1. The date of cash distribution from capital reduction will be October 9, 2007. The cash will be distributed by wire transfer or by checks sent via registered mail to shareholders.

2. The ratio of cash returned to be viewed as dividend income is 0.137518% (note).
   Domestic institutional and individual shareholders should report 0.137518% of cash returned as dividend income within year 2007. Tax certificates will be sent to shareholders before February 10, 2008.
   Cash returned to non-residents (foreign institutional and individual shareholders) will be withheld by Taiwanese tax authorities. The withholding amount will be deducted from the cash returned. Withholding amount = cash returned x 0.137518% x withholding tax rate.

3. For Shareholders who own stock with deferred tax issued before 1999, the income derived from capital reduction will be calculated by the reduction ratio - 30.283357% of the total shares. The income certificates from stocks with deferred tax will be sent to shareholders before February 10, 2008.

4. This cash distribution from UMC's capital reduction will be treated as capital reduction under applicable Republic of China regulations. However, the applicable tax treatment of this cash distribution from our capital reduction under other tax laws and regulations may depend upon those laws and regulations and upon the particular tax payer involved. For example, under current U.S. tax principles, a distribution is normally considered to be from accumulated and current earnings and profits (to the extent they exist) and such distributions are normally taxable as dividends. Thus, to the extent the distribution from UMC's capital reduction is considered under U.S. tax regulations to be from accumulated and current earnings and profits, the capital reduction is likely to subject U.S. taxpayers to U.S. dividend tax on the distribution involved. Note however that UMC does not account for its earnings and profits in accordance with U.S. federal income tax principles, and thus has not made any determination in this regard. Holders of ADRs who are subject to tax in any jurisdiction other than the Republic of China are encouraged to consult a tax advisor concerning their specific situation and the consequences arising under the laws applicable to them.

The ratio of dividend income to cash returned
= capital reserve from premiums by disposal of fixed assets / share count before capital reduction
= 260,628,277 / 189,521,846,900 = 0.00137518