Bowen Huang – Head, Investor Relations Shih-Wei Sun – Chief Executive Officer Chitung Liu – Chief Financial Officer

Randy Abrams – Credit Suisse Robert Lee – Jefferies Steven Pelayo – HSBC Donald Lu – Goldman Sachs Mahesh Sanganeria – RBC Capital Market

Welcome everyone to UMC’s 2011 Q3 Earnings Conference Call. All lines have been placed on mute to prevent background noise. After the presentation there will be a question-and-answer session. Please follow the instructions given at that time if you would like to ask a question. For your information this conference call is now being broadcast live over the internet. Webcast replay will be available within an hour after conference is finished. Please visit our website www.umc.com under the Investor Relation’s Investor Events section. I would like to introduce Mr. Bowen Huang, Head of Investor Relations at UMC. Mr. Wang, you may begin.

Thank you. And welcome to UMC’s conference call for the third quarter of 2011. With me today is the CEO of UMC, Dr. Shih-Wei Sun; and the CFO, Mr. Chitung Liu. During this conference, we may make forward-looking statements based on management’s current expectation and beliefs. These forward-looking statements are subject to a number of risk and uncertainties that cause actual result to differ materially, including risk that may be beyond the company’s control. For these risks, please refer to UMC’s filing with the SEC in the U.S. and to the ROC Securities Authorities. I’d now like to introduce UMC’s CFO, Mr. Chitung Liu, to explain UMC’s Q3 2011 business results.

Thank you, Bowen. For the third quarter of 2011, revenue was NT$25.19 billion, a 10.5% quarter-over-quarter decrease from NT$28.15 billion in second quarter 2011 and 22.9% year-over-year decrease from NT$32.65 billion in 3Q, 2010. Gross margin was 19.8%, operating margin was 6.1%, net income was NT$1.95 billion and earnings per ordinary share were NT$0.16. Above is a short summary of UMC results from Q3, 2011. More details are available in the quarterly report, which has been posted on our website. I would now turn the call over to Dr. Sun. Shih-Wei Sun: Thanks, Chitung. Good morning, good afternoon and good evening, ladies and gentlemen. In Q3, 2011, revenue was in line with UMC’s guidance. We shipped 1.03 million 8-inch equivalent wafers, with ASP remaining flat. Overall utilization rate was 74%, with 40% of revenue coming from 65-nanometer and below technologies. We maintain our previous semiconductor market view as we enter the fourth quarter of 2011, with unresolved European and the U.S. sovereign debt, China inflation and limited inventory distribution and the digestion visibility through the supply chain all contributing to industry uncertainty. Accordingly, semiconductor market demand continues to be weak as reflected by our customers conservative order patterns. During this time, UMC will continue with its cautious approach. We do anticipate UMC’s rate of revenue decline to ease in Q4 and will remain operating profitable as our efforts to strengthen the company’s operating efficiency and the cost structure bear fruits. Despite the dynamic nature of the semiconductor industry, we believe that customer driven development of advanced processes and IP platforms will form the foundation of UMC’s next growth phase. In addition to the volume production 40-nanometer technologies, we have also invested heavily to develop our 28-nanometer technologies and IP platforms including the High-K/Metal-Gate 28HPM and the Poly/SiON 28HLP processes. UMC’s 28HPM process is developed with the mainstream Gate-Last approach and is suitable for high performance mobile devices and high-speed networking products. The 28HLP delivers industry leading performance to cost ratio through the adoption of the traditional Poly/SiON gate-stack and the proprietary performance enhancement process features. These 28-nanometer technologies are supported with robust IP platforms developed through cross collaboration with ARM, Synopsys and our customers to create optimized the 28-nanometer integrated solutions. Customer 28HLP product has entered the pilot production, with 28HPM scheduled for pilot production in mid-2012. We are optimistic about our 28HLP and 28HPM since they formed the dual-engine that will propel UMC’s advanced process growth, strengthening our future competitiveness and enhance our portfolio of comprehensive foundry solutions available to UMC customers. Now, let me provide you with the guidance for the fourth quarter of 2011. Wafer shipment were decreased approximately 10%. Wafer ASP in NT dollars will increase approximately 5%. Operating margin will be in the low single-digit percentage range. Capacity utilization will be in the mid to high 60% range. The communication segment will outpace consumer and the computer segments. UMC 2011 CapEx will remain at US$1.8 million. That concludes my comments. We are now ready for questions. Operator, please open the lines now. Thanks.

(Operator Instructions) You have a question from the line of Randy Abrams of Credit Suisse. Randy Abrams – Credit Suisse: Yes. Good evening. The first question I had was on the IDM revenue, more dropped from, I guess, a pretty big drop this quarter. Was that in-sourcing or using some adjustments taking place for reclassification of customers just to drive that big change this quarter and if now I guess looking for adjusting any stabilization from the IDMs? Shih-Wei Sun: Randy, if we can separate IDMs outsourcing into advance leading technology that partly is intact, there is not much of a change. But for certain IDM customers during this economic slowdown, they pored some of the legacy technologies back to their own factory. Randy Abrams – Credit Suisse: Okay. Shih-Wei Sun: Okay. Randy Abrams – Credit Suisse: And, I guess, a question on that 28-nanometer, you mentioned a bit of color in your prepared remarks about the process for polysilicon and the High-K/Metal-Gate, where -- are you seeing in terms of customer interest for the two different processes and if you were to think of timing of the inflection where we’ll start to see meaningful volume ramp-up for both of those processes? Shih-Wei Sun: So for the 28HPM, I mentioned in a statement, it’s a targeted for very high performance applications and therefore 28 Poly-SiON, I mentioned as well. We actually turbo charted the process into a better performance option and it can meet quite a bit of application. So we’re quite optimistic about that as well. So, but for UMC as a foundry service provider, we’re offering both processes. And in a early stage, I think Poly-SiON will have a more volume user and as far as volume ramp, as I mentioned, we’re -- today we’re doing pilot production, pilot verification for the real products. So it may take nine to -- nine months to a year before start to ramp which of these to the second half of next year. Randy Abrams – Credit Suisse: Okay. And in this environment with utilization coming down, are you starting to see more price discounting, drop-ins and normally, I think beginning of the year there is a bit of a price drop, but what should we expect looking forward from the pricing environment?

Pricing environment is always a challenge. There is a customer by customer negotiation. So for today’s environment other customers are very careful about the amount of inventory situation. So in terms over the pricing elasticity versus volume, we see certain level of that, but not too much. Today if they don’t want it is a matter how much we lower the price. Randy Abrams – Credit Suisse: Yeah.

The elasticity is weak. Randy Abrams – Credit Suisse: Okay. And last question I had was on the 65-nanometer where there is a good shift in that direction. What are the applications you are seeing driving that strength and is that something you expect that to continue to grow as a percent of sales or would you expect it to start shifting towards 40-nanometer? Shih-Wei Sun: For, yeah, today’s loading is not that great and so last quarter loading is 74%. Randy Abrams – Credit Suisse: Yeah. Shih-Wei Sun: So overall speaking, the 65 percentage of growth are mainly from the communication sector, mostly from the 3G smartphone. Randy Abrams – Credit Suisse: Okay. And will that continue to grow as a percent of sale or do you expect 40 to start seeing a faster ramp up now? Shih-Wei Sun: Our visibility is not that great, it’s kind of a slow but next quarter the 65 will continue to grow quite aggressively. Randy Abrams – Credit Suisse: Okay. Thanks a lot. Shih-Wei Sun: Thank you, Randy.

(Operator Instructions) Your next question comes from the line of Robert Lee of Jefferies. Robert Lee – Jefferies: Okay. Thanks very much for taking my call. And Randy has a done a first class job in asking several of my questions already. So, I think, I’ve only got remaining. Going back to 40-nanometer as a percentage of sales, I think it’s been static about 6% over the last few quarters. I think previously you said you expect it to reach around 10% by the year end, is that still a realistic target? And can you also talk about how this all customer list and designing’s et cetera building by from 40-nanometer and for 28-nanometers well place? Thank you. Shih-Wei Sun: 40-nanometer revenue percentage will be over 10% in the month of December as exactly as we planned out. So there is no surprise. So by December, December month we will be surpassing 10% for 40-nanometer revenue. As far as the customer base, 40-nanometer today approximate 20 customers with about 60 product takeouts over 20 in production. 28 engagements about 10 customers and the 10 takeouts are macro IP, certainly as I mentioned already one customer is in part of production or real production. Robert Lee – Jefferies: Okay. And on the 28-nanometer, is that – had a focus in one particular segment, again, is it in communications or across the Board, FPGA, can you give a little bit of color, how the takeouts looking in both, 40 and 28-nanometer? Shih-Wei Sun: It’s a very broad based, telephony application processor baseband ASIC controller re-channel all kinds of engagement, very broad based. Robert Lee – Jefferies: Okay. And if I may can ask you a quick follow-up question, I mean… Shih-Wei Sun: Yeah. Robert Lee – Jefferies: … obviously, there is a law of reference to the current macro uncertainties and global macro economic risks within your statement. I mean, do you -- some companies out there or some of your customers have alluded to perhaps a bottoming process beginning to take place. I don’t know if you have a firm view or even a gut feeling as to where we might be in this current downturn. Do you have any sort of comment or color that maybe helpful? Shih-Wei Sun: Yeah. So, traditionally, Q3 for foundry has been our peak season. Historically in the past 10 years Q3 over Q2 has been over 10%. But, Q3, we dropped around 10%, so there’s a big swing. And the Q4 is not so strong either and now leading to Q1, actually Q1 is traditionally our weak season for foundry domain. So, I guess, we don’t have exactly clear visibility, because today’s world is very uncertain, it’s really difficult to make too much long-term forecast. But, I think, Q2 should be the good next checkpoint for all of us. Robert Lee – Jefferies: Okay. Thanks very much. Shih-Wei Sun: Thank you.

And you have a question from the line of Steven Pelayo of HSBC. Steven Pelayo – HSBC: Yeah. Just a couple of follow-up questions, I know you spoke about maintaining operating profitability, but I think we’re all concerned a little bit also on the bottom line, what does it mean for asset impairment through investment losses, things like that. Can you give us some general ideas of ranges there, what you might think the impact might be in the non-operating line in the fourth quarter?

We don’t expect any major impairment loss in – on the horizon or in Q4. And, however, we do have some new business in the segment of solar and LED, which are also struggling profit-wise. So for Q4, we don’t have final figures in mind yet about the non-operating. But there shouldn’t be any major impairment loss in Q4. Steven Pelayo – HSBC: Okay. And I’m wondering if you could just help us understand how much capacity you have today for 40-nanometer and even for 28-nanometer, some of the initial, I guess pilot capacity that you have. And then maybe think about it, I don’t know, a year from today where you think that might be. Is there anyway you can help us (inaudible) that? Shih-Wei Sun: I don’t have exact number for 40-nanometer. We are building towards maybe 15,000K per month should employ next year. I don’t have exact number. 28 is a big question. We can – we are still doing our planning for next year, we maybe very aggressive. The demand is very strong. We haven’t got the exact number, right. Today it’s mainly R&D pilot kind of capacity. As I mentioned, the ramp is second half of the next year. It’s still where we’re seeing our capacity planning cycle. Steven Pelayo – HSBC: You mean for 28, but what about for 40-nanometer capacity today? Shih-Wei Sun: I mentioned their building towards 15K per month, some time next year I guess. Steven Pelayo – HSBC: Okay. And then when I look within your segment details, obviously 90-nanometer was down pretty healthy quarter-on-quarter, yet quarter micron was up. I’m wondering if there is any details behind that, if there is anything specific that, what were they relative areas of strength to quarter micron and what were the maybe strong – weakest area the 90 any thoughts coming from that? Shih-Wei Sun: Yeah. 90-nanometer for us, I think its weak node. I mean, many customers just jumped from – they weak nodes to 65 and over 55 as it’s getting mature, the mask is achieved now. So that’s – we’re very happy to see that happening and it is no surprise. 25, I think there are lots of, as I mentioned earlier, there are lots of new engagement, lots of IBM outsourcing and analog or PMIC, many new engagements into that node. So but again it changes very fast, but 90 is shrinking that’s a -- probably will continue unless some of the traditional – until some traditional 8-inch business start to get into that domain, for example driver ICs and we see that happening also into 90 and 80. So, again it’s changing now. Steven Pelayo – HSBC: And my last question is just on, during the afternoon you spoke a little bit about how the quarterly depreciation within cost, it will goes up quite a bit in the fourth quarter and yet your operating expenses also didn’t really fall much flat down as much here in the third quarter. So when I think of that your breakeven rate going forward it seems to me that actually could be rising a little bit. Could you help me understand, kind of a breakeven analysis to the operating line?

Our operating breakeven point is actually highly sensitive to few parameters. Of course, mostly slowly, but also to NT dollar exchange rate as well as ASP. In Q4 both ASP and NT dollar exchange rate work in our favors so that helped to bring down the operating breakeven point a little bit. And going forward I would say somewhere between 65 to 70 is probably our breakeven point level, but depends on the parameters I just mentioned. Steven Pelayo – HSBC: I guess, I’m going back a year – may be three years ago Dr. Chang at TSMC has talked about with move 40-nanometer below he was going to be spending an extra 100 basis points more on R&D. I think it was going from 6% to 7% or 7% to 8%, can’t seem to remember. You seemed to be talking a lot more about the engaging a 20-nanometer and so I’m just curious is this -- suggest structurally higher R&D requirements for you guys as well? Shih-Wei Sun: Actually our 20-nanometer technology wise -- the pure development phase is down, now it’s working with customers on implementation. So our structure is will continue where we are today. We are focusing on 20-nanometer development now. We have taping out -- working with customers on 20-nanometer development. 20 is pretty much down, I think. Steven Pelayo – HSBC: Okay. Great. Thank you. Shih-Wei Sun: Thank you.

Your next question comes from the line of Donald Lu of Goldman Sachs. Donald Lu – Goldman Sachs: Good evening. Couple of questions. First is in terms of on demand, I think you mentioned that the smartphone demand in emerging countries has been the driver in Q4. I just want to see whether there is any other areas are seeing sequential growth. That’s my first question. Shih-Wei Sun: Yeah. Other than the 3G cell phone that’s definitely strong. Other tablets area certainly strained as well. Donald Lu – Goldman Sachs: Okay. Shih-Wei Sun: Some equal co-related tablets and some other things. Donald Lu – Goldman Sachs: I See. Shih-Wei Sun: But it’s a tougher environment today in general. Donald Lu – Goldman Sachs: Sure. Yeah. My second question is on CapEx, I think the equipment are getting more and more expensive to 28-nanometer, 40-nanometer et cetera. What kind of CapEx should we expect for next year given you are ramping both nodes. Shih-Wei Sun: We will guide you the numbers next quarter, but we are doing the planning now. So you are exactly right and the demand may require additional CapEx to satisfy, especially 28-nanometer is getting more expensive. And if we start to ramp next -- second half of next year we need to sink-in more CapEx. Donald Lu – Goldman Sachs: Is there any initial thought, as such in the afternoon there were some comments on the CapEx would be a certain percentage of depreciation or something like that?

Not really. Shih-Wei Sun: No, we didn’t mention. But, of course, internally we have several guidelines from a financial structure point of view and the ideal situation is we were trying to finance all the CapEx through internally generated cash. So, of course, we still have some capacity for debt issuance so we will have some flexibility. But I think a broad guideline will be, we try to finance all the CapEx through internally generated cash.

Also I would like to mention for this 28-nanometer CapEx, it’s a very expensive. So we are not just built ahead and then look for customers. Although, CapEx we are working very hard to align them up with customer demand. Donald Lu – Goldman Sachs: Sure. So, any guidance for depreciation for this year and next year? Shih-Wei Sun: This year will be low single-digit higher than that of last year. But next year we’re expecting to see somewhere around 10% increase compared to that of this year. Donald Lu – Goldman Sachs: I see. Yeah. My -- another question I have is, looking back to your different node, I think at 90, which you commented is a relatively weak node or a 65. At 90-nanometer, I think it as a percentage of revenue it maxed at around the 31% of total revenue, at 65 it’s -- last quarter was 34% of total revenue. If we use this as a guide what do you think your 40-nanometer revenue at the peak would that still be above 30% of total revenue or would that be less? Shih-Wei Sun: That’s a very good question. Actually, the industry landscape steering into territory is very uncertain and certain customers are very aggressive on 28 as well. So it’s hard to predict, so maybe it’s hard to say. We will provide our best service to customers. The customers are changing their minds all the time also. It’s a very fast changing dynamics. Although, good thing for us is for the 40-nanometer in the certain for example 28 Poly-SiON, the capacity are somewhat convertible. Donald Lu – Goldman Sachs: You mean between 40 and the 28 or... Shih-Wei Sun: Poly/SiON, yeah. Donald Lu – Goldman Sachs: ...65. A Poly/SiON at the capacity for that is transferred, okay. Shih-Wei Sun: Yeah. Donald Lu – Goldman Sachs: Great. Okay. Yeah. Thank you very much. Shih-Wei Sun: Thank you.

(Operator Instructions) The next question comes from the line of Mahesh Sanganeria of RBC Capital Market. Mahesh Sanganeria – RBC Capital Market: Thank you very much. Another question on the capacity for the 40-nanometer and 28-nanometer, can you use some of your 90-nanometer and 65-nanometer capacity to convert them to 40 and 28-nanometer and if the case, how much cheaper that is to convert rather than add new wafers? Shih-Wei Sun: I think it’s very difficult. Even 65 converting to 20-nanometer it’s the change of immersion scanner and that’s not convertible so it’s even 65 converting to 40 is very expensive not very efficient, I would like to say. Mahesh Sanganeria – RBC Capital Market: But considering that you have so much capacity of unused capacity of 90 and 65, I mean I’m just thinking maybe at least certain percent maybe 50% of the equipment you can reuse or you will not try that? Shih-Wei Sun: Actually lots of equipment’s are still coming. However ours as I mentioned earlier even 90, 65 we will always have a second wave of specialty technology users to come and use those technologies. That’s the best way. Conversion probably is not that great, even [I didn’t] mentioned even some of the high voltage geography side getting into 90 and 80-nanometer for the HD 720 drivers. So 65 there are lots of new stuff embedded flash CMOS image sensor et cetera, et cetera. So we will always balance that conversion and finding the new specialty technology users for the life legacy. And there is nothing new from 6 inch, 8 inch there is, it’s always happening. Mahesh Sanganeria – RBC Capital Market: And considering that your utilization is in mid 60s and probably Q1 stays in the similar kind of range is it fair to assume that your CapEx in the next year will be more second half loaded and still and the first half still will be pretty weak? Shih-Wei Sun: The CapEx is really long term and 27 or 28-nanometer that’s nothing to do with near-term economic fluctuations. We are quite committed to supporting the customers on the long-term especially the leading edge. Mahesh Sanganeria – RBC Capital Market: And so you expect Q4, I guess you guided Q4 CapEx to be about $700 million, is that correct?

Yeah. Our full year budget is still $1.8 billion. But the actual number may alter according to the final payment term as well as the NT dollar, U.S. dollar exchange rate. But it won’t be a much difference. Mahesh Sanganeria – RBC Capital Market: Okay. Thank you. Shih-Wei Sun: Thank you.

Your next question comes from the line of Steven Pelayo of HSBC. Steven Pelayo – HSBC: Thank you. Every quarter, I’d like to ask you guys about customer concentration, could you talk a little bit about -- I don’t know maybe the percentage of revenues from your top five customers, let’s say in the third quarter versus the second quarter and maybe how that would track going forward? Or alternatively maybe even ask it another way, how many customers are greater than 5% in the third quarter versus second quarter? Could you help me try to quantify that a little bit? Shih-Wei Sun: Steve, we can give you the top 10 revenue. It’s about mid 70s in Q4 increase from high 50s in Q3. Steven Pelayo – HSBC: Okay. I was trying to get a little bit more narrowly defined on that. Okay. My next question is just... Shih-Wei Sun: The top six or top seven are all over 5%. Steven Pelayo – HSBC: Okay. And was there a change in that or…? Shih-Wei Sun: Not much. Of course, Q4 will be one or two more. Steven Pelayo – HSBC: Okay. All right. And then there is a lot of questions about how big the 40-nanometer node will be and can it get back to one-third of your revenues? Help us to understand, when we went in the prior downturns as a technology node was ramping. There’s ultimately the pricing curves that you thought was going to be happening for that node, shift lower and thus you don’t monetize as much in that particular node. Now, I’m thinking for example, SMIC for example put a lot of capacity, 65-nanometer and now, of course, they’re facing probably a much more price pressure than when they originally thought putting that capacity in. Is this an issue or something we should be thinking about for you at 40-nanometer or maybe you put that in perspective historically for us? Shih-Wei Sun: Actually our 40-nanometer capacity expansion, we are very disciplined and careful and as I mentioned for these advanced node. In the past, we at a certain stage, we are building capacity ahead of our customers’ demand. And now, we are very carefully aligning with customer on their demand. And so, I don’t think that would be the situation. Also, as I mentioned at 48-nanometer capacity and the 28 certain Poly/SiON, they are -- in some way they are convertible. They are both immersion scanner, similar engineering technologies, so we wish we are not too bad. But, again, the key is aligning with customers’ demand and get the timing right, get it released timely and not too early, not too late. And we said, discipline to CapEx deployment, a rational expansion that’s really what we are trying hard everyday now. Steven Pelayo – HSBC: Last question. You sound pretty excited about some of the, your early activity with your customer engagements happening at 40 and then 28-nanometer in particular. You know, we don’t get as closer look as what’s going on at Samsung and Global Foundries as they kind of hidden in private companies or bigger entities. It’s interesting your increased confident despite the fact that, it seems like the competitive environment should only be getting more difficult at that node. Could you help us maybe frame this competitive landscape today in light of those in interims? Shih-Wei Sun: First of all, I don’t know what they are doing either. They are not just -- I guess, some companies are not public companies, it’s a private equity. So we don’t know much information either. But for us we are really -- actually for our execution delivery, we are really trying to deliver what we committed to customers and that has been very good. And we are earning our business on this new node, very steadily so we are -- certainly we read some news about some of their challenges. So I think it’s a very good opportunity if we can continue deliver what we committed in our business with our -- with technology delivery and production ramp. Steven Pelayo – HSBC: Okay, guys. Well, thank you. And it appears you guys are doing a pretty good job in your cycle to cycle management this time, so congrats. Take care. Shih-Wei Sun: Thank you, Steve.

Your next question comes from the line Donald Lu of Goldman Sachs. Donald Lu – Goldman Sachs: Yeah. I just want to follow-up what would be the 12-inch and 8-inch utilization rate in Q4?

It’s about the same for our guidance. Donald Lu – Goldman Sachs: I see.

It’s similar. Donald Lu – Goldman Sachs: Okay. So in...

Sorry. Donald Lu – Goldman Sachs: So in Q3, the 8-inch utilization was higher and then in Q4 they are similar, so the ASP actually is improving. Is that the idea?

To some extent is yes, yeah. Donald Lu – Goldman Sachs: Okay. Great. Thank you.

Thank you.

And there are no further questions. I would like to turn the call over to Mr. Liu for closing remarks.

Thank you, again for your interest in UMC. Please feel free to contact us directly if you have additional questions and Operator, back to you.

Thank you for your participation in UMC’s conference. There will be a webcast replay within an hour. Please visit www.umc.com under the Investor Relations/Investor Events section. You may disconnect. Good-bye.