THREE-FIVE SYSTEMS BUILDS MICRODISPLAYS ON UMC'S UNIQUE LIQUID CRYSTAL ON SILICON (LCoS) SEMICONDUCTOR PROCESS

Foundry Enables Microdisplay Providers to Deliver Cutting-Edge High Definition Television (HDTV) Components

SUNNYVALE, Calif., February 12, 2001--UMC (NYSE: UMC), a world leading semiconductor foundry, today announced that Three-Five Systems, Inc., (NYSE: TFS), a U.S.-based designer and manufacturer of custom Liquid Crystal Display (LCD) products and an industry leader in LCoS microdisplay technology, is developing its newest microdisplays utilizing UMC's LCoS backplane manufacturing process. Three-Five is utilizing UMC's factories to produce the silicon required for its MD1024 Extended Graphics Array (XGA) microdisplay for lightweight and portable front projection applications, its MD1280 SXGA microdisplay for monitors, high definition television and high resolution projectors, and its specialized WUXGA microdisplay, the MD1920, for the most advanced applications.

"UMC is poised to be the premier manufacturer of LCoS wafers for the HDTV, image projection and handheld device markets, as it is the foundry industry's only provider of an LCoS technology process," said Jim Ballingall, vice president of worldwide marketing for UMC. "We are enabling leading developers of microdisplay technology to get the benefits of high-resolution, high reflectance, and extremely-small pixel sizes. The fact that Three-Five Systems is utilizing our process for the development of its leading XGA, SXGA, and highest resolution microdisplays means the company's products will benefit from a bright, less pixilated image. Moreover, it also points to the fact that UMC is delivering the cutting-edge technology that today's display companies require."

Russell Flack, senior director of microdisplay engineering for Three-Five Systems, Inc. said, "As a leading provider of cutting-edge LCoS microdisplays, we must adhere to the strictest of quality standards. We selected UMC because of its proven track record for providing the most leading-edge technology solutions. UMC has met and exceeded our expectations for turnaround time and the fidelity of its technology. We are impressed with the foundry's ability to support the highest performance required by our most advanced customers and have experienced faster time-to-market for our products. "

The LCoS microdisplay backplanes to be made by UMC represent the most recent design work in Three-Five's microdisplay technology portfolio. Design enhancements, completed over the past several months at the company's Tempe, Arizona research and development laboratory, have resulted in microdisplays with increased reflectivity, contrast, and overall image uniformity. Three-Five expects that this upgraded design, combined with UMC's manufacturing strength, will produce brighter, more colorful and uniform images for projection (multi-media projectors, televisions, and monitors) and near-to-the-eye (Internet appliances and headsets) display applications.

Charles W. McLaughlin of McLaughlin Consulting Group, a market research firm based in Menlo Park, California, commented, "During the past decade the dramatic growth of the multimedia projector market has driven the sales of microdisplays to more than $1 billion annually. During the next five years, demand for microdisplay-based rear-projection, large-format, digital televisions and desktop monitors will become the high growth segment of the microdisplay projection market. But the next decade will really give rise to the maturation of personal display opportunities. Sales of personal display microdisplays used in viewfinders and headsets and embedded in Internet appliances will grow to $1.5 billion by 2005, becoming a substantial segment of the $5.6 billion total microdisplay market."

About UMC's LCoS Process

UMC's LCoS process technology is an enhancement of its generic, mixed-mode CMOS process. Developers of High Definition TV (HDTV), multi-media image projectors, and handheld devices can implement this technology to devise microdisplays, or small, display panels. Microdisplay products are physically smaller (involving flat panel displays) than those that employ the alternative Cathode Ray Tube (CRT) solution employed for the display screen in a typical TV. UMC's LCoS process is capable of supporting extremely small pixel sizes and thus supports the very high resolutions found in Extended Graphics Array (XGA) (1024 X 768), Super XGA (1280 X 1024), and WUXGA (1920 X 1200) devices. UMC is currently the only foundry to offer a LCoS process.

UMC's LCoS microdisplay process comes equipped with a highly-reflective mirror layer, a film of aluminum that covers the silicon wafer, that is essential for achieving the desired resolution and brightness for a display. UMC has integrated a Reflectance Enhancement Passivation layer over the reflective aluminum layer, which counteracts the inhibiting effects that the silicon normally has on reflectivity and allows for high reflectance. The foundry's LCoS process uses Inter Metal Dielectric (IMD) planarity, post spacer, and Gap Fill, all of which flatten the die so as to maximize the yield of liquid-crystal assembly. UMC's process has enabled microdisplay developers to achieve extremely narrow pixels for enhanced reflectivity and brightness.

About Three-Five Systems, Inc.R

Three-Five Systems, Inc. is a recognized leader in the design and manufacture of liquid crystal display (LCD) modules and technology for OEM customers in wireless communications and data collection, medical electronics, and other commercial and consumer device marketplaces. The company has developed proprietary LCD products, such as LCiD?, a sunlight readable display. In addition to traditional LCDs, the company is developing other display technologies such as LCoS? (Liquid Crystal on Silicon) microdisplays, tiny, high resolution, low power displays designed for new markets such as HDTV, business projectors and wireless Internet appliances. At its Tempe, Arizona headquarters, Three-Five operates the highest volume LCD manufacturing line in North America and houses the David R. Buchanan LCD laboratory, dedicated to the development of advanced display technologies. The company's web site is located at www.threefive.com.

Note Concerning Forward-Looking Statements

Some of the statements in the foregoing announcement are forward looking within the meaning of the U.S. Federal Securities laws, including statements about future outsourcing, wafer capacity, technologies, business relationships and market conditions. Investors are cautioned that actual events and results could differ materially from these statements as a result of a variety of factors, including conditions in the overall semiconductor market and economy; acceptance and demand for products from any of the aforementioned companies; and technological and development risks.

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