United Microelectronics Corp (NYSE:UMC) Q2 2023 Earnings Conference Call July 26, 2023 5:00 AM ET Company Participants Michael Lin - IR Chi-Tung Liu - CFO, SVP, Head, Corporate Governance & Company Secretary Jason Wang - President & Representative Director Conference Call Participants Randy Abrams - Crédit Suisse Brett Simpson - Arete Research Services Charlie Chan - Morgan Stanley Bruce Lu - Goldman Sachs Group Szeho Ng - China Renaissance Securities Gokul Hariharan - JPMorgan Chase & Co. Sunny Lin - UBS O ...

UMC 2Q23 Financial Review NOTE CONCERNING FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and as defined in the United States Private Securities Litigation Reform Act of 1995. These forward looking statements include, but are not limited to, statements relating toanticipatedquarterlyFabcapacity, foundryca ...

Financial Position - Total assets as of March 31, 2023, reached NT$549,631,114 thousand, an increase from NT$533,052,092 thousand as of December 31, 2022, representing a growth of 3.3%[12] - Current assets decreased to NT$241,967,215 thousand as of March 31, 2023, from NT$252,371,038 thousand as of December 31, 2022, a decline of 4.3%[12] - Total non-current assets increased to NT$307,663,899 thousand as of March 31, 2023, from NT$280,681,054 thousand as of December 31, 2022, reflecting a growth of 9.6%[12] - Total liabilities as of March 31, 2023, were $194,081,051, a slight decrease from $197,601,153 as of December 31, 2022[15] - Total equity attributable to the parent company increased to $355,205,636 from $335,107,260 as of December 31, 2022, representing a growth of 6.5%[15] Revenue and Profitability - Operating revenues for Q1 2023 were $54,209,447, a decrease of 14.4% compared to $63,422,820 in Q1 2022[18] - Gross profit for Q1 2023 was $19,224,440, down 30.1% from $27,504,330 in Q1 2022[18] - Net income for Q1 2023 was $16,384,547, a decline of 18.4% from $20,065,623 in Q1 2022[18] - Total comprehensive income for Q1 2023 was $19,709,634, compared to $21,487,507 in Q1 2022, indicating a decline of 8.3%[18] - Operating income for Q1 2023 was $14,480,698, down 35.1% from $22,334,187 in Q1 2022[18] Cash Flow and Investments - Cash generated from operations for the three-month period ended March 31, 2023, was $28,733,130, compared to $30,340,563 in 2022, indicating a decrease of about 5.3%[23] - Cash flows from investing activities showed a net outflow of $29,586,209 compared to an inflow of $14,752,138 in the same period last year[25] - The acquisition of property, plant, and equipment amounted to $29,756,200, significantly higher than $10,802,553 in the previous year[25] - The company reported an increase in guarantee deposits of $2,327,873 compared to a decrease of $2,119 in the same period last year[25] Assets and Liabilities - Accounts receivable, net, fell to NT$26,674,425 thousand as of March 31, 2023, down 26.8% from NT$36,444,510 thousand as of December 31, 2022[12] - Inventories, net, increased to NT$32,678,867 thousand as of March 31, 2023, compared to NT$31,069,960 thousand as of December 31, 2022, reflecting a rise of 5.2%[12] - Current liabilities totaled $105,885,984 as of March 31, 2023, a decrease from $108,565,165 as of December 31, 2022[15] - The company reported a net gain of financial assets and liabilities at fair value through profit or loss of $(705,829) for the three-month period ended March 31, 2023, compared to $(2,417,830) in 2022, showing an improvement[23] Shareholder Information - Earnings per share for Q1 2023 were $1.31, compared to $1.61 in Q1 2022, reflecting a decrease of 18.6%[18] - The company reported a net income attributable to non-controlling interests of $201,545 for Q1 2023, compared to $258,088 in Q1 2022, a decrease of 22%[109] - Cash dividends for 2022 were set at NT$3.60 per share, totaling $45,017,096, marking the first cash dividend distribution since 2021[106] Research and Development - Research and development expenses for Q1 2023 were $2,766,607, a decrease from $3,032,939 in Q1 2022[18] Financial Instruments and Risk Management - The company has a liquidity risk management strategy that includes maintaining a balance between funding continuity and flexibility through cash, bank loans, bonds, and leases[184] - The Company limits credit risk by trading only with approved and creditworthy third parties and monitoring accounts receivable balances[181] - A 10% strengthening of NTD against USD would decrease profit by NT$988 million for the three-month period ended March 31, 2023[173] Accounting and Compliance - The company continues to evaluate the impact of newly issued accounting standards on its financial position and performance[40] - The company utilizes valuation techniques that maximize the use of observable inputs and minimize unobservable inputs for fair value measurement[194]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ...

United Microelectronics Corp (NYSE:UMC) Q1 2023 Earnings Conference Call April 26, 2023 5:00 AM ET Company Participants Michael Lin - IR Chi-Tung Liu - CFO, SVP, Head, Corporate Governance & Company Secretary Jason Wang - President & Representative Director Conference Call Participants Randy Abrams - Crédit Suisse Brett Simpson - Arete Research Services Bruce Lu - Goldman Sachs Group Szeho Ng - China Renaissance Securities Charlie Chan - Morgan Stanley Sunny Lin - UBS Rick Hsu - Daiwa Securities Gokul Harih ...

[Independent Auditors' Report](index=2&type=section&id=Independent%20Auditors'%20Report) [Opinion](index=2&type=section&id=Opinion) The auditors issued an unqualified opinion on the consolidated financial statements for 2022 and 2021, affirming fair presentation in accordance with TIFRSs - The auditors have issued an unqualified opinion on the company's consolidated financial statements for the years ended December 31, 2022 and 2021[4](index=4&type=chunk) [Key Audit Matters](index=3&type=section&id=Key%20Audit%20Matters) Valuation of slow-moving inventories was the key audit matter for 2022, reflecting the complexity of estimating reserves in a rapidly changing semiconductor industry - The primary key audit matter was the valuation for slow-moving inventories, which amounted to a net value of **NT$31.1 billion** as of December 31, 2022[8](index=8&type=chunk) - The audit procedures included testing internal controls, evaluating management's reserve methodology, comparing reserves to historical data, and recalculating the inventory reserve[9](index=9&type=chunk) [Other Matter – Making Reference to the Audits of Component Auditors](index=3&type=section&id=Other%20Matter%20%E2%80%93%20Making%20Reference%20to%20the%20Audits%20of%20Component%20Auditors) The audit opinion partially relies on reports from other auditors for equity method investments, representing 4.84% of total assets in 2022 and impacting pre-tax income Equity Method Investments Audited by Other Auditors | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Investment Value (NT$ million)** | 25,801 | 39,806 | | **% of Total Assets** | 4.84% | 8.57% | | **Share of Profit/(Loss) (NT$ million)** | (2,553) | 8,380 | | **% of Pre-Tax Income** | (2.41)% | 13.56% | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to NT$533.1 billion in 2022, driven by cash and PPE increases, while total liabilities and equity also rose, reflecting strong earnings retention Consolidated Balance Sheet Summary (in thousands of NT$) | Account | 2022 | 2021 | | :--- | :--- | :--- | | **Total Current Assets** | 252,371,038 | 233,273,433 | | **Total Non-Current Assets** | 280,681,054 | 231,153,338 | | **Total Assets** | **533,052,092** | **464,426,771** | | **Total Current Liabilities** | 108,565,165 | 105,453,729 | | **Total Non-Current Liabilities** | 89,035,988 | 77,770,158 | | **Total Liabilities** | **197,601,153** | **183,223,887** | | **Total Equity** | **335,450,939** | **281,202,884** | - Cash and cash equivalents increased significantly to **NT$173.8 billion** in 2022 from **NT$132.6 billion** in 2021[27](index=27&type=chunk) - Property, plant and equipment grew to **NT$171.0 billion** in 2022 from **NT$129.9 billion** in 2021, indicating significant capital investment[27](index=27&type=chunk) [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Operating revenues increased by 30.8% to NT$278.7 billion in 2022, with gross profit surging by 74.6% and net income attributable to the parent growing by 56.3% Consolidated Income Statement Highlights (in thousands of NT$) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Operating Revenues** | 278,705,264 | 213,011,018 | | **Gross Profit** | 125,764,377 | 72,049,629 | | **Operating Income** | 104,292,225 | 51,686,286 | | **Net Income (Parent)** | 87,198,291 | 55,780,255 | | **Basic EPS (NT$)** | 7.09 | 4.57 | | **Diluted EPS (NT$)** | 6.87 | 4.48 | [Consolidated Statements of Changes in Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity increased to NT$335.5 billion in 2022, primarily due to net income and other comprehensive income, partially offset by cash distributions - Total equity attributable to the parent company grew from **NT$281.0 billion** in 2021 to **NT$335.1 billion** in 2022[35](index=35&type=chunk) - Key changes in equity for 2022 included net income of **NT$87.2 billion**, other comprehensive income of **NT$2.4 billion**, and a cash distribution from additional paid-in capital of **NT$37.4 billion**[35](index=35&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow significantly increased to NT$145.9 billion in 2022, while investing activities focused on PPE acquisition and financing involved dividend payments and bond redemption Consolidated Cash Flow Summary (in thousands of NT$) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | 145,860,529 | 90,351,891 | | **Net Cash used in Investing Activities** | (54,427,266) | (62,163,400) | | **Net Cash from (used in) Financing Activities** | (57,254,750) | 12,490,107 | | **Net Increase in Cash** | 41,196,646 | 38,574,095 | | **Cash and Cash Equivalents at End of Year** | **173,818,777** | **132,622,131** | - Acquisition of property, plant and equipment was a major cash outflow in investing activities, amounting to **NT$80.1 billion** in 2022, up from **NT$48.0 billion** in 2021[40](index=40&type=chunk) - Financing activities in 2022 were dominated by cash dividends and distributions from additional paid-in capital totaling **NT$37.4 billion**, and redemption of bonds amounting to **NT$13.3 billion**[40](index=40&type=chunk) [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Summary of Significant Accounting Policies](index=16&type=section&id=Note%204.%20Summary%20of%20Significant%20Accounting%20Policies) The consolidated financial statements are prepared on a historical cost basis, adhering to TIFRSs, with key policies covering consolidation, revenue recognition, and inventory valuation - The financial statements are prepared on a historical cost basis, except for financial instruments measured at fair value, and comply with TIFRSs[61](index=61&type=chunk)[62](index=62&type=chunk) - Revenue from contracts with customers is recognized when performance obligations are satisfied, following the five-step model of IFRS 15[162](index=162&type=chunk)[163](index=163&type=chunk) - Inventories are valued at the lower of cost (weighted-average) and net realizable value[110](index=110&type=chunk) [Contents of Significant Accounts](index=38&type=section&id=Note%206.%20Contents%20of%20Significant%20Accounts) This note provides detailed breakdowns of significant balance sheet and income statement items, including inventories, PPE, bonds, equity, revenues, and earnings per share [Inventories, Net](index=41&type=section&id=6(6)%20Inventories,%20Net) Net inventories increased to NT$31.1 billion in 2022, with work in process remaining the largest component, reflecting growth across all categories Inventory Breakdown (in thousands of NT$) | Category | 2022 | 2021 | | :--- | :--- | :--- | | Raw materials | 6,335,428 | 3,371,520 | | Supplies and spare parts | 7,161,216 | 5,106,770 | | Work in process | 14,897,926 | 14,043,143 | | Finished goods | 2,675,390 | 489,750 | | **Total** | **31,069,960** | **23,011,183** | [Property, Plant and Equipment](index=44&type=section&id=6(8)%20Property,%20Plant%20and%20Equipment) Net PPE increased to NT$171.0 billion in 2022, driven by NT$72.6 billion in additions, primarily for construction and equipment, indicating ongoing capacity expansion PPE Movement in 2022 (in thousands of NT$) | Category | As of Jan 1, 2022 | Additions | Disposals | As of Dec 31, 2022 (Net) | | :--- | :--- | :--- | :--- | :--- | | **Assets Used by the Company** | 127,989,504 | 72,596,881 | (6,560,736) | 169,163,819 | | **Assets Subject to Operating Leases** | 1,952,199 | - | (660) | 1,818,247 | | **Total PPE (Net)** | **129,941,703** | **-** | **-** | **170,982,066** | [Bonds Payable](index=51&type=section&id=6(13)%20Bonds%20Payable) Total bonds payable decreased to NT$28.2 billion in 2022, following the repurchase and cancellation of US$187.1 million of exchangeable bonds - On July 7, 2021, UMC issued **US$400 million** in zero-coupon exchangeable bonds due 2026, which are exchangeable into common shares of NOVATEK MICROELECTRONICS CORPORATION[230](index=230&type=chunk) - In 2022, the company repurchased and cancelled **US$187.1 million** of the principal amount of these exchangeable bonds[234](index=234&type=chunk) [Equity](index=63&type=section&id=6(19)%20Equity) UMC had 12.505 billion common shares issued in 2022, with a proposed cash dividend of NT$3.60 per share for 2022 earnings and a NT$37.4 billion distribution for 2021 2022 Proposed vs. 2021 Approved Earnings Appropriation | Item | 2022 (Proposed) | 2021 (Approved) | | :--- | :--- | :--- | | **Legal Reserve (NT$M)** | 8,905 | 5,833 | | **Cash Dividends (NT$M)** | 45,017 | - | | **Cash Dividend per Share (NT$)** | 3.60 | - | | **Cash from Add'l Paid-in Capital (NT$M)** | - | 37,446 | - The dividend policy allows for **20% to 100%** of distributable earnings to be paid as cash dividends, determined based on investment needs, competitive landscape, and capital expenditure forecasts[261](index=261&type=chunk) [Operating Revenues](index=67&type=section&id=6(21)%20Operating%20Revenues) Operating revenues reached NT$278.7 billion in 2022, predominantly from wafer sales, with Taiwan, China, and Singapore being the largest geographic markets Revenue by Geography (in thousands of NT$) | Region | 2022 | 2021 | | :--- | :--- | :--- | | Taiwan | 87,500,215 | 80,655,096 | | Singapore | 39,093,439 | 29,068,748 | | China (includes Hong Kong) | 46,146,545 | 31,176,136 | | Japan | 17,667,412 | 13,705,192 | | USA | 35,175,569 | 24,270,210 | | Europe | 8,831,645 | 5,628,998 | | Others | 44,290,439 | 28,506,638 | | **Total** | **278,705,264** | **213,011,018** | [Earnings Per Share](index=78&type=section&id=6(27)%20Earnings%20Per%20Share) Basic EPS increased to NT$7.09 in 2022 from NT$4.57 in 2021, with diluted EPS also rising, reflecting strong net income growth Earnings Per Share (in NT$) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Basic EPS** | 7.09 | 4.57 | | **Diluted EPS** | 6.87 | 4.48 | [Significant Contingencies and Unrecognized Contract Commitments](index=83&type=section&id=Note%209.%20Significant%20Contingencies%20and%20Unrecognized%20Contract%20Commitments) Future commitments include NT$42 billion for construction and NT$1.1 billion for patent licenses, alongside a global settlement with Micron Technology for trade secret litigation - UMC and Micron announced a global settlement agreement on November 26, 2021, resolving all legal proceedings worldwide concerning trade secret allegations[321](index=321&type=chunk) - The settlement resulted in a fine of **NT$20 million** and a one-time payment to Micron, which were recorded as non-operating losses with no material ongoing financial effect[321](index=321&type=chunk)[325](index=325&type=chunk) - As of December 31, 2022, the company had unrecognized commitments of approximately **NT$42 billion** for construction contracts and **NT$1.1 billion** for patent license agreements[322](index=322&type=chunk)[321](index=321&type=chunk) [Others (Financial Instruments and Risk Management)](index=85&type=section&id=Note%2012.%20Others%20(Financial%20Instruments%20and%20Risk%20Management)) The company's debt-to-capital ratio improved to 6.62% in 2022, with risk management strategies addressing foreign currency, interest rate, equity price, and credit risks Capital Structure Analysis | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Total Liabilities (NT$M)** | 197,601 | 183,224 | | **Net Debt (NT$M)** | 23,782 | 50,602 | | **Total Equity (NT$M)** | 335,451 | 281,203 | | **Total Capital (NT$M)** | 359,233 | 331,805 | | **Debt to Capital Ratio** | 6.62% | 15.25% | - A **10% strengthening** of the NTD against the USD would decrease profit by **NT$1.31 billion** in 2022[334](index=334&type=chunk) - Accounts receivable from the top ten customers represented **56%** of the total accounts receivable in 2022, indicating some customer concentration risk[343](index=343&type=chunk) [Operating Segment Information](index=96&type=section&id=Note%2014.%20Operating%20Segment%20Information) The company operates as a single wafer fabrication segment, with Taiwan holding the largest share of non-current assets and one major customer contributing significantly to revenues - The company operates under a single operating segment, which is wafer fabrication[383](index=383&type=chunk) - One customer (Customer A) accounted for a significant portion of revenue, representing **NT$24.1 billion** in 2022 and **NT$21.9 billion** in 2021[385](index=385&type=chunk) Geographic Non-Current Assets (in thousands of NT$) | Region | 2022 | 2021 | | :--- | :--- | :--- | | Taiwan | 130,812,383 | 81,505,018 | | Singapore | 29,080,766 | 10,610,974 | | China (includes Hong Kong) | 37,213,538 | 48,667,135 | | Japan | 10,736,562 | 10,010,255 | | **Total** | **207,863,887** | **150,838,197** |

Financial Data and Key Metrics Changes - In Q4 2022, consolidated revenue was TWD 67.84 billion, with a gross margin rate of 42.9% and net income attributable to shareholders of TWD 19 billion, resulting in earnings per share (EPS) of TWD 1.54 [6][10] - Revenue declined by 10% sequentially from the previous quarter, while total operating income decreased by approximately 20% to TWD 23.6 billion [6][10] - For the full year 2022, total revenue grew by 31% to TWD 278.7 billion, and operating income more than doubled to TWD 104 billion, with EPS increasing to TWD 7.09 from TWD 4.57 in the previous year [7][10] Business Line Data and Key Metrics Changes - The revenue breakdown showed that the North American market represented about 30% of total revenue, up from 23% in the previous quarter, while the Asian market saw a decline from 52% to 54% [7][10] - The communication segment remained the largest, accounting for 45% of total revenue, while the automotive segment grew by 82% year-over-year, now representing approximately 9% of total sales [8][12] Market Data and Key Metrics Changes - The quarterly breakdown indicated that IDM (Integrated Device Manufacturer) accounted for 19% and Fabless for 81% of revenue, with IDM remaining at about 15% for the full year [8] - The technology breakdown for Q4 showed that 22/28 nanometer technology represented 28% of revenue, while 40 nanometer accounted for about 17% [8] Company Strategy and Development Direction - The company is focusing on enhancing its specialty technology offerings and improving profitability through strategic customer relationships, particularly in the automotive segment [11][12] - UMC plans to implement strict cost control measures and defer certain capital expenditures in response to the soft global economic outlook for 2023 [13] Management's Comments on Operating Environment and Future Outlook - Management expects the current challenging environment to persist through Q1 2023, with wafer shipments projected to decline by high teens percentage range and capacity utilization at approximately 70% [14] - The company remains optimistic about long-term demand driven by digital transformation across industries, despite short-term inventory corrections [13][14] Other Important Information - The company has a cash-based CapEx budget of $3 billion for 2023, with 90% allocated to 12-inch related expansions [9] - The company is also experiencing a minor decline in available capacity due to maintenance but expects to return to normal levels by Q2 2023 [9] Q&A Session Summary Question: Discussion on the business cycle and inventory correction - Management indicated that they are still in the midst of an inventory correction, with some improvement expected in certain segments by the second half of 2023 [16][17] Question: Pricing strategy and customer negotiations - Management stated that pricing adjustments will have limited effects on demand creation, and they intend to maintain firm pricing while supporting customer competitiveness [20][21] Question: 2023 outlook and CapEx details - Management projected a low single-digit decline for the semiconductor industry in 2023, with a CapEx budget primarily focused on new capacity expansion and product mix upgrades [31][32] Question: 28-nanometer technology utilization - Management expects 28-nanometer utilization to hold up slightly better than the overall corporate average, despite a general decline in capacity utilization [29][30] Question: Geopolitical developments and supply chain diversification - Management acknowledged trends in supply chain diversification but noted that significant engagement and order opportunities may not materialize until after 2023 [65][68]

United Microelectronics Corporation (NYSE:UMC) Q4 2018 Results Conference Call October 26, 2022 5:00 AM ET Company Participants Michael Lin - Head, IR Jason Wang - President Chi-Tung Liu - CFO Conference Call Participants Randy Abrams - Credit Suisse Gokul Hariharan - JP Morgan Laura Chen - Citigroup Sunny Lin - UBS Bruce Lu - Goldman Sachs Szeho Ng - China Renaissance Charlie Chan - Morgan Stanley Operator Welcome everyone to UMC’s 2022 Third Quarter Earnings Conference Call. [Operator Instructions] For yo ...