UNITED MICROELECTRONICS CORPORATION
FORM 20-F ANNUAL REPORT
FISCAL YEAR ENDED DECEMBER 31, 2025
Table of Contents
SUPPLEMENTAL INFORMATION
FORWARD-LOOKING STATEMENTS IN THIS ANNUAL REPORT MAY NOT BE REALIZED
PART I.
ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3
KEY INFORMATION
ITEM 4
INFORMATION ON THE COMPANY
ITEM 4A.
UNRESOLVED STAFF COMMENTS
ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
ITEM 7
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
ITEM 8
FINANCIAL INFORMATION
ITEM 9
THE OFFER AND LISTING
ITEM 10
ADDITIONAL INFORMATION
ITEM 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 12
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
PART II.
ITEM 13
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15
CONTROLS AND PROCEDURES
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 16B.
CODE OF ETHICS
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E.
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G.
CORPORATE GOVERNANCE
ITEM 16H.
MINE SAFETY DISCLOSURE
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J.
INSIDER TRADING POLICIES
ITEM 16K.
CYBERSECURITY
PART III.
ITEM 17
FINANCIAL STATEMENTS
ITEM 18
ITEM 19
EXHIBITS
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The references to “United Microelectronics”, “we”, “us”, “our”, “our company” and “the Company” in this Annual Report refer to United Microelectronics Corporation and its consolidated subsidiaries, unless the context suggests otherwise. The references to “Taiwan” and “R.O.C.” refer to Taiwan, Republic of China. The references to “China” and “PRC” refer to People’s Republic of China. The references to “shares” and “common shares” refer to our common shares, par value NT$10 per share, and “ADSs” refer to our American Depositary Shares, each representing five common shares. The ADSs are issued under the Deposit Agreement, dated as of October 21, 2009, as amended, supplemented or modified from time to time, among United Microelectronics, JPMorgan Chase Bank, N.A. and the holders and beneficial owners from time to time of American Depositary Receipts issued thereunder. The references to “TIFRSs” refer to the Taiwan International Financial Reporting Standards as issued by the Financial Supervisory Commission in the Republic of China, or R.O.C. FSC. “IFRS Accounting Standards” refer to International Financial Reporting Standards as issued by the International Accounting Standards Board, or IASB. “U.S. GAAP” refer to the generally accepted accounting principles in the United States. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding.
We publish our financial statements in New Taiwan dollars, the lawful currency of the R.O.C. In this Annual Report, “NT$” and “NT dollars” mean New Taiwan dollars; “$,” “US$” and “U.S. dollars” mean United States dollars; “¥” means Japanese Yen; and “RMB¥” means Renminbi.
Our disclosure and analysis in this Annual Report contain or incorporate by reference some forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words “may,” “will,” “is/are likely to,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify a number of these forward-looking statements. Forward-looking statements in this Annual Report include, but are not limited to, statements regarding our business strategies and future plans, anticipated business condition and financial results, our capital expenditure plans, our capacity management plans, expectations as to the capabilities of our technologies and manufacturing process, technological upgrades, investment in research and development, future market demand, regulatory or other developments in our industry, business expansion plans or new investments as well as business acquisitions and financing plans. Please see “Item 3. Key Information—D. Risk Factors” for a further discussion of certain factors that may cause actual results to differ materially from those indicated by our forward-looking statements. Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions about us, including, among other things:
our dependence on frequent introduction of new product services and technologies based on the latest developments;
the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets;
risks associated with our international business activities;
our dependence on key personnel;
general economic conditions, including those related to the semiconductor, communications, consumer electronics and computer industries;
possible disruptions in commercial activities caused by natural and human-induced disasters, and outbreaks of contagious diseases;
fluctuations in foreign currency exchange rates;
geopolitical conflicts, including political relationships between U.S., China and Taiwan;
additional disclosures we make in our previous and future Form 20-F annual reports and Form 6-K periodic reports to the U.S. Securities and Exchange Commission, or the SEC; and
those other risks identified in the “Item 3. Key Information—D. Risk Factors” section of this Annual Report.
We do not and will not undertake the obligation to update or revise any forward-looking statements contained in this Annual Report whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Annual Report might not occur and our actual results could differ materially from those anticipated in these forward-looking statements.
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GLOSSARY
2
3
4
Not applicable.
[RESERVED]
Capitalization and Indebtedness
Reasons for the Offer and Use of Proceeds
Risk Factors
Our business and operations are subject to various risks, many of which are beyond our control. If any of the risks described below actually occurs, our business, financial condition or results of operations could be seriously harmed.
Risks Related to Our Business and Financial Condition
Any global systemic political, economic and financial crisis could negatively affect our business, results of operations and financial condition.
In recent times, several major systemic economic and financial crises have negatively affected global business, banking and financial sectors, including the semiconductor industry and markets. These types of crises cause turmoil in global markets that often result in declines in electronic product sales from which we generate our income through our goods and services. In addition, these crises may cause various indirect effects such as undermining the ability of our customers to remain competitive when faced with the financial and economic challenges created by adverse political and macroeconomic conditions and by companies struggling to survive in the wake of these crises. For example, beginning in early 2023, the semiconductor industry was affected by an economic downturn that resulted in reduced demand for consumer electronics and other products incorporating semiconductors, which in turn affected our business operations and financial condition. While there were signs of recovery since 2024, the industry continued to face challenges from global economic uncertainties.
In addition, even when these crises have abated, there could be lingering effects from these types of crises on our business, including a significant reduction in orders from our customers, insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of our products, customer insolvencies and bankruptcies, and counterparty failures negatively impacting our treasury operations. Any future systemic political, economic or financial crisis could cause revenues for the semiconductor industry as a whole to decline dramatically, and if the economic condition or financial condition of our customers were to deteriorate, additional accounting related allowances may be required in the future and such additional allowances could increase our operating expenses and therefore reduce our operating income and net income. Any disruption in global trade conditions such as an increase in tariffs or the escalation of regional trade tensions will indirectly impact the global business environment which may adversely impact our business, results of operations and financial condition.
The seasonality and cyclical nature of the semiconductor industry and periodic overcapacity make us particularly vulnerable to significant and sometimes prolonged economic downturns.
The semiconductor industry has historically been highly cyclical and, at various times, has experienced significant downturns. Since most of our customers operate in semiconductor-related industries, variations in order levels from our customers can result in volatility in our revenues and earnings. Because our business is, and will continue to be, largely dependent on the requirements of semiconductor companies for our services, downturns in the semiconductor industry will lead to reduced demand for our services.
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Our operating revenues are also typically affected by seasonal variations in market conditions that contribute to the fluctuations of the average selling price of semiconductor services and products. The seasonal sales trends for semiconductor services and products closely mirror those for consumer electronics, communication and computer sales. We generally experience seasonal lows in the demand for semiconductor services and products during the first half of the year, primarily as a result of inventory correction by our customers. Any change in the general seasonal variations, which we cannot anticipate, may result in materially adverse effects on our revenues, operations and businesses.
Our operating results fluctuate from quarter to quarter, which makes it difficult to predict our future performance.
Our revenues, expenses and results of operations have varied significantly in the past and may fluctuate significantly from quarter to quarter in the future due to a number of factors, many of which are beyond our control. Our business and operations have at times in the past been negatively affected by, and are expected to continue to be subject to the risk of the following factors:
the seasonality and cyclical nature of both the semiconductor industry and the markets served by our customers;
our customers’ adjustments in their inventory;
the loss of a key customer or the postponement of orders from a key customer;
the rescheduling and cancellation of large orders;
our ability to obtain equipment, raw materials, electricity, water and other required utilities on a timely and economic basis;
pandemic and outbreaks of other contagious diseases;
regulatory development and changes affecting our business operations globally;
global and regional geopolitical conditions, including armed conflicts and wars;
announcement of major collaboration or partnership agreements;
environmental events, such as fires and earthquakes, or industrial accidents; and
technological changes.
Due to the factors noted above and other risks discussed in this section, many of which are beyond our control, you should not rely on quarter-to-quarter comparisons to predict our future performance. Unfavorable changes in any of the above factors may seriously harm our business, financial condition and results of operations. In addition, our operating results may be below the expectations of public market analysts and investors in some future periods. In this event, the price of the common shares or ADSs may underperform or fall.
A decrease in demand for or selling prices of communication devices, consumer electronics and computer goods may decrease the demand for our services and reduce our margins.
Our customers generally use the semiconductors produced in our fabs in a wide variety of applications. We derive a significant percentage of our operating revenues from customers who use our manufacturing services to make semiconductors for communication devices, consumer electronics, PCs and other computers. The semiconductor industry experienced several downturns due to recent major financial crises and natural disasters. These downturns resulted in a reduced demand for our services and hence decreased our revenues and earnings. Any significant decrease in the demand for communication devices, consumer electronics, PCs or other computers may further decrease the demand for our services. In addition, if the average selling price of communication devices, consumer electronics, PCs or other computers decline significantly, we will be pressured to further reduce our selling prices, which may reduce our revenues and, therefore, reduce our margins significantly. As demonstrated by downturns in demand for high technology products in the past, market conditions can change rapidly, without apparent warning or advance notice. In such instances, our customers will experience inventory buildup and/or difficulties in selling their products and, in turn, will reduce or cancel orders for wafers from us. The timing, severity and recovery of these downturns cannot be predicted accurately or at all. When they occur, our business, profitability and price of the common shares and ADSs are likely to suffer. In addition, we may not be able to verify or guarantee the creditworthiness of some of our customers. If customers fail to make payments on a timely basis and accumulate substantial accounts receivable, we may not be able to collect payments or may incur substantial costs and expenses to pursue legal remedies to recover such losses, which may have an adverse effect on our financial conditions and results of operations.
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Overcapacity in the semiconductor industry may reduce our revenues, earnings and margins.
The prices that we can charge our customers for our services are significantly related to the overall worldwide supply of integrated circuits and semiconductor products. The overall supply of semiconductor products is based in part on the capacity of other companies, which is outside of our control. For example, based on market conditions, some companies, including our largest competitors, have announced plans to increase capacity expenditures significantly. We believe such plans, if carried out as planned, will increase the industry-wide capacity and are likely to result in overcapacity in the future. In periods of overcapacity, if we are unable to offset the adverse effects of overcapacity through, among other things, our technology and product mix, we may have to lower the prices we charge our customers for our services and/or we may have to operate at significantly less than full capacity. Such actions could reduce our margin and profitability and weaken our financial condition and results of operations. We cannot give any assurance that an increase in the demand for foundry services in the future will not lead to overcapacity in the near future, which could materially adversely affect our revenues, earnings and margins.
Any problem in the semiconductor outsourcing infrastructure can adversely affect our operating revenues and profitability.
Many of our customers depend on third parties to provide mask tooling, assembly and test services, and we and our customers may not be able to control or direct such third parties to provide these services timely or at costs reasonable to our customers. If these customers cannot timely obtain these services on reasonable terms, they may not order any foundry services from us. This may significantly reduce our operating revenues and negatively affect our profitability.
We may be unable to implement new technologies as they become available, which may result in the decrease of our profitability and the loss of customers and market share.
The semiconductor industry is characterized by rapidly evolving and constantly changing technology. If we do not anticipate the technology evolution and rapidly adopt new and innovative technology, we may not be able to produce sufficiently advanced services at competitive prices. Our competitors may adopt new technology before we do and reduce our ability to compete effectively in the market. If we are unable to begin offering advanced services and processes on a competitive and timely basis, we may lose customers to our competitors providing similar technologies, which may cause our operating revenues to decline unless we can replace lost customers with new customers. In addition, the market prices for advanced technology and services tend to fall over time. As a result, if we are unable to offer new advanced services and processes on a competitive and timely basis, we may need to reduce prices that we set for our existing services and processes, which would have a negative effect on our profitability. We also depend upon the introduction of new technologies on a timely basis in order to benefit from the relatively higher prices such new technologies offer in the earlier stages of their life cycles. If we are unable to introduce new technologies on a timely and competitive basis, we may not be able to benefit from the relatively higher prices for new technologies, and our average selling price and profits would decrease accordingly.
We may be unable to provide leading technology to our customers if we lose the support of our technology partners.
Enhancing our manufacturing process technologies is critical to our ability to provide services for our customers. We intend to continue to advance our process technologies through internal research and development and alliances with other companies. In addition to our internal research and development team focused on developing new and improved semiconductor manufacturing process technologies, we are also dependent on some of our technology partners to advance certain process technology portfolios. In addition, we currently have patent cross-licensing agreements with several companies, including International Business Machines Corporation, or IBM. Some mask and equipment vendors also supply our technology development teams with masks and equipment needed to develop more advanced processing technologies. If we are unable to continue any of our joint development arrangements, patent cross-licensing agreements and other agreements, on mutually beneficial economic terms, if we re-evaluate the technological and economic benefits of such relationships, if we are unable to enter into new technology alliances and arrangements with other leading and specialty semiconductor companies, or if we fail to secure masks and equipment from our vendors in a timely manner sufficient to support our ongoing technology development, we may be unable to continue providing our customers with leading edge mass-producible process technologies and may, as a result, lose important customers, which would have a materially adverse effect on our businesses, results of operations and financial condition.
In addition, some of our customers rely upon third-party vendors, or intellectual property (IP) vendors, for the IP they embed into their designs. Although we work and collaborate with IP vendors with respect to such matters, there can be no guarantee that we will be successful or that the vendors will deliver according to our requirements or the needs of our customers. Failures to meet the targets or to deliver on a timely basis could cause customers to cancel orders and/or shift capacity to other suppliers.
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The outbreak of infectious disease may materially and adversely affect our business and operations as well as our financial condition and results of operations.
Any outbreak of contagious diseases, including but not limited to Zika virus, Ebola virus, avian or swine influenza or severe acute respiratory syndrome, in any region of the world in which we operate our business may disrupt our ability to adequately staff our business and may generally disrupt our operations. An occurrence of a major pandemic, such as the COVID-19 pandemic, can materially and adversely affect our operations and the semiconductor markets in which we conduct our business. We have significant operations in China, Taiwan and the Asia Pacific region, including supply chain and manufacturing facilities and sales and marketing channels. If a potential outbreak occurs in these areas, we may experience a decline of sales activities and customer orders, reduction of operation and workforce at our fabs, difficulties in international travels and communications, regulatory restrictions, reduction of research and development activities, and other risks resulting from the outbreak. We cannot predict the impact of infectious disease on the semiconductor industry in the future. As a result, any increase in our customers’ demand may not be sustainable and we may experience a decline in our sales activities and customer orders. Any of these factors may adversely affect our business, financial conditions and results of operations.
Our business may suffer if we cannot compete successfully in our industry.
The worldwide semiconductor foundry industry is highly competitive. We compete with dedicated foundry service providers, as well as the foundry operation services of some integrated device manufacturers. Integrated device manufacturers principally manufacture and sell their own proprietary semiconductor products, but may also offer foundry services. New entrants and consolidations in the foundry business are likely to initiate a trend of competitive pricing and create potential overcapacity in legacy technology. Some of our competitors have greater access to capital and substantially greater production, research and development, marketing and other resources than we do. As a result, these companies may be able to compete more aggressively over a longer period of time than we can.
The principal elements of competition in the wafer foundry market include:
technical competence;
time-to-volume production and cycle time;
time-to-market;
research and development quality;
available capacity;
manufacturing yields;
customer relationships, including service and design support;
price;
management expertise; and
strategic alliances.
Our ability to compete successfully also depends on factors partially outside of our control, including product availability, IP, including cell libraries that our customers embed in their product designs, and industry and general economic trends.
We may not be able to implement our planned growth if we are unable to obtain the financing necessary to fund the substantial capital expenditures we expect to incur.
Our business and the nature of our industry require us to make substantial capital expenditures leading to a high level of fixed costs. The costs of facilities, tools and equipment to make semiconductors with advanced technology continue to rise, with each generation typically significantly more expensive than the larger-in-size more mature technologies which preceded. We expect to incur significant capital expenditures in connection with our growth plans. These capital expenditures will be made in advance of any additional sales to be generated by new or upgraded fabs as a result of these expenditures. Given the fixed-cost nature of our business, we have in the past incurred, and may in the future incur, operating losses if our revenues do not adequately offset our capital expenditures. Additionally, our actual expenditures may exceed our planned expenditures for a variety of reasons, including changes in:
our growth plan;
our process technology;
our research and development efforts and patent license arrangements;
market conditions;
interest rates;
exchange rate fluctuations; and
prices of equipment.
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We cannot assure you that additional financing will be available on satisfactory terms, if at all. If adequate funds are not available on satisfactory terms, we may be forced to curtail our expansion plans or delay the deployment of our services, which could result in a loss of customers and limit the growth of our business.
Our agreement with Intel subject us to additional risks, and we may not be able to succeed or generate sufficient revenue or profit as we anticipated under the Intel agreement.
On January 25, 2024, we entered into a collaboration with Intel Corporation for the purpose of developing a 12nm semiconductor process platform to address high-growth markets such as mobile, communication infrastructure and networking (the “Collaboration”). The Collaboration combines Intel’s established U.S. manufacturing capacity and our extensive foundry experience on mature nodes to enable an expanded process portfolio, and we currently expect production of 12nm products in 2027. However, the Collaboration subjects us to additional risks in our business operations, including but are not limited to:
Additional cost and investment to operate and support a manufacturing facility in the U.S.;
Inability to control over the manufacturing process;
Disagreement or conflict with Intel as to the terms of Collaboration;
Lack of experience with operating or managing a foundry in the U.S.;
Inability to recruit or retain qualified personnel to advance the collaboration;
Delays in ramp-up productions;
Failure of customers to accept new products; and
Compliance with U.S. regulatory and legal requirements.
In addition, there is no guarantee that the Collaboration will result in financial and economic benefits as we anticipated. Any of the risk factors listed above and other risks may cause a delay in the production of 12nm products under the Collaboration or even prevent us from completing the joint development projects. Our failure to succeed or generate sufficient revenue under the Collaboration will adversely affect our business operations and results of operations, and may damage our reputation and adversely affect the trading price of our ADS.
We depend on a small number of customers for a significant portion of our operating revenues and any loss of these customers would result in significant declines in our operating revenues.
We have been largely dependent on a small number of customers for a substantial portion of our business. Our top ten customers accounted for 62.0%, 55.6% and 57.0% of our operating revenues in 2023, 2024 and 2025, respectively. Our largest customer from our wafer fabrication segment accounted for 13.1%, 10.4% and 11.8% of our operating revenues in 2023, 2024 and 2025, respectively. We expect that we will continue to depend upon a relatively limited number of customers for a significant portion of our operating revenues. We cannot assure you that our operating revenues generated from these customers, individually or in the aggregate, will reach or exceed historical levels in any future period. Loss or cancellation of business from significant changes in scheduled deliveries to, or decreases in the prices of services sold to any of these customers could significantly reduce our operating revenues.
Our customers generally do not have long-term agreements with us to purchase wafers, and many customers do not place purchase orders far in advance, which makes it difficult for us to predict our future revenues, adjust production costs and allocate capacity efficiently on a timely basis. In addition, due to the cyclical nature of the semiconductor industry, our customers’ purchase orders have varied significantly from period to period. As a result, we do not typically operate with any significant backlog, except in periods of extreme capacity shortage. The lack of significant backlog and the unpredictable length and timing of semiconductor cycles make it difficult for us to forecast our revenues in future periods. Moreover, our expense levels are based in part on our expectations of future revenues, and we may be unable to adjust costs in a timely manner to compensate for revenue shortfalls. We expect that in the future our operating revenues in any quarter will continue to be substantially dependent upon purchase orders received in that quarter.
Moreover, the increasing trend in mergers and acquisitions activities in the semiconductor industry could reduce total available customer base, which could potentially result in a loss of customers.
Our operations and business will suffer if we lose one or more of our key personnel without adequate replacements.
Our future success to a large extent depends on the continued services of our Chairman and key executive officers. We do not carry key person insurance on any of our personnel. If we lose the services of any of our Chairman or key executive officers, it could be difficult to find and integrate replacement personnel in a short period of time, or at all, which could harm our operations and the growth of our business.
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We may have difficulty attracting and retaining skilled employees, who are critical to our future success.
The success of our business depends upon attracting and retaining experienced executives, engineers and other employees to implement our strategy. The competition for skilled employees is intense in our industry, which is exacerbated by the shortage of qualified personnel with appropriate experiences and expertise. We expect demand for personnel in Taiwan to increase in the future as new wafer fabrication facilities and other businesses are established in Taiwan. We also expect demand for experienced personnel in other locations to increase significantly as our competitors establish and expand their operations. Some of our competitors are willing to offer better compensation than what we do to our executives, engineers and other employees. We do not have long-term employment contracts with any of our employees. If we were unable to retain our existing personnel or attract, assimilate and recruit new experienced personnel in the future, it could seriously disrupt our operations and delay or restrict the growth of our business.
Our transactions with affiliates and shareholders may hurt our profitability and competitive position.
We have provided foundry services to several of our affiliates and shareholders. We currently do not provide any preferential treatment to any of these affiliates and shareholders. However, we may in the future reserve or allocate our production capacity to these companies if there is a shortage of foundry services in the market to enable these companies to maintain their operations and/or to protect our investments in them. This reservation or allocation may reduce our capacity available for our other customers, which may damage our relationships with other customers and discourage them from using our services. This may hurt our profitability and competitive position.
If we fail to maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence in our company may be adversely affected.
We are required to comply with the R.O.C. and the U.S. securities laws and regulations in connection with internal controls. As a public company in the United States, our management is required to assess the effectiveness of our internal control over financial reporting using the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), or the COSO criteria, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may decline to issue an opinion as to the effectiveness of our internal control over financial reporting, or may issue a report that is qualified or adverse. During the course of the evaluation of internal control over financial reporting, we or our independent registered public accounting firm may identify control deficiencies that we may not be able to remediate prior to the date of our first assessment of internal control over financial reporting. Our failure to achieve and maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements or prevent fraud, which in turn could harm our business and negatively impact the trading price of our securities.
Although effective internal controls can provide reasonable assurance with respect to the preparation and fair presentation of financial statements, they may not prevent or detect misstatements because of their inherent limitations, including the possibility of human error, the circumvention or overriding of controls, fraud or corruption. If we fail to maintain the adequacy of our internal controls, our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could be a material adverse effect on the market price of our common shares and ADSs.
The trend of adopting protectionist measures in certain countries, including the United States, could have a material adverse impact on our results of operations and financial condition.
Governments in the United States, PRC and certain other countries have implemented fiscal and monetary programs to stimulate economic growth as a result of the recent economic downturn, and many of these programs include protectionist measures that encourage the use of domestic products and labor. Recent policy developments by the governments in the U.S., China and elsewhere also suggest an increased unwillingness to allow international companies to invest in or acquire local businesses. Since many of our direct customers and other downstream customers in the supply chain are located in or have operations in the countries where protectionist measures were adopted, such protectionist measures may have a material adverse effect on demand for our manufacturing services.
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We may decide to make strategic acquisitions of other companies, assets or businesses and such acquisitions may introduce significant risks and uncertainties, including risks related to integrating the acquired assets or businesses.
In order to position ourselves to take advantage of growth opportunities, we have made, and may continue to make, certain strategic acquisitions, mergers and alliances that involve significant risks and uncertainties. Even if we have identified a suitable target or partner for a strategic transaction, there is no guarantee that we will be able to negotiate a successful agreement at pricing favorable to us or to consummate the transaction in a timely manner, or at all. Furthermore, we may incur significant costs in pursuing such strategic transaction and invest in a substantial amount of time and effort without a guarantee that such transaction will be completed. Successful acquisitions and alliances in the semiconductor industry are difficult to accomplish because they require efficient integration and aligning of product offerings and manufacturing operations and coordination of sales and marketing and research and development efforts. The difficulties of integration and alignment may be increased by the necessity of coordinating geographically separated organizations, the complexity of the technologies being integrated and aligned and the necessity of integrating personnel with disparate business backgrounds and combining different corporate cultures. Furthermore, there is no guarantee that we will be able to identify a viable target for strategic acquisition, and we may incur significant costs and resources in such effort that may not result in a successful acquisition. In addition, we may also issue equity securities to pay for future acquisitions or alliances, which could be dilutive to existing shareholders. We may also incur debt or assume contingent liabilities in connection with acquisitions and alliances, which could impose restrictions on our business operations and harm our operating results.
Currency fluctuations could increase our costs relative to our revenues, which could adversely affect our profitability.
More than half of our operating revenues are denominated in currencies other than New Taiwan dollars, primarily in U.S. dollars. On the other hand, more than half of our costs of direct labor, raw materials and overhead are incurred in New Taiwan dollars. Although historically we hedged a portion of the resulting net foreign exchange position through the use of foreign exchange spot transactions, or currency forward contracts, we are still affected by fluctuations in foreign exchange rates among the U.S. dollar, the New Taiwan dollar and other currencies. Any significant fluctuation in exchange rates may impact our financial condition, including the U.S. dollar value of the ADSs and the U.S. dollar value of any cash dividends we distribute, which could have an adverse effect on the market price of the ADSs.
Risks Relating to Manufacturing
Our manufacturing processes are highly complex, costly and potentially vulnerable to impurities and other disruptions that can significantly increase our costs and delay product shipments to our customers.
Our manufacturing processes are highly complex, require advanced and costly equipment and are continuously being modified to improve manufacturing yields and product performance. Impurities or other difficulties in the manufacturing process or defects with respect to equipment or supporting facilities can lower manufacturing yields, interrupt production or result in losses of products in process. As system complexity has increased and process technology has become more advanced, manufacturing tolerances have been reduced and requirements for precision have become even more demanding. Although we have been enhancing our manufacturing capabilities and efficiency, from time to time we have experienced production difficulties that have caused delivery delays and quality control problems, as is common in the semiconductor industry. In the past we have encountered the following problems:
capacity constraints due to changes in product mix or the delayed delivery of equipment critical to our production, including scanners, steppers and chemical stations;
construction delays during expansions of our clean rooms and other facilities;
difficulties in upgrading or expanding existing facilities;
manufacturing execution system or automatic transportation system failure;
unexpected breakdowns in our manufacturing equipment and/or related facilities;
changing or upgrading our process technologies;
raw materials shortages and impurities; and
delays in delivery and shortages of spare parts and in maintenance for our equipment and tools.
Should these problems persist or repeat, we may suffer delays in delivery and/or loss of business and revenues. In addition, we cannot guarantee that we will be able to increase our manufacturing capacity and efficiency in the future to the same extent as in the past.
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Our profit margin may substantially decline if we are unable to continuously improve our manufacturing yields, maintain high capacity utilization and optimize the technology mix of our silicon wafer production.
Our ability to maintain our profitability depends, in part, on our ability to:
maintain high capacity utilization, which is defined as the ratio of the wafer-out quantity of 12-inch wafer equivalents divided by our estimated total 12-inch equivalent capacity in a specified period. The estimated capacity figures may vary depending upon equipment delivery schedules, pace of migration to more advanced processing technologies and other factors affecting production ramp-ups;
maintain or improve our manufacturing yields, which is defined as the percentage of usable devices manufactured on a wafer; and
optimize the technology mix of our production by increasing the number of wafers manufactured by utilizing different processing technologies.
Our manufacturing yields directly affect our ability to attract and retain customers, as well as the price of our services. Our capacity utilization affects our operating results because a large percentage of our operating costs are fixed. Our technology mix affects utilization of our equipment and process technologies, as well as the prices we can charge, either of which can affect our margins. If we are unable to continuously improve our manufacturing yields, maintain high capacity utilization or optimize the technology mix of our wafer production, our profit margin may substantially decline.
We may have difficulty in ramping up production in accordance with our schedule, which could cause delays in product deliveries and decreases in manufacturing yields.
As is common in the semiconductor industry, we have from time to time experienced difficulties in ramping up production at new or existing facilities or effecting transitions to new manufacturing processes. As a result, we have suffered delays in product deliveries or reduced manufacturing yields. We may encounter similar difficulties in connection with:
the migration to more advanced process technologies, such as 28/22 and 14-nanometer and more advanced process technology;
the joint development with vendors for more powerful tools (both in production and inspection) needed in the future to meet advanced process technology requirements; and
the adoption of new materials in our manufacturing processes.
We may face construction delays, interruptions, infrastructure failure and delays in upgrading or expanding existing facilities, or changing our process technologies, any of which might adversely affect our production schedule. Our failure to achieve our production schedule could delay the time required to recover our investments and seriously affect our profitability.
Our production schedules could be delayed and we may lose customers if we are unable to obtain raw materials and equipment in a timely manner.
We are a manufacturing company that relies on suppliers to provide raw materials. In order to ensure stable manufacturing operations, we have signed long-term supply contracts with our suppliers to obtain sufficient quantities of acceptable quality raw materials. For example, we purchased a majority of our silicon wafers from Shin-Etsu Handotai Corporation, or Shin-Etsu, GlobalWafers, Sumco Group (including Sumco Corporation and Formosa Sumco Technology Corporation) and Soitec. Although we source raw materials from multiple suppliers, a small number of these suppliers hold an important position in our raw material supply due to the consistency of their product quality, and this concentration of supply may subject us to additional risks, particularly if we are not able to maintain relationships with these suppliers. In addition, our ability to source raw materials may depend on factors outside of our control, such as geopolitical tensions and regulatory development that could restrict our ability to do business with these suppliers.
In addition, from time to time we may reject materials that do not meet our specifications and quality standards, resulting in declines in output or manufacturing yields. We cannot assure you that we will be able to obtain sufficient quantities of raw materials and other supplies in a timely manner. Furthermore, the recent global supply chain disruption may adversely affect our ability to acquire and purchase raw materials in sufficient quantities or at all, or in a timely manner. If the supply of materials is substantially diminished or if there are significant increases in the costs of raw materials, we may be forced to incur additional costs to acquire sufficient quantities of raw materials to sustain our operations, which may increase our marginal costs and reduce profitability.
We also depend on a limited number of manufacturers and vendors that make and maintain the complex equipment we use in our manufacturing processes. In addition, we rely on these manufacturers and vendors to improve our technology to meet our customers’ demands as technology improves. During periods of unpredictable and highly diversified market demand, the lead time from order to delivery of this equipment can be as long as twelve to twenty-four months. If there are delays in the delivery of equipment or in the availability or performance of necessary maintenance, it could cause us to delay our introduction of new manufacturing capacity or technologies and postpone product deliveries, which may result in the loss of customers and revenues.
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With the fluctuations in the economy, the demand for semiconductors declined from 2023, and some material supply and demand situations will be alleviated. In order to reduce supply risks in the future, we are actively engaging new supply sources. However, there is no guarantee that we will be able to secure new supply sources, and even if we are able to identify such sources, we may have difficulties in negotiating terms favorable to us.
We may be subject to the risk of loss due to fire because the materials we use in our manufacturing processes are highly flammable.
We use highly flammable materials such as silane and hydrogen in our manufacturing processes and may therefore be subject to the risk of loss arising from fires. Despite taking many countermeasures, the risk of fire associated with these materials cannot be completely eliminated. We maintain insurance policies to reduce losses caused by fire, including property damage and business interruption insurance. However, our insurance coverage is subject to deductibles and self-insured retention and may not be sufficient to cover all of our potential losses. If any of our fabs were to be damaged or cease operations as a result of a fire, it would temporarily reduce manufacturing capacity, which will adversely affect our business operations and results of operations. In order to mitigate the impact, we have introduced the ISO 22301 BCM system in all production fab and practice emergency response every year to speed up the recovery time in the event of a fire. However, these additional measures may not be sufficient to prevent all future risks of loss.
We and suppliers are vulnerable to natural disasters and other events outside of our control, which may seriously disrupt our operations.
Most of our assets and suppliers are located in certain parts of Taiwan. Our operations and suppliers are vulnerable to earthquakes, floods, droughts, power losses and similar events that affect the locations of our operations. The occurrence of any of these events could interrupt our services and cause severe damages to wafers in process, or lead to business disruptions. For example, the prolonged period in the lack of rainfall, particularly acute in southern Taiwan, may impact our manufacturing capacity and therefore may have a potentially adverse and material impact on our operational and financial performance. Besides the potential risks that may be caused by water shortage, we have in the past experienced severe earthquakes which adversely affected our wafer manufacturing operations in Taiwan. For example, in April 2024, we experienced a 7.2 magnitude earthquake in Taiwan. Additionally, in January 2025, a 6.4 magnitude earthquake occurred in southern Taiwan, causing damage to some work-in-progress wafers at our Fab 12A factory in Tainan. Although we have adopted anti-seismic damper and anchorage in our fab, piping and equipment to ensure the safety of our employees and minimize impact resulting from the earthquake, and we can recover some of the losses from our insurance policy, there is no guarantee that all our countermeasures will always be effective. There is also no guarantee that any future damages or business loss from severe natural disasters will be covered by insurance, or that such coverage will be sufficient due to the unpredictability in insurance policies. Furthermore, the cost of insurance policies may increase in the future that will make it more expensive for us to obtain and maintain adequate insurance policies.
Our operations may be delayed or interrupted and our business could suffer if we violate environmental, safety and health, or ESH, regulations.
The semiconductor manufacturing process requires the use of various gases, chemicals, hazardous materials and other substances such as solvents and sulfuric acid which may have an impact on the environment. We are always subject to ESH regulations, and a failure to manage the use, storage, transportation, emission, discharge, recycling or disposal of raw materials or to comply with these ESH regulations could result in (i) regulatory penalties, fines and other legal liabilities, (ii) suspension of production or delays in operation and capacity expansion, (iii) a decrease in our sales, (iv) an increase in pollution cleaning fees and other operation costs, or (v) damage to our public image, any of which could harm our business. In addition, as ESH regulations are becoming more comprehensive and stringent, we may incur a greater amount of capital expenditures in technology innovation and materials substitution in order to comply with such regulations, which may adversely affect our results of operations.
Climate change may negatively affect our business.
There is increasing concern that climate change is occurring and may have dramatic effects on human activity without aggressive remediation steps. The change in temperature would result in increased severity and frequency of extreme weather events such as cyclones, floods, water stress, high temperature and increasing risk of extinction for the world’s species. Public expectations for reductions in greenhouse gas emissions and climate-related risks could result in increased energy, water, transportation and raw material costs, which raised shareholder’s concern and caused several international standards and questionnaires being revised to request enterprises disclosing their risks and financial impacts.
Furthermore, as climate change continues to be severe, the international community not only pays attention to the energy transition, but also successively establishes mechanisms for monetizing the impact of carbon emissions on society and the environment, such as carbon pricing mechanism, carbon border adjustment mechanism, etc. For example, we have an advanced 12-inch wafer fab in Singapore. The Singapore government introduced a carbon tax in 2019, making it the first country in Southeast Asia to implement such a measure. In Taiwan, the “Climate Change Response Act” was promulgated in 2023 and the “Fee-Charging Rates of Carbon Fees” were announced in 2024. The standard carbon fee rate is set at NT$300 per ton of CO2e for general entities. Since our self-determined reduction plan was approved, we are eligible for the preferential carbon fee rate of NT$50 per ton of CO2e. The impacts on us include increases in operating and investment costs.
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In addition, government’s energy management measures may cause power shortage and affect our business operation. For example, the PRC government requested enterprises to reduce electricity consumption in 2022. Although our plants in China have not been directly affected, there is no guarantee that such reduction in consumption will not occur in the future.
Accordingly, we have developed climate change risk assessment tool and related departments participated in the identification work. Adaptation and mitigation measures are developed in response to the identified climate change risk. Furthermore, we also disclose risk and opportunity of climate change according to the framework of TCFD (Task Force on Climate-related Financial Disclosures) in our Sustainability Report and our official website. Looking ahead, we will adopt the IFRS S2 Climate-related Disclosures framework under IFRS Sustainability Disclosure Standards to disclose climate-related information. However, there can be no guarantee that our initiatives and efforts can always be effective and in compliance with the regulatory requirements and international standards in this regard.
Disruptions in the international trading environment may seriously decrease our international sales.
We have operations worldwide and a significant percentage of our operating revenues is generated from sales to locations outside the R.O.C. and we expect this trend to continue in the foreseeable future. The success and profitability of our international activities depend on certain factors beyond our control, such as general economic conditions, labor conditions, political stability, tariff, tax laws, import duties, intellectual property rights, export control and foreign exchange controls of the countries in which we sell our products, and the political and economic relationships between these countries. As a result, our manufacturing services will continue to be vulnerable to disruptions in the international trading environment, including adverse changes in foreign government regulations, political unrest and international economic downturns.
These disruptions in the international trading environment affect the demand for our manufacturing services and change the terms upon which we provide our manufacturing services overseas, which could seriously decrease our international sales.
Political, Economic, Regulatory and Legal Risks
We face substantial political risks associated with doing business in Taiwan, particularly due to the tense relationship between the R.O.C. and the PRC which could negatively affect the value of your investment.
Our principal executive offices and most of our assets and operations are located in Taiwan. Accordingly, our business, financial condition and results of operations and the market price of our common shares and the ADSs may be affected by changes in R.O.C. governmental policies, taxation, inflation or interest rates and by social instability and diplomatic and social developments in or affecting Taiwan which are outside of our control. Taiwan has a unique international political status. Since 1949, Taiwan and the Chinese mainland have been separately governed. The PRC claims that it is the sole government in China and that Taiwan is part of China. Although significant economic and cultural relations have been established between the R.O.C. and the PRC, such as the adoption of the Economic Cooperation Framework Agreement and memorandum regarding cross-strait financial supervision, we cannot assure you that relations between the R.O.C. and PRC will not become strained again, in particular, considering the increasingly tense relationship between the United States and the PRC. For example, the PRC government has refused to renounce the use of military force to gain control over Taiwan and, in March 2005, passed an Anti-Secession Law that authorized non-peaceful means and other necessary measures should Taiwan move to gain independence from the PRC. Past developments in relations between the R.O.C. and the PRC have on occasions depressed the market prices of the securities of companies in the R.O.C. Such initiatives and actions are commonly viewed as having a detrimental effect to reunification efforts between the R.O.C. and the PRC. Relations between the R.O.C. and the PRC and other factors affecting military, political or economic conditions in Taiwan could materially and adversely affect our financial condition and results of operations, as well as the market price and the liquidity of our securities.
Our business depends on the support of the R.O.C. government and other government authorities in countries and regions where we operate, and a decrease in these supports may reduce our net income.
We, like many R.O.C. technology companies, have benefited from substantial tax incentives provided by the R.O.C. government and other government authorities in countries and regions where we operate under various different tax incentive programs, which are subject to the review and approval by the relevant tax authorities on the case by case basis. Although we will make our best efforts to meet the requirements under different incentive schemes and make the relevant applications, we cannot assure you that the tax authorities will grant the approval as we apply. Our application may be denied for reasons outside of our control, including changes in tax incentive regulations and criteria for qualifications. Additionally, the tax incentives granted, taken as a whole, may not be as favorable to us as those currently in effect. If any of the above occurs, our net income may decrease.
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Our future tax obligations may adversely affect our net income.
We operate in various jurisdictions, which involve different tax regimes and application of tax regulations. Applicable taxes for which we make provisions could increase significantly as a result of changes in applicable tax laws in the countries where we operate.
Some of the above-mentioned tax incentives may be subject to the investment milestone and compliance with the terms and conditions set forth in the agreements with the government. Failure to fulfill the investment milestone or the terms and conditions would result in termination or revocation of the incentives. The local authority may have the rights to revoke these incentive rewards even if the company received tax benefits that it had enjoyed during the applicable period by the applicable tax laws or regulations.
In addition, the Organisation for Economic Co-operation and Development (“OECD”) created the Base Erosion and Profit Shifting (BEPS) Actions, which contemplate changes to numerous international tax principles, such as the Global Minimum Tax. These changes may increase our income tax rate in future, which may adversely affect our net income.
The Ministry of Finance of the Republic of China announced that the renewed “Agreement between the Taipei Representative Office in Singapore and the Singapore Trade Office in Taipei for the Elimination of Double Taxation with Respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance” (the “Renewed Agreement”) entered into force on February 13, 2026 and will become effective on January 1, 2027. Pursuant to the transitional provisions of the Renewed Agreement, the tax-sparing clause provided as a preferential mechanism under the original agreement will cease to apply after three taxable years from the effective date of the Renewed Agreement. Consequently, the phase-out of such preferential tax treatments is expected to increase the Company’s effective income tax rate in future periods. Upon the substantive enactment of the Renewed Agreement on February 13, 2026, the Company recognized an increase in deferred tax assets of NT$1,947 million (US$62 million), reflecting higher tax credits expected to be available in future periods as compared to those prior to the enactment of the Renewed Agreement.
Compliance with U.S. Conflict Minerals Law may affect our ability or the ability of our suppliers to purchase raw materials at an effective cost.
We are subject to U.S. disclosure rules on conflict minerals adopted by the SEC, pursuant to which we are required to conduct due diligence of our supply chain and file an annual report to disclose whether conflict minerals utilized by us originated in the Democratic Republic of the Congo (DRC) or an adjoining country. We have filed the conflict mineral disclosure report every year since 2014 in order to comply with such rules, and we will continue to verify the relevant information with our vendors and suppliers and file the required report. However, we cannot assure you that we will be able to collect all the information required to comply with such regulations. If we are not able to confirm such information with vendors, or if we discover that some vendors are sourcing conflict minerals from prohibited countries, we may decide or be required to discontinue our relationship with such vendors, which may negatively impact our ability to obtain adequate supplies of materials needed for the manufacturing of our products and services. The failure to obtain necessary information or to maintain adequate supplies of materials from supply chains outside the DRC and adjoining countries may delay our production, increasing the risk of losing customers and business.
Similarly, many jurisdictions have promulgated regulations with the intention to deter human rights violations within supply chains. Possible violation by our suppliers may not be known to us and is beyond our control. While we believe our suppliers comply with applicable human rights requirements, there can be no guarantee that they will continue to do so, or that we will be able to obtain the necessary information on their activities to ensure compliance with any future requirements.
Cyberattacks and data security breaches may adversely affect our operations and damage our reputation.
Our business and operations depend upon reliable and uninterrupted information technology services, including the integrity of our web-based and electronic customer service systems. Although we have implemented what we believe are reasonable precautions to prevent accidental and/or malicious disruption of these services, there can be no assurance that our preventive measures will preclude failure of the information technology, web-based and electronic customer service systems upon which our business depends. Our systems might also be damaged by natural or man-made events or by computer viruses, physical or electronics break-ins, cyber-attacks and similar disruptions affecting the global Internet. In the past, we have experienced security breaches by third parties, including a distributed denial-of-service (DDoS) attack against our official website in October 2024. Although we were able to rectify such security breaches without any material impact on our operations, we cannot assure you that our information technology systems will be completely secure from future security breaches or cyberattacks. Disruption of these systems could adversely affect our ability to operate our business and to serve our customers, thereby negatively affecting our financial performance.
In addition, in the course of our operations, we receive confidential information from and about our customers, vendors, partners and employees. Although we take what we believe are reasonable precautions to protect such information from disclosure to or interruption, there are no guarantees our precautions will prevent accidental or malicious access to such information. In the event of such unauthorized access, our reputation could be adversely affected, and customers and others may not entrust us with their confidential information, which would negatively affect our operations, and we may incur costs to remedy the breach. Furthermore, the loss of confidential information of third parties may result in legal claims against us, in which case we will incur additional costs and expenses to defend such litigation.
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Moreover, many jurisdictions have proposed stringent regulations concerning data privacy, and such regulations may impose additional legal requirements that make our operations more expensive and/or less efficient. In addition, should we experience a breakdown in our systems or failure in our precautions that results in a violation of such regulations, we may suffer adverse customer reaction and face governmental penalties.
Intellectual property disputes could result in lengthy and costly arbitration, litigation or licensing expenses or prevent us from providing services to customers.
As is typical in the semiconductor industry, we or our customers may receive claims of infringement from time to time or otherwise become aware of potentially relevant patents or other intellectual property rights held by other parties that may cover some of our technology, products and services or those of our end customers. The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights which has resulted in protracted and expensive arbitration and litigation for many companies.
Any litigation or arbitration regarding patents or other intellectual property could be costly and time consuming and could divert our management and key personnel from our business operations. We have in the past and may from time to time in the future become involved in litigation that requires our management to commit significant resources and time.
Because of the complexity of the technology involved and the uncertainty of litigation generally, any intellectual property arbitration or litigation involves significant risks. Any claim of intellectual property infringement against us may require us to:
incur substantial legal and personnel expenses to defend the claims or to negotiate for a settlement of claims;
pay substantial damages or settlement to the party claiming infringement;
refrain from further development or sale of our products;
enter into costly royalty or license agreements that might not be available on commercially reasonable terms or at all;
cross-license our technology with a competitor to resolve an infringement claim, which could weaken our ability to compete with our competitors;
indemnify our distributors, end customers, licensees and others from the costs of and damages of infringement claims; and
curtail or modify our operations in response to regulatory inquiries relating to the alleged infringement, which may result in additional costs and expenses.
In addition, because we have a global operation, we may be subject to intellectual property disputes and litigation in foreign jurisdictions with divergent laws and practices, which will make it more costly and time consuming for us to initiate or defend such litigations. Furthermore, if we are engaged or involved in a high-profile intellectual property dispute or litigation in foreign countries with stringent national security regulations, such as the U.S. and China, we may be subject to heightened scrutiny by government agencies in such countries, which may lead to adverse actions taken by such government agencies, including prolonged investigation and litigation, which can negatively affect our operations and damage our reputation. Any intellectual property claim or litigation could harm our business, results of operations, financial condition and prospects.
Geopolitical conflicts, tensions and developments could affect our operations, business and profitability.
Rising political or economic conflicts and tensions between the United States and China have threatened and destabilized trading relationships and economic activities between the two countries. Because we have operations in both countries, such conflicts and tensions may negatively impact our business. At various times during recent years, the United States and China have had disagreements over political and economic issues, including but not limited to, the imposition of tariffs by the U.S. on goods imported from China. Since January 2025, President Trump has imposed rounds of tariffs on imports from China, including 10% tariff in February 2025 and another 10% in March 2025. On April 2, 2025, President Trump imposed an additional 34% tariff on imports from China, and a 32% tariff on imports from Taiwan. Subsequently, on April 9, 2025, President Trump further increased the additional tariff on imports from China to 125%, but adjusted the 32% tariff on Taiwan goods to 10%, with the remaining 22% subject to a temporary 90-day pause. The United States announced the suspension of the heightened reciprocal tariffs on imports from the PRC until November 10, 2026. In addition, the tariff on imports from Taiwan was set at 20% in August 2025, and the Taiwanese authorities have indicated that they continue to engage in discussions with the United States to explore the possibility of a further reduction. It should be noted that the U.S. government may also impose tariffs targeting the imports of semiconductors from Taiwan, including those manufactured by us. In April 2025, the U.S. Department of Commerce announced the initiation of investigations into the imports of semiconductors and semiconductor manufacturing equipment, which may lead to the imposition of tariffs on imports of such products to the U.S. and could have an adverse effect on us. On February 20, 2026, the U.S. Supreme Court ruled that certain of the tariffs imposed by the Trump administration under the International Emergency Economic Powers Act were unlawful. Following the Supreme Court’s decision, the United States imposed new, temporary tariffs on imports from all countries under Section 122 of the Trade Act of 1974 and could take action to invoke other laws to collect tariffs. There remains substantial uncertainty regarding the impacts of this decision on the availability, timing, and amount of potential refunds, if any, for the invalidated tariffs, the scope and duration of newly announced tariffs, and the possibility of further additional or modified tariffs or retaliatory actions.
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Moreover, in recent years, the U.S. government has expanded controls on exports to China of certain goods and technologies, including advanced semiconductors and related tools and equipment. Most recently, in January 2025, the U.S. Department of Commerce’s Bureau of Industry and Security, or BIS, issued additional rules expanding controls worldwide on advanced computing integrated circuits, and imposing new due diligence requirements on semiconductor foundries and outsourced semiconductor assembly and test (“OSAT”) companies, including us. In particular, while we are listed under the new BIS rule as an approved OSAT company, the new due diligence requirements and controls on semiconductors could significantly increase our compliance costs, restrict the customers we may be able to serve, and we may be investigated, fined or penalized by the U.S. government for potential violations, which would in turn negatively affect our business and operations. On January 20, 2025, President Trump issued a memorandum titled “America First Trade Policy” directing the Department of Commerce to review existing measures to enhance export controls and eliminate loopholes. Under the Trump Administration, the U.S. government may enact new and more restrictive export control regulations that may reduce our ability to ship and sell products to certain customers in China and Asia and increase our cost to implement additional measures to comply with such new regulations. U.S.-China tension has also affected cross-strait relations, and the rise in escalations have increased the uncertainty of future business environment affecting the Company’s operations and investments including revenue, delivery time, goodwill and investment plans. For example, a sharp increase in U.S. or European tariffs may favor local/domestic manufacturers while hurting exports which may drive up costs of the Company’s products which are manufactured in Asia. This would reduce demand from our customers towards us and impact our business and operations. In addition, the United States export control laws regulate exports to certain countries if the content originating from the U.S. exceeds a certain ratio of the product or if the goods are direct products of certain U.S.-origin good, technology or software, which will affect our direct or indirect supply to specific customers. Restrictions on the export of high-tech materials or equipment may also affect our production and capacity expansion plans, which may disrupt shipments and damage our goodwill, while investment restrictions and regulatory changes may potentially affect our strategic planning, operational and financial performance. Furthermore, political tensions in the Taiwan Strait, including any threat of potential military confrontation between China and Taiwan, as well as U.S. involvement of any such military operations, could have a material adverse effect on our business by, among other things, making it more difficult for us to coordinate our operations between the United States and China and discouraging customers to place orders with us.
In addition, the ongoing war between Ukraine and Russia has resulted in the imposition of trade barriers, such as sanctions and import and export controls, which could increase our manufacturing costs, limit our access to certain supplies, make our pricing less competitive, increase the cost of energy and power, and limit our ability to offer our products and services in some markets or source key materials and key production equipment, which may have adverse direct or indirect effects on our sales. Recent developments in the Middle East, including U.S. military actions involving Iran, have increased geopolitical uncertainty and instability in the region. The situation remains dynamic, and the ultimate scope, duration, and impact of these events are uncertain. Further escalation, retaliation, or expansion of hostilities could contribute to heightened volatility in global energy supplies and prices and global political, economic and financial conditions. In particular, the closure of the Strait of Hormuz starting in March 2026 could threaten the semiconductor industry overall by limiting the supplies of natural gas, and if prolonged, could interrupt the energy supply to our fab and disrupt chip production, cause major delays, and/or increase costs.
We cannot predict the geopolitical development in the future and if the geopolitical landscape further deteriorates, potential supplies such as materials could be disrupted and ceased and demand for our products by customers in various countries could be affected, which will negatively affect our financial performance.
Risks Related to the Common Shares, ADSs and Our Trading Markets
Restrictions on the ability to deposit common shares into our ADS program may adversely affect the liquidity and price of the ADSs.
The ability to deposit common shares into our ADS program is restricted by R.O.C. law. Under current R.O.C. law, no person or entity, including you and us, may deposit common shares into our ADS program without specific approval of the R.O.C. FSC except for the deposit of the common shares into our ADS program and for the issuance of additional ADSs in connection with:
distribution of share dividends or free distribution of our common shares;
exercise of the preemptive rights of ADS holders applicable to the common shares evidenced by ADSs in the event of capital increases for cash; or
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delivery of our common shares which are purchased in the domestic market in Taiwan directly by the investor or through the depositary or are already in the possession of the investor to the custodian for deposit into our ADS program, subject to the following conditions: (a) the re-issuance is permitted under the deposit agreement and custody agreement, (b) the depositary may accept deposit of those common shares and issue the corresponding number of ADSs with regard to such deposit only if the total number of ADSs outstanding after the issuance does not exceed the number of ADSs previously approved by the R.O.C. FSC, plus any ADSs issued pursuant to the events described in (A) and (B) above and (c) this deposit may only be made to the extent previously issued ADSs have been withdrawn.
As a result of the limited ability to deposit common shares into our ADS program, the prevailing market price of our ADSs on New York Stock Exchange, or the NYSE, may differ from the prevailing market price of the equivalent number of our common shares on the Taiwan Stock Exchange.
Holders of our ADSs will not have the same proposal or voting rights as the holders of our common shares, which may affect the value of your investment.
Except for treasury common shares and common shares held by our subsidiaries which meet certain criteria provided under the R.O.C. Company Act, each common share is generally entitled to one vote and no voting discount will be applied. However, except as described in this Annual Report and in the deposit agreement, holders of our ADSs will not be able to exercise voting rights attached to the common shares evidenced by our ADSs on an individual basis. Holders of our ADSs will appoint the depositary or its nominee as their representative to exercise the voting rights attached to the common shares represented by the ADSs. The voting rights attached to the common shares evidenced by our ADSs must be exercised as to all matters brought to a vote of shareholders collectively in the same manner.
Moreover, holders of the ADSs do not have individual rights to propose any matter for shareholders’ votes at our shareholders’ meetings. However, holders of at least 51% of the ADSs outstanding at the relevant record date may request the depositary to submit to us one proposal per year for consideration at our annual ordinary shareholders’ meeting, provided that such proposal meets certain submission criteria and limitations, including the language and the length of the proposal, the time of submission, the required certification or undertakings, and the attendance at the annual ordinary shareholders’ meeting. However, if the proposal submitted by the depositary does not qualify, we have no obligation to allow the depositary to modify such proposal.
Furthermore, if holders of at least 51% of the ADSs outstanding at the relevant record date instruct the depositary to vote in the same manner regarding a resolution, including election of directors, the depositary will appoint our Chairman, or his designee, to represent the ADS holders at the shareholders’ meetings and to vote the common shares represented by the ADSs outstanding in the manner so instructed. If by the relevant record date, the depositary has not received instructions from holders of ADSs holding at least 51% of the ADSs to vote in the same manner for any resolution, then the holders will be deemed to have instructed the depositary to authorize and appoint our Chairman, or his designee, to vote all the common shares represented by ADSs at his sole discretion, which may not be in your interest. As a result of these rules and restrictions, holders of ADSs have limited ability to vote or be represented with respect to any actions to be taken by shareholders of the Company.
The rights of holders of our ADSs to participate in our rights offerings may be limited, which may cause dilution to their holdings.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. Under the deposit agreement, the depositary will not offer those rights to ADS holders unless both the rights and the underlying securities to be distributed to ADS holders are either registered under the Securities Act of 1933, as amended (the “Securities Act”), or exempt from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or underlying securities or to endeavor to cause such a registration statement to be declared effective. Accordingly, holders of our ADSs may be unable to participate in our rights offerings and may experience dilution in their holdings.
Changes in exchange controls that restrict your ability to convert proceeds received from your ownership of ADSs may have an adverse effect on the value of your investment.
Your ability to convert proceeds received from your ownership of ADSs depends on existing and future exchange control regulations of the Republic of China. Under the current laws of the Republic of China, an ADS holder or the depositary, without obtaining further approvals from the R.O.C. Central Bank of China, or the CBC, or any other governmental authority or agency of the Republic of China, may convert NT dollars into other currencies, including U.S. dollars, in respect of:
the proceeds of the sale of common shares represented by ADSs or received as share dividends with respect to the common shares and deposited into the depositary receipt facility; and
any cash dividends or distributions received from the common shares represented by ADSs.
In addition, the depositary may also convert into NT dollars incoming payments for purchases of common shares for deposit in the depositary receipt facility against the creation of additional ADSs. If you withdraw the common shares underlying your ADSs and become a holder of our common shares, you may convert into NT dollars subscription payments for rights offerings. The depositary may be required to obtain foreign exchange approval from the CBC on a payment-by-payment basis for conversion from NT dollars into foreign currencies of the proceeds from the sale of subscription rights of new common shares. Although it is expected that the CBC will grant approval as a routine matter, required approvals may not be obtained in a timely manner, or at all.
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Under the Republic of China Foreign Exchange Control Law, the Executive Yuan of the Republic of China may, without prior notice but subject to subsequent legislative approval, impose foreign exchange controls or other restrictions in the event of, among other things, a material change in international economic conditions.
Our public shareholders may have more difficulties protecting their interests than they would as shareholders of a U.S. corporation.
Our corporate affairs are governed by our articles of incorporation and bylaws governing R.O.C. corporations. The rights of our shareholders to bring shareholders’ suits against us or our board of directors under R.O.C. law are much more limited than those of the shareholders of U.S. corporations. Therefore, our public shareholders may have more difficulties protecting their interests in connection with actions taken by our management, members of our board of directors or controlling shareholders than they would as shareholders of a U.S. corporation. Please refer to “Item 10. Additional Information—B. Memorandum and Articles of Association—Rights to Bring Shareholders’ Suits” included elsewhere in this Annual Report for a detailed discussion of the rights of our shareholders to bring legal actions against us or our directors under R.O.C. law.
Holders of our ADSs will be required to appoint several local agents in Taiwan if they withdraw common shares from our ADS program and become our shareholders, which may make ownership burdensome.
Non-R.O.C. persons wishing to withdraw common shares represented by their ADSs from our ADS program and hold our common shares represented by those ADSs are required to, among other things, appoint a local agent or representative with qualifications set forth by the applicable R.O.C. laws and regulations to open a securities trading account with a local brokerage firm, pay R.O.C. taxes, remit funds and exercise shareholders’ rights. In addition, the withdrawing holders are also required to appoint a custodian bank or a securities firm with qualifications set forth by the R.O.C. FSC to hold the securities in safekeeping, make confirmations, settle trades and report all relevant information, in which the securities firm is appointed as the custodian, the payments shall be held in safekeeping in a special account opened in a bank approved by the R.O.C. FSC. Without making this appointment and opening of the accounts, the withdrawing holders would not be able to subsequently sell our common shares withdrawn from a depositary receipt facility on the Taiwan Stock Exchange. Under R.O.C. law and regulations, except under limited circumstances, PRC persons are not permitted to withdraw the common shares underlying the ADSs or to register as shareholders of our company. Under the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors promulgated by the R.O.C. Executive Yuan on April 30, 2009, as amended, only qualified domestic institutional investors, or QDIIs and limited entities or individuals, are permitted to withdraw the common shares underlying the ADSs, subject to compliance with the withdrawal relevant requirements, and only QDIIs, and limited entities or individuals who meet the qualification requirements set forth therein are permitted to own common shares of an R.O.C. company listed for trading on the Taiwan Stock Exchange or the Taipei Exchange, provided that among other restrictions generally applicable to investments made by PRC persons, their shareholdings are subject to certain restrictions as set forth in the abovementioned regulations and that such mainland area investors shall apply for a separate approval if their investment, individually or in aggregate, amounts to or exceeds 10 percent of the common shares of any R.O.C. listed company.
You may not be able to enforce a judgment of a foreign court in the R.O.C.
We are a company limited by shares incorporated under the R.O.C. Company Act. Most of our assets and most of our directors and executive officers are located in Taiwan. As a result, it may be difficult for you to enforce judgments obtained outside Taiwan upon us or such persons in Taiwan. We have been advised by our R.O.C. counsel that any judgment obtained against us in any court outside the R.O.C. arising out of or relating to the ADSs will not be enforced by R.O.C. courts if any of the following situations shall apply to such final judgment:
the court rendering the judgment does not have jurisdiction over the subject matter according to R.O.C. law;
the judgment or the court procedure resulting in the judgment is contrary to the public order or good morals of the R.O.C.;
the judgment was rendered by default, except where the summons or order necessary for the commencement of the action was legally served on us within the jurisdiction of the court rendering the judgment within a reasonable period of time or with judicial assistance of the R.O.C.; or
judgments of the R.O.C. courts are not recognized in the jurisdiction of the court rendering the judgment on a reciprocal basis.
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We may be considered a passive foreign investment company, which could result in adverse U.S. federal income tax consequences for U.S. investors.
We do not believe that we were a passive foreign investment company, or PFIC, for 2025 and we do not expect to become one in the foreseeable future, although there can be no assurance in this regard. Characterization as a PFIC could result in adverse U.S. federal income tax consequences to you if you are a U.S. investor.
For example, if we are a PFIC, our U.S. investors may become subject to increased tax liabilities under U.S. federal income tax laws and regulations and will become subject to burdensome reporting requirements. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, for any taxable year we will be classified as a PFIC for U.S. federal income tax purposes if either (i) 75% or more of our gross income in that taxable year is passive income or (ii) the average percentage of our assets (which includes cash) by value in that taxable year which produce or are held for the production of passive income is at least 50%. The calculation of the value of our assets will be based, in part, on the quarterly market value of our common shares and ADSs, which is subject to change. See “Taxation—U.S. Federal Income Tax Considerations for U.S. Persons—Passive Foreign Investment Company.”
The trading price of the common shares and ADSs may be adversely affected by the general activities of the Taiwan Stock Exchange and U.S. stock exchanges, the trading price of our common shares, increases in interest rates and the economic performance of Taiwan.
Our common shares are listed on the Taiwan Stock Exchange and our ADSs are listed on the NYSE. The trading price of our ADSs may be affected by the trading price of our common shares on the Taiwan Stock Exchange and the economic performance of Taiwan. The Taiwan Stock Exchange is smaller and, as a market, more volatile than the securities markets in the United States and some European countries. The Taiwan Stock Exchange has experienced substantial fluctuations in the prices and volumes of sales of listed securities, and there are currently limits on the range of daily price movements on the Taiwan Stock Exchange. The Taiwan Stock Exchange is particularly volatile during times of political instability, such as when the relationship between Taiwan and the PRC becomes tense. Moreover, the Taiwan Stock Exchange has experienced disturbance caused by market manipulation, insider trading and payment defaults, and the government of Taiwan has from time to time intervened in the stock market by purchasing stocks listed on the Taiwan Stock Exchange. The recurrence of these or similar events could deteriorate the price and liquidity of our common shares and ADSs.
The market price of the ADSs may also be affected by general trading activities on the U.S. stock exchanges, which have experienced significant volatility with respect to trading prices of technology companies. Fluctuation in interest rates and other general economic conditions may also influence the market price of the ADSs.
History and Development of the Company
Our legal and commercial name is United Microelectronics Corporation, commonly known as “UMC.” We were incorporated under the R.O.C. Company Law as a company limited by shares in May 1980 and our common shares are listed on the Taiwan Stock Exchange since 1985. Our principal executive office is located at No. 3 Li-Hsin 2nd Road, Hsinchu Science Park, Hsinchu, Taiwan, R.O.C, and our telephone number is 886-3-578-2258. Our Internet website address is www.umc.com. The information on our website does not form part of this Annual Report. Our ADSs have been listed on the NYSE under the symbol “UMC” since September 19, 2000. In 2025, we were ranked among the top 5% of companies for the eleventh consecutive year in the Corporate Governance Evaluation conducted by the Taiwan Stock Exchange and Taipei Exchange. The assessment was conducted across over 1,700 public companies in Taiwan.
We are one of the world’s largest independent semiconductor foundries and a leader in semiconductor manufacturing process technologies. Our primary business is the manufacture, or “fabrication”, of semiconductors, sometimes called “chips” or “integrated circuits”, for others. Using our own proprietary processes and techniques, we make chips to the design specifications of our many customers. Our company maintains a diversified customer base across industries, including communication devices, consumer electronics, computer and others, while continuing to focus on manufacturing for high growth, large volume applications, including networking, telecommunications, internet, multimedia, PCs and graphics. We sell and market mainly wafers which in turn are used in a number of different applications by our customers. The following table presented the percentages of our wafer sales by application for the years ended December 31, 2023, 2024 and 2025.
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Application
Communication
Consumer
Computer
Others
Total
We focus on the development of leading manufacturing process technologies designed for mass production. We were among the first in the foundry industry to enter into commercial operation with such advanced capabilities as producing integrated circuits with line widths of 0.25, 0.18, 0.15, 0.13 micron and 90, 65/55, 45/40, 28, 22 and 14 nanometer. The arrival of 5G technologies have increased the penetration rate in smartphones, wearables, and other devices associated with the Internet of Things which will spur a new wave of semiconductor related applications driving long term silicon content and wafer demand. More powerful semiconductors are required to drive multimedia functions (e.g., processing visual data) and to resolve network bandwidth issues. At the same time, the trend towards portable personal electronic devices have resulted in products that are becoming physically smaller and consuming less power. Process technology must also have the ability to shrink form factors of products aggressively to cater to this trend. Such technology must demonstrate the ability to integrate multiple functions, reduce the size of components needed for operation and lower IC power consumption. Dedicated semiconductor foundries need to achieve this process improvement and at the same time develop multiple process technologies to satisfy varying needs of communication, consumer and computer products. We believe our proprietary process technologies will enable us to continue to offer our customers significant performance benefits for their products, faster time-to-market production, cost savings and other competitive advantages.
We provide high quality service based on our performance. In today’s marketplace, we believe it is important to make available not only the most effective and flexible processes, but also the best solutions to enable customers to design integrated circuits capable of incorporating entire systems on a chip. Through these efforts, we intend to be the foundry solution for SoC customer needs. To achieve this goal, we believe it is necessary to timely develop and offer the IP and design support that customers need to ensure their specific design blocks function seamlessly with the other design blocks of the integrated circuit system in the manner intended. Accordingly, we have a dedicated IP and design support team that focuses on timely development of IP and processes specifically designed for our customers in order to ensure products that operate and perform as intended. Our design service team actively cooperates with our customers and vendors to identify, early in the product/market cycle, the offerings needed to ensure that our coordinated offerings are available in a streamlined and easy-to-use manner. This ensures the timely delivery of service offerings from the earliest time in the customer design cycle, resulting in a shorter time-to-volume production. We also provide our customers with real-time online access to production data and specifications, resulting in superior communication and efficiency. We further address our customers’ needs using our advanced technology and proven methodology to achieve fast cycle time, high yield, production flexibility and close customer communication. For example, we select and configure our clean rooms and equipment and develop our processes to maximize the flexibility in meeting and adapting to rapidly changing customer and industry needs. As a result, we believe that our cycle time, or the period from customer order to wafer delivery, and our responsiveness to customer request changes are among the fastest in the dedicated foundry industry. We believe our leading technology and high-volume capability is a major competitive advantage.
Our technology and service have attracted two principal types of foundry industry customers: fabless design companies and integrated device manufacturers. Fabless design companies design, develop and distribute proprietary semiconductor products but do not maintain internal manufacturing capacity. Instead, these companies depend on third party manufacturing sources. Integrated device manufacturers, in contrast, generally have integrated internally some or all functions—manufacturing as well as design, development, sales and distribution.
Our primary customers, in terms of our sales revenues, include premier integrated device manufacturers, such as Texas Instruments and Intel, plus leading fabless design companies, such as MediaTek, Realtek and Novatek. In 2025, our company’s top ten customers accounted for 57.0% of our operating revenues. We believe our success in attracting these customers is a direct result of our commitment to high quality service and our intense focus on customer needs and performance.
In 2014, we established United Semiconductor (Xiamen) Co., Ltd., or USCXM, based in Xiamen, Fujian Province, China that focuses on 12-inch wafer foundry services. The initial groundbreaking event of USCXM took place in March 2015 and the grand opening ceremony took place in November 2016. USCXM successfully commenced commercial mass production by the end of 2016 and has carried out production on both 40nm and 28nm technology nodes in 2017. In February 2020, the board of directors of Hejian Technology (Suzhou) Co., Ltd., or Hejian, approved an investment of US$500 million in USCXM which was completed in March 2023. In addition, we obtained approval from the R.O.C. government on October 26, 2022 for a US$120 million investment by Hejian and a US$664 million investment by UMC to purchase equity interest of USCXM from existing shareholders. After the completion of the transaction in July 2023, the Company and Hejian hold 100% of the shares of USCXM, and USCXM has increased its contribution to the overall financial performance of UMC. As one of our four 12-inch fabs in geographically diverse locations, USCXM provides global customers with high-quality fabrication services and varied manufacturing options.
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On January 25, 2024, we entered into a collaboration with Intel Corporation (the “Collaboration”), pursuant to which the parties agreed to jointly develop and commercialize new 12nm-related technology. In connection with the Collaboration, the parties granted each other certain IP licenses and rights necessary to carry out their respective obligations. The Collaboration is expected to create a 12nm semiconductor process platform to address high-growth markets such as mobile, communication infrastructure and networking. The Collaboration agreements provide for the combination of Intel’s at-scale U.S. manufacturing capacity and our extensive foundry experience on mature nodes, enabling an expanded process portfolio. The Collaboration is also expected to offer global customers greater choice in their sourcing decisions, with access to a more geographically diversified and resilient supply chain. We believe that the Collaboration will enable our customers to smoothly migrate to a 12nm node, and allow us to establish a more significant footprint in the U.S.-based production of the 12nm process, which is expected to begin in 2027. The Collaboration provides for a long-term agreement between UMC and Intel. The agreements may be terminated upon the occurrence of specified events, each as further set forth therein, including uncured material breach or violation of laws, inability to gain required regulatory approval, bankruptcy or similar circumstances, certain change of control transactions or failure to achieve certain business or operational milestones.
On February 27, 2024, our board approved capital injection of up to US$22 million in UMC Capital Corp. to participate in its capital increase. On the same date, the Board of UMC Capital Corp. approved the investment in 7V AI Capital LLC of not more than US$20 million.
On March 22, 2024, our board approved capital injection of up to NT$800 million in Faraday Technology Corp. to participate in its capital increase.
On April 2, 2024, the board of directors of our PRC subsidiary, Hejian, approved the disposal of its ownership in UnitedDS Semiconductor (Shandong) Co., Ltd. to SiS Semiconductor (Shandong) Co., Ltd., an associate of UMC, as part of its strategic plan. The disposal was completed in August 2024 with a total transaction price of RMB¥77 million, which was approximately NT$341 million.
On December 18, 2024, we entered into a corporate power purchase agreement (“CPPA”) with Fengmiao I Offshore Wind Farm (“Fengmiao I”), developed by Copenhagen Infrastructure Partners’ flagship fund, Copenhagen Infrastructure V. Pursuant to the CPPA, we agreed to purchase more than 30 billion kilowatt-hours of power from Fengmiao I over at least 30 years, marking the largest renewable energy transaction that we have ever made. This agreement will help us achieve our goal of 50% renewable energy use by 2030 as part of our roadmap to net zero emissions and 100% renewable energy by 2050.
On December 4, 2025, we signed a memorandum of understanding (“MOU”) with Polar Semiconductor, LLC to explore collaboration on delivering scalable U.S.-based 8-inch production of high-quality wafers that are essential across pillar industries including automotive, data centers, consumer electronics, and aerospace and defense.
On December 8, 2025, we announced a licensing agreement with imec, a world-leading research and innovation hub in advanced semiconductor technologies, for the transfer of imec’s iSiPP300 silicon photonics process, featuring co-packaged optics (CPO) compatibility, to accelerate our silicon photonics roadmap. The licensed technology will enable us to bring a 12-inch silicon photonics platform to market targeting next-generation connectivity.
On December 17, 2025, our board approved capital injection of up to NT$700 million in Unimicron Technology Corp. to participate in its capital increase.
Please refer to “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources” for a discussion of our capital expenditures in the past three years and the plan for the current year.
Our Strategy
To maintain and enhance our position as a market leader, we have adopted a business strategy that focuses on a partnership-driven business model designed to accommodate our customers’ business needs and objectives and to promote their interests as our partners. We believe that our success and profitability are inseparable from the success of our customers. The goal of this business model is to create a network of partnerships and alliances among integrated device manufacturers, IP and design houses, as well as foundry companies. We believe that we and our partners will benefit from the synergy generated through such long-term partnerships and alliances and from the added value to be shared among the partners. The key elements of our strategy are:
Operate as a Customer-Driven Foundry. We plan to operate as a customer-driven foundry. The increasing complexity of 40 nanometer, 28 nanometer, and more advanced technologies has impacted the entire semiconductor industry, as ICs can now be designed with greater gate density and higher performance while incorporating the functions of an entire system on a single chip. These designs have created new markets in 5G communications, AIoT and automotive applications, as well as increased silicon content per device. We collaborate closely with our customers as well as partners throughout the entire supply chain, including equipment, electronic design automation tool and IP vendors, to work synergistically toward each customer’s SoC solution. We also possess experience and know-how in system design and architecture to integrate customer designs with advanced process technologies and IP. We believe the result is a higher rate of first-pass silicon success for our SoC solutions.
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Our customer-driven foundry solutions begin with a common logic-based platform, where designers can choose the process technologies and transistor options that best fit their specific applications. From there, technologies such as radio frequency complementary metal-oxide-semiconductor, or RF CMOS, and embedded flash memories can be used to further fine-tune the process for customers’ individual needs. Furthermore, as IP has become a critical resource for SoCs, our portfolio includes basic design building blocks as well as more complex IP with optimized portability and cost, developed both internally and by third-party partners. With advanced technology, a broad IP portfolio, system knowledge and advanced 300-millimeter manufacturing, we offer comprehensive solutions that help customers deliver successful results in a timely fashion.
Build a Customer-Focused Partnership Business Model. We have focused on building partnership relationships with our customers, and we strive to help our customers achieve their objectives through close cooperation. Unlike the traditional buy-and-sell relationship between a foundry and its customers, we believe our partnership business model helps us understand our customers’ requirements and, accordingly, better accommodate their needs in a number of ways, such as customized processes and services that optimize the entire value chain (not just the foundry portion) and IP-related support. We believe that this business model enables us to deliver our products to our customers at the earliest time they require for their design cycle, resulting in shorter time-to-market and time-to-volume production. Furthermore, we believe we can provide more cost-effective services by focusing our research and development expenditures on the specific requirements of our customers. We believe our partnership business model will help us not only survive a market downturn, but also achieve a better competitive position.
Continue to Focus on High-Growth Applications and Customers and Actively Explore New Market Opportunities. We believe one measure of a successful foundry company is the quality of its customers. We focus our sales and marketing efforts on customers that are established or emerging leaders in industries with high growth potential. Our customers include industry leaders such as MediaTek, Realtek, Novatek and Texas Instruments. We seek to maintain and expand our relationships with these companies. We strive to demonstrate to these customers the superiority and flexibility of our manufacturing, technology and service capabilities and to provide them with production and design assistance. We are also making efforts to further diversify our customer portfolio in order to maintain balanced exposure to different applications and different customers. We believe these efforts strengthen our relationships with our customers and enhance our reputation in the semiconductor industry as a leading foundry service provider.
In addition to customer diversification, we have also been actively exploring new market opportunities in consumer electronics, such as the Internet of Things, where we believe our technology platforms and IP portfolio are highly relevant.
Maintain Our Leading Position in Mass-Producible Semiconductor Technology and Selectively Pursue Strategic Investments in New Technologies. We believe that maintaining and enhancing our leadership in semiconductor manufacturing technology for mass production is critical to attracting and retaining customers. Our reputation for technological excellence has enabled us to acquire both established and emerging leaders in the semiconductor industry as customers, who work closely with us on technology development. We believe our processing expertise enables us to provide flexible production schedules to meet our customers’ particular needs. We plan to continue building internal research and development expertise, focusing on logic and specialty process development to accelerate access to next-generation and specialized technologies.
In April 2021, we announced an expansion of 300mm Fab 12A Phase 6 (P6) in Taiwan’s Southern Taiwan Science Park through a collaboration model. Furthermore, on February 24, 2022, our board of directors approved a plan to build a new advanced manufacturing facility next to our existing 300mm fab (Fab 12i) in Singapore. The first phase of this greenfield fab is expected to have a design capacity of 30,000 wafers per month, with production expected to commence in the second half of 2026. The new fab (Fab 12i P3) will utilize 28nm and 22nm process technologies.
We are also pursuing strategic collaborations to expand our U.S. production footprint and enhance supply chain resilience. In January 2024, we entered into a collaboration with Intel Corporation to jointly develop a new 12nm semiconductor process platform that combines Intel’s at-scale U.S. manufacturing capacity and our extensive foundry experience on mature nodes, with U.S.-based 12nm production expected to begin in 2027. In December 2025, we signed a MOU with Polar Semiconductor, LLC to explore collaboration on delivering scalable U.S.-based 8-inch production of high-quality wafers that are essential across pillar industries including automotive, data centers, consumer electronics, and aerospace and defense. These initiatives are intended to provide our customers with greater choice in sourcing and support a more geographically diversified and resilient supply chain.
Our continuous technology development efforts and capital investments have allowed us to acquire new customers and business opportunities. We believe our progress in developing more advanced process technologies has benefited our customers in the fields of computers, communications, consumer electronics and other applications with specific requirements for product performance, density and power consumption.
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Moreover, we expect to strengthen our leading position and increase our market share by collaborating with DENSO Corporation. In 2022, we agreed to jointly work on the production of power semiconductors at USJC’s 300mm fab to serve growing demand in the automotive market. This cooperation leverages our robust portfolio of advanced specialty technologies and our IATF 16949 certified fabs in diversified locations, positioning us well to serve demand across auto applications, including advanced driver assistance systems, infotainment, connectivity and powertrain.
We also recognize that the foundry industry is ever-evolving. Accordingly, we believe we should invest in new research and development technologies intelligently and in a cost-effective manner to maximize the value of the resulting technologies. We balance the expected rate of return on our research and development investments with the importance of developing technology at the right time to enhance our competitive edge without unduly diluting our profitability. We intend to avoid investments in technologies that do not present commercial potential for volume production. We believe that developing the earliest and most advanced semiconductor technology without regard to its potential for near-term volume production may prove costly to our operations and would not strengthen our competitive position. We therefore believe it is beneficial to defer investment in premature equipment needed to claim the earliest advanced technology and instead to purchase more advanced and less expensive versions of such equipment from vendors who design this equipment based on pre-production lessons learned from the earliest technology. This disciplined approach is intended to reduce the risk of capital inefficiencies while ensuring that we can respond effectively when demand for new technologies reaches sustainable volume levels.
Maintain Scale and Capacity Capabilities to Meet Customer Requirements, with a Focus on 12-inch Wafer Facilities for Future Expansion. We believe that maintaining our foundry capacity with advanced technology and facilities is critical to maintaining our industry leadership. Our production capacity is currently among the largest of all semiconductor foundries in the world. We intend to increase our 12-inch wafer production capacity to meet the needs of our customers and to fully capitalize on the expected growth of our industry. We expect our future capacity expansion plans will focus on 12-inch wafer facilities in order to maintain our technology leadership. 12-inch wafers offer manufacturing advantages over 8-inch wafers due to, among other reasons, the greater number of chips on each wafer and the advantages offered by newer 12-inch capable equipment. In addition, 12-inch wafer facilities present a more cost-effective solution in achieving an economic scale of production. We intend to carefully monitor current market conditions in order to optimize the timing of our capital spending.
Business Overview
Manufacturing Facilities
To maintain a leading position in the foundry business, we have placed great emphasis on achieving and maintaining a high standard of manufacturing quality. As a result, we seek to design and implement manufacturing processes that produce consistent, high manufacturing yields to enable our customers to estimate, with reasonable certainty, how many wafers they need to order from us. In addition, we continuously seek to enhance our production capacity and process technology, two important factors that characterize a foundry’s manufacturing capability. Our large production capacity and advanced process technologies enable us to provide our customers with volume production and flexible and quick-to-market manufacturing services. All of our fabs operate 24 hours per day, seven days per week. Substantially all maintenance at each of the fabs is performed concurrently with production.
The following table sets forth operational data of each of our manufacturing facilities as of December 31, 2025.
Commencement ofvolume production
Estimated fullcapacity (1)(2)
per
month
Wafer size
Measured in stated wafer size.
The capacity of a fab is determined based on the capacity ratings given by manufacturers of the equipment used in the fab, adjusted for, among other factors, actual output during uninterrupted trial runs, expected down time due to set up for production runs and maintenance and expected product mix.
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Our fabs are located in the R.O.C., Singapore, PRC and Japan. The following table sets forth the size and primary use of our facilities and whether such facilities, including land and buildings, are owned or leased. The land in the Hsinchu and Southern Taiwan Science Parks is leased from the R.O.C. government. The land in the Pasir Ris is leased from statutory boards of the Singapore government. The land in the Suzhou Industrial Park and Xiang’an District is leased from the PRC government.
Location
Size
(Land/Building)
Primary Use
Land
(Owned or Leased)
Building
Fab 8A, No. 3, 5, Li-Hsin 2nd Rd.,
Hsinchu Science Park,
Hsinchu, Taiwan 300094, R.O.C.
8-inch wafer
production
Fab 8C & Fab 8D, No. 6, 8, Li-Hsin 3rd Rd.,
Fab 8E, No. 17, Li-Hsin Rd.,
Fab 8F, No. 3, Li-Hsin 6th Rd.,
Hsinchu, Taiwan 300096, R.O.C.
Fab 8S, No. 16, Creation 1st Rd.,
Hsinchu, Taiwan 300093, R.O.C.
Fab 8N, No. 333, Xinghua St.,
Suzhou Industrial Park, Suzhou,
Jiangsu Province 215025, P.R.C.
Fab 12A, No. 18, 20, Nan-Ke 2nd Rd., &
No. 57, Nan-ke 3rd Rd., Southern Taiwan Science Park, Sinshih, Tainan, Taiwan 744092 & 744094, R.O.C.
12-inch wafer
Fab 12i, No. 3, Pasir Ris Drive 12,
Singapore 519528 & 61A Pasir Ris Industrial Drive 1, Singapore 519536
Fab 12M, 2000, Mizono, Tado-cho,
Kuwana, Mie, 511-0118, Japan
United Tower, No. 3, Li-Hsin 2nd Rd.,
Administration
office
Neihu Rd. Office, 8F, No. 68, Sec. 1,
Neihu Rd., Taipei,
Taiwan 114066, R.O.C.
Testing Building, No. 1, Chin-Shan, 7th St.,
Hsinchu, Taiwan 300063, R.O.C.
R&D Building, No. 18, Nan-Ke 2nd Rd.,
Southern Taiwan Science Park, Sinshih,
Tainan, Taiwan 744092, R.O.C.
Wavetek, No. 10, Chuangxin 1st Rd.,
Baoshan Township,
Hsinchu, Taiwan 300092, R.O.C.
Process Technology
Process technology is a set of specifications and parameters that we implement for manufacturing the critical dimensions of the patterned features of the circuitry of semiconductors. Our process technologies are currently among the most advanced in the foundry industry. These advanced technologies have enabled us to provide flexible production schedules to meet our customers’ particular needs.
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We have been constantly strengthening our independent R&D capabilities and fabrication in semiconductor process technologies, especially dedicated to the R&D of logic and specialty processes in the recent years. We will adhere to our R&D strategy to establish independent R&D capabilities and will work with important partners, such as IDM and fabless, to develop key process technologies through technology licensing. We will also work with suppliers of photomask, packaging, equipment, material, and EDA to accelerate market launch schedule in order to fulfill our promise to provide customers with innovative and reliable process technologies.
We pioneered the production of numerous semiconductor products. Our continued enhancement of our process technologies has enabled us to manufacture semiconductor devices with smaller geometries. In 2013, we successfully developed and released into production 28nm Poly-SiON and High-k/metal gate technologies. In 2015, we provided a High-k/metal gate with high performance compact, or HPC, solution and improved to a high-performance compact plus, or HPC+, solution by the end of 2017 for speed-intensive and optimized power consumption products. We and Cadence Design Systems collaborate on certification of analog/mixed-signal flow for 28HPC+ process. Certification enables customers to leverage the integrated, comprehensive AMS solution to facilitate accelerated designs on our most advanced 28nm node. In 2018, we developed 22nm ULP (ultra-Low Power) and ULL (ultra-Low Leakage) technology to provide cost effective solutions and to obtain better chip performance for IoT applications. We also joined the IBM chip alliance, for advanced process development. With IBM’s know-how and support, we aim to continue to improve our internally developed 14nm FinFET technology, so as to offer a 14nm competitive low-power enhanced technology for mobile computing and communication products. In March 2017, we commenced shipments of 14nm wafers to customers and achieved production quality yields for the advanced process that is being utilized for consumer electronic applications. Our 14nm FinFET technology delivers 55% higher speed and twice the gate density compared with 28nm process technology. The 14nm process also consumes approximately 50% less power than the 28nm process. Moreover, we are actively developing a 12nm FinFET Compact (12FFC) process, which offers a significant performance boost, smaller chip size, and lower power consumption compared with the 14FFC process. The 12FFC technology is more competitive and fully leverages the advantages of FinFET process technology to drive the adoption of next-generation silicon chips in various fields, such as networking, artificial intelligence, and further high-end consumer electronic products. We are also collaborating with Intel on the 12nm FinFET process to be manufactured in the United States. The collaboration is an important part of our strategy to pursue cost-effective capacity expansion and technology node upgrades, while maintaining our consistent commitment to customers. The 12nm collaboration is currently progressing smoothly. In 2025, Intel completed the technology transfer based on our electrical design rules and UMC-verified process, successfully replicating our 12nm FinFET process with its advantages of high performance, low power consumption and small chip area. Currently, the qualification of technology transfer is being accelerated at Intel’s Arizona fab in the United States and is expected to be completed in 2026. Production of the 12nm FinFET process is expected to begin in 2027.
Our 22nm technology readiness follows silicon validation on the world’s smallest USB 2.0 test vehicle. The latest specialty process offering provides competitive performance and a seamless migration path from 28nm to 22nm. We are offering a 22uLP version that has compatible design rules and the same mask count as the foundry’s 28nm technology, and also a 22uLL version. UMC 22uLP and 22uLL form a superset to support a voltage domain from 1.0V to 0.6V, allowing customers to enjoy the benefits of both technologies on system-on-chip (SoC) designs. The 22nm platform is supported by our foundation IP and is ideal for a wide variety of semiconductor applications including consumer ICs for set-top boxes, digital TVs, surveillance, power- or leakage-sensitive IoT chips (with Bluetooth or Wi-Fi) and wearable products that require longer battery life.
Furthermore, we have successfully developed specialty technologies such as 55/40/28/22nm embedded memory for MCU and automotive products. The 28nm non-volatile memory has completed verification for general-purpose and IoT microprocessors, as well as automotive electronics (Auto G1). We have also developed 40/22nm RRAM for advanced node embedded solutions, which has been validated for general-purpose and IoT microprocessors. In addition, we partnered with Avalanche in 2018 for the joint development and production of MRAM, providing an alternative to embedded flash for 22nm technologies. The 22nm high-density 1Gb HDMRAM product for aerospace and LEO satellite communications has already entered trial production. We also offer 55/40/28/22/14nm eHV device for display drivers. Compared with 28eHV, our 14nm FinFET embedded high-voltage (14eHV) process technology platform greatly improves chip performance, reduces die size, and lowers power consumption by more than 40%. It can be used in display driver ICs to provide higher resolution and higher refresh rates. Moreover, we offer 55/28/22nm BSI-CSI for image sensors, 110/55nm BCD for power management circuits, and RF-SOI technologies of 110/90/55/40nm nodes, covering both custom and platform for RF device applications. All of these specialty technologies enable comprehensive system-on-chip (SoC) solutions.
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We have successfully integrated deep trench capacitors (DTC) into our 2.5D Si interposer solution and have already shipped wafers to major customers, enabling excellent power integrity for various applications in high-performance computing (HPC), cloud computing, and large language models (LLMs) for artificial intelligence (AI). We have launched a wafer-level 3D wafer-to-wafer (W2W) hybrid bonding solution that offers advantages in both bandwidth and form factor reduction, addressing the growing trend of edge computing and the miniaturization requirements of mobile devices. We have collaborated with customers to achieve the mass production of RF components for mobile devices in 2025. For edge AI and high-bandwidth memory applications, Our active interposer, which combines through-silicon via (TSV-middle) technology with logic processes, is currently being validated with multiple customers. We have established a one-stop vertical integration program with our supply chain partners, providing customized low-power logic chips and heterogeneous memory module integration to meet customer requirements in IoT, secure smart infrastructure, and other end devices.
We are actively investing in the research and industrialization of 12-inch silicon photonics technology. In the first half of 2025, we successfully completed the production line configuration required for the 12-inch silicon photonics process, and in the second half of the year, we finalized design tape-outs with customers, officially entering the trial-run stage. Meanwhile, in the second half of 2025, we obtained a license for the iSiPP300 silicon photonics process technology from the globally renowned research institution, imec, showcasing the results of international cooperation. Leveraging our years of semiconductor manufacturing experience, we integrate SOI wafer process technology, 12-inch immersion lithography, Ge and SiGe epitaxy technologies, and our existing 8-inch silicon photonics mass production foundation, combined with imec’s long-standing expertise in silicon photonics processes, to further advance the development of 12-inch silicon photonics technology. This technology encompasses micro-ring modulators, GeSi electro-absorption modulators (EAM), and diverse low-loss fiber interfaces, comprehensively enhancing product performance and application versatility. Currently, we and imec have begun close cooperation and have started trial runs, laying a solid foundation for Taiwan’s semiconductor industry in the silicon photonics field and strengthening its international competitiveness.
The table below sets forth our actual process technology range, categorized by line widths, or the minimum physical dimensions of the transistor gate of integrated circuits in production by each fab in 2025, and the estimated annual full capacity of each fab, actual total annual output and capacity utilization rates in 2023, 2024 and 2025:
Wavetek
Fab 8A
Fab 8C
Fab 8D
Fab 8E
Fab 8F
Fab 8S
Fab 8N
Fab 12A
Fab 12i
Fab 12X
Fab 12M
Total estimated capacity
Total output (actual)
Average capacity utilization
Capacity and Utilization
The fabs in Taiwan that we own directly are named Wavetek, Fab 8A, Fab 8C, Fab 8D, Fab 8E, Fab 8F, Fab 8S and Fab 12A. All of them are located in the Hsinchu Science Park except for Fab 12A which is located in the Southern Taiwan Science Park. The fab in Singapore is named Fab 12i. The fabs in China are named Fab 8N and Fab 12X, located in Suzhou and Xiamen, respectively. The fab in Japan is named Fab 12M located in Mie.
Our average capacity utilization rate was 68.5% in 2023, 68.7% in 2024 and 75.2% in 2025.
Equipment
Because the performance and productivity of our manufacturing capability depends substantially on the technology node of our capital equipment, we always purchase equipment that not only meet the criteria of our existing process requirement, but also have the capability to be upgraded to match our future demand. The principal equipment we use to manufacture semiconductor devices are scanners/steppers, cleaners and track equipment, inspection equipment, etchers, furnaces, wet stations, strippers, implanters, sputters, CVD equipment, probers, testers and so on. We own all of the production equipment except for a few demonstration tools.
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Our policy is to purchase performance proven equipment from vendors with dominant market share to ensure our continued competitiveness in the semiconductor field.
Although some equipment is only available from limited qualified vendors and/or is manufactured in limited quantities, we believe that our relationships with equipment suppliers are strong enough to allow us to leverage our position as a major customer to purchase equipment with competitive terms.
Although we face the challenge of procuring the right equipment in sufficient quantity necessary for ramp-up or expansion of our fabrication facilities under constraint of short lead times, we have not in the past experienced any material problems in procuring the latest generation equipment on a timely basis even in periods of unpredictably high market demand. We manage the risks through procurement process via timely internal cross-division communications, efficient market information collection, early slot booking and constant communications with our suppliers.
Raw Materials
Our manufacturing processes use many raw materials, primarily silicon wafers, chemicals, gases and various types of precious sputtering targets. These raw materials are generally available from several suppliers. Our policy with respect to raw material purchases, similar to that for equipment purchases, is to select only a small number of qualified vendors who have demonstrated quality and reliability on delivery time of the raw materials. We may have long-term supply contracts with our vendors if necessary.
Our general inventory policy is to maintain sufficient stock of each principal raw material for production and rolling forecasts of near-term requirements received from customers. In addition, we have agreements with several key material suppliers under which they hold similar levels of inventory in their warehouses for our use. However, we are not under any obligation to purchase raw material inventory that is held by our vendors for our benefit until we actually order it. We typically work with our vendors to plan our raw material requirements on a monthly basis, with indicative pricing generally set on a quarterly basis. The actual purchase price is generally determined based on the prevailing market conditions. In the past, prices of our principal raw materials have not been volatile to a significant degree. Although we have not experienced any shortage of raw materials that had a material effect on our operations, and supplies of raw materials we use currently are adequate, shortages could occur in various critical materials due to interruption of supply or an increase in industry demand.
The most important raw material used in our production processes is silicon wafer, which is the basic raw material from which integrated circuits are made. The principal makers for our wafers are Shin-Etsu, GlobalWafers, Sumco Group and Soitec. We have in the past obtained and believe that we will continue to be able to obtain a sufficient supply of silicon wafers. We believe that we have close working relationships with our wafer suppliers. Based on such long-term relationships, we believe that these major suppliers will use their best efforts to accommodate our demand.
We use a large amount of water in our manufacturing process. We obtain water supplies from government-owned entities. We also use substantial amounts of dual loop electricity supplied by Taiwan Power Company in the manufacturing process. We maintain back-up generators that are capable of providing adequate amounts of electricity to maintain the required air pressure in our clean rooms in case of power interruptions. We believe our back-up devices are reasonably adequate in preventing business interruptions caused by power outages and emergency situations.
Quality Management
We believe that our advanced process technologies and reputation for high quality and reliable services and products have been important factors in attracting and retaining leading international and domestic semiconductor companies as customers.
We structure our quality management system in accordance with the latest international quality standards and our customers’ strict quality and reliability requirements. Our quality management system incorporates comprehensive quality control programs into the entire business flow of foundry operation including, among others, new process development management, production release control, incoming raw material inspection, statistical process control and methodology development, process change management, technical documentation control, product final inspection, metrology tool calibration and measurement system analysis, quality audit program, nonconformity management, customer complaint disposition, eight-discipline problem solving and customer satisfaction monitoring.
We set high quality standards to ensure consistent high yielding and reliable product performance. Our quality program is continually enhanced through top-down annual Business Policy Management and bottom-up Total Quality Management activities. In addition, our efforts to observe best practices among fabs in the foundry industry have also contributed to the improvement of our overall quality management system.
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Many of our customers perform physical production site qualification process in the early development phase and routine quality conformance audits in the volume production phase. These audits include both quality system review and physical fabrication area inspection for verification of conformity with the international quality standard and customers’ quality requirement. Our quality management system and quality control programs have been qualified and routinely audited by numerous customers who are recognized as world-class semiconductor companies with best-in-class quality standards.
Our Quality Assurance Division and Reliability Technology and Assurance Division collaborate to provide quality and reliability performance to customers. With our wafer processing quality and reliability conformance monitoring program, we monitor the product quality and reliability at various stages of the entire manufacturing process before shipment to customers.
All our fabs are certified in compliance with IATF 16949 and QC080000 IECQ HSPM standards. IATF 16949 sets the criteria for developing a fundamental quality management system emphasizing on customer satisfaction in quality management, continual improvement, defect prevention and variation and waste reduction. QC080000 IECQ HSPM sets the criteria for developing a process management system for hazardous substances and focuses on developing environmentally friendly manufacturing processes. We are committed to continuously improving our quality management system and to delivering high quality product to our customers.
Services and Products
We primarily engage in wafer fabrication for foundry customers. To optimize fabrication services for our customers, we work closely with them as they finalize circuit design and contract for the preparation of masks to be used in the manufacturing process. We also offer our customers turnkey solutions by providing subcontracted assembly and test services. We believe that this ability to deliver a variety of foundry services in addition to wafer fabrication enables us to accommodate the needs of a full array of integrated device manufacturers, system companies and fabless design customers with different in-house capabilities.
Wafer manufacturing requires many distinct and intricate steps. Each step in the manufacturing process must be completed with precision in order for finished semiconductor devices to work as intended. The processes require taking raw wafers and turning them into finished semiconductor devices generally through five steps: circuit design, mask tooling, wafer fabrication, assembly and test. The services we offer to our customers in each of these five steps are described below.
Circuit Design. At this initial design stage, our engineers generally work with our customers to ensure that their designs can be successfully and cost-effectively manufactured in our facilities. We have assisted an increasing number of our customers in the design process by providing them with access to our partners’ electronic design analysis tools, IP and design services, as well as by providing them with custom embedded memory macro-cells. In our Silicon Shuttle program, we offer customers and IP providers early access to actual silicon samples with their desired IP and content in order to enable early and rapid use of our advanced technologies. The Silicon Shuttle program is a multi-chip test wafer program that allows silicon verification of IP and design elements. In the Silicon Shuttle program, several different vendors can test their IP using a single mask set, greatly reducing the cost of silicon verification for us and the participating vendors. In our alliances with them, we coordinate with leading suppliers of IP, design and ASIC services to ensure their offerings are available to our customers in an integrated, easy to use manner which matches customers’ need to our technologies. With a view to lowering customer design barriers, we expanded our design support functions from conventional design support to adding IP development to complement third-party intellectual properties and to provide customers with the widest range of silicon-verified choices. Our offerings range from design libraries to basic analog mixed-mode intellectual properties which, together, have helped shorten our customer’s design cycle time.
Mask Tooling. Our engineers generally assist our customers to design and/or obtain masks that are optimized for our advanced process technologies and equipment. Actual mask production is usually provided by independent third parties specializing in mask tooling.
Wafer Fabrication. As described above, our manufacturing service provides all aspects of the wafer fabrication process by utilizing a full range of advanced process technologies. During the wafer fabrication process, we perform procedures in which a photosensitive material is deposited on the wafer and exposed to light through the mask to form transistors and other circuit elements comprising of a semiconductor. The unwanted material is then etched away, leaving only the desired circuit pattern on the wafer. As part of our wafer fabrication services, we also offer wafer probing services, which test, or probe, individual die on the processed wafers and identify dice that fail to meet required standards. We prefer to conduct wafer probing internally to obtain speedier and more accurate data on manufacturing yield rates.
Assembly and Testing. We offer our customers turnkey solutions by providing the option to purchase finished semiconductor products that have been assembled and tested. We outsource assembly and test services to leading assembly and test service providers, including Siliconware Precision Industries Co., Ltd., or Siliconware, and Advanced Semiconductor Engineering Inc. in Taiwan. After final testing, the semiconductors are shipped to our customers’ designated locations.
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Customers and Markets
Our primary customers, in terms of our sales revenues, include premier integrated device manufacturers, such as Texas Instruments and Intel, plus leading fabless design companies, such as MediaTek, Realtek and Novatek. Although we are not dependent on any single customer, a significant portion of our operating revenues has been generated from sales to a few customers. Our top ten customers accounted for approximately 57.0% of our operating revenues in 2025.
Set forth below is a geographic breakdown of our operating revenues in 2023, 2024 and 2025 by the location where our customers are headquartered.
Region
Taiwan
China (including Hong Kong)
Japan
Korea
USA
Europe
We believe our success in attracting these end customers is a direct result of our commitment to high quality service and our intense focus on customer needs and performance. As an independent semiconductor foundry, most of our operating revenue is generated by our sales of wafers. The following table presented the percentages of our wafer sales by types of customers for the years ended December 31, 2023, 2024 and 2025.
Customer Type
Fabless design companies
Integrated device manufacturers
We focus on providing a high level of customer service in order to attract customers and maintain their ongoing loyalty. Our culture emphasizes responsiveness to customer needs with a focus on flexibility, speed and accuracy throughout our manufacturing and delivery processes. Our customer-oriented approach is especially evident in two types of services: customer design development services and manufacturing services. We believe that our large production capacity and advanced process technology enable us to provide better customer service than many other foundries through shorter turn-around time, greater manufacturing flexibility and higher manufacturing yields.
We work closely with our customers throughout the design development and prototyping processes. Our design support team closely interacts with customers and IP vendors to facilitate the design process and to identify their specific requirements for IP offerings. We are responsive to our customers’ requirements in terms of overall turn-around time and production time-to-market by, for example, helping our customers streamline their IP offering processes and delivering prototypes in a timely and easy-to-use fashion. We also maintain flexibility and efficiency in our technical capability and respond quickly to our customers’ design changes.
For IP offerings, we work with several leading IP vendors from digital, memory and analog fields in the semiconductor industry to deliver quality IP blocks that have been silicon validated using our advanced processes. Our alliances with major electronic design automation vendors provide our customers with digital/analog reference design procedures and easy-to-use design solutions. By continuously enhancing our IP offerings, reference design procedures and design services through collaboration with major vendors, we aim to provide complete, accurate and user-friendly design solutions to our customers.
As a design moves into manufacturing production, we continue to provide ongoing customer support through all phases of the manufacturing process. The local account manager works with our customer service representative to ensure the quality of our services, drawing upon our marketing and customer engineering support teams as required.
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We offer an online service, “MyUMC,” which gives our customers easy access to our foundry services by providing a total online supply chain solution. MyUMC offers 24-hour access to detailed account information such as manufacturing, engineering and design support documents through each customer’s own customized start page. The features that are available to customers through MyUMC include (i) viewing the status of orders from the start of production to the final shipping stages; (ii) designing layouts to shorten customers’ tape out time; (iii) collecting customer engineering requests; (iv) gathering and downloading documents for design purposes; and (v) accessing online in real-time the same manufacturing data used by our fab engineers.
We also have system-to-system connecting services to provide direct data exchange between our system and our customers’ systems. These services, which include our “Design Support Online Services,” facilitate our design collaborations with our customers to help reduce the cost of chip designs and reduce the time to market. In order to continue to improve our information security management system, we received the certification of ISO/IEC 27001:2005 in 2008 and renewed ISO/IEC 27001:2022 in 2025.
In addition, we have established a data-driven advanced semiconductor smart manufacturing system to provide world-class quality production, ensure information security and service quality, as well as improve customer satisfaction, operational and R&D efficiency. We achieved this by integrating a spectrum of innovative digital technologies, including Internet of Things, big data, cloud, artificial intelligence and information technology, and our enterprise information and semiconductor expertise.
We price our products on a per die or per wafer basis, taking into account the complexity of the technology, the prevailing market conditions, the order size, the cycle time, the strength and history of our relationship with the customer and our capacity utilization. Our main sales office is located in Taiwan, which is in charge of our sales activities in Asia. United Microelectronics (Europe) BV, our wholly-owned subsidiary based in Amsterdam, assists our sales to customers in Europe. Our sales in North America are made through UMC Group (USA), our subsidiary located in Silicon Valley. We also have sales offices in China, Japan and Korea to support our customers in those regions.
We advertise in trade journals, organize technology seminars, hold a variety of regional and international sales conferences and attend a number of industry trade fairs to promote our products and services. We also publish a corporate newsletter for our customers.
Information Security Risk Management
We have made information security risk analysis and have taken the mitigating measures as described below:
(1) Risk Management Organization
We have established an Enterprise Risk Management Committee to coordinate with key internal departments for risk management and control, jointly reviewing and managing internal and external risks of the Company. In addition, we established the “Corporate Security Division” in 2018, which is responsible for our information security and physical security planning and related audit matters, and work together with our Information Technology Division to further strengthen information security.
(2) Information Security Policy (Internal Control and Protocol)
Our information security policy is based on the guiding principle: “To establish Information Security Management rules in accordance to customer’s requirement, to reach a consensus that information security is everyone’s responsibility through full awareness, to protect information confidentiality, integrity, availability for the Company and customer, and to provide safe production environment to ensure sustainable operation of the Company’s business.” Our major information security objectives are aimed at antivirus, anti-intrusion and anti-leakage through the building of multiple internal controls such as firewall, intrusion detection and antivirus systems to enhance our ability to defend against external attacks. Also, through regular educational and training programs, security operation/awareness is embedded and seamlessly integrated into every employee’s daily work.
(3) Establish Enterprise Risk Management System
According to the Enterprise Risk Management Committee management procedure, we assess the risk level of information security, take the appropriate actions and regularly review the effectiveness of these actions. The committee regularly reviews the possibility of risk occurrence and the potential change of severity over time to understand and assess the effectiveness of risk management programs and related control operations. We comply with multiple ISO certification standards in the areas of quality, environment, water resources, carbon footprint and green energy. Related information security certification includes ISO15408, ISO22301 and ISO27001.
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(4) Assessment of Information Security and Cyber Risks
We place particular emphasis on preventing information security and cyber risks, and have built a comprehensive multi-layered defense mechanism including firewall, intrusion detection, antivirus system, vulnerability scanning, patch management procedure and penetration testing. Our company followed the National Institute of Standards and Technology to establish a corporate information security framework and created corresponding metrics to strengthen information security management including (i) aiming to further improve the detection of irregularities and elevate preventive capabilities including protocols such as Security Orchestration, Automation, and Response (SOAR) and Endpoint Detection and Response (EDR), (ii) optimizing network security area of overall information systems and (iii) increasing the multi-factor authentication protection for hosting privileged account login.
(5) Information Security Management System (ISMS) Verification
Our ADRs have been listed on NYSE since 2000 and we have complied with the Sarbanes-Oxley Act (SOX 404) for internal control over financial reporting processes. We also strengthened our information security process by introducing ISO27001 information security management system certification to reduce security risk and production anomaly that may be caused by human error. We carry out the relevant continuous improvement and recertification on an annual basis.
In 2014, a cross-division security committee was established. Based on the need to produce secure products like smart card ICs, we introduced ISO15408 (CC, Common Criteria) certification specifically designed for secure production procedures not only in data receiving, processing and destruction but also higher physical access control request for the purpose of securing entire production line. We carry out the relevant continuous improvement and recertification on a biennial basis.
(6) Insurance against Information Security Risks
Data leakage, virus infection, ransomware attacks and hacking event in Taiwan and throughout the world have caused many international and well-known companies to encounter significant operating loss. There is no guarantee that enterprises will not become the target of attacks despite reasonable security protection in place. In view of this, we obtained cybersecurity insurance to mitigate and reduce this risk. Such insurance policy has been in effect since January 2019 with retroactive option which can trace back to undiscovered pre-existing threats. The annual insurance coverage is US$15 million for the Company and its subsidiaries.
(7) The Impact of Occurred Major Asset Security Incidents and Response Measures
We had no major information security incidents in recent years, except for a distributed denial-of-service (DDoS) attack on our official website in October 2024. This led to slow access to the Company’s official website, making it unable to provide normal services. This incident did not cause system infection, damage, intrusion, or data leakage, and had no significant impact on the Company’s operations. The Company immediately blocked the attacking IP addresses through the security protection system, and activated traffic cleaning services, and the official website was restored back to normal access. The Company has established corresponding DDoS monitoring indicators to detect and respond to potential attacks early.
In short, new invasive techniques are constantly evolving but past defense achievements do not necessarily mean or guarantee that anomaly breach will not occur in the future. Enterprises must keep pace with the ever-changing and growing information security threat and requires continuous improvement. We will uphold to “Integrity, Pragmatism, Agility, Ingenuity” as corporate culture and will fulfill due care/due diligence’ management responsibility to provide customers with a secure production environment to reduce operational risk and reward shareholders with highest investment value as possible.
Competition
The worldwide semiconductor foundry industry is highly competitive, particularly during periods of overcapacity and inventory correction. We compete internationally and domestically with dedicated foundry service providers, as well as with integrated device manufacturers and final product manufacturers which have in-house manufacturing capacity or foundry operations. Some of our competitors have substantially greater production, financial, research and development and marketing resources than we have. As a result, these companies may be able to compete more aggressively over a longer period of time than we can. In addition, several new dedicated foundries have commenced operations and compete directly with us. New entrants in the foundry business are likely to initiate a trend of competitive pricing and create potential overcapacity in legacy technology. Any significant increase in competition may erode our profit margins and weaken our earnings.
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The principal elements of competition in the semiconductor foundry industry include technical competence, production speed and cycle time, time-to-market, research and development quality, available capacity, manufacturing yields, customer service and price. We believe that we compete favorably with our competitors on each of these elements, particularly our technical competence and research and development capabilities.
Intellectual Property
Our success depends on our ability to obtain patents, licenses and other intellectual property (IP) rights covering our production processes and activities. To that end, we have developed and acquired certain patents and patent licenses and intend to continue to seek patents on our production processes. As of December 31, 2025, we had obtained more than 16,700 patents worldwide, of which more than 7,490 patents were in the U.S. As trade secret protection become increasingly critical, we have stepped up internal compliance training and established a robust IP management system. In 2023, we achieved Taiwan Intellectual Property Management System (TIPS) certification for the second year, with our certification level improving from AA to AAA (such certificate is valid until December 31, 2026), underscoring our unwavering commitment to IP and corporate governance best practices.
Our ability to compete also depends on our ability to operate without infringing on the proprietary rights of others. The semiconductor industry is generally characterized by frequent claims and litigation regarding patent and other IP rights. As is the case with many companies in the semiconductor industry, we have from time to time received communications from third parties asserting patents that allegedly cover certain of our technologies and alleging infringement of certain IP rights of others. We expect that we will continue to receive similar communications in the future. Irrespective of the validity or the successful assertion of such claims, we could incur significant costs and devote significant management resources to the defense of these claims, which could seriously harm our company. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Manufacturing—Political, Economic, Regulatory and Legal Risks—Intellectual property disputes could result in lengthy and costly arbitration, litigation or licensing expenses or prevent us from providing services to customers.”
In order to minimize our risks from claims based on our manufacture of semiconductor devices or end-use products whose designs infringe on others’ IP rights, we in general accept orders only from companies that we believe have established satisfactory reputation and for products that are not identified as risky for potential infringement claims. Furthermore, we obtain indemnification rights from customers. We also generally obtain indemnification rights from equipment vendors to hold us harmless from any losses resulting from any suit or proceedings brought against our company involving allegation of infringement of IP rights on account of our use of the equipment supplied by them.
We have entered into various patent cross-licenses with major technology companies, including a number of leading international semiconductor companies, such as IBM and Broadcom Inc. Our cross licenses may have different terms and expiry dates. Depending upon our competitive position and strategy, we may or may not renew our cross licenses and further, we may enter into different and/or additional technology and/or IP licenses in the future.
Research and Development
We place significant importance on the dynamics of the semiconductor industry and continue to invest and develop semiconductor manufacturing process technology and know-how. In order to continue the development of logic and specialty technologies, optimize transistor performance, reduce power consumption, and continuously enhance our technical advantages, in 2023, 2024 and 2025, we spent NT$13,284 million, NT$15,616 million and NT$17,725 million (US$565 million), respectively, on research and development, which represented 6.0%, 6.7% and 7.5%, respectively, of our operating revenues of such years. Our research and development efforts mainly focus on delivering comprehensive foundry solutions that consist of the key process technologies encompassing logic as well as specialty manufacturing technologies that address customers’ needs. These resources provide our foundry customers with improved opportunities to develop diverse product lines that supply the global semiconductor market. Our commitment to research and development can be illustrated by our research and development expenditures, which was approximately 7.5% of operating revenues, and a total of 623 domestic and foreign patents granted in 2025.
As of December 31, 2025, we employed 1,591 professionals in our research and development activities. In addition, other management and operational personnel are also involved in research and development activities but are not separately identified as research and development professionals. We will continue to invest in technology innovation, optimize capacity to enhance product mix and penetrate emerging applications. We believe that these efforts will create higher customer adoption of our logic and specialty technologies and expand our market share to fuel growth.
Our Investments
Our investment holdings consist of equity interest in certain company and reflect current market valuations as these assets may change in accordance with market conditions.
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The following table sets forth the sales of our investments in 2023:
Investees
King Yuan Electronics Co., Ltd.
Unimicron Technology Corp.
Evergreen Aviation Technologies Corp.
AMPAK Technology Inc.
Win Win Precision Technology Co., Ltd.
The following table sets forth the sales of our investments in 2024:
FORTEMEDIA, INC.
PHISON ELECTRONICS CORP.
The following table sets forth the sales of our investments in 2025:
OAK HILL OPPORTUNITIES FUND, SEGREGATED PORTFOLIO
Environmental, Safety and Health Matters
We have implemented extensive ESH management systems since 1996. These systems enable our operations to identify applicable ESH regulations, assist in evaluating compliance status and timely establish loss preventive and control measures. The systems we implemented in all our fabs have been certified as meeting the ISO 14001 and ISO 45001 standards. ISO 14001 consists of a set of standards that provide guidance to the management of organizations to achieve an effective environmental management system. Procedures are established at manufacturing locations to ensure that all accidental spills and discharges are properly addressed. ISO 45001 is an international occupational health and safety management system standard, which may be applied to assess and certify our management systems. Our goal in implementing ISO 14001 and ISO 45001 systems is to continually improve our ESH management, comply with ESH regulations and to be a sustainable green foundry. Our major ESH policies include:
Environmental Protection Aspects:
Fully comply with or go beyond requirements of environmental laws and regulations, and international conventions, striving for zero pollution and sustainable development.
Integrate environmental management into the Company’s operational and management systems, and build an environmentally conscious company culture.
Actively set aggressive environmental management goals, regularly track and continuously improve environmental performance, and reduce environmental impact.
Actively consult external stakeholders to introduce and develop environmentally friendly technologies that can be applied to R&D, procurement, production operations, business facilities, distribution and logistics, products, and/or services to minimize environmental impact at each life cycle stage in order to achieve green design, green production, and green operations goals.
Stay informed of environmental trends around the world, assess the associated opportunities and risks, engage in proper waste management, effectively utilize energy/resources, and promote circular economy.
Conduct regular training on risk assessment and risk management to ensure employees understand the environmental impact of their work activities, enhance environmental protection awareness, and encourage responsible action.
Enhance awareness of the Company’s environmental policy and environmental impact among both internal and external stakeholders (including the Company and its subsidiaries, value chain partners, civil society) through due diligence, active communication and engagement, and transparent information disclosure.
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Fulfill corporate social responsibility and cooperate with the government, the public and global business partners in ecological improvement and rehabilitation.
Safety and Health Aspects:
Meet or exceed the requirements on occupational safety and health of the place of operation and comply with ISO 45001 and relevant international standards, aiming for zero incident. We are committed to steady development while making safety a priority.
Set up prioritization and action plans, continue to promote safety and health management system and risk improvement processes to achieve and maintain world-class safety/health and risk management performance.
Use advanced safety and health technologies as well as risk and disaster rescue techniques to actively enhance all safety aspects in a pioneering manner.
Implement due diligence to ensure the safety of the work environment and operations, contractors, customers as well as partners in the operation of the enterprise.
Through communication, consultation and participation in decision-making with staff or their representatives, make it a responsibility for personnel of all levels to exercise influence, eliminate hazard factors, prevent occurrence of accidents and work-related illnesses, and promote effective safety and health interactions through cooperation and sharing.
Continue conducting safety and health education and advocacy, encouraging active participation in safety and health activities, and allowing for health and safety to be a habit and a way of life for all workers.
As a member of the global community and a semiconductor industry leader, we have implemented measures to deal with environmental problems and mitigate climate change. We have introduced green concepts in our operations, including green commitment, management, procurement, production, products, recycling, office, education and marketing.
With respect to safety and health management, we realized that lowering the risks in equipment and processes can reduce accidents, but cannot guarantee the safety of all employees. In order to achieve the goal of “zero-accident,” we intend to promote the concept of “safety is my responsibility.” We have educated employees with the concepts of “be aware of your own safety as well as the safety of others” and “safety is everyone’s responsibility, and my personal accountability.”
Furthermore, we have implemented the Failure Mode and Effects Analysis (FMEA) method to foster employees’ capabilities in risk analysis. Therefore, we established a channel for communication to encourage and ensure the employees to fully express their opinions for professional response and assistance. By doing so, we hope to establish a culture of “Safety and health first” to further improve the quality of our working environment, and eventually to become a good example of global safety and health management.
The following list sets forth some of the important awards that we received in environmental protection, safety and health:
Achieved the top ranking in the Semiconductors & Semiconductor Equipment sector by the S&P Global Corporate Sustainability Assessment (CSA) for two consecutive years, and has also been selected as a component of the Dow Jones Best-in-Class World Index (DJBIC World Index) for seventeen consecutive years and the Emerging Markets Index for eight consecutive years;
Selected as component of MSCI ACWI Socially Responsible Investment (SRI) Index, the MSCI ACWI Selection Index, and the MSCI Emerging Markets Selection Index;
Selected as component of FTSE4Good All-World Index and FTSE4Good Emerging Index for eleventh consecutive years, and FTSE4Good TIP Taiwan ESG Index since the launch of the index in 2017;
Recognized double A List by CDP for climate change and water security for four consecutive years;
Awarded “Top 10 Taiwanese Companies Sustainability Model Award” (2025) and “Corporate Sustainability Report Award” (2008-2025) for eighteen consecutive years by Taiwan Institute for Sustainable Energy;
Awarded “National Enterprise Environmental Protection Award” by Ministry of Environment, Executive Yuan, R.O.C. (2003-2025) for twenty-three consecutive years;
Awarded “Outstanding Unit for Promoting Occupational Safety and Health - Special Excellence Award” (1998-2025) and “Environmental, Safety and Health Sustainable Development Action - ESG Excellence Leadership” (2025) by the Hsinchu Science Park, National Science and Technology Council;
Awarded “Occupational Health and Safety Performance Disclosure Evaluation - Outstanding Enterprise” by Occupational Safety and Health Administration, Ministry of Labor, Executive Yuan, R.O.C. (2025);
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Climate Change
Our climate change policies include: (i) achieving carbon neutral status via carbon management, (ii) becoming a comprehensive low-carbon emissions solution provider, and (iii) leveraging corporate resources to cultivate a low-carbon emissions economy. In order to implement these policies, we set greenhouse gas reduction goals as to various phases. In the program of UMC Sustainability Strategy and Blueprint, we launched resource and energy productivity improvement plans which target to reduce the usage of water, electricity and waste per unit of product by 30%, 30% and 50% in 2030, respectively, compared to 2015.
In June 2021, we announced our pledge to reach net zero emissions by 2050 and to take concrete steps to Net Zero Action as the first semiconductor foundry globally. We are vigorously responding to the Paris Climate Agreement goal and pursuing efforts to limit the global warming not exceeding 1.5°C. In addition, we were admitted into RE100, becoming the second semiconductor wafer foundry in this initiative, and committed to using 100% renewable energy by 2050. To reach net zero emissions by 2050, we have three resolutions to cover direct emissions from fab operations, indirect emissions from energy consumption, and indirect emissions from value chain. The three resolutions are:
Persistent and proactive carbon emission reduction: Through continually developing advanced foundry process technologies, enhancing productivity and improving energy efficiency, we are able to minimize carbon emissions in both manufacturing stage of wafers and using stage of IC end products.
100% renewable energy: A 3-stage objective of 25% by 2025, 50% by 2030, and 100% by 2050 is set to substantially increase the proportion of consuming renewable energy, and we will also invite our value chain to support the low-carbon energy transition.
Investment in net-zero technologies: we commit to investing in net zero emissions technologies and participating in Carbon Offset Projects to remove and offset carbon emissions that are inevitable or still subject to technical restrictions.
In 2021, we officially pledged to achieve net zero emissions by 2050 and received approval from the international renewable energy initiative “RE100,” committing to 100% renewable energy usage by 2050. In 2022, our GHG reduction targets passed the SBTi review, making it the world’s first semiconductor foundry to do so. Having achieved its near-term reduction targets ahead of schedule, we further raised its targets and passed the SBTi net-zero target review in 2025. Its near-term, long-term, and net-zero targets are in line with the 1.5°C pathway. By 2030, we aim to reduce total GHG emissions, including direct emissions (Scope 1) and indirect emissions from electricity (Scope 2) by 42%, and to reduce value chain (Scope 3) emissions by 25%, compared to the 2020 baseline year. Furthermore, to achieve the 2050 net zero target, we plan to reduce Scope 1 and Scope 2 emissions by 95% and Scope 3 emissions by 90%, with the remaining unavoidable emissions to be offset or neutralized.
We also support timely disclosure of carbon information and ensuring data quality and engage third-party verifiers to ensure the quality of the data. We completed the verification on greenhouse gas emission and reduction records for all of our fabs on an annual basis. Since 2006, we have participated in the Carbon Disclosure Project formed by global institutional investors and disclosed our annual greenhouse gas emission volume, reduction goals and results. In 2025, we have been recognized in CDP’s “A List” for transparency and action on both climate change and water security. We stand out as the sole semiconductor company globally to secure this double “A” recognition for four consecutive years, affirming our commendable performance in greenhouse gas emission reduction and water resource management.
Climate change will not only bring about negative impacts but also drive opportunities for semiconductor simultaneously. Consequently, we have been proactively searching for our own climate related opportunities by considering of market demand for energy-saving and our technique advantages. We are committed to investing in the development of high-efficiency product technologies, providing semiconductor manufacturing services in clean technology fields such as automotive electronics, smart energy management, industrial automation, and system optimization, to reduce carbon emissions across the value chain, i.e., the end products of customers. To align its technology development with global carbon reduction goals, we have set phased targets to increase the revenue share of sustainable products by 2030.
Risk Management
Risk and safety matters are administered by Group Risk Management and Environmental Safety Health Division. We are pursuing the goal of a highly protected risk status in the semiconductor industry through the implementation of strict engineering safety procedures, regular enforcement of safety codes and standards, and compliance of detailed industry safety guidelines.
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Our risk control strategy has been implemented in many ways, including constructing inherently safe fabs, strengthening physical protection standards, redundancy/contingency design, providing with real-time abnormity detection, implementing disciplined maintenance and inspection, deploying natural hazard early warning systems, enhancing emergency response abilities, and developing business continuity plan, which includes crisis management and recovery procedures, to achieve our continuous operation promise. The achievements in the recent years are as follows:
We collaborate with international insurance companies, such as American International Group (AIG), and global insurance brokers to regularly conduct risk audits.
Inherent safety design and rescue skill develop for emerging risk, including but not limit to: solar power generation system on the roof-top, lithium battery inside automated guided vehicle and uninterruptible power supply system, and electrical car, etc.
Enhanced power distribution system’s reliability and early abnormality detection, such as gradually replace existing lead-acid UPS batteries with lithium-iron, install real-time leak current measurement of cable shielding conductors’ grounding system of HV distribution system, enlarge diesel generators installation rate to increase emergency power percentage and maintain diesel oil in a safety level, etc. For the countermeasure against momentary voltage drops, continually increase the uninterruptible power supply coverage rate for production tools.
Fixed-term contract for private water source and water trucks and in combination with self water-saving, U Water, and reclaimed water usage, which can supply more than 50% of water consumption to overcome water shortage risk in the drought season.
Enhance cleanroom’s seismic bracing for suspended ceiling and raised floor in older 8-inch fabs in Hsinchu. The earthquake improvement plan will continue to expand to other areas, such as laboratories.
Taiwan situates in Circum-Pacific Seismic Belt, and the threat of earthquakes cannot be underestimated. We have implemented tons of proactive efforts in earthquake loss prevention. We imported the latest anti-seismic technologies, a seismic isolation platform for newly installed reticle stocker and furnace and built up an earthquake warning system in Tainan production base that will provide us with enhanced response time in the event of an earthquake.
Nowadays, extreme weather has become a risk to various business operations. In the face of water shortage, we have implemented actions based on different water restriction stages, including formulating various water-saving measures and production scheduling adjustments. We also continue to hire water trucks and increase the capacity of contracted private water sources as a contingency plan. In the future, various options such as the use of reclaimed water, recycled water and desalinated seawater will be continuously introduced to reduce water risks.
In addition, we are fully aware of the impact presented by business interruption. We are also devoted in the pursuit of corporate resilience and continuity by committing non-interrupted services to satisfy our valued customers and important shareholders. Since 2013, Fab 12A in Tainan was the first foundry in the world to receive ISO 22301 Business Continuity Management certification. To date, all our production sites have been certified. It demonstrates our commitment to carrying out disaster response abilities and ensuring continuous production objective.
Insurance
We maintain industrial all risk insurance for our buildings, facilities, equipment and inventories as well as third-party properties. The insurance for fabs and their equipment covers losses from physical damage and business interruption up to their respective policy limits except for policy exclusions, including damages and interruptions caused by natural disasters such as earthquake or typhoons. In addition, we purchase directors and officers liability insurance for our board directors and executive officers, covering the liabilities incurred in relation to his/her/its operation of business and legally responsible for. We also maintain public liability insurance for losses to third parties arising from our business operations. We believe that our insurance arrangement is adequate to cover all major types of losses relevant to the semiconductor industry practice. However, significant damage to any of our production facilities, whether as a result of fire or other causes, could seriously harm our business and we may not be able to recover all of our losses through insurance policy coverage.
Seasonality
We generally experience seasonal lows in the demand for semiconductor services and products during the first half of the year, primarily as a result of inventory correction by our customers.
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Organizational Structure
The following list sets forth our subsidiaries as of December 31, 2025:
Company
UMC Group (USA)
United Microelectronics (Europe) B.V.
UMC Capital Corp.
TLC Capital Co., Ltd.
Green Earth Limited
Fortune Venture Capital Corp.
UMC Investment (Samoa) Limited
ECP Vita Pte. Ltd.
Soaring Capital Corp.
Unitruth Advisor (Shanghai) Co., Ltd.
Tera Energy Development Co., Ltd.
United Microchip Corporation
Wavetek Microelectronics Corporation
Everrich Energy Investment (HK) Limited
Everrich (Jining) New Energy Technology Co., Ltd. (formerly Everrich (Shandong) Energy Co., Ltd.)
Wavetek Microelectronics Corporation (USA)
Best Elite International Limited
Infoshine Technology Limited
Oakwood Associates Limited
Hejian Technology (Suzhou) Co., Ltd.
United Semiconductor (Xiamen) Co., Ltd.
UMC Korea Co., Ltd.
Omni Global Limited
United Microtechnology Corporation (California)
Sino Paragon Limited
United Semiconductor Japan Co., Ltd.
Property, Plants and Equipment
Please refer to “—B. Business Overview—Manufacturing Facilities” for a discussion of our property, plants and equipment.
None.
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Unless stated otherwise, the discussion and analysis of our financial condition and results of operations in this section apply to our financial information as prepared in accordance with IFRS Accounting Standards. You should read the following discussion of our financial condition and results of operations together with the consolidated financial statements and the notes to such statements included in this Annual Report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this Annual Report on Form 20-F.
For the convenience of readers, NT dollar amounts used in this section for, and as of, the year ended December 31, 2025, have been converted into U.S. dollar amounts using US$1.00 = NT$31.37, the foreign currency exchange rate on December 31, 2025, as released by the Board of Governors of the Federal Reserve System. The U.S. dollar conversion appears in parentheses next to the relevant NT dollar amount.
Overview
We are one of the world’s leading independent semiconductor foundries, providing comprehensive wafer fabrication services and technologies to our customers based on their designs.
Cyclicality of the Semiconductor Industry
As the semiconductor industry is highly cyclical, our revenues have varied significantly over this period. In recent years, the industry has undergone a shift in demand in response to several prevalent trends, including the widespread implementation of 5G communications, the proliferation of the Internet of Things, and the advancement and adoption of electric vehicles and related technologies. After experiencing a period of sustained growth, there were inevitably cases of repeated orders to foundries, resulting in higher-than-normal inventory levels. In addition, the foundry industry was adversely affected by various factors, such as the war in Ukraine and COVID-19 lockdown measures and reopening in China, and faced sluggish demand and inventory adjustments in 2023. Although industry conditions have gradually improved since then, these challenges have continued to weigh on overall demand and have prevented a full recovery to the peak utilization levels experienced in prior up-cycles. Our average capacity utilization rate was 68.5%, 68.7% and 75.2% for the years ended December 31, 2023, 2024 and 2025, respectively. We believe that our operating results continue to reflect the ongoing uncertainty in the global economy.
Pricing
We price our products on either a per die or a per wafer basis, taking into account a variety of factors, including the complexity of the technology, the prevailing market conditions, the order size, the cycle time, the strength and history of our relationship with the customer and our capacity utilization. Because semiconductor wafer prices tend to fluctuate frequently, we regularly review our pricing on a quarterly basis. As a majority of our costs and expenses are fixed or semi-fixed in nature, fluctuations in our products’ average selling price historically have had a substantial impact on our margins and profitability. Our average selling price decreased by 5.0% from 2023 to 2024 and decreased by 5.4% from 2024 to 2025, which reflects the nominal price erosion in 2024 and 2025.
We believe that our current level of pricing is comparable to that of other leading foundries in each respective geometry. We believe that our ability to provide a wide range of advanced foundry services and process technologies as well as large manufacturing capacity will enable us to provide competitive pricing with other leading foundries at a comparable price level.
Capacity Utilization Rates
Our operating results are characterized by relatively high fixed costs. In 2023, 2024 and 2025, approximately 63.9%, 69.6% and 70.8%, respectively, of our manufacturing costs consisted of depreciation, a portion of indirect material costs, amortization of license fees, indirect labor and utilities costs.
If our utilization rates increase, our costs would be allocated over a larger number of units, which generally leads to lower unit costs. As a result, our capacity utilization rates can significantly affect our margins. Our utilization rates have varied from period to period to reflect our production capacity and market demand. Our average capacity utilization rate was 68.5%, 68.7% and 75.2% for the years ended December 31, 2023, 2024 and 2025, respectively. Utilization rates were primarily affected by global macroeconomic factors. Other factors affecting utilization rates are efficiency in production facilities, product flow management, the complexity and mix of the wafers produced, overall industry conditions, the level of customer orders, mechanical failure, disruption of operations due to expansion of operations, relocation of equipment or disruption of power supply, acquisition and disposition of foundry assets, and fire or natural disaster.
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Our production capacity is determined based on the capacity ratings of the equipment in the fab, provided by engineers, adjusted for, among other factors, actual output during uninterrupted trial runs, expected down time due to set up for production runs and maintenance, expected product mix and research and development. Because these factors include subjective elements, our measurement of capacity utilization rates may not be comparable to those of our competitors.
Change in Product Mix and Technology Migration
Because the price of wafers processed with different technologies varies significantly, the mix of wafers that we produce is among the primary factors that affect our revenues and profitability. The value of a wafer is determined principally by the complexity and performance of the processing technology used to produce the wafer, as well as by the yield and defect density. Production of devices with higher levels of functionality and performance, with better yields and lower defect density as well as with greater system-level integration requires better manufacturing expertise and generally commands higher wafer prices. The increase in price generally has more than offset associated increases in production cost once an appropriate economy of scale is reached.
Prices for wafers of a given level of technology generally decline over the processing technology life cycle. As a result, we have continuously been migrating to increasingly sophisticated technologies to maintain the same level of profitability. We introduced our 28-nanometer technology to customers in 2011 and commenced large-scale commercial production in 2014. The development of 22nm started in 2018 and entered into volume production in 2021. The logic and specialty process technology offerings from 22nm as well as 28nm specialty technologies satisfy new market demand as customers adopt our latest 12-inch process solutions. Our 28nm and below technologies contributed approximately 30.7%, 33.7% and 36.8% of our foundry revenue in 2023, 2024 and 2025 respectively.
The table below sets forth a breakdown of percentage of our wafer sales by process technologies in 2023, 2024 and 2025.
Process Technologies
14 nanometers and under
28 nanometers
40 nanometers
65 nanometers
90 nanometers
0.11/0.13 micron
0.15/0.18 micron
0.25/0.35 micron
0.50 micron or higher
Manufacturing Yields
Manufacturing yield per wafer is measured by the number of functional dice on that wafer over the maximum number of dice that can be produced on that wafer. A small portion of our products is priced on a per die basis, and our high manufacturing yields have allowed us to achieve higher margins. In addition, with respect to products that are priced on a per wafer basis, we believe that our ability to deliver high manufacturing yields generally has allowed us to either charge higher prices per wafer or attract higher order volumes, resulting in higher margins.
We continually upgrade our process technologies. At the beginning of each technological upgrade, the manufacturing yield utilizing the new technology is generally lower, sometimes substantially lower, than the yield under the current technology. The yield is generally improved through the expertise and cooperation of our research and development personnel and process engineers, as well as equipment and at times raw material suppliers. Our policy is to offer customers new process technologies as soon as the new technologies have passed our internal reliability tests.
Investments
Most of our investments were made to improve our market position and for strategy considerations, a significant portion of which are in foundry-related companies including fabless design customers, raw material suppliers and IP vendors.
We have, from time to time, disposed of investments for financial, strategic or other purposes in recent years. See “Item 4. Information on the Company—B. Business Overview—Our Investments” for a description of our investments.
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Treasury Share and Repurchase Programs
We have from time to time announced plans, none of which were binding on us, to repurchase up to a fixed amount of our common shares on the Taiwan Stock Exchange at the price range set forth in the plans. On April 24, 2019, our board of directors resolved to purchase up to 200 million common shares on the Taiwan Stock Exchange at a price between NT$8.40 and NT$18.10 per share during the period from April 25, 2019 to June 24, 2019 for cancellation. Our board of directors further resolved to repurchase up to 200 million common shares on the Taiwan Stock Exchange during a two-month period from June 8, 2020 to transfer to employees. We repurchased the total of 105 million common shares from June 8, 2020 through August 7, 2020 at a price between NT$11.55 and NT$23.25, with an average price of NT$15.98 per share.
During 2023, 2024 and 2025, we did not purchase any of our common shares.
Operating Results
Operating Revenues
We generate our operating revenues primarily from the manufacture and sales of wafers that are fabricated at our foundries. We also derive a small portion of our operating revenues from wafer probe services that we perform internally as well as mask tooling services and assembly and test services that we subcontract to other companies.
Operating Costs
Our operating costs consist principally of:
overhead, including depreciation and maintenance of production equipment, indirect labor costs, indirect material costs, supplies, utilities and royalties;
wafer costs;
direct labor costs; and
service charges paid to subcontractors for mask tooling, assembly and test services.
Our total depreciation expenses were NT$37,758 million, NT$45,472 million and NT$56,427 million (US$1,799 million) in 2023, 2024 and 2025, respectively.
Operating Expenses
Our operating expenses consist of the following:
Sales and marketing expenses, which consist primarily of salaries expenses, related personnel expenses and mask expenses;
General and administrative expenses, which consist primarily of salaries for our administrative, finance and human resource personnel, fees for professional services, and expenses of computer systems;
Research and development expenses, which consist primarily of salaries and related personnel expenses, research testing related expenses, depreciation on the equipment and expenses of computer systems; and
Expected credit impairment gains (losses). For notes, accounts receivable and contract assets, we apply a simplified approach in calculating expected credit losses (ECLs) and recognize a loss allowance based on lifetime ECLs at each reporting date. ECLs are measured based on our historical credit loss experience and customers’ current financial condition, adjusted for forward-looking factors, such as customers’ economic environment.
Net Other Operating Income and Expenses
Net other operating income and expenses consist primarily of:
Amortization of deferred government grants related to machinery and equipment;
Gains or losses arising from disposal of property, plant and equipment; and
Net rental income or loss from property.
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Non-operating Income and Expenses
Our non-operating income and expenses primarily consist of the following:
Interest income, which is primarily derived from time deposits.
Other income, which principally consists of dividend income, which is primarily derived from financial assets at fair value through profit or loss and financial assets at fair value through other comprehensive income.
Other gains and losses, which principally consist of:
gains or losses on valuation of financial assets and liabilities, which are primarily derived from disposal of and changes in the values of financial assets and liabilities classified as fair value through profit or loss; and
gains or losses on disposal of investments, which are primarily derived from our disposal of investments accounted for under the equity method and disposal of a subsidiary.
Finance costs, which principally consist of:
interest expenses, which are primarily derived from bonds payable and bank loans; and
financial expenses, which are primarily derived from shareholder services proxy fee.
Share of profit or loss of associates and joint ventures, which is primarily derived from the recognition of investee companies’ net profit based on the ownership percentage we hold.
Bargain purchase gain, which is derived from the acquisition of significant influence over SILICON INTEGRATED SYSTEMS CORP. (SIS). SIS was previously measured at fair value through other comprehensive income and reclassified as investments accounted for under the equity method. Our share of the net fair value of SIS’s identifiable assets and liabilities was in excess of the fair value of the previously held investment in SIS at the acquisition date, and the difference was recognized as bargain purchase gain. For more information, please refer to Note 6(7) to our audited consolidated financial statements included in this Annual Report.
Taxation
In the R.O.C., the corporate income tax rate and unappropriated earnings tax rate are 20% and 5%, respectively. Our branch in Singapore enjoys tax exemption for income derived from tax-exempted activities under Singapore’s Income Tax Act and Economic Expansion Incentive (Relief from Income Tax) Act. These tax exemptions resulted in tax savings of approximately NT$1,387 million, NT$422 million and NT$614 million (US$20 million) in 2023, 2024, and 2025, respectively. Under the amendment to the R.O.C. Statute of Industrial Innovation in 2019, the amounts of unappropriated earnings from 2018 and thereafter used for constructing or purchasing buildings, qualified equipment and technology can qualify for deduction when computing the income tax on unappropriated earnings. We also benefit from other tax incentives generally available to technology companies in Taiwan, such as tax credits applicable against corporate income tax that range from 10% to 25% of qualified research and development expenditures and 3% to 5% of the amount of investment in certain qualified equipment and technology. These tax incentives resulted in tax savings of approximately NT$3,074 million, NT$1,652 million and NT$1,050 million (US$33 million) in 2023, 2024, and 2025, respectively.
The R.O.C. government enacted the R.O.C. Income Basic Tax Act, also known as the “Alternative Minimum Tax Act,” or the AMT Act, to impose an alternative minimum tax. AMT is a supplemental tax which is payable if the income tax payable pursuant to the R.O.C. Income Tax Act is below the minimum amount prescribed under the AMT Act. Most tax-exempt income under the R.O.C. Income Tax Act is considered to be taxable under the AMT Act, such as eligible income generated during tax holidays and capital gain from selling domestic securities, and tax credits are not allowed to deduct AMT. The tax rate for business entities is 12%.
According to the R.O.C. Controlled Foreign Company (CFC) rules enacted in 2016 and implemented since January 1, 2023, certain undistributed profits generated by companies operating in low-tax jurisdictions will be subject to deemed distribution and advance taxation by their Taiwanese parent company.
Certain subsidiaries of the Group operate in jurisdictions where OECD Pillar Two legislation has been enacted or substantively adopted. These regulations take effect in phases beginning in 2024, and impose a top-up tax on profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum rate.
After taking into account the tax exemptions and tax incentives discussed above, we recorded NT$8,311 million, NT$8,370 million and NT$7,903 million (US$252 million) of income tax expenses in 2023, 2024, and 2025, respectively. Our effective income tax rate in 2025 was 16.44%.
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Comparisons of Results of Operations
The following table sets forth some of our results of operations data as a percentage of our operating revenues for the periods indicated.
Operating revenues
Operating costs
Gross profit
Operating expenses
Sales and marketing
General and administrative
Research and development
Expected credit impairment gains
Subtotal
Net other operating income and expenses
Operating income
Non-operating income and expenses
Income from continuing operations before income tax
Income tax expense
Net income
Total other comprehensive income (loss)
Total comprehensive income
Net income (loss) attributable to:
Shareholders of the parent
Non-controlling interests
Comprehensive income (loss) attributable to:
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Operating revenues. Operating revenues increased by 2.3% from NT$232,303 million in 2024 to NT$237,553 million (US$7,573 million) in 2025, primarily due to an increased customer demand from 3,446 thousand 12-inch equivalent wafers in 2024 to 3,870 thousand 12-inch equivalent wafers in 2025, partially offset by a decline of 5.4% in average selling price from 2024 to 2025, and a 2.9% appreciation of the NTD against the U.S. dollar in 2025 compared to 2024.
Operating costs. Operating costs increased by 7.7% from NT$156,649 million in 2024 to NT$168,647 million (US$5,376 million) in 2025, primarily due to the increase in shipments, the increasing depreciation cost and higher utilities costs.
Gross profit and gross margin. Gross profit decreased from NT$75,654 million in 2024 to NT$68,906 million (US$2,197 million) in 2025. Our gross margin decreased from 32.6% in 2024 to 29.0% in 2025, primarily due to an annual decline of 5.4% in average selling price and a 2.9% appreciation of the NTD against the U.S. dollar in 2025 compared to 2024, partially offset by the increase in capacity utilization.
Operating income and operating margin. Operating income decreased from NT$51,613 million in 2024 to NT$43,949 million (US$1,401 million) in 2025. Our operating margin decreased from 22.2% in 2024 to 18.5% in 2025. The decrease in operating margin was largely due to the decrease in gross profit as described above. Operating expenses increased by 6.2% from NT$25,365 million in 2024 to NT$26,948 million (US$859 million) in 2025.
Sales and marketing expenses. Our sales and marketing expenses decreased by 9.9% from NT$2,702 million in 2024 to NT$2,433 million (US$78 million) in 2025, mainly due to the decrease of NT$290 million (US$9 million) in IP and IP royalty expenses and NT$105 million (US$3 million) in personnel expenses, partially offset by the increase of NT$162 million (US$5 million) in mask expenses. Our sales and marketing expenses as a percentage of our operating revenues decreased from 1.1% in 2024 to 1.0% in 2025.
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General and administrative expenses. Our general and administrative expenses decreased by 4.6% from NT$7,117 million in 2024 to NT$6,792 million (US$216 million) in 2025, mainly due to the decrease of NT$406 million (US$13 million) in personnel expenses, partially offset by the increase of NT$64 million (US$2 million) in professional services fees. Our general and administrative expenses as a percentage of our operating revenues decreased from 3.1% in 2024 to 2.8% in 2025.
Research and development expenses. Our research and development expenses increased by 13.5% from NT$15,616 million in 2024 to NT$17,725 million (US$565 million) in 2025. The increase in research and development expenses was mainly due to the increase of NT$1,338 million (US$43 million) in depreciation on the equipment, NT$571 million (US$18 million) in research expenses, NT$295 million (US$9 million) in IP expenses, NT$82 million (US$3 million) in maintenance expenses, and NT$81 million (US$3 million) in indirect material expenses, partially offset by the decrease of NT$266 million (US$8 million) in personnel expenses and NT$135 million (US$4 million) in computer usage expenses. Our research and development expenses as a percentage of our operating revenues increased from 6.7% in 2024 to 7.5% in 2025.
Expected credit impairment gains (losses). Our expected credit impairment gains decreased from NT$70 million in 2024 to NT$2 million (US$0 million) in 2025. The decrease in expected credit impairment gains was mainly due to the decrease in reversal of loss allowance on accounts receivable. Our expected credit impairment gains as a percentage of our operating revenues decreased from 0.0% in 2024 to 0.0% in 2025.
Net other operating income and expenses. Net other operating income increased by 50.3% from NT$1,324 million in 2024 to NT$1,990 million (US$63 million) in 2025, mainly due to an increase of NT$553 million (US$18 million) in government grants. Net other operating income and expenses as a percentage of our operating revenues increased from 0.5% in 2024 to 0.8% in 2025.
Non-operating income and expenses. Non-operating income decreased by 23.9% from NT$5,432 million in 2024 to NT$4,133 million (US$132 million) in 2025, mainly due to a decrease of NT$1,392 million in interest income caused by the decline in the average deposit balance and interest rate, a shift from net exchange gains of NT$1,329 million to net exchange losses of NT$583 million, partially offset by a shift in other gains and losses from a loss of NT$303 million in 2024 to a gain of NT$925 million (US$29 million) in 2025, and an increase of NT$1,204 million in other income. The increase in other gains and losses was resulted from an increase on valuation of financial assets and liabilities at fair value through profit or loss, shifting from a loss of NT$321 million in 2024 to a gain of NT$707 million (US$23 million) in 2025.
Other comprehensive income (loss). Our other comprehensive income (loss) decreased from an income of NT$9,322 million in 2024 to a loss of NT$5,509 million (US$176 million) in 2025. We attributed this change primarily to the change in exchange differences on translation of foreign operations from a gain of NT$9,056 million in 2024 to a loss of NT$5,340 million (US$170 million) in 2025, the change of unrealized gain (loss) from equity instruments investments measured at fair value through other comprehensive income from a loss of NT$514 million in 2024 to a loss of NT$3,207 million (US$102 million) in 2025, in share of other comprehensive income (loss) of associates and joint ventures which may be reclassified subsequently to profit or loss from a gain of NT$299 million in 2024 to a loss of NT$10 million (US$0 million) in 2025. These gains and losses were partially offset by the change in share of other comprehensive income of associates and joint ventures which will not be reclassified subsequently to profit or loss from a gain of NT$330 million in 2024 to a gain of NT$2,933 million (US$93 million) in 2025.
Net income (loss) attributable to the shareholders of the parent. Due to the factors described above, our net income decreased by 17.3% from NT$48,779 million in 2024 to NT$40,360 million (US$1,287 million) in 2025.
Comprehensive income (loss) attributable to the shareholders of the parent. Due to the factors described above, our comprehensive income decreased by 40.0% from NT$58,101 million in 2024 to NT$34,851 million (US$1,111 million) in 2025.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
For the comparison of our operating results for the year ended December 31, 2024 to the year ended December 31, 2023, please refer to “Item 5. Operating and Financial Review and Prospects—Operating Results—Comparisons of Results of Operations—Year Ended December 31, 2024 Compared to Year Ended December 31, 2023” of our annual report on Form 20-F filed with the SEC on April 24, 2025.
Liquidity and Capital Resources
The foundry business is highly capital intensive. Our development over the past three years has required significant investments. Additional expansion for the future generally will continue to require significant cash for acquisition of plant and equipment to support increased capacities, particularly for the production of 12-inch wafers, although our expansion program will be adjusted from time to time in response to market conditions and customer demand. In addition, the semiconductor industry has historically experienced rapid changes in technology. To maintain competitiveness at the same capacity, we are required to make adequate investments in plant and equipment. In addition to our need for liquidity to support the substantial fixed costs of capacity expansion and the upgrading of our existing plants and equipment for new technologies, as we ramp up production of new plant capacity, we require significant working capital to support purchases of raw materials for our production and to cover variable operating costs such as labor costs until production yields provide sufficiently positive margins for a fabrication facility to produce operating cash flows.
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Resource for Liquidity
We have financed our capital expenditure requirements in recent years from operating cash inflows, bank borrowings, as well as the issuance of corporate bonds. Operating cash inflows significantly exceed operating income, reflecting the significant non-cash depreciation expense. Our working capital is sufficient for our present requirements at least in the next 12 months.
As of December 31, 2025, we had NT$110,660 million (US$3,528 million) of cash and cash equivalents and NT$569 million (US$18 million) of current financial assets at fair value through profit or loss. As of December 31, 2025, our cash and cash equivalents were primarily held in U.S. dollars, New Taiwan dollars and Renminbi. Cash equivalents included time deposits with original maturities of three months or less and repurchase agreements collateralized by government bonds and corporate notes. These agreements bore interest rates ranging from 0.71% to 0.85%, 0.85% to 0.98% and 0.84% to 0.98%, in 2023, 2024 and 2025, respectively. The terms of these agreements were typically less than one month. As of December 31, 2023, 2024 and 2025, we held repurchase agreements in the amount of NT$1,948 million, NT$6,098 million and NT$7,639 million (US$244 million), respectively. As of December 31, 2025, we had US$22 million outstanding in foreign currency forward contracts to sell U.S. dollars against NT dollars for hedging purposes.
In mid-June 2014, we issued an aggregate principal amount of NT$5,000 million of seven-year and ten-year domestic unsecured corporate bonds, with a denomination of NT$1 million per bond. The seven-year domestic unsecured corporate bond was issued with an aggregate principal amount of NT$2,000 million with an annual coupon bearing an interest rate of 1.7%. The ten-year domestic unsecured corporate bond was issued with an aggregate principal amount of NT$3,000 million with an annual coupon bearing an interest rate of 1.95%. All the principal has been fully repaid. The proceeds of this bond offering were used for repayment of debts.
In late March 2017, we issued another five-year and seven-year domestic unsecured corporate bonds totaling NT$8,300 million, with a face value of NT$1 million per unit. The five-year domestic unsecured corporate bond was issued in the amount of NT$6,200 million. Interest is due and payable annually at 1.15%, and the principal was repaid in March 2022. The seven-year domestic unsecured corporate bond was issued in the amount of NT$2,100 million. Interest is due and payable annually at 1.43%, and the principal was repaid in March 2024. The proceeds of this bond offering were used for repayment of debts.
In early October 2017, we issued another five-year and seven-year domestic unsecured corporate bonds totaling NT$5,400 million, with a face value of NT$1 million per unit. The five-year domestic unsecured corporate bond was issued in the amount of NT$2,000 million. Interest is due and payable annually at 0.94%, and the principal was repaid in October 2022. The seven-year domestic unsecured corporate bond was issued in the amount of NT$3,400 million. Interest is due and payable annually at 1.13%, and the principal was repaid in October 2024. The proceeds of this bond offering were used for repayment of debts.
In late April 2021, we issued another five-year, seven-year and ten-year domestic unsecured corporate bonds totaling NT$9,600 million, with a face value of NT$1 million per unit. The five-year domestic unsecured corporate bond was issued in the amount of NT$5,500 million. Interest is due and payable annually at 0.57%, and the principal will be repayable in April 2026 upon maturity. The seven-year domestic unsecured corporate bond was issued in the amount of NT$2,000 million. Interest is due and payable annually at 0.63%, and the principal will be repayable in April 2028 upon maturity. The ten-year domestic unsecured corporate bond was issued in the amount of NT$2,100 million. Interest is due and payable annually at 0.68%, and the principal will be repayable in April 2031 upon maturity. The proceeds of this bond offering were used for purchasing machinery and equipment and environmental protection related expenditures. As of December 31, 2025, NT$9,600 million aggregate principal amount of these bonds were outstanding.
In early July 2021, we issued zero coupon exchangeable bonds due 2026. The exchangeable bond offerings consist of US$400 million bonds exchangeable into common shares of Novatek Microelectronics Corp., Ltd., or Novatek. As of December 31, 2025, no bonds had been exchanged into common shares of Novatek and we had repurchased and cancelled the outstanding principal amount of exchangeable bonds totaling US$187 million in 2022.
In mid-December 2021, we issued another five-year domestic unsecured corporate bonds totaling NT$5,000 million, with a face value of NT$1 million per unit. Interest is due and payable annually at 0.63%, and the principal will be repayable in December 2026 upon maturity. The proceeds of this bond offering were used for purchasing machinery and equipment. As of December 31, 2025, NT$5,000 million aggregate principal amount of these bonds were outstanding.
In mid-September 2023, we issued another five-year domestic unsecured corporate bonds totaling NT$10,000 million, with a face value of NT$1 million per unit. Interest is due and payable annually at 1.62%, and the principal will be repayable in September 2028 upon maturity. The proceeds of this bond offering were used for green building. As of December 31, 2025, NT$10,000 million aggregate principal amount of these bonds were outstanding.
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In late June 2025, we issued two series of five-year domestic unsecured corporate bonds totaling NT$5,200 million, with a face value of NT$1 million per unit. The five-year domestic unsecured corporate bond was issued in the amount of NT$2,000 million. Interest is due and payable annually at 1.94%, and the principal will be repayable in June 2030 upon maturity. Another five-year domestic unsecured corporate bond was issued in the amount of NT$3,200 million. Interest is due and payable annually at 1.99%, and the principal will be repayable in June 2030 upon maturity. The proceeds of this bond offering were used for environmental protection related expenditures and repayment of debts. As of December 31, 2025, NT$5,200 million aggregate principal amount of these bonds were outstanding.
In late August 2025, we issued another three-year domestic unsecured corporate bonds totaling NT$5,000 million, with a face value of NT$1 million per unit. Interest is due and payable annually at 1.80%, and the principal will be repayable in August 2028 upon maturity. The proceeds of this bond offering were used for repayment of debts. As of December 31, 2025, NT$5,000 million aggregate principal amount of these bonds were outstanding.
In late October 2025, we issued another three-year domestic unsecured corporate bonds totaling NT$5,000 million, with a face value of NT$1 million per unit. Interest is due and payable annually at 1.70%, and the principal will be repayable in October 2028 upon maturity. The proceeds of this bond offering were used for repayment of debts. As of December 31, 2025, NT$5,000 million aggregate principal amount of these bonds were outstanding.
In early December 2025, we issued another three-year and five-year domestic unsecured corporate bonds totaling NT$4,800 million, with a face value of NT$1 million per unit. The three-year domestic unsecured corporate bond was issued in the amount of NT$2,300 million. Interest is due and payable annually at 1.55%, and the principal will be repayable in December 2028 upon maturity. The five-year domestic unsecured corporate bond was issued in the amount of NT$2,500 million. Interest is due and payable annually at 1.60%, and the principal will be repayable in December 2030 upon maturity. The proceeds of this bond offering were used for repayment of debts. As of December 31, 2025, NT$4,800 million aggregate principal amount of these bonds were outstanding.
Operating Activities
In 2025, net cash provided by operating activities was NT$99,864 million (US$3,183 million), primarily due to net income before income tax of NT$48,082 million (US$1,533 million) and the add-back of non-cash items, such as depreciation and amortization in the amount of NT$59,259 million (US$1,889 million).
In 2024, net cash provided by operating activities was NT$93,872 million, primarily due to net income before income tax of NT$57,045 million and the add-back of non-cash items, such as depreciation and amortization in the amount of NT$48,168 million.
In 2023, net cash provided by operating activities was NT$86,000 million, primarily due to net income before income tax of NT$68,450 million and the add-back of non-cash items, such as depreciation and amortization in the amount of NT$40,484 million.
Investing Activities
In 2025, net cash used in investing activities was NT$53,154 million (US$1,694 million), primarily due to cash used for acquisition of property, plant and equipment amounting to NT$47,745 million (US$1,522 million) and net increase of financial assets measured at amortized cost amounting to NT$8,263 million (US$263 million).
In 2024, net cash used in investing activities was NT$85,941 million, primarily due to cash used for acquisition of property, plant and equipment amounting to NT$88,544 million.
In 2023, net cash used in investing activities was NT$97,787 million, primarily due to cash used for acquisition of property, plant and equipment amounting to NT$91,474 million and net increase of financial assets measured at amortized cost amounting to NT$5,617 million.
Financing Activities
In 2025, net cash used in financing activities was NT$39,204 million (US$1,250 million), primarily due to NT$35,784 million (US$1,141 million) for cash dividend payment and NT$21,796 million (US$695 million) due to net decrease in bank loans, partially offset by NT$19,984 million (US$637 million) due to bonds issued.
In 2024, net cash used in financing activities was NT$39,200 million, primarily due to NT$37,586 million for cash dividend payment.
In 2023, net cash used in financing activities was NT$29,086 million, primarily due to NT$45,015 million for cash dividend payment and NT$21,209 million for payment of other financial liabilities, partially offset by NT$17,388 million due to net increase in bank loans, NT$10,423 million due to net increase in guarantee deposits and NT$9,989 million due to bonds issued.
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We had bonds payable of NT$50,228 million (US$1,601 million) in the aggregate as of December 31, 2025.
The following table sets forth our outstanding long-term bank loans as of December 31, 2025:
Due in 2026
Due in 2027
Due in 2028
Due in 2029
Due in 2030
Due in 2031 & thereafter
The interest rates of our long-term bank loans range from 1.53% to 2.98%.
As of December 31, 2025, the current or exchangeable portion of bonds due within one year was NT$16,157 million (US$515 million), and the current portion of long-term bank loans due within one year was NT$3,031 million (US$97 million).
Capital Expenditures
We will continue to employ a ROI-driven approach in our capital expenditure planning as our expansion projects will be supported by customers who have signed multi-year supply agreements with us. As of December 31, 2025, our construction contracts amounted to NT$24,191 million (US$771 million) and the portion of the contracts not yet recognized was approximately NT$5,454 million (US$174 million). In 2023, 2024 and 2025, we incurred capital expenditures of approximately NT$94,087 million, NT$91,052 million and NT$50,562 million (US$1,612 million), respectively, primarily to purchase equipment for research and development and production at our fabs.
On February 24, 2022, our board of directors approved a plan to build a new advanced manufacturing facility next to our existing 300mm fab (Fab 12i) in Singapore. The first phase of this greenfield fab is expected to have a design capacity of 30,000 wafers per month, with production expected to commence in the second half of 2026. The new fab (Fab 12i P3) will utilize 28nm and 22nm process technologies.
Contractual Obligations
Our material cash requirement for known contractual obligation came from bonds, loans, lease obligation, commitment for purchase obligations and the guarantee deposits. As of December 31, 2025, the total contractual cash obligations, including the amounts which has yet been recorded on our balance sheet as of December 31, 2025, are NT$193,028 million (US$6,153 million), among which NT$86,811 million (US$2,767 million) will be due within one year and NT$106,217 million (US$3,386 million) will be due after one year.
In addition, as part of the normal course of business, we have entered into multi-year contract to purchase renewable energy. We will purchase more than 30 billion kilowatt-hours of Offshore Wind Power over least 30 years. The amounts to be paid under this contract will be based on the actual volumes of electricity to be generated by the power generation equipment specified in the contract. Our payment obligations under this contract are not readily determinable.
Transactions with Related Parties
See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions” and Note 7 to our audited consolidated financial statements included in this Annual Report.
Research, Development, Patents and Licenses
The semiconductor industry is characterized by rapid changes in technology, frequently resulting in obsolescence of process technologies and products. As a result, effective research and development is essential to our success. We invested approximately NT$13,284 million, NT$15,616 million and NT$17,725 million (US$565 million) in 2023, 2024 and 2025, respectively, in research and development, which represented 6.0%, 6.7% and 7.5%, respectively, of operating revenues for such years. Following our operation and development planning, our IP division has formulated strategies and plans for the protection and development of intellectual property to promote the steady growth of the number of patent rights. Status on the implementations is reported to the board of directors at least once a year. We were granted a total of 623 domestic and foreign patents in 2025, 303 of which are US patents, 176 R.O.C. (Taiwan) patents, 95 China patents, and 49 patents from the rest of the world. The total accumulated number of our patents is more than 16,700, which can provide a thorough and strong IP foundation for our technologies.
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Our current research and development activities seek to optimize the use of available capacity by developing specialty technology platforms into existing technology nodes. Although we emphasize firm-wide participation in the research and development process, we maintain central research and development teams primarily responsible for developing cost-effective technologies that can serve the manufacturing needs of our customers. We believe we have a strong foundation in research and development and intend to continue our efforts on technology developments. Our management believes in the value of continued support of research and development efforts and intends to continue our foundry position by providing customers with comprehensive technology solutions in the industry.
Trend Information
Please refer to “Item 5. Operating and Financial Review and Prospects—Overview” for a discussion of the most significant recent trends in our production, sales, costs and selling prices. In addition, please refer to discussions included in this Item 5 for a discussion of known trends, uncertainties, demands, commitments and events that we believe are reasonably likely to have a material effect on our operating revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Critical Accounting Estimates
Please refer to Note 5 to our audited consolidated financial statements included elsewhere in this Annual Report.
Directors and Senior Management
The following tables set forth the name, age, position, tenure and biography of each of our directors and executive officers as of March 31, 2026. There is no family relationship among any of these persons.
The business address of our directors and executive officers is the same as our registered address.
Board of Directors
Name
Position
Stan Hung
Jason Wang
Ming Hsu
Lih J. Chen (1)
Jyuo-Min Shyu (1)
Kuang Si Shiu (1)
Wen-Hsin Hsu (1)
Ling-Ling Wu (1)
Su Lin Wang (1)
Member of the audit committee, remuneration committee and nominating committee.
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Executive Officers
TS Wu
G C Hung
Oliver Chang
Chitung Liu
JT Lin
Victor Chuang
Chuck Chen
S F Tzou
Osbert Cheng
Steven Hsu
Jerry CJ Hu
Y S Shen
Steven S Liu
Francia Hsu
Mindy Lin
Linwu Kuo
Eric Chen
Olivia Liao
Stan Hung is a director, the Chairman and Chief Strategic Officer of the Company. Mr. Hung joined the Company in 1991 and previously served as the Company’s Chief Financial Officer and Senior Vice President. Mr. Hung concurrently serves as the Chairman and Strategic Officer of Faraday Technology Corporation and Silicon Integrated Systems Corp., Chairman of Fortune Venture Capital Corp., TLC Capital Co. Ltd., and UMC Capital Corp., a director of Triknight Capital Corporation and United Microelectronics (Europe) B.V., and director and legal representative of SiS Semiconductor (Shandong) Co., Ltd. and UnitedDS Semiconductor (Shandong) Co., Ltd. Mr. Hung received a bachelor’s degree in Accounting from Tamkang University in 1982.
Jason Wang is a director and Chief Executive Officer of the Company. Mr. Wang is a representative institutional director of Silicon Integrated Systems Corp. Mr. Wang joined the Company as Vice President of Corporate Marketing in 2008, and from 2009 to 2014 served as President of UMC Group (USA), responsible for business operations and North America strategic business development. He was later appointed Senior Vice President, and became Co-President in 2017. As Co-President, Mr. Wang oversaw corporate strategy and planning, sales and marketing, and customer engineering. He was named Chief Executive Officer in 2026. Prior to joining the Company, Mr. Wang spent 18 years at Trident Microsystems in various leadership roles. He was named Vice President of Trident’s Business Operations and Finance (Asia) after leading a strategic restructuring plan in 2003, shifting the company’s business focus from PC graphics to digital media. Mr. Wang concurrently serves as a director of Fortune Venture Capital Corp., TLC Capital Co., Ltd., UMC Group (USA), United Microelectronics (Europe) B.V., UMC Capital Corp., and eJoule International Limited. Mr. Wang did his undergraduate study in Business Administration at San Jose State University.
Ming Hsu is a director, President and Chief Operating Officer of the Company. Mr. Hsu is the representative institutional director of Hsun Chieh Investment Co., Ltd. Mr. Hsu joined the Company in 2003, and has held leadership roles across functions including IP and design support, sales operations, corporate and operation planning, corporate marketing, and customer engineering. Prior to his current appointment, he was Executive Vice President, overseeing global business strategy and corporate operational planning across the Company’s manufacturing sites. Mr. Hsu concurrently serves as a director of Fortune Venture Capital Corp., TLC Capital Co., Ltd., and UMC Capital Corp. Mr. Hsu received a Master of Science degree in Electrical Engineering from University of Southern California in 1987.
Lih J. Chen is an independent director of the Company and serves as the lead independent director and the convener of the Audit Committee. Professor Chen is the Distinguished Chair Professor at National Tsing Hua University and an Academician at Academia Sinica. He previously served as the President of National Tsing Hua University and the Deputy Minister of National Science Council. Professor Chen is an expert in materials science and his research fields include metal silicides, thin film materials, and nanomaterials relevant to semiconductor electronic materials. Professor Chen received a Ph.D. degree in physics from University of California, Berkeley in 1974.
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Jyuo-Min Shyu is an independent director of the Company and serves as the convener of Sustainable Development and Nominating Committee. Dr. Shyu is an Emeritus Professor at National Tsing Hua University. He previously served as Minister of Ministry of Science and Technology and the President of Industrial Technology Research Institute (ITRI). During his service at ITRI, Professor Shyu established several forward-looking R&D alliances and the SoC Technology Center for the trend of System-on-a-chip. Professor Shyu concurrently serves as an independent director of Qisda Corporation and Far Eastone Telecommunications Co., Ltd., and as a director of Iridium Medical Technology Co., Ltd., Alpha Ring Asia Inc. and Zyxel Group Corporation. Professor Shyu received a Ph.D. degree in Electrical Engineering and Computer Science from University of California, Berkeley in 1988.
Kuang Si Shiu is an independent director of the Company and serves as the convener of the Remuneration Committee. Mr. Shiu concurrently serves as a consultant to Yuanta Commercial Bank Co., Ltd. Mr. Shiu has served in financial institutions for over 30 years. He previously served as Chairman and President of Mega Financial Holding Co., Ltd. and Mega International Commercial Bank Co., Ltd., Chairman of Hua Nan Financial Holdings Co., Ltd., Hua Nan Commercial Bank Ltd. and Land Bank of Taiwan Co., Ltd. He was an independent director of Yuanta Financial Holdings Co., Ltd. and Yuanta Commercial Bank Co., Ltd. Mr. Shiu received an MBA degree from Indiana University in 1978.
Wen-Hsin Hsu is an independent director of the Company and serves as the convener of the Capital Budget Committee. Professor Hsu is a professor at the Department of Accounting at National Taiwan University. She previously served as Director of Global MBA and as Associate Dean of International affairs at the College of Management, National Taiwan University. Professor Hsu concurrently serves as an independent director of Unitech Printed Circuit Board Corp., and ANT Precision Industry Co., Ltd., and as Senior Executive Vice President and Chief Financial Officer of Chunghwa Telecom Co., Ltd. Professor Hsu received a Ph.D. degree in Accounting and Finance from Lancaster University in 2006.
Ling-Ling Wu is an independent director of the Company, and a professor in the Department of Information Management at National Taiwan University. Professor Wu previously served as an independent director of Faraday Technology Corp., Unimicron Technology Corp., ITE Technology Inc., Crystalwise Technology Inc., and Hycon Technology Corp. Professor Wu received a Ph.D. degree in Psychology from University of Chicago in 1995.
Su Lin Wang is an independent director of the Company. Mrs. Wang is an Adjunct Specialist Professor at the Institute of International Business at National Cheng Kung University and concurrently serves as an independent director of Jess-Link products Co., Ltd. and AVerMedia Technologies, Inc., as well as President and Director of MAYO Human Capital Inc. Mrs. Wang previously served as Senior Vice President and corporate Chief Financial Officer of Delta Electronics, Inc. Mrs. Wang received a master’s degree in Finance from National Taiwan University in 2004.
TS Wu is our Senior Vice President, responsible for global fab operations, and serves as Chief Information Security Officer. Mr. Wu joined the Company in 1990 and has over 35 years of experience in semiconductor development and manufacturing. He has held roles across wafer fabrication, process integration, technology transfer and development, smart manufacturing and digital security, manufacturing resource integration and engineering services. Mr. Wu also serves as Secretary-General of Company’s Corporate Sustainability Committee, responsible for integrating business operations with sustainable development, and leading the formulation and implementation of the Company’s environmental, social, and governance (ESG) strategies. Mr. Wu is the Vice Chairman of Hejian Technology (Suzhou) Co., Ltd. and a director of United Semiconductor (Xiamen) Co., Ltd. Mr. Wu received a master’s degree in Electronic Engineering from National Chiao Tung University in 1990.
G C Hung is our Senior Vice President, responsible for technology and business development. Mr. Hung plays a pivotal role in shaping the Company’s corporate strategy, customer engineering, and corporate marketing initiatives, while leading the Company’s overall research and development. Prior to his current position, Mr. Hung served as Vice President of Technology Development at UMC. Mr. Hung acted as Co-Chair of SEMI Taiwan’s IC Committee from 2019 to 2022. Mr. Hung received a master’s degree in Chemical Engineering from National Taiwan University in 1992.
Oliver Chang is our Senior Vice President, responsible for global sales. Mr. Chang has been with the Company for more than 20 years and has held positions including Vice President of Sales at UMC Japan, Sales Director for the Asia region, and Vice President of Sales at UMC USA. Mr. Chang received an Executive MBA degree from National Taiwan University in 2009. Between 2008 and 2020, Mr. Chang served as Chief Executive Officer of the U.S. subsidiary of Elpida Memory, Inc., and later became Chief Sales Officer of the group. Following that, he joined Japan Display Inc.’s Taiwan module assembly subsidiary, serving as its Chairman. Mr. Chang is a director of Chipbond Technology Corporation. Mr. Chang received a bachelor’s degree in Physics from Chinese Culture University in 1986.
Chitung Liu is the Chief Financial Officer and the Senior Vice President of the Company. On March 6, 2019, Mr. Liu was appointed as our Head of Corporate Governance. Prior to joining our company in 2001, Mr. Liu was a managing director of UBS. Mr. Liu is the Chairman of Hejian Technology (Suzhou) Co., Ltd., United Semiconductor (Xiamen) Co., Ltd. and a director of Fortune Venture Capital Corp., TLC Capital Co., Ltd., Unimicron Technology Corp., Yann Yuan Investment Co., Ltd., UMC Group (USA), Green Earth Limited, ECP Vita Pte. Ltd., UMC Capital Corp., United Microchip Corporation and Wavetek Microelectronics Corporation. Mr. Liu received an Executive MBA degree from National Taiwan University in 2009.
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JT Lin is our Vice President, responsible for operations management of all 200mm Fabs, including production, cost management, labor and digital transformation; risk and ESH management, including oversight of company-wide loss prevention, business continuity management (BCM), environmental protection, workplace safety and health, fire protection and ESG-related operations; facility operations and construction engineering, including new fab construction. Mr. Lin joined the Company in 1995 and has more than 30 years of experience in the semiconductor industry. Mr. Lin is a director of Wavetek Microelectronics Corporation. Mr. Lin received a master’s degree in Materials Science and Engineering from National Tsing Hua University in 1992.
Victor Chuang is our Vice President. Mr. Chuang joined the Company in 1993 and has more than 30 years of experience in the semiconductor industry. He has held leadership roles across functions of Fab 12A and Fab 12M operations. Prior to his current appointment, he was an Associate Vice President of Fab 12A operations, responsible for manufacturing, module engineering and process integration. Mr. Chuang is the Chairman of United Semiconductor Japan Co., Ltd. Mr. Chuang received a bachelor’s degree in Electrical Engineering from National Cheng Kung University in 1989.
Chuck Chen is our Vice President. Mr. Chen joined the Company in 1996 and has held leadership roles across functions including R&D, manufacturing, digital, and engineering service. Prior to his current role, he served as an Associate Vice President, overseeing digital transformation initiatives, product yield analysis, turnkey testing services, and photomask fabrication services. Mr. Chen received a master’s degree in Engineering Science from National Cheng Kung University in 1991.
S F Tzou is our Vice President. Mr. Tzou joined the Company in 1989 and has held multiple management positions, including fab mass production and technology development. He has led multiple R&D projects from 90nm logic to 14nm FinFET and memory process development. Mr. Tzou received a master’s degree in Materials Science and Engineering from National Tsing Hua University in 1987.
Osbert Cheng is our Vice President. Mr. Cheng joined the Company in 1998 and has held leadership roles including device, model and IP design support. He is also responsible for the joint development project with strategic customers. Mr. Cheng has served on the Technical Program Committee of the VLSI Symposium for more than five years and also serves as a review board member of EDMA, TSRI, NFC, NSTC and SEMICOM Taiwan/Compound and power. Mr. Cheng received a Ph.D. degree in Electrical Engineering from National Chiao Tung University in 1995.
Steven Hsu is our Vice President, responsible for technology development. Mr. Hsu joined the Company in 1999 and has more than 26 years of experience in the semiconductor foundry industry. He is responsible for process development in different technology segments including logic, eHV, BCD, embedded non-volatile memory (eNVM), RF-SOI, silicon photonics and advanced packaging. Mr. Hsu received a master’s degree in Electronic Engineering from National Chiao Tung University in 1998.
Jerry CJ Hu is our Vice President, responsible for customer engineering, overseeing engineering and technology services from development execution to high-volume manufacturing for global customers. Earlier in his tenure at the Company, Mr. Hu held leadership positions in Europe and Japan sales and key account management. Prior to joining the Company, Mr. Hu worked at Texas Instruments for 18 years in roles including advanced CMOS R&D and external technology development and manufacturing. Mr. Hu received a Ph.D. degree in Materials Science and Engineering from Stanford University in 1995.
Y S Shen is our Vice President, overseeing sales operations in the Asia-Pacific region. Since joining the Company in 1989, Mr. Shen has accumulated over 30 years of experience in the semiconductor industry focused on sales and business development. Mr. Shen is a director of Faraday Technology Corporation. Mr. Shen holds an MBA degree from National Taiwan University.
Steven S Liu is our Vice President, responsible for Europe and Japan sales. Mr. Liu’s semiconductor experience includes leadership roles at multinational companies. Prior to joining the Company, he was an Associate Partner at McKinsey & Co. focused on growth strategy and business innovation for the semiconductor sector. Before joining McKinsey & Co., he served as corporate Vice President and General Manager of the global desktop business unit at AMD. He previously held a Vice President position at Samsung. Mr. Liu received a Master of Science degree in Electrical Engineering from University of Southern California in 2000.
Francia Hsu is our Vice President. Ms. Hsu joined the Company in 1994 and has been responsible for corporate and operational planning. Ms. Hsu also serves as a director of HeJian Technology (Suzhou) Co., Ltd., United Semiconductor (Xiamen) Co., Ltd., United Semiconductor Japan Co., Ltd. and Wavetek Microelectronics Corporation. She received a master’s degree in Industrial Engineering from National Chiao Tung University in 1994.
Mindy Lin is our Vice President, responsible for quality and reliability. Ms. Lin joined the Company in 1988 and has more than 30 years of experience in the semiconductor industry. Ms. Lin has experience in new fab build-outs, including the Company’s first joint venture with a customer in 1996. Ms. Lin previously worked at an IP design company with responsibilities including sales, procurement, product engineering, quality, and reliability management, and also at a III-V manufacturing company in a quality and reliability role. Ms. Lin received an MBA degree from the University of Leicester in 2000.
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Linwu Kuo is our Vice President, responsible for public affairs and corporate communications. Mr. Kuo joined the Company in 2021. Mr. Kuo has experience in the public and private sectors, including crisis management and homeland security related issues. In public service, he served as the first Director of the Office of Homeland Security in Taiwan’s Executive Yuan, and as a senior NSC staff member. Mr. Kuo participated in national response planning for major global and domestic events, including SARS, the U.S. War on Terror, and the September 1999 earthquake in Taiwan. Mr. Kuo is a director of Locus Cell Co., Ltd. Mr. Kuo received a master’s degree in European Studies from KU Leuven (Katholieke Universiteit Leuven) and a master’s degree in Diplomacy from National Chengchi University.
Eric Chen is the Chief Human Resources Officer and the Vice President of the Company. Mr. Chen joined the Company in 1990 and has more than 35 years of experience within the organization. He has held leadership roles including heading the Finance and Accounting Division at the Company. Mr. Chen was appointed as Chief Human Resources Officer of the Company in March 2011. He previously served as Senior Vice President at Silicon Integrated Systems Corp. Mr. Chen is a director of Best Elite International Limited. Mr. Chen received an Executive MBA degree in Finance from National Taiwan University in 2011.
Olivia Liao is the General Counsel and Vice President of the Company. Ms. Liao is a distinguished lawyer and IP specialist with more than 30 years of experience. Ms. Liao joined the Company in 2023 as General Counsel. Prior to this role, Ms. Liao served as General Counsel for Greater China at ROHM Semiconductor in 2008 and was appointed Chairperson of ROHM Taiwan in 2020. Dual-qualified as a licensed attorney and patent agent, Ms. Liao launched her legal career at leading law firms in Taiwan and Japan, building a strong foundation in IP and mergers and acquisitions. Ms. Liao received an LL.M. from the University of Tokyo, an LL.M. from National Chengchi University, and a Bachelor of Laws from National Chengchi University.
Except for Mr. Jason Wang and Mr. Ming Hsu as disclosed above, there is no arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management.
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Compensation
The aggregate compensation paid and benefits in kind granted to our directors in 2025 were approximately NT$48 million (US$1.5 million). The remuneration was out of our 2025 earnings distribution plan, and the distribution percentage for directors is 0.1%. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Dividends and Distributions.” Some of the remuneration was paid to the legal entities that certain directors represent. The aggregate compensation paid and benefits in kind granted to our executive officers in 2025 were approximately NT$923.4 million (US$29.4 million), which included NT$286 million (US$9.1 million) as bonus. The aggregate compensation paid and benefits in kind granted to our directors and senior management in 2025 were approximately NT$971.2 million (US$31.0 million), which included NT$286 million (US$9.1 million) as bonus.
Board Practices
All of our directors were elected in May 2024 for a term of three years at our annual general meeting of shareholders. Neither we nor any of our subsidiaries has entered into a contract with any of our directors by which our directors are expected to receive benefits upon termination of their services.
Audit Committee
Our board of directors established an audit committee in March 2005. In the annual general meeting held on June 13, 2008, we amended our articles of incorporation to introduce the mechanism of an audit committee. See “Item 10. Additional Information—B. Memorandum and Articles of Association—Directors”. After the re-election of directors in the annual general meeting on May 30, 2024, our board of directors appointed Lih J. Chen, Jyuo-Min Shyu, Kuang Si Shiu, Wen-Hsin Hsu, Ling-Ling Wu and Su Lin Wang to be members of the audit committee. Each audit committee member is an independent director who is financially literate with accounting or related financial management expertise. The audit committee meets as often as it deems necessary to carry out its responsibilities. Pursuant to an audit committee charter, the audit committee has responsibility for, among other things, overseeing the qualifications, independence and performance of our internal audit function and independent auditors, and overseeing the accounting policies and financial reporting and disclosure practices of our company. The audit committee also has the authority to engage special legal, accounting or other consultants it deems necessary in the performance of its duties.
Remuneration Committee
The R.O.C. Securities and Exchange Act, as amended on November 24, 2010, further introduced the mechanism of a “Remuneration Committee,” which requires publicly listed companies in the R.O.C., including our company, to adopt a remuneration committee. Pursuant to the Regulations Governing the Establishment and Exercise of Powers by Remuneration Committees of Public Companies, the remuneration committee shall be composed of no less than three members commissioned by the board of directors. In addition, for a company with independent directors, such as us, at least one of the remuneration committee members shall be an independent director. We established a remuneration committee in accordance with Article 14-6 of the R.O.C. Securities and Exchange Act on April 27, 2011. We amended our articles of incorporation to implement the mechanism of our remuneration committee during the annual general meeting held on June 15, 2011. After the re-election of directors in the annual general meeting on May 30, 2024, our board of directors appointed Lih J. Chen, Jyuo-Min Shyu, Kuang Si Shiu, Wen-Hsin Hsu, Ling-Ling Wu and Su Lin Wang to serve as members of the remuneration committee.
Pursuant to applicable SEC rules and NYSE listing standards, we as a foreign private issuer are required to disclose any significant ways in which our corporate governance practices differ from those followed by NYSE-listed U.S. domestic companies under the NYSE’s listing standards. A copy of the significant differences between our corporate governance practices and NYSE corporate governance rules applicable to U.S. companies is available on our website http://www.umc.com/upload/media/08_Investors/Corporate_Governance/Corporate_Governance/The_differences_between_the_UMCs_corporate_governance_practices_and_those_required_of_domestic_companies_under_NYSE_listing_standards_20190306.pdf.
Nominating Committee
Our board of directors established a nominating committee in December 2017. Our nominating committee consists of Lih J. Chen, Jyuo-Min Shyu, Kuang Si Shiu, Wen-Hsin Hsu, Ling-Ling Wu and Su Lin Wang, each of whom is an independent director. The nominating committee is to assist the board to enhance the management mechanism and improve corporate governance for our sustainable development. The objectives of our nominating committee include: (i) to constitute the nomination policy and succession plans of the directors and the executives, and to review and propose the candidate list of the directors and the executives accordingly, (ii) to construct and to develop the operation of our board and the board committees, as well as to plan and assess the performance of the board, the board committees and the executives, and (iii) to enhance the corporate governance system and practices in order to protect the interests of our shareholders.
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Employees
As of December 31, 2025, we had 19,097 employees, which included 12,337 engineers, 5,924 technicians and 836 administrative staff performing administrative functions, on a consolidated basis, where a majority of the employees work from our Taiwan R.O.C. offices and facilities. We have in the past implemented, and may in the future evaluate the need to implement, labor redundancy plans based on the work performance of our employees.
Engineers
Technicians
Administrative Staff
Employee salaries are reviewed annually. Salaries are adjusted based on industry standards, inflation and individual performance. As an incentive, additional bonuses in cash may be paid at the discretion of management based on the performance of individuals. In addition, except under certain circumstances, R.O.C. law requires us to reserve from 10% to 15% of any offerings of our new common shares for employees’ subscription.
Our employees participate in our profit distribution pursuant to our articles of incorporation. Employees are entitled to receive additional bonuses based on a certain percentage of our allocable surplus income. On February 25, 2026, our board of directors proposed an employee bonus in cash in the aggregate amount of NT$3,438.3 million (US$109.6 million) in relation to retained earnings in 2025.
Our employees are not covered by any collective bargaining agreements. We believe we have a good relationship with our employees.
Share Ownership
As of March 31, 2026, each of our directors and executive officers held common shares and/or ADSs of UMC, either directly for their own account or indirectly as the representative of another legal entity on our board of directors, except for our independent directors Lih J. Chen, Jyuo-Min Shyu, Kuang Si Shiu, Wen-Hsin Hsu, Ling-Ling Wu and Su Lin Wang. As of March 29, 2026, our most recent record date, Hsun Chieh Investment Co., Ltd. held approximately 441 million of our common shares, representing approximately 3.51% of our issued and outstanding share capital; Silicon Integrated Systems Corp. held approximately 267 million of our common shares, representing approximately 2.12% of our issued and outstanding share capital; and Chairman Mr. Hung held approximately 60 million of our common shares, representing approximately 0.47% of our issued and outstanding share capital.
Disclosure of a registrant’s action to recover erroneously awarded compensation.
On October 25, 2023, the remuneration committee of our board of directors approved an Incentive Based Compensation Clawback Policy providing for the Company’s recoupment of recoverable incentive compensation that is received by covered Officers of the Company under certain circumstances, in compliance with Section 10D of the Exchange Act, Rule 10D-1 promulgated thereunder and NYSE Section 303A.14. See Exhibit 97.1 to this Annual Report. The Company has not recouped compensation, or attempted to recoup compensation, from any employee to date.
Major Shareholders
The following table sets forth information known to us with respect to the beneficial ownership of our common shares as of (i) March 29, 2026, our most recent record date, and (ii) as of certain record dates in each of the preceding two years, for (1) the shareholders known by us to beneficially own more than 2% of our common shares and (2) all directors and executive officers as a group. Beneficial ownership is determined in accordance with SEC rules.
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Name of Beneficial Owner
Capital Tip Customized Taiwan Select High Dividend ETF
Cathay Sustainability High Dividend ETF
Hsun Chieh Investment Co., Ltd. (1)
Yuanta/P-shares Taiwan Dividend Plus ETF
Silicon Integrated Systems Corp.
Directors and executive officers as a group
36.49% owned by United Microelectronics Corporation as of March 31, 2026.
None of our major shareholders have different voting rights from those of our other shareholders. To the best of our knowledge, we are not directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly.
For information regarding our common shares held or beneficially owned by persons in the United States, see “Item 9. The Offer and Listing—A. Offer and Listing Details—Market Information for Our American Depositary Shares” in this Annual Report.
Related Party Transactions
From time to time we have engaged in certain transactions with our affiliates. The sales and purchase prices with related parties are determined through mutual agreement in reference to market conditions.
The following table shows our aggregate equity ownership interest, on a consolidated basis, in major related fabless design companies that we enter into transactions from time to time as of March 29, 2026.
Faraday Technology Corp.
We provide foundry services to these fabless design companies and the sales price was determined through arms-length negotiation and mutual agreement in reference to market conditions. We generated total of NT$3,022 million, NT$3,611 million and NT$4,387 million (US$140 million) of our operating revenues in 2023, 2024 and 2025, respectively, from the provision of our foundry services to these two companies. For more information of related party transactions, please refer to Note 7 to our audited consolidated financial statements included in this Annual Report.
Interests of Experts and Counsel
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Consolidated Statements and Other Financial Information
Please refer to Item 18 for a list of all financial statements filed as part of this Annual Report on Form 20-F.
Legal Proceedings
During the ordinary course of operations, we may encounter certain disputes arising from business transactions or contractual relationships. These matters are considered routine events in the ordinary course of business and are assessed and addressed in accordance with our internal control and compliance procedures. As of the date of this Annual Report, these disputes have not had any material adverse impact on our financial position or operating results, nor are there any other material litigation or non-litigation matters required to be disclosed by applicable laws and regulations.
Dividend Policy
As for our policy on dividend distributions, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Dividends and Distributions.” On May 31, 2023, our shareholders approved a cash dividend of NT$3.60 per common share for an aggregate of NT$45,017,096,342. On June 7, 2023, our board of directors resolved to adjust the cash dividend ratio to NT$3.60046348 per common share because the number of outstanding common shares had changed as a result of cancellation of Restricted Stock Awards. On May 30, 2024, our shareholders approved a cash dividend of NT$3.0 per common share for an aggregate of NT$37,587,101,925. On June 12, 2024, our board of directors resolved to adjust the cash dividend ratio to NT$3.00011747 per common share because the number of outstanding common shares had changed as a result of cancellation of Restricted Stock Awards.
On May 28, 2025, our shareholders approved a cash dividend of NT$2.85 per common share for an aggregate of NT$35,787,597,878. On June 4, 2025, our board of directors resolved to adjust the cash dividend ratio to NT$2.85016443 per common share because the number of outstanding common shares had changed as a result of cancellation of Restricted Stock Awards.
On February 25, 2026, our board of directors proposed dividends of NT$32,704,164,009 (approximately NT$2.60 per common share), which are expected to be approved at our annual general meeting on May 27, 2026.
The following table sets forth the cash dividends per share and stock dividends per share as a percentage of common shares outstanding paid during each of the years indicated in respect of common shares outstanding at the end of each such year, except as otherwise noted.
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2023
2024
2025
We declare stock dividends in an NT dollar amount per share, but we pay the stock dividends to our shareholders in the form of common shares. The amount of common shares distributed to each shareholders is calculated by multiplying the dividend declared by the number of common shares held by the given shareholders, divided by the par value of NT$10 per share. Fractional common shares are not issued but are paid in cash.
Significant Changes
For the significant subsequent events following the close of the last financial year up to the date of this Annual Report on Form 20-F, please refer to Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report.
Offer and Listing Details
Market Information for Our Common Shares
Our common shares have been listed on the Taiwan Stock Exchange under the symbol “2303” since July 1985. There is no public market outside Taiwan for our common shares.
Market Information for Our American Depositary Shares
Our ADSs have been listed on the NYSE under the symbol “UMC” since September 19, 2000. The outstanding ADSs are identified by the CUSIP number 910873405. Each of our ADSs represents the right to receive five common shares.
As of March 31, 2026, there were a total of 149,782,816 ADSs listed on the NYSE. With certain limited exceptions, holders of common shares who are not R.O.C. persons are required to hold these common shares through a brokerage or custodial account in the R.O.C. As of March 31, 2026, 748,914,080 common shares were registered in the name of a nominee of JPMorgan Chase & Co., the depositary under the deposit agreement. JPMorgan Chase & Co. has advised us that, as of March 31, 2026, 149,765,625 ADSs representing these 748,828,125 common shares were held of record by Cede & Co., and 17,191 ADSs were held by U.S. registered shareholders. We have no further information as to common shares held or beneficially owned by U.S. persons.
Plan of Distribution
Markets
The principal trading markets for our common shares are the Taiwan Stock Exchange and the New York Stock Exchange (NYSE), on which our common shares trade in the form of ADSs. See also “—A. Offer and Listing Details” for more details.
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Selling Shareholders
Dilution
Expenses of the Issue
Share Capital
Memorandum and Articles of Association
The following statements summarize the material elements of our capital structure and the more important rights and privileges of shareholders conferred by the R.O.C. law and our articles of incorporation.
Objects and Purpose
The scope of business of UMC as set forth in Article 2 of our articles of incorporation, includes, among others, (i) integrated circuits; (ii) semiconductor parts and components; (iii) parts and components of microcomputers, microprocessors, peripheral support and system products; (iv) parts and components of semiconductor memory systems products; (v) semiconductor parts and components for digital transceiver product and system products; (vi) semiconductor parts and components for telecom system and system products; (vii) testing and packaging of integrated circuits; (viii) mask production; (ix) metals, derived fuels and chemical products generated simultaneously from our manufacturing process; (x) management consulting service in regard to sustainable development, energy/resources conservation technologies and semiconductor fab related affairs; (xi) clearance, recycle and disposal of waste and manufacturing outputs; research and development, design, production, sales, promotion and after-sale services related to our business; and (xii) export/import trade related to our business.
Directors
The R.O.C. Company Act and our articles of incorporation provide that our board of directors is elected by shareholders and is responsible for the management of our business. As of March 31, 2026, our board of directors consisted of nine directors, out of which six are independent directors. In the annual general meeting held on June 11, 2007, we amended our articles of incorporation to abolish the managing director mechanism. In the annual general meeting held on June 13, 2008, we amended our articles of incorporation to introduce the mechanism of an audit committee. The Chairman presides at all meetings of our board of directors, and also has the authority to represent our company. The term of office for our directors is three years, and our directors are elected by our shareholders by means of cumulative voting. The amendment to our articles of incorporation on June 11, 2007 also adopts a nomination system which provides that holders of one percent or more of the issued and outstanding shares of our company would be entitled to submit a roster of candidates to be considered for nomination to our company’s board of directors at an annual general meeting involving the election of directors. Pursuant to the R.O.C. Company Act, entity that owns our common shares may be elected as a director, in which case a natural person must be designated to act as the legal entity’s representative. A legal entity that is our shareholder may designate its representative to be elected as our director on its behalf. In the event several representatives are designated by the same legal entity, any or all of them may be elected. A director who serves as the representative of a legal entity may be removed or replaced at any time at the discretion of such legal entity, and the replacement director may serve the remainder of the term of office of the replaced director. As of March 31, 2026, two of our nine directors are representatives of other legal entities, as shown in “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”
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According to the R.O.C. Company Act and the rules promulgated under the R.O.C. Securities and Exchange Act, a director who has a personal interest in a matter to be discussed at the meeting of the board of directors, shall explain the essential contents of such personal interest in the meeting of the board of directors. Moreover, where the spouse, a blood relative within the second degree of kinship of a director, or any company which has a controlling or subordinate relation with a director has interests in a matter to be discussed at the meeting of the board of directors, such director shall be deemed to have a personal interest in the matter. In case that such personal interest may impair the interests of us, such director shall abstain from joining the discussion and voting on such matter. In case that such director is the representative designated by a legal entity shareholder to be elected as our director and such legal entity shareholder has personal interest in the matter to be discussed at the meeting of the board of directors, the rules above mentioned shall also apply. Our articles of incorporation provide that our board of directors is authorized, by taking into account of the extent of his/her/its involvement of our operation activities and the value of his/her/its contribution, to determine the compensation for each director at a comparable rate adopted by other companies of the same industry regardless of the profit received by our company. In addition, according to our articles of incorporation, we may distribute a maximum of 0.2% of the annual profits before tax as remuneration to directors. Please refer to “—Dividends and Distributions” in this item below for more details. Our articles of incorporation do not impose a mandatory retirement age limit for our directors. Furthermore, our articles of incorporation do not impose a shareholding qualification for each director, while the laws and regulations require the aggregate shareholding of all directors, excluding independent directors, to meet certain thresholds considering the paid-in capital and the numbers of the independent directors. According to our current internal Loan Procedures, we shall not extend any loan to our directors.
In order to strengthen corporate governance of companies in Taiwan, effective from January 1, 2007, the amended R.O.C. Securities and Exchange Act authorizes the R.O.C. FSC, after considering certain factors, including the scale, shareholding structure and business nature of a public company, to require that a public company, such as our company, meet certain criteria, including having at least two independent directors but not less than one fifth of the total number of directors.
In addition, pursuant to the R.O.C. Securities and Exchange Act, a public company is required to either establish an audit committee, or retain supervisors, provided that the R.O.C. FSC may, after considering the scale and business nature of a public company and other necessary situation, require the company to establish an audit committee in place of its supervisors. We have amended our articles of incorporation in the annual general meeting held on June 13, 2008, introducing the mechanism of an audit committee. On February 20, 2013, the R.O.C. FSC has ruled that a public company with certain scale or of certain business nature, including us, shall establish an audit committee instead of the supervisors. According to our articles of incorporation and audit committee charter, our audit committee is composed of all independent directors and performs the power and duties provided by applicable laws and regulations, including without limitation the powers and the duties of supervisors provided under the R.O.C. Company Act. A company is not allowed to maintain both supervisors and an audit committee, so we chose to eliminate our supervisors when we established our audit committee in 2009.
According to our current articles of incorporation, we may purchase directors and officers liability insurance for our directors, covering the liabilities incurred in relation to his/her/its operation of business and legally responsible for.
Common Shares
As of December 31, 2025, our authorized share capital was NT$260 billion, divided into 26 billion common shares, of which 12,588,156,344 common shares were issued and outstanding. All common shares presently issued are fully paid and in registered form, and existing shareholders are not subject to any capital calls. We do not have any outstanding warrants or option to purchase our common shares.
Restricted Share Awards & Employee Compensation Program
To retain our employees, we issue equity-based compensation to the selected employees and management. The restricted shares will be awarded to if the financial performance meets (i) return on equity (ROE%) and (ii) operating margin (OM%) criteria set forth in the Restricted Stock Awards Program.
The return on equity (ROE%) and operating margin (OM%) are used as performance indicators for the operational goals of the Company. The performance target for the two indicators are listed below, which shall be simultaneously fulfilled. Determination of fulfillment of the indicators will be based on the consolidated financial statements, audited by a certified public accountant, for the last fiscal year prior to the end of each vesting period.
Effective Date of Equity Based Compensation: July 9, 2020
Effective Date of Share Distribution: September 1, 2020
Equity Based Compensation Shares: 200.030 million shares
Effective Date of Share Distribution: June 9, 2021
Equity Based Compensation Shares: 1.268 million shares
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Indicator
Return on equity (ROE%)
Operating margin (OM%)
2 years after
3 years after
4 years after
For the restricted share awards approved by the board of directors in 2022, the following performance indicators will be used as operational goals for the Company: return on equity (ROE%), earnings per share (EPS) and Morgan Stanley Capital International (MSCI) annual ESG ratings. The performance targets and weighting for the indicators are listed below. Target are set for each indicator. Indicators that have achieved the target value, the number of vested shares in the year is calculated according to the corresponding weighting. Otherwise, the corresponding weighting is 0%. The performance period refers to the fiscal year of the most recent annual financial statement audited by a certified public accountant before the vesting date. Performance indicators are based on the consolidated financial statements audited by a certified public accountant corresponding to the period required by the indicators.
Effective Date of Equity Based Compensation: October 6, 2022
Effective Date of Share Distribution: December 5, 2022
Equity Based Compensation Shares: 23.0595 million shares
Effective Date of Share Distribution: December 5, 2023
Equity Based Compensation Shares: 26.7275 million shares
Target
Return on Equity (ROE%)
Earnings Per Share (EPS)
Morgan Stanley Capital International (MSCI) Annual ESG rating
Note 1. Comparing the performance period with the average of the preceding three years.
Note 2. The year of MSCI annual ESG rating is consistent with the performance period defined in the return on equity and earnings per share.
For the restricted share awards approved by the board of directors in 2024, the following performance indicators will be used as operational goals for the Company: earnings per share (EPS), total shareholder return (TSR) and ESG. The performance targets and weighting for the indicators are listed below. Target are set for each indicator. Indicators that have achieved the target value, the number of vested shares in the year is calculated according to the corresponding weighting. Otherwise, the corresponding weighting is 0%. The performance period refers to the fiscal year of the most recent annual financial statements audited by a certified public accountant before the relevant vesting date. Performance indicators are based on the consolidated financial statements audited by a certified public accountant corresponding to the period required by the indicators.
Effective Date of Equity Based Compensation: October 8, 2024
Effective Date of Share Distribution: December 5, 2024
Equity Based Compensation Shares: 32.9560 million shares
Effective Date of Share Distribution: December 5, 2025
Equity Based Compensation Shares: 32.8780 million shares
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Total Shareholder Return (TSR) (Note 2)
The Company’s TSR compared to the TWSESCI Index TSR:
•
Greater than or equal to the TWSESCI Index TSR: 100%
Less than the TWSESCI Index TSR: 0%
ESG
100% if both of the following goals are met; otherwise, 0%. The conditions are as follows:
Greenhouse gas (GHG) emissions (Note 3)
On the job for 2 years after granted: Reduce 14% or more in year 2025;
On the job for 3 years after granted: Reduce 16% or more in year 2026;
On the job for 4 years after granted: Reduce 18% or more in year 2027.
Female directors reach one-third or more of the Board. (Note 4)
Note 1. Comparing the performance period with the average of the preceding three years. The average of the preceding three years is calculated by taking the EPS of each year to infinite decimal places and then rounding the resulting average to four decimal places.
Note 2. The TSR is calculated based on the share prices of the Company (Ticker: 2303 TT) and the Taiwan Semiconductor Index (Ticker: TWSESCI Index) during the performance period, with the initial share price defined as the average stock price of the previous 30 trading days up to and including the first day of the performance period, and the ending share price defined as the average stock price of the previous 30 trading days up to and including the last day of the performance period, plus the dividends (if any). Stock price and dividend information are based on the Taiwan Stock Exchange and Bloomberg Financial Database.
Note 3. GHG emissions take year 2020 as the base year, with the calculation scopes defined under GHG Protocol, including direct emissions (Scope 1) and indirect emissions from purchased or acquired energy (Scope 2) defined by GHG Protocol, and the reduction performance is calculated under a full-capacity production scenario.
Note 4. Based on the list of board members on each vesting date.
New Shares and Preemptive Rights
New shares may only be issued with the prior approval of our board of directors. If our issuance of any new shares will result in any change in our authorized share capital, we are required under R.O.C. Company Act to amend our articles of incorporation and obtain approval of our shareholders in a shareholders’ meeting. We must also obtain the approval of, or submit a registration with, the R.O.C. FSC and the Science Park Administration. According to the R.O.C. Company Act, when a company issues capital stock for cash, 10% to 15% of the issue must be offered to its employees. In addition, if a listed company intends to offer new shares for cash, at least 10% of the issue must also be offered to the public. This percentage can be increased by a resolution passed at a shareholders’ meeting, which will reduce the number of new shares in which existing shareholders may have preemptive rights. Unless the percentage of the common shares offered to the public is increased by a resolution, existing shareholders of the company have a preemptive right to acquire the remaining 75% to 80% of the issue in proportion to their existing shareholdings. According to the Corporate Merger and Acquisition Act of the R.O.C., as effective on February 8, 2002 and amended on May 5, 2004 and July 8, 2015 which took effect on January 8, 2016, if new shares issued by our company are solely for the purpose of merger, acquisition, share swap or spin-off, the above-mentioned restrictions, including the employee stock ownership plan, the preemptive rights of the existing shareholders and the publicity requirement of a listed company, to such issuance of new common shares may not be applied.
Shareholder
We only recognize persons registered in our register as our shareholders. We may set a record date and close our register of shareholders for specified periods to determine which shareholders are entitled to various rights pertaining to our common shares.
Transfer of Common Shares
Under the R.O.C. Company Act, a company may issue individual share certificates or no certificate at all, to evidence common shares. Our articles of incorporation provide that we may deliver common shares in book-entry form instead of by means of issuing physical share certificates. We have issued our common shares in uncertificated/scripless form since 2007. Therefore, the transfer of our common shares is carried out on the book-entry system. The settlement of trading of our common shares is normally carried out on the book-entry system maintained by the Taiwan Depository and Clearing Corporation. Transferees must have their names and addresses registered on our register in order to assert shareholder’s rights against us. Our shareholders are required to file their respective specimen seals with our share registrar, Horizon Securities Co., Ltd.
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Shareholders’ Meetings
We are required to hold an annual ordinary shareholders’ meeting once every calendar year within six months from the end of each fiscal year. Our board of directors may convene an extraordinary meeting whenever the directors deem necessary, and they may do so if requested in writing by shareholders holding no less than 3% of our issued shares who have held these common shares for more than a year. At least 15 days’ advance written notice must be given of every extraordinary shareholders’ meeting and at least 30 days’ advance written notice must be given of every annual ordinary shareholders’ meeting. In addition, shareholder(s) who have continuously held more than 50% of our issued common shares for a period of three months or longer may convene an extraordinary shareholders’ meeting without any approval of our board of directors. The period during which a shareholder holds the shares and the number of shares held by a shareholder shall be determined based on our register of shareholders as of the book close date of the relevant extraordinary shareholders’ meeting. Unless otherwise required by law or by our articles of incorporation, voting for an ordinary resolution requires an affirmative vote of a simple majority of those present. A distribution of cash dividends would be an example of an ordinary resolution. The R.O.C. Company Act and, in the case of certain merger and acquisition deals, the Corporate Merger and Acquisition Act, also provides that in order to approve certain major corporate actions, including any amendment of our articles of incorporation, dissolution, merger or spin-off, share swap, entering into, amendment, or termination of any contract for lease of the company’s business in whole, or for entrusted business, or for joint operation with others, on regular basis, the transfer of all or an essential part of the business or assets, accept all of the business or assets of any other company which would have a significant impact on our operations, removing directors or the distribution of dividend in stock form, a special resolution shall be adopted by the holders of the majority of our common shares represented at a shareholders’ meeting at which holders of at least two-thirds of our issued and outstanding common shares are present; provided that, in the case of a public company, such as our company, such resolution may be adopted by the holders of at least two-thirds of the common shares represented at a shareholders’ meeting at which holders of at least a majority of our issued and outstanding common shares are present; provided, further, that in the case of merger, spin-off, transfer of all or essential part of business or asset, or share swap which meets the specific criteria provided under the Corporate Merger and Acquisition Act, such as short-form merger/spin-off/share swap or whale-minnow merger/spin-off/share-swap (as defined therein), such corporate action can be approved by a board resolution adopted by majority consent at a meeting with at least two-thirds of our directors’ present without shareholders’ approval. Notwithstanding the foregoing, in the event such transaction will result in our delisting, the approval from holders of at least two-thirds of our issued and outstanding common shares is required.
Voting Rights
Each common share and Class A preferred share, if issued, is generally entitled to one vote and no voting discount will be applied. However, treasury shares and our shares held by (i) an entity in which we own more than 50% of the voting shares or paid-in capital, or (ii) a third party in which we and an entity controlled by us jointly own, directly or indirectly, more than 50% of the voting shares or paid-in capital are not entitled to any vote. Except as otherwise provided by law or our articles of incorporation, a resolution can be adopted by the holders of a simple majority of the issued and outstanding shares represented at a shareholders’ meeting. The quorum for a shareholders’ meeting to discuss the ordinary resolutions is a majority of the issued and outstanding shares. Pursuant to the R.O.C. Company Act amended on December 28, 2011, the election of directors by our shareholders shall be conducted by means of cumulative voting rather than other voting mechanisms adopted in our articles of incorporation. Except as otherwise provided under applicable laws and regulations, in all other matters, a shareholder must cast all his or her votes in the same manner when voting on any of these matters.
Our shareholders may be represented at an ordinary or extraordinary shareholders’ meeting by proxy if a valid proxy form is delivered to us five days before the commencement of the ordinary or extraordinary shareholders’ meeting, unless such proxy has been revoked no later than two days before the date of the shareholders’ meeting. Voting rights attached to our common shares exercised by our shareholders’ proxy are subject to the proxy regulation promulgated by the R.O.C. FSC.
Authorized by the R.O.C. Company Act, the R.O.C. FSC has issued an administrative order on February 20, 2012 to require Taiwan Stock Exchange-listed companies, such as our company, and Taipei Exchange (previously known as “GreTai Securities Market”)-listed companies in the R.O.C. with NT$10 billion or more of paid-in share capital and with 10,000 or more shareholders as of the first date of the close period applicable to the shareholders’ meeting to adopt an e-voting system for the shareholders’ meeting. According to the administrative order by the R.O.C. FSC, commencing from January 1, 2018, all listed companies shall adopt the e-voting system for the shareholders’ meeting. The e-voting system provides a new platform for shareholders to exercise their voting rights online. As a company that meets the foregoing criteria, we have successfully adopted the e-voting system in the 2012 shareholders’ meeting and voted by poll on each agenda item for discussion.
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Any shareholder who has a personal interest in a matter to be discussed at our shareholders’ meeting, the outcome of which may impair our interests, shall not vote or exercise voting rights on behalf of another shareholder on such matter.
According to the R.O.C. Company Act amended on January 4, 2012, a shareholder of a public company who holds common shares for others, such as a depositary, may choose to exercise his/her/its voting power separately. On April 13, 2012, R.O.C. FSC promulgated the Regulations Governing the Split Voting of the Shareholders and Compliance Matters for Public Companies, the implementation rules of such split voting method, which stipulates that the depository of the overseas depositary receipts may exercise its voting power separately in accordance with the instructions of the respective holders of the ADS. Notwithstanding the foregoing, before any amendment to the currently effective Deposit Agreement is made, holders of our ADSs generally will not be able to exercise voting rights on the common shares underlying their ADSs on an individual basis.
Dividends and Distributions
We are not allowed under R.O.C. law to pay dividends on our treasury shares. We may distribute dividends on our issued and outstanding shares if we have earnings. Before distributing a dividend to shareholders, among other things, we must recover any past losses, pay all outstanding taxes and set aside a legal reserve equivalent to 10% of our net income and other profit (or loss) items adjusted to the current year’s undistributed earnings other than net income until our legal reserve equals our paid-in capital, and a special reserve, if any.
At an annual ordinary shareholders’ meeting, our board of directors submits to the shareholders for their approval proposals for the distribution of dividends or the making of any other distribution to shareholders from our net income or reserves for the preceding fiscal year. Dividends are paid to shareholders proportionately. Dividends may be distributed either in cash or in common shares or a combination of cash and shares, as determined by the shareholders at such meeting. Previously, the employee bonus and directors’ remuneration were categorized as “profit sharing” items and were calculated and distributed based on earnings after tax basis. However, according to Articles 235 and 235-1 of the R.O.C. Company Act, both amended and added on May 20, 2015, employee bonus and directors’ remuneration shall no longer be a profit-sharing item but shall be calculated based on earnings before tax and distributed as “expenses.” Our articles of incorporation currently in effect, provide that where we make profits before tax for the annual financial year, subject to a board resolution adopted by majority consent at a meeting with at least two-thirds of our directors’ present, we shall appropriate (i) no less than 5% of such annual profits before tax as employee bonus, of which no less than 30% shall be allocated to entry-level employees, and (ii) a maximum of 0.2% as directors’ remuneration. The employees eligible for the distribution include our employees and employees of our subsidiaries and the form of employee bonus may be made in stock or cash. The qualifications of such employees are to be determined by our board of directors. Notwithstanding the foregoing, if we have accumulated losses from previous years, we shall set aside the amount of such accumulated losses prior to the allocation of the employee bonus and the above directors’ remuneration. For the purpose of calculation of the above employee bonus and the directors’ remuneration, such “annual profits before tax” shall be without giving effect of the deduction and distribution of such employee bonus and the directors’ remuneration.
The remaining amount may be distributed according to the distribution plan proposed by our board of directors based on our dividend policy, and submitted to the shareholders’ meeting for approval. Our articles of incorporation also specify that the amount distributable as dividend shall be the sum of (x) the balance of our earnings deducted by (i) payment of all taxes and dues, (ii) deduction of any past losses, (iii) allocation of 10% of our net income as a statutory reserve (which may be exempted if the accumulated amount of legal reserve has amounted to our paid-in capital); and (iv) special reserve, if any, plus (y) the retained earnings of previous years; provided, however, that the cash dividend to Class A preferred shares, if issued, shall be distributed in priority to the distribution of dividend to the common shares. In the annual general meeting held in June 2005, our shareholders approved a change of the percentage of stock dividend issued to our shareholders, if any, to no more than 80% and cash dividend, if any, to no less than 20%.
In addition to permitting dividends to be paid out of net income, we are permitted under the R.O.C. Company Act to make distributions to our shareholders of additional common shares by capitalizing reserves, including the legal reserve and capital surplus of premiums from issuing stock and earnings from gifts received, or make such distributions by cash, if we do not have losses. However, where legal reserve is distributed by capitalization or in cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.
For information as to R.O.C. taxes on dividends and distributions, see “—R.O.C. Tax Considerations” in this Item.
Repurchase of Our Common Shares
An R.O.C. company may not acquire its own common shares, except under certain exceptions provided in the R.O.C. Company Act or the R.O.C. Securities and Exchange Act. Under the R.O.C. Company Act, a company may purchase up to 5% of its issued common shares for transfer to employees as employee compensation in accordance with a resolution of its board of directors, passed by a majority vote, at a meeting with at least two-thirds of the directors’ present.
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Under Article 28-2 of the R.O.C. Securities and Exchange Act, we may, by a board resolution adopted by majority consent at a meeting with two-thirds or more of our directors’ present, purchase up to 10% of our issued common shares on the Taiwan Stock Exchange or by a tender offer, in accordance with the procedures prescribed by the R.O.C. FSC, for any of the following purposes:
to transfer our common shares to our employees as employee compensation;
to transfer upon conversion of bonds with warrants, preferred shares with warrants, convertible bonds, convertible preferred shares or certificates of warrants issued by us; or
if necessary, to maintain our credit and our shareholders’ equity; provided that the common shares so purchased shall be canceled thereafter.
We have from time to time announced plans, none of which was binding on us, to buy back up to a fixed amount of our common shares on the Taiwan Stock Exchange at the price range set forth in the plans disclosed in “Item 16E—Purchase Of Equity Securities By The Issuer And Affiliated Purchasers.” We may not spend more than the aggregate amount of the retained earnings, the premium from issuing stock and the realized portion of the capital reserve to purchase our common shares. Historically, we have cancelled some of the repurchased common shares and transferred some of the repurchased common shares to our employees as employee compensation. From June 8, 2020 through August 7, 2020, we purchased 105 million of our common shares on the Taiwan Stock Exchange at an average price of NT$15.98 per share to transfer to our employees as employee compensation. During 2023, 2024, and 2025, we did not purchase any of our common shares, and transfer such common shares that we repurchased under these plans to our employees as employee compensation.
We may not pledge or hypothecate any purchased common shares. In addition, we may not exercise any shareholders’ rights attached to such common shares. In the event that we purchase our common shares on the Taiwan Stock Exchange, our affiliates, directors, managers and their respective spouses and minor children and/or nominees are prohibited from selling any of our common shares during the period in which we purchase our common shares.
In addition to the share purchase restriction, the R.O.C. Company Act provides that our subsidiaries may not acquire our common shares or the equity securities of our majority-owned subsidiaries if the majority of the outstanding voting equity securities or paid-in capital of such subsidiary is directly or indirectly held by us.
Liquidation Rights
In the event of a liquidation, shareholders will be entitled to participate in any surplus assets after payment of all debts, liquidation expenses and taxes proportionately.
Rights to Bring Shareholders’ Suits
Under the R.O.C. Company Act, a shareholder may bring suit against us in the following events:
within 30 days from the date on which a shareholders’ resolution is adopted, a shareholder may file a lawsuit to annul a shareholders’ resolution if the procedure for convening a shareholders’ meeting or the method of resolution violates any law or regulation or our articles of incorporation. However, if the court is of the opinion that such violation is not material and does not affect the result of the resolution, the court may reject the shareholder’s claim.
if the substance of a resolution adopted at a shareholders’ meeting contradicts any applicable law or regulation or our articles of incorporation, a shareholder may bring a suit to determine the validity of such resolution.
Shareholders may bring suit against our directors under the following circumstances:
Shareholder(s) who have continuously held 1% or more of our issued common shares for a period of six months or longer may request in writing that the audit committee institutes an action against a director on our behalf. In case the audit committee fails to institute an action within 30 days after receiving such request, the shareholder (s) may institute an action on our behalf. In the event shareholder(s) institute an action, a court may, upon the defendant’s motion, order such shareholder (s) to furnish appropriate security.
Shareholder (s) who hold more than 3% or more of our total issued common shares may institute an action with a court to remove a director of ours who has materially violated the applicable laws or our articles of incorporation or has materially damaged the interests of our company if a resolution for removal on such grounds has first been voted on and rejected by our shareholders and such suit is filed within 30 days of such shareholders’ vote.
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In the event that any director, manager or shareholder holding more than 10% of our common shares or any respective spouses or minor children and/or nominees of any of them sells common shares within six months after acquisition of such common shares, or repurchases the common shares within six months after the sale, we may claim for recovery of any profits realized from the sale and purchase. If our board of directors or audit committee fail to claim for recovery, any shareholder may set forth a 30-day period for our board of directors or audit committee to exercise the right. In the event our directors or audit committee fail to exercise the right during such 30-day period, such requesting shareholder shall have the right to claim such recovery on our behalf. Our directors shall be jointly and severally liable for damages suffered by us as a result of their failure to exercise the right of claim.
Other Rights of Shareholders
Under the R.O.C. Company Act and the Corporate Merger and Acquisition Act, dissenting shareholders are entitled to appraisal rights in the event of a spin-off or a merger and various other major corporate actions. Dissenting shareholders may request us to redeem all their common shares at a then fair market price to be determined by mutual agreement. If no agreement can be reached, the valuation will be determined by a court. Subject to applicable law, dissenting shareholders may, among other things, exercise their appraisal rights by notifying us in writing before the related shareholders’ meeting and/or by raising and registering their dissent at the shareholders’ meeting and also waive their voting rights.
One or more shareholders who have held 3% or more of the issued and outstanding shares one year or longer may require our board of directors to call an extraordinary shareholders’ meeting by sending a written request to our board of directors. In addition, shareholder(s) who have continuously held more than 50% of our issued shares for a period of three months or longer may convene an extraordinary shareholders’ meeting without any approval of our board of directors. The period during which a shareholder holds the shares and the number of shares held by a shareholder shall be determined based on our register of shareholders as of the book close date of the relevant extraordinary shareholders’ meeting.
Moreover, the R.O.C. Company Law allows shareholder(s) holding 1% or more of the total issued shares of a company to, during the period of ten days or more prescribed by the company, submit one proposal in writing or by way of electronic transmission containing no more than three hundred words (in terms of Chinese characters) for discussion at the annual ordinary shareholders’ meeting.
There are no limitations on the rights to own the company’s shares, including the right of foreign shareholders to hold or exercise voting rights on the shares.
Financial Statements
For a period of at least 10 days before our annual ordinary shareholders’ meeting, we must make available our annual financial statements at our principal offices in Hsinchu, Taiwan, and our share registrar in Taipei for our shareholders’ inspection.
Transfer Restrictions
Our directors, managers and shareholders holding more than 10% of our shares are required to report any changes in their shareholding to us on a monthly basis. In addition, the number of common shares that they can sell or transfer on the Taiwan Stock Exchange on a daily basis is limited by R.O.C. law. Further, they may sell or transfer our common shares on the Taiwan Stock Exchange only after reporting to the R.O.C. FSC at least three days before the transfer, provided that such reporting is not required if the number of common shares transferred does not exceed 10,000 in one business day.
Material Contracts
Development Collaboration
Contract Type
Contracted Party
Contract Period
Key Content
Restrictive Clause
Jan. 25, 2024~
Jan. 24, 2034
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Patent and Technology Licenses
We value and protects intellectual property rights. With over 40 years of commitment to developing and securing semiconductor patents, we have achieved a predominant position in the semiconductor industry. We also enter into patent or technology license contracts with major semiconductor or technology patent holders to ensure that our customers are not subject to the risk of wafer process infringement. The following are patent licensing contracts received and given by us:
Jun. 25, 2009~
Jun. 30, 2029
Jun. 13, 2013~
Dec. 30, 2035
Jul. 11, 2013~
Jul. 10, 2028
Apr. 01, 2017~
Mar. 31, 2032
Nov. 23, 2018~
Nov. 22, 2028
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Construction
Contract Date
L&K Engineering Co., Ltd.,
Mega Union Technology Inc. and others.
Liying Environmental Protection Technology Co., Ltd.
ECOVE Environment Services Corporation
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Other Agreements
Exchange Controls
Foreign Investment and Exchange Controls in Taiwan
We have extracted from publicly available documents the information presented in this section. Please note that citizens of the People’s Republic of China and entities organized in the People’s Republic of China are subject to special R.O.C. laws, rules and regulations, which are not discussed in this section.
General
Historically, foreign investments in the securities market of Taiwan were restricted. However, commencing in 1983, the Taiwan government has from time to time enacted legislation and adopted regulations to make foreign investment in the Taiwan securities market possible. Initially, only overseas investment trust funds of authorized securities investment trust enterprises established in Taiwan were permitted to invest in the Taiwan securities market. Since January 1, 1991, qualified foreign institutional investors are allowed to make investments in the Taiwan public securities market. Since March 1, 1996, non-resident foreign institutional and individual investors, called “general foreign investors,” are permitted to make direct investments in the Taiwan public securities market. On September 30, 2003, the Executive Yuan amended the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, or the Investment Regulations, under which the “Qualified Foreign Institutional Investors,” or QFII, designations have been abolished and the restrictions on foreign portfolio investors have been revised. According to the Investment Regulations, “Foreign Institutional Investor,” or FINI, means an entity which is incorporated under the laws of countries other than the R.O.C. or the branch of a foreign entity that is established within the territory of the R.O.C., and “Foreign Individual Investor,” or FIDI, means an overseas Chinese or a foreign natural person. In addition, the Investment Regulations also lifted some restrictions and simplified procedures of investment application.
On April 30, 2009, the R.O.C. FSC promulgated regulations allowing QDIIs under PRC regulations and certain other PRC persons to invest in the securities of R.O.C. companies. However, prior approval from the Department of Investment Review of the R.O.C. Ministry of Economic Affairs (formerly known as the Investment Commission of the R.O.C. Ministry of Economic Affairs) is required for QDIIs or certain other PRC persons to own 10% or more of the issued and outstanding share capital of a listed R.O.C. company.
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Foreign Ownership Limitations
Foreign ownership of the issued share capital in a Taiwan Stock Exchange-listed company or a Taipei Exchange-listed company has been limited to 50% in the past. Since December 30, 2000, the 50% limit has been lifted. Foreign investors can now hold such investments without any foreign ownership percentage limitations, unless the law has imposed restrictions otherwise.
Foreign Investors
Each FINI who wishes to invest directly in the R.O.C. securities market is required to register with the Taiwan Stock Exchange and obtain an investment identification number if the FINI is a non-resident and has no sub-investment accounts in the R.O.C. Each FIDI who wishes to invest directly in the R.O.C. securities market is also required to register with the Taiwan Stock Exchange and obtain an investment identification number. The R.O.C. FSC has lifted the limitation on the amount of investment in the R.O.C. securities market for a non-resident FIDI. Except for some restrictions imposed by specific laws and regulations, the individual and aggregate foreign ownership of the issued share capital in a Taiwan Stock Exchange-listed company or a Taipei Exchange-listed company is not restricted. An R.O.C. custodian for a non-resident FINI or FIDI is required to submit to the CBC, and the Taiwan Stock Exchange a report of trading activities, inward and outward remittance of capital and status of assets under custody and other matters every month. Foreign institutional investors are not subject to any ceiling for investment in the R.O.C. securities market.
Foreign Investment Approval
Foreign investors (both institutional and individual) who wish to make direct investments in the common shares of R.O.C. companies are required to submit a “foreign investment approval” application to the Department of Investment Review of the R.O.C. MOEA, or other government authority and enjoy benefits granted under the Statute for Foreigner’s Investment and the Statute for Overseas Chinese’s Investment. The Department of Investment Review of the R.O.C. MOEA or other government authority reviews each foreign investment approval application and approves or disapproves the application after consultation with other governmental agencies, if necessary. Any non-R.O.C. person possessing a foreign investment approval may repatriate annual net profits and interests attributable to an approved investment. Investment capital and capital gains attributable to the investment may be repatriated with approval of the Department of Investment Review of the R.O.C. MOEA or other government authority.
In addition to the general restrictions against direct investments by foreign investors in R.O.C. companies, foreign investors are currently prohibited from investing in certain prohibited industries in Taiwan under the “Negative List.” The prohibition on direct foreign investment in the prohibited industries in the Negative List is absolute in the absence of a specific exemption from the application of the Negative List. Under the Negative List, some other industries are restricted so that foreign investors may directly invest only up to a specified level and with the specific approval of the relevant authority responsible for enforcing the legislation that the Negative List is intended to implement. Our business does not operate in a restricted industry under the Negative List.
In June 2009, the R.O.C. MOEA further allowed PRC persons to make direct investments in Taiwan. However, such direct investment is still subject to various restrictions, such as that only the industries listed in the Positive List, as promulgated by the Executive Yuan, are legally permitted targets and that all the PRC persons who wish to make direct investments in the R.O.C. are required to submit an “investment approval” application to the Department of Investment Review of the R.O.C. MOEA.
Taiwan’s Foreign Exchange Control Statute and regulations provide that all foreign exchange transactions must be executed by banks designated to handle foreign exchange transactions by the Ministry of Finance and the CBC. Current regulations favor trade-related foreign exchange transactions. Consequently, foreign currency earned from exports of merchandise and services may now be retained and used freely by exporters. All foreign currency needed for the importation of merchandise and services may be purchased from the designated foreign exchange banks.
Aside from trade-related foreign exchange transactions, R.O.C. companies and residents may remit to and from Taiwan foreign currencies of up to US$100 million (or its equivalent) and US$10 million, (or its equivalent) respectively in each calendar year; provided, however, that depending on the economic and financial situation as well as the need to maintain the order of foreign exchange market, the CBC may, at its discretion, to adjust such limits. These limits apply to remittances involving a conversion between NT dollars and U.S. dollars or other foreign currencies. A requirement is also imposed on all private enterprises to register all medium- and long-term foreign debt with the CBC.
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In addition, foreign currency earned from or needed to be paid for direct investment or portfolio investments, which are approved by the competent authorities, may be retained or sold by the investors or purchased freely from the designated bank.
Aside from the transactions discussed above, a foreign person without an alien resident card (or who has relevant resident card with a validity of less than one year) or an unrecognized foreign entity may remit to and from Taiwan foreign currencies of up to US$100,000 per remittance without obtaining prior approval or permit if required documentation is provided to Taiwan authorities. This limit applies to remittances involving a conversion between NT dollars and U.S. dollars or other foreign currencies.
Depositary Receipts
In April 1992, the R.O.C. Securities and Futures Bureau, or the R.O.C. SFB (the predecessor of the R.O.C. FSC), began allowing R.O.C. companies listed on the Taiwan Stock Exchange to sponsor the issuance and sale of depositary receipts evidencing depositary shares. Notifications for these issuances are still required. In December 1994, the Ministry of Finance began allowing companies whose shares are traded on the Taipei Exchange to sponsor the issuance and sale of depositary receipts evidencing depositary shares. On October 24, 2002, the R.O.C. SFB began allowing public companies that are not listed on the Taiwan Stock Exchange or the Taipei Exchange to sponsor the issuance and sale of depositary receipts by way of private placements outside the R.O.C.
A holder of depositary shares wishing to withdraw common shares underlying depositary shares is required to appoint a local agent or representative with qualifications set forth by the R.O.C. FSC to, among other things, open a securities trading account with a local brokerage firm, pay R.O.C. taxes, remit funds, and exercise shareholders’ right. In addition, the withdrawing holder is also required to appoint a custodian bank or a securities firm with qualifications set forth by the R.O.C. FSC to hold payments and the securities in safekeeping, make confirmations, settle trades and report all relevant information in which the securities firm is appointed as the custodian, and the payments be held in safekeeping in a special account opened in a bank approved by the R.O.C. FSC. Without making this appointment and the opening of accounts, the withdrawing holder would be unable to subsequently sell the common shares withdrawn from a depositary receipt facility on either the Taiwan Stock Exchange or the Taipei Exchange.
After the issuance of a depositary share, a holder of the depositary share may immediately, comparing to a three-month waiting period restriction which was lifted in 2003, request the depositary issuing the depositary share to cause the underlying common shares to be sold in the R.O.C. or to withdraw the common shares represented by the depositary receipt and deliver the common shares to the holder. On April 30, 2009 and July 3, 2009, the R.O.C. Executive Yuan approved the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors and the Regulations Governing Investment in Taiwan by Mainland Area Persons, respectively, under which qualified PRC persons are permitted to invest in Taiwan companies under limited circumstances, including purchase of the depositary receipts issued by a Taiwan company. However, prior approval from the Department of Investment Review of the R.O.C. Ministry of Economic Affairs is required for a qualified PRC person’s ownership of 10% or more of the issued and outstanding share capital of a listed R.O.C. company or certain other manners of investment by a qualified PRC person.
No deposits of common shares may be made in a depositary receipt facility and no depositary receipts may be issued against deposits without specific R.O.C. FSC approval, unless they are:
stock dividends;
free distributions of common shares;
due to the exercise by a holder of his or her preemptive rights in the event of capital increases for cash; or
permitted under the deposit agreement and the custody agreement, due to the direct purchase of common shares or purchase through the depositary in the domestic market or the surrender of common shares under the possession of investors and then delivery of such common shares to the custodian for deposit in the depositary receipt facility, provided that the total number of depositary receipts outstanding after an issuance cannot exceed the number of issued depositary shares previously approved by the R.O.C. FSC in connection with the offering plus any depositary shares issued pursuant to the events described in (A), (B) and (C) above. These issuances may only be made to the extent previously issued depositary shares have been withdrawn.
A depositary may convert New Taiwan dollars from the proceeds of the sale of common shares or cash distributions received into other currencies, including U.S. dollars. A depositary may be required to obtain foreign exchange approval from the CBC on a payment-by-payment basis for conversion into New Taiwan dollars of subscription payments for rights offerings or conversion into foreign currencies from the proceeds from the sale of subscription rights for new common shares. It is expected that the CBC will grant this approval as a routine matter.
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A holder of depositary shares may convert NT dollars into other currencies from proceeds from the sale of any underlying common shares. Proceeds from the sale of the underlying common shares withdrawn from the depositary receipt facility may be used for reinvestment in securities listed on both the Taiwan Stock Exchange and the Taipei Exchange, provided that the investor designates a local securities firm or financial institution as agent to open an NT dollar bank account in advance.
R.O.C. Tax Considerations
The following summarizes the principal R.O.C. tax consequences of owning and disposing of the ADSs or common shares to a holder of ADSs or common shares that is not a resident of the R.O.C. A foreign individual holder will be considered as not a resident of the R.O.C., or a non-R.O.C. resident, for the purposes of this section if he or she is not physically present in Taiwan for 183 days or more during any calendar year. An entity holder will be considered as not a resident of the R.O.C., or a non-R.O.C. resident, if it is organized under the laws of a jurisdiction other than Taiwan for profit making purpose and has no fixed place of business or other permanent establishment or business agent in the R.O.C. Prospective purchasers of ADSs or common shares should consult their own tax advisors concerning the tax consequences of owning ADSs or common shares in the R.O.C. and any other relevant taxing jurisdiction to which they are subject.
Dividends
Dividends, whether in cash or common shares, declared by us out of retained earnings and paid out to a holder that is not an R.O.C. resident in respect of common shares represented by ADSs are subject to R.O.C. withholding tax at the time of distribution. The rate of withholding is currently 21% of the amount of the distribution in the case of cash dividends or of the par value of the common shares distributed in the case of stock dividends. Under current practice adopted by tax authorities, a 21% withholding rate is applied to a non-R.O.C. resident ADS holder without requiring the holder to apply for or obtain foreign investment approval. As discussed in the section “—Tax Reform” below, certain of our retained earnings will be subject to a certain percentage of undistributed retained earnings tax. There is no withholding tax with respect to stock dividends declared out of our capital surplus of premiums from issuing stock resulting from the capital paid by the shareholders.
Capital Gains
In 2015, an amendment to the R.O.C. Income Tax Act then in effect, which deleted the provisions regarding the capital gain from securities transaction, was adopted and took effect from January 1, 2016. Accordingly, under the R.O.C. law currently in effect, gains realized on R.O.C. securities transactions are primarily exempt from income tax.
Subject to the AMT Act, gains realized from various securities transactions by an R.O.C.-resident entity shall be calculated as taxable income for the purpose of the AMT Act and may further be subject to income tax. If the above entity has held common shares for more than three (3) years, 50% of capital gain may be exempted from AMT. In addition, gains realized from transfers of ADSs by non-R.O.C. resident holders are not regarded as income from sources in the R.O.C. and, as a result, any gains derived therefrom are currently not subject to R.O.C. income tax.
Securities Transaction Tax
The R.O.C. government imposes a securities transaction tax that will apply to sales of common shares, but not to sales of ADSs. The securities transaction tax, which is payable by the seller, is generally levied on sales of common shares at the rate of 0.3% of the sales proceeds. Withdrawals of our common shares from our depositary facility are not subject to the R.O.C. securities transaction tax.
Preemptive Rights
Distribution of statutory preemptive rights for common shares by us in compliance with the R.O.C. Company Act is not subject to R.O.C. tax. Proceeds derived from sales of statutory preemptive rights evidenced by securities are subject to the R.O.C. securities transaction tax, currently at the rate of 0.3% of the gross amount received. Proceeds derived from sales of statutory preemptive rights that are not evidenced by securities are subject to capital gains tax at the rate of 20% of the gains realized for non-R.O.C. resident entities and non-R.O.C. resident individuals. Subject to compliance with the R.O.C. law, we have sole discretion to determine whether statutory preemptive rights are evidenced by securities or not.
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Estate Taxation and Gift Tax
R.O.C. estate tax is payable on any property within the R.O.C. of a deceased individual who is a non-resident individual or a non-R.O.C. citizen and R.O.C. gift tax is payable on any property located within the R.O.C. donated by any such person. Under the Articles 13 and 19 of the R.O.C. Estate and Gift Tax Act, which became effective on May 12, 2017, tax brackets and rates of estate tax are as follows: (1) if the net taxable estate is no more than NT$50,000,000, the tax rate shall be 10%; (2) if the net taxable estate is more than NT$50,000,000 but no more than NT$100,000,000, the estate tax payable shall be NT$5,000,000 plus 15% for the amount in excess of NT$50,000,000; and (3) if the net taxable estate is more than NT$100,000,000, the estate tax payable shall be NT$12,500,000 plus 20% for the amount in excess of NT$100,000,000; tax brackets and rates of gift tax are as follows: (1) if the net taxable gifts are no more than NT$25,000,000, the tax rate shall be 10%; (2) if the net taxable gifts are more than NT$25,000,000 but no more than NT$50,000,000, the gift tax payable shall be NT$2,500,000 plus 15% for the amount in excess of NT$25,000,000; and (3) if the net taxable gifts are more than NT$50,000,000, the gift tax payable shall be NT$6,250,000 plus 20% for the amount in excess of NT$50,000,000. Under R.O.C. estate and gift tax laws, the common shares will be deemed located in the R.O.C. irrespective of the location of the owner. It is unclear whether a holder of ADSs will be considered to own common shares for this purpose.
Tax Treaties
The Republic of China does not have an income tax treaty with the United States. On the other hand, the Republic of China has income tax treaties with Indonesia, Singapore, South Africa, Australia, Vietnam, New Zealand, Malaysia, North Macedonia, Eswatini, the Netherlands, the United Kingdom, Gambia, Senegal, Sweden, Belgium, Denmark, Israel, Paraguay, Hungary, France, India, Slovakia, Switzerland, Germany, Thailand, Kiribati, Luxembourg, Italy, Japan, Canada, Poland, Austria, Czech Republic, Saudi Arabia, and Republic of Korea (South Korea) which may limit the rate of Republic of China withholding tax on dividends paid with respect to common shares in Taiwan companies. It is unclear whether a non-R.O.C. holder of ADSs will be considered to own common shares for the purposes of such treaties. Accordingly, a holder of ADSs who is otherwise entitled to the benefit of a treaty should consult its own tax advisors concerning eligibility for benefits under the treaty with respect to the ADSs.
Tax Reform
An amendment to the R.O.C. Income Tax Act was enacted on January 1, 1998, to integrate the corporate income tax and the shareholder dividend tax with the aim of eliminating the double taxation effect for resident shareholders of Taiwanese corporations. In order to improve Taiwan’s tax system and to keep up with the trend of international tax reform, the R.O.C. Income Tax Act was further amended in 2018 to replace the old tax system which integrated the corporate income tax and the shareholder dividend tax. Except for limited exceptions, the amendment took effect retroactively from January 1, 2018.
Under this amendment, a 10% retained earnings tax will be imposed on a company for its after-tax earnings generated after January 1, 1998 that are not distributed in the following year; while a 5% retained earning tax will be imposed for after-tax earnings generated from January 2018. The retained earnings tax so paid will further reduce the retained earnings available for future distribution. Under the old tax system, when we declared dividends out of those retained earnings, up to a maximum amount of half of the amount of such tax of the declared dividends was credited against the withholding tax imposed on the non-R.O.C. resident holders of our ADSs or common shares; while from January 1, 2019, the benefit no longer exists and no retained earnings tax is credited.
U.S. Federal Income Tax Considerations for U.S. Persons
The following is a summary of certain U.S. federal income tax consequences for beneficial owners of our common shares or ADSs that hold the common shares or ADSs as capital assets and that are U.S. holders that are not citizens of the R.O.C., do not have a permanent establishment in the R.O.C. and are not physically present in the R.O.C. for 183 days or more within a calendar year. You are a U.S. holder if you are, for U.S. federal income tax purposes, any of the following:
an individual who is a citizen or resident of the United States;
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source;
a trust that is subject to the primary supervision of a court within the United States and that has one or more U.S. persons with the authority to control all substantial decisions of the trust; or
a trust that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
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This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below. It is for general purposes only and you should not consider it to be tax advice. In addition, it assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms. This summary does not represent a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances and does not address the Medicare tax on net investment income or the effects of any state, local or non-U.S. tax laws (or other U.S. federal tax consequences, such as U.S. federal estate or gift tax consequences). In addition, it does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:
a dealer in securities or currencies;
a trader in securities if you elect to use a mark-to-market method of accounting for your securities holdings;
a financial institution or an insurance company;
a tax-exempt organization;
a regulated investment company;
a real estate investment trust;
a person liable for alternative minimum tax;
a person holding common shares or ADSs as part of a hedging, integrated or conversion transaction, constructive sale or straddle;
a partnership or other pass-through entity for U.S. federal income tax purposes;
a person owning, actually or constructively, 10% or more of our stock (by vote or value);
a person required to accelerate the recognition of any item of gross income with respect to our common shares or ADSs as a result of such income being recognized on an applicable financial statement; or
a U.S. holder whose “functional currency” is not the U.S. dollar.
We cannot assure you that a later change in law will not alter significantly the tax considerations that we describe in this summary.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our common shares or ADSs, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common shares or ADSs, you should consult your tax advisor.
You should consult your own tax advisor concerning the particular U.S. federal income tax consequences to you of the ownership and disposition of the common shares or ADSs, as well as the consequences to you arising under the laws of any other taxing jurisdiction.
In general, for U.S. federal income tax purposes, a U.S. person who is the beneficial owner of an ADS will be treated as the owner of the common shares underlying its ADS. Accordingly, deposits or withdrawals of common shares by U.S. holders for ADSs generally will not be subject to U.S. federal income tax.
Taxation of Dividends
Except as discussed below with respect to the passive foreign investment company rules, the amount of distributions (including amounts withheld in respect of R.O.C. withholding taxes) you receive on your common shares or ADSs (other than certain pro rata distributions of common shares or ADSs to all shareholders, including holders of ADSs) will generally be treated as dividend income to you if the distributions are made from our current and accumulated earnings and profits as calculated according to U.S. federal income tax principles. Such income (including withheld taxes) will be includible in your gross income as ordinary income on the day you actually or constructively receive it, which in the case of an ADS will be the date actually or constructively received by the depositary. The amount of any distribution of property other than cash will be the fair market value of such property on the date it is distributed. You will not be entitled to claim a dividend received deduction with respect to distributions you receive from us.
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Subject to certain conditions and limitations (including a minimum holding period requirement), dividends received by non-corporate U.S. holders (including individuals) from a qualified foreign corporation may be treated as “qualified dividend income” that is subject to reduced rates of taxation. A foreign corporation is treated as a qualified foreign corporation with respect to dividends paid by that corporation on common shares (or ADSs backed by such common shares) that are readily tradable on an established securities market in the United States. U.S. Treasury Department guidance indicates that our ADSs (which are listed on the NYSE), but not our common shares, are readily tradable on an established securities market in the United States. Thus, subject to the applicable conditions and limitations and the discussion below with respect to the passive foreign investment company rules, we believe that dividends we pay on our ADSs will meet the conditions required for these reduced tax rates. Since we do not expect that our common shares will be listed on an established securities market in the United States, we do not believe that dividends we pay on our common shares that are not represented by ADSs currently meet the conditions required for these reduced tax rates. Moreover, there can be no assurance that our ADSs will continue to be readily tradable on an established securities market in the United States in later years. Non-corporate U.S. holders will also not be eligible for the reduced rates of taxation on dividends if we are a passive foreign investment company (as discussed below under “—Passive Foreign Investment Company”) in the taxable year in which such dividends are paid or in the preceding taxable year. U.S. holders should consult their own tax advisors regarding the application of these rules given their particular circumstances.
The amount of any dividend paid in NT dollars will equal the U.S. dollar value of the NT dollars you receive (calculated by reference to the exchange rate in effect on the date you actually or constructively receive the dividend, which in the case of an ADS will be the date actually or constructively received by the depositary), regardless of whether the NT dollars are actually converted into U.S. dollars. If the NT dollars received as a dividend are converted into U.S. dollars on the date they are actually or constructively received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the NT dollars received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a basis in the NT dollars equal to their U.S. dollar value on the date of receipt. Any gain or loss you realize if you subsequently sell or otherwise dispose of the NT dollars will be ordinary income or loss from sources within the United States for foreign tax credit limitation purposes.
Subject to certain conditions and limitations (including a minimum holding period requirement), you may be entitled to a credit against your U.S. federal income tax liability for any R.O.C. taxes that are withheld from dividend distributions made to you. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends we pay with respect to common shares or ADS will generally be considered passive category income from sources outside the United States. The rules governing the foreign tax credit are complex. For example, U.S. Treasury regulations addressing foreign tax credits impose additional requirements for foreign taxes to be eligible for a foreign tax credit, and there can be no assurance that those requirements will be satisfied. The Department of the Treasury and the Internal Revenue Service, or the IRS, are considering proposing amendments to these regulations. In addition, recent notices from the IRS provide temporary relief by allowing taxpayers that comply with applicable requirements to apply many aspects of the foreign tax credit regulations as they previously existed (before the release of the current regulations) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). Instead of claiming a foreign tax credit, you may be able to deduct R.O.C. withholding taxes on dividends in computing your taxable income, subject to generally applicable limitations under U.S. federal income tax law (including that a U.S. holder is not eligible for a deduction for otherwise creditable foreign income taxes paid or accrued in a taxable year if such U.S. holder claims a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year). You are urged to consult your tax advisors regarding the availability of the foreign tax credit or a deduction under your particular circumstances.
To the extent that the amount of any distribution you receive exceeds our current and accumulated earnings and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in your adjusted basis in the common shares or ADSs and thereby increasing the amount of gain, or decreasing the amount of loss, you will recognize on a subsequent disposition of the common shares or ADSs. The balance in excess of adjusted basis, if any, will be taxable to you as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be reported and treated as a dividend (as discussed above).
It is possible that pro rata distributions of common shares or ADSs to all shareholders, including holders of ADSs, may be made in a manner that is not subject to U.S. federal income tax. In the event that such distributions are tax-free, the basis of any new common shares or ADSs so received will generally be determined by allocating the U.S. holder’s basis in the old common shares or ADSs between the old common shares or ADSs and the new common shares or ADSs, based on their relative fair market values on the date of distribution. For U.S. federal income tax purposes, any such tax-free share or ADS distribution generally would not result in foreign source income to you. Consequently, you may not be able to use a foreign tax credit associated with any R.O.C. withholding tax imposed on such distributions unless you can use the credit against U.S. federal income tax due on other foreign source income in the appropriate category for foreign tax credit purposes. You should consult your own tax advisors regarding all aspects of the foreign tax credit.
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Taxation of Capital Gains
Except as discussed below with respect to the passive foreign investment company rules, when you sell or otherwise dispose of your common shares or ADSs, you will generally recognize capital gain or loss in an amount equal to the difference between the U.S. dollar value of the amount realized for the common shares or ADSs and your basis in the common shares or ADSs, determined in U.S. dollars. If you are an individual or other non-corporate holder, and the common shares or ADSs being sold or otherwise disposed of are capital assets that you have held for more than one year, any gain recognized will generally be eligible for reduced rates of taxation. Your ability to deduct capital losses is subject to limitations. Any gain or loss you recognize will generally be treated as U.S. source gain or loss for foreign tax credit limitation purposes.
If you pay any R.O.C. securities transaction tax in connection with the sale of common shares, such tax is not treated as an income tax for U.S. federal income tax purposes, and therefore will not be a creditable foreign tax for U.S. federal income tax purposes. You are urged to consult your tax advisors regarding the U.S. federal income tax consequences of these taxes.
Passive Foreign Investment Company
Based on the past and projected composition of our income and assets and the valuation of our assets, including goodwill, we do not believe that we were a passive foreign investment company, or PFIC, for 2025 and we do not expect to become one in the foreseeable future, although there can be no assurance in this regard.
In general, a foreign company is considered a PFIC for any taxable year if either:
at least 75% of its gross income is passive income, which generally includes income derived from certain dividends, interest, royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a related person), annuities or property transactions; or
at least 50% of the value of its assets is attributable to assets that produce or are held for the production of passive income.
The 50% of value test is generally based on the average of the value of our assets for each quarter during the taxable year. Cash and other assets readily convertible into cash are generally considered passive assets for purposes of this test. If we own at least 25% by value of another corporation’s stock, we will be treated, for purposes of the PFIC rules, as owning our proportionate share of the assets and receiving our proportionate share of the income of that corporation.
In addition, the determination of whether we are a PFIC is made annually. Accordingly, it is possible that we may become a PFIC in the current or any future taxable year due to changes in our asset or income composition. The calculation of the value of our assets will be based, in part, on the quarterly market value of our common shares and ADSs, which is subject to change. A decrease in the price of our common shares and ADSs may also result in our becoming a PFIC. If we are a PFIC for any taxable year during which you hold common shares or ADSs, you will be subject to special tax rules discussed below.
If we are a PFIC for any taxable year during which you hold common shares or ADSs and you do not make a timely mark-to market election as described below, you will be subject to special tax rules with respect to any “excess distribution” that you receive and any gain you realize from a sale or other disposition (including a pledge) of common shares or ADSs. Distributions you receive in a taxable year that are greater than 125% of the average annual distributions you received during the shorter of the three preceding taxable years or your holding period for the common shares or ADSs will be treated as excess distributions. Under these special tax rules:
the excess distribution or gain will be allocated ratably over your holding period for the common shares or ADSs;
the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC, will be treated as ordinary income; and
the amount allocated to each other year will be subject to tax at the highest tax rate in effect for that year for individuals or corporations, as applicable, and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.
If you hold common shares or ADSs in any year in which we are a PFIC, you are generally required to file IRS Form 8621.
If we are a PFIC for any taxable year during which you hold common shares or ADSs and any of our non-U.S. subsidiaries is also a PFIC, you would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.
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Under certain circumstances, a U.S. holder, in lieu of being subject to the rules discussed above with respect to excess distributions and recognized gains, may make an election to include gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such stock is regularly traded on a qualified exchange (within the meaning of the applicable Treasury regulations). Under this method, any difference between the stock’s fair market value and its adjusted basis at the end of the year is accounted for by either an inclusion in income or, subject to limitations, a deduction from income, as described below. Under current U.S. Treasury Department guidance, the mark-to-market election may be available to holders of ADSs because the ADSs are listed on the NYSE, which constitutes a qualified exchange, although there can be no assurance that the ADSs will be “regularly traded” for purposes of the mark-to-market election. You should also note that only the ADSs and not the common shares are listed on the NYSE. Our common shares are listed on the Taiwan Stock Exchange, which must meet certain trading, listing, financial disclosure and other requirements to be treated as a qualified exchange under applicable U.S. Treasury regulations for purposes of the mark-to-market election, and no assurance can be given that the common shares will be “regularly traded” for purposes of the mark-to-market election.
If you make an effective mark-to-market election, in each year that we are a PFIC you will include in income as ordinary income the excess of the fair market value of your common shares or ADSs at the end of the year over your adjusted tax basis in the common shares or ADSs. You will be entitled to deduct as an ordinary loss in each such year the excess of your adjusted tax basis in the common shares or ADSs over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. If you make an effective mark-to-market election, in each year that we are a PFIC any gain you recognize upon the sale or other disposition of your common shares or ADSs will be treated as ordinary income, and any loss will be treated as ordinary loss, but such loss will be ordinary only to the extent of the net amount of previously included income as a result of the mark-to-market election, and thereafter will be capital loss.
Your adjusted tax basis in common shares or ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the common shares or ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election. You will not, however, be able to make a mark-to-market election in respect of any lower-tier PFIC as described above. You should consult your tax advisors about the availability of the mark-to-market election, and whether making the election would be advisable under your particular circumstances.
Alternatively, a U.S. holder of common shares or ADSs in a PFIC can sometimes avoid the rules described above by electing to treat the PFIC as a “qualified electing fund” under Section 1295 of the Code. This option is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election.
Non-corporate U.S. holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year. You should consult your own tax advisors concerning the U.S. federal income tax consequences of holding common shares or ADSs if we are considered a PFIC in any taxable year.
Information Reporting and Backup Withholding
In general, unless you are an exempt recipient such as a corporation, information reporting will apply to dividends in respect of your common shares or ADSs and to the proceeds from the sale, exchange or other disposition of your common shares or ADSs that are paid to you within the United States (and in some cases, outside of the United States). Additionally, if you fail to provide your taxpayer identification number and a certification that you are not subject to backup withholding, or fail to report in full dividend and interest income, you may be subject to backup withholding.
Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability, provided you furnish the required information to the IRS.
Dividends and Paying Agents
Statement by Experts
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Documents on Display
We have filed this Annual Report on Form 20-F, including exhibits, with the SEC. As allowed by the SEC, in Item 19 of this Annual Report, we incorporate by reference certain information we filed with the SEC. This means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this Annual Report.
The SEC also maintains a website at www.sec.gov that contains reports, proxy statements and other information regarding registrants that file electronically with the SEC. Our Annual Report and some of the other information submitted by us to the SEC may be accessed through this website.
Subsidiary Information
Annual Report to Security Holders
Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risks, including changes in interest rates and foreign currency exchange rates, in the normal course of business.
We use financial instruments, including variable rate debt and swaps and foreign exchange spot transactions, to manage risks associated with our interest rate and foreign currency exposures through a controlled program of risk management in accordance with established policies. These policies are reviewed and approved by our board of directors and shareholders’ meeting. Our treasury operations are subject to internal audit on a regular basis. We do not hold or issue derivative financial instruments for speculatively purposes.
Our primary market risk exposures relate to interest rate movements on borrowings and exchange rate movements on foreign currency-denominated accounts receivable, capital expenditures relating to equipment used in manufacturing processes (including lithography, etching and chemical vapor deposition) and purchased primarily from Europe, Japan and the United States.
The following table provides information as of December 31, 2025 on our market risk sensitive financial instruments.
Time Deposits
Accounts Receivable (denominated in foreign currency)
Accounts Payable (denominated in foreign currency)
Bonds Payable
Long-term Loans
Interest Rate Risk
Our major market risk exposure is changing interest rates. Our exposure to market risk for changes in interest rates relates primarily to our long-term debt obligations. We primarily enter into debt obligations to support general corporate purposes including capital expenditures and working capital needs.
The tables below provide information of our company as of December 31, 2025 about our financial instruments that are sensitive to changes in interest rates, including debt obligations and certain assets. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. The information is presented in the currencies in which the instruments are denominated.
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2030 and
thereunder
Fair
Value
Time Deposits:
Fixed Rate (US$)
Average Interest Rate
Fixed Rate (NT$)
Short-term Loans:
Variable Rate (NT$)
Unsecured Long-term Loans:
Secured Long-term Loans:
Variable Rate (RMB¥)
Bonds:
Unsecured (NT$)
Fixed Rate
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Foreign Currency Risk
Although the majority of our transactions are in NT dollars, some transactions are based in other currencies. The primary foreign currency to which we are exposed is the U.S. dollar. We have in the past, and may in the future, enter into short-term, foreign currency forward contracts to hedge the impact of foreign currency fluctuations on certain underlying assets, liabilities, and firm commitments for operating expenses and capital expenditures denominated in U.S. dollars and other foreign currencies. The purpose of entering into these hedges is to minimize the impact of foreign currency fluctuations on the results of operations. We use the policy of natural hedging to reduce our foreign exchange exposure arising out of changes in the rates of exchange among the U.S. dollar and other foreign currencies. As a general matter, our natural hedging strategy relies on matching revenues and costs for the same currency or offsetting losses in one currency with gains in another.
As of December 31, 2025, we had US$22 million outstanding in foreign currency forward contracts to sell U.S. dollars against NT dollars.
Foreign Currency Forward Contracts:
Sell US$ against NT$
Contract Amount
Average Contractual Exchange Rate
We believe we do not have material market risk as of December 31, 2025.
Debt Securities
Warrants and Rights
Other Securities
American Depositary Shares
Depositary Fees and Charges
Under the terms of the deposit agreement for our ADSs, an ADS holder may have to pay the following service fees to the depositary:
Service
Fees
Issuance of ADSs
Cancellation of ADSs
Distribution of cash dividends or other cash distributions
Distribution of ADSs pursuant to stock dividends, free stock distributions or exercises of rights
Distribution of securities other than ADSs or rights to purchase additional ADSs
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In addition, an ADS holder shall be responsible for the following charges:
taxes (including applicable interest and penalties) and other governmental charges;
such registration fees as may from time to time be in effect for the registration of common shares or other deposited securities on the share register and applicable to transfers of common shares or other deposited securities to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;
such cable, telex and facsimile transmission and delivery expenses as are expressly provided in the deposit agreement to be at the expense of ADS holders and beneficial owners of ADSs;
the expenses and charges incurred by the depositary in the conversion of foreign currency;
such fees and expenses as are incurred by the depositary in connection with compliance with exchange control regulations and other regulatory requirements applicable to common shares, deposited securities, ADSs and ADRs;
the fees and expenses incurred by the depositary, the custodian or any nominee in connection with the servicing or delivery of deposited securities; and
Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary by the brokers (on behalf of their clients) receiving the newly-issued ADSs from the depositary and by the brokers (on behalf of their clients) delivering the ADSs to the depositary for cancellation. The brokers in turn charge these transaction fees to their clients.
Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary to the holders of record of ADSs as of the applicable ADS record date. The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividends, rights offerings), the depositary charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or un-certificated in direct registration), the depositary sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts via the central clearing and settlement system, The Depository Trust Company, or DTC, the depositary generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary.
In the event of refusal to pay the depositary fees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.
The fees and charges ADS holders may be required to pay may vary over time and may be changed by us and by the depositary. ADS holders will receive prior notice of such changes.
Depositary Payments
In 2025, pursuant to the terms of the deposit agreement, we received reimbursement of US$2.5 million from JPMorgan Chase & Co., the depositary for our ADR program. The reimbursement was to cover our expense related to ADR program, including:
investor relations efforts
NYSE listing fees, SEC filing fees and accounting supporting fees for FASB & PCAOB
fees in connection with annual financial and Sarbanes-Oxley Act of 2002 audit
other ADR program-related expenses
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Disclosure Controls and Procedures
For the period ended on December 31, 2025, an evaluation has been performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2025.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, for our company. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with International Financial Reporting Standards as issued by International Accounting Standards Board.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the Securities and Exchange Commission, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 using the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), or the COSO criteria, as amended regularly. Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2025 based on the COSO criteria. Our independent registered public accounting firm, Ernst & Young, has issued an attestation report with unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2025, which is included immediately following this report.
Changes in Internal Control over Financial Reporting
During 2025, there was no material change to our internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
See below.
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Attestation Report of the Independent Registered Public Accounting Firm
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of United Microelectronics Corporation:
Opinion on Internal Control Over Financial Reporting
We have audited United Microelectronics Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, United Microelectronics Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”) and our report dated April 30, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
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Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
April 30, 2026
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Our board of directors has determined that Kuang Si Shiu, Wen-Hsin Hsu and Su Lin Wang, three of our independent directors and members of the audit committee, qualify as audit committee financial experts as defined in Item 16A of Form 20-F and are independent in accordance with the applicable requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended.
The SEC has indicated that the designation of Mr. Shiu, Dr. Hsu and Mrs. Wang as the audit committee financial experts does not: (i) make Mr. Shiu, Dr. Hsu or Mrs. Wang an “expert” for any purpose, including without limitation for purposes of Section 11 of the Securities Act as a result of this designation; (ii) impose any duties, obligations or liability on Mr. Shiu, Dr. Hsu or Mrs. Wang that are greater than those imposed on them as a member of the audit committee and our board of directors in the absence of such designation; or (iii) affect the duties, obligations or liability of any other member of the audit committee or our board of directors.
We amended the Code of Ethics for Directors and Officers in November 2017, and the Employee Code of Conduct in February 2020. The Employee Code of Conduct, which is applicable to all employees, replaced the code of ethics filed with the SEC in our 2003 annual report on Form 20-F. We have also created a separate code of ethics applicable to our directors and officers. A copy of each of the Code of Ethics for Directors and Officers and the Employee Code of Conduct are displayed on our website at http://www.umc.com/english/pdf/Code_of_Ethics.pdf and http://www.umc.com/english/pdf/Employee_Code_of_Conduct-e.pdf, respectively. Shareholders may request a hard copy of the Code of Ethics for Directors and Officers and the Employee Code of Conduct free of charge. Please contact the investor relations department of our company at ir@umc.com.
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by Ernst & Young, our principal external auditors, for the years indicated.
Audit Fees (1)
Audit-related Fees (2)
Tax Fees (3)
Audit fees consist of fees associated with the annual audit, review of our quarterly financial statements, statutory audits and internal control review. They also include fees billed for those services that are normally provided by the independent accountants in connection with statutory and regulatory filings.
Audit-related fees consist of fees billed for assurance and services related to the performance of the audit or review of our financial statements but not described in footnote (1) above. These services include certification of our Singapore Branch to Singapore authorities and application for corporation registration.
Tax fees include fees billed for professional services rendered by Ernst & Young, primarily in connection with our tax compliance activities.
All audit and non-audit services performed by Ernst & Young were pre-approved by our audit committee. In certain circumstances, the audit committee delegates to a designated member to pre-approve such audit and non-audit services. Pre-approval by a designated member should be reported to the audit committee at its upcoming meeting.
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As a R.O.C. company listed on the New York Stock Exchange, or NYSE, we are subject to the U.S. corporate governance rules to the extent that these rules are applicable to foreign private issuers as defined under SEC rules. The following summary details the significant differences between our corporate governance practices and corporate governance standards for U.S. companies (i.e. non-foreign private issuers) under the NYSE listing standards.
The Legal Framework. In general, corporate governance principles for Taiwanese companies are set forth in the Company Act of the Republic of China, or the R.O.C. Company Act, the R.O.C. Securities Exchange Act and, to the extent they are listed on the Taiwan Stock Exchange, under listing rules of the Taiwan Stock Exchange. Corporate governance principles under provisions of R.O.C. law may differ in significant ways to corporate governance standards for U.S. companies listed on the NYSE. Committed to high standards of corporate governance, we have generally brought our corporate governance in line with U.S. regulations, including the formation and independence of an audit committee. However, we have not adopted certain recommended NYSE corporate governance standards where such standards are contrary to R.O.C. laws or regulations or generally prevailing business practices in Taiwan, as discussed in more detail below.
Independent Board Members. Under the NYSE listing standards applicable to U.S. companies, independent directors must comprise a majority of the board of directors. We currently have six independent directors out of a total of nine directors on our board of directors. Our standards for determining director independence substantially comply with the NYSE listing standards, which include detailed tests for determining director independence. In addition, even though our independent directors meet in committee meetings of which they are committee members, we do not hold executive sessions of non-management directors. Such requirement is contrary to the R.O.C. Company Act.
Board Committees. Under the NYSE listing standards, companies are required to have a nominating/corporate governance committee, composed entirely of independent directors. In addition to identifying individuals qualified to become board members, the nominating/corporate committee must develop and recommend to the board a set of corporate governance principles. Our nominating committee currently consists of six of our independent directors. The nominating committee is expected to assist our board to constitute a nomination policy and succession plans of the directors and the executives. We currently do not have a corporate governance committee, as such committee is not required under R.O.C. requirements. Our board of directors is responsible for regularly reviewing our corporate governance standards and practices.
Under the NYSE listing standards, companies are required to have a compensation committee, composed entirely of independent directors. Under the R.O.C. Company Act, however, companies incorporated in the R.O.C. are not required to have a compensation committee with the same standards as the NYSE listing standards, but publicly listed companies in the R.O.C. must have a remuneration committee in accordance with the applicable laws and rules in the R.O.C. We have established a remuneration committee composed of all the independent directors and convened meetings in accordance with the applicable laws and rules in the R.O.C. The remuneration committee is responsible for determining the form and amount of compensation for each of our directors and executive officers under our articles of incorporation and the remuneration committee charter. In addition to the compensation approved at the annual general meeting, in the event we have net income in any fiscal year, we will distribute 0.1% of our earnings after payment of all income taxes, deduction of any past losses and allocation of 10% of our net income for legal reserves, as remuneration to our directors pursuant to our articles of incorporation.
Equity Compensation Plans. The NYSE listing standards also require that a company’s shareholders must approve equity compensation plans. Under the corresponding requirements in the R.O.C. Company Act and the R.O.C. Securities Exchange Act, shareholders’ approval is required for the distribution of employee bonuses in the form of stock, while the board of directors has authority, subject to the approval of the R.O.C. SFB, to approve employee stock option plans and to grant options to employees pursuant to such plans and also has authority to approve share buy-back programs for the purpose of selling common shares so purchased to employees and the sale of such common shares to employees pursuant to such programs. We intend to continue to follow only the R.O.C. requirements.
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Exhibit
Number
Description of Exhibits
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Filed herewith.
Furnished herewith.
Incorporated by reference to Exhibit (a) to our Registration Statement on Form F-6 (File No. 333-162437) filed with the SEC on October 13, 2009.
Incorporated by reference to Exhibit (a)(2) to our Registration Statement on Form F-6 (File No. 333-172990) filed with the SEC on April 12, 2017.
Incorporated by reference to Exhibit (a)(3) to our Registration Statement on Form F-6 (File No. 333-172990) filed with the SEC on August 1, 2022.
Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2006 (File No. 001-15128) filed with the SEC on May 9, 2007.
Incorporated by reference to Exhibit 10.7 to our Registration Statement on Form F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 10.8 to our Registration Statement on Form F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 10.9 to our Registration Statement on Form F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 10.10 to our Registration Statement on Form F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 10.11 to our Registration Statement on F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 10.12 to our Registration Statement on F-1 (File No. 333-12444) filed with the SEC on August 28, 2000, as amended.
Incorporated by reference to Exhibit 4.9 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2006 (File No. 001-15128) filed with the SEC on May 9, 2007.
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Incorporated by reference to Exhibit 4.10 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2006 (File No. 001-15128) filed with the SEC on May 9, 2007.
Incorporated by reference to Exhibit 99.1 to the Form 6-K furnished to the SEC on March 25, 2005.
Incorporated by reference to Exhibit 99.2 to the Form 6-K furnished to the SEC on May 26, 2006.
Incorporated by reference to Item 12.D. in this Annual Report on Form 20-F for the fiscal year ended December 31, 2025.
Incorporated by reference to Exhibit 97.1 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2023 (File No. 001-15128) filed with the SEC on April 25, 2024.
Incorporated by reference to Exhibit 11.3 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 (File No. 001-15128) filed with the SEC on April 24, 2025.
(P) Paper exhibits
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
Date: April 30, 2026
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