Edgar Filing: UNITED MICROELECTRONICS CORP

As of June 30,

Common stock

Form 6-K

1934 Act Registration No. 1-15128

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

Dated September 15, 2006

For the month of August 2006

United Microelectronics Corporation

(Translation of Registrant’s Name into English)

No. 3 Li Hsin Road II

Science Park

Hsinchu, Taiwan, R.O.C.

(Address of Principal Executive Office)

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

Form 20-F V Form 40-F

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

Yes No V

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


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SIGNATURE

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


	United Microelectronics Corporation

Date: 9/15/2006	By	/s/ Chitung Liu
		Chitung Liu
		Chief Financial Officer


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Exhibit


Exhibit		Description
99.1		Announcement on August 16, 2006: To announce related materials on acquisition of machinery and equipment

99.2		Announcement on August 17, 2006: To announce related materials on acquisition of machinery and equipment

99.3		Announcement on August 17, 2006: To announce related materials on disposal of MediaTek Incorporation securities

99.4		Announcement on August 21, 2006: To announce related materials on acquisition of machinery and equipment

99.5		Announcement on August 22, 2006: To announce related materials on acquisition of Promos Technologies. common shares

99.6		Announcement on August 24, 2006: To announce related materials on disposal of MediaTek Incorporation securities

99.7		Announcement on August 24, 2006: Important Resolutions from 10th term 2nd Board Meeting

99.8		Announcement on August 25, 2006: To announce related materials on acquisition of Promos Technologies common shares

99.9		Announcement on August 29, 2006: To announce related materials on acquisition of machinery and equipment

99.10		Announcement on September 1, 2006: To announce related materials on disposal of MediaTek Incorporation securities

99.11		Announcement on September 6, 2006: To announce related materials on acquisition of machinery and equipment

99.12		Announcement on September 7, 2006: July Revenue

99.13		Announcement on September 8, 2006: To announce related materials on disposal of MediaTek Incorporation securities

99.14		Announcement on September 12, 2006: To announce related materials on acquisition of Promos Technologies. common shares

99.15		Announcement on September 14, 2006: To announce related materials on acquisition of Promos Technologies. common shares

99.16		Announcement on September 15, 2006: 1) the trading and pledge of UMC common shares by directors, supervisors, executive officers and 10% shareholders of UMC 2) the acquisition and disposition of assets by UMC

99.17		United Microelectronics Corporation (and Subsidiaries) Financial Statements With Report of Independent Auditors for the Six-Month Periods Ended June 30, 2006 And 2005

Exhibit 99.1


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To announce related materials on acquisition of machinery and equipment

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

2.	Date of the occurrence of the event: 2006/08/10~2006/08/15

3.	Transaction volume (e.g. XX square meters, equivalent to XX p’ing), unit price, total transaction price: Transaction volume: one lot; average unit price: $579,622,500 NTD; total transaction price:$ 579,622,500 NTD

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

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

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

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

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

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

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

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

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

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

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

15.	Broker and broker’s fee: Not applicable

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

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

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

Exhibit 99.2


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To announce related materials on acquisition of machinery and equipment

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

2.	Date of the occurrence of the event: 2006/08/04~2006/08/16

3.	Transaction volume (e.g. XX square meters, equivalent to XX p’ing), unit price, total transaction price: Transaction volume: one lot; average unit price: $ 910,484,460 NTD; total transaction price:$ 910,484,460 NTD

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

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

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

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

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

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

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

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

15.	Broker and broker’s fee: Not applicable

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

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

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

Exhibit 99.3


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To announce related materials on disposal of MediaTek Incorporation securities

1.	Name of the securities: Common shares of MediaTek Incorporation

2.	Trading date: 2006/08/14~2006/08/17

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 1,200,000 shares; average unit price:$292.67 NTD; total amount:$351,207,500 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): $ 338,795,376 NTD

5.	Relationship with the underlying company of the trade: MediaTek Incorporation, none.

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 34,334,499 shares; amount: 355,136,706 NTD; percentage of holdings: 3.55%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 12.30%; ratio of shareholder’s equity: 15.20%; the operational capital as shown in the most recent financial statement: $96,736,519 thousand NTD

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

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

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

Exhibit 99.4


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To announce related materials on acquisition of machinery and equipment

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

2.	Date of the occurrence of the event: 2006/08/18

3.	Transaction volume (e.g. XX square meters, equivalent to XX p’ing), unit price, total transaction price: Transaction volume: one lot; average unit price: $ 576,985,950 NTD; total transaction price:$ 576,985,950 NTD

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

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

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

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

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

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

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

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

15.	Broker and broker’s fee: Not applicable

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

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

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

Exhibit 99.5


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To announce related materials on acquisition of Promos Technologies common shares

1.	Name of the securities: Common shares of Promos Technologies.

2.	Trading date: 2006/08/16~2006/08/22

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 30,498,000 shares; average unit price: $ 12.94 NTD; total amount: $ 394,644,660 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Not applicable

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

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 370,730,000 shares; amount:NTD 4,728,652,310; percentage of holdings: 6.12%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 12.24% ratio of shareholder’s equity: 15.13%; the operational capital as shown in the most recent financial statement: $96,736,519 thousand NTD

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

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

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

Exhibit 99.6


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To announce related materials on disposal of MediaTek Incorporation securities

1.	Name of the securities: Common shares of MediaTek Incorporation

2.	Trading date: 2006/08/18~2006/08/24

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 1,196,000 shares; average unit price: $ 295.65 NTD; total amount: $ 353,595,000 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): $ 341,224,250 NTD

5.	Relationship with the underlying company of the trade: MediaTek Incorporation, none.

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 33,138,499 shares; amount: 342,765,956 NTD; percentage of holdings: 3.42%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 12.50%; ratio of shareholder’s equity: 15.45%; the operational capital as shown in the most recent financial statement: $96,736,519 thousand NTD

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

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

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

Exhibit 99.7


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Important Resolutions from 10th term 2nd Board Meeting

1.	Date of occurrence of the event:2006/08/24

2.	Name of the company: United Microelectronics Corp.

3.	Relationship to the company (listed company or affiliated company): Listed company

4.	The shareholding ratios of mutual holding: N/A

5.	Cause of occurrence:

The board meeting has approved important resolutions as the followings:

(1)

To approve the financial statements for the 1st half of 2006.

(2)

To approve a list of applicants for “UMC Conversion Sales Program”. The Company will assist the shareholders to issue and sell UMC ADRs.

6.	Countermeasures: none

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

Exhibit 99.8


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To announce related materials on acquisition of Promos Technologies common shares

1.	Name of the securities: Common shares of Promos Technologies.

2.	Trading date: 2006/08/24~2006/08/25

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 43,237,000 shares; average unit price: $12.98 NTD; total amount: $ 561,119,853 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Not applicable

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

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 413,967,000 shares; amount:NTD 5,289,772,163; percentage of holdings: 6.83%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 12.42% ratio of shareholder’s equity: 15.34%; the operational capital as shown in the most recent financial statement: $96,736,519 thousand NTD

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

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

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

Exhibit 99.9


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To announce related materials on acquisition of machinery and equipment

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

2.	Date of the occurrence of the event: 2006/08/25~2006/08/28

3.	Transaction volume (e.g.XX square meters, equivalent to XX p’ing), unit price, total transaction price: Transaction volume: a batch; average unit price: $ 636,459,640 NTD; total transaction price: $ 636,459,640 NTD

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

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

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

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

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

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

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

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

15.	Broker and broker’s fee: Not applicable

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

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

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

Exhibit 99.10


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To announce related materials on disposal of MediaTek Incorporation securities

1.	Name of the securities: Common shares of MediaTek Incorporation

2.	Trading date: 2006/08/25~2006/09/01

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 1,135,000 shares; average unit price: $ 301.49 NTD; total amount: $ 342,192,500 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): $ 330,452,699 NTD

5.	Relationship with the underlying company of the trade: MediaTek Incorporation, none.

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 32,003,499 shares; amount: 331,026,155 NTD; percentage of holdings: 3.31%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 13.18%; ratio of shareholder’s equity: 16.63%; the operational capital as shown in the most recent financial statement: $ 82,601,170 thousand NTD

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

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

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

Exhibit 99.11


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To announce related materials on acquisition of machinery and equipment

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

2.	Date of the occurrence of the event: 2006/09/04~2006/09/05

3.	Transaction volume (e.g. XX square meters, equivalent to XX p’ing), unit price, total transaction price: Transaction volume: one lot; average unit price: $ 798,611,650 NTD; total transaction price:$ 798,611,650 NTD

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

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

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

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

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

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

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

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

15.	Broker and broker’s fee: Not applicable

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

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

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

Exhibit 99.12


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United Microelectronics Corporation

September 7, 2006

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

1)	Sales volume (NT$ Thousand)


Period	Items	2006	2005	Changes	%
August	Invoice amount	8,277,724	8,220,082	57,642	0.70	%
2006	Invoice amount	62,005,406	53,693,930	8,311,476	15.48	%
August	Net sales	9,416,111	8,010,667	1,405,444	17.54	%
2006	Net sales	68,753,291	54,804,546	13,948,745	25.45	%

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


*Balance as of period end*	This Month	Last Month	Limit of lending
UMC	0	0	38,140,222
UMC’s subsidiaries	22,653	22,749	539,824

3)	Endorsements and guarantees (NT$ Thousand)


	Change in This Month		Balance as of period end	Limit of endorsements
UMC	(252,149	)	2,025,923	76,280,445
UMC’s subsidiaries	0		0	7,664,389
UMC endorses for subsidiaries			0	0
UMC’s subsidiaries endorse for UMC			0	0
UMC endorses for PRC companies			0	0
UMC’s subsidiaries endorse for PRC companies			0	0

4)	Financial derivatives transactions

a	Hedging purpose : NT$ thousand


*Financial instruments*	Forwards	Interests SWAP
Deposit Paid	0	0
Royalty Income (Paid)	0	0
Unwritten-off Trading Contracts	0	0
Net Profit from Fair Value	0	0
Written-off Trading Contracts	0	0
Realized profit (loss)	0	0

b	Trading purpose : NT$ thousand


*Financial instruments*	Credit-linked Deposits
Deposit Paid	0
Unwritten-off Trading Contracts	19,130,863
Net Profit from Market Value	(1,183,652	)
Written-off Trading Contracts	0
Realized profit (loss)	0

Exhibit 99.13


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To announce related materials on disposal of MediaTek Incorporation securities

1.	Name of the securities: Common shares of MediaTek Incorporation

2.	Trading date: 2006/09/04~2006/09/08

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 1,070,000 shares; average unit price: $ 327.19 NTD; total amount: $ 350,098,000 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): $ 339,030,522 NTD

5.	Relationship with the underlying company of the trade: MediaTek Incorporation, none.

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 30,933,499 shares; amount: 319,958,677 NTD; percentage of holdings: 3.19%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 13.21%; ratio of shareholder’s equity: 16.67%; the operational capital as shown in the most recent financial statement: $ 82,601,170 thousand NTD

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

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

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

Exhibit 99.14


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To announce related materials on acquisition of Promos Technologies common shares

1.	Name of the securities: Common shares of Promos Technologies.

2.	Trading date: 2006/08/28~2006/09/12

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 51,236,000 shares; average unit price: $ 13.60 NTD; total amount: $ 696,822,741 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Not applicable

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

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 465,203,000 shares; amount:NTD 5,986,594,904; percentage of holdings: 7.68%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 13.01% ratio of shareholder’s equity: 16.41%; the operational capital as shown in the most recent financial statement: $ 82,601,170 thousand NTD

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

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

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

Exhibit 99.15


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To announce related materials on acquisition of Promos Technologies common shares

1.	Name of the securities: Common shares of Promos Technologies.

2.	Trading date: 2006/09/13~2006/09/14

3.	Trading volume, unit price, and total monetary amount of the transaction: trading volume: 61,547,000 shares; average unit price: $ 13.72 NTD; total amount: $ 844,519,478 NTD

4.	Gain (or loss) (not applicable in case of acquisition of securities): Not applicable

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

Current cumulative volume, amount, and shareholding percentage of holdings of the security being traded (including the current trade) and status of any restriction of rights (e.g. pledges): cumulative volume: 526,750,000 shares; amount:NTD 6,831,114,382; percentage of holdings: 8.69%; status of restriction of rights: no

Current ratio of long or short term securities investment (including the current trade) to the total assets and shareholder’s equity as shown in the most recent financial statement and the operational capital as shown in the most recent financial statement: ratio of total assets: 13.20% ratio of shareholder’s equity: 16.65%; the operational capital as shown in the most recent financial statement: $ 82,601,170 thousand NTD

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

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

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

Exhibit 99.16


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United Microelectronics Corporation

For the month of August, 2006

This is to report 1) the trading of directors, supervisors, executive officers and 10% shareholders of United Microelectronics Corporation (“UMC”) (NYSE: UMC) 2) the pledge and clear of pledge of UMC common shares by directors, supervisors, executive officers and 10% shareholders of UMC 3) the acquisition assets by UMC 4) the disposition of assets by UMC for the month of August, 2006.

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


*Title*	*Name*	Number of shares held as of *July 31, 2006*	Number of shares held as of *August 31, 2006*	*Changes*
Director	Ting-Yu Lin	16,182,403	16,782,403	600,000
Vice President	Shih-Wei Sun	15,183,341	15,083,341	(100,000	)
Vice President	Ing-Ji Wu	12,217,039	11,907,039	(310,000	)
Vice President	Wen-Yang Chen	6,877,255	4,377,255	(2,500,000	)
Vice President	Lee Chung	601,546	531,546	(70,000	)
Vice President	Po-Wen Yen	1,612,551	1,462,551	(150,000	)

Note: Shares transferred to children.

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

Title

Name

Number of shares
pledge as of

July 31, 2006

Number of shares
pledge as of

August 31, 2006

Changes

—

3)	The acquisition assets (NT$ Thousand)


*Description of assets*	*August*	*2006*
Semiconductor Manufacturing Equipment	3,978,470	15,763,431
Fixed assets	45,697	259,788

4)	The disposition of assets (NT$ Thousand)


*Description of assets*	*August*	*2006*
Semiconductor Manufacturing Equipment	24,151	197,865
Fixed assets	0	0

Exhibit 99.17


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United Microelectronics Corporation (and Subsidiaries) Financial Statements With Report of Independent Auditors for the Six-Month Periods Ended June 30, 2006 And 2005

UNITED MICROELECTRONICS CORPORATION

FINANCIAL STATEMENTS

WITH REPORT OF INDEPENDENT AUDITORS

FOR THE SIX-MONTH PERIODS ENDED

JUNE 30, 2006 AND 2005

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

Telephone: 886-3-578-2258

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

REPORT OF INDEPENDENT AUDITORS

English Translation of a Report Originally Issued in Chinese

To the Board of Directors and Shareholders of

United Microelectronics Corporation

We have audited the accompanying balance sheets of United Microelectronics Corporation as of June 30, 2006 and 2005, and the related statements of income, statements of changes in stockholders’ equity, and cash flows for the six-month periods ended June 30, 2006 and 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. As described in Note 4(10) to the financial statements, certain long-term investments were accounted for under the equity method based on financial statements as of June 30, 2006 and 2005 of the investees, which were audited by other auditors. Our opinion insofar as it relates to the investment income amounting to NT$499 million and NT$144 million for the six-month periods ended June 30, 2006 and 2005, respectively, and the related long-term investment balances of NT$5,706 million and NT$5,559 million as of June 30, 2006 and 2005, respectively, is based solely on the reports of the other auditors.

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

In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of United Microelectronics Corporation as of June 30, 2006 and 2005, and the results of its operations and its cash flows for the six-month periods ended June 30, 2006 and 2005, in conformity with the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers” and accounting principles generally accepted in the Republic of China.

As described in Note 3 to the financial statements, effective from January 1, 2006, United Microelectronics Corporation has adopted the R.O.C. Statement of Financial Accounting Standards No. 34, “Accounting for Financial Instruments” and No. 36, “Disclosure and Presentation of Financial Instruments” to account for the financial instruments.

As described in Note 3 to the financial statements, effective from January 1, 2005, United Microelectronics Corporation has adopted the R.O.C. Statement of Financial Accounting Standards No. 35, “Accounting for Asset Impairment” to account for the impairment of its assets. Effective from January 1, 2006, goodwill is no longer subject to amortization.

We have also audited the consolidated financial statements of United Microelectronics Corporation as of and for the six-month periods ended June 30, 2006 and 2005, and have expressed an unqualified opinion with explanatory paragraph on such financial statements.

July 19, 2006

Taipei, Taiwan

Republic of China

Notice to Readers

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

BALANCE SHEETS

June 30, 2006 and 2005

(Expressed in Thousands of New Taiwan Dollars)


		As of June 30,
Assets	Notes	2006			2005
Current assets
Cash and cash equivalents	2, 4 (1)	$	90,049,580		$	68,065,457
Financial assets at fair value through profit or loss, current	2, 3, 4 (2)		1,506,063			2,286,070
Available-for-sale financial assets, current	2, 3, 4 (3)		—			772,509
Held-to-maturity financial assets, current	2, 3, 4 (4)		779,456			63,080
Notes receivable	4 (5)		2,755			288
Notes receivable - related parties	5		70,880			57,853
Accounts receivable, net	2, 4 (6)		5,308,537			5,082,399
Accounts receivable - related parties, net	2, 5		7,173,966			4,506,666
Other receivables	2, 5		722,558			611,559
Inventories, net	2, 4 (7)		10,383,292			7,898,701
Prepaid expenses			849,094			820,875
Deferred income tax assets, current	2, 4 (22)		2,720,051			3,413,529

Total current assets			119,566,232			93,578,986

Funds and investments
Available-for-sale financial assets, noncurrent	2, 3, 4 (8)		37,864,803			5,171,355
Held-to-maturity financial assets, noncurrent	2, 3, 4 (4)		200,000			1,153,028
Financial assets measured at cost, noncurrent	2, 3, 4 (9)		2,265,728			2,544,521
Long-term investments accounted for under the equity method	2, 3, 4 (10)		33,261,799			37,304,798

Total funds and investments			73,592,330			46,173,702

Property, plant and equipment	2, 3, 4 (11), 7
Land			1,132,576			1,132,576
Buildings			16,249,112			15,860,960
Machinery and equipment			380,689,179			348,877,930
Transportation equipment			78,461			88,095
Furniture and fixtures			2,300,342			2,119,552

Total cost			400,449,670			368,079,113
Less : Accumulated depreciation			(274,361,684	)		(228,295,715	)
Add : Construction in progress and prepayments			10,539,974			20,087,650

Property, plant and equipment, net			136,627,960			159,871,048

Intangible assets
Goodwill	2, 3		3,745,122			4,168,997
Technological know-how	2		299,877			399,178

Total intangible assets			4,044,999			4,568,175

Other assets
Deferred charges	2		1,627,918			1,800,209
Deferred income tax assets, noncurrent	2, 4 (22)		4,414,737			3,922,375
Other assets - others	2, 4 (12), 6		1,956,997			2,069,695

Total other assets			7,999,652			7,792,279

Total assets		$	341,831,173		$	311,984,190


		As of June 30,
Liabilities and Stockholders’ Equity	Notes	2006			2005
Current liabilities
Short-term loans	4 (13)	$	—		$	1,645,280
Financial liabilities at fair value through profit or loss, current	2, 3, 4 (14)		1,188,290			27,475
Accounts payable			4,733,091			3,797,102
Income tax payable	2		1,188,953			60,389
Accrued expenses			5,781,758			5,274,099
Dividend payable	4 (20)		7,161,301			1,758,736
Payable on equipment			4,398,689			3,413,036
Other payables	4 (20)		311,960			27,006
Current portion of long-term liabilities	2, 4 (15)		10,312,904			5,250,000
Other current liabilities	7		1,888,116			820,413

Total current liabilities			36,965,062			22,073,536

Long-term liabilities
Bonds payable	2, 4 (15)		30,279,246			28,347,240

Total long-term liabilities			30,279,246			28,347,240

Other liabilities
Accrued pension liabilities	2, 4 (16)		3,044,682			2,962,723
Deposits-in			21,451			20,636
Deferred credits - intercompany profits	2		9,806			9,806
Other liabilities - others			551,252			510,637

Total other liabilities			3,627,191			3,503,802

Total liabilities			70,871,499			53,924,578

Capital
Common stock	2, 4 (17), 4 (18), 4 (20)		188,452,341			177,794,314
Stock dividends for distribution			2,248,771			19,560,220
Capital reserve	2, 4 (17)
Premiums			60,712,685			64,227,411
Change in equities of long-term investments			6,655,250			20,786,958
Retained earnings	4 (17), 4 (20)
Legal reserve			16,699,508			15,996,839
Special reserve			322,150			1,744,171
Unappropriated earnings			3,434,838			3,622,790
Adjusting items in stockholders’ equity	2, 4 (8)
Cumulative translation adjustment			(855,518	)		(1,998,163	)
Unrealized gain or loss on financial instruments			19,677,371			(9,597,290	)
Treasury stock	2, 4 (10), 4 (17), 4 (19)		(26,387,722	)		(34,077,638	)

Total stockholders’ equity			270,959,674			258,059,612

Total liabilities and stockholders’ equity		$	341,831,173		$	311,984,190

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF INCOME

For the six-month periods ended June 30, 2006 and 2005

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


		For the six-month period ended June 30,
	Notes	2006			2005
Operating revenues	2, 5
Sales revenues		$	49,078,075		$	39,605,151
Less : Sales returns and discounts			(456,096	)		(729,298	)

Net sales			48,621,979			38,875,853
Other operating revenues			1,512,987			852,773

Net operating revenues			50,134,966			39,728,626

Operating costs	4 (21), 5
Cost of goods sold			(40,738,614	)		(36,279,398	)
Other operating costs			(999,065	)		(266,257	)

Operating costs			(41,737,679	)		(36,545,655	)

Gross profit			8,397,287			3,182,971
Unrealized intercompany profit	2		(91,439	)		(68,741	)
Realized intercompany profit	2		120,153			154,417

Gross profit-net			8,426,001			3,268,647

Operating expenses	4 (21), 5
Sales and marketing expenses			(1,373,023	)		(1,050,885	)
General and administrative expenses			(1,207,715	)		(1,298,115	)
Research and development expenses			(4,130,707	)		(3,956,436	)

Subtotal			(6,711,445	)		(6,305,436	)

Operating income (loss)			1,714,556			(3,036,789	)

Non-operating income
Interest revenue	2, 5		709,934			436,914
Investment gain accounted for under the equity method, net	2, 4 (10)		582,324			—
Dividend income			26,371			36,789
Gain on disposal of property, plant and equipment	2		93,923			33,840
Gain on disposal of investments	2		18,708,934			6,439,830
Exchange gain, net	2		90,800			41,233
Gain on recovery of market value of inventories	2		—			315,151
Gain on valuation of financial liabilities	2		89,197			—
Other income			440,236			390,360

Subtotal			20,741,719			7,694,117

Non-operating expenses
Interest expense	4 (11)		(397,415	)		(447,071	)
Investment loss accounted for under the equity method, net	2, 4 (10)		—			(2,144,439	)
Loss on disposal of property, plant and equipment	2		(23,501	)		(63,344	)
Loss on decline in market value and obsolescence of inventories	2		(401,003	)		—
Financial expenses			(104,842	)		(149,905	)
Impairment loss	2, 4 (10)		(21,807	)		—
Loss on valuation of financial assets	2		(590,466	)		—
Other losses			(36,390	)		(34,472	)

Subtotal			(1,575,424	)		(2,839,231	)

Income from continuing operations before income tax			20,880,851			1,818,097
Income tax expense	2, 4 (22)		(1,354,548	)		(397	)

Net income from continuing operations			19,526,303			1,817,700
Cumulative effect of changes in accounting principles (the net amount after deducted tax expense $0)	3		(1,188,515	)		—

Net income		$	18,337,788		$	1,817,700



		Pre-tax			Post-tax			Pre-tax		Post-tax
Earnings per share-basic (NTD)	2, 4 (23)
Income from continuing operations		$	1.15		$	1.08		$	0.10	$	0.10
Cumulative effect of changes in accounting principles			(0.07	)		(0.07	)		—		—

Net income		$	1.08		$	1.01		$	0.10	$	0.10

Earnings per share-diluted (NTD)	2, 4 (23)
Income before income tax		$	1.11		$	1.03		$	0.10	$	0.10
Cumulative effect of changes in accounting principles			(0.06	)		(0.06	)		—		—

Net income		$	1.05		$	0.97		$	0.10	$	0.10


Pro forma information on earnings as if subsidiaries’ investment in the Company is not treated as treasury stock	2, 4 (23)
Net income		$	18,337,788	$	1,817,700

Earnings per share-basic (NTD)		$	1.00	$	0.09

Earnings per share-diluted (NTD)		$	0.97	$	0.09

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the six-month periods ended June 30, 2006 and 2005

(Expressed in Thousands of New Taiwan Dollars)


		Capital											Retained Earnings								Unrealized Gain/Loss on Financial Instruments			Cumulative Translation Adjustment			Treasury Stock			Total
	Notes	Common Stock			Stock Dividends for Distribution		Collected in Advance			Capital Reserve			Legal Reserve		Special Reserve			Unappropriated Earnings			Unrealized Gain/Loss on Financial Instruments			Cumulative Translation Adjustment			Treasury Stock			Total
Balance as of January 1, 2005	4 (17)	$	177,919,819		$	—	$	4,040		$	84,933,195		$	12,812,501	$	90,871		$	29,498,329		$	(9,871,086	)	$	(1,319,452	)	$	(27,685,463	)	$	266,382,754
Appropriation of 2004 retained earnings	4 (20)
Legal reserve			—			—		—			—			3,184,338		—			(3,184,338	)		—			—			—			—
Special reserve			—			—		—			—			—		1,653,300			(1,653,300	)		—			—			—			—
Cash dividends			—			—		—			—			—		—			(1,758,736	)		—			—			—			(1,758,736	)
Stock dividends			—			17,587,365		—			—			—		—			(17,587,365	)		—			—			—			—
Remuneration to directors and supervisors			—			—		—			—			—		—			(27,005	)		—			—			—			(27,005	)
Employee bonus - stock			—			1,972,855		—			—			—		—			(1,972,855	)		—			—			—			—
Purchase of treasury stock	2, 4 (19)		—			—		—			—			—		—			—			—			—			(8,570,374	)		(8,570,374	)
Cancellation of treasury stock	2, 4 (19)		(491,140	)		—		—			(177,419	)		—		—			(1,509,640	)		—			—			2,178,199			—
Net income in the first half of 2005			—			—		—			—			—		—			1,817,700			—			—			—			1,817,700
Adjustment of capital reserve accounted for under the equity method	2		—			—		—			(20,055	)		—		—			—			—			—			—			(20,055	)
Changes in unrealized gain on financial instruments of investees	2		—			—		—			—			—		—			—			273,796			—			—			273,796
Exercise of employee stock options	2, 4 (18)		361,595			—		—			278,648			—		—			—			—			—			—			640,243
Common stock transferred from capital collected in advance			4,040			—		(4,040	)		—			—		—			—			—			—			—			—
Changes in cumulative translation adjustment	2		—			—		—			—			—		—			—			—			(678,711	)		—			(678,711	)

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

Balance as of January 1, 2006	4 (17)	$	197,947,033		$	—	$	36,600		$	85,381,599		$	15,996,839	$	1,744,171		$	8,831,782		$	(9,527,362	)	$	(241,153	)	$	(41,885,956	)	$	258,283,553
The effect of adopting SFAS NO. 34	3 (3)		—			—		—			—			—		—			—			23,499,003			11,547			—			23,510,550
Appropriation of 2005 retained earnings	4 (20)
Legal reserve			—			—		—			—			702,669		—			(702,669	)		—			—			—			—
Special reserve			—			—		—			—			—		(1,422,021	)		1,422,021			—			—			—			—
Cash dividends			—			—		—			—			—		—			(7,161,267	)		—			—			—			(7,161,267	)
Stock dividends			—			895,158		—			—			—		—			(895,158	)		—			—			—			—
Remuneration to directors and supervisors			—			—		—			—			—		—			(6,324	)		—			—			—			(6,324	)
Employee bonus - cash			—			—		—			—			—		—			(305,636	)		—			—			—			(305,636	)
Employee bonus - stock			—			458,455		—			—			—		—			(458,455	)		—			—			—			—
Capital reserve transferred to common stock	4 (17)		—			895,158		—			(895,158	)		—		—			—			—			—			—			—
Purchase of treasury stock	2, 4 (19)		—			—		—			—			—		—			—			—			—			(24,279,397	)		(24,279,397	)
Cancellation of treasury stock	2, 4 (17), 4 (19)		(10,000,000	)		—		—			(3,269,100	)		—		—			(6,371,128	)		—			—			19,640,228			—
Adjustment of treasury stock due to loss of control over subsidiary			—			—		—			—			—		—			(9,256,116	)		2,620,135			—			20,137,403			13,501,422
Net income in the first half of 2006			—			—		—			—			—		—			18,337,788			—			—			—			18,337,788
Adjustment of capital reserve accounted for under the equity method	2		—			—		—			(15,280	)		—		—			—			—			—			—			(15,280	)
Adjustment of funds and investments disposal	2		—			—		—			(14,110,993	)		—		—			—			—			8,171			—			(14,102,822	)
Changes in unrealized loss on available-for-sale financial assets	2		—			—		—			—			—		—			—			(149,372	)		—			—			(149,372	)
Changes in unrealized gain on financial instruments of investees	2		—			—		—			—			—		—			—			3,234,967			—			—			3,234,967
Exercise of employee stock options	2, 4 (18)		468,708			—		—			276,867			—		—			—			—			—			—			745,575
Common stock transferred from capital collected in advance			36,600			—		(36,600	)		—			—		—			—			—			—			—			—
Changes in cumulative translation adjustment	2		—			—		—			—			—		—			—			—			(634,083	)		—			(634,083	)

Balance as of June 30, 2006		$	188,452,341		$	2,248,771	$	—		$	67,367,935		$	16,699,508	$	322,150		$	3,434,838		$	19,677,371		$	(855,518	)	$	(26,387,722	)	$	270,959,674

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

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CASH FLOWS

For the six-month periods ended June 30, 2006 and 2005

(Expressed in Thousands of New Taiwan Dollars)


	For the six-month period ended June 30,
	2006			2005
Cash flows from operating activities:
Net income	$	18,337,788		$	1,817,700
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		22,717,399			22,080,111
Amortization		921,607			1,111,695
Bad debt expenses (reversal)		7,825			(116,245	)
Loss (gain) on decline (recovery) in market value and obsolescence of inventories		401,003			(315,151	)
Cash dividends received under the equity method		—			7,500
Investment loss (gain) accounted for under the equity method		(582,324	)		2,144,439
Loss on valuation of financial assets and liabilities		1,689,784			—
Impairment loss		21,807			—
Gain on disposal of investments		(18,708,934	)		(6,439,830	)
Loss (gain) on disposal of property, plant and equipment		(70,422	)		29,504
Exchange loss (gain) on financial assets and liabilities		(13,861	)		13,576
Exchange gain on long-term liabilities		(226,299	)		(9,789	)
Amortization of bond discounts		48,280			—
Amortization of deferred income		(59,747	)		(26,732	)
Changes in assets and liabilities:
Financial assets and liabilities at fair value through profit or loss, current		370,882			101,641
Notes and accounts receivable		(217,198	)		2,004,339
Other receivables		111,015			(46,543	)
Inventories		(829,918	)		1,528,698
Prepaid expenses		(427,841	)		(510,188	)
Accounts payable		(9,516	)		(920,209	)
Accrued expenses		(3,706	)		(3,287,674	)
Other current liabilities		470,496			(124,763	)
Capacity deposits		(9,400	)		(201,216	)
Accrued pension liabilities		40,904			272,212
Other liabilities - others		236,756			107,962

Net cash provided by operating activities		24,216,380			19,221,037

Cash flows from investing activities:
Cash proceeds from merger		—			943,862
Acquisition of available-for-sale financial assets		(296,823	)		(318,396	)
Proceeds from disposal of available-for-sale financial assets		5,115,113			4,602,598
Proceeds from disposal of held-to-maturity financial assets		—			453,640
Acquisition of financial assets measured at cost		—			(323,616	)
Proceeds from disposal of financial assets measured at cost		31,188			—
Acquisition of long-term investments accounted for under the equity method		(3,465,263	)		(1,685,256	)
Proceeds from disposal of long-term investments accounted for under the equity method		7,801,029			2,627,313
Proceeds from liquidation of long-term investments		—			95,090
Acquisition of property, plant and equipment		(11,198,577	)		(7,812,374	)
Proceeds from disposal of property, plant and equipment		100,882			78,242
Increase in deferred charges		(599,150	)		(686,340	)
Decrease (increase) in other assets - others		60,117			(129,531	)
Increase in other receivables		—			(5,137,760	)

Net cash used in investing activities		(2,451,484	)		(7,292,528	)

English Translation of Financial Statements Originally Issued in Chinese

UNITED MICROELECTRONICS CORPORATION

STATEMENTS OF CASH FLOWS

For the six-month periods ended June 30, 2006 and 2005

(Expressed in Thousands of New Taiwan Dollars)


	For the six-month period ended June 30,
	2006			2005
(continued)

Cash flows from financing activities:
Decrease in short-term loans	$	—		$	(259,120	)
Repayment of long-term loans		—			(16,153,714	)
Redemption of bonds		(5,250,000	)		(2,820,004	)
Increase (decrease) in deposits-in		627			(1,437	)
Purchase of treasury stock		(23,831,089	)		(8,570,374	)
Exercise of employee stock options		745,575			640,243

Net cash used in financing activities		(28,334,887	)		(27,164,406	)

Effect of exchange rate changes on cash and cash equivalents		22,948			(45,975	)

Decrease in cash and cash equivalents		(6,547,043	)		(15,281,872	)
Cash and cash equivalents at beginning of period		96,596,623			83,347,329

Cash and cash equivalents at end of period	$	90,049,580		$	68,065,457

Supplemental disclosures of cash flow information:
Cash paid for interest	$	777,461		$	1,130,964

Cash paid (refunded) for income tax	$	78,693		$	(27,513	)

Investing activities partially paid by cash:
Acquisition of property, plant and equipment	$	10,319,403		$	4,947,474
Add: Payable at beginning of period		5,277,863			4,704,299
Payable transferred in from the Branch at beginning of period		—			1,573,637
Less: Payable at end of period		(4,398,689	)		(3,413,036	)

Cash paid for acquiring property, plant and equipment	$	11,198,577		$	7,812,374

Investing and financing activities not affecting cash flows:
Principal amount of exchangeable bonds exchanged by bondholders	$	69,621		$	—
Book value of reference available-for-sale financial assets delivered for exchange		(20,242	)		—
Elimination of related balance sheet accounts		15,302			—

Recognition of gain on disposal of available-for-sale financial assets	$	64,681		$	—

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

UNITED MICROELECTRONICS CORPORATION

NOTES TO FINANCIAL STATEMENTS

June 30, 2006 and 2005

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

1.	HISTORY AND ORGANIZATION

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

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

Based on the resolution of the board of directors’ meeting on August 26, 2004, UMCI LTD. had transferred its businesses, operations, and assets to the Company’s Singapore branch (the Branch) since April 1, 2005.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Summaries of significant accounting policies are as follows:

Use of Estimates

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

Foreign Currency Transactions

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

Non-currency assets and liabilities denominated in foreign currencies and marked to market with changes in market value charged to the statement of income, are valued at the spot exchange rate at the balance sheet date, with arising exchange gains or losses recognized in the current reporting period. For similar assets and liabilities where the changes in market value are charged to stockholders’ equity, the spot exchange rate at the balance sheet date is used and any resulting exchange gains or losses are recorded as adjustment items to stockholders’ equity. The exchange rate at the date of transaction is used to record non-currency assets and liabilities which are denominated in foreign currencies and measured at cost.

Translation of Foreign Currency Financial Statements

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

Cash Equivalents

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

Financial Assets and Financial Liabilities

Based on the R.O.C. Statement of Financial Accounting Standard (SFAS) No. 34, “Accounting for Financial Instruments” and the “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, financial assets are classified as financial assets at fair value through profit or loss, held-to-maturity financial assets, financial assets measured at cost, and available-for-sale financial assets. Financial liabilities are classified as financial liabilities at fair value through profit or loss.

The Company’s purchases and sales of financial assets and liabilities are recognized on the trade date, the date that Company commits to purchasing or selling the asset and liability. Financial assets and financial liabilities are initially recognized at fair value plus the acquisition or issuance costs. Accounting policies prior to, and including, December 31, 2005 are described in Note 3.

Financial assets and financial liabilities at fair value through profit or loss

Financial assets and financial liabilities held for short-term sale or repurchase purposes, and derivative financial instruments not qualified for hedging purposes are classified as either financial assets or financial liabilities at fair value through profit or loss.

Financial assets or financial liabilities are subsequently measured at fair value and changes in fair value are recognized as profit or loss. Stocks of listed companies, convertible bonds, and close-end funds are measured at closing prices at the balance sheet date. Open-end funds are measured at the unit price of the net assets at the balance sheet date. The fair value of derivative financial instruments is determined by using valuation techniques commonly used by market participants to price the instrument.

Held-to-maturity financial assets

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity where the Company has the positive intention and ability to hold to maturity. Investments that are intended to be held to maturity are subsequently measured at amortized cost.

If there is any objective evidence of impairment, impairment loss is recognized by the Company. If subsequently the impairment loss has recovered, and such recovery is evidently related to improvements in events or factors that have originally caused the impairment loss, the Company shall reverse the amount, which will be recorded as profit in the current period. The new cost basis as a result of the reversal shall not exceed the amortized cost prior to the impairment.

Financial assets measured at cost

Unlisted stocks, funds, and others without reliable market prices are measured at cost. Where objective evidence of impairment exists, the Company shall recognize impairment loss, which shall not be reversed in subsequent periods.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets neither classified as financial assets at fair value through profit or loss, nor held-to-maturity financial assets, loans and receivables. Subsequent measurement is measured at fair value. Stocks of listed companies are measured at closing prices at the balance sheet date. The gain or loss arising from the change in fair value, excluding impairment loss and exchange gain or loss, is recognized as an adjustment to stockholders’ equity until such investment is reclassified or disposed of, upon which the cumulative gain or loss previously charged to stockholders’ equity will be recorded in the income statement.

The Company recognizes impairment loss when there is any objective evidence of impairment. Any reduction in the loss of equity investments in subsequent periods will be recognized as an adjustment to stockholders’ equity. For debt instruments, if the reduction is clearly related to improvements in the factors or events that have originally caused the impairment, the amount shall be reversed and recognized in the current period’s statement of income.

Allowance for Doubtful Accounts

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

Inventories

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

Long-term Investments Accounted for Under the Equity Method

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

Investment income or loss from investments in both listed and unlisted investees is accounted for under the equity method provided that the Company owns at least 20% of the outstanding voting rights of the investees or has significant influence on operating decisions of the investees. The difference of the acquisition cost and the underlying equity in the investee’s net assets is amortized over 5 years. However, effective from January 1, 2006, such a difference is no longer amortized. Arising differences from new acquisitions are analyzed and accounted for in the manner similar to the allocation of acquisition cost as provided in the R.O.C. SFAS No. 25, “Business Combination – Accounting Treatment under Purchase Method”, where goodwill is not subject to amortization.

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

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

Unrealized intercompany gains and losses arising from upstream transactions with investees accounted for under the equity method are eliminated in proportion to the Company’s ownership percentage. Unrealized intercompany gains and losses arising from transactions between investees accounted for under the equity method are eliminated in proportion to the Company’s ownership percentage, while those arising from transactions between majority-owned subsidiaries are eliminated in proportion to the Company’s ownership percentage in the subsidiary incurred with a gain or loss.

If the recoverable amount of investees accounted for under the equity method is less than its carrying amount, the difference is to be recognized as impairment loss in the current period.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Interest incurred on loans used to finance the construction of property, plant and equipment is capitalized and depreciated accordingly. Maintenance and repairs are charged to expense as incurred. Significant renewals and improvements are treated as capital expenditure and are depreciated accordingly. When property, plant and equipment are disposed, their original cost and accumulated depreciation are to be written off and the related gain or loss is classified as non-operating income or expenses. Idle assets are transferred to other assets according to the lower of net book or net realizable value, with the difference charged to non-operating expenses.

Depreciation is provided on a straight-line basis using the estimated economic life of the assets less salvage value, if any. When the estimated economic life expires, property, plant and equipment which are still in use, are depreciated over the newly estimated remaining useful life using the salvage value. The estimated economic life of the property, plant and equipment is as follows: buildings – 20 to 55 years; machinery and equipment – 5 years; transportation equipment – 5 years; furniture and fixtures – 5 years.

Intangible Assets

Effective from January 1, 2006, goodwill generated from consolidation is no longer subject to amortization.

Technological know-how is stated at cost and amortized over its estimated economic life using the straight-line method.

The Company assesses whether there is any indication of impairment other than temporary. If any such indication exists, the recoverable amount is estimated and impairment loss is recognized accordingly. The book value after recognizing the impairment loss is recorded as the new cost.

Deferred Charges

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

Prior to, and including December 31, 2005, the issuance costs of convertible and exchangeable bonds were classified as deferred charges and amortized over the life of the bonds. Since January 1, 2006, the amortized amounts as of December 31, 2005 were reclassified as discount of bonds as a deduction to bonds payable. The amounts are amortized based on the interest method during remaining life of the bonds. Where the difference between straight-line method and interest method is slight, the bond discounts shall be amortized based on the straight-line method.

The Company assesses whether there is any indication of other than temporary impairment. If any such indication exists, the recoverable amount is estimated and impairment loss is recognized accordingly. The book value after recognizing the impairment loss is recorded as the new cost basis.

Convertible and Exchangeable Bonds

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

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

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

Based on the R.O.C. SFAS No. 34, “Accounting for Financial Instruments”, as of January 1, 2006, derivative financial instruments embedded in convertible bonds shall be bifurcated and accounted as financial liabilities with changes in market value recognized in earnings if the economic and risk characteristics of the embedded derivative instrument and the host contract are not clearly and closely related.

Pension Plan

All regular employees are entitled to a defined benefit pension plan that is managed by an independently administered pension fund committee within the Company. The fund is deposited under the committee’s name in the Central Trust of China and hence, not associated with the Company. Therefore the fund shall not be included in the Company’s financial statements. Pension benefits for employees of the Branch are provided in accordance with the local regulations.

The Labor Pension Act of the R.O.C. (the Act), which adopts a defined contribution plan, became effective on July 1, 2005. In accordance with the Act, employees may choose to elect either the Act, by retaining their seniority before the enforcement of the Act, or the pension mechanism of the Labor Standards Law. For employees who elect the Act, the Company will make monthly contributions of no less than 6% of the employees’ monthly wages to the employees’ individual pension accounts.

The accounting for pension is computed in accordance with the R.O.C. SFAS No. 18. For the defined benefit pension plan, the net pension cost is calculated based on an actuarial valuation, and pension cost components such as service cost, interest cost, expected return on plan assets, the amortization of net obligation at transition, pension gain or loss, and prior service cost, are all taken into consideration. For the defined contribution pension plan, the Company recognizes the pension amount as expense in the period in which the contribution becomes due.

Employee Stock Option Plan

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

Treasury Stock

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

Revenue Recognition

The main sales term of the Company is Free on Board (FOB) or Free Carrier (FCA). Revenue is recognized when the ownership and risk of the products have been transferred to customers and the possibility of sales collection is reasonably assured. Allowance for sales returns and discounts is estimated based on customer complaints and historical experiences. Such provisions are recognized in the reporting period the products are sold.

Capital Expenditure versus Operating Expenditure

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

Income Tax

The Company adopted the R.O.C. SFAS No. 22, “Accounting for Income Taxes” for inter-period and intra-period income tax allocation. Provision for income tax includes deferred income tax resulting from temporary differences, loss carry-forward and investment tax credits. Deferred income tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements using enacted tax rates and laws that will be in effect when the difference is expected to reverse. Valuation allowance on deferred income tax assets is provided to the extent that it is more likely than not that the tax benefits will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the expected reversal date of the temporary difference.

According to the R.O.C. SFAS No. 12, “Accounting for Income Tax Credits”, the Company recognizes the tax benefit from the purchase of equipment and technology, research and development expenditure, employee training, and certain equity investment by the flow-through method.

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

The Income Basic Tax Act of the R.O.C. (the IBTA) became effective on January 1, 2006. The IBTA is a supplemental tax at 10% (set up by the Executive Yuan) that is payable if the income tax payable pursuant to the R.O.C. Income Tax Act is below the minimum amount as prescribed by the IBTA, and is calculated based on taxable income defined under the IBTA which includes most income that is exempted from income tax under various legislations. The impact of the IBTA has been considered in the Company’s income tax for the current reporting period.

Earnings per Share

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

Asset Impairment

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

For previously recognized losses, the Company assesses, at the balance sheet date, whether there is any indication that the impairment loss may no longer exist or may have diminished. If there is any such indication, the Company recalculates the recoverable amount of the asset. If the recoverable amount increases as a result of the increase in the estimated service potential of the assets, the Company reverses the impairment loss such that the resulting carrying amount of the asset shall not exceed the amount (net of amortization or depreciation), that would otherwise result had no impairment loss been recognized for the assets in prior years.

In addition, a goodwill-allocated CGU or group of CGUs is tested for impairment each year, regardless of whether impairment is indicated. If an impairment test reveals that the carrying amount (including goodwill) of CGU or group of CGUs is greater than its recoverable amount, there is an impairment loss. In allocating impairment losses, the portion of goodwill allocated is to be written down first. After goodwill has been written off, the remaining impairment loss, if any, is to be shared among other assets pro rata to their carrying amount. The write-down in goodwill cannot be reversed under any circumstance in subsequent periods.

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

3.	ACCOUNTING CHANGE

Asset Impairment

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

Goodwill

The Company adopted the amendments to the R.O.C. SFAS No. 1, “Conceptual Framework of Financial Accounting and Preparation of Financial Statements”, SFAS No. 5, “Long-Term Investments in Equity Securities”, and SFAS No. 25, “Business Combinations - Accounting Treatment under Purchase Method”, which have all discontinued the amortization of goodwill effective on January 1, 2006. The above changes in accounting principles has increased the Company’s total assets as of June 30, 2006 by NT$ 429 million, and increased the Company’s net income and earnings per share by NT$429 million and NT$0.02, respectively, for the six-month period ended June 30, 2006.

Financial Instruments

(1)

The Company adopted the R.O.C. SFAS No. 34, “Accounting for Financial Instruments” and SFAS No. 36, “Disclosure and Presentation of Financial Instruments” to account for the financial instruments for its financial statements beginning on and after January 1, 2006. Some items have already been reclassified according to the R.O.C. “Guidelines Governing the Preparation of Financial Reports by Securities Issuers”, SFAS No. 34 and No. 36 for the six-month period ended June 30, 2005.

(2)

The accounting policies prior to, and including, December 31, 2005 are as follows:

Marketable Securities

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

Long-Term Investment – Cost Method or Lower of Cost or Market Value Method

Investments of less than 20% of the outstanding voting rights in listed investees, where significant influence on operating decisions of the investees does not reside with the Company, are accounted for by the lower of aggregate cost or market value method. The unrealized loss resulting from the decline in market value of investments that are held for the purpose of long-term investment is deducted from the stockholders’ equity. The market value at the balance sheet date is determined by the average closing price during the last month of the reporting period. Investments of less than 20% of the outstanding voting rights in unlisted investees are accounted for under the cost method. Impairment losses for the investees will be recognized if an other than temporary impairment is evident and the book value after recognizing the losses shall be treated as the new cost basis of such investment.

Derivative Financial Instruments

The net receivables or payables resulting from interest rate swap and forward contracts were recorded under current assets or current liabilities.

(3)

The above changes in accounting principles increased the Company’s total assets, total liabilities, and stockholders’ equity as of January 1, 2006 by NT$23,648 million, NT$1,326 million, and NT$22,322 million, respectively; and resulted in an unfavorable cumulative effect of changes in accounting principles of NT$1,189 million to be deducted from net income, thereby reducing earnings per share by NT$0.07 for the six-month period ended June 30, 2006.

4.	CONTENTS OF SIGNIFICANT ACCOUNTS

(1)

CASH AND CASH EQUIVALENTS


	As of June 30,
	2006		2005
Cash:
Cash on hand	$	1,874	$	1,617
Checking and savings accounts		3,167,141		1,932,245
Time deposits		79,104,197		57,396,748

Subtotal		82,273,212		59,330,610

Cash equivalents:
Government bonds acquired under repurchase agreements		7,776,368		8,734,847

Total	$	90,049,580	$	68,065,457

(2)

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS, CURRENT


	As of June 30,
Held for trading	2006		2005
Listed stocks	$	1,138,214	$	628,747
Convertible bonds		313,439		1,657,323
Open-end funds		54,410		—

Total	$	1,506,063	$	2,286,070

During the six-month period ended June 30, 2006, net loss arising from the changes in fair value of financial assets at fair value through profit or loss, current, was NT$547 million.

(3)

AVAILABLE-FOR-SALE FINANCIAL ASSET, CURRENT

(4)

HELD-TO-MATURITY FINANCIAL ASSETS


	As of June 30,
	2006			2005
Credit-linked deposits and repackage bonds	$	979,456		$	1,216,108
Less: Non-current portion		(200,000	)		(1,153,028	)

Total	$	779,456		$	63,080

(5)

NOTES RECEIVABLE

(6)

ACCOUNTS RECEIVABLE, NET


	As of June 30,
	2006			2005
Accounts receivable	$	5,498,927		$	5,190,555
Less: Allowance for sales returns and discounts		(133,071	)		(23,981	)
Less: Allowance for doubtful accounts		(57,319	)		(84,175	)

Net	$	5,308,537		$	5,082,399

(7)

INVENTORIES, NET


	As of June 30,
	2006			2005
Raw materials	$	933,763		$	126,994
Supplies and spare parts		1,691,672			1,734,764
Work in process		8,325,959			6,760,326
Finished goods		305,657			520,695

Total		11,257,051			9,142,779
Less: Allowance for loss on decline in market value and obsolescence		(873,759	)		(1,244,078	)

Net	$	10,383,292		$	7,898,701

Inventories were not pledged.

(8)

AVAILABLE-FOR-SALE FINANCIAL ASSETS, NONCURRENT

Details of available-for-sale financial assets are as follows :


	As of June 30,
	2006		2005
Common stock	$	36,448,324	$	5,171,355
Preferred stock		1,416,479		—

Total	$	37,864,803	$	5,171,355

The Company recognized net loss of NT$149 million due to the changes in fair value as an adjustment to stockholders’ equity for the six-month period ended June 30, 2006.

(9)

FINANCIAL ASSETS MEASURED AT COST, NONCURRENT


	As of June 30,
	2006		2005
Common stock	$	1,458,246	$	1,758,239
Preferred stock		300,000		300,000
Funds		507,482		486,282

Total	$	2,265,728	$	2,544,521

(10)

LONG-TERM INVESTMENTS ACCOUNTED FOR UNDER THE EQUITY METHOD

Details of long-term investments accounted for under the equity method are as follows :


	As of June 30,
	2006			2005
Investee Company	Amount		Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights
Listed companies
UMC JAPAN	$	6,134,625	50.09	$	7,269,416	47.42
HOLTEK SEMICONDUCTOR INC.		922,620	24.67		797,730	25.23
ITE TECH. INC.		347,675	22.04		292,828	22.21
UNIMICRON TECHNOLOGY CORP.		4,531,744	20.40		3,640,017	20.85
FARADAY TECHNOLOGY CORP. (Note A)		—	—		907,782	18.38
SILICON INTEGRATED SYSTEMS CORP. (Note A)		—	—		4,048,689	16.16
NOVATEK MICROELECTRONICS CORP. (Note A)		—	—		1,428,604	13.24

Subtotal		11,936,664			18,385,066


	As of June 30,
	2006			2005
Investee Company	Amount		Percentage of Ownership or Voting Rights	Amount		Percentage of Ownership or Voting Rights
Unlisted companies
UMC GROUP (USA)	$	803,681	100.00	$	708,829	100.00
UNITED MICROELECTRONICS (EUROPE) B.V.		276,285	100.00		283,099	100.00
UMC CAPITAL CORP.		2,140,698	100.00		1,306,287	100.00
UNITED MICROELECTRONICS CORP. (SAMOA)		12,865	100.00		14,897	100.00
UMCI LTD. (Note B)		23	100.00		14,604	100.00
TLC CAPITAL CO., LTD.		6,030,797	100.00		—	—
FORTUNE VENTURE CAPITAL CORP. (Note C)		6,332,605	99.99		3,758,856	99.99
UNITED MICRODISPLAY OPTRONICS CORP.		252,208	86.72		201,914	83.48
PACIFIC VENTURE CAPITAL CO., LTD.		277,379	49.99		300,407	49.99
UNITECH CAPITAL INC.		746,830	42.00		710,102	42.00
HSUN CHIEH INVESTMENT CO., LTD. (Note D)		4,069,373	36.49		10,409,009	99.97
THINTEK OPTRONICS CORP. (THINTEK) (Notes E, F)		11,837	27.82		30,383	14.26
HIGHLINK TECHNOLOGY CORP. (HIGHLINK) (Notes E, F)		251,430	18.99		—	—
XGI TECHNOLOGY INC. (Note E)		65,721	16.50		—	—
AMIC TECHNOLOGY CORP. (Note E)		53,403	11.86		60,134	11.83
TOPPAN PHOTOMASKS TAIWAN LTD. (formerly DUPONT PHOTOMASKS TAIWAN LTD.)		—	—		1,012,456	45.35
APTOS (TAIWAN) CORP. (Note E, G)		—	—		108,755	9.72

Subtotal		21,325,135			18,919,732

Total	$	33,261,799		$	37,304,798

Note A :

In the beginning of 2006 as the Company determined it did not have significant influence over the investee, and in compliance with the R.O.C. SFAS No. 34, the investment in the investee was classified as available-for-sale financial asset.

Note B :

Based on the resolution of the board of directors’ meeting on August 26, 2004, UMCI has transferred its business, operations, and assets to the Branch since April 1, 2005.

Note C :

As of June 30, 2006 and 2005, the cost of investment was NT$6,504 million and NT$3,931 million, respectively. After deducting the Company’s stock held by the subsidiary (treated as treasury stock by the Company) of NT$172 million in both years, the residual book values totalled NT$6,332 million and NT$3,759 million as of June 30, 2006 and 2005, respectively.

Note D :

As of January 27, 2006, the Company sold 58,500 thousand shares of HSUN CHIEH INVESTMENT CO., LTD. The share ownership decreased from 99.97% to 36.49%. As the company ceased to be a subsidiary, the Company’s stock held by HSUN CHIEH INVESTMENT CO., LTD. was no longer treated as treasury stock. Consequently, the effect on the Company’s long-term investment accounted for under the equity method and stockholders’ equity simultaneously amounted to NT$10,881 million.

The ending balance as of June 30, 2005 of NT$10,409 million was computed by deducting the Company’s stock held by the investee (treated as treasury stock by the Company), amounting NT$20,137 million from the cost of investment balance at period-end of NT$30,546 million.

Note E :

The equity method was applied for investees, in which the total ownership held by the Company and its subsidiaries is over 20%.

Note F :

The book value of the Company’s investment in THINTEK OPTRONICS CORP. and HIGHLINK TECHNOLOGY CORP. exceeded the net equity by NT$14 million and NT$8 million, respectively. Equivalent amounts of impairment have been accordingly recognized.

Note G :

As of September 1, 2005, the Company’s former investee, APTOS (TAIWAN) CORP. (accounted for under the equity method), merged into CHIPBOND TECHNOLOGY CORP. (accounted for as an available-for-sale financial asset). Three shares of APTOS (TAIWAN) CORP. were exchanged for one share of CHIPBOND TECHNOLOGY CORP.

Total gain (loss) arising from investments accounted for under the equity method, based on the audited financial statements of the investees, were NT$582 million and NT$(2,144) million for the six-month periods ended June 30, 2006 and 2005, respectively. Among which, investment income amounting to NT$499 million and NT$144 million for the six-month periods ended June 30, 2006 and 2005, respectively, and the related long-term investment balances of NT$5,706 million and NT$5,559 million as of June 30, 2006 and 2005, respectively, were determined based on the investees’ financial statements audited by other auditors.

The long-term equity investments were not pledged.

(11)	PROPERTY, PLANT AND EQUIPMENT


	As of June 30, 2006
	Cost		Accumulated Depreciation			Book Value
Land	$	1,132,576	$	—		$	1,132,576
Buildings		16,249,112		(5,029,042	)		11,220,070
Machinery and equipment		380,689,179		(267,628,301	)		113,060,878
Transportation equipment		78,461		(57,351	)		21,110
Furniture and fixtures		2,300,342		(1,646,990	)		653,352
Construction in progress and prepayments		10,539,974		—			10,539,974

Total	$	410,989,644	$	(274,361,684	)	$	136,627,960


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

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

Total interest expense before capitalization amounted to NT$397 million and NT$643 million for the six-month periods ended June 30, 2006 and 2005, respectively.

Details of capitalized interest are as follows:


	For the six-month period ended June 30,
	2006		2005
Machinery and equipment	$	—	$	192,785
Other property, plant and equipment		—		2,922

Total interest capitalized	$	—	$	195,707

Interest rates applied		—		2.88%~4.20%

The property, plant, and equipment were not pledged.

(12)	OTHER ASSETS – OTHERS


	As of June 30,
	2006		2005
Leased assets	$	1,355,758	$	1,363,681
Deposits-out		542,121		584,339
Others		59,118		122,675

Total	$	1,956,997	$	2,069,695

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

(13)	SHORT-TERM LOANS


	As of June 30,
	2006		2005
Unsecured bank loans	$	—	$	1,645,280

Interest rates		—		3.22%~3.73%

The Company’s unused short-term lines of credits amounted to NT$8,287 million and NT$8,872 million as of June 30, 2006 and 2005, respectively.

(14)	FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS, CURRENT


	As of June 30,
	2006		2005
Interest rate swaps	$	633,039	$	11,059
Derivatives embedded in exchangeable bonds		555,251		—
Forward contracts		—		16,416

Total	$	1,188,290	$	27,475

During the six-month period ended June 30, 2006, net gain arising from the changes in fair value of financial liabilities at fair value through profit or loss, current, was NT$99 million.

As of June 30, 2006, interest receivable arising from credit-linked deposits, as well as the derivative financial liabilities embedded therein, both amounted to NT$14 million. The resulting net value was therefore NT$0.

(15)	BONDS PAYABLE


	As of June 30,
	2006			2005
Unsecured domestic bonds payable	$	25,250,000		$	30,500,000
Convertible bonds payable		12,361,174			—
Exchangeable bonds payable		3,101,961			3,097,240
Less: discounts on bonds payable		(120,985	)		—

Total		40,592,150			33,597,240
Less: Current portion		(10,312,904	)		(5,250,000	)

Net	$	30,279,246		$	28,347,240

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

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

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

On May 10, 2002, the Company issued LSE listed zero coupon exchangeable bonds. The terms and conditions of the bonds are as follows:

(a)

Issue Amount: US$235 million

(b)

Period: May 10, 2002 ~ May 10, 2007

(c)

Redemption

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

ii.

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

iii.

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

iv.

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

(d)

Terms of Exchange

Underlying securities: ADSs or common shares of AU OPTRONICS CORP.

ii.

Exchange Period: The bonds are exchangeable at any time on or after June 19, 2002 and prior to April 10, 2007, into AUO common shares or AUO ADSs; provided, however, that if the exercise date falls within 5 business days from the beginning of, and during, any closed period, the right of the exchanging holder of the bonds to vote with respect to the shares it receives will be subject to certain restrictions.

iii.

Exchange Price and Adjustment: The exchange price is NT$46.10 per share, determined on the basis of a fixed exchange rate of NT$34.645=US$1.00. The exchange price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

(e)

Exchange of the Bonds

As of June 30, 2006 and 2005, certain bondholders have exercised their rights to exchange their bonds with the total principal amount of US$139 million and US$137 million into AUO shares, respectively. Gains arising from the exercise of exchange rights during the six-month period ended June 30, 2006 amounted NT$65 million and was recognized as gain on disposal of investment. No bonds were exchanged during the six-month period ended June 30, 2005.

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

On October 5, 2005, the Company issued zero coupon convertible bonds on the EuroMTF Market of Luxembourg Stock Exchange (LSE). The terms and conditions of the bonds are as follows:

(a)

Issue Amount: US$381.4 million

(b)

Period: October 5, 2005 ~ February 15, 2008 (Maturity date)

(c)

Redemption:

On or at any time after April 5, 2007, if the closing price of the ADSs listed on the NYSE has been at least 130% of either the conversion price or the last adjusted conversion price, for 20 out of 30 consecutive ADS trading days, the Company may redeem all, but not some only, of the bonds.

If at least 90% in principal amount of the bonds have already been redeemed, repurchased, cancelled or converted, the Company may redeem all, but not some only, of the bonds.

iii.

In the event that the Company’s ADSs or shares have officially cease to be listed or admitted for trading on the New York Stock Exchange or the Taiwan Stock Exchange, as the case may be, each bondholder shall have the right, at such bondholder’s option, to require the Company to repurchase all, but not in part, of such bondholder’s bonds at their principal amount.

iv.

In the event of certain changes in taxation in the R.O.C. resulting in the Company becoming required to pay additional amounts, the Company may redeem all, but not part, of the bonds at their principal amount; 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.

If a change of control occurs with respect to the Company, each bondholder shall have the right at such bondholder’s option, to require the Company to repurchase all, but not in part, of such bondholder’s bonds at their principal amount.

vi.

The Company will pay the principal amount of the bonds at its maturity date, February 15, 2008.

(d)

Conversion:

Conversion Period: Except for the closed period, the bonds may be converted into the Company’s ADSs on or after November 4, 2005 and on or prior to February 5, 2008.

Conversion Price and Adjustment: The conversion price is US$3.814 per ADS. The applicable conversion price will be subject to adjustments upon the occurrence of certain events set out in the indenture.

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

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


Bonds repayable in	Amount
2006 (3^rdquarter and thereafter)	$	5,000,000
2007		5,351,961
2008		22,861,174
2009		—
2010		7,500,000

Total	$	40,713,135

(16)	PENSION FUND

Pension costs amounting to NT$321 million and NT$344 million were recognized for the six-month periods ended June 30, 2006 and 2005, respectively. The corresponding balances of the pension fund were NT$1,135 million and NT$1,013 million as of June 30, 2006 and 2005, respectively.

(17)	CAPITAL STOCK

As of June 30, 2005, 22,000,000 thousand common shares were authorized to be issued and 17,779,431 thousand common shares were issued, each at a par value of NT$10.

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

On April 26, 2005 the Company cancelled 49,114 thousand shares of treasury stocks, which were bought back during the period from February 20 to April 19, 2002 for transfer to employees.

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

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

As of June 30, 2006, 26,000,000 thousand common shares were authorized to be issued and 18,845,234 thousand common shares were issued, each at a par value of NT$10.

Among the employee stock options issued by the Company on October 7, 2002 and January 3, 2003, 50,531 thousand shares were exercised during the six-month period ended June 30, 2006.

On May 22, 2006 the Company cancelled 1,000,000 thousand shares of treasury stocks, which were bought back during the period from February 16, 2006 to April 11, 2006 for retainment of the company’s creditability and stockholders’ interests.

As recommended by the board of directors, and amended and approved by the shareholders on the meeting held on June 12, 2006, the Company issued 224,877 thousand new shares from capitalization of retained earnings and capital reserve that amounted to NT$2,249 million, of which NT$895 million was stock dividend, NT$459 million was employee bonus, and NT$895 million was capital reserve.

As of June 30, 2006, the Company has issued a total of 276,820 thousand ADSs which were traded on the NYSE. The total number of common shares of the Company represented by all issued ADSs was 1,384,102 thousand shares (one ADS represents five common shares).

(18)	EMPLOYEE STOCK OPTIONS

On September 11, 2002, October 8, 2003, September 30, 2004, and December 22, 2005, the Company was authorized by the Securities and Futures Bureau of the Financial Supervisory Commission, Executive Yuan, to issue employee stock options with a total number of 1 billion, 150 million, 150 million, and 350 million units, respectively. Each unit entitles an optionee to subscribe to 1 share of the Company’s common stock. Settlement upon the exercise of the options will be made through the issuance of new shares by the Company. The exercise price of the options was set at the closing price of the Company’s common stock on the date of grant. The grant period for the options is 6 years and an optionee may exercise the options in accordance with certain schedules as prescribed by the plan starting 2 years from the date of grant. Detailed information relevant to the employee stock options is disclosed as follows:


Date of grant	Total number of options granted (in thousands)	Total number of options outstanding (in thousands)	Exercise price (NTD)
October 7, 2002	939,000	608,181	$	15.9
January 3, 2003	61,000	48,717	$	17.9
November 26, 2003	57,330	47,430	$	25.0
March 23, 2004	33,330	23,715	$	23.2
July 1, 2004	56,590	46,140	$	20.9
October 13, 2004	20,200	15,670	$	18.0
April 29, 2005	23,460	18,790	$	16.6
August 16, 2005	54,350	44,850	$	21.9
September 29, 2005	51,990	48,875	$	20.0
January 4, 2006	39,290	33,940	$	18.3
May 22, 2006	42,058	40,598	$	19.8

A summary of the Company’s stock option plans, and related information for the six-month periods ended June 30, 2006 and 2005, are as follows:


	For the six-month period ended June 30,
	2006					2005
	Option (in thousands)			Weighted-average Exercise Price (NTD)		Option (in thousands)			Weighted-average Exercise Price (NTD)
Outstanding at beginning of year		975,320		$	17.5		973,858		$	17.0
Granted		81,348		$	19.1		23,460		$	16.6
Exercised		(50,531	)	$	15.9		(36,563	)	$	15.9
Forfeited		(29,231	)	$	19.3		(15,064	)	$	17.9

Outstanding at end of period		976,906		$	17.6		945,691		$	17.0

Exercisable at end of period		502,264					357,276

Weighted-average fair value of options granted during the period (NTD)	$	5.9				$	6.0

The information of the Company’s outstanding stock options as of June 30, 2006, is as follows:


		Outstanding Stock Options				Exercisable Stock Options
Authorization Date	Range of Exercise Price	Option (in thousands)	Weighted-average Expected Remaining Years	Weighted-average Exercise Price (NTD)		Option (in thousands)	Weighted-average Exercise Price (NTD)
2002.09.11	$15.9~$17.9	656,898	0.7	$	16.1	466,219	$	16.1
2003.10.08	$20.9~$25.0	117,285	2.1	$	23.0	36,045	$	24.4
2004.09.30	$16.6~$21.9	128,185	3.4	$	19.9	—	$	—
2005.12.22	$18.3~$19.8	74,538	4.1	$	19.1	—	$	—

		976,906	1.5	$	17.6	502,264	$	16.7

The Company has used the intrinsic value method to recognize compensation costs for its employee stock options issued since January 1, 2004. The compensation costs for the six-month periods ended June 30, 2006 and 2005 are NT$0. Pro forma information using the fair value method on net income and earnings per share is as follows:


	For the six-month period ended June 30, 2006
	Basic earnings per share		Diluted earnings per share
Net Income	$	18,337,788	$	18,264,169
Earnings per share (NTD)	$	1.01	$	0.97
Pro forma net income	$	18,147,409	$	18,073,790
Pro forma earnings per share (NTD)	$	1.00	$	0.96


	For the six-month period ended June 30, 2005 (retroactively adjusted)
	Basic earnings per share		Diluted earnings per share
Net Income	$	1,817,700	$	1,817,700
Earnings per share (NTD)	$	0.10	$	0.10
Pro forma net income	$	1,741,162	$	1,741,162
Pro forma earnings per share (NTD)	$	0.09	$	0.09

The fair value of the options granted was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for the six-month periods ended June 30, 2006 and 2005: expected dividend yields of 1.37% and 1.63%; volatility factors of the expected market price of the Company’s common stock of 38.94% and 42.39%; risk-free interest rate of 2.09 % and 2.24%; and a weighted-average expected life of the options of 4.4 years.

(19)	TREASURY STOCK

The Company bought back its own shares from the open market during the six-month periods ended June 30, 2006 and 2005. Details of the treasury stock transactions are as follows:

For the six-month period ended June 30, 2006

(In thousands of shares)


Purpose	As of January 1, 2006	Increase	Decrease	As of June 30, 2006
For transfer to employees	442,067	243,171	—	685,238
For conversion of the convertible bonds into shares	500,000	—	—	500,000
For retainment of the Company’s creditability and stockholders’ interests	—	1,000,000	1,000,000	—

Total shares	942,067	1,243,171	1,000,000	1,185,238

For the six-month period ended June 30, 2005

(In thousands of shares)


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

According to the Securities and Exchange Law of the R.O.C., total shares of treasury stock should not exceed 10% of the Company’s stock issued. Total purchase amount should not exceed the sum of the retained earnings, capital reserve-premiums, and realized capital reserve. As such, the maximum number of shares of treasury stock that the Company could hold as of June 30, 2006 and 2005, was 1,884,523 thousand shares and 1,777,943 thousand shares while the ceiling of the amount was NT$80,233 million and NT$83,442 million, respectively. As of June 30, 2006 and 2005, the Company held 1,185,238 thousand shares and 567,027 thousand shares of treasury stock that amounted to NT$26,216 million and NT$13,768 million, respectively.

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

As of June 30, 2006, the Company’s subsidiary, FORTUNE VENTURE CAPITAL CORP., held 21,846 thousand shares of the Company’s stock, with a book value of NT$19.40 per share. The closing price on June 30, 2006 was NT$19.40.

As of June 30, 2005, the Company’s subsidiaries, HSUN CHIEH INVESTMENT CO., LTD. and FORTUNE VENTURE CAPITAL CORP., held 543,732 thousand shares and 19,808 thousand shares, respectively, of the Company’s stock, with a book value of NT$23.19 and NT$8.68 per share, respectively. The average closing price of the Company’s stock during June 2005 was NT$23.19.

(20)	RETAINED EARNINGS AND DIVIDEND POLICIES

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

Payment of all taxes and dues;

Offset prior years’ operation losses;

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

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

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

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

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

The distributions of retained earnings for the years 2005 and 2004 were approved at the shareholders’ meetings held on June 12, 2006 and June 13, 2005. The details of distribution are as follows:


	2005		2004
Cash dividend	$	0.40 per share	$	0.10 per share
Stock dividend	$	0.05 per share	$	1.03 per share
Employee bonus – cash (NTD thousands)		305,636		—
Employee bonus – stock (NTD thousands)		458,455		1,972,855
Remuneration to directors and supervisors (NTD thousands)		6,324		27,005

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

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

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

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

For the 2005 appropriations approved by the shareholders’ meeting on June 12, 2006, unrealized loss on long-term investments exempted from the provision of special reserve pursuant to the above regulations amounted to NT$18,208 million.

(21)	OPERATING COSTS AND EXPENSES

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


	For the six-month period ended June 30,
	2006						2005
	Operating costs		Operating expenses		Total		Operating costs		Operating expenses		Total
Personnel expenses
Salaries	$	3,401,756	$	1,015,022	$	4,416,778	$	1,590,737	$	707,813	$	2,298,550
Labor and health insurance		213,244		59,748		272,992		202,468		55,159		257,627
Pension		249,115		72,347		321,462		254,043		89,986		344,029
Other personnel expenses		41,122		11,869		52,991		29,028		8,065		37,093
Depreciation		21,611,294		1,098,235		22,709,529		21,159,529		911,915		22,071,444
Amortization		98,047		823,560		921,607		73,478		968,702		1,042,180

The numbers of employees as of June 30, 2006 and 2005, were 12,448 and 11,588, respectively.

(22)	INCOME TAX

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


	For the six-month period ended June 30,
	2006			2005
Income tax on pre-tax income at statutory tax rate	$	5,197,957		$	831,762
Permanent differences		(4,438,925	)		(757,916	)
Change in investment tax credit		(311,360	)		6,512,323
Change in valuation allowance		(246,556	)		(6,586,169	)
Tax accrual		1,153,000			—
Income tax on interest revenue separately taxed		432			397

Income tax expense	$	1,354,548		$	397

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


	As of June 30,
	2006						2005
	Amount			Tax effect			Amount			Tax effect
Deferred income tax assets
Investment tax credit				$	13,920,405					$	15,124,463
Loss carry-forward	$	10,005,826			2,501,456		$	14,994,930			3,748,732
Pension		3,042,614			760,654			2,962,723			740,681
Allowance on sales returns and discounts		737,457			184,364			382,310			95,578
Allowance for loss on obsolescence of inventories		761,978			190,495			811,580			202,895
Others		812,027			203,007			282,944			70,736

Total deferred income tax assets					17,760,381						19,983,085
Valuation allowance					(8,428,805	)					(8,975,040	)

Net deferred income tax assets					9,331,576						11,008,045

Deferred income tax liabilities
Unrealized exchange gain		(461,337	)		(115,334	)		(548,978	)		(137,245	)
Depreciation		(6,078,835	)		(1,519,709	)		(14,139,585	)		(3,534,896	)
Others		(2,246,979	)		(561,745	)		—			—

Total deferred income tax liabilities					(2,196,788	)					(3,672,141	)

Total net deferred income tax assets				$	7,134,788					$	7,335,904

Deferred income tax assets - current				$	6,089,901					$	5,255,111
Deferred income tax liabilities - current					(320,832	)					(137,245	)
Valuation allowance					(3,049,018	)					(1,704,337	)

Net					2,720,051						3,413,529

Deferred income tax assets - noncurrent					11,670,480						14,727,974
Deferred income tax liabilities - noncurrent					(1,875,956	)					(3,534,896	)
Valuation allowance					(5,379,787	)					(7,270,703	)

Net					4,414,737						3,922,375

Total net deferred income tax assets				$	7,134,788					$	7,335,904

The Company’s income tax returns for all the fiscal years up to 2003 have been assessed and approved by the R.O.C. Tax Authority.

Pursuant to the R.O.C. “Statutes for the Establishment and Administration of Science Park”, the Company was granted several four-year income tax exemption periods with respect to income derived from the expansion of operations. The starting date of the exemption period attributable to the expansions in 2001 had not yet been decided. The income tax exemption for other periods will expire on December 31, 2010.

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

As of June 30, 2006, the Company’s unused investment tax credit was as follows:


Expiration Year	Investment tax credits earned		Balance of unused investment tax credits
2006	$	2,850,484	$	2,850,484
2007		1,613,158		1,613,158
2008		6,275,971		6,275,971
2009		1,737,860		1,737,860
2010		1,442,932		1,442,932

Total	$	13,920,405	$	13,920,405

Under the rules of the Income Tax Law of the R.O.C., net loss can be carried forward for 5 years. As of June 30, 2006, the unutilized accumulated loss was as follows:


Expiration Year	Accumulated loss		Unutilized accumulated loss
2006	$	10,856,896	$	6,190,792
2007		3,773,826		3,773,826
2008 (Transferred in from merger with SiSMC)		2,283		2,283
2009 (Transferred in from merger with SiSMC)		38,925		38,925

Total	$	14,671,930	$	10,005,826

The balance of the Company’s imputation credit amounts as of June 30, 2006 and 2005 were NT$9 million and NT$55 million, respectively. The expected creditable ratio for 2005 and the actual creditable ratio for 2004 was 0% and 0.35%, respectively.

The Company’s earnings generated in the year ended December 31, 1997 and prior years have been fully appropriated.

(23)	EARNINGS PER SHARE

The Company’s capital structure is composed mainly of zero coupon convertible bonds and employee stock options. Therefore, under consideration of such complex structure, the calculated basic and diluted earnings per share for the six-month periods ended June 30, 2006 and 2005, are disclosed as follows:


	For the six-month period ended June 30, 2006
	Amount							Earnings per share (NTD)
	Income before income tax			Net income			Shares expressed in thousands	Income before income tax			Net income
Earning per share-basic (NTD)
Income from continuing operations	$	20,880,851		$	19,526,303		18,148,981	$	1.15		$	1.08
Cumulative effect of changes in accounting principles		(1,188,515	)		(1,188,515	)			(0.07	)		(0.07	)

Net income	$	19,692,336		$	18,337,788			$	1.08		$	1.01

Effect of dilution
Employee stock options	$	—		$	—		125,747
Convertible bonds payable	$	(73,619	)	$	(73,619	)	500,000
Earning per share-diluted:
Income from continuing operations	$	20,807,232		$	19,452,684		18,774,728	$	1.11		$	1.03
Cumulative effect of changes in accounting principles		(1,188,515	)		(1,188,515	)			(0.06	)		(0.06	)

Net income	$	19,618,717		$	18,264,169			$	1.05		$	0.97


	For six-month period ended June 30, 2005 (retroactively adjusted)
	Amount							Earnings per share (NTD)
	Income before income tax			Net income			Shares expressed in thousands	Income before income tax			Net income
Earning per share-basic (NTD)
Income from continuing operations	$	1,818,097		$	1,817,700		18,477,495	$	0.10		$	0.10
Cumulative effect of changes in accounting principles		—			—				—			—

Net income	$	1,818,097		$	1,817,700			$	0.10		$	0.10

Effect of dilution
Employee stock options	$	—		$	—		102,777
Earning per share-diluted:
Income from continuing operations	$	1,818,097		$	1,817,700		18,580,272	$	0.10		$	0.10
Cumulative effect of changes in accounting principles		—			—				—			—

Net income	$	1,818,097		$	1,817,700			$	0.10		$	0.10

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


	For the six month period ended June 30, 2006
*(shares expressed in thousands)*	Basic			Diluted
Net income	$	18,337,788		$	18,264,169

Weighted-average of shares outstanding:
Beginning balance		18,852,636			18,852,636
Purchase of 1,243,171 thousand shares of treasury stock from January 1 to June 30, 2006		(623,210	)		(623,210	)
Exercise of 50,531 thousand units of employee stock options		30,859			30,859
Dilutive shares of employee stock options accounted for under treasury stock method		—			125,747
Dilutive shares issued assuming conversion of bonds		—			500,000

Ending balance		18,260,285			18,886,032

Earnings per share Net income (NTD)	$	1.00		$	0.97


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

Weighted-average of shares outstanding:
Beginning balance		17,550,801			17,550,801
Purchase of 374,960 thousand shares of treasury stock from January 1 to June 30, 2005		(39,313	)		(39,313	)
Exercise of 36,563 thousand units of employee stock options		20,172			20,172
Stock dividends and employees’ bonus at 11.4% in 2005		2,006,882			2,006,882
Dilutive shares of employee stock options accounted for under treasury stock method		—			102,777

Ending balance		19,538,542			19,641,319

Earnings per share Net income (NTD)	$	0.09		$	0.09

Pro forma information on retroactively adjusted earnings per share, as if 2006 earnings and capital reserve transferred to common stock are distributed:


	For the six-month period ended June 30, 2006
	Basic		Diluted
Net income	$	18,337,788	$	18,264,169

Weighted-average number of shares outstanding (increase in capital through 2006 retained earnings and capital reserve at proportion of 1.3%)		18,380,084		19,007,433

Earnings per share (NTD)	$	1.00	$	0.96


	For the six-month period ended June 30, 2005 (retroactively adjusted)
	Basic		Diluted
Net income	$	1,817,700	$	1,817,700

Weighted-average number of shares outstanding (increase in capital through 2006 retained earnings and capital reserve at proportion of 1.3%)		18,712,782		18,816,868

Earnings per share (NTD)	$	0.10	$	0.10

5.	RELATED PARTY TRANSACTIONS

(1)

Name and Relationship of Related Parties


Name of related parties		Relationship with the Company
UMC GROUP (USA) (UMC-USA)		Equity Investee
UNITED FOUNDRY SERVICE, INC. (liquidated in April 2005)		Equity Investee
UNITED MICROELECTRONICS (EUROPE) B.V. (UME BV)		Equity Investee
UMC CAPITAL CORP.		Equity Investee
UNITED MICROELECTRONICS CORP. (SAMOA)		Equity Investee
FORTUNE VENTURE CAPITAL CORP. (FORTUNE)		Equity Investee
HSUN CHIEH INVESTMENT CO., LTD. (HSUN CHIEH)		Equity Investee
UMCI LTD. (UMCI)		Equity Investee
UNITED MICRODISPLAY OPTRONICS CORP.		Equity Investee
UMC JAPAN (UMCJ)		Equity Investee


Name of related parties		Relationship with the Company
TOPPAN PHOTOMASKS TAIWAN LTD. (formerly DUPONT PHOTOMASKS TAIWAN LTD.) (TOPPAN) (Disposed in March 2006)		Equity Investee
HOLTEK SEMICONDUCTOR INC. (HOLTEK)		Equity Investee
UNITECH CAPITAL INC.		Equity Investee
ITE TECH. INC.		Equity Investee
UNIMICRON TECHNOLOGY CORP.		Equity Investee
AMIC TECHNOLOGY CORP.		Equity Investee
PACIFIC VENTURE CAPITAL CO., LTD.		Equity Investee
APTOS (TAIWAN) CORP. (APTOS) (merged into CHIPBOND TECHNOLOGY CORP. on September 1, 2005)		Equity Investee
THINTEK OPTRONICS CORP.		Equity Investee
XGI TECHNOLOGY INC.		Equity Investee
TLC CAPITAL CO., LTD.		Equity Investee
HIGHLINK TECHNOLOGY CORP.		Equity Investee
FARADAY TECHNOLOGY CORP. ( No longer an equity investee since January 1, 2006)		Equity Investee
NOVATEK MICROELECTRONICS CORP. ( No longer an equity investee since January 1, 2006)		Equity Investee
SILICON INTEGRATED SYSTEMS CORP.		The Company’s director
DAVICOM SEMICONDUCTOR, INC.		Subsidiary’s equity investee
UNITRUTH INVESTMENT CORP. (UNITRUTH)		Subsidiary’s equity investee
UWAVE TECHNOLOGY CORP. (formerly UNITED RADIOTEK INC.)		Subsidiary’s equity investee
UCA TECHNOLOGY INC.		Subsidiary’s equity investee
AFA TECHNOLOGY, INC.		Subsidiary’s equity investee
STAR SEMICONDUCTOR CORP.		Subsidiary’s equity investee
AEVOE INC.		Subsidiary’s equity investee
USBEST TECHNOLOGY INC.		Subsidiary’s equity investee
SMEDIA TECHNOLOGY CORP.		Subsidiary’s equity investee
U-MEDIA COMMUNICATIONS, INC.		Subsidiary’s equity investee
CHIP ADVANCED TECHNOLOGY INC.		Subsidiary’s equity investee
CRYSTAL MEDIA INC.		Subsidiary’s equity investee
ULI ELECTRONICS INC.		Subsidiary’s equity investee
NEXPOWER TECHNOLOGY CORP.		Subsidiary’s equity investee
MOBILE DEVICES INC.		Subsidiary’s equity investee

(2)	Significant Related Party Transactions

Operating revenues


	For the six-month period ended June 30,
	2006			2005
	Amount		Percentage	Amount		Percentage
UMC-USA	$	24,239,799	48	$	18,179,163	46
Others		8,254,342	17		9,814,975	24

Total	$	32,494,141	65	$	27,994,138	70

The sales price to the above related parties was determined through mutual agreement based on the market conditions. The collection period for overseas sales to related parties was net 60 days, while the terms for domestic sales were month-end 45~60 days. The collection period for third party overseas sales was net 30~60 days, while the terms for third party domestic sales were month-end 30~60 days.

Purchases


	For the six-month period ended June 30,
	2006			2005
	Amount		Percentage	Amount		Percentage
UMCI	$	—	—	$	1,244,347	12

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

Notes receivable


	As of June 30,
	2006			2005
	Amount		Percentage	Amount		Percentage
HOLTEK	$	68,752	93	$	57,853	100
Others		2,128	3		—	—

Total	$	70,880	96	$	57,853	100

Accounts receivable


	As of June 30,
	2006				2005
	Amount			Percentage	Amount			Percentage
UMC-USA	$	5,493,509		41	$	3,550,827		35
UME BV		1,366,652		10		704,927		7
Others		1,062,689		8		719,430		7

Total		7,922,850		59		4,975,184		49

Less : Allowance for sales returns and discounts		(636,457	)			(358,329	)
Less : Allowance for doubtful accounts		(112,427	)			(110,189	)

Net	$	7,173,966			$	4,506,666

Financial activities

The Company did not conduct any financial activities with related parties during the six-month period ended June 30, 2006.

Other receivables – related parties

For the six-month period ended June 30, 2005

Maximum balance

Ending
balance

Interest

rate

Interest
revenue

Amount

Month

UMCI

5,137,760

2005.03

—

2.74% ~ 3.05%

7,669

Significant asset transactions

The Company did not undertake any significant asset transactions with related parties during the first half ended June 30, 2006.


	For the six-month period ended June 30, 2005
	Item	Amount
FORTUNE	Purchase of APTOS CORP. (TAIWAN) stock	$	140,231
FORTUNE	Purchase of “EPITECH TECHNOLOGY CORP.” stock		185,840
HSUN CHIEH	Purchase of “EPITECH TECHNOLOGY CORP.” stock		97,658
UNITRUTH	Purchase of “EPITECH TECHNOLOGY CORP.” stock		16,495

Total		$	440,224

Notes provided for endorsements and guarantees

As of June 30, 2006 the amount of notes provided as endorsement and guarantee by the Company for its subsidiary, UMCJ, amounted NT$2,247 million.

Other transactions

The Company has made several other transactions, including service charges, development expenses of intellectual property, and commission, totaling NT$8 million and NT$413 million for the six-month periods ended June 30, 2006 and 2005, respectively.

The Company has purchased approximately NT$104 million and NT$166 million of masks from TOPPAN during the six-month periods ended June 30, 2006 and 2005, respectively.

6.	ASSETS PLEDGED AS COLLATERAL

As of June 30, 2006


	Amount		Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$	520,846	Customs	Customs duty guarantee

As of June 30, 2005


	Amount		Party to which asset(s) was pledged	Purpose of pledge
Deposit-out (Time deposit)	$	523,730	Customs	Customs duty guarantee

7.	COMMITMENTS AND CONTINGENT LIABILITIES

(1)

The Company has entered into several patent license agreements and development contracts of intellectual property for a total contract amount of approximately NT$20 billion. Royalties and development fees for future years are set out as follows:


For the year ended December 31,		Amount
2006 (3^rd quarter and thereafter)		$