Affiliated Enterprises Overview & Special Disclosures - UMC

Summary of Affiliated EnterprisesOrganization ChartAffiliated Enterprises OverviewUnited Microelectronics CorporationTLC Capital Co., Ltd. 100.00%Fortune Venture Capital Corporation 99.99% Unitruth Investment Corporation 100.00%Hsun Chieh Investment Co., Ltd. 99.97% UMC Japan 4.54%UMC Group (USA) 100.00%UMC Japan 48.95%UMC Capital Corp. 100.00% UMC Capital (USA) 100.00%UMCi Ltd. 100.00% ECP VITA Ltd. 100.00%United Microelectronics Corp. (Samoa) 100.00%United Microelectronics (Europe) B.V. 100.00%United Microdisplay Optronics Corp. 86.72% Thintek Optronics Corp. 40.00%Thintek Optronics Corp. 14.26%Basic Data of Affiliated EnterprisesName of CorporationDate ofEstablishmentAddress Capital Major Business /Production ItemsIn thousand NTDFortune Venture CapitalCorporationHsun Chieh Investment Co.,Ltd.1993.9.21 2F, 76, Sec. 2, Tunhwa S. Rd.,Taipei, Taiwan 106, R.O.C.2000.1.12 2F, 76, Sec. 2, Tunhwa S. Rd.,Taipei, Taiwan 106, R.O.C.5,000,000 Consulting and planning forinvestment in new business921,512 Investment holdingUnitruth Investment Co. 2004.7.22 2F, 76, Sec. 2, Tunhwa S. Rd.,Taipei, Taiwan 106, R.O.C.TLC Capital Co., Ltd. 2005.10.14 2F, 76, Sec. 2, Tunhwa S. Rd.,Taipei, Taiwan 106, R.O.C.400,000 Investment holding3,000,000 Consulting and planning forinvestment in new businessUMC Group (USA) 1997.8.11 488 De Guigne Drive,Sunnyvale, CA 94086, USAUMC Japan 1984.5.15 1580, Yamamoto,Tateyama-City, Chiba, JapanUMC Capital Corp. 2001.1.16 P.O. Box 1034GT,Grand Cayman, Cayman IslandsUMC Capital (USA) 2001.2.13 488 De Guigne Drive,Sunnyvale, CA 94085, USAUMCi Ltd. 2001.1.18 3 Pasir Ris Drive 12,Singapore 519528529(USD16,437.5)7,935,791(JPY27,140,188,000)2,380,728(USD74,000,000)6,434(USD200,000)28,312(USD880,006)IC salesSales and manufacturing ofintegrated circuitsInvestment holdingInvestment holdingSales and manufacturing ofintegrated circuitsUnited Microelectronics Corp.(Samoa)2000.10.12 Offshore Chambers, P.O. Box 217,Apia, Samoa32,172(USD1,000,000)Investment holdingUnited Microelectronics(Europe) B.V.United Microdisplay OptronicsCorporation1989.5.23 World Trade Center, H-Tower,Schipholboulevard 243 1118 BH Schiphol,The Netherlands2002.9.11 2F, 3, Li-Hsin 2 nd Rd.,Hsinchu Science Park, Taiwan 300, R.O.C.124,676(USD3,875,309)IC sales700,000 Sales and manufacturing ofLCOSThintek Optronics Corp. 2003.10.16 3F, 1, Jin-Shen 7 th St.,Hsinchu , Taiwan 300, R.O.C.250,000 Design, sales and manufacturingof LCOSECP VITA Ltd. 2005.7.27 Romasco Place, Wickhams Cay 1,P.O. Box 3140, Road Town,Tortola, British Virgin Islands32,172(USD1,000,000)InsuranceNote (1) USD:NTD =1:32.172; JPY:NTD = 1:0.2924 (2) The data is dated December 31, 2005.79

United Microelectronics Corporation | Annual Report 2005Data for Common Shareholders of Treated-as Controlled Companies and AffiliatesNone.Business of United Microelectronics Corporation (UMC) and its Affiliated EnterprisesThe business of UMC and its affiliated enterprises includes semiconductor wafer manufacturing, electronics, optronics,investment activities, insurance, and trade.80

Affiliated Enterprises OverviewDirectors, Supervisors and Presidents of Affiliated EnterprisesName of Corporation Title Name or Representative ShareholdingShares %Fortune Venture Capital Corporation Chairman United Microelectronics Corporation 499,994,000 99.99Representative: Robert H.C. Tsao - -Director United Microelectronics Corporation 499,994,000 99.99Representative: John Hsuan - -Director United Microelectronics Corporation 499,994,000 99.99Representative: Stan Hung - -Director United Microelectronics Corporation 499,994,000 99.99Representative: Duen-Chian Cheng - -Director United Microelectronics Corporation 499,994,000 99.99Representative: Bellona Chen - -Supervisor United Microelectronics Corporation 499,994,000 99.99Representative: Tzyy-Jang Tseng - -President Duen-Chian Cheng - -Hsun Chieh Investment Co., Ltd. Chairman United Microelectronics Corporation 92,124,110 99.97Representative: Robert H.C. Tsao - -Director United Microelectronics Corporation 92,124,110 99.97Representative: John Hsuan - -Director United Microelectronics Corporation 92,124,110 99.97Representative: Stan Hung - -Supervisor United Microelectronics Corporation 92,124,110 99.97Representative: Frieda Shih - -Unitruth Investment Co. Chairman Fortune Venture Capital Corporation 40,000,000 100.00Representative: Robert H.C. Tsao - -Director Fortune Venture Capital Corporation 40,000,000 100.00Representative: Stan Hung - -Director Fortune Venture Capital Corporation 40,000,000 100.00Representative: Duen-Chian Cheng - -Supervisor Fortune Venture Capital Corporation 40,000,000 100.00Representative: Bellona Chen - -TLC Capital Co., Ltd. Chairman United Microelectronics Corporation 300,000,000 100.00Representative: Robert H.C. Tsao - -Director United Microelectronics Corporation 300,000,000 100.00Representative: Stan Hung - -Director United Microelectronics Corporation 300,000,000 100.00Representative: Duen-Chian Cheng - -Supervisor United Microelectronics Corporation 300,000,000 100.00Representative: Chitung Liu - -81

United Microelectronics Corporation | Annual Report 2005Name of Corporation Title Name or Representative ShareholdingShares %UMC Group (USA) Director Peter J. Courture - -Director Tony Yu - -UMC Japan Chairman Robert H.C. Tsao - -Director and President Frank Wen - -Director John Hsuan - -Director Noriaki Kano 104 0.01Director Wen-Yang Chen - -Director Oliver Chang - -Director Toshiji Sugawara 920 0.09Director Masahide Tanihira 40 0.00Supervisor Minetaka Suzuki 70 0.01Supervisor Eiichi Arakawa 172 0.02Supervisor Grace Li - -UMC Capital Corp. Director United Microelectronics Corporation 74,000,000 100.00Representative: Robert H.C. Tsao - -UMC Capital (USA) Director and President Peter J. Courture - -Director Stan Hung - -UMCi Ltd. Chairman Robert H.C. Tsao - -Director Jackson Hu - -Director and President Peter Chang - -Director Sheu Nan-Chen - -Director Lin Jenn Tarng - -United Microelectronics Corp. (Samoa) Director United Microelectronics Corporation 1,000,000 100.00Representative: Stan Hung - -United Microelectronics (Europe) B.V. Director Robert H.C. Tsao - -Director John Hsuan - -United Microdisplay Optronics Corporation Chairman United Microelectronics Corporation 60,700,596 86.72Representative: John Hsuan - -Director United Microelectronics Corporation 60,700,596 86.72Representative: Robert H.C. Tsao - -Director United Microelectronics Corporation 60,700,596 86.72Representative: Stan Hung - -Supervisor United Microelectronics Corporation 60,700,596 86.72Representative: Duen-Chian Cheng - -82

Affiliated Enterprises OverviewDirectors, Supervisors and Presidents of Affiliated EnterprisesName of Corporation Title Name or Representative ShareholdingShares %Thintek Optronics Corp. Chairman United Microdisplay Optronics 9,999,000 40.00Representative: Hubert Yih - -Director United Microdisplay Optronics 9,999,000 40.00Representative: Stan Hung - -Director Premier Image Technology Corp. 9,999,000 40.00Representative: John Huang - -Supervisor United Microdisplay Optronics 9,999,000 40.00Representative: Wei-Chung Lian - -ECP VITA Ltd. Director UMC Capital Corp. 1,000,000 100.00Representative: Stan Hung - -Director UMC Capital Corp. 1,000,000 100.00Representative: Chitung Liu - -Note The data is dated December 31, 2005.Summarized Operation Results of Affiliated EnterprisesName of Corporation Capital TotalAssetsNote USD:NTD = 1:32.172; JPY:NTD = 1:0.2924TotalLiabilitiesNetWorthNetOperatingRevenuesOperatingIncome(Loss)NetIncome(Loss)In thousand NTDEarnings(Loss) PerShare(NTD)TLC Capital Co., Ltd. 3,000,000 3,104,309 113,051 2,991,258 16,448 (8,155) (8,742) (0.03)Fortune Venture Capital Corp. 5,000,000 4,540,983 1,946 4,539,037 1,092,870 31,994 15,425 0.04Hsun Chieh Investment Co., Ltd. 921,512 13,840,615 6,064,441 7,776,174 6,966,424 (896,701) (1,006,811) (0.75)UMC Group (USA) 529 5,857,761 5,102,652 755,109 43,506,307 11,164 4,662 0.28UMC Japan 7,935,791 22,512,538 8,241,363 14,271,175 6,743,434 (3,297,734) (3,601,744) (3,639.80)UMC Capital Corp. 2,380,728 2,015,368 2,060 2,013,308 102,477 69,502 69,502 1.20UMCi Ltd. 28,312 19,031,766 14,668 19,017,098 1,273,533 (4,454,166) (4,523,114) (5.14)United Microelectronics Corp. (Samoa) 32,172 14,046 130 13,916 - (1,712) (1,688) (1.99)United Microelectronics (Europe) B.V. 124,676 810,649 541,825 268,824 6,937,019 (20,914) (13,102) (1,455.83)United Microdisplay Optronics Corp. 700,000 392,388 25,496 366,892 173,163 (157,424) (374,125) (3.70)Thintek Optronics Corp. 250,000 82,911 40,116 42,795 16,592 (96,317) (114,451) (4.81)Unitruth Investment Corp. 400,000 366,793 110 366,683 25,342 (36,610) (39,044) (2.23)UMC Capital (USA) 6,434 10,188 662 9,526 32,217 1,534 (46) (0.23)ECP VITA Ltd. 32,172 48,890 8,231 40,659 9,169 7,957 8,487 8.4983

Special DisclosuresStatus of Internal ControlStatement of Internal ControlThe self-assessment of UMC’s internal control was conductedfor the year ended December 31, 2005 based on UMC’sinternal control system. The results are described as follows:1. UMC acknowledges that the Board of Directors and themanagement are responsible for establishing, executingand maintaining a sufficient internal control system,which has been already set up. The purposes of theinternal control system are to provide a reasonable assuranceof achieving the goals of efficiency and effectivenessof the operations, such as profitability, performance andthe safeguard of the assets, the reliability of the financialreports and the compliance with applicable laws and regulations.2. The internal control system has its inherent constraints,and can only provide reasonable assurances of achievingthe three goals mentioned above no matter how well ithas been designed. The effectiveness of the internalcontrol system is subject to changes in the environmentand circumstances. UMC has established an internalcontrol system with the function of self-monitoring, whichis designed to take corrective actions whenever a shortcomingis identified.3. UMC’s assessment of the effectiveness of the design andexecution of the internal control system is based on theStandards governing the establishment of internal controlsystem by public companies (the Standards), which specifythe judgement items for evaluating the effectiveness ofinternal control.The internal control is divided into five components,based on the process of management control, accordingto the judgement items for internal control employedby the Standards, such as: (1) Control Environment, (2)Risk Assessments, (3) Control Activities, (4) Informationand Communication, and (5) Monitoring. Each componentconsists of certain items, which could be referred tothe Standards.4. UMC has employed the judgement items mentioned aboveto evaluate the effectiveness of the design and execution ofthe internal control system.5. UMC believes that the effectiveness of the design andexecution of its internal control system (including subsidiaries)during the above mentioned assessment periodprovides reasonable assurance of achieving the goals ofefficiency and effectiveness of operations, the reliabilityof financial reports and the compliance with applicablelaws and regulations.6. The Statement of Internal Control will be an integralpart of UMC’s annual report and prospectus that areopen to the public, and within which any illegal acts, suchas misstatement or concealment, would subject to the legalliabilities of Code 20, Code 32, Code 171 and Code 174 ofthe Securities Exchange Laws.7. UMC’s Board of Directors approved the Statement ofInternal Control (the Statement) on March 17, 2006. Sixdirectors attended and agreed with the content of theStatement.Jackson Hu,Chairman and CEOMarch 17, 2006The Company was not required to engage with a CPA to attest to the internal control system; therefore, there is no CPA auditreport on internal control to be disclosed for 2005.85

United Microelectronics Corporation | Annual Report 2005Directors’ or Supervisors’ Objections on the Important Resolution of Board MeetingsNone.Issuance of Private Placement SecuritiesNone.Acquisition or Disposal of UMC Shares by SubsidiariesIn thousand NTD, SharesSubsidiaryPaid-inCapitalSourceof CapitalHolding %by theCompanyAcquisitionor DisposalDateShares Acquiredand AmountDisposalShares andAmountProfit/LossAs of Annual ReportPrinting DateSharesAmountFortune VentureCapitalCorporation5,000,000 New sharesfor cash99.99 2005 2,038,725 (Note 1) None None 21,846,386 171,8572006 None None None 21,846,386 171,857Notes (1) 2,038,725 shares were distributed as a dividend in 2005. (2) Data represented for 2006 was gathered up until March 17, 2006. (3) None of the above companiespledged UMC shares as collateral. (4) The Company did not provide endorsements or guarantees to these subsidiaries. (5) The Company did not provide loans tothese subsidiaries.86

Special DisclosuresMajor Resolutions of the Shareholders’ Meeting and the Board of Directors’ MeetingsShareholders’ MeetingThe Company’s 2005 Shareholders’ Meeting was held atUMC Recreation Center in Hsinchu Science Park on June13, 2005. The shareholders present in person or by proxyapproved the following resolutions:1. Acceptance of the 2004 business report and financialstatement.2. Distribution of 2004 retained earnings.3. Capitalization of retained earnings from 2004 and previousyears.4. Amendment of the Company’s Articles.5. An extraordinary motion that(a) the China affairs strategies designed and formulatedby the Chairman be concurred, (b) any and all assistancethe Chairman and management team offered andprovided to Hejian in the past be affirmed, (c) the 15%shareholding given by the shareholders of the holdingcompany of Hejian be agreed to be endeavored under thecircumstance in compliance with the law to be recorded asUMC’s assets, and (d) any person making claims with anycause in any form against the Chairman and the managementteam for liability be confirmed as not in the interestof UMC and UMC’s shareholders.Board of Directors’ MeetingsThe major resolutions from the Board of Directors fromJanuary 1, 2005 to the printing day are summarized below:1. The directors fully authorize and support the Chairmanin handling the affairs related to Hejian Technology inaccordance with government legislation and regulations.2. The Company proposed a donation in the amount ofNTD 50 million annually to support the educational needsof children from poor families unable to meet these needsby themselves.3. Acceptance of the 2004 business report and financialstatement.4. Distribution of 2004 retained earnings.5. Capitalization of retained earnings from 2004 andprevious years.6. The establishment of the “Code of Ethics for directors,supervisors, and officers of the Company”.7. The establishment of an “Audit Committee Charter”.8. Amendment of the Company’s Articles about theearnings distribution ratio for shareholders andemployees.9. Cancellation of 49,114,000 treasury shares.10. The 8 th shares buyback program.11. Adjustment of the ratios of stock and cash dividendsfrom 2004 retained earnings.12. Issuance of Euro Convertible Bonds Due 2008.13. Change of the buyback purpose for the 8 th buybackprogram.14. The 9 th shares buyback program.15. The open-up of ADS conversion sales program forUMC’s common shareholders.16. Approve the shareholders joining ADS conversion salesprogram.17. Issuance of employee stock options.18. The election of Jackson Hu as Chairman.19. The disposal of 63.48% of the equity of its subsidiaryHsun Chieh Investment Co., Ltd. to Hsieh Yong CapitalCo., Ltd.20. The 10 th shares buyback program.21. Acceptance of the 2005 business report and financialstatement.22. Distribution of 2005 retained earnings.23. Capitalization of retained earnings from 2005 andprevious years and capital reserve.24. Modify the term “Audit Committee” in Chinese to avoidmisinterpretation under Taiwan Laws.25. The election of the 10 th term of Directors andSupervisors.87

United Microelectronics Corporation | Annual Report 2005Description of Violations/Infringement of Regulations and the Company’s ResponseOn April 20, 2005, Taiwan Financial Supervisory Commission,Executive Yuan (FSC) fined the Company’s formerChairman, Mr. Robert H.C. Tsao, NTD 3 million for theCompany’s violation of Taiwan Securities and ExchangeAct (Article 36 (2) paragraph (2) subparagraph, Article 178(1) paragraph (3) subparagraph) and Mr. Robert H.C. Tsao,was responsible for the Company’s acts (the aforesaid Act,Article 179). Please refer to the Litigation and Non-litigatedIncidents page in this report for the response’s details.On February 15, 2006, Taiwan Ministry of EconomicAffairs, Executive Yuan (MOEA) fined the Company NTD5 million according to Article 35 and Article 86 of GoverningRelations between Peoples of the Taiwan Area and theMainland Area Act for the Company’s alleged violation ofthe said Article 35 (failure to gain government’s approval forconducting investment in China Mainland). Please refer tothe Litigation and Non-litigated Incidents page in this reportfor the response’s details.Other Necessary SupplementsNone.88

Disclosure According to US Security Authorities RegulationsDisclosures of Events which may Have a Significant Influence on Stockholders’ Equityor Share Price, in Compliance with Item 2, Paragraph 2 in Article 36 of the Securitiesand Exchange Law of the ROCOn February 15, 2005, the Hsinchu District Prosecutor’s Officeconducted a search of the Company’s facilities. On February18, 2005, the Company’s former Chairman Mr. RobertH.C. Tsao, released a public statement explaining that itsassistance to Hejian Technology Corp. (Hejian) did notinvolve any investment or technology transfer. Furthermore,from the very beginning Hejian had a verbal indication that,at the proper time, the Company would be compensatedappropriately for its assistance, and circumstances permitting,at some time in the future, it will push through with amerger between the two companies. Notwithstanding theforegoing, no written agreement was made and executed atthat time. Upon the Company’s request to materialize theverbal indication of Hejian by compensating in the form ofeither cash or equity, the Chairman of the holding companyof Hejian offered 15% of the outstanding shares of the holdingcompany of Hejian in return for the Company’s pastassistance and for continued assistance in the future.The holding company has already issued a total of 700million shares and the subscription price per share in thelast offering is USD 1.1. Therefore, the total market value ofthe holding company is estimated at over USD 700 million,with 15% of this figure being worth more than USD 110 million.Immediately after the Company had received the offer,it filed an application to the Investment Commission of theMinistry of Economic Affairs on March 18, 2005 (Ref. No.94-Lian-Tung-Tzu-0222), for their executive guidance forthe successful transfer of said shares to the Company. Furthermore,the representative of Hejian is putting the sharesin escrow to protect the Company’s interests. In the eventHejian distributes any stock dividend or cash dividend, theCompany’s stake in Hejian will accumulate accordingly.On February 15, 2006, the Company was fined in theamount of NTD 5 million on the grounds of unauthorizedinvestment activities in Mainland China, implicating theviolation of Article 35 of the Act “Governing Relations BetweenPeoples of the Taiwan Area and the Mainland Area”by the R.O.C. Ministry of Economic Affairs. However, as theCompany believes it was illegally and improperly fined; theCompany had filed an administrative appeal against MOEAto the Executive Yuan on March 16, 2006. This case is waitingfor the Executive Yuan’s decision.89