UMC Announces Capital Reduction of NTD 57,393,578,070

HSINCHU, Taiwan, January 23, 2007 - UMC (NYSE: UMC TSE: 2303), a world leading semiconductor foundry, announced that it will carry out a capital reduction of NTD 57,393,578,070 with the cancellation of 5,739,357,807 of its outstanding shares, following a resolution passed at a meeting of the Board of Directors held today. Shareholders will receive approximately NT$3 for each of their shares held. Upon completion of the capital reduction, the outstanding capital of the company will be approximately NT$133,918,348,830, with the exact exchange ratio for shares and the amount of the capital reduction to be set on the record date for capital reduction.

Established in 1980, UMC is entering its 27^th year of operations and the company has entered a stage of sustained growth. Going forward, cash flow will significantly increase as the company's six eight-inch fabs approach full depreciation. After careful calculation, the company has determined that cash flows generated from UMC's future operations will be sufficient for the research and development of advanced process technologies and the continued expansion of advanced manufacturing capacity, including the second 300mm fab in Taiwan's Tainan Science Park which is estimated to cost US$5 billion. In order to avoid future cash levels becoming excessive and to better respond to the expectations of today's capital markets, the company has resolved to carry out this capital reduction and return cash to its investors. This action is expected to make a positive contribution to shareholders' equity through the improvement of the company's capital structure. UMC will continue to pursue the maximum benefits for its shareholders, employees, and the many participants in the global and domestic semiconductor industry.

The board also announced at today's meeting the date of the company's shareholders' meeting, which will be on June 11, 2007, at UMC Recreation Center in Hsinchu Science Park. The period for suspension of share transfer is from April 13 to June 11, in accordance with government regulations.

Note From UMC 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 UMC; and technological and development risks.

About UMC
UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SoC) designs, including volume production 90nm, industry-leading 65nm, and mixed signal/RFCMOS. UMC's 10 wafer manufacturing facilities include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. The company employs approximately 12,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.

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