SoC. era of the. united microelectronics corporation. United Microelectronics Corporation Annual Report 2004 NYSE: UMC TSE: 2303

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1 THE SoC SOLUTION FOUNDRY United Microelectronics Corporation Annual Report 2004 united microelectronics corporation era of the SoC annual report NYSE: UMC TSE: 2303

2 Corporate Information Spokesperson Chitung Liu Finance Division Director Chitung_ Deputy Spokespersons Sandy Yen The Chairman and President s Office Senior Manager Sandy_Yen@umc.com Sheng Yui Wang Finance Division Deputy Director Sheng _Yui_Wang@umc.com UMC Annual Report Information can be Accessed from the Following Websites: newmops.tse.com.tw Printed on March 21, 2005 Headquarters 3 Li-Hsin 2nd Rd., Taipei Office 3F, 76, Sec. 2, Tunhwa S. Rd., Taipei, Taiwan 106, R.O.C. Fab 6A 10 Innovation 1st Rd., Hsinchu, Taiwan 308, R.O.C. Fab 8A 3 Li-Hsin 2nd Rd., Fab 8B 5 Li-Hsin 2nd Rd., Fab 8C 6 Li-Hsin 3rd Rd., Fab 8D 8 Li-Hsin 3rd Rd., Fab 8E 17 Li-Hsin Rd., Fab 8F 3 Li-Hsin 6th Rd., Fab 8S 16 Creation 1st Rd., Hsinchu, Taiwan 308, R.O.C. Fab 12A 18 Nan-Ke 2nd Rd., Tainan Science Park, Sinshih, Tainan, Taiwan 744, R.O.C. 886 (6) Securities Dealing Institute SinoPac Securities Corp. Stock Registration Department 3F, 53 Po-Ai Rd., Taipei, Taiwan 100, R.O.C. 886 (2) ADR Depositary and Registrar Citibank, N.A. Depositary Receipt Services 388 Greenwich Street, 14th Floor New York, NY 10013, U.S.A. 1 (877) (Toll-free) Stockholder Service Representatives are available Monday through Friday, 8:30a.m. to 6:00p.m., Eastern Time. Citibank@em.fcnbd.com ADR Exchange Marketplace New York Stock Exchange, Inc. 11 Wall Street New York, NY 10005, U.S.A. 1 (212) Ticker/Search Code: UMC Exchangeable Bond Exchange Marketplace Luxembourg Stock Exchange 11, Av de la Porte-Neuve L-2227 Luxembourg 352 (47) Ticker: UniMicElexCorp EB Search Code: ISIN XS Auditors Diwan, Ernst & Young Kim Chang, MY Lee 9F, 333, Sec. 1, Keelung Rd., Taipei, Taiwan 110, R.O.C (2)

3 united microelectronics corporation era of the SoC

4 Table of Contents Introduction 4 Letter to Shareholders 8 Era of the SoC Corporate Overview 21 Corporate Profile 24 Corporate Organization 38 Capital and Shares 42 Corporate Bonds 45 Preferred Stock 46 American Depositary Receipts 48 Employee Stock Option Certificates 50 Mergers and Acquisitions Operations Overview 53 Business Scope 53 Industry Scope 54 Research & Development Achievements and Plans 56 Market and Sales Conditions 60 Employee Analysis 61 Environmental Protection Information 61 Labor Relations 62 Major Agreements 64 Financing Plans and Execution Status

5 Financial Review Unconsolidated 67 Condensed Balance Sheets 68 Condensed Statements of Income 69 Financial Analysis 70 Supervisors Report 71 Report of Independent Auditors 72 Balance Sheets 74 Statements of Income 75 Statements of Changes in Stockholders Equity 76 Statements of Cash Flows 78 Notes to Financial Statements 102 Attachments to Notes Review of Financial Position, Operating Results, Risk Management and Evaluation, and Corporate Governance Practices 169 Analysis of Financial Position 170 Analysis of Operating Results 171 Liquidity Analysis 171 Major Capital Expenditures and Sources of Funding 171 Analysis for Investment 172 Risk Management and Evaluation 175 Corporate Governance Practices Affiliated Enterprises Overview 177 Summary of Affiliated Enterprises Financial Review Consolidated 118 Representation Letter 119 Report of Independent Auditors 120 Consolidated Balance Sheets 122 Consolidated Statements of Income 123 Consolidated Statements of Changes in Stockholders Equity 124 Consolidated Statements of Cash Flows 126 Notes to Consolidated Financial Statements 154 Attachments to Notes Special Disclosures 181 Status of Internal Control 182 Acquisition or Disposal of UMC Shares by Subsidiaries 183 Major Resolutions of the Shareholders Meeting and the Board of Directors Meetings The Disclosure According to US Security Authorities Regulation 187 Disclosure Committee 187 Audit Committee 187 Corporate Governance Difference 187 Code of Ethics 187 Employee Code of Conduct 187 US GAAP Financial Information 188 Consolidated Balance Sheets 190 Consolidated Statements of Income