 3 3 3 3 (Note 2) (Note 2) the Company the Company Relationship with Relationship with Counterparty Counterparty UMC GROUP (USA) UMC GROUP (USA) UMC GROUP JAPAN UMC GROUP JAPAN UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. UMC GROUP (USA) UMC GROUP (USA) UMC GROUP JAPAN UMC GROUP JAPAN UMC GROUP (USA) UMC GROUP (USA) UMC GROUP JAPAN UMC GROUP JAPAN UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. UMC GROUP (USA) UMC GROUP (USA) UMC GROUP JAPAN UMC GROUP JAPAN : Related party Related party UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UMC GROUP (USA) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UMC GROUP (USA) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UMC GROUP (USA) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UMC GROUP (USA) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. 0 0 0 0 0 0 1 1 2 2 2 2 0 0 0 0 0 0 1 1 2 2 2 2 No. No. (Note 1) (Note 1) ATTACHMENT 1 (Significant intercompany transactions between consolidated entities) (Amount in thousand; Currency denomination NTD or foreign currencies) For the year ended December 31, 2019 For the year ended December 31, 2018 Note 1: UMC and its subsidiaries are coded as follows: 1. UMC is coded "0". 2. The subsidiaries are coded consecutively beginning from "1" in the order presented table above. Note 2: Transactions are categorized as follows 1. The holding company to subsidiary. 2. Subsidiary to holding company. 3. Subsidiary to subsidiary. Note 3: The sales price to the above related parties was determined through mutual agreement in reference market conditions. item's balance at period-end. Note 4: The percentage with respect to the consolidated asset/liability for transactions of balance sheet items are based on each For profit or loss items, cumulative balances are used as basis. billion which was recognized as deferred revenue. Note 5: UMC authorized technology licenses to its subsidiary, UNITED SEMICONDUCTOR (XIAMEN) CO., LTD., in the amount of USD 0.35 Since it was a downstream transaction, the deferred revenue would be realized over time. 249 United Microelectronics Corporation | Annual Report 2019 $24,495 (Note2) (Note3) Limit of total Limit of total financing amount financing amount $2,349 $20,680,436 $82,721,743 (Note2) (Note3) Limit of financing amount Limit of financing amount for individual counter-party for individual counter-party Collateral Collateral Item Value Item Value $- None $- $2,349 None $- Loss Loss allowance allowance turnover financing financing Reason for Reason for $- Business $2,349 - counter-party counter-party (purchases from) (purchases from) Amount of sales to Amount of sales to financing financing financing operation Nature of Nature of short-term Interest rate provided Interest rate provided Actual amount Actual amount balance balance Ending Ending $2,349 $2,349 $2,349 9.00% Needs for period period Maximum Maximum balance for the balance for the No Yes $7,507,500 $7,507,500 $1,201,200 2.56%-3.06% The need for Related Party Related Party Other Other account account Financial Financial statement statement receivables receivables - related parties Counter-party Counter-party UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. TIPPING POINT ENERGY COC PPA SPE-1,LLC Lender Lender MICROELECTRONICS CORPORATION DEVELOPMENT CO., LTD. 0 UNITED 1 TERA ENERGY No. No. (Note 1) (Note 1) TERA ENERGY DEVELOPMENT CO., LTD. Note 1: The parent company and its subsidiaries are coded as follows: (i) The parent company is coded "0". (ii) The subsidiaries are coded consecutively beginning from "1" in the order presented table above. period. Note 2: Limit of financing amount for individual counter-party shall not exceed 10% the lender's net assets value as Limit of total financing amount shall not exceed 40% the Company’s net asset value. Limit of total financing amount shall not exceed 40% latest financial statements lender. ATTACHMENT 2 (Financing provided to others for the year ended December 31, 2019) (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROELECTRONICS CORPORATION Note 3: Limit of financing amount for individual counter-party shall not exceed 10% of the lender's net assets value as of the period or the needed amount for operation, which is lower. Note 3: Limit of financing amount for individual counter-party shall not exceed 10% the lender's net assets value as
250 Financial Review 93,061,961 $93,061,961 $10,248,216 Limit of total Limit of total amount (Note 4) amount (Note 7) guarantee/endorsement guarantee/endorsement 6.74% 0.36% 38.78% Percentage of accumulated Percentage of accumulated from the latest financial statement from the latest financial statement guarantee amount to net assets value guarantee amount to net assets value $- $- Amount of collateral Amount of collateral - guarantee/endorsement guarantee/endorsement (Note 6) (Note 5) $747,900 13,696,378 provided provided Actual amount Actual amount (Note 6) (Note 5) Ending balance Ending balance for the period for the period Maximum balance Maximum balance
93,061,961 15,105,090 13,933,920 $93,061,961 $2,448,000 $748,000 $10,248,216 $8,832,353 $8,832,353 $3,913,609 antor. Limit of Limit of (Note 7) (Note 3) guarantee/endorsement guarantee/endorsement amount for receiving party amount for receiving party 2 2 6 (Note 2) (Note 2) Releationship Releationship exceed 45% of net wo rth of endorsor/guar Receiving party Receiving party Company name Company name single entity shall not single entity UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. NEXPOWER TECHNOLOGY CORP. UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. Endorsor/Guarantor Endorsor/Guarantor amount of endorsements/guarantees for any amount of endorsements/guarantees for any CORPORATION CORPORATION (SUZHOU) CO., LTD. 0 UNITED MICROELECTRONICS 0 UNITED MICROELECTRONICS 1 HEJIAN TECHNOLOGY No. No. (Note 1) (Note 1) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. ATTACHMENT 3 (Endorsement/Guarantee provided to others for the year ended December 31, 2019) (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROELECTRONICS CORPORATION Note 1: The parent company and its subsidiaries are coded as follows: 1. The parent company is coded "0". 2. The subsidiaries are coded consecutively beginning from "1" in the order presented table above. Securities and Futures Bureau, receiving parties should be disclosed as one of the following: Note 2: According to the "Guidelines Governing Preparation of Financial Reports by Securities Issuers" issued R.O.C. 1. A company with which it does business. 2. A company in which the public directly and indirectly holds more than 50% of voting shares. 3. A company that directly and indirectly holds more than 50 % of the voting shares in public company. 4. A company in which the public holds, directly or indirectly, 90% more of voting shares. in the same industry or for joint builders purposes of undertaking a construction project. 5. A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in proportion to their shareholding percentages. 6. A company that all capital contributing shareholders make endorsements/ guarantees for their jointly invested of a sales contract for pre-construction homes pursuant to the Consumer Protection Act each other. 7. Companies in the same industry provide among themselves joint and several security for a performance guarantee the amount of endorsements/guarantees for any single entity are as follows: Note 3: The amount of endorsements/guarantees shall not exceed 45% the net worth endorsor/guarantor; and ceilings on The 1. 2. The amount of endorsements/guarantees for a company which endorsor/guarantor does business with, except the ceiling rules abovementioned shall not exceed the needed amounts arising from 2. The amount of endorsements/guarantees for a company which endorsor/guarantor does business with, except the ceiling and the receiving party. business dealings which is the higher amount of total sales or purchase transactions between endorsor/guarantor 45% of the Company's net worth, and aggregate amount The aggregate amount of endorsements/guarantees that the Company as a whole is permitted to make shall not exceed endorsements/guarantees for any single entity shall not exceed 45% of the Company's net worth. Note 4: Limit of total guarantee/endorsement amount shall not exceed 45% UMC's net assets value as December 31, 2019. loan from banks including Bank of Taiwan for the amount up to NT$1,700 million, it has been fully repaid in January 2019. Note 5: On December 24, 2014, the board of directors resolved to provide endorsement NEXPOWER TECHNOLOGY CORP.'s syndicated December 31, 2019, actual amount provided was NT$748 million. On December 12, 2018, the board of directors resolved to increase endorsement amounted NT$748 million. As loan from banks including China Development Bank in the amount up to USD 310 million. Note 6: On Feburary 22, 2017, the board of directors resolved to guarantee UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.'s syndicated 24, 2018, the board of directors resolved to increase endorsement amounted USD 41 million. On March 7, 2018, the board of directors resolved to increase endorsement amounted USD 152 million, on October Total endorsement amount is up to USD 464 million. 18, 2019, the board of directors resolved to decrease endorsement amounted 13 million, On July 24, 2019, the board of directors resolved to decrease endorsement amounted USD 26 million, on December as of December 31, 2019. Note 7: Limit of total endorsed/guaranteed amount shall not exceed 45% HEJIAN TECHNOLOGY (SUZHOU) CO., LTD.'s net assets value (SUZHOU) CO., LTD.'s net assets value as of December 31, 2019. The amount of endorsements/guarantees for any single entity shall not exceed 45% net worth HEJIAN TECHNOLOGY 45% of the Company's net worth, and aggregate amount The aggregate amount of endorsements/guarantees that the Company as a whole is permitted to make shall not exceed endorsements/guarantees for any single entity shall not exceed 45% of the Company's net worth. As of December 31, 2019, actual amount provided was NT$13,696 million.
251 United Microelectronics Corporation | Annual Report 2019 collateral Shares as (thousand) 26,692 None 20,125 None 236,800 None 184,500 None 100,446 None 331,577 None 152,878 None 346,630 None 769,125 None 961,898 None 795,795 None 616,333 None 175,494 None $146,730 None 1,521,311 None 1,277,414 None 8,237,712 None 3,601,365 None Fair value/ Net assets value 6.56 1.70 1.16 0.22 9.79 9.29 7.66 4.714.35 - None 0.98 1.68 0.83 0.72 - None 8.67 2.70 17.63 - None 15.75 - None 19.73 17.00 13.03 Percentage of ownership (%) 20,125 - 26,692 184,500 236,800 100,446 331,577 152,878 346,630 769,125 616,333 961,898 795,795 175,494 - December 31, 2019 $146,730 1,521,311 1,277,414 8,237,712 3,601,365 Carrying amount 0 938 - - - None 324 - 1,600 9,883 - 2,675 6,692 5,627 - 1,166 - - - None 1,184 18,182 18,000 22,144 17,511 - 16,680 12,521 10,715 20,483 13,960 20,000 16,445 12,000 105,356 196,136 (thousand) bonds/ shares Units (thousand)/ Financial statement account Financial assets at fair value through profit or loss, current Financial assets at fair value through profit or loss, current Financial assets at fair value through profit or loss, current Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, current Financial assets at fair value through other comprehensive income, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent income, noncurrent income, noncurrent income, noncurrent Financial assets at fair value through other comprehensive income, noncurrent income, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through other comprehensive Financial assets at fair value through other comprehensive Financial assets at fair value through other comprehensive Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent ------Relationship The Company's director Financial assets at fair value through other comprehensive Name of securities Fund MILLERFUL NO.1 REAL ESTATE INVESTMENT TRUST Stock ACTION ELECTRONICS CO., LTD. Stock PIXART IMAGING, INC. Stock KING YUAN ELECTRONICS CO., LTD. Stock PIXTECH, INC. StockStock HOLTEK SEMICONDUCTOR INC. OCTTASIA INVESTMENT HOLDING INC. Stock UNITED FU SHEN CHEN TECHNOLOGY CORP. StockStock UNITED INDUSTRIAL GASES CO., LTD. AMIC TECHNOLOGY CORP. Stock SUBTRON TECHNOLOGY CO., LTD. StockStock UNIMICRON HOLDING LIMITED Stock UNIMICRON TECHNOLOGY CORP. Stock ITE TECH. INC. NOVATEK MICROELECTRONICS CORP. StockStock KING YUAN ELECTRONICS CO., LTD. Stock EPISTAR CORP. Stock TOPOINT TECHNOLOGY CO., LTD. PROMOS TECHNOLOGIES INC. Stock SILICON INTEGRATED SYSTEMS CORP. Type of securities Stock-Preferred stock TONBU, INC. Stock-Preferred stock AETAS TECHNOLOGY INC. Stock-Preferred stock MTIC HOLDINGS PTE. LTD. Stock-Preferred stock TA SHEE GOLF & COUNTRY CLUB ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROELECTRONICS CORPORATION
252 Financial Review collateral Shares as (thousand) 7,280 None 26,903 None 46,896 None 10,232 None 53,850 None 34,535 None 99,584 None 41,160 None 17,125 None 52,522 None 12,087 None 18,504 None 69,053 None $2,923 None 124,875 None 166,996 None 320,130 None Fair value/ Net assets value 4.21 5.35 62,376 None 5.325.31 - None 3.71 3.49 122,818 None 6.67 6,574 None 5.12 3.163.11 - None 2.88 9.12 7.29 3.72 3.21 2.70 8.18 2.96 6.93 48,101 None 19.65 15.9415.12 - None 14.49 - None 13.76 10.23 Percentage of ownership (%) 7,280 46,896 26,903 10,232 53,850 17,125 34,535 99,584 41,160 52,522 12,087 18,504 69,053 $2,923 124,875 166,996 320,130 December 31, 2019 Carrying amount 3 62,376 15 957 - 800 526 6,574 265 - 900 1,514 1,968 3,838 6,609 - 1,800 - 3,000 2,500 3,750 4,600 4,416 1,200 6,741 1,800 3,150 48,101 10,059 122,818 10,719 (thousand) bonds/ shares Units (thousand)/ Financial statement account Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent 6,374 Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent ------Relationship Name of securities I SP Fund TRENDFORCE CAPITAL FUND SPC-TRENDFORCE Fund TRANSLINK CAPITAL PARTNERS IV, L.P. Stock DARCHUN VENTURE CORP. Stock SOLARGATE TECHNOLOGY CORP. Stock ACTI CORP. StockStock MERIDIGEN BIOTECH CO., LTD. EXCELLENCE OPTOELECTRONICS INC. StockStock SUBTRON TECHNOLOGY CO., LTD. TAIWAN AULISA MEDICAL DEVICES TECHNOLOGIES, INC. Stock LICO TECHNOLOGY CORP. Stock ALL-STARS XMI LTD. Stock TRONC-E CO., LTD. Stock ACT GENOMICS HOLDINGS CO., LTD. Stock SOLID STATE SYSTEM CO., LTD. Stock EVERGLORY RESOURCE TECHNOLOGY CO., LTD. StockStock ANIMATION TECHNOLOGIES INC. TOPOINT TECHNOLOGY CO., LTD. StockStock BRIGHT SHELAND INTERNATIONAL CO., LTD. TAIWAN SEMICONDUCTOR CO., LTD. Stock CENTERA PHOTONICS INC. StockStock ADVANCE MATERIALS CORP. MONTJADE ENGINEERING CO., LTD. StockStock WIN PRECISION TECHNOLOGY CO., LTD. RISELINK VENTURE CAPITAL CORP. Stock NEW SMART TECHNOLOGY CO., LTD. Type of securities ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) FORTUNE VENTURE CAPITAL CORP.
253 United Microelectronics Corporation | Annual Report 2019 collateral Shares as (thousand) N/A None N/A None 9,540 None 6,769 None 1,027 None 46,186 None 30,030 None 59,459 None 37,087 None 13,900 None $1,432 None 179,600 None 176,019 None 121,408 None 334,635 None 264,495 None Fair value/ Net assets value 1.96 - None 1.71 4,564 None 2.15 24,060 None 2.23 1.02 25,045 None 1.61 2.07 0.95 0.75 - None 0.65 65,260 0.46 None 24,088 None 0.02 3 None 0.53 125,650 0.44 None 9,370 None 0.84 7.00 0.14 Percentage of ownership (%) 3 9,540 6,769 1,027 - 3,987 - 46,186 59,459 - 37,087 - 13,900 - 30,030 - 10,000 - $1,432 179,600 176,019 - 121,408 - 334,635 264,495 December 31, 2019 Carrying amount 1 - - - None 2 21 40 261 - 600 24,060 327 125 265 24,088 311 700 125,650 200 9,370 200 1,141 4,564 2,114 25,045 8,000 1,000 9,930 - 1,300 65,260 2,250 1,900 1,449 23,909 10,500 16,079 (thousand) bonds/ shares Units (thousand)/ Financial statement account Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent 582 Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent income, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through other comprehensive Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent income, noncurrent Prepayments for investments Prepayments for investments ------Relationship Parent company Financial assets at fair value through other comprehensive Name of securities . Fund VERTEX V (C.I.) FUND L.P. StockStock MOBILE DEVICES INC. WIESON TECHNOLOGIES CO., LTD. Stock SOLAR APPLIED MATERIALS TECHNOLOGY CORP. Stock CHITEC TECHNOLOGY CORP., LTD. Stock NORATECH PHARMACEUTICALS, INC. Stock CRYSTALWISE TECHNOLOGY INC. Stock WALTOP INTERNATIONAL CORP. Stock TAIWANJ PHARMACEUTICALS CO., LTD. Stock TIGERAIR TAIWAN CO., LTD. Stock SHIN-ETSU HANDOTAI TAIWAN CO., LTD. Stock POWERTEC ELECTROCHEMICAL CORP. StockStock FUSHENG PRECISION CO., LTD. Stock LINTES TECHNOLOGY CO., LTD. Stock QUASER MACHINE TOOLS, INC. FORTEMEDIA, INC. Stock UNITED MICROELECTRONICS CORP. Stock EMPASS TECHNOLOGY INC. Stock VALUE VALVES CO., LTD. Type of securities Convertible bonds EPISIL-PRECISION INC. Stock-Preferred Stock BRAVOTEK CORP. Stock-Preferred Stock GEAR RADIO LTD. Stock-Preferred Stock EJOULE INTERNATIONAL LIMITED Stock-Preferred Stock FORTEMEDIA, INC. Stock-Preferred Stock ACEPODIA, INC. Stock-Preferred Stock FLOADIA CORP. Stock-Preferred Stock CEREBREX, INC. ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) FORTUNE VENTURE CAPITAL CORP
254 Financial Review collateral Shares as (thousand) $- None 8,220 None 7,314 None 7,452 None 5,658 None 11,708 None 41,853 None 84,364 None 53,465 None 20,192 None 26,630 None 19,328 None 40,750 None 30,090 None 10,060 None 11,120 None 223,462 None 243,278 None 111,766 None 431,012 None 181,831 None Fair value/ Net assets value 4.98 6.08 4.91 9.00 4.58 2.74 3.20 4.62 0.77 1.02 0.80 4.24 0.87 2.67 Percentage of ownership (%) $- - 8,220 7,314 7,452 5,658 - 41,85315.35 84,364 13.99 11,708 53,465 20,192 26,630 19,328 40,750 10,060 - 30,090 11,120 - 223,462 243,278 111,766 18.18 431,012 181,831 December 31, 2019 Carrying amount 9 2 50 365 33,179 0.64 33,179 None 779 500 100 100 2,252 8,529 6,433 1,200 1,829 5,435 1,978 93,559 0.64 93,559 None 1,422 1,127 6,4701,000 - 0.49 35,000 0.25 - None 35,000 None 1,000 150,500 (thousand) bonds/ shares Units (thousand)/ Financial statement account Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, current - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent ------Relationship Name of securities . ENERGY CORP.) Fund OAK HILL OPPORTUNITIES FUND, SEGREGATED PORTFOLIO Fund EVERYI CAPITAL ASIA FUND, L.P. Fund TRANSLINK CAPITAL PARTNERS III, L.P. Fund H&QAP GREATER CHINA GROWTH FUND, L.P. Stock BEAUTY ESSENTIALS INTERNATIONAL LTD. Stock ACTI CORP. Stock WINKING ENTERTAINMENT LTD. Stock EVERGLORY RESOURCE TECHNOLOGY CO., LTD. Stock EXCELLENCE OPTOELECTRONICS INC. Stock WIESON TECHNOLOGIES CO., LTD. Stock ADVANCE MATERIALS CORP. Stock SIMPLO TECHNOLOGY CO., LTD. Stock SUNDIA MEDITECH GROUP Stock ALL-STARS XMI LTD. StockStock TXC CORP. LINTES TECHNOLOGY CO., LTD. Stock MATERIALS ANALYSIS TECHNOLOGY INC. Stock POWTEC ELECTROCHEMICAL CORP.(formerly POWERTEC StockStock ENTEREX INTERNATIONAL LTD. HANDA PHARMACEUTICALS, INC. Stock EVERGREEN STEEL CORP. Type of securities Convertible bonds CLOUD MOMENT (CAYMAN) INC. Convertible bonds SIGURD MICROELECTRONICS CORP. Convertible bonds EPISIL-PRECISION INC. Convertible bonds TECHCENTIAL INTERNATIONAL LTD. ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) TLC CAPITAL CO., LTD
255 United Microelectronics Corporation | Annual Report 2019 collateral collateral Shares as Shares as (thousand) (thousand) 916 None 190 None 703 None 959 None N/A None 2,077 None 6,898 None 67,880 None $6,192 None 264,029 None 169,778 None 128,396 None 178,037 None 179,734 None 104,054 None Fair value/ Fair value/ Net assets value Net assets value 8.87 USD 14.33 USD 11.47 USD 16,371 None Percentage of Percentage of ownership (%) ownership (%) 916 - USD 190 - USD 703 - USD 959 3,987 - 67,880 - $6,192 - 264,029 - 128,396 - 178,037 - 179,734 - 104,054 - 169,778 - December 31, 2019 December 31, 2019 Carrying amount Carrying amount 40 279 770 359 - - - None 2,377 194,971 - 194,971 None 2,685 5,3328,519 - - - - - None - None 1,739 2,000 7,035 USD 11,608 9.76 USD 11,608 None 21,703 35,863 (thousand) (thousand) bonds/ shares bonds/ shares Units (thousand)/ Units (thousand)/ Financial statement account Financial statement account Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, current - USD Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, current - USD Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, current - USD Financial assets at fair value through profit or loss, noncurrent 3Financial assets at fair value through profit or loss, noncurrent USD 7 USD 7,123 2,077 5.03 5.35 USD USD 7,123 None Financial assets at fair value through profit or loss, noncurrent - USD Prepayments for investments Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent 26,499 Financial assets at fair value through profit or loss, noncurrent - USD 16,371 Financial assets at fair value through profit or loss, noncurrent - USD 6,898 Financial assets at fair value through profit or loss, noncurrent ------Relationship Relationship Name of securities Name of securities . Fund TRANSLINK CAPITAL PARTNERS III, L.P. Fund TRANSLINK CAPITAL PARTNERS IV, L.P. StockStock ALL-STARS XMI LTD. ALL-STARS SP IV LTD. Stock VALUE VALVES CO., LTD. Stock OCTTASIA INVESTMENT HOLDING INC. Capital TRANSLINK MANAGEMENT III, L.L.C. Type of securities Type of securities Convertible bonds SWIFTSTACK, INC. Convertible bonds CLOUDWORDS, INC. Convertible bonds CNEX LABS, INC. Stock-Preferred stock YOUJIA GROUP LTD. Stock-Preferred stock ALO7 LTD. Stock-Preferred stock ADWO MEDIA HOLDINGS LTD. Stock-Preferred stock TURNING POINT LASERS LTD. Stock-Preferred stock ARTERY TECHNOLOGY CORP. Stock-Preferred stock X2 POWER TECHNOLOGIES LTD. Stock-Preferred stock GAME VIDEO LTD. Stock-Preferred stock CLOUD MOMENT (CAYMAN) INC. Stock-Preferred stock IMO, INC. Stock-Preferred stock HIGHLANDER FINANCIAL GROUP CO., LTD. Stock-Preferred stock EJOULE INTERNATIONAL LTD. Stock-Preferred stock PLAYNITRIDE INC. ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) TLC CAPITAL CO., LTD UMC CAPITAL CORP.
256 Financial Review collateral Shares as (thousand) 56 None 51 None 240 None 133 None 2,695 None 1,630 None 2,989 None 9,112 None 1,307 None 3,237 None 2,092 None 3,433 None 1,678 None 6,631 None 4,789 None 1,386 None 4,968 None 6,592 None 1,165 None 2,266 None Fair value/ Net assets value 3.33 USD 1.76 USD 1.69 USD Percentage of ownership (%) 56 0.46 USD 51 - USD 240 133 - USD December 31, 2019 Carrying amount 4 USD 3,601 4.00 USD 3,601 None 80 USD 614 USD 1,307 - USD 517 USD 175 USD 8,520 USD 9,112 - USD 1,349 USD 2,092 - USD 3,052 USD 3,433 - USD 2,644 USD 6,631 - USD 3,866 USD 1,386 - USD 3,500 USD 6,592 - USD 4,9802,855 USD - - 1,165 - - USD None 6,555 - -1,287 USD - None 2,266 - USD 12,241 USD 4,968 - USD (thousand) bonds/ shares Units (thousand)/ Financial statement account Financial assets at fair value through profit or loss, noncurrent - USDFinancial assets at fair value through profit or loss, noncurrent 1,630 - USD 4.53 USD Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - USD 1,678 - USD Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - USD 2,695 Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent 64 Financial assets at fair value through profit or loss, noncurrent USD 27,819 USD 3,237 - USD 4,789 - USD Financial assets at fair value through profit or loss, noncurrent - USD 2,989 Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent 174 USD 300 - USD 300 None Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrentFinancial assets at fair value through profit or loss, noncurrent 9,461 USD 4,526 2,770 - USD 4,526 - None - - None ------Relationship Name of securities FundFund TRANSLINK CAPITAL PARTNERS II, L.P. OAK HILL OPPORTUNITIES FUND, SEGREGATED PORTFOLIO Fund GROVE VENTURES II, L.P. Fund STORM VENTURES FUND V, L.P. Fund SIERRA VENTURES XI, L.P. Stock ACHIEVE MADE INTERNATIONAL LTD. Type of securities Convertible bonds GLYMPSE, INC. Stock-Preferred stock SENSIFREE LTD. Stock-Preferred stock APPIER HOLDINGS, INC. Stock-Preferred stock DCARD HOLDINGS LTD. Stock-Preferred stock ATSCALE, INC. Stock-Preferred stock GLYMPSE, INC. Stock-Preferred stock ACHIEVE MADE INTERNATIONAL LTD. Stock-Preferred stock CNEX LABS, INC. Stock-Preferred stock NEXTINPUT, INC. Stock-Preferred stock SHOCARD, INC. Stock-Preferred stock SIFOTONICS TECHNOLOGIES CO., LTD. Stock-Preferred stock GCT SEMICONDUCTOR, INC. Stock-Preferred stock FORTEMEDIA, INC. Stock-Preferred stock NEVO ENERGY, INC. Stock-Preferred stock SWIFTSTACK, INC. Stock-Preferred stock NEXENTA SYSTEMS, INC. Stock-Preferred stock CLOUDWORDS, INC. Stock-Preferred stock EAST VISION TECHNOLOGY LTD. Stock-Preferred stock RENIAC, INC. Stock-Preferred stock BLUESPACE.AI, INC. ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) UMC CAPITAL CORP.
257 United Microelectronics Corporation | Annual Report 2019 collateral collateral collateral collateral Shares as Shares as Shares as Shares as (thousand) (thousand) (thousand) (thousand) $- None 33,499 None $5,561 None $85,482 None Fair value/ Fair value/ Fair value/ Fair value/ Net assets value Net assets value Net assets value Net assets value 1.18 18.00 Percentage of Percentage of Percentage of Percentage of ownership (%) ownership (%) ownership (%) ownership (%) $- 33,499 5.00 $5,561 $85,482 11.13 December 31, 2019 December 31, 2019 December 31, 2019 December 31, 2019 Carrying amount Carrying amount Carrying amount Carrying amount - RMB 38,533 9.71 RMB 38,533 None - - 54 375 (thousand) (thousand) (thousand) (thousand) bonds/ shares bonds/ shares bonds/ shares bonds/ shares Units (thousand)/ Units (thousand)/ Units (thousand)/ Units (thousand)/ Financial statement account Financial statement account Financial statement account Financial statement account Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent Financial assets at fair value through profit or loss, noncurrent - - - - - Relationship Relationship Relationship Relationship . Name of securities Name of securities Name of securities Name of securities . . Fund SPARKLABS GLOBAL VENTURES FUND I, L.P. Fund LANHOR FUND Fund SPARKLABS KOREA FUND II, L.P. Stock TIAN TAI PHOTOELECTRICITY CO., LTD. Stock PACIFIC-GREEN INTEGRATED TECHNOLOGY INC. Type of securities Type of securities Type of securities Type of securities NEXPOWER TECHNOLOGY CORP SINO PARAGON LIMITED ATTACHMENT 4 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) (Amount in thousand; Currency denomination NTD or foreign currencies) TERA ENERGY DEVELOPMENT CO., LTD UNITED SEMICONDUCTOR (XIAMEN) CO., LTD
258 Financial Review (Note 3) (Note 2) $2,281,631 17,515,233 Amount (Note 1) Ending balance (thousand) bonds/shares Units (thousand)/ $- 237,000 Gain (Loss) from disposal $- $- Disposal Amount Cost (thousand) bonds/shares Units (thousand)/ $720,000 - Amount Addition (thousand) bonds/shares Units (thousand)/ $1,520,575 72,000 Amount (Note 1) Beginning balance (thousand) bonds/shares Units (thousand)/ - 18,447 2,220,103 97,800 15,711,370 - - - - 116,247 Relationship Counter-party Purchase of newly issued shares Associate 168,000 FUJITSU SEMICONDUCTOR LIMITED Investments accounted for under the equity method Investments accounted for under the equity method TRIKNIGHT CAPITAL CORPORATION UNITED SEMICONDUCTOR JAPAN CO., LTD. which was reclassified changes in fair value $84 thousand from financial assets at fair value through other comprehensive, noncurrent to investments accounted for under equity method. The ending balance includes bargain purchase gain of $171,585 thousand resulted from the acquisition, to investments accounted for under equity method. The ending balance includes bargain purchase gain of $171,585 thousand which was reclassified changes in fair value $84 thousand from financial assets at through other comprehensive, noncurrent and exchange differences on translation of foreign operations adjustment under equity method $(945,069) thousand. gains or losses on hedging instruments of $2,572 thousand, share profit associates and joint ventures $270,787 thousand Stock Stock Type of securities Name of the securities Financial statement account Note 2 : The ending balance includes share of profit of associates and joint ventures of $71,056 thousand and capital reduction of NT$(30,000) thousand. Note 2 : The ending balance includes share of profit associates and joint ventures $71,056 thousand capital reduction interest of 84.1% on October 1, 2019, MIE FUJITSU SEMICONDUCTOR LIMITED) was treated as disposal and requisition upon completion of the acquisition remaining ownership Note 3 : The previously held ownership interest of 15.9% in UNITED SEMICONDUCTOR JAPAN CO., LTD. (Before the name was changed to Note 1 : The amounts of beginning and ending balances of financial assets at fair value through other comprehensive income, noncurrent are recorded at the prevailing market prices. The amounts of beginning and ending balances of investments accounted for under the equity method include adjustments method. are recorded at the prevailing market prices. The amounts of beginning and ending balances investments accounted for Note 1 : The amounts of beginning and ending balances financial assets at fair value through other comprehensive income, noncurrent ATTACHMENT 5 (Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for year ended December 31, 2019) ATTACHMENT 5 (Individual securities acquired or disposed of with accumulated amount exceeding the lower NT$300 million 20 (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROELECTRONICS CORPORATION
259 United Microelectronics Corporation | Annual Report 2019 Other commitments utilization and status of Date of acquisition Price reference amount Transaction Date of transaction former holder and acquirer of property Relationship between Where counter-party is a related party, details of prior transactions of property Former holder p Relationshi y Counter-part amount Payment status Transaction date Transaction None Name of properties ATTACHMENT 6 (Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019) ATTACHMENT 6 (Acquisition of individual real estate with amount exceeding the lower NT$300 million or 20 percent capital (Amount in thousand; Currency denomination NTD or foreign currencies)
260 Financial Review Other commitments Price reference disposal Reason of Relationship Counter-party Gain (Loss) from disposal collection Status of proceeds amount Transaction amount Carrying acquisition Date of original date Transaction None Names of properties ATTACHMENT 7 (Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019) ATTACHMENT 7 (Disposal of individual real estate with amount exceeding the lower NT$300 million or 20 percent capital (Amount in thousand; Currency denomination NTD or foreign currencies)
261 United Microelectronics Corporation | Annual Report 2019 Note Note Note Note Note 3 % 2 % 0 % 0 % 8 % 3 % 1 % 1 % 0 % 7 % 29 % 99 % 93 % Percentage of total Percentage of total Percentage of total Percentage of total Percentage of total receivables (payable) receivables (payable) receivables (payable) receivables (payable) receivables (payable) 705 7,738 1,109 4,920 31,635 11,906 197,973 186,971 2,310,603 $5,937,706 608,622 31,334 85,373 Balance Balance Balance Balance Balance Notes and accounts receivable (payable) Notes and accounts receivable (payable) Notes and accounts receivable (payable) Notes and accounts receivable (payable) Notes and accounts receivable (payable) Term Term Term length transaction length transaction length transaction length transaction length transaction Details of non-arm's Details of non-arm's Details of non-arm's Details of non-arm's Details of non-arm's Unit price Term Unit price Unit price Unit price Unit price Term Term Term Term Term Term 9 % Net 60 days N/A N/A RMB 1 % Net 30 days N/A N/A 3 % Net 60 days N/A N/A 5 %2 % Net 45 days Net 60 days N/A N/A N/A N/A RMB RMB 2 % Net 60 days N/A N/A USD 1 % Net 60 days N/A N/A RMB 0 % Net 60 days N/A N/A USD 1 % Month-end 60 days N/A N/A 6 % Net 60 days N/A N/A JPY 39 % Net 60 days N/A N/A 98 % Net 60 days N/A N/A USD 94 % Net 60 days N/A N/A JPY purchases (sales) purchases (sales) purchases (sales) purchases (sales) purchases (sales) Percentage of total Percentage of total Percentage of total Percentage of total Percentage of total Transactions Transactions Transactions Transactions Transactions 4,937 23,335 166,527 849,777 $47,736,335 1,209,310 3,933,964 805,385 Amount Amount Amount Amount Amount (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Associate Sales RMB AssociateAssociate Sales Sales RMB RMB 121,132 56,029 Associate Purchases USD Associate Sales RMB 33,968 Associate Purchases USD Associate Sales Associate Purchases JPY Subsidiary Sales Subsidiary Sales Subsidiary Sales Relationship Relationship Relationship Relationship Relationship Parent company Purchases USD 1,504,518 Parent company Purchases JPY 12,877,097 Counter-party Counter-party Counter-party Counter-party Counter-party UMC GROUP JAPAN UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. UMC GROUP JAPAN UMC GROUP JAPAN ATTACHMENT 8 ( Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent of capital stock for the year ended December 31, 2019) ATTACHMENT 8 ( Related party transactions for purchases and sales amounts exceeding the lower of NT$100 million or 20 percent (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROELECTRONICS CORPORATION UMC GROUP (USA) UNITED MICROELECTRONICS CORPORATION UNITED MICROELECTRONICS CORPORATION FARADAY TECHNOLOGY CORPORATION UMC GROUP (USA) HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. FARADAY TECHNOLOGY CORPORATION UMC GROUP (USA) UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UMC GROUP (USA) UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.
262 Financial Review $- $- Loss allowance $5,945,175 305,829 11,180 subsequent period subsequent period Loss allowance Amount received in Amount received in RMB 31,635 d erio p uent q Collection status subsequent period subse $- - Overdue receivables Overdue receivables Amount Amount Collection status Turnover Turnover rate (times) rate (times) $5,945,175 7.21 Total Total $- RMB 31,635 5.94 RMB 3,525 Collection in Other Other receivables receivables Ending balance Ending balance $5,937,706 $7,469 Accounts Accounts receivable receivable $- RMB 31,635 $- Notes Notes receivable receivable Associate Subsidiary Subsidiary - 608,622 13,671 622,293 5.20 40,320 Collection in Relationship Relationship Counter-party Counter-party HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. ATTACHMENT 9 (Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of December 31, 2019) ATTACHMENT 9 (Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent capital stock (Amount in thousand; Currency denomination NTD or foreign currencies) UMC GROUP (USA) FARADAY TECHNOLOGY CORP. UNITED MICROELECTRONICS CORPORATION UMC GROUP JAPAN
263 United Microelectronics Corporation | Annual Report 2019 Note 979 940 (886) 2,803 24,565 51,278 71,056 89,068 31,312 47,467 (14,859) (24,195) 962,222 342,966 870,821 $77,135 270,787 Note (128,750) (200,700) (221,978) (5,124,276) (loss) recognized Investment income 979 940 (886) 2,803 24,565 13,131 31,312 47,467 166,098 177,640 342,966 212,066 870,821 $77,135 270,787 (107,860) (119,265) (420,302) (279,115) 2,643,852 (5,124,276) investee company Net income (loss) of 20,499 18,157 42,022 95,116 142,378 642,660 590,702 260,035 121,840 (140,850) 4,273,912 4,378,193 3,829,934 2,281,631 1,470,499 3,756,049 4,398,331 11,643,953 23,183,005 $1,755,033 17,515,233 Carrying amount 36.49 30.87 40.00 13.78 42.00 47.75 45.44 79.83 (%) ownership Percentage of 9 100.00 1 100.00 Investment as of December 31, 2019 shares (thousand) Number of 5,421 4,300 4,300 100.00 1,520 1,520 100.00 2,600 2,600 100.00 38,918 34,240 60,000 336,241 277,280 4,610,000 397,956 100.00 2,300,000 46,000 1,680,000 237,000 4,160,053 401,734 100.00 5,956,791 33,998 1,707,482 144,948 5,421 USD 4,300 USD 1,520 USD 2,600 USD 38,918 60,000 JPY Initial Investment 336,241 4,610,000 2,300,000 2,370,000 3,440,053 5,956,791 1,894,660 Ending balance Beginning balance USD 977,000 USD 977,000 977,000 100.00 USD USD 81,500 USD 81,500 71,663 100.00 KRW 550,000 KRW 550,000 110 100.00 USD 21,000 USD 21,000 21,000 USD 309,102 USD 309,102 664,966 100.00 USD USD USD 16,438 USD 16,438 16,438 100.00 SGD 12,000 SGD 12,000 12,000 USD JPY 64,421,068 JPY 9,999,974 116,247 100.00 JPY Main businesses and products Investment holding circuit capital IC Sales Investment holding Investment holding Marketing support activities circuits batteries Investment holding Investment holding IC Sales circuits Sales and manufacturing of integrated Address Taipei City, Taiwan Venture capital Samoa Cayman Islands Investment holding USA British Virgin Islands Investment holding Taipei City, Taiwan Investment holding British Virgin Islands Investment holding Taipei City, Taiwan Investment holding Samoa Samoa Taipei City, Taiwan Consulting and planning for venture Korea Singapore Samoa Taipei City, Taiwan Investment holding Japan Taichung City, Taiwan Sales and manufacturing of solar power Investee company ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) ATTACHMENT 10 (Names, locations and related information of investee companies as December 31, 2019) (Not including investment (Amount in thousand; Currency denomination NTD or foreign currencies) UMC GROUP (USA) UNITED MICROELECTRONICS CORPORATION TLC CAPITAL CO., LTD. UNITED MICROELECTRONICS (EUROPE) B.V. The NetherlandsUMC CAPITAL CORP. GREEN EARTH LIMITED Marketing support activities Note: The UNITED SEMICONDUCTOR JAPAN CO., LTD. became consolidated entity on October 1,2019. YANN YUAN INVESTMENT CO., LTD. FARADAY TECHNOLOGY CORPORATION Hsinchu City, Taiwan Design of application-specific integrated UMC INVESTMENT (SAMOA) LIMITED UNITECH CAPITAL INC. HSUN CHIEH INVESTMENT CO., LTD. SINO PARAGON LIMITED TRIKNIGHT CAPITAL CORPORATION OMNI GLOBAL LIMITED FORTUNE VENTURE CAPITAL CORP. UMC GROUP JAPAN UMC KOREA CO., LTD. MTIC HOLDINGS PTE. LTD. BEST ELITE INTERNATIONAL LIMITED UNITED SEMICONDUCTOR JAPAN CO., LTD. Japan WAVETEK MICROELECTRONICS CORPORATION Hsinchu County, Taiwan Sales and manufacturing of integrated NEXPOWER TECHNOLOGY CORP.
264 Financial Review Note Note Note - 6 (0) (2,835) (1,875) (9,110) 47,315 $7,443 (41,502) (51,035) $(3,560) (37,044) $(22,063) (140,654) (loss) recognized (loss) recognized Note (loss) recognized (loss) recognized Investment income Investment income Investment income Investment income - -- -- 6 USD (1) (6,380) $7,443 (34,224) $(3,560) 249,901 $(22,063) (279,115) (165,087) (420,302) (133,431) $(420,302) investee company investee company investee company investee company Net income (loss) of Net income (loss) of Net income (loss) of Net income (loss) of - - - 592 552 USD 7,164 3,424 (98,710) (35,816) 276,866 $61,238 121,973 $38,469 $10,264 122,060
Carrying amount Carrying amount Carrying amount Carrying amount 0.66 21.90 44.45 33.46 25.14 32.78 12.14 25.90 30.00 12.00 10.38 USD 5,742 USD 21,843 USD 1,815 (%) (%) (%) (%) ownership ownership ownership ownership Percentage of Percentage of Percentage of Percentage of - Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 shares shares shares shares (thousand) (thousand) (thousand) (thousand) Number of Number of Number of Number of 22,581 - - - 283,439 13,932 $100,752 18,655 100.00 Beginning balance 750 USD 750 750 100.00 900 USD 900 900 100.00 200 USD 200 200 100.00 USD 10,000 - 1,000 95,916 95,916 4,251 Initial Investment Initial Investment Initial Investment Initial Investment 277,508 888,019 888,019 8,645 $100,752 1,688,630 1,688,630 23,827 8,856 8,856 1,194 - - EUR 1,120 - - Ending balance Beginning balance Ending balance Beginning balance Ending balance Beginning balance USD 22,500 USD 22,500 22,500 USD EUR 5,900 EUR 5,900 5,900 USD 6,000 USD 6,000 6,000 EUR 2,160 EUR 2,160 2,160 USD 4,036 USD 4,036 USD USD e s s Main businesses and products Ending balance Main businesses and products Main businesses and products Main businesses and products atterie circuit b Investment holding batteries Microcontamination control servic Investment holding Solar project Solar project Solar project reagents and consumables Investment holding Investment holding Investment holding ) Address Address Address Address Hongkong Xinbei City, Taiwan Thin client Taichung City, Taiwan Sales and manufacturing of solar power Hongkong Taipei City, Taiwan Investment holding Samoa Germany Germany Germany Taipei City, Taiwan Medical devices, measuring equipment, USA Cayman Islands Investment holding Taichung City, Taiwan Sales and manufacturing of solar power Hsinchu City, Taiwan Chemicals and filtration products & Samoa Investee company Investee company Investee company Investee company WAVETEK MICROELECTRONICS CORPORATION Hsinchu County, Taiwan Sales and manufacturing of integrated CLIENTRON CORP. FORTUNE VENTURE CAPITAL CORP. NEXPOWER TECHNOLOGY CORP. SOARING CAPITAL CORP. WINAICO IMMOBILIEN GMBH WINAICO SOLAR PROJEKT 1 GMBH WINAICO IMMOBILIEN GMBH UNITED LED CORPORATION HONG KONG LIMITED YUNG LI INVESTMENTS, INC. ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) ATTACHMENT 10 (Names, locations and related information of investee companies as December 31, 2019) (Not including investment (Amount in thousand; Currency denomination NTD or foreign currencies TERA ENERGY DEVELOPMENT CO., LTD. Hsinchu City, Taiwan Energy Technical Services HSUN CHIEH CAPITAL CORP. TERA ENERGY DEVELOPMENT CO., LTD. VSENSE CO., LTD. UMC CAPITAL (USA) TRANSLINK CAPITAL PARTNERS I, L.P. EVERRICH ENERGY INVESTMENT (HK) LIMITED NEXPOWER TECHNOLOGY CORP. PURIUMFIL INC. UMC CAPITAL CORP. TLC CAPITAL CO., LTD.
265 United Microelectronics Corporation | Annual Report 2019 Note $20 (169) $237 1,583 29,580 $(6,920) $(89,915) Note $877,676 $877,676 (loss) recognized Note (loss) recognized (loss) recognized Note (loss) recognized Note (loss) recognized Note (loss) recognized Note Investment income Investment income Investment income Investment income Investment income Investment income $20 (169) $237 1,583 29,580 $(6,920) $(89,915) $877,676 $877,676 investee company investee company investee company investee company investee company investee company Net income (loss) of Net income (loss) of Net income (loss) of Net income (loss) of Net income (loss) of Net income (loss) of $- 8,908 $2,124 $2,777 35,164 $30,256 536,647 $23,113,468 $23,113,468 Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount Carrying amount - (%) (%) (%) (%) (%) (%) ownership ownership ownership ownership ownership ownership Percentage of Percentage of Percentage of Percentage of Percentage of Percentage of - 0 100.00 4 100.00 0 100.00 Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 Investment as of December 31, 2019 60 100.00 shares shares shares shares shares shares (thousand) (thousand) (thousand) (thousand) (thousand) (thousand) Number of Number of Number of Number of Number of Number of 60 Beginning balance 60 USD 950 USD 950 Initial Investment Initial Investment Initial Investment Initial Investment Initial Investment Initial Investment - EUR 3,637 Ending balance Ending balance Beginning balance Ending balance Beginning balance Ending balance Beginning balance Ending balance Beginning balance Ending balance Beginning balance JPY 35,000 JPY 35,000 USD 1,500 USD 1,500 1,500 100.00 USD USD 354,000 USD 354,000 - 100.00 USD 354,000 USD 354,000 - 100.00 USD USD 1,000 USD 1,000 USD 9,000 USD 9,000 9,000 100.00 Main businesses and products Main businesses and products Main businesses and products Main businesses and products Main businesses and products Main businesses and products Investment holding Sales and marketing service Photovoltaic power plant development and consulting services Insurance Research & Development Research & Development Semiconductor manufacturing technology Address Address Address Address Address Address USA Samoa Italy British Virgin Islands Investment holding USA USA Singapore British Virgin Islands Investment holding Japan Investee company Investee company Investee company Investee company Investee company Investee company ： SOCIALNEX ITALIA 1 S.R.L. was disposed in November 2019. WAVETEK MICROELECTRONICS CORPORATION (USA) ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) ATTACHMENT 10 (Names, locations and related information of investee companies as December 31, 2019) (Not including investment (Amount in thousand; Currency denomination NTD or foreign currencies) WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED SOCIALNEX ITALIA 1 S.R.L. BEST ELITE INTERNATIONAL LIMITED Note INFOSHINE TECHNOLOGY LIMITED OMNI GLOBAL LIMITED WAVETEK MICROELECTRONICS CORPORATION OAKWOOD ASSOCIATES LIMITED WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED UNITED MICROTECHNOLOGY CORPORATION (NEW YORK) UNITED MICROTECHNOLOGY CORPORATION (CALIFORNIA) INFOSHINE TECHNOLOGY LIMITED NEXPOWER TECHNOLOGY CORP. UMC TECHNOLOGY JAPAN CO., LTD. ECP VITA PTE. LTD.
266 Financial Review $(5,124,809) (loss) recognized Note Investment income $(5,124,809) investee company Net income (loss) of $11,617,342 Carrying amount (%) ownership Percentage of Investment as of December 31, 2019 shares (thousand) Number of Initial Investment Ending balance Beginning balance USD 974,050 USD 974,050 974,050 100.00 Main businesses and products Investment holding Address Cayman Investee company ATTACHMENT 10 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) ATTACHMENT 10 (Names, locations and related information of investee companies as December 31, 2019) (Not including investment (Amount in thousand; Currency denomination NTD or foreign currencies) UNITED MICROCHIP CORPORATION GREEN EARTH LIMITED
267 United Microelectronics Corporation | Annual Report 2019 $- 4,392) 131,892 as of - - - - December 31, 2019 Accumulated inward remittance of earnings (USD 37,979 51,010) $10,058 106,657 24,827) 219,139 3,479,458) 22,349,119 5,202,309) 14,947,752 as of Carrying amount December 31, 2019 (RMB (RMB (RMB (RMB (ii) (ii) (ii) (iii) (iii) (iii) 7,505 8,089) 34,750 $(3,529) (9,310)) 856,193 199,300) (39,996) (6,296,372) (1,465,636)) (Note 2) (loss) recognized Investment income (RMB (RMB (RMB 64.95% 25.14% 98.14% 98.14% (Note 4) (RMB ownership Percentage of 7,505 100.00% 8,243) 35,412 872,462 $(3,529) 100.00% 203,087) (159,094) (37,033)) (9,694,611) (2,256,660)) investee company Net income (loss) of (RMB (RMB - 800) 750) 22,523 (Note5) 20,250) (RMB $24,024 608,108 964,966) 309,102) (RMB 9,282,333 28,977,929 Taiwan as of of investment from December 31, 2019 Accumulated outflow (USD (USD (USD (USD (USD $- Inflow - - $- - -- Investment flows Outflow $124,082,614 - - 800) 750) 22,523 20,250) (Note5) $24,024 608,108 309,102) 964,966) 9,282,333 28,977,929 outflow of Upper limit on investment Taiwan as of Accumulated January 1, 2019 investment from (USD (USD (USD (USD $48,880,582 (USD 1,627,725) CORP. (Note 1) LIMITED (ii)OAKWOOD (ii)UNITED LED KONG LIMITED Method of investment INVESTMENT (HK) CORPORATION and (SUZHOU) CO., LTD. (SUZHOU) CO., LTD. (ii)SOARING CAPITAL CORPORATION HONG ASSOCIATES LIMITED (USD (ii)EVERRICH ENERGY (ii)UNITED MICROCHIP (iii)HEJIAN TECHNOLOGY (iii)HEJIAN TECHNOLOGY 750) 800) Commission, MOEA 22,523 84,000) $24,024 128,880 30,000) 2,522,520 3,205,014) 13,768,740 54,549,723 12,697,794) Investment amounts authorized by paid-in capital Total amount of (RMB (RMB (USD (USD (USD (RMB $38,914,917 (USD 1,295,868) Main businesses and products Investment Holding and advisory Solar engineering integrated design services Design support of integrated circuits Sales and manufacturing of integrated circuits Sales and manufacturing of integrated circuits Research, manufacturing and sales in LED epitaxial wafers December 31, 2019 (i) Direct investment in Mainland China. in third region). (ii) Indirectly investment in Mainland China through companies registered a third region (Please specify the name of company (iii) Other methods. firm. (i) The financial report was audited by an international certified public accounting firm in cooperation with R.O.C. (ii) The financial statements were audited by the auditors of parent company. (iii) Others. Accumulated investment in Mainland China as of in the total amount of USD 383,569 thousand. As December 31, 2019, investment has been all remitted. thousand. As of December 31, 2019, the amount investment has been all remitted. The consent to invest in USCXM's investment has been approved by the Investment Commission, MOEA total amount of USD 1,222,356 Investee company UNITEDDS SEMICONDUCTOR (SHANDONG) CO., LTD. UNITRUTH ADVISOR (SHANGHAI) CO., LTD. EVERRICH (SHANDONG) ENERGY CO., LTD. UNITED LED CORPORATION HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. Note 1 : The methods for engaging in investment Mainland China include the following: Note 2 : basis: The investment income (loss) recognized in current period, the were determined based on following Note 3 : at the financial report date. Initial investment amounts denominated in foreign currencies are translated into New Taiwan Dollars using the spot rates Note 4 : an equity investee. The investment has been approved by the Investment Commission, MOEA The Company indirectly invested in HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. via investment BEST ELITE INTERNATIONAL LIMITED, Note 5 : The investment to UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. (USCXM) from HEJIAN TECHNOLOGY (SUZHOU) and indirectly invested in USCXM via investment GREEN EARTH LIMITED. ATTACHMENT 11 (Investment in Mainland China as of December 31, 2019) (Amount in thousand; Currency denomination NTD or foreign currencies)
268 Financial Review Other section section ting and Attestation of Attestation and ting sectionourof report), the parent ce we have obtained is sufficient and appropriate accounting policies (together “the parent company company parent “the (together policies accounting Regulations Governing Audi e Parent Company Only Financial Statements Statements Financial Only Company Parent e Governing thePreparation of Financial Reports by Securities sponsibilities under those standards are further described in the the in described are further standards those under sponsibilities Report Translated from Chinese Chinese from Translated ’ Report Auditors’ Responsibilities th of Audit the for Financial Statements by Certified Public Accountants and auditing standards generally accepted in in accepted generally standards Accountants and auditing Public by Certified Statements Financial Our re China. Republic the of opinion. our for basis a provide to Matters Key Audit in significance most of were judgment, professional our in that, matters those are matters audit Key the in addressed were matters These statements. financial only company parent 2019 of audit our our and in as a whole, forming statements financial only company the parent of our audit of context on these matters. opinion a separate not provide and do we thereon, opinion of our report. We are independent of the Company in accordance with the Norm of Professional Professional of Norm the with accordance in Company the of are independent report. We our of of China “Norm”), (the Republic Certifiedhave fulfilled Ethics Accountant of for the and we Public reports the and audits our on Based Norm. the with accordance in responsibilities ethical other our eviden the audit that we believe auditors, other of Matter – Making Reference to the Audits of Component Auditors Auditors Component of Audits the to Reference Making – Matter the respects, in all material fairly, present above to referred statements financial only company performance its financial and 2018, and 2019 31, December as of Company the of position financial the with in conformity 2018, and 2019 31, December ended the years for flows and cash requirements of the Regulations Issuers. forBasis Opinion the with accordance in audits our conducted We only financial statements”). statements”). financial only to refer the (please the reports audits other and of based on our auditors opinion, In our Independent Auditors Independent Corporation Microelectronics United To Opinion United of sheets balance only company parent the accompanying have audited We related the and 2018, and 2019 31, December of as “Company”) (the Corporation Microelectronics for flows cash and equity in changes income, comprehensive of statements only company parent only financial company parent the to notes and and 2018, 31, 2019 December ended the years significant of the summary including statements, ements have been prepared originally in Chinese. In the In Chinese. in originally prepared been have ements uage financial statements shall prevail. FOR FOR THE YEARS ENDED PARENT COMPANY ONLY ONLY COMPANY PARENT FINANCIAL STATEMENTS STATEMENTS FINANCIAL DECEMBER 31, 2019 AND 2018 2019 31, DECEMBER WITH REPORT OF INDEPENDENT AUDITORS AUDITORS INDEPENDENT OF REPORT WITH UNITED MICROELECTRONICS CORPORATION CORPORATION MICROELECTRONICS UNITED event of a conflict between these financial statements and the original Chinese version or difference in interpretation interpretation in or difference version Chinese original the and statements financial these between a conflict of event lang Chinese the the two versions, between Address: R.O.C. Taiwan, 3 Li-Hsin No. Road II,Hsinchu City, Park, Science Hsinchu 886-3-578-2258 Telephone: financial that company The parent only stat reader is advised 269 United Microelectronics Corporation | Annual Report 2019 ance for the Parent collusion, forgery, intentional omissions, omissions, intentional collusion, forgery, cient and appropriate to a and appropriate to provide our cient basis for committee, are responsible for overseeing the the overseeing for responsible are committee, atement of the parent company only financial financial only company the parent of atement d fair presentation of the parent company only only company the of parent presentation d fair gn and perform audit procedures responsive to to responsive procedures audit and perform gn Charged withCharged Govern sstatement resulting from fraud is higher than for for is higher than from fraud resulting sstatement maintain professional skepticism throughout the the throughout skepticism professional maintain e about whether the parent company only financial financial only company parent the whether about e Company, disclosing, as applicable, matters related related as applicable, matters disclosing, Company, e Parent Company Only Financial Statements Statements Financial Only Company Parent e opinion. opinion. The not risk of a detecting mi material involve may error, as fraud resulting from one control. of internal or the override misrepresentations, Identify and assess the risks of material misst material risksand of assess the Identify desi or error, fraud to due whether statements, that evidence is those risks, suffi audit and obtain Responsibilities of Management and Those Company Only Financial Statements Statements Only Financial Company an the preparation for responsible is Management the Governing Regulations the of requirements with the in accordance statements financial management as control internal such for and Issuers Securities by Reports Financial of Preparation that statements financial only company parent of preparation enable the to is necessary determines error. or fraud to due whether misstatement, material from free are assessing for is responsible management statements, financial only company parent the preparing In the ability tocontinue as a going of theconcern to going concern and using the going concern basis of accounting unless management either intends either intends unless management of accounting basis the concern going using and toconcern going so. to do but alternative realistic no or has operations, cease to or Company the liquidate to audit including governance, with charged Those financial reporting process of the Company. Company. the of process reporting financial th ofAudit the Responsibilities Auditor’s for assurancOur obtain objectives to reasonable are to and error, or fraud to due whether misstatement, material from are free awhole as statements of level a high is assurance Reasonable opinion. our includes that report an auditor’s issue standards auditing with accordance in conducted audit that an a guarantee not is but assurance, it when material misstatement a detect always Chinawill of inthe Republic accepted generally or in if, individually material are and considered error or from fraud can arise exists. Misstatements users taken of decisions economic the influence to be expected they reasonably could the aggregate, statements. only financial company these parent of basis on the in the Republic of accepted generally standards with auditing in accordance As part of an audit and judgment we China, exercise professional also:audit. We 1. -moving inventories was the income before tax for the the for before tax income the Please refer to Notes 5 and 6 Notes to Please refer ventories reserve process. For example, we we example, For process. reserve ventories ies reserve percentages. We also recalculated recalculated also We percentages. reserve ies s including historical usage, write-off activities write-off usage, historical including s , associates and joint ventures under the equity equity the under ventures joint and associates , ting the valuation slow ting for consider this is a matter.key audit presenting 12.85% and and (12.06)% 12.85% of presenting Valuationfor slow-moving inventories complex due to judgement involved in the Company’s estimation of the appropriate amount of the of the amount of the appropriate Company’s estimation in the involved judgement due to complex input key utilizing reserve, inventories slow-moving we Therefore, aging. inventory and of effectiveness operating the tested and design the evaluated an understanding, We obtained controlsinternal over the Company’s slow-moving in in the used inputs key the and method reserve the of review management’s over control the tested included, procedures audit our reserve, inventories slow-moving the test To process. valuation inventory of determination management’s of of appropriateness the others, an evaluation amongst and usage as such historical data underlying the of completeness and accuracy the testing and aging inventor activitiesused in determining the write-off categories. aging inventory the to percentages reserve the of application the for reserve inventory In addition, inventories.we evaluated the adequacydisclosures of of statements. only financial company parent the to Auditors Component of Audits the to Reference Making – Matter Other ventures joint and associates subsidiaries, certain of statements financial the audit not did We auditors, other by were audited statements financial Those method. equity the for under accounted solely based are herein expressed opinions our and to us, furnished been have thereon reports whose equity under ventures joint and subsidiaries, associates These auditors. other reports of on the of 2.72% and 3.68% representing million, and NT$8,151 million to NT$11,132 amounted method (loss) profits of shares related The respectively. 2018, and 2019 31, December of as assets total to NT$1,174 amounted method equity the under ventures joint and associates the subsidiaries, from millionre and NT$(749) million, years ended December 31, 2019 and 2018, respectively, and the related shares of other other of shares related and the respectively, and 2018, 31, 2019 December years ended the subsidiaries from (loss) income comprehensive of and (2.83)% 9.06% representing million, NT$(230) million and NT$1,189 to amounted method 2018, respectively. and 31, December 2019 the years ended (loss) for income the comprehensive As of December 31, 2019, the Company’s net inventories amounted to NT$16,305 million. As the As the million. to NT$16,305 amounted inventories Company’s net the 31, 2019, December As of to had management technology, in changes rapid by is characterized industry semiconductor or be to written-off expected are that inventories slow-moving for reserve a estimate and evaluate Audi date. future at a of disposed otherwise
270 Financial Review r’s report or unless law e intended only to present the financial position, results results position, financial tothe present only e intended ese matters our in audito 2019 parent company only financial statements and statements only financial company parent 2019 of operations and cash flows in accordance with accounting principles and practices generally accepted in the Republic the Republic accepted in practices generally inprinciples accordancewithflows and accounting cash of and operations of Chinaand not those ofany other jurisdictions.The standards, proceduresand practicesto audit such parent company China. of Republic in the applied and accepted generally those are statements financial only the accompanying parent company financialonly statementsAccordingly, and report independentof auditors are not intendedfor use those by who arenot informed about theaccounting principles or auditingstandards generallyaccepted the of responsibility the are statements financial the As practice. in applications their and China, of Republic the in any for or translation English the on, reliance or of, use the for liability any accept cannot Young & Ernst management, errors or misunderstandingsthat mayderive from the translation. Notice to Readers ar statements financial only company parent accompanying The regulation precludes public disclosure about the matter or when, in extremely rare circumstances, circumstances, rare extremely when, in matter or the disclosure about public precludes regulation report because the adverse that a in our be communicated matter should we determine not of interest benefits the public to outweigh be expected reasonably so would doing of consequences communication. such Wan-Ju Chiu, Hsu, Hsin-Min Taiwan Ernst & Young, 2020 26, February are therefore the key audit matters. We describe th matters. describe key audit the We are therefore From the matters communicated with those charged with governance, we determine those matters matters those determine we governance, with charged those with matters communicated the From of the audit in significance were of that most drawto in attention ists related events to any significant deficiencies in in deficiencies significant any y only financial statements or, statements financial y only e audit in order to design audit audit design in order to e audit ty exists, we are required are we exists, ty and events in a manner that achieves fair fair achieves that manner a in events and be thought to bear on our independence, and and independence, our on to bear be thought ances, but not for the purpose of expressing an an expressing of purpose the for not but ances, our opinion. Our conclusions are based on the the on are based conclusions Our our opinion. internal control of the Company.control of internal mpany to express an opinion on the parent company only only on the company parent opinion to express an mpany gnificant audit findings, including including findings, audit gnificant d disclosures in the parent compan dit evidence regarding the financial information ordit of the entities evidence regarding the financial of internal control relevant to th identify during our audit. audit. during our identify Obtain an understanding understanding an Obtain procedures that are appropriate in the in circumst that are appropriate procedures the of on opinion the effectiveness Evaluate the appropriateness of accounting policies used and the reasonableness of accounting accounting of reasonableness the used and policies accounting of appropriateness the Evaluate by management. made disclosures and related estimates accounting of basis concern going the of use management’s of appropriateness on the Conclude ex uncertainty a material whether evidence obtained, audit the on and, based if such if disclosures to are inadequate, modify events or However, future report. up to the our auditor’s date of evidence obtained audit concern. as a going to cease continue the Company cause may conditions financial only company the parent of content structure and Evaluate overall presentation, the financial only company the parent and whether notes, the accompanying including statements, transactions the represent underlying statements presentation. au appropriate sufficient Obtain business activities within the Co the of performance and supervision direction, the for are responsible statements. We financial our opinion. audit responsible for remain solely audit. We group or conditions that may cast significant doubt on the ability to continue as a going concern of the of concern as a going to continue on the ability significant doubt cast may that or conditions uncertain material a that conclude we If Company. relate the to report auditor’s our 2. 3. 4. 5. 6. planned the matters, other among regarding, governance with charged those with communicate We scope and timing of the audit and si internal controlinternal that we with complied we have that with a statement governance with charged those We also provide with all them to communicate and independence, regarding requirements ethical relevant reasonably may that matters other and relationships related safeguards. where applicable, 271 United Microelectronics Corporation | Annual Report 2019 - 118 15,257 81,187 543,046 212,657 497,042 8,359,266 1,534,955 2,164,496 1,707,136 2,553,055 5,694,439 2,886,159 3,804,024 15,214,634 13,583,599 68,746,586 11,131,667 59,342,170 101,335,770 197,851,450 101,115,727 299,187,220 2018
$ $ 98 19,227 27,699 As of December 31, of As December 106,290 533,567 668,476 1,727,109 1,691,526 1,229,680 6,683,936 2,532,392 5,618,879 4,082,826 3,261,999 4,445,752 16,305,112 12,900,009 79,486,445 80,506,509 14,388,597 66,534,836 107,866,299 194,884,665 302,750,964 2019
$ $ Notes 8 4, 5, 6(23) 4, 6(9), 7 4, 6(8) 4, 5, 6(7), 7 4, 6(6), 7 4, 5, 6(5), 12(7) 4 4 4, 5, 6(4) 6(18) 4, 5, 6(2), 12(7) 4, 6(18) 4 4, 6(3) 4, 7 4, 5, 6(2), 12(7) 4, 6(1) (continued) December 31, 2019 and 2018 December (Expressed in Thousands ofTaiwan New Dollars) PARENT COMPANY ONLY BALANCE SHEETS UNITED MICROELECTRONICS CORPORATION Assets English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Financial TranslationEnglish Issued Only Originally Statements of Parent Company Total non-current assets Other noncurrent assets-others Prepayment for equipment Prepayment Refundable deposits Deferred tax assets Intangible assets Intangible Right-of-use assets Right-of-use Property, plant Property, and equipment Investments accounted for under the method equity Investments Financial assets noncurrent at income, fair other through value comprehensive Other receivables Current tax assets net Inventories, Prepayments Other current assets Total current assets Non-current assets Financial assets at fair profit through value or loss, noncurrent Contract assets, current Notes receivable Accounts receivable, net Accounts receivable-related parties, net Financial assets at fair profit through value or loss, current 272 assetsCurrent and cash Cash equivalents Total assets
Financial Review - - - - - 39 8,181 (2,058) 447,702 666,640 569,368 573,336 108,613 178,401 1,384,650 1,500,011 1,473,238 4,167,174 5,745,166 2,939,455 1,326,250 2,832,595 1,737,113 1,515,297 (5,647,430) (5,692,326) (8,819,556) 10,621,434 26,797,263 38,878,947 20,564,867 66,320,234 93,117,497 36,278,383 10,865,280 50,723,263 124,243,187 206,069,723 299,187,220 2018 $ $
- 1,218 95,887 13,211 As of December 31, As 547,024 415,719 248,788 482,080 332,611 573,336 123,268 214,455 (119,801) 1,355,850 1,966,284 3,900,000 1,629,818 2,988,314 4,025,373 6,008,570 2,047,760 2,744,391 1,476,405 (8,948,337) (2,073,977) 10,580,952 20,593,825 43,764,772 18,687,591 20,372,772 52,181,835 95,946,607 34,404,110 11,572,579 14,513,940 34,733,761 117,243,187 206,804,357 302,750,964 2019 $ $
Notes 6(10), 6(25) 4, 6(18) 7 4 4, 6(8), 6(25) 4, 6(11), 6(12), 6(25), 12(7) 6(14), 6(15), 6(25), 7 4, 6(18) 4, 6(11), 6(25), 12(7) 6(12), 6(25), 12(7) 4, 5, 6(23) 4, 6(8), 6(25) 4, 5, 6(13) 6(25) 4, 6(14), 6(25), 9(4) 4, 6(11), (16) 4, 6(11), 6(16), 6(17) 6(16) 4 4, 6(16), 6(17) December 31, 2019 and 2018 (Expressed Taiwan in of New Thousands Dollars) PARENT COMPANY ONLY BALANCE SHEETS BALANCE ONLY PARENT COMPANY UNITED MICROELECTRONICS CORPORATION MICROELECTRONICS UNITED The accompanying notes are financialThe an integral accompanying part of the statements. only parent company English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Issued Statements Financial Originally Translation Only English of Parent Company Liabilities and Equity and Liabilities
Current liabilities Current loans Short-term Contract liabilities, current payable Accounts Other payables on equipment Payables liabilities tax Current current liabilities, Lease Current liabilities portion of long-term liabilities current Other liabilities current Total liabilities Non-current Contract liabilities, noncurrent payable Bonds loans Long-term liabilities tax Deferred liabilities, noncurrent Lease Net defined benefit liabilities, noncurrent Guarantee deposits Other noncurrent liabilities-others liabilities non-current Total liabilities Total Equity Capital Common stock advance in collected Capital capital paid-in Additional Premiums stock transactions Treasury The differences between the fair of the value consideration paid or received from acquiring or amounts of the subsidiaries and the carrying disposing in Recognition subsidiaries’ of changes ownership in Sharenet of changes of associates assets method and joint accounted equity ventures for using stock options Employee Stock options Other earnings Retained reserve Legal reserve Special Unappropriated earnings equity of components Other Exchange differences on translation operations of foreign on financial or losses Unrealized gains measured assets at other fair comprehensive through value income instruments on hedging or losses Gains stock Treasury equity Total equity liabilities and Total 273 United Microelectronics Corporation | Annual Report 2019
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)
For the years ended December 31, Notes 2019 2018 Operating revenues 4, 6(18), 7 $ 123,622,436 $ 132,834,602 Operating costs 4, 6(4), 6(9), 6(13), (96,461,206) (102,286,411) 6(17), 6(19), 7 Gross profit 27,161,230 30,548,191 Operating expenses 4, 6(3), 6(9), 6(13), 6(17), 6(18), 6(19), 7 Sales and marketing expenses (2,870,050) (2,932,576) General and administrative expenses (3,791,439) (3,475,793) Research and development expenses (9,719,780) (11,133,700) Expected credit losses (689,095) (356,435) Subtotal (17,070,364) (17,898,504) Net other operating income and expenses 4, 6(14), 6(20), 7 191,108 140,550 Operating income 10,281,974 12,790,237 Non-operating income and expenses Other income 4 1,203,175 944,738 Other gains and losses 4, 6(21) 1,017,178 (772,104) Finance costs 6(21) (861,601) (824,954) Share of profit or loss of subsidiaries, associates and joint ventures 4, 6(6) (2,872,245) (6,641,627) Bargain purchase gain 6(6) 171,585 - Exchange gain, net 4,12 193,033 712,366 Subtotal (1,148,875) (6,581,581) Income from continuing operations before income tax 9,133,099 6,208,656 Income tax benefit 4, 5, 6(23) 574,515 864,334 Net income 9,707,614 7,072,990 Other comprehensive income (loss) 6(22) Items that will not be reclassified subsequently to profit or loss Remeasurements of defined benefit pension plans 4, 5, 6(13) 106,403 (55,060) Unrealized gains or losses from equity instruments investments measured at 1,458,848 5,605,384 fair value through other comprehensive income Gains or losses on hedging instruments which will not be reclassified 4 (2,572) - subsequently to profit or loss Share of other comprehensive income (loss) of subsidiaries, associates 1,112,547 (479,969) and joint ventures which will not be reclassified subsequently to profit or loss Income tax related to items that will not be reclassified subsequently 4, 5, 6(23) (158,260) 112,384 Items that may be reclassified subsequently to profit or loss Exchange differences on translation of foreign operations (1,045,504) 1,094,614 Share of other comprehensive loss of subsidiaries, associates (2,204,824) (1,062,412) and joint ventures which may be reclassified subsequently to profit or loss Income tax related to items that may be reclassified subsequently 4, 5, 6(23) 8,252 (11,995) Total other comprehensive income (loss), net of tax 3,423,998 1,053,838 Total comprehensive income (loss) $ 13,131,612 $ 8,126,828
Earnings per share (NTD) 4, 6(24) Earnings per share-basic $ 0.82 $ 0.58 Earnings per share-diluted $ 0.76 $ 0.55
The accompanying notes are an integral part of the parent company only financial statements.
274 Financial Review ------9,485 11,131 14,655 11,442 (24,362) (21,101) 377,004 463,415 (475,272) 8,126,828 7,072,990 1,053,838 9,707,614 3,423,998 (2,524,593) (8,557,023) (6,916,105) (3,440,471) 13,131,612 212,838,559 206,804,357
Total Equity $ $ ------(119,801)
2,203,4433,129,182 2,899,669 8,387,127 (4,719,037) (6,261,018) (6,261,018) (2,859,498) (2,859,498)
Treasury Stock Treasury
$ $ ------
2,058 (2,058) (2,058) on Hedging Instruments
$ $ Gains or Losses ------(10,573) 551,903 (387,654) (9,867,013) (2,073,977)
Income Unrealized on Financial at Fair Valueat Fair through Other through
$ $ Comprehensive Gains or Losses Assets Measured Assets ------Other Components of Equity of Components Other (13,935) (5,712,533) (8,948,337)
Foreign Exchange Operations Translation of Differences on Differences $ $ ------84,744 (3,242,076) 6,581,330 10,573 (22,341) 20,207 1,058,030 (22,280) 387,654 (475,311) (551,903) (962,873) (707,299) 7,072,990 7,050,649 20,207 1,058,030 9,707,614 9,792,358 (3,242,076) 6,581,330 (2,475,950) (8,557,023) (6,916,105) (3,457,987) 56,133,198 50,723,263 (5,706,261) (8,819,556) (2,058) (5,647,430) 206,045,361 50,723,263 (5,692,326) (8,819,556) (2,058) (5,647,430) 206,069,723 34,733,761
Earnings $ $ Unappropriated ------
14,513,940 (14,513,940) 14,513,940
$ $ Retained Earnings ------962,873 707,299 9,902,407
11,572,579
Legal ReserveLegal Reserve Special $ $ ------39 1,179 9,485 11,442 11,131 14,655 15,458 (10,427) (48,643) 696,226 377,004 (1,129,182) (1,387,127) 40,858,350 40,388,936 10,865,280 40,399,363 10,865,280 39,550,394
Additional $ $ Paid-in Capital ------
332,611 130,804 332,611
Advance For the years ended December the years 31, 2019 and 2018 For (Expressed Taiwan in of New Thousands Dollars) Collected in UNITED MICROELECTRONICS CORPORATION MICROELECTRONICS UNITED $ $ ------Capital The accompanying notes are an integral part of the parent company only financial statements. financial only company parent the of part an integral are notes accompanying The PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY IN CHANGES STATEMENTS OF ONLY PARENT COMPANY (2,000,000) (7,000,000) 124,243,187 126,243,187 124,243,187 117,243,187
$ $ Common Stock Common English Translation of Parent Company Only Financial Statements Originally Issued in Chinese Issued Statements Financial Originally Translation Only English of Parent Company Notes 6(16) 3 6(22) 6(17) 4, 6(16) 4, 6(16) 4 6(22) 4 6(5) 6(16) 4, 6(16) 4, 4, 6(17) 4, 6(11), 6(16) 6(11), 4, 6(16) 4, 6(16) 4, 6(16) 4, Legal reserve Legal dividends Cash reserve Legal reserve Special dividends Cash Net income for the year ended December 31, 2018 31, December ended year the for income Net cancelled stock Treasury Others Appropriation and distribution of 2018 retained earnings 2018 retained of distribution and Appropriation Impact of retroactive applications retroactive of Impact Adjusted balance as of January 1, 2019 1, January of as balance Adjusted Adjusted balance as of January 1, 2018 1, January of as balance Adjusted 2018 31, December ended year the for tax of net (loss), income comprehensive Other (loss) income comprehensive Total transaction payment Share-based accounted for ventures and joint associates of assets net in changes of Share method equity using company parent from received subsidiaries dividends for Adjustments 31, 2018 December of as Balance 2019 31, December ended year the for income Net accounted for ventures and joint associates of assets net in changes of Share method equity using ownership subsidiaries' in Changes company parent from received subsidiaries dividends for Adjustments other through value fair at measured investments instruments equity of Disposal income comprehensive Other comprehensive income (loss), net of tax for the year ended December 31, 2019 31, December ended year the for tax of net (loss), income comprehensive Other Changes in subsidiaries' ownership subsidiaries' in Changes Appropriation and distribution of 2017 retained earnings 2017 retained of distribution and Appropriation Treasury stock acquired stock Treasury Total comprehensive income (loss) income comprehensive Total transaction payment Share-based Others Conversion of convertible bonds convertible of Conversion Treasury stock acquired stock Treasury Balance as of December 31, 2019 December of as Balance Treasury stock cancelled stock Treasury 275 United Microelectronics Corporation | Annual Report 2019
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)
For the years ended December 31, 2019 2018 Cash flows from operating activities: Net income before tax $ 9,133,099 $ 6,208,656 Adjustments to reconcile net income before tax to net cash provided by operating activities: Depreciation 31,630,966 36,634,963 Amortization 1,872,075 1,894,471 Expected credit losses 689,095 356,435 Net (gain) loss of financial assets and liabilities at fair value through profit or loss (964,614) 896,806 Interest expense 818,313 763,080 Interest income (584,052) (422,239) Dividend income (619,123) (522,499) Share-based payment 366,186 695,669 Share of loss of subsidiaries, associates and joint ventures 2,872,245 6,641,627 Gain on disposal of property, plant and equipment (137,308) (168,849) Exchange gain on financial assets and liabilities (209,799) (170,206) Bargain purchase gain (171,585) - Amortization of deferred government grants (1,138,743) (1,132,898) Income and expense adjustments 34,423,656 45,466,360 Changes in operating assets and liabilities: Financial assets and liabilities at fair value through profit or loss 151,453 6,177 Contract assets (26,198) (354,665) Notes receivable and accounts receivable 1,406,598 (3,288,853) Other receivables 14,542 483,890 Inventories (1,165,198) (7,601) Prepayments 737,806 (13,899) Other current assets 895,067 (1,680,000) Contract fulfillment costs 36,539 (343,898) Contract liabilities 101,987 (3,170,712) Accounts payable 464,631 461,121 Other payables (857,045) (476,828) Other current liabilities 537,918 167,726 Net defined benefit liabilities (35,398) (26,405) Other noncurrent liabilities-others - 4,815,200 Cash generated from operations 45,819,457 48,246,269 Interest received 552,382 427,175 Dividend received 715,515 1,187,648 Interest paid (391,559) (490,768) Income tax paid (253,547) (566,445) Net cash provided by operating activities 46,442,248 48,803,879
(continued)
276 Financial Review
English Translation of Parent Company Only Financial Statements Originally Issued in Chinese UNITED MICROELECTRONICS CORPORATION PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS For the years ended December 31, 2019 and 2018 (Expressed in Thousands of New Taiwan Dollars)
For the years ended December 31, 2019 2018 Cash flows from investing activities: Proceeds from disposal of equity instruments investments measured at fair value $ 44,466 $ - through other comprehensive income or loss Acquisition of investments accounted for under the equity method (16,485,610) (17,709,460) Increase in prepayment for investments - (132,937) Proceeds from capital reduction of investments 750,000 840,000 Derecognition of hedging financial assets and liabilities - (2,572) Acquisition of property, plant and equipment (10,966,528) (10,291,299) Proceeds from disposal of property, plant and equipment 323,807 413,519 Increase in refundable deposits (248,459) (1,537,579) Decrease in refundable deposits 268,717 667,555 Increase in other receivables (1,253,320) (4,688,320) Decrease in other receivables - 8,916,796 Acquisition of intangible assets (2,112,818) (838,675) Government grants related to assets acquisition 51,862 123,367 Increase in other noncurrent assets-others (15,074) (36,440) Decrease in other noncurrent assets-others 8,786 - Net cash used in investing activities (29,634,171) (24,276,045) Cash flows from financing activities: Increase in short-term loans 4,199,985 6,821,325 Decrease in short-term loans (4,177,125) (12,647,575) Cash payments for the principal portion of the lease liability (462,642) - Redemption of bonds (2,500,000) (7,500,000) Proceeds from long-term loans 8,859,840 700,000 Repayments of long-term loans (5,279,660) (474,356) Increase in guarantee deposits 207,596 82,518 Decrease in guarantee deposits (16,748) (125,466) Cash dividends (6,911,058) (8,557,684) Treasury stock acquired (2,972,243) (6,148,273) Treasury stock sold to employees - 2,204,000 Others 10,818 - Net cash used in financing activities (9,041,237) (25,645,511) Effect of exchange rate changes on cash and cash equivalents (574,174) 177,045 Net increase (decrease) in cash and cash equivalents 7,192,666 (940,632) Cash and cash equivalents at beginning of year 59,342,170 60,282,802 Cash and cash equivalents at end of year $ 66,534,836 $ 59,342,170
The accompanying notes are an integral part of the parent company only financial statements.
277 United Microelectronics Corporation | Annual Report 2019 e lease term if the contract contains contains contract the if e term lease lio of similar leases with reasonably lio of e liabilities recognized were NT$3,578 NT$3,578 were recognized liabilities e apply IFRS 16 to contracts that were that contracts to 16 IFRS apply NT$40 million; an increase in lease lease in increase an million; NT$40 plied the standardplied the retrospectively only to 019, the present value discounted at the the present value discounted 019, S 17 and IFRIC 4. 4. IFRIC 17and S elected The Company right-of-use assets amountingright-of-use to NT$3,535 a million; $3,578 million; a decrease in additional$3,578 million; paid-in t lease exemptions, as lease liabilities at the present te of 2.32% on January 1, 2019. 1, te of 2.32% on January 2019. basis, On a lease-by-lease
Apply a single discount portfo discount rate to a a single Apply characteristics. the which for leases to leases as short-term way same the in account to Elect of ends within 121, 2019. lease term January months th determining as in such hindsight, Use options to extend or terminate the lease. (i) (ii) (iii)
capital-other amounting to NT$10 million; and a decrease in other components of of components other in decrease a and million; NT$10 to amounting capital-other amountingequity to NT$14 million. the right-of-use asset was measured and recognized at an amount equal to the to the lease equal amount at an and recognized was measured asset the right-of-use payments). lease of prepaid any amount the by (adjusted liability Company The was primarily application date initial the of at effect cumulative assessed the to method equity the under for accounted Investments in decrease a of consisted NT$22 million; an increase in to amounting payables other in decrease liabilities amounting to NT were recognized as expenses on a straight-line basis over the lease terms. terms. lease the over basis straight-line a on expenses as recognized were Upon for except leases, those recognized and measured 16, the Company IFRS of adoption short-term or low-value asse using its weighted average discounted lease payments, value the remaining of incremental borrowing ra following practical expedients on a lease-by-lease basis to leases previously previously leases to basis a lease-by-lease on expedients practical following leases: as operating classified 2 1, January of As million. NT$4,364 lessee’s incremental borrowing rate leas rate and borrowing incremental lessee’s million. contracts that were not completed at the date of initial application in accordance with with in accordance application of initial the date at completed were not that contracts 16. IFRS in provision transition the of effect cumulative the recognized Company The IFRS initially applying 16 on January 1, 2019. As the Company only has operating as follows: 16 are summarized of the adoption IFRS arising leases, impact from the i. payments lease 17, IAS leases applying as operating classified leases that were For ii. In accordance with the transition provision in IFRS 16, the Company used the the used Company the 16, IFRS in provision transition the with accordance In ii. The Company elected not to reassess whether a contract was, or contained, a lease at a lease the was, or contained, a contract not to reassess whether elected The Company provision transition the with accordance in 2019) 1, (January application initial of date 16.IFRS in Company permittedThe to was IA as identified leases previously applying and ap information comparative restate to not were 31, 2018 December 17 as of IAS under lease The operating commitments iii.
Taiwan Stock Exchange Exchange Stock Taiwan ting Standards, International 17”), IFRIC 4 “Determining whether an an whether 4 17”), IFRIC “Determining a variety of services to satisfy customer customer satisfy services to of variety a Shares (ADSs) were listed on the New York Shares (ADSs) were listed on the New York any) China was in Republic of incorporated publicly listedthe on Dollars unless Specified) Otherwise e of Transactions in the Legal Form of a Lease” for a Lease” for of the Legal Form in Transactions of e s financial position and performance. bed below, all other standards and interpretations have no no have interpretations and standards other all below, bed For the Years Ended December 31, 2019 and 2018 2018 and 2019 31, December Ended Years the For UNITED MICROELECTRONICS CORPORATION CORPORATION UNITED MICROELECTRONICS IFRS 16 “Leases” (“IFRS 16”) 16”) “Leases” 16 (“IFRS IFRS IFRS 16 replaces IAS 17 “Leases” (“IAS (“IAS 17 “Leases” IAS replaces 16 IFRS Arrangement contains a Lease” (“IFRIC 4”), SIC 15 “Operating Leases-Incentives” and and Leases-Incentives” SIC 15 “Operating 4”), a Lease” (“IFRIC contains Arrangement Substanc the “Evaluating 27 SIC annual periods beginning on or after January 1, 2019. 1, 2019. January on or after periods beginning annual (Expressed Thousands in of Taiwan New material impact on the Company’ a. Accounting Standards, and Interpretations issued, revised or amended which are endorsed endorsed are which amended or revised issued, Interpretations and Standards, Accounting periods annual for effective become and (“FSC”) Commission Supervisory by Financial and the standards of impact the from Apart 2019. 1, January after on or beginning is interpretations which descri NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS STATEMENTS FINANCIAL ONLY COMPANY PARENT TO NOTES (the Comp Corporation Microelectronics United 1982. in April operations and commenced 1980 (R.O.C.) in May full is a The Company and provides foundry, wafer service semiconductor needs. were shares ordinary Company’s The Depositary andJuly American its 1985 (TWSE) in 2000. September in (NYSE) Exchange Stock Road II, Li-Hsin 3, business is No. of place principal and office its registered of The address Taiwan. City, Park, Hsinchu Hsinchu Science ISSUE issue in of were authorized for the Company statements only financial company The parent 26, 2020. on February meeting Directors’ of the of with a resolution Board accordance
(1) The Company applied International Financial Repor (1)
2. FOR STATEMENTS OF FINANCIAL AND PROCEDURES OF AUTHORIZATION DATE 3. INTERPRETATIONS AND REVISED ISSUED OR STANDARDS NEWLY 1. AND ORGANIZATION HISTORY
278 Financial Review cial Instruments: Instruments: cial beginning on or after on or after beginning Effective periods annual for Effective 1 January, 2022 2022 1 January, To be determined by IASB by IASB be determined To 1 January, 2021 2021 1 January, , an entity theapply shall separately affected by the interest rate benchmark by the affected interest rate benchmark prospective assessments, an prospective entity shall 9”), IAS 39 “Finan rest rate benchmark reform gives rise to rise gives reform benchmark rate rest inception of such hedging relationships. such hedging inception of the actual results of the hedge are within a range of of range a are within actual the hedge of resultsthe sed when the evaluation is completed. completed. is evaluation the sed when rate benchmark on which the hedged item, hedged risk risk item, the hedged which hedged on rate benchmark evaluating the potential impact of the aforementioned standards standards aforementioned the of impact potential the evaluating Rate Benchmark Reform Benchmark Rate res requirements of the amendments. amendments. the of requirements res Investor and its Associate or Joint Ventures Joint or Associate its and Investor Non-current Non-current Sale or Contribution of Assets Assets between an Sale or Contribution of hedged cash flows are based is not altered as a result of the interest rate benchmark benchmark rate interest the of result a as altered not is based are flows cash hedged reform. prospective assessments: performing When assume that the interest assume rate interest the of result a as not is altered based are instrument hedging and/or reform. benchmark An entity is not required to undertake the IASIAS 39 retrospective 39 assessment: retrospective assessment (i.e. 80~125%) for hedging relationships directly relationships hedging for 80~125%) reform. reform. specified non-contractually a of hedges For components: risk identifiable separately risk interest rate of component benchmark identifiable requirement only at the highly probable requirement: When determining whether a forecast transaction is transaction forecast a whether When determining requirement: probable highly probable,highly an entity assumeshall rate benchmark on that the interest which the No. or Standards Interpretations of The projects The amendments also include the end of application of the exceptions requirements and and requirements exceptions the of application of end the include also amendments The the related disclosu ii. iii. iv.
The amendments include a number of exceptions, which apply to all hedging all hedging to apply which exceptions, of a number include The amendments reform. benchmark interest rate by affected directly are that relationships hedging A inte the if affected directly is relationship the of flows cash benchmark-based of amount or and timing the about uncertainties instrument. hedging or the item hedged to theexceptions shall apply entity the Hence, by the interest rate benchmark reform. affected hedging relationshipsall directly include: The amendments i. Recognition and Measurement” (“IAS 39”) and IFRS 7 “Financial Instruments: Instruments: 7 “Financial IFRS 39”) and (“IAS Measurement” and Recognition - Disclosures” Interest IAS 28 IFRS 10 and IFRS 17 IFRS IAS 1 Contracts Insurance Classification of Liabilities as Current or and the related impact will be disclo arebelow: determined by FSC) listed mpany’s financial position and performance, performance, and position financial mpany’s Co (b) listedthe to (d) ~ interpretations and The Company is currently d. IFRS 9 “Financial Instruments” (“IFRS Instruments” 9 “Financial IFRS d. (3) (3) be are to dates effective (the by FSC endorsed yet but not by IASB issued Standards
It states that beginning on or after on or after beginning Effective periods annual for Effective January 1, 2020 1, 2020 January January 1, 2020 1, January 2020 January 1, 2020 1, 2020 January e amendments clarify that amendments e materiality ant’s perspective to determine whether an an whether determine to perspective ant’s tities to determine whether a transaction whether a determine tities to business in IFRS 3 Business Combinations. Combinations. 3 Business IFRS business in a business. The amendments clarify the the clarify amendments The business. a unting Standards Board (“IASB”) which are which are Board (“IASB”) Standards unting Definition of Material of Material Definition Interest Rate Benchmark Reform Reform Rate Benchmark Interest Definition of a Business Business a of Definition
No. or Standards Interpretations of projects The
IFRSadopt a market 3 continues to particip will depend on the nature or magnitude of information. information. of or magnitude nature the on depend will assess to need will entity An or in combination individually the information, either whether with other information, is statements. financial the of context the in material “information is material if omitting, misstating or obscuring it could reasonably be be reasonably it could omitting, misstating if or obscuring is material “information financial general purpose users of primary the that decisions influence to expected financial provide statements, which financial on thethose basis of make statements entity.” reporting specific a about information Th The amendments clarify the definition of a a of definition the clarify amendments The of Material Definition - Errors” and Estimates Accounting in Changes Policies, (Amendment) of material. definition new clarify to is amendment main The The amendments are intended to to en assist intended are amendments The or acquisition. as an asset combination as a business accounted for be should acquired set of activities and assets is assets and activities of set acquired an assess whether entities to help guidance add business; a for requirements minimum outputs; of of and and a business narrow the definitions substantive; process is acquired etc. to IAS 1 and 8 to IFRS 9, IAS 39 and 7 IFRS to IFRS 3 Amendments Amendments Amendments Amendments Amendments Amendments c. IAS 1 “Presentation of Financial Statements” (“IAS 1”) and IAS 8 “Accounting “Accounting and IAS 8 1”) (“IAS Statements” of Financial 1“Presentation IAS c. b. 3”) a Business (Amendment) of - Definition (“IFRS 3 “BusinessCombina tions” IFRS endorsed by FSC, but not yet adopted by the Company are listed below: are listed below: by the Company adopted but not yet FSC, by endorsed
(2) Standards Internationalby issued (2) Acco
279 United Microelectronics Corporation | Annual Report 2019 ency at the closing at closing the ency ey arise except for the the for except arise ey company presented in in presented company rt of a reporting entity’s net net entity’s reporting a of rt included in the financial statements are are statements financial the in included rded as an adjustment to interest costs are are interest costs to an adjustment as rded gnized initially in other comprehensive ided that the profit or loss and other other or loss and profit the that ided ed into functional curr functional into ed ement of monetary items or on translating items on or ementtranslating monetary of ted in the parent ted companyonly financial theperiod whichin th ented in the consolidated financial statements statements financial consolidated the in ented ttributable to to the ttributable parent tion date. Monetary assets and tion date. Monetary liabilities at the dates of the initial transactions. the dates of at at are eligible forcapitalization. a monetary item monetary a pa is that income and reclassified from equity to profit or loss upon disposal of such investment. investment. such of disposal loss upon or profit equity to from and reclassified income investment in a foreign operation are are reco operation in a investment foreign Foreign currency derivatives within the scope of IFRS 9 are accounted for based on the the on based for accounted are 9 IFRS of scope the within derivatives currency Foreign instruments. financial for policy accounting on arising differences Exchange Exchange differences arising from foreign currency borrowings for an acquisition of of a an acquisition for borrowings currency foreign arising from differences Exchange theyrega assetqualifying to the extent that are included in the borrowing costs th b. c. a. with accordance statements in only financial company parent prepared Company The Article 21 the Regulations, of which prov only financial parent in company presented the for the period income comprehensive income comprehensive or loss be the same as other profit shall statements and pres the parent of to stockholders attributable presen equity total the and period, the for equity shall statements be the same asa the
the consolidated financial statements. Therefore, the Company accounted for its the accounted for Company statements. Therefore, financial the consolidated necessary made accordingly, and, method equity using in subsidiaries investments adjustments. following: The parent company only financial statements have been prepared on a historical cost cost historical a on prepared been have statements financial only company parent The value. at fair measured instruments financial for basis, except in its functional presented are financial statements only company parent Company’s The Dollars (NTD). New Taiwan Items currency, currency. that using functional measured Company functional the by recorded initially are in foreign currencies Transactions at the transac prevailing rates currency denominated in foreign currencies are translat are currencies foreign in denominated date. reporting the at exchange of rates in value fair at measured items Non-monetary value fair is when the at the date rates the exchange translated using currencies are foreign determined. currencies foreign in cost historical at measured are that items Non-monetary rates as exchange using the are translated All exchange differences arising the settl arising on differences All exchange in profitorto taken are items monetary loss (2) (2) Preparation Basis of (3) (3) Transactions Foreign Currency ts in future periods are ts in periods are future of a subsidiary that is contributed to an an to contributed is that subsidiary a of ribution of Assets between an Investor and and an Investor between of Assets ribution tial impact of the aforementioned standards and and standards aforementioned the of tial impact Company’s statemen financial Company’s lities aslities Current orNon-current e other equity holders in the associate or joint venture. joint or associate in the holders e other equity e Preparation of Financial Reports by Securities Issuers Issuers by Securities Reports Financial of Preparation e ness as defined in IFRS 3 between and its an investor en the evaluation is completed. completed. is evaluation the en
The amendments address the inconsistency between the requirements in IFRS 10 10 and in IFRS the requirements between inconsistency address the The amendments control of loss the with 28, in dealing IAS from arising losses gains and restricts 28 IAS venture. joint a or associate of to the extent or venture associate a joint an to assets non-monetary of contributions interestthe attributable to th a subsidiary. control of of the loss on or profit loss recognition full 10 requires IFRS of contribution or sale the from resulting loss or gain the that so amended was 28 IAS constitute a busi assetsthat associate or joint venture is recognized in full. in full. is recognized venture or joint associate so that the 10 amended was also IFRS not resulting athat does gain orloss of subsidiary from the sale or c ontribution or joint its associate and investor an 3 between in IFRS defined as business a constitute in the interests investors’ the unrelated toof only the extent is recognized venture or joint venture. associate These are the amendments to paragraphs 69-76 of IAS 1 presentation of financial IAS 1financial of presentation to paragraphs 69-76 These are the amendments statements and the amended paragraphs related to the classification of liabilities as current or non-current. Associates and Joint Ventures” - Sale or Cont Ventures” Associates and Joint 28”) (“IAS (Amendment) Ventures or Associate Joint its The potential effects of adopting the standards or interpretations issued by by IASB but not issued the or interpretations adopting of standards effects The potential yet endorsed by FSC on the summarized as below: as below: summarized e. in “Investments 28 IAS and 10”) (“IFRS Statements” Financial “Consolidated 10 IFRS accordance in prepared were statements only financial company parent Company’s The Governing th Regulations with (Regulations). f. f. of Liabi - Classification 1 IAS
(1) (1) of Compliance Statement interpretations listed (e) ~ (f) to the Company’s financial position and performance, and the the and performance, and position financial the Company’s to ~ (f) (e) listed interpretations impact related will be disclosed wh the poten evaluating The Company is currently
4. ACCOUNTING POLICIES SIGNIFICANT OF SUMMARY
280 Financial Review value and subsequently subsequently value and cluding time deposits with with deposits time cluding ter the period; or reporting ght to defer settlement of the liability for for liability the of settlement defer to ght . of a liability that could, the at Terms ortized cost or at fair value through other other through value at ortized cost or fair initially atinitially fair value plus, in the case of investments that are readily convertible to convertible are readily that investments or loss, financial assets at fair value through at fair assets or loss, financial liabilities aretradedate recognized using and repurchase agreements repurchase and by collateralized arily for the purpose of trading; the purposeof arily for cognized initially fair at cognized e statement of comprehensive income. income. of comprehensive e statement lt in its settlement equity instrumentslt by the issueof do changes in interest rates, in changes in interest rates, settled within twelve months af months twelve within settled nancial liabilities are recognized when the Company becomes a party a party becomes Company the when recognized are liabilities nancial ines the classification of classification assets its the at ines recognition. initial financial In Financial assets that are not measured at am at assets not that are measured Financial comprehensive income are re measured at fair value with changes in fair value recognized in profit or loss. in profit value recognized in at with changes fair value fair measured i. through profitor lossvalue Financial assetsfair at measurement subsequent and Classification
at least twelve months after the reporting date after the reporting twelve months least at resu option of the counterparty, itsclassification. not affect government bonds and corporate bonds. bonds. and corporate bonds government otherAll liabilities are classified as non-current. Cash equivalents are short-term, highly liquid highly short-term, are equivalents Cash of risks significant present do not that dates with maturity and cash of amounts known from resulting value in changes originalmaturities of months three orless and fi Financial assets to the contractual provisions of the instrument. the instrument. of provisions contractual to the The Company determ ascurrent when: is classified liability A
a. investments not at fair value through profit or loss, directly attributable loss,costs. directly or investments not at fair value through profit Financial value, and recognized at fair initially are or value through profit loss assets at fair in th transaction costs are expensed accordance with IFRS 9 and the Regulations, financial assets of the Company are classified classified are of Company the assets financial Regulations, the 9 and IFRS with accordance profit value through at fair assets as financial cost. amortized at assets measured financial and income, comprehensive other assets and financial sale of or Purchase accounting. are recognized assets All financial Assets Financial a. the Company expects to settle the liability in normal operating cycle; b. the Company holds liability prim c. the liability is due to be d. ri not have an unconditional does the Company (6) Cash Equivalents (7) Instruments Financial the closing rate of of rate closing the at does not result in a within twelve months after the reporting s to the carrying amounts and of assets intends to sell or in consume it, its normal foreign operation are treated as assets and assets and as treated are operation foreign the cumulative amount of the exchange exchange of the amount the cumulative ily for the purpose of trading; trading; of purpose the ily for expressed in its functional currency. currency. its functional in expressed foreign operation. foreign or a of an associate disposal On partial reign operation that does not result in a loss of significant significant of a loss not result in does that reign operation operating cycle; cycle; operating period; or or period; or used to settle a liabilitymonths aftertwelve the at least period. reporting for The assets and liabilities operations foreign ar e translated into NTD at of at translated are expenses and income their and date reporting the at prevailing exchange the on arising differences exchange The theperiod. for rate exchange average an a foreign of disposal income. On in other comprehensive are recognized translation to that foreign relating differences exchange the of amount the cumulative operation, the separate in and accumulated income comprehensive in other recognized operation, gain or loss on the when or loss equity to profit from is reclassified equity, of component is recognized. disposal partialOn disposal a subsidiary that includes of operation a foreign th of share proportionate the loss of control, the to re-attributed is income comprehensive other in recognized differences non-controlling interests in that joint ventureincludesa fo that the of the cumulative amount control, share of joint only the proportionate or influence or to profit is reclassified income in other comprehensive recognized differences exchange loss. value adjustment fair any and goodwill Any liabilities arising from the acquisition of a operation and the foreign of liabilities asset An is classified as current when: as non-current. assets are classified other All
c. the Company expects to realize the asset the realize to expects the Company c. b. b. primar asset the holds Company the a. a. or asset, the realize to expects Company the When a gain or loss on a non-monetary item is recognized in other comprehensive income, item income, a gain or on acomprehensive When is recognized in loss other non-monetary income. comprehensive other in recognized is loss or gain that of component exchange any exchange any or loss, profit in item is recognized non-monetary a on or loss a gain When loss. or profit in is recognized loss gain or that of component d. exchanged being from is restricted the asset unless equivalent asset is cash or a cash the (4) (4) Statements Financial Currency Foreign of Translation (5) Current and Non-Current Distinction
281 United Microelectronics Corporation | Annual Report 2019 antly since initial initial since antly all all the risks and storical credit loss carrying amount of carrying cognized and the part part the and cognized equity instruments). mpany applies a simplified simplified applies a mpany allocates the previous cantly cantly initial signifi since increased not s inues to be recognized and the part that part that and is the recognized to be inues at continuesat to be re s and rewards of the s risk and rewards of the all ubstantially in in retained earnings (for ansferred control of the asset. of control ansferred information including forward-looking information. information. information forward-looking including and contractthe Co and assets, investments measured at fair value through other other through value at fair measured investments
asset have been transferred; or transferred; asset been have rewards tr has asset, but the of i. expired; asset have the from flows cash receive to rights contractual the ii. the Company has transferred assets and s iii. the Company has neither transferred substantially the Company has neither nor retained transferred iii. Derecognition of financial assets financial of Derecognition asset is derecognized when:financial A experience and customers’ current financial condition, adjusted for forward-looking forward-looking adjusted for condition, financial current and customers’ experience environment. economic as customers’ such factors, On derecognition of a financial asset in its entirety, the difference between the carrying the carrying between difference the a of asset financial in its entirety, derecognition On gain cumulative any including to be received received or and the consideration amount in profit is recognized income comprehensive other in recognized been had or loss that or directly instruments) debt (for or loss qualifies part transferred asset and the financial a larger of asset is transferred part the If the Company derecognitionfor in its entirety, parts. of those values fair the relative based on derecognized, between difference The consideration the of sum the and derecognized part to the allocated amount carrying the that had gain or loss allocated any cumulative and derecognized the part for received loss or profit in is recognized income, comprehensive in other recognized been in earnings. retained directly policy Impairment losses credit expected for allowance date, an reporting each at measures, Company The (ECLs) for debt instrument the larger asset between the financial part larger th the the of date on the those parts of values fair relative the on based derecognized, is that transfer. comprehensive other in recognized been had that loss or gain cumulative Any cont that part the between is allocated income assessing cost by at amortized assets measured financial and income comprehensive and supportable reasonable asset ha financial the crediton a risk Where ECLs. to 12-month equal amount at an is loss allowance measured the recognition, signific has asset increased on a financial credit risk the Where ECLs. equallifetime to the amount an at is measured allowance loss the recognition, notes, accounts receivable For in calculating ECLs. approach in does changes not track the Therefore, Company ECLs at each lifetime on based loss allowance a recognizes but instead risk, credit hi date. reporting the Company’s ECLs base d on are measured b. c. pal and interest on the principal amount amount interest on the principal pal and rculation period. rculation Gains and losses are sset give rise on specified dates to cash dates to cash rise on specified sset give ch financial assets at fair valueat fair through assets ch financial interest method amortization process, and interest method business model whose objective is to hold to hold is objective whose model business a business model whose objective is achieved objective achieved is whose model a business ment gains or losses,ment inte rest revenue and foreign the financial asset give rise on specified dates to cash cash to the financial dates asset give on rise specified through other comprehensive income income comprehensive other through
by both collecting contractual cash flows and selling assets selling financial and and cash flows contractual collecting by both princi aresolely payments of that flows outstanding.
financial assets in order to collect contractual cash flows; and cash contractual flows; financial assets in order to collect flows that are solely paymen ts of principal and interest on amount the principal outstanding.
exchange gains and losses are recognized in and losses or loss.profit gains are recognized exchange the financial When other in recognized or loss previously gain cumulative the are derecognized assets or profit to income comprehensive other from reclassified is income comprehensive adjustment. reclassification a as loss other comprehensive income are recognized in other comprehensive income. income. comprehensive in other are recognized income comprehensive other derecognition,Before impair equivalent, notes, accounts and other receivables and other financial assets) if both of of both assets) if financial other and other receivables and notes, accounts equivalent, met. conditions are following the interest income, measured by the effective effective the by measured income, interest ci during losses are recognized impairment assets derecognized. are or lossthe financial profit when in recognized At initial recognition, the Company an irrevocablemay make to present election in in an investment of value the fair in changes subsequent income comprehensive other held not is that trading. for instrument equity an such of is there disposal a When income in other comprehensive presented amounts accumulated instrument, equity to the directly or loss but are transferred to profit transferred subsequently not are earnings. retained income comprehensive other through value at fair measured are instruments debt The conditions are met: thefollowing of both if (i) the financial asset is held within (ii) of terms contractual the su value in the fair of changes Subsequent The financial assets are measured at amortized cost (including cash and cash cash and cash (including cost amortized at measured are assets The financial (i) a within is held asset the financial (ii) (ii) a financial of the terms contractual the Subsequent to initial recognition for financial assets measured at amortized cost, at amortized cost, assets measured Subsequent to initialfor recognition financial ii. value Financial assetsfair at iii. Financial assets measured at amortized cost cost amortized at assets Financial measured iii.
282 Financial Review . Inventories at are valued reign currency exchange risk. exchange currency reign the With finished goods are stated at standard costs costs at standard are stated goods finished e hedging instrument is recognized directly in directly recognized is instrument hedging e subsequently results saction in the recognition value (present value) of expected the cash value of flows future value) (present acity is expensed as incurred as acity expensed is em with the existence of an economic relationship and relationship an economic em of with the existence , terminated or exercised. item from inception of the hedge. item from inception of the on the hedged hedged the on the cumulative gain or loss on the hedging instrument from inception of and the hedge; of inception from instrument or the hedging gain loss on cumulative the in fair change cumulative the item by item. item value realizable net Net realizable and cost value is the of lower the costs of estimated less the business of course ordinary in the price selling estimated sale. the make to costs necessary estimated the and completion Cash flow hedges hedges flow Cash fo from arising exposures manages Company The be an to determined that is instrument hedging the loss on or gain the of portion The the ineffective whereas hedge income, is in other recognized comprehensive effective th of fairvalue the in change ofthe portion profit or loss. of a a hedge forecast If tran were gains or losses that the associated liability, asset or a non-financial a non-financial of assetthe cost of or in the initial are included income in other comprehensive recognized liability. the hedging when only hedge accounting discontinues prospectively The Company hedging the when instance criteria; for qualifying the meet to ceases relationship instrument expires or is sold basis. on a perpetual for accounted are Inventories at actual stated are materials Raw the costs, while and work purchase process in month. each of end at the costs to weighted-average adjusted subsequently and The cost s raw materials, goods comprise direct and finished other work progress in of direct labor, overheads. production related and costs the to overheads production fixed of Allocation theproduction of facilities. the normal capacity is based on conversion costs of Cost associated with underutilized cap adoption of IFRS 9, the Company designates a hedging relationship between the hedging the between relationship a designateshedging the Company of 9, IFRS adoption instrument and the hedged it effectiveness. hedge ratio to the meet the hedge determines designates The Company risks rate exchange currency the foreign hedge partially to instruments hedging certain transactions. probable forecast certain highly with associated of component The separate (in following the of the lower to is adjusted item hedged the with associated equity amounts): absolute a. b.
(8) Accounting Hedge Inventories (9) al liability and the al liability and r from the same lender on same lender the from r as a financial liability or an equity liability equity an or financial a as ofit or ofit loss financialliabilities include using the effective interest method after method after interest effective the using through the effective interest method method interest effective the through signated upon initial recognition as at fair financial difficulty of the debtor), such an an such debtor), the of difficulty financial en the obligation under the liability is recognition of the origin the of recognition ing any non-cash assets transferred orassumed,ing any non-cash liabilities lity and an equity instrument. instrument. and equity lity an ured at amortized cost
held for trading and financial liabilitiesheld de for orloss. value through profit or losses risk, gains credit in own Excluding changes or in profit recognized paid interest are including measurement on the subsequent loss. Financialliabilities costamortized at and bearing include interest measured loans measured subsequently are that borrowings initial recognition. Gainsprofit or and the losslosses are r ecognized in when as liabilities are derecognized as well process. amortization on or premium any discount by taking into account cost is calculated Amortized costs. transaction or and fees acquisition Financial liabilitiesFinancial pr through value fair at ii. Financial liabilities meas i. or loss liabilities profit Financial at through fair value substantially different terms, or the terms of an existing liability are substantially of an existing liability or the terms terms, different substantially (whethermodified or not attributable to the modification exchange or is treated as a de and amounts carrying in the respective and the difference a new liability, of recognition consideration paid,the includ recognized in profit orloss.is Derecognition of financial liabilities ofliabilities Derecognition financial liability is derecognizedwh financial A discharged, cancelled or expires. expires. or cancelled discharged, an existing financial liabilityWhen is replaced by anothe
Classification and subsequent measurement measurement subsequent and Classification issued instrument the classifies Company The the and arrangement contractual the of the substance with in accordance instrument liabi a financial of definitions b. Financial Liabilities a.
283 United Microelectronics Corporation | Annual Report 2019 rests in subsidiariesin that rests influence is the power to influence n cost, after n cost, reassessing the fair after value, is ntrol and the fair value of the retained ntrol and the value of fair ment in an associate or a joint or associate or an in venture joint ment a iary were not resulted from their profit or profit their from resulted not were iary nture becomes an investment in a subsidiary, int venture. Significant the Company’s ownership inte ownership the Company’s the consideration paid or received is recognized directly directly is recognized received or paid consideration the d operating policy decisions of an entity, but is not control d operating policy decisions of an entity, the investments. the identifiable assets and liabilities of an associate at the date of acquisition is acquisition of thedate at associate an liabilities of assets and identifiable the investment. the of amount carrying the in included is and goodwill as recognized Amortization of goodwill is not permitted. acquisitio the over associate of an liabilities recognized as a gain in profit or loss on the acquisition date. the acquisition or loss on in profit as a gain recognized
do not result in the Company losing control over the subsidiaries are accounted for as as for accounted subsidiaries are over the losingcontrol in the Company result not do transactions. equity in the of investment amount the carrying between difference Any subsidiaryvalue of and the fair in equity. equity. in significant and control of loss method upon equity the use to ceases Company The the of amount carrying the between difference Any subsidiary. the over influence co of loss upon subsidiary a in investment in profit will or be recognized disposal loss. plus proceeds from investment an If invest an becomes subsidiary in a investment in associates Investment that is and influence the Company has significant associate is entity over which an An subsidiary nor a jo neither a an investment in an associate or a joint ve or a joint associate in an investment an interest. retained the remeasures and method equity the apply to continues Company the evidence objective any is there whether date reporting each at determines Company The the being loss, impairment An impaired. are subsidiaries in investments the that amount, is of the and its carrying amount subsidiary between recoverable the difference part of forms and income comprehensive of statement in the or loss profit in recognized of amount carrying the the financial an participate in or joint control over those policies. fair net the of share Company’s and the cost acquisition the between difference Any as follows: for the of associates is identifiable value of liabilities accounted and assets i. of the net fair value of share Company’s cost over the acquisition the of excess Any and assets identifiable the of net value fair the of ii. share Company’s the of excess Any When changes in the net assets of netsubsid the in changes of assets When loss or other comprehensive income, and such changes do not affect the Company’s the Company’s affect not do changes such income, and or other comprehensive loss related all of share its proportionate recognizes Company the percentages, ownership equity. in changes in Changes
b.
ributions received ements to the extent to the extent ements mpany or the sales between cost, after reassessing the fair value, is made to bring the accounting policies in made to bring the accounting any only financial statany only financial s the from Company to subsidiaries are and associates are accounted for using the using for are accounted and associates om subsidiariesto the Co ts and liabilities of subsidiaries are accounted for as as for accounted are subsidiaries of liabilities and ts which the Company has control. has control. the Company which r Under the Equity Method the identifiable assets and liabilities of a subsidiary at the date of acquisition is acquisition of the at date subsidiary a of liabilities assets and identifiable the investment. the of amount carrying the in included is and goodwill as recognized Amortization of goodwill is not permitted. subsidiary over the acquisition of a liabilities date. the acquisition or loss on in profit as a gain recognized
Investment in Investment subsidiaries fair net the of share Company’s and the cost acquisition the between difference Any the identifiableof asse value and assets identifiable the of net value fair the of ii. share Company’s the of excess Any follows: i. of the net fair value of share Company’s cost over the acquisition the of excess Any balance the on carried is in subsidiary the investment the method, equity the Under or loss and profit share of Company’s in the changes acquisition post plus at cost sheet subsidiary. theof in changes income of comprehensive share other Company’s The the in directly is recognized income comprehensive or and other loss profit subsidiaries’ nsive income. comprehe other or loss and Dist profit Company’s of the investment. the carrying amount a subsidiary reduce from sale to due and losses profits Unrealized statements. financial only company parent Company’s profits The the in eliminated to the sales fr due losses and comp parent the in recognized are subsidiaries by the Company. owned interests are not the shares of which of as the reporting period the same for are prepared of subsidiaries statements Financial Company. are adjustments necessary, Where Company. the of those with line A subsidiary is an entity over entity an is subsidiary A
The Company’s in subsidiaries The investments assets non-current as classified be to criteria the that meet those than other method equity sale. held for a. Investments (10) Accounted Fo
284 Financial Review change of consideration,change of and to obtain meeting the recognition criteria are treated are treated criteria the recognition meeting ecognition criteria are met. Significant met. are Significant criteria ecognition act conveys the right to control the use of an an of use the control to right the conveys act e previous estimation are recorded as changes as changes are recorded estimation e previous lease and separates the lease and non-lease non-lease and the lease lease separates and d in other operating income and expenses. expenses. and income operating d in other ht-line basis over the estimated useful estimated the ht-line basis over lives. A years 20~56 Machinery and equipment equipment and Machinery equipment Transportation years 6 fixtures and Furniture 6 years years 6 Buildings Buildings Property, plant and equipment are stated at cost, net of accumulated depreciation and and depreciation accumulated are cost, stated net of at equipment plant and Property, long-term for costs incurred borrowing any, and any if losses, impairment accumulated the r if are capitalized projects construction as applying in 2019 is policies follows: accounting significant of The summary the contr if a lease is, or contains, contract A time ex of in period a asset for identified Company asset. The the identified use of from benefits all economic substantially a single as contract a lease for accounts in the contract. included components as a lessor The Company renewals, renewals, improvements and major inspections as capital expenditures, and the carrying amounts of those replaced parts are derecognized. parts are derecognized. replaced those of amounts carrying the and expenditures, as capital as incurred. inexpenses are recognized repairs and Maintenance or loss arising gain Any the of derecognition assets is recognize from estimates. in accounting useful estimated the depreciated, not is which land, for Except as assets are the of lives follows: a straig on is calculated Depreciation life useful different a has which equipment and plant property, of item an part of significant the remainder from of the is depreciateditem separately. at reviewed assets are for the values residual lives and useful methods, depreciation The th from the changes year and end, fiscal each a income on rental as leases operating from payments lease recognizes Company The lease. the of term the over basis straight-line
Lease (12) Equipment and Plant Property, (11) ributions received d the associate are additional paid-in capital. additional ortionate share of all related changes in in changes related all of share ortionate taining significant influenceits over that at associate, a proportionate share of the of share at proportionate a associate, e associate, the Company reclassifies the the reclassifies Company the e associate, profit or loss on a pro rata basis. tween the Companytween the an se would be accounted for as an acquisition of an additional equity equity additional an of as an acquisition accounted be for se would Under the equity method, the investment in the associate is carried on the balance sheet sheet balance carried on the is in the associate the investment method, the equity Under other loss and or profit of share Company’s in the changes post acquisition cost plus at in changes of share Company’s The associate. the of income comprehensive directly in the income recognized is comprehensive profit loss or other and associates’ nsive income. comprehe other or loss and Dist profit Company’s investment. the of amount carrying the reduce associate an from gains unrealized Any and lossesresulting from transactions be eliminated to the extent of the Company’s interest in the associate. the associate. in interest the Company’s of to the extent eliminated as the period reporting same the for prepared are of associates statements Financial Company. in policies accounting the bring to made are adjustments necessary, Where Company. the of those with line than shares more up takes the Company if shares, new of issuance associate’s an Upon main while holding proportionate original its associate, such increa associate. the in interest Company the new shares, if of issuance associate’s an Upon while percentage its stockholding reduces and shares proportionate up take not does overmaintaining its th influence significant reclassified to is income comprehensive other in recognized loss previously or gain profit loss. and Any differenceremaining will be charged to a in equity of change does not When an associate result from its profit or loss or other ownership Company’s the affect not do changes such and income, comprehensive Company prop its the recognizes percentage, of disposal th upon Accordingly, equity. capital to additionalaforementioned paid-in an over influence significant of loss upon method equity the use to ceases Company The an in investment the of amount carrying the between difference Any associate. value investment and the the of retained fair influence significant of upon loss associate or loss. profit in disposal will be recognized plus proceeds from an investment If in an ve nture or an investment in a joint in a joint venture an investment becomes associate equity the to apply continues anassociate, the Company in an investment becomes not remeasureand does the retained interest. method evidence objective any is there whether date reporting each at determines Company The impaired. are ventures joint and in associates investments the that loss, impairment An joint venture or of the associate amount recoverable the between difference the being of or the statement loss in in profit is recognized amount, carrying its and investments. the of amount carrying the of part and forms income comprehensive
285 United Microelectronics Corporation | Annual Report 2019 from indefinite to from finite is ecognition at cost. cost. ecognition at The cost of the of the intangible asset is not revalued thod for an intangible asset with a finite a finite an intangible asset with thod for ination is its fair value as at the date of value as at the date ination fair is its to non-cancellable and mutually agreed agreed mutually and non-cancellable to that the intangible assets may be impaired. may the intangible assets that an intangiblein other asset ar e recognized rm or estimated useful life (3 years) on a a on years) (3 life useful estimated or rm gning of contract and obtaining the right to to the right obtaining and contract of gning ion of future economic benefits embodied in determine whether the indefinite useful life life useful indefinite the whether determine (3 years) of the related technology on a on technology the related years) of (3 assessed as either finite or indefinite. or indefinite. as finite either assessed not, the change in useful life life useful in change the not, any’s intangible assets are summarized as follows: assets intangible summarized are any’s tely are measuredinitial on r recognition, intangible assets arecarriedless any at cost ich fail to meet the recognition criteria are not capitalized to ich criteria arethe recognition meet not capitalized fail nite useful lives are not amortized, but are tested for for tested are but amortized, not are lives nite useful straight-line basis. straight-line an as recognized and discounted, is technology and patent for fees license future fixed liability. asset and related intangible The cost life (5~10 useful over the on and initial recognition, once determined amortized is years) on a related liability straight-line from the are expenses basis. Interest method. interest effective the on based calculated and recognized timing the on Based non-current. and as current is classified the liability payments, of contractterm or estimated useful life basis. straight-line intellectual property, any portion attributable portion any property, intellectual Intangible assets acquired separa period incurred. the in loss or profit in reflected are expenditures the and are intangible The lives of assets useful of intangible assets acquired in a business comb a business in assets acquired intangible of Internally any. if losses, impairment accumulated and amortization accumulated generated intangible assets wh assessed lives and over the useful amortized are assetsfinite lives useful with Intangible indication an is there whenever impairment for The amortization period and the amortization me appropriate, as method, or period amortization the changing by for accounted is asset the estimates. in accounting as changes is and treated Intangible assets with indefi supportable. to be continues If prospective on a basis. made orlosses arisingGains from derecognition of and expenses. income operating Accounting policies of the Comp acquisition. Following initial at life areuseful least at reviewed year. the each of end fiscal in the expected Changes of consumpt life orpattern useful the expected of assessment The level. CGU the or at either individually impairment annually, life annually indefinite useful to is reviewed a. te contract the over is amortized Software b. si Upon fee: license technology and Patent c. amortized over the shorter of property license fees, the are Others intellectual mainly (13) Intangible Assets
ght-line basis over the basis over ght-line hould be recognized and measured at the at the measured and recognized be hould use assets are measured using cost model. use using assets arecost measured model. if the Company is reasonably certain to less it is reasonably certain early that as expenses on a strai a on as expenses borrowing rate. The paymentscomprise:
exercise; and exercise; and termination will not occur.
i. of the amount of the initial the lease liabilities; measurement ii. and date; commencement the before or at made payments lease any any initial direct costs incurred. iii. At the commencement date, the right-of-use assets should be measured at cost, which which cost, at be measured should assets right-of-use the date, commencement At the comprise: to initialthe right-of- recognition, Subsequent Right-of-use assets measured under the cost model are depreciated from the the from are depreciated model cost the under assets measured Right-of-use assets the right-of-use life of useful of the end earlier of the the date to commencement terms. the lease of end or the theresults of lease liabilities in a Any remeasurement assets. of right-of-use the adjustment corresponding present value of the lease payments that have not been paid at that date, using the the that date, using at paid been not that have the leaseof payments present value incremental Company’s i. receivable; incentives payments any less lease fixed ii. rate; or index an on depend that lease payments variable guarantees; value residual under by the Company to be payable expected amounts iii. option a purchase price of the exercise iv. interest method, using the effective are periods measured liabilities subsequent in Lease lease terms. the over are recognized expenses the interest and the carrying In addition, of lease liabilities amount is remeasured there which is not is modification if a payments the lease in change a term, lease the in change lease, a a separate as accounted to used or rate index an in a change from resulting payments future to changes (e.g., purchase to option an of assessment the or in a change payments) lease such determine asset. underlying the At the commencement date, lease liabilities s v. payments for terminating the lease un the terminating for payments v.
lease terms. terms. lease The Company presents right-of-use assets and lease liabilities on the balance sheets, and sheets, and balance on the lease liabilities assets and right-of-use presents The Company of statements in the presented are separately expenses interest and expenses depreciation with associated payments lease the income. recognizes comprehensive Company The leases asset low-value leases and short-term b. The Company as a lessee as a The Company lessee assets right-of-use recognize to is required a lessee a lease, of date commencement At the and lease liabilities, except short-te rm leases and low-valuefor asset leases. a.
286 Financial Review sis over the periods in rest, is recognizedrest, in other d benefit d liability (asset),benefit which additional paid-in capital-premiums.additional paid-in ontribution payable to the plan in exchange payable to the plan in exchange ontribution t defined benefit liability be benefit (asset) shall defined t a non-current liability in all other respects. respects. other all in liability a non-current fit fit liability (asset) are recognized as expenses loss on a systematic ba ertible bonds is classified as a current liability current liability as a ertible bondsis classified y amounts in net included inte to common stock and rrying amount of the liability component. The adjusted adjusted The component. liability ofthe amount rrying Remeasurement of the net define bility component of conv comprises actuarial gains and losses, the return on plan assets and any change in the effect effect the in change any assets and plan on return losses, the and gains actuarial comprises the asset excluding an ceiling,of comprehensive income in the period in which they occur. occur. which they in period in the income comprehensive in recognized Remeasurement not be shall and earnings in retained immediately is reflected income comprehensive other period. or loss to profit in a subsequent reclassified Under defined contribution pension plans, the c the pension plans, contribution defined Under of Disclosure and Grants Government for “Accounting 20 IAS with accordance In is there when grants government the recognizes Company the Assistance”, Government to attaching them the and conditions be received will such grants that assurance reasonable be complied with. will in profit and recognized deferred income as grant is recorded government asset related An basis or loss the useful lives of over on a straight-line the assets. An related expense or is grant profit in recognized government for the service rendered by an employee during a period shall be recognized as an expense. expense. an as recognized be shall period a during employee an by rendered service the for a as recognized is paid, already amount any deducting after payable, contribution The liability. Under defined pension plans, the ne benefit deducting obligation, benefit of defined the of present value as the amount recognized ceiling. asset of the adjusting effect any plan assets and for any the value of fair Service bene defined net interest on the cost and net in the period service. of if within 12 months the bondholders may exercise the put right. right. put right the put exercise the After may the bondholders months 12 within if as a be reclassified bonds should of the convertible component liability the expires, of the definition it liability if meets non-current the maturity, before right conversion their exercise bondholders convertible the If ca the adjust shall Company carrying amount of the liability component at conversion and the carrying amount of of amount the carrying and at conversion component theliability of amount carrying equity arecomponent credited conversion. bond upon is recognized gain or loss No lia the addition, In which the Company recognizes as expenses the related costs for which the grant is which the grant the related costs as expenses for recognizes the Company which losses or expenses for compensate. to compensates that intended grant government A Company the to support financial immediate giving of purpose the for or incurred already receivable. profit whenbecomes or loss it in is recognized costs related no future with (17) Government Grants (16) Post-Employment Benefits
eviously recognized previously recognized recognized previously ntly measured at measured ntly valuefair through profit determine tible bondsissuedwhether to determine it es the recoverable amount since last since the amount recoverable es the overable amount. amount. overable A pr assified as a financial liability measured at assified at as a financial liability measured ods. does not bond issued the convertible If nt testing for the CGU to which the assets individual ing the derivatives, its fairvalue is determined based on lied at that time by the market to instruments of comparable comparable of instruments to by the market time that at lied
The Company assesses at each reporting date whether there is an indication that an asset in an asset in that is an indication there date whether reporting at each assesses The Company impaired. be may Assets” of “Impairment 36 IAS of scope the exists, indication any If the Company completes impairme the date, reporting each at decreased have may or exist longer no may losses impairment re-assessesCompany the asset’s rec or CGU’s service estimated the in increase an been has there if reversedonly is loss impairment potential which in turn of an asset increas loss was recognized. impairment of amount carrying is limited so reversal the that The that amount carrying the exceed nor amount, recoverable its exceed not does asset the loss had no impairment amortization, or of depreciation net determined, have been would years. prior in the asset for recognized been The recognition or reversal of impairment is classified losses as other operating income expenses. and belong. belong. amount, recoverable its exceeds CGU or asset an of amount carrying the Where the asset is considered impaired and is down written to its recoverable amount. The of an individual amount asset or a CGU its of is the higher fair less costs recoverable value value in use. disposal and its of that indicate circumstances If amortized cost using the effective interest method before the instrument is converted or is converted instrument the before interest method cost the effective using amortized settled. is not closelyrelatedis that derivative to the host contract, it the embedded For subseque and component asliability a classified or loss unless as it qualifies component. an equity is component recognized The equity a as instrument financial compound the of value fair the between at the difference initially is not amount Its carrying component. the liability value of fair and the whole peri accounting subsequent in the remeasured with in accordance instrument as a for hybrid it is accounted component, equity an have 9. IFRS under requirements the the effective interest rateinterest app the effective status. credit is cl component The liability Convertible bonds bonds Convertible conver the of terms the evaluates Company The component. and an equity a liability both contains assesses if the Company Furthermore, in the embedded options put and call the of and risks characteristics the economic host the of risk and characteristics economic the to related closely are bonds convertible element. equity the separating before contract For the liability component exclud Impairment (14) of Non-Financial Assets Bonds (15)
287 United Microelectronics Corporation | Annual Report 2019 d are expected to be to be expected are d of control of the goods or the goods or of control of ice that are determined using contractual contractual using determined ice that are gations in the in future, an gations ntrol of promisedntrolof goods and services. The at a significant reversal in in the amount of reversal at a significant rn and allowances based on the customer customer the on based allowances and rn nces which the Company estimates based on ideration, and the transfer ce to the performance obligations in the contract; and contract; in the obligations performance ce to the ce, and other known factors. factors. known other ce, and identify the contract with a customer; with a customer; the contract identify contract; obligations in the the performance identify thedetermine transaction price; pri transaction allocate the recognize revenue when (or as) the entity satisfies its performance obligations
Revenues on the Company’s contracts with customers for the sales of wafers and joint joint and wafers sales of the for customers with contracts Company’s the on Revenues The Company recognizes accounts receivable when the Company transfers control of the control of transfers Company the when receivable accounts recognizes Company The The Company recognizes revenue from contracts with customers by applying the applying by customers with contracts from revenue recognizes Company The with Customers”: Contracts from “Revenue IFRS 15 of steps following a. b. c. d. e.
Revenue from Contracts with Customers Customers Contracts with from Revenue technology development are recognized as the Company satisfies its performance performance its satisfies Company as the are recognized development technology co of transfer upon to customers obligations pr at transaction revenue recognizes Company prices reduced by sales returns and allowa historical experience having determined th determined having experience historical recognizes Company The occur. to probable not are recognized revenue cumulative estimated sales retu for liabilities refund experien historical complaints, is that consideration of an amount has a right to and to customers services or goods unconditional. are and do short receivable term not contain a significant accounts Such Company the provide do not that contracts certain For component. financing unconditional rights to the cons services has been satisfied, the Company recognizes contract assets and revenues. assets and revenues. contract recognizes the Company been satisfied, services has to the Company pr ior customers having from satisfied its received Consideration to are which transferred liabilities as contract for obligations are accounted performance satisfied. are obligations performance the after revenue to costs recognizes The Company enhance generate or contract, to the relate directly costs the when a contract fulfill obli performance satisfy to used be to resources recovered. The costs and revenues are recognized when the Company satisfies its satisfies Company the when recognized are revenues and costs The recovered. and goods of promised control of customers upon transfer to obligations performance services. (20) Revenue Revenue (20) Recognition granted, the cancelled granted, the cancelled ltimately vest.ltimately to The charge for the award is recognized immediately. immediately. award is recognized the for the consideration is recognized in equity. equity. in the is recognized consideration treated as if it fully vests on the date of of date the on vests fully it if as treated nditions within the nditions either the control of on the date that it is of the Company’s own equity instruments. instruments. equity own Company’s the of if a new if award a new substitutes the cancelled for ate pricing model by reference to the market market to the reference by model pricing ate spective of whether the market or non-vesting non-vesting or market the whether of spective ng is conditional upon a market or non-vesting non-vesting or market a upon conditional is ng equity instruments that will u riods in which the performance and/or service conditions are are service conditions and/or performance the which riods in e-based payment transaction, or is otherwise beneficial to the or is otherwise transaction, beneficial payment e-based ruments on the grant date. date. the on grant ruments and new awards are treated as if they were a modification of the original award. of original the were a they modification as if treated new awards are and being fulfilled. fulfilled. being each at transactions equity-settled for recognized expense cumulative The the Company’s and passed has period vesting the to which reflects the extent date reporting quantity of the best estimate of modification. of date the at as measured employee it is is cancelled, award equity-settled an Where price the equity inst of corresponding a with together recognized, is transactions equity-settled of cost The overthe pe increase in equity, profit or loss for a periodrecognized expense represents cumulative in the movement that period. and the end of the beginning between for except vest, ultimately not do that awards for recognized be will expense No equity-settled which vesti transactions for condition. irre vested as treated are These are conditions service and/or performance other all that provided satisfied, is condition satisfied. expense the minimum are modified, award transaction an equity-settled of the terms Where the of terms the original if been modified, not had terms the if as expense the is recognized met. are award increases that modification any for recognized An additional expense is the total fair value of the shar yet recognized not expense any and cancellation, co where non-vesting any award includes This are met. not employee the or entity However, award replacement a as designated is and award The Company’s own equity instruments repurchased (treasury stocks) are recognized at at are recognized stocks) (treasury repurchased instruments equity own Company’s The equity. from deducted and cost repurchase or profit in recognized be shall loss or gain No loss on the purchase, sale, issue or cancellation of equity-settled transactions The cost between the Company and its employees is appropri an value using fair the at measured Any difference between the carrying amount and amount the carrying between difference Any
Share-Based (19) Payment Transactions (18) Treasury Treasury (18) Stock
288 Financial Review in a transaction a business is in that not ferred tax assets are recognized only to the the to only recognized are assets tax ferred lized shall be recognized in profit or loss, or loss, profit in recognized be shall lized erences associated with investments in with investments associated erences y differences will will the reverse in foreseeable differences y against which the temporary differences can can differences temporary the which against the tax consequences that would the follow that would tax consequences the tity and the same taxation authority. authority. taxation same the and tity rred tax assets to be recovered.rred tax ctly in equity. Deferred tax assets are reassessed and assets are tax Deferred ctly in equity. other comprehensive income or equity. or equity. income comprehensive other from new information about facts and circumstances that existed at the acquisition date date at the acquisition existed that circumstances and facts about new information from that to related goodwill any of amount carrying the reduce to applied be shall acquisition. the carrying amount If of that goodwill deferred tax is nil, any remaining or loss; profit in shall be recognized benefits In respect of deductible temporary diff temporary deductible of respect In combination and, at the time of the transaction, affects neither the accounting profit nor nor profit accounting the neither affects transaction, the of time the at and, combination loss; or profit taxable de ventures, joint and associates subsidiaries, the temporar that probable that it is extent profit available be and taxable will future be utilized. Where the deferred tax asset relating to the deductible temporary difference arises from arises from difference temporary deductible the to relating asset tax deferred the Where the initial recognition of an asset or liability
b. a. Deferred tax assets and liabilities offset each other, if a legally enforceable right exists to to exists right enforceable legally a if other, each offset liabilities and assets tax Deferred current income tax currentasse ts against taxincome set off liabilities, and the deferred taxes relate to the same taxable en criteria for the satisfying not but combination, business a of part as acquired benefits Tax subsequently recognized and realized be date, might acquisition at the recognition separate as follows: result period that a. measurement the within recognized tax benefits deferred Acquired rea benefits tax b. deferred acquired other All Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in in apply to expected are that rates tax the at are measured liabilities and assets tax Deferred tax laws rates and settled, based on tax is is realized or the liability asset the year the when date. the reporting at enacted or substantively enacted been have that The measurement reflects tax assets and liabilities deferred of manner in which the Company expects, at the end of the reporting period, to recover or to recover period, the reporting of end the expects, at the Company in which manner and liabilities. of its assets carrying the amount settle tax relating to items Deferred recognized outside in other profit or loss but rather or loss in profit is not rec ognized comprehensive income or dire recognized at each reporting date. at each reporting recognized at tax assets are reassessed deferred Unrecognized future that probable become that has it extent to the recognized are and date reporting each taxable profits will allow the defe the differences, temporary all deductible for recognized are assets Deferred tax that probable is to the extent it credits, tax unused and losses tax unused of carryforward temporary which the deductible against that profit will be available future taxable be credits can unused tax tax losses unused and of the carryforward and differences except: utilized, income tax expense g to items recognized recognized items to g e profit or loss; e profit od on temporary differences differences on temporary od nings as is recognized s and their carrying amounts in financial in financial amounts their s and carrying the initial recognition of goodwill orof recognition of an the initial r the current period and prior periods are nt income tax relatin ing profit nor taxabl nor ing profit l taxable temporary differences, except: except: differences, temporary l taxable tion of profit or loss for the period. ined using the liabilityined meth e income or equity is recognized in other comprehensive in other or equity is comprehensive recognized e income In respect of taxable temporary differences associated with investments in subsidiaries, subsidiaries, in investments with associated differences temporary taxable of respect In temporary the reversal of the of timing the when ventures, joint and associates not will differences the that temporary probable it and is controlled be can differences future. in the foreseeable reverse When the deferred tax liability arises from arises from liability tax deferred the When time of a business combination and, that at the is not in a transaction or asset liability neither the account affects transaction, the
Current income Current income tax Deferred income tax b. a. Interest income income Interest through assets at fair value and financial cost at amortized assets measured financial For interest recorded is using the effective income income, interest other comprehensive is established, the dividends to receive right the when Company’s is Revenue recognized dividend. the approve stockholders is generally when which liabilitiesassets and fo Current tax income enacted substantively or enacted been have laws tax that and rates tax the using measured period. the reporting of end by the Curre directly in othercomprehensiv or loss.than profit rather income orequity The additional tax income undistributedear for stockholders’ the by approved is proposal distribution the when year subsequent the in meeting. is tax determ income Deferred Income tax expense (benefit) is the aggregate amount of current income tax and deferred deferred and tax income current of amount aggregate the is (benefit) tax expense Income determina the in included tax income method and recognized in profit or loss. in profit and recognized method Dividends between the tax bases of assets and liabilitie between the tax bases of date. reporting at the statements Deferred tax liabilities are recognized for al (21) Income (21) Income Tax
289 United Microelectronics Corporation | Annual Report 2019 nce, based on historical experience and experience historical on nce, based ment bonds extrapolated from maturity from bonds extrapolated ment on, inflation and the discount rate. on, inflation Due to tion multiples, etc. Changes in assumptions and net realizable value item by item.by item value realizable net and Net y rate, etc., and may differ from actual actual from differ y may and rate, etc., ce in the ordinary course of business less the less the of business course ordinary ce in the In determining the appropriate discount rate, management management rate, discount appropriate the determining In l 3 Financial Instrumentsl 3 Financial the complexity of the actuarial valuation and its long-term nature, a defined benefit benefit nature, a defined and its long-term valuation the of actuarial complexity the in these assumptions. to changes sensitive highly is obligation are used The assumptions 6(13). disclosed in Note Where the fair values of the level 3 financial assets and liabilities recordedfinancial on the the by determined are they markets, active from be derived cannot sheet balance market and approach the income including method valuation an appropriate of application approach. in the judgment significant involves assets financial these of valuation The equity or companies comparable of selection a cash forecasts, flow of preparation rates, discount as such assumptions of application the as well as prices, transaction and valua marketability, discounts lack of for of the financial assets. value reported the fair could affect these factors about Please refer details. more to Note 12 for at are cost the of lower Inventories valued pri realizable value is the estimated selling sale. the to make necessary costs the estimated and completion of costs estimated Please 6(4). including to Note refer overhead, labor and include direct completion Costs of labor costs, indirect indirect e quipment, production of and maintenance depreciation thatmaterial costs,supplies,royalties is expected utilities and tobe incurred at normal level. production account into taking level production normal estimates Company The planned maintena capacity resulting from loss of capacity. production current a pension for obligation benefit of the defined value costs and the present benefit Defined valuation actuarial An method. projected unit credit the using determined are plan the discount of the determination include which assumptions, various making involves mortalit increase rate, salary rate, future developments in the future. considers the interest rates of the govern obligation. benefit defined the of duration expected the to corresponding rate the As for comparisons past of experiences, takes account management salary increase, future of regi geographical the and industry the within
Inventories (2) (3) Benefits Post-Employment (1) Leve of Value Fair The ssesses a judgement or or judgement ssesses a If the Company concludes that that concludes Company the If outstanding of The weighted-average terest and other income or expenses derived derived or expenses income other and terest ty. The Company rea Company The ty. about these assumptions and about and estimates these could assumptions profit, tax bases, unused tax losses, unused tax credits or tax credits losses, unused tax unused tax bases, profit, tax treatments used to be tax used or planned used in treatments its income tax from any underlying dilutive share equivalents. any underlying from compensation stock and employee stock dividends for retroactively is adjusted shares issues. Earnings per share is computed according to IAS 33, “Earnings per Share”. Basic Basic 33, Share”. “Earnings per to IAS according is computed per share Earnings of number by the weighted-average income dividing net by share is computed per earnings period. reporting current during the per outstanding Diluted earnings shares ordinary additional plus consideration into share per earnings basic taking by computed is share had been equivalents share if the dilutive been outstanding would have that shares ordinary issued. income isNet also adjusted in for tax rates consistently with the tax uncertain an accept will authority taxation that the probable not it is If filings. or the amount likely most the either using estimates makes Company the treatment, to expects Company the method which on depending treatment, tax the of value expected uncertain the resolutionthe predict of better it thatwillis probable it the authority taxation accept an uncertain taxthe treatment, the determines taxable Company accept will authority a that taxation it is probable whether considered has Company The its income in tax filings. the uncertain tax treatments used estimate if the facts and circumstance change. change. circumstance and facts the if estimate ofor assets amount carrying to the adjustment material a require that outcomes in result periods. in future affected liabilities at uncertainty estimating of sources key and other the future concerning assumptions key The to the carrying adjustment a material for risk significant a have would that date reporting the of assets or liabilities within the amounts next discussed year are fiscal below. parent when available the on information and estimates bases its assumptions Company The prepared. were statements only financial company assumptions and Existing circumstances circumstances or changes market to due change may however, developments, future about Company. the of control the beyond arising assumptions the in reflected are changes Such occur. they when requires statements financial only company parent the Company’s of preparation The of amounts reported the affect that assumptions and estimates judgments, make to management of disclosure the and disclosures the accompanying liabilities, assets, expenses, revenues, uncertainty contingent liabilities. However, Earnings per Share (22) 5. ACCOUNTING SIGNIFICANT ASSUMPTIONS AND JUDGMENTS, ESTIMATES
290 Financial Review
- -
- - 3,561 20,125 20,125 26,700 $4,733 $4,733 $4,734 As of December 31, As of As of December 31, 31, December As of As of December 31, of As 184,500 184,500 180,900 (663,686) 2019 2018 2019 2019 2018 2019 2018 $668,476 $668,476 $497,042 4,445,752 4,445,752 3,804,024 5,688,872 5,688,872 10,439,872 7,918,278 7,918,278 8,135,817 $5,114,228 $5,114,228 $4,301,066 $5,114,228 $5,114,228 $4,301,066 $4,909,603 $4,909,603 $4,089,905 52,922,953 52,922,953 40,761,747 $13,563,695 $13,563,695 $13,583,599 $12,900,009 $12,900,009 $13,583,599 $66,534,836 $66,534,836 $59,342,170 easured at fair value and the change change the and value fair at easured teralized by government by government teralized measuredat fair value Funds Funds Preferred stocks Preferred Forward contracts Option
bonds and corporate notes notes corporate and bonds Common stocks stocks Common through profit or loss profit through et Total Total Time deposits deposits Time Cash on hand and petty cash cash petty and hand on Cash accounts savings and Checking Total Total
Total Total Repurchase agreements agreements colla Repurchase Financial assets Financial mandatorily Current allowance loss Less: Noncurrent Noncurrent
Accounts receivable receivable Accounts N The Company had a call option of a joint venture agreement between FUJITSU FUJITSU between agreement a joint venture of call option a had Company The LIMITED SEMICONDUCTOR (FSL), m was which loss. or in profit was recorded value the fair in Directors of Board the 2018, 29, On June on acquisition the and completed option, call the exercise to Companythe resolved of 1, 2019. October (2) (2) or Loss Profit through Value at Fair Assets Financial (1) Equivalents Cash and (3) (3) Net Receivable, Accounts
6. ACCOUNTS CONTENTS SIGNIFICANT OF
it is probable that future taxable profit profit taxable future probable that is it s to derive from derive to s asset the or CGU. Cash s value in use. costs of The value less fair tation of complex tax regulations, changes in in changes regulations, tax complex of tation ble to reflect the amount that an entity could could entity an that amount the reflect to ble xable temporary differences against which the against differences xable temporary orderly transaction between market participants, orderly transaction between tax laws, and the amount and timing of future taxable income. income. taxable future of timing and amount the and laws, tax establishes Company The by the tax audits of consequences possible for estimates, reasonable on based provisions, authority. such as experience factors, is based on various such provisions of The amount by the made regulations of tax interpretations different and audits tax previous of responsible tax authority. losses, credits and tax tax unused of carryforward all for assets are recognized tax Deferred that extent the to differences temporary deductible ta or there are available be sufficient will utilized. be can differences temporary deductible or credits tax unused tax losses, unused likely the upon is based to be recognized determined assets tax deferred of amount The temporary differences. taxable and profits taxable future of level and the timing Please tax assets. to Note deferred refer 6(23) for unrecognized more details on At each reporting date or whenever events indicate that the asset’s value has declined or or declined has value the asset’s that indicate events date or reporting whenever each At Company the place, taken have effect an adverse with the market changes in significant be may 36 IAS of scope the in asset that an indication is an there whether assesses impaired. any If completes exists, testingindication Company the impairment for the the interpre to respect exist with Uncertainties CGU to which the individual assets belong. assets belong. individual the which to CGU or asset an of amount carrying the Where is down and written impaired is considered the asset amount, recoverable its exceeds CGU amount. its recoverable to asset or is the CGU an individual of amount The recoverable it and disposal less costs of value fair of higher availa information best on is based disposal an the asset in disposal of the obtain from disposal. of costs the deducting present after net the at measured is use in value The expect entity the flows cash future the of value and the estimated estimates judgments which include involves subjective projection flow that future cash flows, and equipment, capacity generates plant property, lives of useful the and industry the in cycle economic of fluctuations potential output, physical of capacity situation. operating Company’s (4) Plant and Equipment Impairment of Property, (5) Tax Income
291 United Microelectronics Corporation | Annual Report 2019
$- $- $-
come in relation to
- -- December 31, December December 31, December For the years ended ended the years For For the years ended ended the years For As of December 31, 31, December As of 175,494 175,494 184,026 2019 2018 2018 2019 2019 2019 2018 2019 2019 2018 $339,327 $339,327 $249,391 $339,327 $249,391 $249,391 $339,327 $(551,903) $(551,903) $2,348,454 $2,348,454 $14,388,597 $14,388,597 $11,131,667 $14,213,103 $14,213,103 $10,947,641 in operating cost, of which in NT$1,174 operating cost, of 2018, the Company recognized NT$93,322 NT$93,322 the Company recognized 2018, other comprehensive in nvestments measured at fair value through value at nvestments measured through fair other comprehensivebelow: income arelisted ted to write-downted inventories.of
eclassified to retainedeclassified
earnings due to derecognition to derecognition due earnings Held at end of period at end of Held period the during Derecognized Fair value on the date of sale of sale date the on value Fair Total Dividend income recognized in profit or loss in profit or recognized income Dividend Cumulative gains (losses) r
These investments in equity instruments are held for medium to long-term purposes purposes long-term to medium for held are instruments equity in investments These income. comprehensive other value as through fair for are accounted therefore and Amountsrecognized in profitor loss and through value fair assets at financial the In consideration of the Company’s investment strategy, the Company disposed and and disposed Company the strategy, investment Company’s ofthe consideration In i instrument equity partial derecognized income. comprehensive other the for investments of such derecognition Details on are as and 2018 follow: 31, 2019 December end years
None of the aforementioned inventories were pledged. pledged. were inventories the aforementioned None of million and NT$98,266 million, respectively, For the years ended December 31, 2019 and 31, 2019 and ended December For the years Preferred stocks Preferred million and NT$503 million were rela were million NT$503 and million Common stocks stocks Common Total Total Equity instruments
b. a. a. b. c.
(5) (5) Non-Current Income, Comprehensive through Other Value Assets at Fair Financial
- $- $- $-
$- $- December 31, December 95,137 95,137 359,592 84,043 84,043 511,706 For the years ended ended the years For As ofAs December 31, As of December 31, 31, December As of 602,704 602,704 249,654 129,322 129,322 433,672 663,686 663,686 ’s operating situation and situation operating ’s 2019 2018 2018 2019 2019 2018 2018 2019 2019 2018 $663,686 $663,686 2,061,059 2,061,059 1,766,380 1,038,210 1,038,210 1,134,786 8,791,223 8,791,223 9,131,201 2,668,558 4,026,414 4,026,414 2,668,558 1,757,352 1,757,352 2,471,790 $4,414,620 $4,414,620 $3,182,267 $16,305,112 $15,214,634 $15,214,634 $16,305,112 $10,231,451 $10,231,451 $9,557,185 $12,900,009 $13,583,599 $13,583,599 $12,900,009 rate to calculate rateECLs. calculate to rate provision A individually assesses whether to recognize to recognize assesses whether individually sses by considering customer sses considering by 30 days days 30 121 121 days Subtotal Subtotal 31 to 60 days 60 days 31 to 90 days 61 to days 120 to 91 ≤ ≥ either past due nor impaired past either nor impaired due Ending balance Ending Beginning balance balance Beginning period the for Net charge Raw materials and spare parts Supplies process in Work goods Finished Total
net: receivable, accounts of analysis Aging N impaired: not but due Past Total receivable: accounts of loss for allowance Movement were sales overseas party sales third and for third party domestic periods The collection days, respectively. 30~60 days and net 30~60 month-end credit expected date to measure reporting at each is performed analysis impairment An receivable. accounts (ECLs) of losses including 60 days, within due past receivable For a provision estimates the Company past due, not customers’ and experience loss credit historical Company’s the on based determined is customers’ as such factors, forward-looking for adjusted condition, financial current environment. economic applies the Company 60 days, over past due receivable For the also and rate provision aforementioned the credit additional expected lo ability. debt-paying
(4) (4) Inventories, Net
292 Financial Review these value of The fair and 2018, respectively. and 2018, respectively. that thethe Company obtained ability ideration of minority interestideration discount values totalled NT$4,398and million ed to NT$1,470 million and NT$1,477 NT$1,477 and million to NT$1,470 ed and NT$(749) million the years ended for $1,448 million, as of December 31, 2019 31, 2019 December as of million, $1,448 tion of a joint venture agreement between between agreement venture a joint of tion 31, 2019 and 2018, respectively. respectively. 2018, and 31, 2019 ber 31, 2019 joint ventures amounted to NT$1,189 million million NT$1,189 to amounted ventures joint 019 and 2018, respectively. 019 and 2018, respectively. FARADAY as an associate given the fact given as an associate FARADAY on its representation through FARADAY over influence exercise significant to Board Directors. of is the surviving company. FORTUNE and FORTUNE with merged respectively. million, NT$5,478 and million Company’s the deducting After of Company) the by stock treasury as (treated subsidiary the by held stock book residual the million, NT$120 as of December NT$5,358 million FUJI SEMICONDUCTOR LIMITED (FSL) to acquired 84.1% ownership interest in MIE FUJITSU SEMICONDUCTOR LIMITED (MIFS) for JPY 1, 2019. October on of billion 15.9% 54.4 held previously The Company MIFS. in interest ownership the of subsidiary a wholly-owned became MIFS CO., Company and renamed as UNITEDwas JAPAN SEMICONDUCTOR of the acquisition. upon completion (USJC) LTD. The the net fair value of identifiable assets acquired and liabilities assumed the excess of was in interest held previously ownership and the transferred consideration aggregate as recognized was the difference and date, theacquisition at USJC in 15.9% of resulted gain purchase the bargain of gain. Recognition purchase bargain 15.9% in USJC interest of which was held ownership the previously from valueat cons with fair remeasured the date. immediately at the acquisition was As of July 1, BUSINESS2018, UMC NEW CORP. INVESTMENT B: Note NT$4,518 were investment of costs the 2018, and 2019 31, C: December of As Note the call op exercised D: The Company Note E: Note Please refer to Note 9(4). which for method equity the using for accounted of investments amount carrying The amount quotations price published are there 31, 2 December as of million, its in accounts investment for the Company June 2015, from Beginning A: Note investments were NT$1,928 million and NT and million NT$1,928 were investments and 2018, respectively. respectively. 2018, and other were by method the equity audited under accounted for investments Certain accountants. independent or of Shares lossprofit of these subsidiaries, and associates million NT$1,174 to ventures amounted joint were method equity the using for accounted investments the aforementioned of None pledged. December 31, 2019 and 2018, respectively. income comprehensive other of Share 2018, respectively. and 2019 31, December and associates these subsidiaries, (loss) of 31, 2019 and 2018, respectively. NT$(230) ended December million and for the years NT$11,132 were method under the equity for accounted of investments balances The of Decem as NT$8,151 and million - - voting rights voting ownership or or ownership Percentage of - 2018 2018 8,153,579 59,115,840 $68,746,586 As of DecemberAs 31, voting rightsvoting Amount ownership or ownership Percentage of
- 47.75 53,958 47.75 the equity method are as follows: method follows: as equity the are Amount Amount 2019 2019
642,660 42.00 568,005 42.00 11,643,953 100.00 17,150,726 100.00 590,702 121,840 100.00 100.00 572,512 120,901 100.00 100.00 11,150,575 11,150,575 42,022 100.00 42,908 100.00 1,755,033 100.00 1,712,388 100.00 4,273,912 100.00 4,246,675 100.00 18,157 45.44 4,378,193 36.49 3,026 3,419,430 45.44 36.49 $80,506,509 $80,506,509 2,281,631 40.00 1,520,575 40.00 3,756,049 100.00 3,496,187 100.00 4,398,331 4,398,331 100.00 5,358,068 100.00
95,116 100.00 45,187 100.00 87,327 - 2,786,893 3,829,934 30.87 2,642,543 30.87 67,885,435 67,885,435 20,499 100.00 20,688 100.00
r Under the Equity Method Investee companies Details of investments accounted for under for accounted investments Details of
a. (6) (6) Accounted Investments Fo Subtotal Subtotal Subtotal Subtotal (Note (Note C) B, (Note E) (Note E) Investments in associates in associates Investments LTD. PTE. HOLDINGS MTIC Total UNITECH CAPITAL INC. INC. CAPITAL UNITECH CORPORATION CAPITAL TRIKNIGHT CHIEHCO., LTD. HSUN INVESTMENT CO., YUAN LTD. INVESTMENT YANN FARADAY TECHNOLOGY CORP. (FARADAY) (Note A) (Note (FARADAY) TECHNOLOGY CORP. FARADAY $1,470,499 13.78 (USA) UMC GROUP $1,477,167 B.V. (EUROPE) MICROELECTRONICS UNITED CORP. CAPITAL UMC 13.78 LIMITED GREEN EARTH 142,378 CO., LTD. TLC CAPITAL LIMITED (SAMOA) INVESTMENT UMC 100.00 (FORTUNE) CORP. CAPITAL VENTURE FORTUNE 142,532 100.00 CORPORATION MICROELECTRONICS WAVETEK CORP. NEXPOWER TECHNOLOGY 260,035 79.83 275,854 77.74 UMC GROUP JAPAN JAPAN UMC GROUP LTD. CO., KOREA UMC LIMITED GLOBAL OMNI LIMITED SINO PARAGON LIMITED INTERNATIONAL ELITE BEST (Note D) CO., LTD. UNITED SEMICONDUCTOR JAPAN 17,515,233 23,183,005 100.00 100.00 23,090,363 100.00 UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. CO.,LTD. (XIAMEN) SEMICONDUCTOR UNITED
Investments Investments in subsidiaries Listed company Listed company associates in Investments Unlisted companies companies Unlisted
293 United Microelectronics Corporation | Annual Report 2019
- 31,203,508 - 67,285 - (2,841,979) - (2,577,512) $- $686,971,254 $- $712,822,556 awaiting awaiting inspection Total equipment progress and progress Construction in (10) Furniture and fixtures and - 10 (67,285) 25 (6,844) (317) (940) (908) (5,173) (850) (3,279) (317) (651) Furniture Furniture equipment and fixtures Total and fixtures Total Transportation Transportation - - - - $- $115,334 $1,973,746 3,827 42,155 135,467 67,295 Machinery Machinery Machinery Machinery Machinery Machinery and equipment and equipment and equipment - (81,872) 3,213 (78,659) - (67,295) - (623) - 990,980 29,858,993 4,320 349,215 - (2,429) - - (4,265) - - - (29,574) (2,805,586) - (4,624) (2,557,858) (2,327) (12,703) $- $15,333,123 $667,193,746 $32,946 $4,411,439 $- $905,738 $125,413 $1,036,914 $2,068,065 $- $819,016 $188,881 $995,916 $2,003,813 $- $16,289,905 $691,756,590 $34,964 $4,741,097 $452,915 $2,316,123 $207,285 $1,150,260 $4,126,583 Land Buildings Land Buildings Land Buildings to restate prior periods in accordance with the transition provision in in IFRS 16. provision transition the with prior periods in accordance to restate Assets Subject to Operating Leases(Note): Leases(Note): Operating to Subject Assets Cost: Accumulated Depreciation and Impairment: and Impairment: Depreciation Accumulated Note: 1, 2019. January 16 on IFRS adopted The Company not elected The Company Accumulated Depreciation and Impairment: and Impairment: Depreciation Accumulated b.
Transfers and reclassifications Transfers Disposals - (334) Depreciation and reclassifications Transfers Depreciation - 89,485 Disposals 2019 1, of January As As of31, 2019 As December $452,915 $2,311,235 $125,413 $1,152,248 $4,041,811 Exchange effect Exchange effect
As of January 1, 2019 2019 1, of January As Exchange effect Exchange effect of31, 2019 As December Transfers and reclassifications Transfers Exchange effect Exchange effect amount: carrying Net 31, of 2019 As December $861,487 $9,295,797 $63,035,439 $13,096 $953,690 - Disposals $3,353,190 $77,512,699 amount: carrying Net 31, of 2019 As December $452,915 $1,405,497 As of January 1, 2019 of 1, As January As of December 31, of 2019 As December
awaiting awaiting inspection Total inspection Total equipment progress and progress Construction in - 9,557,500 9,557,500 December 31, December For the years ended ended the years For of the foreign entity will be entity the foreign of 2019 2018 Furniture 1,264,480 (472,059) and fixtures and $2,399,050 $2,399,050 $(1,089,187) $1,134,570 $1,134,570 $(617,128) - oss) in the financial statementsoss) in the financial for the equipment of the foreign entity is different from the from the foreign entity is different of Transportation Transportation -
Machinery Machinery and equipment and equipment
- - ence arising from translation - - (52,450) (3,039,442) (76) (7,655) (21,468) (3,121,091) -- (4,637) 30,577 (2,736,247) 10,900,865 (2,327) 3,557 (12,776) 211,284 (67,457) (10,388,204) (2,823,444) 758,079 Land Buildings
Total comprehensive income (loss) income comprehensive Total
Income (loss) from continuing operations operations continuing from (loss) Income (loss) income comprehensive Other Assets Used by the Company(Note): Cost: recognized in other comprehensive income (loss). Such exchange differences differences exchange Such (loss). income comprehensive other in recognized (l income comprehensive other in recognized NT$27 million, and million NT$(19) were 2018 and 2019 31, December ended years were following table. which not included the in respectively, for accounted are that associates its of share the Company’s of amount aggregate The follows: the equity method as using was of associates: Financial information the for Company. associate significant is no individually There an is a associate When operation,thefunctional currency foreign and differ exchange an Company, One of the Company’s associates, HSUN CHIEH INVESTMENT CO., LTD., held 441 held 441 CO., LTD., CHIEH INVESTMENT associates, HSUN the Company’s One of 2018. and 31, 2019 December as of stock the Company’s shares of million Another 172 and shares million 200 held LTD., CO., INVESTMENT YUAN YANN associate, 2018. 2019 and 31, December as stock of the Company’s shares million of 2019 2019 a. b. c. (7) (7) Equipment and Plant Property,
As of January 1, 2019 of 1, As January $861,487 $25,612,212 $749,666,853 $46,906 $5,503,934 $4,272,819 $785,964,211 As of December 31, of 2019 As December $861,487 $25,585,702 $754,792,029 $48,060 $5,694,787 $3,353,190 $790,335,255 Transfers and reclassifications and reclassifications Transfers Exchange effect Additions Disposals 294 Financial Review 2019 2019 ended ended December 31, 31, December December 31, 31, December December 31, 31, December $248,788 $248,788 $3,237,102 $3,237,102 9,509 4,907 24,925 24,925 7,450 2,193 $3,261,999 $3,261,999 8,308 $291,991 As of the year For of As 2019 2,988,314 2,988,314 $2,905,908 $2,905,908 $257,198 $257,198 314,207 19,385 the Company’s addition to to right-of-use addition the Company’s st expenses on the lease liabilities. liabilities. lease the on expenses st pledged as collateral.
t elected not to restate prior periods in accordance with the transition transition the with accordance in prior periods restate to not elected 16. in IFRS provision elected not to restate prior periods in accordance with the transition transition the with accordance in prior periods restate to not elected 16. in IFRS provision For the year ended December 31, 2019, 2019, 31, December ended year the For to NT$204million. assets amounted Right-of-use assets were not oncurren
Depreciation Depreciation Land Land Buildings Buildings equipment and Machinery equipment Transportation Other equipment Net Land Buildings equipment and Machinery equipment Transportation Other equipment Total Note: Note: The Company 2019. 1, January 16 on IFRS adopted Company The Right-of-use Assets N i. Lease Liabilities Current ii. Total Total Note: Note: The Company 2019. 1, January 16 on IFRS adopted Company The to Note 6(21) for the refer Please intere (b) (a) The Company as The Company a lessee
a.
- 36,634,963 - 3,893,037 - (2,413,355) - (2,704,161) $- $650,860,422 $- $688,975,067 awaiting awaiting awaiting inspection Total inspection Total inspection Total equipment equipment progress and progress and progress Construction in Construction in - 9,861,161 9,861,161 fixtures fixtures Furniture and Furniture and - equipment equipment Transportation Transportation Transportation
- equipment equipment Machinery and Machinery and
- - of be land located in R.O.Cof will payments state that lease - 1,184,606 35,076,853 3,208 370,296 - - 41,241 3,841,232 319 10,245 - 83,767 4,306,514 311 12,366 4,419 4,407,377 - 244,298 10,749,582 5,687 278,107 (10,713,653) 564,021 - (57,812) (2,340,752) (7,193) (7,598) - (64,878) (2,624,143) (7,515) (7,625) $- $14,984,104 $630,805,294 $36,612 $5,034,412 $- $16,152,139 $667,382,627 $32,946 $5,407,355 Land Buildings Land Buildings
$1,314,402 $11,776,196 $82,491,511 $13,960 $1,246,839 $4,272,819 $101,115,727
The Company leases various properties, such as land , buildings, machinery and and machinery , buildings, such as land properties, leases various Company The 2 of 30 to with lease terms other equipment and equipment transportation equipment, years. Most lease contracts purchase have not does value. Company land The announced the on based adjusted the lease terms. of the end of leased land at options 2018 Cost: Accumulated Depreciation and Impairment: Impairment: and Depreciation Accumulated Property, plant and equipment were not pledged as collateral. as collateral. pledged not were plant and equipment Property,
(8) Leases Leases (8)
Additions Depreciation Disposals Disposals Exchange effect As of January 1, 2018 2018 1, January of As $1,314,402 and reclassifications Transfers $27,665,148 Exchange effect $737,442,185 of31, 2018 As December $48,423 $1,314,402 $6,371,346 $27,928,335 $5,120,892 $749,874,138 $777,962,396 $46,906 $6,654,194 $4,272,819 $790,090,794 2018 1, January of As Disposals Disposals As of31, 2018 As December Net carrying amount: carrying Net 31, 2018 of December As 295 United Microelectronics Corporation | Annual Report 2019 $8,818,121 $5,358,292 $8,467,425 - - 35,145 - 20,878 - - 369,563 December 31, December December 31, December 1,086,882 1,086,882 1,784,031 For the years ended ended the years For For the years ended ended the years For As of December 31, 31, December As of 2019 2018 2019 2018 2019 2018 $664,315 $664,315 $657,958 $1,159,963 $1,126,073 $1,355,850 $1,384,650 ) (987,841) (1,581,935) ) (987,841) (1,581,935) - 1.96%~2.89% 1.56%~2.85% technology technology technology Patents and and Patents and Patents license feeslicense $4,521,199 Others $3,565,606 Total feeslicense $2,548,207 Others $2,306,558 Total $4,589,136 $3,190,018 - 214,278 612,253 826,531 ,563 2,068 33,077 1,410 19,468 369 (414,676) (179,418 (414,676) (179,418 $731,316 $503,527 Software Software Software d Operating costs Operating expenses Operating loans bank Unsecured Interest rates applie
As of 1, January 2018 As of 1, January 2018 As of Additions Additions 247,348Amortization 449,801 amount: carrying Net 2018 31, December of As $350,662 $1,751,078 $784,419 $2,886,159 Disposals Disposals Reclassifications effect Exchange Exchange effect effect Exchange As December of 31, 2018 $688,271 2018 31, December of As $337,609 $2,838,058 $2,405,599 $5,581,266 Amortization Accumulated and Impairment: Cost: 2018 The amortization amounts of intangible assets are as follows: assets are as follows: of intangible amounts The amortization
NT$34,578 million as of December 31, 2019 and 2018, respectively. respectively. and 2018, 31, 2019 as of December million NT$34,578 The Company’s unused short-term lines of credit amounted to NT$33,063 million and million and NT$33,063 to credit amounted of lines short-term unused Company’s The (10) Short-Term Short-Term (10) Loans
- (10,033) - (19,716) - 36,210 0,018 $8,467,425 5,599 $5,581,266 ,128) (638,815) (1,810,802) ,128) (638,815) (1,810,802) 806,915 851,679 2,994,418 510,020 849,330 1,824,278 technology technology technology Patents and and Patents and Patents license feeslicense Others Total feeslicense Others Total rlying assets. The contracts are to main $4,589,136 $3,19 $2,838,058 $2,40 $2,385,592 $2,616,114 $5,584,709 plant and equipment for operating leases under operating leases under for and equipment plant (969) (969) (18,747) (675) (675) (9,358) 36,210 36,210 - 464,928 464,928 (218,859) (218,859) (953 (218,859) (953 $688,271 $337,609 1,335,824 1,335,824 Software Software Software
The Company as a lessor as a The Company lessor are which equipment and plant property, certain on leases into entered Company The and the risks all of substantially transfer did not as they leases as operating classified unde the of ownership to incidental rewards clauses. with cancellation to dormitory employees the lease to Note refer Please property, of disclosure relevant 6(7) for 16. IFRS As of January 1, 2019 1, January 2019 As of 1, January 2019 As of Disposals Disposals Reclassifications effect Exchange 2019 31, December of As $1,840,477 $4,424,176 $3,402,882 $9,667,535 Disposals effect Exchange 2019 31, December of As $583,003 Additions Additions Amortization amount: carrying Net 2019 31, December of As $1,257,474 $2,038,584 $786,768 $4,082,826 Amortization Accumulated and Impairment: Cost: 2019 b. (9) (9) Intangible Assets
296 Financial Review ice will be subject to adjustments upon upon adjustments to subject be will ice incipal amount of the bonds has already has already of bonds the amount incipal not part, of the bonds, at the Early Early the at bonds, the of part, not ght of the converting holder of the bonds theof bonds holder theof converting ght 5% of the conversion price. price. conversion the of 5% Early The t: The conversion price was originally t: The conversion price of redemption for payment in USD. in payment redemption for of ), and this fixed NTD amount will converted be and this fixedNTD amount ), s, in whole but not in part, at the Early Redemption Redemption ats, Early part, the in but not whole Stock Exchange. Exchange. Stock issuance and prior to the maturity date, at the principal amount of the bonds with the bonds with amount of date, the principal prior to the maturity at and issuance Redemption Early (the annum per -0.25% of rate the at calculated interest an the on the Company of shares ordinary the of closing price the if Amount) which of last the days, trading of 30 consecutive out 20 of period a for TWSE, such of notice which upon date the prior to 5 days more than occurs not 12 is at least is published, redemption Redemption Price will NTDbe converted Fixed into the Exchange based on Rate (NTD 30.708=USD 1.00 using the prevailing rate at the time if at Amount Redemption least 90% in pr cancelled. and repurchased or redeemed converted, been in the changes R.O.C.’s in at of any time, event Amount certain Redemption the of payments to gross up for the Company require would tax rules which interest of premium. or payments up for or to gross principal, principal the of 99.25% at 2018 18, May on bondholders of option the at amount. to be shares cease ordinary the Company’s if Amount Redemption the Early listed on the Taiwan the require to right the shall have bondholders the the Company, occurs to the bond to redeem Company Amount. provided, shares; ordinary Company the into 2020, 8, May to prior and 2015 beginning the days from 5 business within falls date if the exercise that however, ri the period, closed any during, and of, recei ves will beshares it subject to vote with respect to the certain to restrictions. NT$17.50 per share. share. per NT$17.50 pr The conversion inthe indenture. set out certain events of the occurrence price The conversion 31, 2019. on December share per was NT$14.2179 (ii) (ii) the Early at not in part, but whole, in bonds, the redeem may Company The but all, redeem may Company The (iii) Amount Redemption Early at redeemable be (iv) will theof bonds portion or any All (v) at of the bonds all to redeem Company the to require the right have Bondholders (i) the Company Ordinary shares of Securities: Underlying (ii) tible at any The are conver time Period: bonds Conversion on orJune 28, after Adjustmen and Price Conversion (iii) (i) (i) the of 3 years after or in part, in whole bonds, the redeem may Company The the bonds of the in indenture as defined control of change a that event the In (vi) On May 18, 2015, the Company issued SGX-ST listed currency linked zero coupon coupon zero linked currency listed SGX-ST issued Company the 2015, 18, May On convertible bonds. of the bonds were as follows: and terms The conditions iv. Terms of Conversion: of Conversion: Terms iv. i. million US$600 Amount: Issue ii. date) (Maturity 2020 18, May ~ 2015 18, May Period: Redemption: iii. b.
Repayment rincipal in June will be repayable rincipal in June will be repayable principal will be repayable in upon maturity. October 2024 principal will be repayable in upon maturity. October 2022 p 2021 upon maturity. p 2024 upon maturity. principal will be repayable in Marchupon maturity. 2022 principal will be repayable in Marchupon maturity. 2024 principal wasfully repaid in June 2019. principal wasfully repaid in March 2018. principal will be repayable in Marchupon maturity. 2020 As of December 31, 31, December of As Interest will and the be paid annually Interest will and the be paid annually Interest will and the be paid annually Interest will and the be paid annually Interest will be paid annually and the Interest will and the be paid annually Interest will and the be paid annually (147,877) (518,150) 2019 2018 2018 2019 17,729,293 17,729,293 18,196,332 38,781,416 41,378,182 41,378,182 38,781,416 (20,093,825) (2,499,235) $18,687,591 $38,878,947 $38,878,947 $18,687,591 $21,200,000 $23,700,000 NT$3,400 million 1.13% NT$2,000 million 0.94%
2017 2017
Term Issuance date Issued amount Coupon rate Seven-year In early October Ten-year mid-June In 2014 NT$3,000 million Five-year late In March 2017 1.95% NT$6,200 million Seven-year late In March 2017 NT$2,100 million 1.15% Five-year In early October 1.43% Seven-year June 2012 early In NT$2,500 million 1.63% Interestand the annually was paid Five-year mid-March In 2013 NT$7,500 million Seven-year mid-March In 2013 NT$2,500 million 1.35%and Interest the annually was paid 1.50% Seven-year mid-June In 2014 NT$2,000 million 1.70% The Company issued domestic unsecured corporate bonds. bonds. corporate unsecured domestic issued Company The conditions and terms The of the bonds were as follows: Total Total Net Net
Less:Discounts bonds on payable Unsecureddomesticpayablebonds payable bonds convertible Unsecured portion Current Less: a.
(11) Bonds Bonds (11) Payable
297 United Microelectronics Corporation | Annual Report 2019
NT$69 million, respectively, were NT$69 respectively, million, tal of tal adjustments. six expiration The r 17, 2016. 2016. r 17, the offered agreement The completion of the total of the completion and year 15th s. agreement the of date expiration The in the Company’s parentthe companyin Company’s only on. This line of credit will be reduced billion, NT$3 billion,respectively. into a 5-year loan agreement with Mega International International with Mega agreement loan a 5-year into Commercial Bank, effective from Octobe from effective Bank, Commercial billion. NT$3 of credit Company a revolving line of This line of credit will be first use the after six years and months the two the of end from starting reduced with a to thereafter, six months every and is April 16, 2022. the agreement of date 2018, the 31, As and December 2019 of werecredit NT$0.5 of unused line 2, 2016. November from effective Bank, a Company the offered agreement The billi NT$3 of credit of revolving line three months every use and the first the third year after of the end starting from thereafter, with a total of nine adjustment 2022. 27, October is of line unused the 2018, and 2019 31, December of As respectively. billion, and NT$3 billion NT$0.6 credit were units will not exceed 45 units. 45 units. not exceed will units to equivalent amount an contributes The Company fund pension the to basis monthly a on wages salaries and total employees’ the of 2% supervisory fund pension a of name the under Taiwan of Bank the with deposited designated government’s the by is managed fund pension The committee. included not is and therefore authorities total 2018, and 2019 31, years December ended the For statements. financial expenses million and pension of NT$59 by the recognized Company. defined benefit plan. The pension benefits are disbursed based on the units of units the on based areplan. disbursed benefit benefits pension The defined Labor the to according retirement to prior salary monthly average and years service Act. Standards of services years the first 15 for awarded are units per year Two the after awarded is per year unit while one the R.O.C. Act of is the Labor Pension a defined under plan pension The employee plan. contribution of contributions monthly makes Company the the plan, to Pursuant pension employees’ to wage or salary employee’s individual each on based 6% accounts. in provided are branch the Singapore of benefits employees for Pension local regulations. the with accordance and million NT$893 of expenses pension Total 31, December ended years the for Company by the contributed are NT$883 million respectively. 2018, and 2019 i. is a R.O.C. the of Act Standards Labor the by plan mandated pension The employee
a. plan contribution Defined b. Defined benefit plan Note A: The Company entered A: Note B: Note Commercial with Chang Hwa agreement 5-year loan a into entered Company The (13) Post-Employment (13) Post-Employment Benefits
rest rate on the
Company will redeem Redemption Redemption 2019 to December 23, 2021 with with 2021 23, December to 2019 payments. monthly interest April 16, 2020 16, to October interest 2022 with monthly payments. 26, 2021 to October 26, 2022 with 2022 26, October to 2021 26, payments. interest monthly - from semi-annually Repayable - from January quarterly Repayable . The effective inte . The effective e registration procedures have not been e maturity date, the tible bonds totaling US$15 million into 33 totaling tible bonds $- $1,000,000 23, from March quarterly Repayable December31, For theFor years ended As of December 31, ofDecember As 2019 2019 2018 2019 2019 2018 (500,000) (500,000) (333,360) 4,400,000 4,400,000 1,000,000 2,000,000 2,000,000 2,400,000 $3,900,000 $3,900,000 $666,640 0.55%~1.22% 0.55%~1.22% 0.99%~1.22% the bonds shall have been redeemed at option of the bondholder; of bondholder; the at option redeemed been have shall bonds the cancelled.
(i) (i) or Company, the of option the at bonds the redeemed have shall Company The (ii) before maturity; or right the conversion exercised shall have The bondholders and Company the by repurchased or been redeemed have shall bonds The (iii) the bonds at 98.76% of the principal amount unless, prior to date: unless, to such amount prior the principal of at 98.76% the bonds
liability component of the convertible bonds was determined to be 2.03%. 2.03%. be to determined was bonds the convertible of component liability the had converted bondholders certain 31, 2019, December the year ended During the conver outstanding principal amount of shar increase capital million shares, which of collected in advance. as capital and were classified completed In accordance with IAS 32 “Financial Instruments Presentation”, the value of the of the value Instruments Presentation”, “Financial 32 with IAS In accordance in recognized and issuance at was determined bonds convertible the of right conversion reduction after to NT$1,894 million, amounting options capital-stock paid-in additional to NT$9 millionissuance costs amounting of v. v. Maturityth on the Date: On Redemption Lenders Lenders are as follows: 31, 2019 and 2018 December long-term of loans as of Details (12) Long-Term (12) Long-Term Loans from Chang Hwa Hwa Chang from B) (Note Bank Commercial from Bank of Taiwan from Bank of Taiwan Mega International from Commercial Bank A) (Note otal otal Interest rates applied applied rates Interest Unsecured Revolving Loan Revolving Loan Unsecured Unsecured Long-Term Loan Long-Term Unsecured Revolving Loan Unsecured Less: Current portion Less: Subtotal Subtotal
T
298 Financial Review
8% 17% 17% 51% 24% 2018 2018
in the market over 45% 24% As of December31, As of December 31, As of As ofAs December 31, 0.67% 0.91% 3.50% 3.50% 2019 2019 2018 2019 2018 2019 2018 1,385,696 1,385,696 1,453,335 (4,025,373) (4,025,373) (4,167,174) $(4,025,373) $(4,025,373) $(4,167,174) turn on assets is determined based on based determined turnis assets on on the assets’ returns on the assets’ inable from interest rates offered by local by interest rates offered inable from alance alance b recognized on the parent company only balance sheets are sheetsare balance only parent company recognized on the
recognized on the parent company only company parent on the recognized sheets sheets Present value of the defined benefit obligation benefit the defined value of Present assets of value plan Fair $(5,411,069) status Funded $(5,620,509) definedNet benefit liabilities, noncurrent rate Discount futureRate of salary increase
Debt instruments Others 10% Cash 21% 21% Cash Equity instruments assets are as follows: follows: as are assets as follows: as follows: of Bank by the a trust administered under is deposited pension fund Employee of re rate overall expected The Taiwan. historical trend and actuaries’ expectations expectations actuaries’ and trend historical deposits. time two-year for banks the obligation period. period. obligation the by the determined is the fund of utilization the Furthermore, minimum the also guarantees which committee, supervisory fund pension labor atta the earnings less than be no to earnings
v. v. are as follows: actuarial assumptions underlying The principal iii. The defined benefit planThe defined benefit iii. total the plan of value the fair of assets as a percentage categoriesplan of The major iv.
December 31, December December 31, December 65,119 (97,257) 65,119 41,284 42,197 42,197 41,284 13,225 16,552 16,552 13,225 95,577 94,362 For the years ended the years ended For For the years ended years ended the For (21,043)(51,146)(72,189) (24,477) (61,247) (85,724) 180,095 (5,907) 180,095 216,510 233,530 233,530 216,510 (114,976) (91,350) (216,510) (233,530) 2019 2018 2019 2018 $1,453,335 $1,532,539 $1,532,539 $1,453,335 $1,385,696 $1,453,335 $1,453,335 $1,385,696 $(5,411,069) $(5,620,509) $(5,620,509) $(5,671,058)
d benefit obligation during the year: year: during the obligation benefit d in other comprehensive $55 million and NT$59 million,respectively. and $55 million excluding amounts included in interest income Service cost Service Interest cost Arising from changes in financial assumptions assumptions in financial changes from Arising Experience adjustments adjustments Experience income (loss): Interest income on plan assets assets plan on income Interest income (loss): Returnplan on assets,
Subtotal Subtotal Defined benefit obligation at beginning of year of at beginning benefit obligation Defined as profit or loss: recognized Items Remeasurementsrecognized in other comprehensive Benefits paid of year end at obligation benefit Defined plan assets fair value of balance of Beginning as profit or loss: recognized Items Subtotal Subtotal Fair value of plan assets at end of year of plan assets at end Fair of value Remeasurementsrecognized Contribution by employer by employer Contribution Benefits paid assets are as follows: follows: as are assets
Movements in present value of define Movements in fair value of plan assets during the year: assets during the value plan in of fair Movements 31, December ended years the for Company the of assets plan on returns actual The 2018 were 2019 and NT ii. Movements in present value of defined benefit obligation and fair value of plan plan of value fair and obligation benefit defined of value in present Movements ii.
299 United Microelectronics Corporation | Annual Report 2019
(3,947) (3,947) 2,674 51,862 51,862 123,367 (58,763) (58,763) (35,429) As of December 31, of As As of December 31, 31, December As of $55,063 $49,878 $49,878 $55,063 138,480 154,513 154,513 138,480 2019 2018 2019 2018 2019 2018 $204,391 $204,391 $113,779 $193,543 $193,543 $204,391 $193,543 $204,391 $204,391 $193,543 $1,684,617 $1,684,617 $1,164,813 ted by all issued ADSs were 692 million mber 31, 2019 and 2018, respectively. respectively. 2018, and 2019 31, mber One , of which 11,724 million shares, and 12,424 million million which 11,724 , of under other current liabilities) liabilities) under other current December 31, 2019 and 2018 December par at a each respectively, 2018, and 31, 2019 December as of issued shares were NT$10. of value of totalnumber The respectively. 2018, and 2019 31, December of as NYSE represen the Company shares of common Dece as of shares million 717 shares and shares. common represents five ADS
i. of as issued be to shares authorized common million 26,000 had Company The the on traded which were ADSs, million 143 and million 138 had The Company ii. Other operating income income operating Other Refund liabilities liabilities Refund
Ending balance Ending Exchange effect effect Exchange Beginning balance balance Beginning period the during Arising Recorded profit in or loss: Current Noncurrent Total the by received acquisitions to equipment grants related government significant The recorded and equipment, related lives of useful the over income as are amortized Company expenses. and income operating in the net other a. stock: Capital
(15) Refund (15) Refund Liabilities (classified (16) Equity (14) Deferred Government Grants Deferred Government (14) 0.5% 0.5% 0.5% 252,969 298,483 328,958 377,022 decrease decrease decrease 4,263,427 0.5% 0.5% increase increase increase As of December 31, 2019 December As of 31, 2019 0.5% 0.5% 0.5% decrease decrease decrease As of December 31, 2019 2019 31, December As of 2018 31, December As of
Discount rate salary future increase of Rate Discount rate salary future increase of Rate 0.5% 0.5% 0.5% $235,666 $235,666 $(251,131) $(215,694) $205,388 $262,909 $(281,037) $(244,120) $231,751 increase increase
Year Year 2021 2021 2022 2022 2023 2024 2020 2020 $230,468 Total Total $5,751,327 2025 and thereafter thereafter and 2025 definedbenefit obligation definedbenefit obligation Decrease (increase) in Decrease (increase) in
method on thatThe sensitivity based a analyses determined above have been as result reasonable of benefit obligation a on the net defined the impact extrapolates period. the reporting of the end at occurring in key assumptions changes in 2020. million of NT$93 contribution pension fund make to expects The Company years 10 are 9 and obligation benefit the defined of durations weighted-average The 2018, respectively. 31, and 2019 December as of years
payments are as follows: benefit future Expected vi. vii. Sensitivity analysis:
300 Financial Review 2018 2018 As of As of December 31, December RP., held 16 million the shares of RP., - 200,000 200,000 stockholders except for subscription to new subscription for except stockholders
Exchangeof Law theR.O.C., treasury stock - 480,000 280,000 200,000 400,000 400,000 480,000 480,000 400,000 2018 2018 Increase Decrease As of January 1, January and dividend policies: policies: dividend and
Purpose employees employees Company’s Company’s credit and its stockholders’ and rights interests
For transfer to To maintain the the maintain To
(In thousands of shares) of (In thousands For the year ended December 31, 2018 2018 31, December the year ended For reached the Company’s paid-in capital. capital. paid-in Company’s the reached the Company’s stock through acquiring shares of UNITED SILICON INC. in 1997, 1997, INC. in SILICON UNITED of shares acquiring through stock Company’s the the of result as a 2000 in stock Company’s the to converted were these shares and 1 the Company’s merger. in 5 2018, and 31, 2019 December As of Company’s CO VENTURE CAPITAL FORTUNE subsidiary, 2018, were and 31, 2019 December on price The closing stock. Company’s respectively. and NT$11.25, NT$16.45 stock issuance and voting rights. should not be pledged, nor should be entitledit to voting rights or receiving These stock. treasury as is treated subsidiaries held by Stock dividends. as rights other the same have subsidiaries treasury stock shall not exceed 10% of the Company’s issued stock, and the total and issued stock, Company’s the of 10% exceed not shall treasury stock paid-in additional earnings, retained of the sum the not exceed shall amount purchase paid-in and capital. realized additional capital-premiums of As such, the number 2018, and 2019 31, December held of as Company the that stock treasury of shares did not exceed the limit.
any, if earnings, year’s current Incorporation, of Articles to the Company’s According order: in the be distributed following shall i. of Payment taxes. ii. years. preceding up loss for Making has reserve legal accumulated when for except reserve, legal for 10% aside Setting iii.
iv. The Company’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held shares of held CORP., VENTURE CAPITAL FORTUNE subsidiary, The Company’s iv. iii. In compliance and with Securities iii. ii. According to the Securities and Exchange Law of the R.O.C., the total shares of of shares total R.O.C., the the of Law Exchange and Securities the to According ii. c. Retained earnings - - - 2019 2019 As of December 31, December 300 million shares of treasury stock, treasury of shares million 300 d 200 million shares of treasury stock, stock, treasury of shares million d 200 et. and repurchase the for The purpose
200,000 -200,000 200,000 280,000 220,000280,000 500,000 480,000 220,000480,000 700,000 2019 2019 Increase Decrease As of January 1, January
Purpose employees employees Company’s Company’s credit and its stockholders’ and rights interests
For transfer to To maintain the the maintain To
(In thousands of shares) of (In thousands For the year ended December 31, 2019 31, December the year ended For which were repurchased during the period from May 13 to June 13, 2016 for the for 2016 13 to June 13, May from the period during were repurchased which April period the from during repurchased and employees, to transferring of purpose its and credit Company’s the maintaining of purpose the for 2019 13, June to 26 interests. and rights stockholders’ 4, January to 2018 7, November from the period during were repurchased which rights its stockholders’ and credit the Company’s maintaining of purpose the 2019 for interests. and which were repurchased during the period from March 12 to May 4, 2018 for the 4, for to May 2018 12 March from the period during were repurchased which and rights stockholders’ its and credit the Company’s maintaining of purpose interests. December ended the year the Company for of shares ordinary into bonds convertible 2019. 31, mark the centralized securities exchange were 2018 and 31, 2019 December ended the years during stock in treasury changes as follows:
cancelled the Company 2019, On March 11, iv. stock, treasury of shares million 400 cancelled Company the 2019, 28, June On iii. v. cancelle Company the 27, 2018, On August unsecured overseas of conversion Company’s the for 6(11) Note to refer Please vi. i. from shares its repurchased and program stock treasury a out carried Company The b. stock: Treasury
301 United Microelectronics Corporation | Annual Report 2019
Total Total
sted on grant, the Company the date of e grant date, whereas for the stocks with the stocks for whereas date, e grant porting date. Information relevant to the of one or two-years from the date the grant, of of one or two-years from For the year ended December 31, 2019 31, 2019 ended December year the For 119 73,036 13,732 761,527 1,678 850,656 China (includes Hong Kong) Kong) Hong Japan USA Europe Others talents and reward the employees for their productivity and their productivity for the employees reward talents and - 564 Taiwan Singapore Singapore Taiwan $43,554,269 $6,918,354 $10,666,851 $3,936,180 $47,749,235 $2,705,710 $8,091,837 $123,622,436 By geography By geography
Board of Directors’ meeting recommendations and stockholders’ meeting approval can approval meeting stockholders’ and recommendations meeting Directors’ of Board TWSE. the of website the on System” Post Observation the “Market from obtained be directors’ and employees the on information for 6(19) Note to refer Please compensation. approved been yet not has earnings retained 2019unappropriated of appropriation The as of the re meeting the stockholder’s by
loyalty, the Company carried out a compensation plan to offer 200 million shares of shares of million 200 plan to offer a compensation out carried the Company loyalty, August 2018. in to employees treasury stock the shared-based cost for The compensation between the difference in expense recognized at value, fair having was measured payment from received cash the and date grant the at shares the of price market quoted closing the employees. grant date on the shares Company’s the of price market closing quoted The ve the stocks For share. per NT$16.95 was In order attract, retain to th on cost compensation entire the recognized requisite service conditions to vest end at the vest to conditions service requisite in period the over basis straight-line a on cost compensation the recognizes Company the with a corresponding increase in the servicesfulfilled, together which conditions are equity. As such, for the years ended December 31, 2019 and 2018, total compensation the by recognized were respectively, million, NT$696 and million NT$366 of cost Company.
a. a. revenue of Disaggregation
(17) Share-Based Share-Based (17) Payment (18) Operating Operating (18) Revenues
contracts with with contracts customers $43,554,269 $6,918,354 $10,666,851 $3,936,180 $47,749,235 $2,705,710 $8,091,837 $123,622,436 Total Total The timing of revenue recognition: At a point in timeAt a point in $43,553,705Over time $6,918,354 $10,666,732 $3,863,144 $47,735,503 $1,944,183 $8,090,159 $122,771,780 Revenue from Revenue
, such as as such , uity iture forecast, as iture forecast, shall be shall be distributed
(NT dollars) dollars) (NT Cash dividend per share share per Cash dividend ital intensive industry and continues to ital by the Board of Directors according to to according Directors of the Board by and its capitalits and expend 2020. 2020. are as of distribution The details s shall propose the distribution plan and and plan distribution the propose s shall ear-end. ear-end. is prohibited special reserve Such policy of the Company the shall be determined of policy 2019 2018 2018 2019 2019 2018 $614,784 $614,784 $707,299 (in thousand NT dollars) dollars) NT thousand (in Appropriation of earnings earnings of Appropriation
regulations. regulations. to the distribution plan proposed according approval. for meeting stockholders’ the to submitted and policy dividend the Legal reserve Legal reserve reserve Special (3,491,626) 14,513,940 Cash dividends dividends Cash 55 9,765,1 6,916,105 $0.75 $0.58 in a cap business conducts Company the Because operate in its growth phase, the dividend dividend the phase, growth its in operate its requirements, funding environment, such as the investment to factors pursuant landscape competitive overseas and domestic long-term Company’s the dividends and interest, balancing as stockholders’ well planning. financial Director of The Board year. every meeting stockholders’ of distribution toThe it the stockholders’ submit stock and 100%, to 20% of range in the dividend as cash allocated be shall dividend dividend in therange to 80%. of 0% a appropriate to required is Company the FSC, of Taiwan regulations the to According eq under elements debit of sum equal to the the in amount reserve special unrealized loss on financial instruments and debit balance of exchange differences on on differences exchange of balance debit and instruments financial loss on unrealized y at every operations, of foreign translation the special elements is reversed, the debit any of if However, distribution. from distribution or earnings for be released may equal reversal to the in the amount reserve deficits. accumulated offsetting held meeting stockholders’ the by approved was 2018 for earnings of distribution The the by approved was 2019 for earnings of the distribution 2019, while June 12, on 26, on February meeting Directors’ Board of follows:
was meeting stockholders’ by approved distribution 2018 aforementioned The 2019. 6, March held on BoardDirectors of of meeting with the resolutions consistent share per to NT$0.58989396 adjusted was 2018 for share per dividend cash The 2019. 19, June on meeting Directors’ the Board of of resolution the to according The share to the shares due common outstanding decrease in the for was made adjustment repurchase program. or other officials government by reserve special reversing or Appropriating iv. v. earnings, unappropriated year’s previous the plus The remaining,
302 Financial Review - - 2018 2018 January 1, January The estimate of the 47,702 $3,614,908 2018 2018 As of December 31, December
n and the consideration received from from received consideration the and n sed in Note 9(5). igns with progress toward completion of a completion progress toward with igns 2019 $547,024 $447,702 $547,024 $3,614,908 $1,029,104 $4 $1,029,104 $1,029,104 $447,702$1,029,104 $3,614,908 December 31, December fulfill a contract with customer with customer a contract fulfill The Company will recognize revenue as the Company satisfies its its satisfies Company as the revenue recognize will Company The
Noncurrent Noncurrent Total - 482,080 Sales of goods and services and services goods of Sales Current
the of difference timing the by caused mainly is liabilities contract of The movement obligatio of performance a of satisfaction customers. in respectively, million, and NT$3,429 million NT$249 recognized The Company as period ofthe beginning the at liabilities contract the balance revenues from 31, and 2019 December ended the for years were satisfied obligations performance 2018. As of December 31, 2019 and 2018, the Company recognized costs to fulfill to costs fulfill recognized Company the 2018, and 2019 31, December As of amounted to NT$2,987 million and NT$3,148 million as of December 31, 2019 and and 31, 2019 as December of million NT$3,148 and million NT$2,987 to amounted respectively. 2018, future. the in contract estimated reliably be cannot progress the date, report the of As disclo as suspension the to due primarily performance obligations over time that al time over obligations performance ii. Contract liabilities engineering service contracts eligible for capitalization as other current assets which which assets current as other capitalization eligible for contracts service engineering the Subsequently, respectively. amounted to NT$425 million and NT$464 million, to a Company willcosts fulfill operating costs when the to contract expense from related obligations are satisfied. transaction price does not include any estimated amounts of variable consideration that consideration of variable amounts any estimated include not does price transaction are constrained. c. The Company’s transaction price allocated to unsatisfied performance obligations obligations performance unsatisfied to price allocated transaction The Company’s c.
d. to costs from recognized Asset
- 2018 2018 - 4,386,351 January 1, 2019 2018 2018 2018 As of As 5,731,637 9,192,057 9,192,057 5,731,637 December 31, December $117,890,799 $123,642,545 $123,642,545 $117,890,799 $123,622,436 $132,834,602 $132,834,602 $123,622,436 For the years ended December 31 December ended the years For velopment agreement. agreement. velopment to refer Please allowance was mainly resulted from the from mainly resulted was allowance
2019 2019 $106,290 $106,290 $81,187 $81,399 31, December
For the year ended December 31, 2018 31, 2018 ended December year the For China (includes Hong Kong) Japan USA Europe Others Total - 3,276,411 4,253 41,625 977,213 Taiwan Singapore Singapore Taiwan $43,787,610 $5,936,074 $10,665,969 $4,218,796 $57,168,649 $6,490,550 $4,566,954 $132,834,602 Sales of goods and services and services goods of Sales Loss allowance Less: $454,323 $436,638 (348,033) $81,399 (355,451) Net
indictment filed by the United States Department of Justice (DOJ) against theindictment of (DOJ) against filed by Justice Department the United States de to technology related joint the Company Note 9(5). The loss allowance was assessed by the Company primarily at an amount equal to equal amount an at primarily Company the by assessed was allowance The loss losses. credit expected lifetime The loss
Wafer Wafer Others Total Total
the on based was revenues operating Company’s of the breakdown geographic The customers. of the Company’s location By Product i. Contract assets, current b. Contract balances
contracts with with contracts customers Total Total $43,787,610 $5,936,074 $10,665,969 $4,218,796 $57,168,649 $6,490,550 $4,566,954 $132,834,602 The timing of revenue recognition: At a point in time At a point in $43,700,761 Over time $5,936,074 $7,389,558 $4,214,543 $57,127,024 86,849 $5,513,337 $4,566,954 $128,448,251 Revenue from Revenue
303 United Microelectronics Corporation | Annual Report 2019 December 31, December December 31, December 98,245 98,245 (73,078) 77,832 77,832 142,732 52,564 52,564 124,702 10,259 10,259 7,624 For the years ended ended the years For For the years ended ended the years For 137,308 137,308 168,849 2019 2018 2019 2018 2019 2018 $191,108 $191,108 $140,550 $964,614 $(896,806) $(896,806) $964,614 $(122,277) $(122,277) $(97,953) $1,017,178 $1,017,178 $(772,104) $1,132,952 $1,132,952 $1,400,835 compensation for 2018 reported during during reported 2018 for compensation ry expense adjustment for the year ended ended year the for adjustment expense ry illion and NT$1 million, respectively. illion and NT$1 million, respectively. The Company's held on 6, 2019. held on March
liabilities at value throughfair or loss profit
Total Total Others Others
Gain (loss) on valuation of financial assets and assets and financial of valuation (loss) on Gain
Directors’ compensation compensation Directors’ Employees’ compensation – Cash Cash – compensation Employees’ The aforementioned employees directors’ employees and The aforementioned the stockholders’ meeting were consistent with the resolutions of the Board of Directors Directors of Board the of resolutions with the consistent were meeting stockholders’ the meeting can compensation directors’ and employees the aforementioned to relevant Information TWSE. the of website the on System” Post Observation the “Market from obtained be The distributions of employees and directors’ compensation for 2018 were reported to to reported were 2018 for compensation directors’ and of employees distributions The and employees of distributions the while 2019, 12, June on meeting stockholders’ the Directors the Board of through were approved 2019 for compensation directors’ 2020. 26, on February meeting are as follows: of distribution The details non-employee directors as of December 31, 2019 and 2018. and 2018. 2019 31, December as of directors non-employee 2019 and 2018 were NT$2 m 2%. by increased 31, 2019 December average salary expenses for the years ended December 31, 2019 and 2018 were both both were 2018 and 2019 31, December years ended the for salary expenses average million. NT$1 average sala Company's The Net rental property Net rental from loss and equipment plant property, disposal of Gain on grants Government Others Others Total
6 including both 15,558, and were 14,589 employees Company’s b. the of number The c. 31, December the years ended for expenses benefit employee average Company's The
a. and losses Othergains
(21) Non-Operating Income and Expenses and Expenses Income Non-Operating (21) (20) Net OtherOperating Incomeand Expenses (20) 2,283,7661,194,589 36,515,920 1,894,471 expenses Total Total expenses Operating Company will recognize - 13,384 13,384 costs Operating rity vote at a meeting of the Board of the Boardof of a meeting at rity vote 105 822,946 311,621 1,134,567 413 219,091 71,371 290,462 mpensation and report to the stockholders’ thestockholders’ to report and mpensation tal employee compensation divided by the by divided compensation employee tal $19,970,279 $14,618,870 $6,272,280 $20,891,150 compensation for each profitable fiscal year year fiscal profitable each for compensation The aforementioned employees’ compensation compensation employees’ The aforementioned Total Total
951,815 708,919 243,354 952,273 31,467,770 1,872,075 34,232,154 699,882 For the ended December years 31, expenses expenses Operating
- 17,339 17,339 - 17,339 the employees and directors’ compensation in the profit or profit the in compensation directors’ and employees the
682,686 1,189,389 813,373 309,732 1,123, 227,893 81,520 309, costs Operating $13,959,517 $6,010,762 ee benefit benefit ee y benefit expenses insurance directors Labor and health Pension Remuneration to 703,096 248,719 Salaries Other employee Other employee expenses expenses epreciation mortization 30,104,380 1,363,390 mplo
2018 2019 The Company shall allocate no less than 5% of profit as employees’ compensation and and compensation employees’ as profit of 5% less than no allocate shall Company The directors’ as profit of 0.1% than more no any cumulative losses. after offsetting in shares or cash. be distributed will subsidiaries the Company’s of employees The granted be may Board of Directors by the stipulated requirements specific fulfill who in cash. The only Directorscompensation may receive compensation. such a by majo adopted by a resolution may, Company the total number attended by two-thirds of distribute the of directors,Directors co directors’ employees and aforementioned meeting forsuch distribution. recognizes The Company the change as an adjustment in the profit or loss in the subsequent period. in the or period. profit loss in the subsequent as an adjustment change the According to the Company’s Articles of Incorporation, the employees and directors’ directors’ and employees the Incorporation, of Articles the to Company’s According order: following the in distributed be shall compensation loss during the periods when earned for the years ended December 31, 2019 and 2018. 2018. and 31, 2019 December ended years the for earned when the periods during loss Articles of the consideration into taking by the amount estimates Directors Board of The of the Board If and industry averages. regulations government Incorporation, of number the stock, through compensation employee distribute to resolves Directors to on based calculated is distributed stock of If the Board meeting. of Directors the Board before pricethe day of closing the significantly, estimates the modifies subsequently Directors summarized as follows: follows: as summarized E D A are expenses amortization and depreciation benefit, employee Company’s The a.
Costs and Expenses Operating (19)
304 Financial Review Other Other net of tax net tax of net of tax net tax of income (loss), income income (loss), income comprehensive comprehensive
$- $(1,045,504)
effect effect effect effect Income tax Income tax Other Other before tax before tax before tax before tax income (loss), income income (loss), income comprehensive comprehensive
- (2,204,824) (2,196,572) 8,252 - (2,572) 514 (2,058) - (479,969) 34,697 (445,272) - 1,458,848 44,526 1,503,374 $- $(1,045,504) $- $(55,060) $32,647 $(22,413) $- $3,574,006 $(150,008) $3,423,998 For the year ended December 31, 2019 For the ended year December 31, 2018 adjustments adjustments adjustments adjustments Reclassification Reclassification during theduring period during theduring period
(2,572) $(55,060) (479,969) 1,458,848 (2,204,824) $3,574,006 the period the period the period $(1,045,504) Arising during during Arising Arising during Arising during e reclassified subsequently instruments which will not not will which instruments benefit pension plans plans benefit pension instruments equity from investments measured at other through value fair comprehensive income b income (loss) of subsidiaries, associates and will which ventures joint not be reclassified or to profit subsequently loss to profit or loss loss or to profit translation of foreign operations income (loss) of subsidiaries, income ventures joint and associates which may be reclassified loss or to profit subsequently Exchange differences on Share of other comprehensive comprehensive of other Share Gains or losses on hedging hedging on losses Gains or Remeasurements of defined Unrealized or losses gains Share ofother comprehensive subsequently to profitsubsequently or loss: subsequently to profit or loss: or to profit subsequently income (loss) income Items that will not be reclassified reclassified be not will that Items
Items that may be reclassified be that Items may Total other comprehensive comprehensive other Total
- Other net of tax net tax of income (loss), income comprehensive - 1,112,547
effect effect 155 112 112 155 December 31, December Income tax 82,821 62,435 62,435 52,305 43,288 43,288 61,874 For the years ended ended the years For 2019 2018 $672,902 $672,902 $710,663 $861,601 $824,954 $824,954 $861,601 Other $106,403 $(21,281) $85,122 5,605,384 (136,979) 5,468,405 before tax before tax income (loss), income comprehensive ith the transition provision in IFRS 16.
- - - 1,112,547 $- For the year ended December 31, 2019 adjustments adjustments Reclassification during theduring period
mprehensive Income (Loss) Income mprehensive $106,403 $106,403 1,112,547 1,112,547 5,605,384 the period the period Arising during during Arising to restate prior w periods accordance in Others Bank loans Bank loans Lease liabilities (Note) Bonds payable payable Bonds Interest expenses expenses Interest Financial expenses expenses Financial Total
Note: Note: 2019. 1, on January 16 IFRS adopted The Company not elected The Company
b. costs Finance (22) Components of Other Co Components of (22) benefit pension benefitplans pension from equity instruments instruments equity from investments measured at fair value through other income comprehensive income (loss) of subsidiaries, income ventures joint and associates be not which will reclassified to subsequently profit or loss Remeasurements of defined defined of Remeasurements Unrealized gains or losses or gains Unrealized Share of comprehensive other Share subsequently to profit or loss: or to profit subsequently
be reclassified not that will Items
305 United Microelectronics Corporation | Annual Report 2019 6,560 29,118 29,118
- 39,742 - - 514 - - December 31, December December 31, December $8,252 $8,252 $(11,995) $8,252 $8,252 $(18,555) For the years ended the years ended For For the years ended the years ended For $(21,281) $(21,281) $11,012 (136,979) 31,998 2019 2019 2018 2019 2019 2018 profit loss: or other comprehensive income (loss) income comprehensive other reclassified subsequently to profit or loss or profit to subsequently reclassified $(158,260) $112,384 of subsidiaries, associates and joint ventures which will not be reclassified subsequently profit to or loss plans at fair measured investments instruments comprehensive other through value income which will not be reclassified subsequently profit to or loss of subsidiaries, associates and joint reclassified be which ventures may subsequently profit to or loss subsequently reclassified rates rates Deferred income tax related to changes in tax tax in changes to related tax income Deferred be not related that will to tax items Income Share of other comprehensive income (loss) income other comprehensive of Share
Remeasurements of defined benefit pension pension benefit defined of Remeasurements equity gains orUnrealized losses from Gains or losses on hedging instruments (loss) income other comprehensive of Share tax in changes to related tax income Deferred tax relatedIncome to that items may be
subsequently to subsequently reclassified be not will that Items Items that may be reclassified subsequently to profitor loss: that Items may be reclassified
(i) (ii)
ii. components of to Income tax related
Other net of tax net tax of $158,250 $158,250 $(864,334) income (loss), income comprehensive $- $1,094,614
- (831,081) - effect effect December 31, December Income tax For the years ended ended the years For
463,869 1,397,173 1,397,173 463,869 (226,634) (335,367) (824,921) (1,114,417) (268,986) (137,390) 2019 2018 $163,773 $163,773 $(574,515) Other before tax before tax income (loss), income comprehensive
- - (1,062,412) (11,995) (1,074,407) $- $953,449 $100,389 $1,053,838 $- $- $1,094,614 For the ended year December 31, 2018 adjustments adjustments Reclassification during theduring period ted to originationted and ted to changes in tax
$953,449 $953,449 (1,062,412) (1,062,412) $1,094,614 $1,094,614 the period Arising during Arising during derecognition of tax lossesandtax unused credits prior periods prior periods reversal of temporary differences differences temporary of reversal rates or reversal of write-down deferred of tax assets Deferred tax related to income recognition and Deferred income tax rela Deferred income tax rela Deferred income Adjustments in respect of current income tax of tax of of current income respect in Adjustments Current income tax charge charge tax income Current Adjustment of prior year’s deferred income tax income deferred prior year’s of Adjustment write-down arising from tax Deferred income 118,384 (1,502) Deferred income tax expense (benefit): (benefit): tax expense Deferred income Current income tax expense (benefit): (benefit): tax expense income Current Income loss or profit in recorded benefit tax
and 2018 were as follows: i. or loss in profit recorded (benefit) tax expense Income
a. The major components of income tax expense for the years ended December 31, 2019 a. 2019 31, December ended years the for expense tax income of components major The e reclassified subsequently income (loss) of subsidiaries, associates and may joint ventures which subsequently to profit or to profit subsequently loss: foreign of translation operations (23) Income (23) Income Tax b to profit or loss loss or to profit Share ofother comprehensive Items that may be reclassified be that may Items on differences Exchange income (loss) income Total comprehensive other Total
306 Financial Review
93 93 (2,701) (559) (559) (56,759) December 31, December 4,967 4,967 (5,523) For the years ended years ended the For (11,792) (11,792) (7,599) (69,485) (69,485) (139,693) As of December 31, 31, December As of 117,515 117,515 243,270 570,450 570,450 385,289 339,185 339,185 232,854 475,952 475,952 336,869 499,539 499,539 499,539 797,432 797,432 825,792 139,084 139,084 70,534 (453,176) (453,176) (329,584) (530,190) (530,190) (460,767) (565,175) (565,175) (535,595) 2019 2018 2019 2018 2018 2019 4,221,294 4,221,294 4,274,927 5,618,879 5,618,879 5,694,439 1,568,645 1,568,645 1,703,942 (1,629,818) (1,473,238) $1,111,077 $1,111,077 $1,396,350 $4,221,201 $4,221,201 $4,277,628 $3,989,061 $3,989,061 $4,221,201 $3,989,061 $3,989,061 $4,221,201 during the period the during (86,633) (91,833)
Depreciation Depreciation Loss carry-forward Loss carry-forward Pension tax credits Investment Others Others Others Convertible bond option option bond Convertible Depreciation Depreciation gain Investment Unrealized exchange gain gain exchange Unrealized Unrealized profit on intercompany sales sales on intercompany profit Unrealized Refund liabilities liabilities Refund valuation losses inventory for Allowance loss Investment
Deferred income tax assets tax assets income Net deferred 1 January of as Balance applications of retroactive Impact Amounts recognized in profitor loss Adjusted balance as of January 1 1 January balance as of Adjusted income comprehensive other in recognized Amounts equity in recognized Amounts (150,008) adjustments Exchange 31 Balance as of December 100,389 Total deferred income tax liabil ities Total Total deferred income tax assets assets tax income deferred Total Deferred income tax liabilities tax Deferred income c. c. were assets income liabilities tax follows: and deferred as Significantof components d. Movement of deferred tax
- - $- 455,603 455,603
- (56,759) - (831,081) $(45) (514) December 31, December December 31, December $(559) $(56,759) 13,254 13,254 35,551 90,904 129,310 129,310 90,904 For the years ended ended the years For For the years ended ended the years For (75,647) (45,183) 129,800 137,056 137,056 129,800 406,047 406,047 (123,825) (104,500) (300,718) (335,367) (824,921) (1,114,417) 2019 2018 2019 2018 2018 2019 1,826,620 1,241,731 1,241,731 1,826,620 $(574,515) $(864,334) (1,716,029) (433,037) $9,133,099 $9,133,099 $6,208,656 current income tax of of tax income current rate
Reversal of temporary difference arising from from arising difference temporary of Reversal initialthe of recognition equity component of the instrument financial compound which instruments Gains or losses on hedging or to profit subsequently not be reclassified will loss Deferred income tax Deferred income related to changes in tax rates Total
tax credits tax credits expenses: non-deductible income exempt Tax loss Investment income Dividend Others write-downs/reversals and different jurisdictional and different write-downs/reversals tax rates prior periods prior periods et changes in loss carry-forward and investment investment and carry-forward in loss changes et Tax effect of non-taxable income and of income non-taxable effect Tax Adjustment of deferred tax assets/liabilities for for tax assets/liabilities deferred Adjustment of in tax rates to changes related tax income Deferred jurisdictions in other withheld Taxes Others or loss in profit recorded benefit tax Income Income before tax tax before Income tax At statutory income Adjustments of in respect N applicable tax rate was as follows: follows: was rate tax as applicable iii. Deferred income to equitytax charged directly iii.
b. Company’s at the tax before income and tax expense income between reconciliation A
307 United Microelectronics Corporation | Annual Report 2019
2019 As of December 31, December
December 31, December $0.76 $0.55 Others Others 90,047 90,047 137,511 For the years ended ended the years For (Note A) 289,121 289,121 283,349 2019 2018 1,295,729 1,295,729 1,243,599 11,785,108 12,103,880 12,103,880 11,785,108 $9,707,614 $9,707,614 $7,072,990 13,170,884 13,170,884 13,484,990
660) $- $1,355,850 80,180) - 4,400,000 Non-cash changes Non-cash Foreign exchange - (698,127) 381,213 20,093,441 Cash Flows sing from Financing Activities Activities Financing from sing
622,033 190,848 1,177 (619,347) 194,711 2019 As of 1,000,000 3,580,180 (1 3,578,071 (462,642) 4,408 117,265 3,237,102 20,410,355 $1,384,650 $22,860 $(51, 41,378,182 (2,500,000) - (96,766) 38,781,416 January 1, January
t
dilution (thousand shares) (thousand shares) dilution basic earnings per share (thousand shares) (thousand per share basic earnings Unsecured convertible bonds bonds convertible Unsecured compensation Employees’ Unsecured convertible bonds bonds convertible Unsecured Net income income Net of dilution Effect of dilution Effect Earningsshare- per diluted (NTD) Income attributable to the Company’s stockholders stockholders Company’s the to attributable Income $9,996,735 $7,356,339
Weighted-average number of common stocks after stocks after common of number Weighted-average Weighted-average number of common stocks for for stocks common of number Weighted-average
For the year ended December 31, 2019: 2019: 31, December the year ended For b. Earnings share-diluted per Items Items
(25) Reconciliation of Liabilities Ari portion included) portion liabilities-noncurrent (current portion portion (current included) (current portion portion (current included)
Short-term loans Short-term
Bondspayable (curren Other financial financial Other Lease liabilities Lease liabilities Guarantee deposits deposits Guarantee Long-term loans Long-term x authorities through x authorities through gn jurisdictions.gn The December 31, December $0.82 $0.58 For the years ended ended the years For 2019 2018 $9,707,614 $9,707,614 $7,072,990 Tax Act, effective from 2018, the the 2018, from effective Act, Tax ption for several periods with respect to to with respect ption periods several for of December 31, 2019, income tax returns returns tax income 2019, 31, December of iwan and other forei other and iwan om 17% to 20%, and the 10% undistributed undistributed and the 10% to 20%, 17% om d shares) shares) d 11,785,108 12,103,880 d by the tax authorities of the respective countries of countries of tax authoritiesof the respective the d by endments to the R.O.C. Income basic earnings per share (thousan share per earnings basic et income income et
N shares for ordinary of number Weighted-average (NTD) Earnings per share-basic Company’s income tax returns for all the fiscal years up to 2016 have been assessed and and assessed been have to 2016 years up all the fiscal for returns tax income Company’s Authority. the R.O.C. by Tax approved As ta the by examination completed Singapore branchbeen the has of operations. of the expansion will from exemption tax derived income The income 31, 2020. on December expire NT$1,345 NT$0 and to amounted recognized been have assets tax income deferred million, respectively. to amounted subsidiaries in investments with associated liabilities tax deferred million,respectively. million and NT$11,036 NT$11,389 corporate income tax rate is raised fr tax is lowered to 5%. earnings 2014. of returns tax income the of tax positionoutcome the There is an uncertain th at accepte be not may Company the operations. tax and current income deferred of and measurement the recognition For and estimates judgments, accounting significant which tax involved income 5(5). to Note refer please assumptions, e. Ta taxation in to subject is Company The f. exem tax income was granted Company The no which for differences temporary deductible 2018, and 31, 2019 December of As g. h. unrecognized of differences temporary taxable the and 2018, 2019 31, December As of i. am the to According a. Earnings share-basic per (24) Earnings Earnings (24) Per Share
308 Financial Review - 2018 2018 mutual agreement in in agreement mutual 48 71 592 1,287
December 31, December 8,168 8,030 9,540 9,540 4,266 93,287 93,287 85,878 40,049 40,049 27,881 For the years ended ended the years For (11,180) (11,180) As of December 31, of As As of December 31, 31, December As of 830,682 871,594 871,594 830,682 654,583 654,583 956,850 2019 2018 2019 2018 $292,483 $330,771 $301,291 $340,159 6,695,116 6,695,116 8,359,266 5,182,626 5,667,271 5,667,271 5,182,626 $5,937,706 $5,937,706 $7,312,272 $6,683,936 $6,683,936 $8,359,266 $47,736,335 $57,107,585 $57,107,585 $47,736,335 $53,789,692 $63,674,331 $63,674,331 $53,789,692 ion period for domestic sales to related domestic ion period for er other current liabilities)
UMC-USA UMC-USA Others Others Total Total Net Associates Others Subsidiaries Associates Total UMC-USA Subsidiaries Others Total Less: Loss allowance UMC-USA Subsidiaries Associates
2019 Operating revenues revenues Operating was determined through related parties above the to price sales The reference to market conditions. conditions. market to reference collect The parties were month-end 30~60 days, while the collection period for overseas sales was sales was overseas for the collection period days, while 30~60 were month-end parties days. 30~60 net liabilitiesRefund (classified und Accounts receivable, net net receivable, Accounts
Significant Related Party Transactions Transactions Related Party Significant a. transactions Operating
(2)
2018 As of
December 31, December
- 1,000,000
related parties during l liabilities-noncurrent. lated parties Others Others (Note A) Relationship Companythe with
Subsidiary Subsidiary Subsidiary Other relatedOther parties Subsidiary Other relatedOther parties Other re Other Associate Associate The Company’s director TheCompany’s Non-cash changes Non-cash Foreign exchange
$(97,450) $- $1,384,650 tails on othertails on financia
- - (456,551) 380,787 20,410,355 between the Company and and the Company between ATION ATION Cash Flows
774,356 225,644 - 526,068 (42,948) 13,166 125,747 622,033 2018 As of 20,486,119 $7,308,350 $(5,826,250) 48,517,631 (7,500,000) - 360,551 41,378,182 January 1, January Namerelatedof parties
the effective interest method. the effective
UPISEMICONDUCTOR CORP. UNITEDVISIONSEMICONDUCTOR CO., LTD. UNITEDDS SEMICONDUCTOR (SHANDONG) CO., UNITEDDS SEMICONDUCTOR LTD. Subsidiary LTD. CO., (XIAMEN) UNITED SEMICONDUCTOR CORPORATION CAPITAL TRIKNIGHT and its Subsidiaries CORP. TECHNOLOGY FARADAY Subsidiary CORP. SYSTEMS INTEGRATED SILICON Associate GREEN EARTH LIMITED GREENEARTH UMC GROUP JAPAN UMC JAPAN GROUP LTD. CO., JAPAN SEMICONDUCTOR UNITED MICROELECTRONICS CORPORATION WAVETEK HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. Subsidiary Subsidiary PHOTRONICSMASK CORPOR DNP UMC GROUP (USA)UMC GROUP (UMC-USA)
Name and Relationship of Related Parties Parties Related of Relationship and Name Note A: Note by measured amortization discount consisted of mainly changes non-cash Other B:Note Please refer to Note 9(4) for de more
For the year ended December 31, 2018: 2018: 31, December the year ended For
Items Items
the financial reporting periods: periods: reporting the financial (1) The following is a summarytransactions a of The following is
(current portion portion (current included) liabilities-noncurrent (current portion portion (current included) (current portion portion (current included)
Short-term loans Short-term 7. 7. TRANSACTIONS PARTY RELATED Bonds payable payable Bonds Other financial financial Other Guarantee deposits deposits Guarantee Long-term loans Long-term
309 United Microelectronics Corporation | Annual Report 2019 - - Purpose of pledge of pledge Purpose guarantee guarantee guarantee lease lease dormitory lease guarantee
Energy resources
Customs duty duty Customs Bank performance performance Bank
- - December 31, December 2,147 2,147 3,938 62,135 62,135 293,791 For the years ended ended the years For As of December 31, 31, December As of 2019 2018 2019 2018 $159,990 $159,990 $285,617 $448,302 $492,563 $492,563 $448,302 $224,272 $224,272 $583,346 was pledged pledged was Party to which asset(s) which to Party Division, CPC Corporation, Taiwan Taiwan Corporation, CPC Division, Customs Customs Administration Science Park Science Administration Park Collateral for land LiquefiedGas Business Natural Collateral for China of Bank 19,579 37,084 the Company pledged as collateral: as pledged Company the
19,510 41,785 Carrying Amount Amount Carrying 331,361 220,603 As As of December 31, $810,035 $809,000 1,000,000 1,000,000 $2,202,691 $2,086,266 Others Others benefits employee Short-term benefits Post-employment benefits Termination payment Share-based Total
to others provided and Endorsement/Guarantee to others provided Financing 2. Attachment 1 and Attachment to Please refer compensation personnel Key management Other payables of mask expenditure expenditure mask of payables Other d. e. Items Items 2018 2019 The table following lists assets of As of December 31, 2019 and 2018 2018 and 2019 31, December of As (Time deposit) deposit) (Time (Time deposit) (Time (Time deposit) (Time deposit) (Time (Time deposit) (Time Refundable Deposits Refundable
Total Total 8. AS COLLATERAL PLEDGED ASSETS Deposits Refundable
Refundable Deposits Deposits Refundable Deposits Refundable Deposits Refundable gain gain gain gain Deferred Deferred Deferred Disposal/ Disposal/ Disposal/ Disposal/ December 31, December December 31, December Purchase price amount amount amount amount Disposal For the years ended ended the years For Disposal Disposal For the years ended ended the years For 2019 2018 2019 2018 $339,463 $200,610 $200,610 $339,463 $1,755,085 $1,577,235 $1,577,235 $1,755,085 Item Item Item For the year ended December 31, 2019 31, 2019 December ended the year For For the year ended December 31, 2018 2018 31, ended December year the For equipment $287,092equipment $45,422 $271,433equipment $12,991
Associates Associates Others
Subsidiaries Subsidiaries and plant of Disposal property, Subsidiaries and plant of Disposal property, Others expenditure Mask Significant asset transactions equipment and plant of property, Disposal assets intangible of Acquisition method equity the under investments of Acquisition for accounte d 10. Item Accounting Major to refer Please
c. b.
310 Financial Review
terest of 12% per annum. per annum. terest of 12% Exchange Act of Exchange Act of 1934 and JINHUA and preventing the JINHUA ately cease to manufacture, sell, and import import and sell, manufacture, to cease ately e same day, the DOJ filed a civil complaint e same day, Company and others conspired to steal trade trade steal to conspired others and Company s to anyone else. s to anyone and civil The indictment Court for the Southern District of New York Court the for Southern District of New York of the Company. The lawsuit filed by the of the Company. es, was filed under Securities ed to pay the technology license fees in accordance with the with in accordance license fees ed to the technology pay and claimed US$10 million with in prepareThe Company counsel to answers has appointed
nufactured by the Company or Company the by nufactured ate in the capital injection of UNITED SEMICONDUCTOR of in UNITED SEMICONDUCTOR ate injection the capital
On July 1, 2016, INTERNATIONAL BUSINESS MACHINES CORPORATION (IBM) BUSINESS MACHINES CORPORATION 1, 2016, INTERNATIONAL On July District States United in the a complaint filed Rule 10b-5 in the United States District Court for the Southern District of New York. York. of New District Southern the for District Court 10b-5 in the United States Rule The 23, 2019. May on counsel plaintiff lead approved and plaintiff lead a appointed court On complaint amended plaintiffs’ of service the received Company the 27, 2019, September procedures. relevant the prepare to counsel appointed and in still is litigation this Given probable and proceeding the legal assess cannot Company the stages, the preliminary or impact. outcome alleging that the Company fail technology license agreement States the United by 2017 15, September issued on a judgment appealed Company The matter. subject rk the for ofNew Yo District District CourtSouthern of States United The 2019, 11, March on order summary a Circuit made Second the for Appeals of Court case. the and remanded judgment district court’s the of part vacated 2019, 27, March On withdrew the IBM with and mutually 3.8 million the Companysettlement USD reacheda litigation. complaint are still on trial. complaint are still United Microelectronics v. Meyer styled class action putative a 14, 2019, On March several executiv Corporation and defendants from transferring the trade secret trade the transferring from defendants joint technology the suspended has Company Besides, the charges. these against activities JINHUA.with development preliminary Givenlitigationsthese thein still are or impact. outcome and probable proceeding assess the legal cannot Company stages, the On November 1, 2018, the Department of Justice of the United States (“DOJ”) unsealed an an unsealed (“DOJ”) the United States of Justice of the Department On November 1, 2018, CO.,LTD. CIRCUIT INTEGRATED JINHUA FUJIAN againstindictmentthe Company, (“JINHUA”), one current employee and two former and three individuals, including that the alleging Company, of the employees products any United States the to exporting from defendants the aforementioned enjoining containing DRAM ma products that infringe products that infringe the patent rights Company is still on trial. was that technology develop to that information used and MICRON, of secrets subsequently transferred to JINHUA. On th holding that the two defendants must immedi must defendants that two the holding
(7) (6) None. None. On February 11, 2020, the Board of Directors of HEJIAN TECHNOLOGY (SUZHOU) CO., HEJIAN TECHNOLOGY Board of Directors of the 2020, 11, February On resolved to particip LTD. (XIAMEN) CO., LTD. in stages at a total investment amount of amount at a in stages RMB investment total 3.5 billion. (XIAMEN) CO., LTD.
10. DISASTER SIGNIFICANT LOSS
11. 11. SIGNIFICANT EVENTSSUBSEQUENT
t yet recognized was and committing to sell and committing to ility in other noncurrent in October 2014 to participate in a 3-way in October 2014 to participate ng the last instalment payment by the made n of the contracts no the contractsn of nd development fees not yet recognized was was yet not recognized fees development nd ng, importing, selling, terest terest totally amounting to RMB 4.9 billion, veral construction contracts for the expansion of its the expansion for veral construction contracts the Company entrusted the institutes to financial open performance
NT$1.1 billion. NT$1.1 The Company entered into several patent license agreements and development contracts of of contracts development and agreements license patent several into entered Company The approximately NT$10.7 billion. amount of contract intellectual property for a total of As royaltiesDecember 31, 2019, the portion of a billion. NT$1.3 The Company entered into se operations. As of December 31, 2019, these construction contracts amounted to amounted contracts construction these 31, 2019, December As of operations. approximately NT$1.2 billion and the portio approximately NT$0.2 billion. The Board of Directors of resolved the Company Directors of Board of The agreement with Xiamen Municipal People’s Government and ELECTRONICFUJIAN Government & Municipal with Xiamen People’s agreement foundry wafer 12’’ on will focus which a company to form GROUP INFORMATION R.O.C. obtained and subsidiaries the Company 31, December 2019, of As services. approval billioninvestmentthe in and for 8.3 RMB invested governmentauthority’s the on based Furthermore, 65.22%. interest of ownership representing USCXM, liab financial recognized a the Company agreement, liabilities-others the purchase for from the other investors of their investments in USCXM cost plus in at their original investment followi (2022) year the seventh from beginning investors. other Fuzhou the actions with patent infringement filed three the Company 2018, 12, On January and others, (XI’AN) Court against, MICRON among CO., LTD. Intermediate People’s requesting the court to order the (SHANGHAI)MICRON CO., TRADING LTD., defendants to stop processimanufacturing, On August 31, 2017, the Taichung District Prosecutors Office indicted the Company based based the Company indicted Office Prosecutors District the 31, 2017, Taichung On August the of Company Act of that employees R.O.C., alleging Secret on the Trade INC. (“MICRON”). MICRONTECHNOLOGY, of misappropriated the trade secrets On Company the against cause similar with action civil a filed MICRON 5,2017, December with the United District Court,States District of California. Northern MICRON claimed the court and requested fees relevant trebleand damages entitlementthe actual damages, to question. secrets in trade its using from Company the enjoins that order an issue to The answers prepare counsels to has appointed in progress the Company case is and currently these charges. against the products deploying the infringing patents in questions, and also to destroy all all destroy also and to in questions, patents infringing the deploying products the Intermediate Fuzhou the 2018, 3, On July and tools. related molds and inventories two defendants, the aforementioned against injunction preliminary Court granted People’s guarantee, mainly guarantee, related to the litigations and customs guarantee,tax amounting to As of December 31, 2019, 31, December of As
(2) (3) (4) (5) (1)
9. AND UNRECOGNIZED COMMITMENTS CONTRACT CONTINGENCIES SIGNIFICANT
311 United Microelectronics Corporation | Annual Report 2019 tes relates primarily ising from purchases venue or expense is denominated in a venue or denominated expense is as net investments in investments net as foreign subsidiaries gnificant monetary items denominated in in denominated items monetary gnificant tary financial assets and liabilities is minor. tary financial assets and liabilities minor. is future cash flows of a cash instrument future financial flows will acts designated by the Company to hedge foreign currency currency foreign hedge to the Company by acts designated ral hedges on the foreign currency risk ar to the Company’s operating activities operating (when re to the Company’s period. of reporting the end the of as currencies foreign strengthens/weakens NTD When 2018 and 31, 2019 December profit ended USD by 10%, the for years against decreases/increases millioby NT$1,009 n and NT$1,367 million, respectively. different currency from the Company’s functional currency) and the Company’s net Company’s the and currency) functional Company’s the from currency different investments in subsidiaries. foreign The Company natu applies the of amount as the same are the contracts currency foreign of the amounts notional The exchange forward any out carry not does Company the principle, In items. hedged commitments. uncertain for contracts currency forward certain designates Company The risk exchange to foreign currency exposure its to hedge hedges as cash flow contracts transactions. forecast probable highly certain with associated assessment, basis of the On value the and contracts exchange currency forward of value that the expects Company the in opposite directions given thefor change systematically of hedged transactions will rates. exchange foreign in changes relationships hedging in these ineffectiveness Hedge of movements value fair the impacting risk, credit the counterparties’ arises from mainly items. hedged and instruments hedging the emerged ineffectiveness of sources other No relationships. these hedging from Furthermore, the Company. by hedged they not are purposes, strategic are for contr exchange Certain forward in JPY, USJC of shares additional with purchase of the rate risks associated exchange 2018. 31, December to prior expired billion, 23 JPY to amounting hedge flow cash The as was recognized NT$(3) million, to amounting of equity, other components in reserve 2019. 1, October on USJC in 84.1% of interest ownership the for consideration Please to Noterefer 6(6). rates exchange foreign in change possible the of analysis sensitivity currency foreign The on si performed profit is Company’s the on or sales, and utilizes spot or forward exchange contracts to manage foreign currency risk risk currency foreign to manage contracts exchange or forward utilizes spot or sales, and mone to of related risks the effect net the and or value fair the that risk the is risk Market risk, currency comprise risks prices. Market in market changes because of fluctuate and other price (suchas equity pricerisk risk).interest rate risk risk currency Foreign ra exchange in foreign changes the risk of to exposure The Company’s
(3) (3) risk Market
-
As of December 31, 31, December As of As of December 31, 31, December of As 194,711 194,711 622,033 804,933 804,933 1,708,786 2019 2019 2018 2019 2019 2018 2,532,392 2,532,392 2,553,055 4,400,000 4,400,000 1,000,000 3,237,102 21,311,152 22,486,029 22,486,029 21,311,152 20,093,441 20,093,441 20,523,099 $1,355,850 $1,355,850 19,306,055 18,637,282 $1,384,650 38,781,416 38,781,416 41,378,182 14,388,597 11,131,667 11,131,667 14,388,597 $86,699,802 $84,214,019 $84,214,019 $86,699,802 $110,681,405 $101,518,039 $101,518,039 $110,681,405 s, procedures and internal controls for for controls internal and procedures s, the transition provision in IFRS 16. IFRS in provision transition the ies. ies. and measures identifies, Company The ocedures. The Company complies with its with complies Company The ocedures. rtion included) included) rtion at amortized cost cost amortized at restate prior periods in accordance with with restate prior in accordance periods Refundable deposits deposits Refundable assets financial Other comprehensive income income comprehensive Short-term loans loans Short-term Payables Payables Cash and cash equivalents (excludes cash on hand) hand) cash on (excludes equivalents Cash and cash Receivables 66,530,103 59,337,436 Bonds payable (current portion included) included) portion (current payable Bonds included) portion (current loans Long-term Lease (Note)liabilities liabilities Other financial Guarantee depositsGuarantee (current po Financial liabilities measured at amortized cost cost amortized at measured liabilities Financial Financial Assets Financial Financial Liabilities Liabilities Financial Total Total Financial assets measured Financial assets at fair value through profit or loss profit assets at value through fair Financial Financial assets at value through otherfair $5,114,228 $4,301,066
Total Total Note: Note: 2019. 1, January on 16 IFRS adopted Company The to not elected Company The risk and credit risk, market the are to manage objectives risk management Company’s The risk related liquidity to its operating activit preference. risk and on policy risks based the aforementioned manages policie appropriate established has The Company risk management. financial activities, approval into significant financial Before entering on based out carried be must Committee Audit and Directors of Board the by process pr control internal and protocols related times. all at policies risk management financial (2) Financial risk management objectivesand policies (1) instruments financial of Categories 12. OTHERS OTHERS 12.
312 Financial Review
- 21,114,113 - 21,114,113 - - 4,508,614 - 194,711 194,711 - - 39,939,843 - 18,464,191 18,464,191 - - 19,110,049 - 19,110,049 - - 1,027,679 $- $- $1,389,620 $- $- $1,412,955 mpany’s financial liabilities liabilities financial mpany’s - - - - - $- $-
720,082 $89,396,676 $2,250,847 years > 5 years Total years > 5 years Total 4 to 5 4 to 5 - - - 17,477,984 21,960,458 4,369,730 As of December 31, 2019 2018 31, of December As $- $- equivalents, bank loans, bonds and lease. lease. bonds and bank loans, equivalents, years years 2 to 3 2 to 3 2 to 3 maturity profile of the Co - 12,668,287 8,445,826 98,824 95,887 52,665 153,973 15,385 622,033 400,010 112,744 1 year year 1 year 1 Less than than Less than Less $24,034,641 $24,024,192 $25,977,762 $13,332,761 $87,369,356 deposits deposits liabilities deposits liabilities liabilities financial liabilities Bonds payable payable Bonds loans Long-term 3,000,855 345,373 23,187,913 682,306 8,484,393 8,563,021 43,236,182 Short-term loansShort-term $1,389,620 loansShort-term $1,412,955 Payables Payables 19,110,049 Payables Payables 18,464,191 Guarantee Guarantee Other financial Guarantee Guarantee Other financial financial liabilities financial Bonds payable payable Bonds loans Long-term 20,659,607 539,584 10,590,265 3,969,030 8,689,971 Lease liabilities Lease liabilities 325,059 625,393 584,285 2,250,847 3,785,584 Total Total Non-derivative Non-derivative Total $41,476,885Total $27,948,862 $17, based on the contractual undiscounted payments and contractual maturity: contractual maturity: and payments undiscounted on the contractual based the The table below summarizes The Company’s objectives are to maintain a balance between continuity of funding and and of funding continuity a between maintain balance are to objectives The Company’s cash and the use of through flexibility the top ten customers from receivable accounts 31, and 2018, December of 2019 As respectively. Company, of the receivable accounts the total of 83% and 84% represent insignificant. is receivable accounts other of risk concentration credit The
(5) (5) Liquidity ri management sk rm and long-term bank bank long-term and rm e change in value in change fair asofe million, respectively. respectively. million, institutions with good credit with good institutions credit financial institutions. The Company’s Company’s The institutions. financial creditworthythird parties. Wherethe ties are susceptible ties are susceptible to market price risk d 6(12) for the range of interest rates of the d 6(12) the interest rates of for range of less credit, it will request collateral from of counter-parties is limitedcounter-parties to of the carrying financial institutions by institutions financial limiting its counter omers who wish to trade on credit terms are are terms credit on trade to wish who omers ive income of listedive income of companies could In addition, notes and accounts receivable e price of the aforementioned financial assets assets aforementioned e the financial price of mpanies could increase/decrease the Company’s Company’s the increase/decrease could mpanies st rate risk floating arising interest bo rrowing at from and NT$2 million, respectively. and NT$2 million, respectively. ic or international financial financial international or ic terest rates would affect the future cash flows but not the but flows the cash future affect would rates terest dings among various by NT$671 million and NT$408
loans are floating, changes in in in changes floating, are loans fair value. value. fair an 6(11) 6(10), Note to refer Please Company’s bonds and bank loans. loans. bank and bonds Company’s rate in a reporting period of a10 basis of interest points change dates, the reporting At to 2018 and 2019 31, December ended the years for profit the cause could million by NT$6 decrease/increase Equity price risk the reporting date. reporting the assets at financial the aforementioned in price of 5% the of change A fair value through profit or loss of listed co and NT$141 million by NT$174 2018 and 2019 31, December ended years the profit for million, respectively. 5% in th change of A comprehens other value through fair at years ended the for income comprehensive other Company’s the increase/decrease 31, 2019 and 2018 December arising from uncertainties about future performance of equity markets. markets. equity of performance future about uncertainties from arising Company’s The a ssets at fair value through profit or lossas financial are classified and investments equity income. other comprehensive assets at value fair financial through on th The sensitivity analysis for the equitybased instruments is Interest rate risk The Company is exposed to intere at are measured and rates interest fixed have bonds Company’s the of rates. All cost. amortized cash flows. the future not affect rates would interest in changes such, As short-te Company’s the hand, as the interest rates of the other On and unlistedsecuri equity listed The Company’s and approved with trades only Company The Company trades with third parties which have them. all cust policy that It is the Company’s procedures. verification subject to credit to credit exposure the Company’s basis to decrease ongoing on an are monitored balances risk. risksThe Company mitigates the credit from only reputable domest to parties standing and spreading its hol default the arising from credit to risk exposure of these instruments. amount (4) (4) risk management Credit
313 United Microelectronics Corporation | Annual Report 2019
on a recurring basis, basis, recurring a on 608,991 4,445,752 4,445,752 608,991 - 14,388,597 971,289 - 11,131,667 2,965,390 As of December 31, 2019 31, 2019 December of As As of December 31, 2018 31, 2018 December of As west level input that tothe west is significant level input that tothe west is significant st level input that is significant to fair the occurred between levels hierarchy the in occurred between rded at fair value on a recurring basis: basis: on a recurring value rded at fair to the fair value measurement as a whole: whole: a as measurement value fair the to Level 1 1 Level 2 Level 3 Level Total Level 1 1 Level 2 Level 3 Level Total $668,476 $- $668,476 $- $493,481 $3,561 $497,042 $- 2,816,636 20,125 1, 2,333,055 26,700 3,804,024 1,444,269 8,166,277 13,417,308
liabilities; observable; indirectly or directly is measurement value fair is unobservable. value measurement fair throughprofitloss, or noncurrent through profit or loss, current through profit or loss, current through other other through income, comprehensive noncurrent through other other through income, comprehensive noncurrent throughprofitloss, or noncurrent Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets at fair value Financial assets: Financial assets: value measurement as a whole) at the end of each reporting period. period. each reporting as a at the end of whole) value measurement a. reco and measured liabilities and Assets is measured or disclosed in the financial which fair value liabilities and for assets All follows, based on as described within thevalue hierarchy, fair are categorized statements the lowest level input that is significant — 1 Level assets or identical markets for in active prices market (unadjusted) Quoted — 2 Level techniques which the lo for Valuation — 3 Level techniques which the lo for Valuation statements the financial in recognized are liabilitiesassets and that For have transfers whether determines Company the the lowe (based on categorization by re-assessing
a market participant’s a market participant’s January 7, 2019 2019 7, January Contract Period liability, assuming that market participants liability, on that the transaction to sell the asset orasset the sell to transaction the that on sset takes into account uld use the asset in its highest and best use. best and its in highest asset the use uld measured using the assumptions that market that the assumptions using measured ilities denominated in foreign currency. ilities denominated in foreign currency. The be received to sell an asset asset an paid to transfer received sell or be to a liability in Notional Amount Type Type Forward exchange contracts contracts exchange Forward 28 Sell USD million 10, 2018~ December ability to generate economic benefits by using the asset in its highest and best use or by wo that participantmarket another to it selling for and circumstances the in appropriate are that techniques valuation uses Company The relevant use of the value, fair maximizing to data are available measure sufficient which inputs. unobservable of the use minimizing and inputs observable risk rate exchange the hedging for contracts exchange forward into entered Company The or liab net monetary assets the arising from as summarized are Company the by into entered contracts exchange forward of details follows: December 31, 2019 As of None. December 31, 2018 As of Fair value is the price that would date. at participants measurement the market between transaction an orderly The fair is the presumpti based on value measurement or in orthe asset liability, market for either in the principal takesplace transfer the liability asset liability. the or for market advantageous most the in market, principal a of absence the the by Company. market must be accessible advantageous or the The principal most asset an liability a or The is of fairvalue or participants would use when pricing the asset interest. best economic their in act a non-financial a of measurement value fair A (6) (6) risk management currency Foreign (7) (7) instruments of financial value Fair
314 Financial Review
inputs and fair value and inputs fair value and inputs discount for lack of of the marketability fairaforementioned unlisted of values stocks could decrease/increase the profit (loss) Company’s and other comprehensive income (loss) for the year ended December 31, NT$80 million by 2018 million, NT$196 and respectively. discount for lack of of the marketability fairaforementioned unlisted of values stocks could decrease/increase the profit (loss) Company’s and other comprehensive income (loss) for the year ended December 31, NT$85 million by 2019 million, NT$53 and respectively. Sensitivity analysis of Sensitivity analysis of interrelationship between between interrelationship between interrelationship A change of 5% in the the in of 5% change A A change of 5% in the the in of 5% change A degree degree of lack of marketability, the thelower fair estimated is value determined. degree degree of lack of marketability, the the lower fair estimated is value determined. and fair value and fair value between inputs inputs between inputs between Interrelationship Interrelationship Interrelationship
into and out of fair value hierarchy hierarchy value fair outof and into value measurement value fair 3 in Level 0%~30% The greater information information Quantitative Quantitative Quantitative 20%~30% 20%~30% The greater 2 As of December 31, 2019 31, December of As 2018 31, December of As inputs inputs Significant Significant Significant Significant lack of of lack marketability lack of lack of marketability iscount for iscount iscount for iscount unobservable unobservable unobservable unobservable D D Approach Approach Valuation Valuation Valuation technique technique Market Market Market equity equity equity equity stock stock securities securities securities securities Category of Category Category of Category Unlisted Unlisted
hierarchy were as follow: as follow: were hierarchy The Company’s policy to recognize the transfer the recognize to policy Company’s The transfer. that caused the circumstances in or changes event is based on the levels of fair inputs unobservable Significant
- - -
- - - - (2,303,988) stock Total stock Total stock Total Preferred Preferred - - - other comprehensive income income comprehensive other income comprehensive other any’s development, development, market any’s restrictions or sale the on Financial assets at fair value through Financial assets at fair value through stock stock Common Common Common 269 $2,781,364 $184,026 $2,965,390 991 $795,795 $175,494 $971,289 e restrictions. e restrictions. if values, fair measure To cash flow forecast, recent fund raising fund recent forecast, flow cash but unrestricted financial assets’ quoted but unrestricted financial assets’ the valuation techniques (income approach approach (income techniques valuation the through profit or loss and financial assets at assets at financial or loss and profit through
stock Total stock Total stock Total 655,421 655,421 $1,687,026 $2, 892,054 $233,326 $3,125,380 444,269 444,269 $1,444,269 $2, 781,364 $184,026 $2,965,390 $1,608,991 $1,608,991 $1,608, profit loss or profit loss or Common Common oss) above, the profit (loss) from financial held assets still - (118,070) (118,070) - 164,722 164,722 - - - (2,303,988) - - - 318,419 (8,532) 309,887 - - - (110,690) (49,300) (159,990) $- $1,444,269 $1,444, $- $- $1, onomic indicators. If there are If there indicators. onomic Financial assets at fair value through value at fair assets Financial through value at fair assets Financial (31,605) (93,082) (124,687) Option Option
comprehensive income (loss) comprehensive income As of January 1, 2019 profit in Recognized Disposal 2018 1, January of As profit in Recognized $31,605 $1, As of December 31, 2019 Recognized in other Recognized in other TransferLevel out of 3 As of December 31, 2018 transfer of a financial asset, which are a characteristic of the asset, the fair value of the the of value fair the the of asset, a characteristic are which asset, a of financial transfer asset bewill determined based on similar th for discounts appropriate price with market significant levelthatis to the or directly input measurement value lowest fair is the value the fair of 2 Level as classified are assets financial the then observable, indirectly as Level 3. otherwise hierarchy, there were no significant and 2018, December 31, the2019 years During ended measurements. value 2 fair Level and 1 Level between transfers as were hierarchy value 3 fair in Level measurement value fair for Reconciliations follows: fair value assets at financial of values Fair profit (l Recognized as part of fair value through other comprehensive income that are categorized into level 1 are into are categorized that income comprehensive other through value fair markets. active in prices market quoted the on based the market, active no there is If Company estimates the value fair by using of in consideration approach) market and comp individual companies, similar of valuation activities, NT$(90) and million NT$165 were 2018 and 2019 31, December of as Company the by million, respectively. conditions conditions other ec and
315 United Microelectronics Corporation | Annual Report 2019 NTD (thousand) (thousand)
4,473 56,973 642,288 8,154 58 420
that it maintains Rate Rate Exchange Exchange Foreign Foreign Currency (thousand) r related parties, while maintaining - 8,032,210 2,220,103 0.2764 nagementensure is to 282 7,855 1,802 (22,530) 532,668 NTD As of December 31, 31, December of As (327,044) (thousand) the Company adjust the payment the Company may dividend any’s capital ma any’s Rate Rate Exchange Exchange -- 7,877 22.28 175,494 8,212 22.41 184,025 4,717 33.94 160,109 13,659 35.41 483,682 82,303 22.46 1,848,507 39,650 22.59 895,677 $37,542 30.03 $1,127,372 $26,063 30.67 $799,338 304,503 30.13 9,174,678 317,636 30.77 9,773,670 1,941,812 0.2792 542,154 3,132,121 878,560 0.2805 4,623,788 4.35 20,094,983 4,538,975 20,411,772 4.50 Currency (thousand) stockholders and the interests of interestsothe of and the stockholders 2019 2018
r onetary items onetary financial on-Monetary items on-Monetary SD SD SD MB MB MB UR UR UR inancial Liabilities PY PY PY Foreign Foreign Comp of the objective primary The the optimal capital structure to reduce costs of capital. costs of reduce optimal structure the capital to structure, the capital adjust or maintain To redeem to assets dispose or shares new issue stockholders, to capital return stockholders, to liabilities. a strong credit rating and healthy capital ratios to support its business and maximize the the maximize and business its support to ratios capital healthy and rating credit strong a to value. continuously ability to operate its also ensures The Company stockholders’ provide returns to SGD SGD SGD The exchange The exchange gain Othe SGD N U J F M U J E R or loss from m andassets liabilities U J E R (9) (9) Capital management
NTD amount amount Carrying Carrying Carrying (thousand)
- 4,400,000 - 1,000,000 $- $38,781,416 $- $41,378,182 Rate Rate Exchange Exchange ich fair is value disclosed: Foreign Foreign foreign currencies currencies foreign Currency (thousand) servable inputs share price, including servable inputs reporting period using using period reporting using period reporting financial instruments including cash and rates. is loans long-term of value The fair NTD As of December 31, 31, December of As Fair value measurements during during measurements value Fair during measurements value Fair (thousand)
ilities denominated in Rate Rate rded at fair value but for wh for but value fair at rded Exchange Exchange
- - - 333 4.45 1,482 4,400,000 4,400,000 4,400,000 - 1,000,000 1,000,000 - Fair value Level 1 Level 2 Level 3 Fair value Level 1 Level 2 Level 3 $39,571,920 $18,224,873 $39,571,920 $21,347,047 $41,714,368 $17,785,349 $41,714,368 $23,929,019 2,162 72,498 33.54 2,113 35.01 73,972 66,197 22.28 1,474,870 34,325 22.41 769,217 1,574,700 0.2751 433,201 16,172,571 0.2764 4,470,099 Currency $1,579,412 30.03 $47,429,752 $1,380,337 30.67 $42,334,947 (thousand) Items Items
2019 2018 portion included) included) portion portion included) included) portion included) portion included) portion a valuation byprice or using is estimated the market payable bonds of value The fair ob market-based uses model The model. interest risk-free and spread credit volatility, current Company’s the on based model, cash flow discounted using determined rates of similarincremental borrowing loans. short-term The fair the values Company’s of assets-current, other deposits, refundable financial receivables, equivalents, cash amount carrying their approximate deposits and guarantee payables loans, short-term due to their within one maturities year. December 31, 2019 of As Bonds payables (current (current loans Long-term December 31, 2018 of As (current payables Bonds (current loans Long-term onetary items SD SD MB MB UR UR inancial Assets PY Foreign Foreign b. Assets and liabilities not reco F M U J E R SGD (8) (8) assets and liab Significant financial
316 Financial Review ting results and financial condition: Please and ting results of ownership, investment income (loss), (loss), income investment ownership, of s, the Company is not required to prepare ns through third regions with the investees in investees in the regions with ns through third ear ended December 31, 2019: Please refer to to refer Please 2019: 31, December ear ended ounts exceeding the lower of NT$100 million NT$100 million of the lower exceeding ounts ina): Please refer to Attachment 9. Attachment to refer ina): Please 2, Attachment 7 and Attachment 8. Attachment 2, Attachment 7 and Please refer to Attachment 10. to Attachment refer Please ice, payment terms, unrealized gain or loss, and other other and or loss, gain unrealized terms, payment ice, ng segment information. information. ng segment Mainland China or 20 percent of the capital stock for the y the stock for of capital the percent 20 or net income Taiwan, from investments of and outflow inflow accumulated investment, of percentage (loss) of investee company, Attachment 6. Attachment 31, December the year ended stock for the capital or 20 percent of million NT$100 7. Attachment to refer Please 2019: limits on and earnings of inward cumulated remittance of investments, amount carrying investment in Mainland China: Mainland China, including pr events with significant effects on on the effects opera with events significant refer Attachmentrefer to Attachment 1, or 20 percent of capital stock as of December 31, 2019: Please refer to Attachment 8. to Attachment refer 2019: Please 31, December stock as of capital of 20 percent or (excluding investment in Mainland Ch
f. million NT$300 of lower the exceeding amount with estate real individual of Disposal a. of method totalcapital, amount and products, name, businesses main company Investee lower of the exceeding amounts sales and purchases transactions for party Related g. h. am with related from parties Receivables j. Note 12. to refer Please transactions: derivative and instruments Financial b. or indirectly Directly transactio significant i. 2019 31, of December as of investees information and related locations Names, Regulation the of 22 Article with accordance In statements. financial only company parent the for information segment operating refer Please and Corporation of United Microelectronics statements financial the consolidated to subsidiaries for operati
(2) in Investment 14. INFORMATION SEGMENT OPERATING 12.45% 14.08% As of December 31, As of 2019 2018 2018 2019 29,411,771 33,775,327 33,775,327 29,411,771 (66,534,836) (59,342,170) $95,946,607 $93,117,497 $93,117,497 $95,946,607 206,069,723 206,804,357 $236,216,128 $239,845,050 $239,845,050 $236,216,128 r the reporting periods, is to maintain a vided by its total capital. capital. its total by vided is debt net The e capital stock for the year ended December ended December year stock for the capital e ed of with accumulated amount exceeding the the exceeding amount accumulated with ed of y monitors its capital based on debt to capital ratio. ratio. capital to debt on based capital its y monitors The
e capital with reasonable cost. reasonable with capital e as ratios capital to debt The Attachment 1. Attachment 2. to Attachment refer Please million or 20 percent of the capital stock for the year ended December 31, 2019: Please Please 2019: 31, December ended year the for stock capital the of percent 20 or million Attachment 5.refer to venture): Please refer to Attachment 3. Attachment to refer Please venture): lower of NT$300 million or 20 percent of th percent 20 or NT$300 million of lower 31, 2019: Please referAttachmentto 4. et debt debt et
Total liabilities Total cash equivalents Less: Cash and N equity Total Debt to capital ratios Total capital Total
the R.O.C. Securities and Futures Bureau: refer to Please 31, 2019: a. December ended year the for to others provided Financing 31, 2019: December ended year the for to others provided Endorsement/Guarantee b. ratio is calculated as the Company’s net debt di ratio as is calculated the Company’s cash and cash minus sheets balance the on liabilities total the taking by derived equivalents. additional paid-in (including capital, consists equity of total The total capital plusdebt. net equity) of components other and earnings retained capital, fo unchanged which is strategy, The Company’s in orderrais to ratio reasonable Similar to its peers, the Compan were as 2018 follows: and December 31, 2019 of c. joint and associates subsidiaries, 31, 2019 (excluding December held as of Securities d. Individual securities acquired or dispos NT$300 of the lower exceeding estate with amount real individual of Acquisition e. (1) arefollowing The disclosuresadditional asrequired affiliates its and Company by the for 13. ADDITIONAL DISCLOSURES 317 United Microelectronics Corporation | Annual Report 2019 (Note2) (Note3) Limit of total of Limit total of Limit financing amount financing amount financing $2,349 $24,495 $20,680,436 $82,721,743 (Note2) (Note3) Limit of financing amount financing of Limit Limit of financing amount financing of Limit for individual counter-party individual for for individual counter-party individual for $- $- Value Value Collateral Collateral Item Item None $- $2,349 None Loss Loss allowance allowance - turnover Business financing financing Reason for Reason Reason for Reason $- $2,349 counter-party counter-party (purchases from) (purchases (purchases from) (purchases Amount of sales to sales of Amount Amount of sales to sales of Amount term The need for short- for financing financing financing Nature of Nature operation Nature of Nature Needs for Needs 9.00% Interest rate Interest Interest rate Interest Actual Actual amount amount provided provided balance balance Ending Ending $2,349 $2,349 $2,349 $7,507,500 $7,507,500 $1,201,200 2.56%-3.06% the period the the period the Maximum Maximum balance for balance balance for balance No Yes Related Party Related Related Party Related Other Other account account Financial Financial statement statement receivables receivables - receivables related parties related Counter-party Counter-party UNITED SEMICONDUCTOR LTD. CO., (XIAMEN) TIPPING POINT ENERGY COC PPA SPE-1,LLC Lender Lender UNITED MICROELECTRONICS CORPORATION TERA ENERGY DEVELOPMENT CO., LTD. 0 1 No. No. (Note 1) (Note (Note 1) (Note ATTACHMENT 1 (Financing provided to others for the year ended December 31, 2019) 31, ended December year the for others to provided 1 (Financing ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount UNITED MICROELECTRONICS CORPORATION DEVELOPMENT ENERGY TERA CO., LTD. follows: coded as are subsidiaries and its company The parent 1: Note coded "0". is company The parent (i) above. table the in presented order the in "1" from beginning coded consecutively are The subsidiaries (ii) period. the of as value assets net lender's the of exceed 10% not shall counter-party individual for amount financing of Limit 2: Note value. asset net Company’s the of exceed 40% not shall amount financing total of Limit lender. of statements financial latest of exceed 40% not shall amount financing total of Limit Note 3: Limit of financing amount for individual counter-party shall not exceed 10% of the lender's net assets value as of the period or the needed amount for operation, which is lower. is which operation, for needed amount the or period the of as value assets net lender's the of exceed 10% not shall counter-party individual for amount financing of Limit 3: Note 318 Financial Review 93,061,961 $10,248,216 $93,061,961 Limit of total Limit of total Limit amount (Note 4) amount (Note 7) amount guarantee/endorsement guarantee/endorsement 6.74% 0.36% 38.78% statement statement Percentage of accumulated Percentage of accumulated Percentage value from the latest financial from value the latest financial from value guarantee amount to net assets amount guarantee to net assets amount guarantee , Total endorsement amount is up to USD 464 million. is up to USD amount , Total endorsement $- $- Amount of collateral Amount of collateral Amount - guarantee/endorsement guarantee/endorsement (Note 5) (Note 6) $747,900 13,696,378 provided provided Actual amount Actual amount Actual (Note 5) (Note 6) 13,933,920 Ending balance Ending balance Ending $2,448,000 $748,000 $8,832,353 $8,832,353 $3,913,609 period period Maximum Maximum balance for the balance for the 93,061,961 15,105,090 $93,061,961 $10,248,216 Limit of Limit of Limit (Note 3) (Note 7) guarantee/endorsement guarantee/endorsement amount for receiving party for receiving amount party for receiving amount 2 2 6 (Note 2) (Note 2) Releationship Releationship Receiving party Receiving Receiving party Receiving Company name Company name Company NEXPOWER CORP. TECHNOLOGY UNITED SEMICONDUCTOR CO., LTD. (XIAMEN) UNITED SEMICONDUCTOR CO., LTD. (XIAMEN) Endorsor/Guarantor Endorsor/Guarantor UNITED MICROELECTRONICS UNITED CORPORATION MICROELECTRONICS UNITED CORPORATION TECHNOLOGY HEJIAN CO., LTD. (SUZHOU) 0 0 1 No. No. (Note 1) (Note 1) ATTACHMENT 2 (Endorsement/Guarantee provided to others for the year ended December 31, 2019) to others for the year ended December provided 2 (Endorsement/Guarantee ATTACHMENT currencies) in NTD or in foreign in thousand; Currency denomination (Amount UNITED MICROELECTRONICS CORPORATION CO., LTD. (SUZHOU) HEJIAN TECHNOLOGY are coded as follows: subsidiaries and its The parent company Note 1: is coded "0". 1. The parent company in the order presented table above. "1" from beginning 2. The subsidiaries are coded consecutively parties should be disclosed as one of the following: issued by the R.O.C. and Futures Bureau, receiving Issuers" Securities the Preparation of Financial Reports by Securities to the "Guidelines Governing Note 2: According with which it does business. company 1. A shares. than 50% of the voting directly and indirectly holds more in which the public company company 2. A shares in the public company. than 50 % of the voting that directly and indirectly holds more company 3. A shares. of the voting holds, directly or indirectly, 90% or more in which the public company company 4. A a construction project. industry or for joint builders purposes of undertaking in the same for another company endorsements/guarantees mutual by providing that fulfills its contractual obligations company 5. A percentages. in proportion to their shareholding company for their jointly invested guarantees endorsements/ shareholders make that all capital contributing company 6. A for each other. Act Protection pursuant to the Consumer of a sales contract for pre-construction homes guarantee security for a performance joint and several themselves among industry provide in the same 7. Companies are as follows: entity for any single of endorsements/guarantees amount the on ceilings and the worth of endorsor/guarantor; exceed net not 45% of the shall of endorsements/guarantees The amount Note 3: entity shall not exceed 45% of net worth endorsor/guarantor. for any single of endorsements/guarantees The amount 1. from arising shall not exceed the needed amounts rules abovementioned does business with, except the ceiling which endorsor/guarantor for a company of endorsements/guarantees 2. The amount party. and the receiving of total sales or purchase transactions between endorsor/guarantor amount which is the higher business dealings of amount net worth, and the aggregate shall not exceed 45% of the Company's to make as a whole is permitted that the Company of endorsements/guarantees amount The aggregate net worth. entity shall not exceed 45% of the Company's for any single endorsements/guarantees 31, 2019. as of December net assets value shall not exceed 45% of UMC's amount of total guarantee/endorsement Note 4: Limit it has been fully repaid up to NT$1,700in January 2019. million, of Taiwan for the amount Bank including banks syndicated loan from CORP.'s to NEXPOWER TECHNOLOGY endorsement 24, to provide 2014,Note 5: On December the board of directors resolved was NT$748 million. provided 31, 2019, actual amount of December As to NT$748 million. amounted to increase the endorsement 12, 2018, the board of directors resolved On December 310 million. up to USD in the amount Bank China Development including banks syndicated loan from CO., LTD.'s (XIAMEN) SEMICONDUCTOR UNITED Note 6: On Feburary 22, to guarantee 2017, the board of directors resolved 41 million. to USD amounted to increase the endorsement on October 24, 2018, 152 million, the board of directors resolved to USD amounted to increase the endorsement On March 7, 2018, the board of directors resolved to 13 million amounted to decrease the endorsement 18, 2019, the board of directors resolved on December 26 million, to USD amounted to decrease the endorsement On July 24, 2019, the board of directors resolved was NT$13,696 million. provided 31, 2019, actual amount of December As 31, 2019. as of December net assets value CO., LTD.'s (SUZHOU) TECHNOLOGY shall not exceed 45% of HEJIAN amount of total endorsed/guaranteed Note 7: Limit 31, 2019. as of December net assets value CO., LTD.'s (SUZHOU) TECHNOLOGY entity shall not exceed 45% of net worth HEJIAN for any single of endorsements/guarantees The amount of amount net worth, and the aggregate shall not exceed 45% of the Company's to make as a whole is permitted that the Company of endorsements/guarantees amount The aggregate net worth. entity shall not exceed 45% of the Company's for any single endorsements/guarantees 319 United Microelectronics Corporation | Annual Report 2019 None None None None None None collateral Shares as Shares (thousand) 26,692 None 20,125 None 961,898 None 795,795 None 236,800 None 100,446 None 331,577 None 616,333 None 175,494 None 184,500 None 152,878 None 769,125 None 346,630 None $146,730 None 3,601,365 None 8,237,712 None 1,521,311 None 1,277,414 None - - - - Fair value/ Fair Net assets value assets Net 4.71 2.70 6.56 1.16 0.22 9.29 0.83 0.72 9.79 7.66 8.67 1.70 4.35 1.68 0.98 13.03 19.73 17.63 17.00 15.75 Percentage of Percentage ownership (%) ownership - - 26,692 20,125 961,898 236,800 100,446 331,577 795,795 616,333 175,494 184,500 152,878 769,125 346,630 December 31, 2019 31, December $146,730 3,601,365 8,237,712 1,521,311 1,277,414 ------Carrying amount Carrying 0 324 938 1,600 2,675 9,883 6,692 5,627 1,184 1,166 20,000 13,960 16,445 12,000 18,000 18,182 17,511 22,144 16,680 12,521 20,483 10,715 105,356 196,136 (thousand) bonds/ shares bonds/ Units (thousand)/ Units Financial statement account statement Financial Financial assets at fair value through other comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, Financial assets at fair value through profit or loss, current loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, current loss, or profit through value fair at assets Financial current loss, or profit through value fair at assets Financial current loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial ------Relationship The Company's director The Company's Name of securities of Name MILLERFUL NO.1 ESTATE REAL INVESTMENT TRUST ACTION ELECTRONICS CO., LTD. INC. PIXART IMAGING, LTD. CO., ELECTRONICS YUAN KING PIXTECH, INC. CORP. TECHNOLOGY CHEN UNITED SHEN FU SEMICONDUCTOR INC. HOLTEK INC. INVESTMENT HOLDING OCTTASIA LTD. CO., GASES UNITED INDUSTRIAL TECHNOLOGY CORP.AMIC SUBTRON LTD. CO., TECHNOLOGY LTD. CO., ELECTRONICS YUAN KING EPISTAR CORP. TOPOINT LTD. CO., TECHNOLOGY PROMOS TECHNOLOGIES INC. INTEGRATEDSILICON SYSTEMS CORP. LIMITED HOLDING UNIMICRON CORP. TECHNOLOGY UNIMICRON ITE TECH. INC. MICROELECTRONICSNOVATEK CORP. TONBU, INC. INC. TECHNOLOGY AETAS GOLF & COUNTRYTA SHEE CLUB PTE.MTIC LTD. HOLDINGS Fund Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Type of securities of Type Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount UNITED MICROELECTRONICS CORPORATION 320 Financial Review None None None None None None None None collateral Shares as Shares (thousand) 7,280 None 46,896 None 69,053 None 12,087 None 17,125 None 18,504 None 10,232 None 34,535 None 26,903 None 53,850 None 99,584 None 41,160 None 52,522 None $2,923 None 124,875 None 166,996 None 320,130 None - - - 6,574 - 48,101 62,376 122,818 Fair value/ Fair Net assets value assets Net 2.96 7.29 3.21 8.18 6.93 6.67 5.35 5.32 5.31 5.12 4.21 3.72 3.71 3.16 3.11 2.88 2.70 9.12 3.49 15.12 19.65 15.94 14.49 13.76 10.23 Percentage of Percentage ownership (%) ownership 7,280 46,896 69,053 12,087 17,125 18,504 10,232 34,535 26,903 53,850 99,584 41,160 52,522 $2,923 124,875 166,996 320,130 December 31, 2019 31, December - - 6,574 - - 48,101 62,376 122,818 Carrying amount Carrying 3 15 957 900 526 800 265 1,514 1,800 3,750 2,500 1,800 3,150 6,609 1,968 4,600 3,838 3,000 4,416 1,200 6,741 10,719 10,059 (thousand) bonds/ shares bonds/ - Units (thousand)/ Units Financial statement account statement Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial 6,374 noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial ------Relationship Name of securities of Name TRANSLINK CAPITAL PARTNERS IV, L.P. PARTNERSTRANSLINK CAPITAL IV, DARCHUN VENTURE CORP. DARCHUN TECHNOLOGY CORP.SOLARGATE TRONC-E LTD. CO., CENTERA PHOTONICS INC. RESOURCE TECHNOLOGYEVERGLORY CO., LTD. CORP. MATERIALS ADVANCE LTD. CO., MONTJADE ENGINEERING NEW LTD. CO., TECHNOLOGY SMART WIN LTD. CO., WIN TECHNOLOGY PRECISION VENTURECORP. CAPITAL RISELINK XMI LTD. ALL-STARS TECHNOLOGYLICO CORP. CORP.ACTI LTD. CO., HOLDINGS GENOMICS ACT BIOTECHLTD. CO., MERIDIGEN EXCELLENCE OPTOELECTRONICS INC. STATE SYSTEMSOLID LTD.CO., SUBTRON LTD. CO., TECHNOLOGY TECHNOLOGIES, INC. DEVICES MEDICAL TAIWAN AULISA INC. TECHNOLOGIES ANIMATION TOPOINT LTD. CO., TECHNOLOGY LTD. CO., INTERNATIONAL BRIGHT SHELAND LTD. SEMICONDUCTOR CO., TAIWAN TRENDFORCE FUND SPC-TRENDFORCE CAPITAL CAPITAL SP I FUND Fund Fund Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Type of securities of Type
ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount FORTUNE CAPITAL VENTURE CORP. 321 United Microelectronics Corporation | Annual Report 2019 None None None None None None None None None None None None None collateral Shares as Shares (thousand) N/A N/A 9,540 None 1,027 None 6,769 None 46,186 None 30,030 None 59,459 None 37,087 None 13,900 None $1,432 None 334,635 None 264,495 None 179,600 None 176,019 None 121,408 None - 4,564 - 9,370 24,060 25,045 65,260 24,088 125,650 3 Fair value/ Fair Net assets value assets Net 0.95 0.75 7.00 0.14 2.07 2.15 1.71 1.61 1.02 0.65 0.53 0.46 0.02 2.23 0.84 1.96 0.44 Percentage of Percentage ownership (%) ownership ------3 9,540 3,987 1,027 6,769 46,186 30,030 59,459 37,087 10,000 13,900 $1,432 334,635 264,495 179,600 176,019 121,408 December 31, 2019 31, December - - - - 4,564 - 9,370 24,060 25,045 65,260 24,088 125,650 Carrying amount Carrying 2 1 21 40 311 327 600 261 700 265 200 200 125 1,449 2,250 1,900 1,141 8,000 2,114 1,000 9,930 1,300 10,500 16,079 23,909 (thousand) bonds/ shares bonds/ - Units (thousand)/ Units Financial statement account statement Financial Financial assets at fair value through other comprehensive other through value fair at assets Financial noncurrent income, comprehensive other through value fair at assets Financial noncurrent income, Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit 582 through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial investments for Prepayments investments for Prepayments Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial ------Relationship Parent company Parent Name of securities of Name VERTEX V (C.I.) L.P. FUND V VERTEX EJOULE INTERNATIONAL LIMITED CORP. FLOADIA CEREBREX, INC. INC. FORTEMEDIA, INC. ACEPODIA, BRAVOTEK CORP. LTD. RADIO GEAR WALTOP INTERNATIONAL CORP. TECHNOLOGYCHITEC CORP., LTD. INC. MOBILE DEVICES LTD. CO., WIESON TECHNOLOGIES TECHNOLOGY APPLIED CORP. MATERIALS SOLAR CRYSTALWISE TECHNOLOGY INC. INC. PHARMACEUTICALS, NORATECH CO., LTD.TAIWANJ PHARMACEUTICALS POWERTEC CORP. ELECTROCHEMICAL LTD. CO., TAIWAN TIGERAIR LTD. CO., PRECISION FUSHENG LTD. CO., LINTES TECHNOLOGY TOOLS, INC. MACHINE QUASER INC. FORTEMEDIA, LTD. CO., TAIWAN HANDOTAI SHIN-ETSU UNITED MICROELECTRONICS CORP. INC. TECHNOLOGY EMPASS CO., LTD. VALVES VALUE EPISIL-PRECISION INC. Fund Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Type of securities of Type Convertible bonds Convertible Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred Stock Stock-Preferred ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount FORTUNE CAPITAL VENTURE CORP. 322 Financial Review None None None None None collateral Shares as Shares (thousand) $- 7,452 None 8,220 None 7,314 None 5,658 None 41,853 None 84,364 None 11,708 None 26,630 None 53,465 None 20,192 None 19,328 None 30,090 None 40,750 None 11,120 None 10,060 None 111,766 None 181,831 None 223,462 None 431,012 None 243,278 None - Fair value/ Fair Net assets value assets Net 2.67 4.91 2.74 4.24 6.08 4.98 4.62 4.58 3.20 1.02 0.87 0.80 0.77 9.00 Percentage of Percentage ownership (%) ownership 0.49 - 18.18 15.35 13.99 - - - $- 7,452 8,220 7,314 5,658 41,853 84,364 11,708 26,630 53,465 20,192 19,328 30,090 40,750 11,120 10,060 111,766 181,831 223,462 431,012 243,278 December 31, 2019 31, December - 93,559 0.64 93,559 35,000 0.25 35,000 33,179 0.64 33,179 Carrying amount Carrying 9 2 50 779 500 365 100 100 6,470 6,433 2,252 8,529 1,200 5,435 1,829 1,127 1,000 1,422 1,978 1,000 150,500 (thousand) bonds/ shares bonds/ - - - - Units (thousand)/ Units Financial statement account statement Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, current loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial ------Relationship Name of securities of Name EVERYI CAPITAL ASIA FUND, L.P. ASIA CAPITAL EVERYI OPPORTUNITIES PORTFOLIO HILL SEGREGATED FUND, OAK PARTNERS L.P.TRANSLINK CAPITAL III, GROWTH L.P. FUND, CHINA GREATER H&QAP WINKING ENTERTAINMENT LTD. BEAUTY INTERNATIONAL LTD. ESSENTIALS CORP.ACTI EXCELLENCE OPTOELECTRONICS INC. RESOURCE TECHNOLOGYEVERGLORY CO., LTD. CORP. MATERIALS ADVANCE XMI LTD. ALL-STARS GROUP MEDITECH SUNDIA LTD. CO., WIESON TECHNOLOGIES ENTEREX INTERNATIONAL LTD. HANDA PHARMACEUTICALS, INC. TECHNOLOGY INC. ANALYSIS MATERIALS LTD. CO., SIMPLO TECHNOLOGY TXC CORP. LTD. CO., LINTES TECHNOLOGY STEELEVERGREEN CORP. CLOUD MOMENTCLOUD INC. (CAYMAN) MICROELECTRONICSSIGURD CORP. EPISIL-PRECISION INC. INTERNATIONAL LTD.TECHCENTIAL POWTEC CORP.(formerly ELECTROCHEMICAL POWERTEC ENERGY CORP.) Fund Fund Fund Fund Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock Type of securities of Type Convertible bonds Convertible bonds Convertible bonds Convertible bonds Convertible ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount CAPITALTLC CO., LTD. 323 United Microelectronics Corporation | Annual Report 2019 None None None None None None None None None None collateral collateral Shares as Shares as Shares (thousand) (thousand) 959 916 190 703 N/A 6,898 None 2,077 None 16,371 None 67,880 None 11,608 None $6,192 None 169,778 None 179,734 None 128,396 None 178,037 None 264,029 None 104,054 None 7,123 194,971 Fair value/ Fair Fair value/ Fair Net assets value assets Net Net assets value assets Net USD USD USD USD USD USD USD USD USD 8.87 11.47 14.33 Percentage of Percentage of Percentage ownership (%) ownership (%) ownership 9.76 5.35 ------959 916 190 703 6,898 3,987 2,077 16,371 11,608 67,880 $6,192 169,778 179,734 128,396 178,037 264,029 104,054 December 31, 2019 31, December 2019 31, December ------7,123 5.03 194,971 Carrying amount Carrying amount Carrying USD USD USD USD USD USD USD USD USD 40 279 359 770 2,685 2,377 5,332 8,519 1,739 2,000 7,035 21,703 35,863 (thousand) (thousand) bonds/ shares bonds/ shares bonds/ 3 7 ------Units (thousand)/ Units (thousand)/ Units Financial statement account statement Financial account statement Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Prepayments for investments for Prepayments noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, current loss, or profit through value fair at assets Financial current loss, or profit through value fair at assets Financial current loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial 26,499 noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial ------Relationship Relationship Name of securities of Name securities of Name TRANSLINK CAPITAL PARTNERS L.P.TRANSLINK CAPITAL III, L.P. PARTNERSTRANSLINK CAPITAL IV, TRANSLINK MANAGEMENT III, L.L.C. III, MANAGEMENT TRANSLINK VALUE VALVES CO., LTD. VALVES VALUE INC. INVESTMENT HOLDING OCTTASIA XMI LTD. ALL-STARS LTD. SP IV ALL-STARS SWIFTSTACK, INC. CLOUDWORDS, INC. CNEX LABS, INC. YOUJIA GROUP LTD.YOUJIA ALO7 LTD. LTD. HOLDINGS ADWO MEDIA IMO, INC. GROUP LTD. CO., FINANCIAL HIGHLANDER X2 POWER TECHNOLOGIES LTD. LTD. VIDEO GAME MOMENTCLOUD INC. (CAYMAN) PLAYNITRIDE INC. EJOULE INTERNATIONAL LTD. LTD.TURNING POINT LASERS ARTERY TECHNOLOGY CORP. Fund Fund Stock Stock Stock Stock Capital Type of securities of Type securities of Type Convertible bonds Convertible bonds Convertible bonds Convertible Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount CAPITALTLC CO., LTD. UMC CAPITAL CORP.
324 Financial Review None None None None None None None None None None collateral Shares as Shares (thousand) 56 51 240 133 2,695 None 2,989 None 1,678 None 6,631 None 3,433 None 2,092 None 9,112 None 4,789 None 1,630 None 1,307 None 3,237 None 1,386 None 4,968 None 6,592 None 1,165 None 2,266 None 300 4,526 3,601 Fair value/ Fair Net assets value assets Net USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD 3.33 1.76 1.69 Percentage of Percentage ownership (%) ownership 4.53 0.46 ------56 51 240 133 1,630 2,695 2,989 1,678 6,631 3,433 2,092 9,112 4,789 1,307 3,237 1,386 4,968 6,592 1,165 2,266 December 31, 2019 31, December 300 - - - - - 4,526 - - - - 3,601 4.00 Carrying amount Carrying USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD 4 80 614 517 175 2,644 3,052 1,349 8,520 3,866 3,500 4,980 2,855 6,555 1,287 12,241 (thousand) bonds/ shares bonds/ - - - - - Units (thousand)/ Units Financial statement account statement Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent 64 loss, or profit through value fair at assets Financial 27,819 noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial 9,461 2,770 noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial 174 ------Relationship Name of securities of Name TRANSLINK CAPITAL PARTNERSTRANSLINK CAPITAL L.P. II, OPPORTUNITIES PORTFOLIO HILL SEGREGATED FUND, OAK L.P. VENTURES II, GROVE VENTURES L.P. XI, SIERRA L.P. V, STORM FUND VENTURES ACHIEVE MADE INTERNATIONAL LTD. MADE ACHIEVE GLYMPSE, INC. ACHIEVE MADE INTERNATIONAL LTD. MADE ACHIEVE CNEX LABS, INC. GLYMPSE, INC. INC. ATSCALE, LTD.SENSIFREE INC. HOLDINGS, APPIER LTD. HOLDINGS DCARD NEXTINPUT, INC. INC. SHOCARD, GCT SEMICONDUCTOR, INC. INC. FORTEMEDIA, LTD. CO., TECHNOLOGIES SIFOTONICS INC. ENERGY, NEVO SWIFTSTACK, INC. SYSTEMS, INC. NEXENTA CLOUDWORDS, INC. LTD. TECHNOLOGY VISION EAST INC. RENIAC, INC. BLUESPACE.AI, Fund Fund Fund Fund Fund Stock Type of securities of Type Convertible bonds Convertible Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred stock Stock-Preferred ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount UMC CAPITAL CORP.
325 United Microelectronics Corporation | Annual Report 2019 None None collateral collateral collateral collateral Shares as Shares as Shares as Shares as Shares (thousand) (thousand) (thousand) (thousand) $- 33,499 None $5,561 None $85,482 None 38,533 Fair value/ Fair Fair value/ Fair value/ Fair Fair value/ Fair Net assets value assets Net Net assets value assets Net value assets Net Net assets value assets Net RMB 1.18 18.00 Percentage of Percentage of Percentage of Percentage of Percentage ownership (%) ownership (%) ownership (%) ownership (%) ownership 5.00 11.13 $- 33,499 $5,561 $85,482 December 31, 2019 31, December 2019 31, December 2019 31, December 2019 31, December 38,533 9.71 Carrying amount Carrying Carrying amount Carrying amount Carrying amount Carrying RMB - - - 54 375 (thousand) (thousand) (thousand) (thousand) bonds/ shares bonds/ shares bonds/ shares bonds/ shares bonds/ Units (thousand)/ Units (thousand)/ Units (thousand)/ Units (thousand)/ Units Financial statement account statement Financial account statement Financial account statement Financial account statement Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial Financial assets at fair value through profit or loss, noncurrent loss, or profit through value fair at assets Financial noncurrent loss, or profit through value fair at assets Financial - - - - - Relationship Relationship Relationship Relationship Name of securities of Name securities of Name securities of Name securities of Name SPARKLABS GLOBAL VENTURES FUND I, L.P. I, FUND VENTURES GLOBAL SPARKLABS L.P. II, FUND KOREA SPARKLABS FUND LANHOR TIAN TAI PHOTOELECTRICITY TAI TIAN CO., LTD. INTEGRATEDPACIFIC-GREEN TECHNOLOGY INC. Fund Fund Fund Stock Stock Type of securities of Type securities of Type securities of Type securities of Type ATTACHMENT 3 (Securities held as of December 31, 2019) (Excluding subsidiaries, associates and joint ventures) and joint associates subsidiaries, (Excluding 2019) 31, December of as held 3 (Securities ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount DEVELOPMENT ENERGY TERA CO., LTD. NEXPOWER CORP. TECHNOLOGY SINO PARAGON LIMITED UNITED SEMICONDUCTOR (XIAMEN) CO., LTD.
326 Financial Review (Note 2) (Note 3) $2,281,631 17,515,233 Amount (Note 1) Ending balance Ending shares bonds/ (thousand) 237,000 Units (thousand)/ $- Gain (Loss) Gain from disposal $- Cost $- Disposal Amount shares bonds/ (thousand) Units (thousand)/ $720,000 - Amount Addition shares bonds/ (thousand) Units (thousand)/ $1,520,575 72,000 Amount (Note 1) Beginning balance shares bonds/ (thousand) 168,000 18,447 2,220,103 97,800 15,711,370 - - - - 116,247 Units (thousand)/ - Associate Relationship Counter-party Purchase of newly issued shares issued newly of Purchase FUJITSU SEMICONDUCTOR FUJITSU LIMITED Financial statement account statement Financial Investments accounted for accounted Investments method equity under the for accounted Investments method equity under the Name of the securities the Name of TRIKNIGHT CAPITAL CORPORATION UNITED SEMICONDUCTOR LTD. CO., JAPAN which was reclassified changes in fair value $84 thousand from financial assets at fair value through other comprehensive, noncurrent to investments accounted for under equity method. The ending balance includes bargain purchase gain of $171,585 thousand resulted from the acquisition, $171,585 acquisition, of purchasethe resulted bargain from gain thousand includes balance ending The method. under equity for accounted investments to noncurrent comprehensive, other through assets value at fair financial $84 from thousand value fair in changes was reclassified which gains or losses on hedging instruments of $2,572 thousand, share of profit of associates and joint ventures of $270,787 thousand and exchange differences on translation of foreign operations adjustment under equity method of $(945,069) thousand. of method equity under adjustment operations foreign of translation on differences exchange and $270,787 thousand of ventures joint and associates of profit of share $2,572 thousand, of instruments hedging on losses or gains Stock Stock Type of securities of Type Note 1 : The amounts of beginning and ending balances of financial assets at fair value through other comprehensive income, noncurrent are recorded at the prevailing market prices. The amounts of beginning and ending balances of investments accounted for under the equity method include adjustments under the equity method. equity adjustments under the include method equity under the for accounted investments of balances ending and beginning of amounts prices. market The are recorded prevailing at the noncurrent income, comprehensive other through assets value at fair financial of balances ending and beginning of amounts The 1Note : $(30,000) thousand. of reduction capital and $71,056 thousand of ventures joint and associates of profit of share includes balance ending The 1, 2019, 2 : October Note 84.1% on of interest ownership remaining of acquisition the of completion upon requisition and disposal as was treated FUJITSU SEMICONDUCTOR LIMITED) MIE to was changed name the (Before CO., SEMICONDUCTOR LTD. JAPAN UNITED 15.9% in of interest ownership held previously The 3 : Note ATTACHMENT 4 (Individual securities acquired or disposed of with accumulated amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December year 31, the 2019) for stock capital the 20 or percent of NT$300 of million lower the exceeding accumulated amount with acquired disposed securities or of ATTACHMENT 4 (Individual (Amount thousand; in Currency denomination NTD in or foreign in currencies) CORPORATION MICROELECTRONICS UNITED
327 United Microelectronics Corporation | Annual Report 2019 Other commitments utilization and status of Date of acquisition of Date Price reference amount Transaction Date of transaction former holder and acquirer of property Relationship between of property Where counter-party is a related party, details of prior transactions Former holder Relationship Counter-party Payment status amount Transaction date Transaction None Name of properties ATTACHMENT 5 (Acquisition of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019) (Amount in thousand; Currency denomination in NTD or in foreign currencies)
328 Financial Review Other commitments Price reference Price disposal Reason of Relationship Counter-party Gain (Loss) from disposal from collection Status of proceeds Status of amount Transaction amount Carrying acquisition Date original of date Transaction None Names of properties ATTACHMENT 6 (Disposal of individual real estate with amount exceeding the lower of NT$300 million or 20 percent of the capital stock for the year ended December 31, 2019) ended December the year for the capital 20 percentstock of or NT$300 of million lower the exceeding amount real estateATTACHMENT with individual of 6 (Disposal currencies) in foreign in NTD or denomination Currency thousand; in (Amount 329 United Microelectronics Corporation | Annual Report 2019 Note Note Note Note Note 0 % 0 % 3 % 1 % 2 % 8 % 3 % 1 % 0 % 7 % 99 % 93 % 29 % Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage receivables (payable) receivables receivables (payable) receivables receivables (payable) receivables receivables (payable) receivables receivables (payable) receivables 705 4,920 7,738 1,109 31,635 11,906 197,973 186,971 2,310,603 $5,937,706 Balance Balance Balance Balance Balance 31,334 85,373 608,622 Notes and accounts receivable (payable) receivable accounts and Notes Notes and accounts receivable (payable) receivable accounts and Notes Notes and accounts receivable (payable) receivable accounts and Notes (payable) receivable accounts and Notes Notes and accounts receivable (payable) receivable accounts and Notes USD JPY RMB RMB RMB RMB USD USD JPY Term Term Term Term Term N/A N/A N/A N/A N/AN/A N/A N/A N/AN/AN/A N/A N/A N/A N/A N/A N/AN/A N/A N/A N/AN/A N/A N/A N/A N/A Unit Unit Unit Unit Unit price price price price price length transactionlength length transactionlength length transactionlength transactionlength length transactionlength Details of non-arm's Details of non-arm's Details of non-arm's Details of non-arm's Details of non-arm's Term Term Term Term Term 1 %1 % Net 60 days 30 days Month-end 5 %2 %1 % Net 45 days Net 60 days Net 60 days 9 % Net 60 days 3 % Net 60 days 2 %0 % Net 60 days Net 60 days 6 % Net 60 days 98 % Net 60 days 94 % Net 60 days 39 % Net 60 days purchases (sales) purchases (sales) purchases (sales) purchases (sales) purchases (sales) Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage Percentage of total of Percentage Transactions Transactions Transactions Transactions Transactions 4,937 23,335 166,527 849,777 $47,736,335 Amount Amount Amount Amount Amount 1,209,310 805,385 1,504,518 12,877,097 121,132 56,029 33,968 3,933,964 USD JPY RMB RMB RMB RMB USD USD JPY Sales Sales Sales Sales Sales Sales Sales Sales (Sales) (Sales) (Sales) (Sales) (Sales) Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Associate Associate Associate Associate Associate Associate Associate Associate Subsidiary Subsidiary Subsidiary Relationship Relationship Relationship Relationship Relationship Parent company Purchases Parent company Purchases Counter-party Counter-party Counter-party Counter-party Counter-party ATTACHMENT 7 ( Relatedtransactions for purchases and party sales amounts exceeding the lower of NT$100 millionATTACHMENT or 20 percent of capital ended December stock for the year 31, 2019) denomination in thousand; Currency currencies) or in(Amount in NTD foreign UNITED MICROELECTRONICS CORPORATION (USA) UMC GROUP JAPAN UMC GROUP UNITED SEMICONDUCTOR CO., (XIAMEN) LTD. CORPORATION TECHNOLOGY FARADAY UMC GROUP (USA) CORPORATION MICROELECTRONICS UNITED UNITED SEMICONDUCTOR CO., (XIAMEN) LTD. CO., (SUZHOU) LTD. TECHNOLOGY HEJIAN UMC GROUP JAPAN CORPORATION MICROELECTRONICS UNITED CO., (SUZHOU) LTD. TECHNOLOGY HEJIAN LTD. CO., (SUZHOU) TECHNOLOGY HEJIAN CORPORATION TECHNOLOGY FARADAY JAPAN UMC GROUP (USA) UMC GROUP UNITED SEMICONDUCTOR (XIAMEN) CO., LTD. (USA) UMC GROUP
330 Financial Review $- $- Loss allowance Loss allowance Loss 31,635 $5,945,175 305,829 11,180 subsequent period subsequent subsequent period subsequent Amount in received Amount in received RMB Collection status Collection status Collection Collection in period subsequent Collection in period subsequent $- - Overdue receivables Overdue Overdue receivables Overdue Amount Amount RMB 3,525 RMB 40,320 5.20 Turnover Turnover rate (times) rate (times) 31,635 5.94 $5,945,175 7.21 Total Total RMB $- Other Other receivables receivables Ending balance Ending Ending balance Ending 31,635 Accounts Accounts receivable receivable RMB $- $- $5,937,706 $7,469 Notes Notes receivable receivable - 608,622 13,671 622,293 Associate Subsidiary Subsidiary Relationship Relationship Counter-party Counter-party HEJIAN TECHNOLOGY (SUZHOU) CO., LTD. CO., (SUZHOU) TECHNOLOGY HEJIAN ATTACHMENT 8 (Receivables from related parties with amounts exceeding the lower of NT$100 million or 20 percent of capital stock as of December 31, 2019) December of as stock capital of 20 percent or million NT$100 of lower the exceeding amounts with parties related from 8 (Receivables ATTACHMENT currencies) foreign in NTD or in denomination Currency thousand; in (Amount CORPORATION MICROELECTRONICS UNITED (USA) GROUP UMC JAPAN GROUP UMC TECHNOLOGY FARADAY CORP.
331 United Microelectronics Corporation | Annual Report 2019 Note Note 979 940 (886) 2,803 24,565 31,312 71,056 51,278 47,467 89,068 (14,859) (24,195) 870,821 $77,135 270,787 342,966 962,222 (221,978) (128,750) (200,700) (5,124,276) (loss) recognized (loss) Investment income Investment 979 940 (886) 2,803 24,565 31,312 47,467 13,131 870,821 177,640 $77,135 166,098 270,787 342,966 212,066 (279,115) (107,860) (119,265) (420,302) 2,643,852 (5,124,276) investee company investee Net income (loss) of (loss) income Net 20,499 42,022 95,116 18,157 142,378 590,702 121,840 260,035 642,660 (140,850) 2,281,631 4,273,912 4,378,193 3,829,934 1,470,499 3,756,049 4,398,331 11,643,953 23,183,005 $1,755,033 17,515,233 Carrying amount Carrying 40.00 36.49 30.87 79.83 13.78 45.44 42.00 47.75 100.00 100.00 100.00 (%) ownership Percentage of Percentage 9 1 Investment as of December 31, 2019 31, December of as Investment 110 116,247 100.00 shares Number of Number (thousand) 5,421 1,520 1,520 100.00 4,3002,600 4,300 2,600 100.00 100.00 38,918 34,240 16,438 16,43881,500 100.00 71,663 100.00 60,000 12,00021,000 12,000 21,000 977,000 977,000 100.00 550,000 309,102 664,966 100.00 336,241 277,280 4,610,000 397,956 100.00 1,680,000 237,000 2,300,000 46,000 4,160,053 401,734 100.00 1,707,482 144,948 5,956,791 33,998 9,999,974 USD USD USD KRW USD USD USD JPY USD USD JPY SGD USD 5,421 1,520 4,300 2,600 38,918 16,438 81,500 60,000 12,000 21,000 Initial Investment Initial 977,000 550,000 309,102 336,241 4,610,000 2,370,000 2,300,000 3,440,053 1,894,660 5,956,791 64,421,068 Ending balanceEnding balance Beginning USD USD USD USD USD JPY KRW USD USD USD SGD USD JPY Main businesses and products businesses Main IC Sales IC holding Investment capital Venture holding Investment Sales IC activities support Marketing holding Investment holding Investment holding Investment holding Investment holding Investment holding Investment holding Investment holding Investment Consulting and planning for venture for and planning Consulting capital integrated of and manufacturing Sales circuits integrated of and manufacturing Sales circuits power solar of and manufacturing Sales batteries integrated application-specific of Design circuit Address USA The Netherlands IslandsCayman activities support Marketing Samoa holding Investment Taiwan Taipei City, Samoa Taiwan Taipei City, Japan Korea Samoa Samoa Islands British Virgin Japan County, Hsinchu Taiwan City, Taichung Singapore Islands British Virgin Taiwan Taipei City, Taiwan Taipei City, Taiwan Taipei City, Taiwan City, Hsinchu Taiwan Investee company Investee The UNITED SEMICONDUCTOR JAPAN CO., LTD. became consolidated entity on October 1,2019. on October entity consolidated became LTD. CO., JAPAN SEMICONDUCTOR The UNITED ： ATTACHMENT 9 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) Mainland in investment including (Not 2019) 31, December of as companies investee of information and related locations 9 (Names, ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount UNITED MICROELECTRONICS CORPORATION UMC GROUP (USA) UNITED MICROELECTRONICS (EUROPE) B.V. UMC CORP. CAPITAL LIMITEDGREEN EARTH TLC CO., CAPITAL LTD. UMC INVESTMENT (SAMOA) LIMITED FORTUNE VENTURECORP. CAPITAL UMC GROUP JAPAN LTD. CO., UMC KOREA OMNI GLOBAL LIMITED LIMITED PARAGON SINO BEST ELITE INTERNATIONAL LIMITED LTD. CO., UNITED SEMICONDUCTOR JAPAN WAVETEK MICROELECTRONICS CORPORATION NEXPOWER CORP. TECHNOLOGY PTE.MTIC LTD. HOLDINGS INC. UNITECH CAPITAL TRIKNIGHT CORPORATION CAPITAL LTD. INVESTMENT CO., CHIEH HSUN LTD. INVESTMENT CO., YUAN YANN CORPORATION TECHNOLOGY FARADAY Note
332 Financial Review Note Note Note Note - - - 6 (0) 1,815 (1,875) (2,835) (9,110) $7,443 47,315 $(3,560) (37,044) (41,502) (51,035) $(22,063) (140,654)
(loss) recognized (loss) (loss) recognized (loss) (loss) recognized (loss) recognized (loss) Investment income Investment Investment income Investment income Investment Investment income Investment USD USD - - - 6 (1) (6,380) 21,843 $7,443 $(3,560) (34,224) 249,901 (133,431) (165,087) $(22,063) (279,115) (420,302) $(420,302) investee company investee investee company investee company investee investee company investee Net income (loss) of (loss) income Net of (loss) income Net of (loss) income Net Net income (loss) of (loss) income Net USD USD - - - - 592 552 5,742 3,424 7,164 (35,816) (98,710) $10,264 122,060 $38,469 121,973 $61,238 276,866
Carrying amount Carrying Carrying amount Carrying amount Carrying Carrying amount Carrying USD USD 0.66 44.45 25.90 32.78 30.00 25.14 12.14 21.90 33.46 10.38 12.00 100.00 100.00 100.00 (%) (%) (%) (%) ownership ownership ownership ownership Percentage of Percentage of Percentage of Percentage Percentage of Percentage - Investment as of December 31, 2019 31, December of as Investment 2019 31, December of as Investment 2019 31, December of as Investment Investment as of December 31, 2019 31, December of as Investment 1,194 1,000 4,251 5,900 8,645 23,827 shares shares shares shares Number of Number of Number of Number (thousand) (thousand) (thousand) Number of Number (thousand) - - - - 900 900 750 750 200 200 4,036 2,1601,120 2,160 6,000 6,000 22,581 22,500 22,500 283,439 13,932 $100,752 18,655 100.00 - 5,900 95,916 888,019 1,688,630 USD USD EUR USD USD USD EUR EUR USD Beginning balance Beginning 750 900 200 5,900 6,000 4,036 2,160 22,500 10,000 95,916 Initial Investment Initial Investment Initial Investment Initial Initial Investment Initial 277,508 888,019 $100,752 1,688,630 - - 8,856 8,856 Ending balance Ending Ending balanceEnding balance Beginning Ending balanceEnding balance Beginning Ending balanceEnding balance Beginning EUR USD USD USD USD USD EUR USD Main businesses and products businesses Main Main businesses and products businesses Main Main businesses and products businesses Main and products businesses Main Solar project Solar client Thin holding Investment holding Investment holding Investment project Solar project Solar Investment holding Investment holding Investment holding Investment Chemicals and filtration products & products and filtration Chemicals service control Microcontamination power solar of and manufacturing Sales batteries integrated of and manufacturing Sales circuits equipment, measuring devices, Medical and consumables reagents power solar of and manufacturing Sales batteries Address Address Address Address Taichung City, Taiwan City, Taichung Germany Taiwan Xinbei City, Samoa Taiwan Taipei City, Taiwan City, Taichung Taiwan Taipei City, IslandsCayman holding Investment Hongkong Germany Germany Hsinchu City, Taiwan City, Hsinchu Services Technical Energy Taiwan City, Hsinchu Hongkong County, Hsinchu Taiwan Samoa USA Investee company Investee Investee company Investee company Investee company Investee ATTACHMENT 9 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) Mainland in investment including (Not 2019) 31, December of as companies investee of information and related locations 9 (Names, ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount FORTUNE CAPITAL VENTURE CORP. TERA ENERGY DEVELOPMENT CO., LTD. PURIUMFIL INC. NEXPOWER CORP. TECHNOLOGY WINAICO IMMOBILIEN GMBH KONG UNITED HONG CORPORATION LED LIMITED CLIENTRON CORP. WAVETEK MICROELECTRONICS CORPORATION CAPITALTLC CO., LTD. CORP. CAPITAL SOARING CORP. CAPITAL CHIEH HSUN LTD. CO., VSENSE NEXPOWER CORP. TECHNOLOGY INC. INVESTMENTS, YUNG LI UMC CAPITAL CORP. UMC CAPITAL (USA) PARTNERSTRANSLINK CAPITAL L.P. I, DEVELOPMENT ENERGY TERA CO., LTD. ENERGY INVESTMENT (HK) LIMITEDEVERRICH WINAICO IMMOBILIEN GMBH PROJEKT SOLAR 1WINAICO GMBH
333 United Microelectronics Corporation | Annual Report 2019 Note Note Note Note Note Note Note $20 (169) $237 1,583 29,580 $(6,920) $(89,915) $877,676 $877,676 (loss) recognized (loss) recognized (loss) recognized (loss) (loss) recognized (loss) (loss) recognized (loss) recognized (loss) Investment income Investment Investment income Investment income Investment income Investment Investment income Investment income Investment $20 (169) $237 1,583 29,580 $(6,920) $(89,915) $877,676 $877,676 investee company investee company investee company investee investee company investee investee company investee company investee Net income (loss) of (loss) income Net Net income (loss) of (loss) income Net of (loss) income Net of (loss) income Net of (loss) income Net of (loss) income Net $- 8,908 $2,124 35,164 $2,777 536,647 $30,256 $23,113,468 $23,113,468 Carrying amount Carrying amount Carrying amount Carrying Carrying amount Carrying amount Carrying amount Carrying - 100.00 100.00 100.00 100.00 100.00 100.00 (%) (%) (%) (%) (%) (%) ownership ownership ownership ownership ownership ownership Percentage of Percentage of Percentage of Percentage of Percentage of Percentage of Percentage - 0 0 4 Investment as of December 31, 2019 31, December of as Investment 2019 31, December of as Investment 2019 31, December of as Investment 2019 31, December of as Investment 2019 31, December of as Investment 2019 31, December of as Investment 60 shares shares shares shares shares shares Number of Number (thousand) of Number of Number (thousand) of Number of Number of Number (thousand) (thousand) (thousand) (thousand) - - 60 950 9,000 9,000 100.00 1,500 1,500 100.00 3,637 1,000 35,000 354,000 354,000 JPY USD USD EUR USD USD USD USD USD Beginning balance Beginning balance Beginning balance Beginning 60 950 9,000 1,500 1,000 35,000 Initial Investment Initial Investment Initial Investment Initial Investment Initial Investment Initial Initial Investment Initial 354,000 354,000 - Ending balance Ending balance Ending balance Ending Ending balanceEnding balance Beginning Ending balanceEnding balance Beginning balanceEnding balance Beginning JPY USD USD USD USD USD USD USD Main businesses and products businesses Main and products businesses Main and products businesses Main Main businesses and products businesses Main and products businesses Main and products businesses Main Investment holding Investment service and marketing Sales plant power Photovoltaic holding Investment holding Investment Insurance Research & Development & Research Development & Research manufacturing Semiconductor and consulting development technology services Address Address Address Address Address Address Samoa USA Italy Islands British Virgin Islands British Virgin Singapore Japan USA USA Investee company Investee company Investee company Investee company Investee company Investee company Investee SOCIALNEX ITALIA 1 S.R.L. was disposed in November 2019. November in disposed was 1 S.R.L. ITALIA SOCIALNEX ： ATTACHMENT 9 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) Mainland in investment including (Not 2019) 31, December of as companies investee of information and related locations 9 (Names, ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount WAVETEK MICROELECTRONICS CORPORATION WAVETEK MICROELECTRONICS INVESTMENT LIMITED(SAMOA) WAVETEK MICROELECTRONICS INVESTMENT (SAMOA) LIMITED WAVETEK MICROELECTRONICS CORPORATION (USA) NEXPOWER CORP. TECHNOLOGY 1 S.R.L. ITALIA SOCIALNEX Note BEST ELITE INTERNATIONAL LIMITED LIMITED TECHNOLOGY INFOSHINE INFOSHINE TECHNOLOGY LIMITED LIMITED OAKWOOD ASSOCIATES OMNI GLOBAL LIMITED CORPORATION UNITED MICROTECHNOLOGY (NEW YORK) CORPORATION UNITED MICROTECHNOLOGY (CALIFORNIA) PTE.ECP VITA LTD. LTD. CO., JAPAN UMC TECHNOLOGY
334 Financial Review Note (loss) recognized (loss) Investment income Investment $(5,124,809) $(5,124,809) investee company investee Net income (loss) of (loss) income Net $11,617,342 Carrying amount Carrying 100.00 (%) ownership Percentage of Percentage Investment as of December 31, 2019 31, December of as Investment shares Number of Number (thousand) 974,050 974,050 USD Initial Investment Initial 974,050 Ending balanceEnding balance Beginning USD Main businesses and products businesses Main Investment holding Investment Address Cayman Investee company Investee ATTACHMENT 9 (Names, locations and related information of investee companies as of December 31, 2019) (Not including investment in Mainland China) Mainland in investment including (Not 2019) 31, December of as companies investee of information and related locations 9 (Names, ATTACHMENT currencies) foreign in or NTD in denomination Currency thousand; in (Amount GREEN EARTH LIMITED UNITED CORPORATION MICROCHIP
335 United Microelectronics Corporation | Annual Report 2019 $- 4,392) 131,892 as of - - - - December 31, 2019 31, December Accumulated inward remittance of earnings of remittance (USD 37,979 51,010) $10,058 106,657 24,827) 219,139 3,479,458) 22,349,119 5,202,309) 14,947,752 as of Carrying amountCarrying December 31, 2019 31, December (RMB (RMB (RMB (RMB (ii) (ii) (ii) (iii) (iii) (iii) 7,505 8,089) 34,750 $(3,529) (9,310)) 856,193 199,300) (39,996) (6,296,372) (1,465,636)) (Note 2) (loss) recognized (loss) Investment income Investment (RMB (RMB (RMB (RMB 25.14% 98.14% 98.14% 64.95% (Note 4) ownership Percentage ofPercentage 7,505 100.00% 8,243) 35,412 872,462 $(3,529) 100.00% 203,087) (159,094) (37,033)) (9,694,611) (2,256,660))
investee company investee Net income (loss) of (loss) Net income (RMB (RMB (RMB (RMB - 800) 750) 22,523 20,250) (Note5) $24,024 608,108 309,102) 964,966) 9,282,333 28,977,929 2019 outflow of outflow Taiwan as of as Taiwan Accumulated December 31, investment from investment (USD (USD (USD (USD (USD - - $- Inflow - - - - $- Investment flows Investment $124,082,614 - - - Outflow - - 800) 750) 22,523 20,250) (Note5) $24,024 608,108 309,102) 964,966) 9,282,333 Upper limit on investment on Upper limit 28,977,929 outflow of outflow Taiwan as of as Taiwan Accumulated January 1, 2019 1, January investment from investment (USD (USD (USD (USD (USD $48,880,582 (USD 1,627,725) (USD CORP. (Note 1) LIMITED (ii)OAKWOOD (ii)UNITED LED (ii)UNITED KONG LIMITED INVESTMENT (HK) INVESTMENT CORPORATION and CORPORATION Method investment of (SUZHOU) CO., LTD. (SUZHOU) CO., LTD. (SUZHOU) (ii)SOARING CAPITAL (ii)SOARING CORPORATION HONG CORPORATION ASSOCIATES LIMITED ASSOCIATES (ii)EVERRICH ENERGY(ii)EVERRICH (ii)UNITED MICROCHIP (ii)UNITED (iii)HEJIAN TECHNOLOGY (iii)HEJIAN TECHNOLOGY (iii)HEJIAN 800) 750) Commission, MOEA 22,523 84,000) $24,024 128,880 30,000) 2,522,520 3,205,014) 13,768,740 54,549,723 12,697,794) Investment amounts authorized by Investment amounts authorized by Investment paid-in capital paid-in Total amountTotal of (USD (USD (USD (RMB (RMB (RMB $38,914,917 (USD 1,295,868) (USD Main businesses and products and businesses Main Investment Holding and advisory Holding Investment design integrated engineering Solar services and sales manufacturing Research, wafers epitaxial LED in of and manufacturing Sales circuits integrated support integrated of Design circuits of and manufacturing Sales circuits integrated December 31, 2019 31, December (i) Direct investment in Mainland China. Mainland in investment Direct (i) region). third in company the name of the specify (Please region a third in registered companies through China Mainland in investment Indirectly (ii) methods. Other (iii) firm. R.O.C. accounting an cooperation with in firm accounting public certified international an report auditedwas by financial The (i) parent auditors the company. of the were statements audited by financial The (ii) (iii) Others. Accumulated investment in Mainland China ofas China Mainland in Accumulated investment in the total amount of USD 383,569 amount total USD of the in December thousand. of remitted. As 31, been all 2019,has amount the investment of 1,222,356 amount total USD of the MOEA in December thousand. of remitted.Commission, As 31, been all Investment beenthe 2019,has approvedhas amount by the investment of investment USCXM's in to invest consent The Investee company Investee Note 5 : LIMITED. GREEN EARTH in investment via USCXM in invested and CO., indirectly LTD. (SUZHOU) TECHNOLOGY from (XIAMEN) HEJIAN (USCXM) CO., LTD. SEMICONDUCTOR to UNITED investment The ATTACHMENT 10 (Investment in Mainland China as of December of as 31, China 2019) Mainland in ATTACHMENT 10 (Investment currencies) foreign NTD or in in denomination thousand;Currency (Amountin ADVISOR UNITRUTH CO., LTD. (SHANGHAI) (SHANDONG) EVERRICH ENERGY CO., LTD. CORPORATION LED UNITED TECHNOLOGY HEJIAN CO., LTD. (SUZHOU) SEMICONDUCTOR UNITEDDS CO., LTD. (SHANDONG) SEMICONDUCTOR UNITED (XIAMEN) CO., LTD. Note 1 : following: the include China Mainland in investment in methods The for engaging Note 2 : basis: were determined(loss) based income following the on currentperiod, investment in the recognized (loss) income investment The Note 3 : reportdate. spot the financial rates at the using Dollars New Taiwan into are currencies translated foreign amounts in denominated investment Initial Note 4 : MOEA Commission, Investment beenthe approvedhas by investment The investee. equity an LIMITED, INTERNATIONAL BEST ELITE in investment via CO., LTD. (SUZHOU) TECHNOLOGY HEJIAN in invested indirectly Company The
336 Financial Review The Company and Its Affiliated Enterprises Have Not Experienced Any Financial Difficulties During the Most Recent Year up to the Publication Date.
337 United Microelectronics Corporation Representative: Stan Hung