Dear Shareholders,
The year 2022 was a landmark year for TSMC. Supported by our strong technology leadership and differentiation, wedelivered a thirteenth-consecutive year of record revenue, with strong profitable growth. Our 2022 annual revenue increased
33.5% year-over-year in U.S. dollar terms, while our EPS rose to NT$39.20, nearly tripling over the past three years.
These achievements were earned in the face of considerable economic, human and geopolitical challenges across the world.
The year started with continued COVID-19 lockdowns, conflict in Ukraine, and geopolitical tensions and trade restrictions
that severely disrupted global supply chains. Retreat of globalization and free trade fueled inflationary pressure aroundthe world, increased macroeconomic uncertainty, and impacted consumer confidence. In the second half of the year,
pandemic-related demand, such as remote working and remote learning, receded as many parts of the world began tore-open, and the semiconductor industry entered an inventory correction mode.
The world also began to focus more intently on the importance of the semiconductor industry, as it suddenly recognized thecritical role semiconductors play in a modern economy. The rising tensions in geopolitics also accentuated the attention on a
resilient semiconductor supply chain, and the key role it plays in their economic and national infrastructure security.
For TSMC, we continued to focus on the fundamentals of our business. We enriched our R&D intensity and worked
diligently on our technology development, especially 2-nanometer, to deliver full node strides in performance and power
benefits to our customers, while offering the industry’s most advanced transistor scaling. We also increased our productivity
and fab operations quality, while successfully bringing our industry-leading 3-nanometer to high volume manufacturing
in 4Q’22. We deepened our service and expanded our capacity to support our customers’ growth, further earning theirtrust, as evidenced by higher scores in our annual customer survey. We enhanced our cybersecurity systems and measurescontinuously, to rigorously protect customers’ IP and our proprietary information. As we entered our third year of digitaltransformation, we accelerated the pace to keep our employees connected and productive in a flexible work environment,
while protecting them from COVID infection with stringent anti-pandemic measures.
Despite the recent macroeconomic uncertainties around the world, the fundamental structural growth trajectory in thelong-term semiconductor demand remains strong, underpinned by the industry’s multi-year megatrends of 5G and High
Performance Computing (HPC)-related applications. Therefore, we continuously work closely with our customers in a
disciplined manner to plan our capacity, based on the long-term market demand profile, and investing in leading edge andspecialty technologies, to support their structural growth.
As geopolitical tensions have arisen in different parts of the world, our customers also start to value more geographic
manufacturing flexibility, in addition to technology leadership, manufacturing excellence, low cost and trust of service quality.
Under this environment, based on customers’ request, we are expanding our global manufacturing footprint, to increasecustomer trust, to expand our future growth opportunities, and to reach for global talents.
In Taiwan, our N3 has just entered volume production in Tainan Science Park. We are also preparing for N2 volume
production starting in 2025, which will be located in Hsinchu and Taichung Science Parks.

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In the U.S., we are in the process of building two advanced semiconductor fabs in Arizona, with N4 and N3 process
technology, respectively. We are also building a 12-inch specialty technology fab in Kumamoto, Japan.
These investment decisions are based on our customers’ needs in each region, and a necessary level of government support.
We believe this is a necessary step to maximize value for our shareholders.
Our pricing will remain strategic to reflect our value, which also includes the value of geographic manufacturing flexibility.
At the same time, we will continue to leverage our competitive advantages of large volume, economies of scale andmanufacturing technology leadership, to continuously drive costs lower. We will also continue to work closely with all theregional governments, to secure their support.
Combining such actions, TSMC will have the ability to absorb the higher costs of overseas fabs, while remaining the mostefficient and cost-effective manufacturer, no matter where we operate. Thus, even as we increase our capacity outside of
Taiwan, we can continue to earn a sustainable and healthy return, while delivering long-term profitable growth for ourshareholders.
To address the insatiable demand for energy-efficient computing power, customers rely on TSMC not only for reliablecapacity, but also a predictable cadence of technology development.
We continued to extend our technology leadership, as our 3-nanometer technology entered volume production in 2022, andis the most advanced semiconductor technology in both PPA and transistor technology.
We are building a strong foundation for the next generation technology to follow. N2 technology development is on track,with risk production scheduled in 2024 and volume production in 2025. Our 2-nanometer technology will be the mostadvanced semiconductor technology in the industry in both density and energy efficiency when it is introduced.
Highlights of TSMC’s accomplishments in 2022:● Total wafer shipments were 15.3 million 12-inch equivalent wafers as compared to 14.2 million 12-inch equivalent wafers
in 2021.
● Advanced technologies (7-nanometer and beyond) accounted for 53 percent of total wafer revenue, up from 50 percent in
2021.
● We deployed 288 distinct process technologies, and manufactured 12,698 products for 532 customers.
● TSMC produced 30 percent of the world semiconductor excluding memory output value in 2022, as compared to 26
percent in the previous year.

2022 Financial Performance
Consolidated revenue reached NT$2,263.89 billion, an increase of 42.6 percent over NT$1,587.42 billion in 2021. Net
income was NT$1,016.53 billion and diluted earnings per share were NT$39.20. Both increased 70.4 percent from the 2021
level of NT$596.54 billion net income and NT$23.01 diluted EPS.

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TSMC generated net income of US$34.07 billion on consolidated revenue of US$75.88 billion, which increased 59.6 percent
and 33.5 percent respectively from the 2021 level of US$21.35 billion net income and US$56.82 billion consolidated
revenue.
Gross profit margin was 59.6 percent as compared with 51.6 percent in 2021, while operating profit margin was 49.5
percent compared with 40.9 percent a year earlier. Net profit margin was 44.9 percent, an increase of 7.3 percentage points
from 2021’s 37.6 percent.
In 2022, the Company further raised its total cash dividend payments to NT$11.0 per share, up from NT$10.25 a year ago.

Technological Developments
In 2022, we continued to increase our investment in R&D to US$5.47 billion to extend our technology leadership anddifferentiation. We also work closely with our customers to enable the global pool of innovators, to unleash their innovations
and create greater value for the semiconductor industry.
In its third year of ramp, our 5-nanometer family of technologies contributed 26% of TSMC’s revenue. We continued toenhance our N5 family’s performance, power and density, and N4 started volume production in 2022. We also introduced
N4P and N4X technologies, targeting next wave 5nm products. N4P technology development is well on track, and volume
production is scheduled in 2023. N4X is TSMC’s first HPC-focused, workload-intensive technology, with customers’ producttape-outs in 2023.
After N3 technology entered volume production in 2022, N3E will further extend our N3 family, with enhanced performance,
power, and yield. Volume production of N3E is scheduled for 2H’23. We are working on a high level of customer
engagement at both N3 and N3E, with the number of tape-outs more than 2x that of N5 in its first and second year. We
expect our N3 family to be another large and long-lasting node for TSMC.
Our 2-nanometer technology will adopt nanosheet transistor structure, and deliver full-node performance and power
efficiency gains, with 10-15% speed improvement at the same power or 25-30% power improvement at the same speed ascompared to N3E, to address the increasing need for energy-efficient computing. N2 will provide our customers with thebest performance, cost and technology maturity, and extend our technology leadership position well into the future.
As TSMC pushes the envelope of transistor scaling, we also continue to expand our TSMC 3DFabricTM design solutions, as
another dimension to improve system-level performance. TSMC 3DFabricTM consists of both wafer-level 3D and advanced
packaging technologies. For our 3D technologies, TSMC-SoIC® Chip-on-Wafer (CoW) technology successfully enteredvolume production in 2022, demonstrating significant performance improvement by stacking SRAM chips on logic wafers.
TSMC-SoIC® Wafer-on-Wafer (WoW) technology demonstrated superb system performance enhancement for HPC products
in 2022 by stacking 7nm logic wafer on deep trench capacitor wafer. For our advanced packaging technologies, the
CoWoS®-S technology that integrates multiple system-on-chip (SoC) chips, high bandwidth memory stacks, and a 3-reticle
size silicon interposer successfully entered volume production for customer HPC products in 2022. For InFO advanced
packaging technology, TSMC successfully entered volume production of Integrated Fan-Out on Substrate (InFO_oS) that
integrates multiple SoC chips in a 2-reticle size fan-out package.

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To help customers unleash their product innovations with fast time-to-market, TSMC provides customers with comprehensive
infrastructure needed to optimize design productivity and cycle times. TSMC continues to expand our Open Innovation
Platform® (OIP), providing over 55,000 items of libraries and silicon IP portfolio, more than 43,000 technology files, and over
2,900 process design kits, from 0.5-micron to 3-nanometer in 2022.

Environmental, Social and Governance
As a responsible global corporate citizen, TSMC is focused on driving changes in Green Manufacturing, establishing a
Responsible Supply Chain, Talent Development, Inclusive Workplace, and Caring for the Underprivileged. In 2022, wepublished our first UN SDGs (United Nations Sustainable Development Goals) Action Report and Materiality Analysis Reportto enhance the transparency of our sustainability progress.
Green Manufacturing is the cornerstone of our sustainability management. TSMC strives to be a global standard of an
eco-friendly corporation, and we integrate green management into all aspects of our daily operations, both in Taiwan andoverseas. In 2022, TSMC’s Reclaimed Water Plant commenced operations in the Southern Taiwan Science Park and beganwater supply of 10,000 metric tons of water per day, with the goal of reaching 36,000 metric tons per day by 2026. At
TSMC Arizona, we plan to build an Industrial Water Reclamation Plant, which would allow us to reach “Near Zero Liquid
Discharge.”
In our supply chain, TSMC is actively working with our suppliers to drive low-carbon emissions management, a key
component of our roadmap to Net Zero Emissions by 2050. We continue to expand carbon capture opportunities in our
supply chain management, and encourage our suppliers to set up carbon capture facilities to reduce carbon emissions.
Talent is critical to the global semiconductor industry’s success. We believe TSMC’s global footprint expansion not only
enables us to better support our customers, but also gives us more opportunities to reach global talent. To attract
more talent and create a sustainable recruitment pipeline for the semiconductor industry, TSMC continues to invest insemiconductor related research through close collaboration with top universities including National Taiwan University,
National Tsing Hua University, National Yang Ming Chiao Tung University, National Cheng Kung University, MIT, Stanford
University, UC Berkeley, Arizona State University, Tokyo University, and other prestigious institutions around the world.
In order to deepen employee awareness and practice of Diversity and Inclusion, TSMC focuses on enhancing employees’
awareness of respecting individual differences and its unique values in the workplace. TSMC has designed a course on
unconscious bias to help employees identify and respond to biases in the right way. Employees can also use interculturalassessment tools to evaluate themselves and learn how to work with colleagues from diverse backgrounds in their teams.
The TSMC Education and Culture Foundation and the TSMC Charity Foundation have long been invested in driving positivechanges towards a better society, by focusing on caring for the disadvantaged and helping youth education. In 2022, the
TSMC Charity Foundation assisted 6,358 students at 134 rural care institutes and collaborated with TSMC volunteers to
produce tutorial videos for scientific experiments and science education. TSMC also partnered with SEMI to hold a session at
2022 SEMICON Taiwan, promoting a matching platform that offered 600 jobs opportunities from 30 different companies torural vocational students.

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Corporate Developments
In December 2022, TSMC announced that, in addition to TSMC Arizona’s first fab, which is scheduled to begin productionof N4 process technology in 2024, the Company has also started the construction of a second fab in Arizona to begin
production of 3nm process technology in 2026. The overall investment for these two facilities will be approximately US$40
billion. When completed, TSMC Arizona’s two fabs will manufacture over 600,000 wafers per year.
In February 2022, TSMC, Sony Semiconductor Solutions Corporation (SSS) and Denso Corporation jointly announced a joint
venture of Japan Advanced Semiconductor Manufacturing (JASM). In addition to the previously announced 22/28 nanometer
process, TSMC will also enhance JASM’s capabilities with 12/16 nanometer FinFET process technology, and increase monthly
production capacity to 55,000 12-inch wafers. With the additional capacity, the total capital expenditure for JASM’s
Kumamoto fab is estimated to be approximately US$8.6 billion with strong support from the Japanese government.

Honors and Awards
TSMC received recognition for achievements in innovation, corporate governance, sustainability, investor relations and overall
excellence in management from organizations including Forbes, Fortune Magazine, Asiamoney, The Asset, CommonWealth
Magazine, Taiwan Stock Exchange, and Taiwan Institute for Sustainable Energy. For innovation, TSMC was recognized as
3rd in IFI Claims Patent Services’ “2022 Top 50 US Patent Assignees.” TSMC was also recognized by Fortune Magazine as“2022 World’s Most Admired Companies.” In sustainability, we were chosen once again as a component of the Dow Jones
Sustainability Indices, becoming the only semiconductor company to be selected for 22 consecutive years. We also received
MSCI ESG Research’s AAA Rating, CDP’s “2022 CDP Supplier Engagement Leader,” Sustainalytics’ “Company ESG Risk
Ratings-Low ESG Risk” rating, ISS ESG’s “Prime” status in the ESG Corporate Rating, and Corporate Knight’s “2022 Global
100 Most Sustainable Corporations.” Meanwhile, we remained a major component in various MSCI ESG and FTSE4Good
indices. In investor relations, TSMC continued to receive multiple awards from Institutional Investor Magazine.

OutlookEntering 2023, macroeconomic and geopolitical uncertainties persist. As global COVID-19 pandemic subsides, we haveentered a more intelligent and connected world. As semiconductors become increasingly essential and ubiquitous to every
part of our daily lives, semiconductor technology is becoming a foundational technology for the modern digital economy.
The semiconductor value in the global supply chain continues to increase, creating greater value opportunities for ourcustomers, and greater value opportunities for TSMC.
It is more important than ever for TSMC to fulfill our mission to be the trusted technology and capacity provider for the
global logic IC industry for years to come. We will uphold our Trinity of Strengths of Technology Leadership, Manufacturing
Excellence, and Customer Trust, to address and capture the strong growth opportunities.

Capacity Plan
2021

2022

2023

Wafer Sales Plan

7%

2021

50%

50%

2022

47%

53%

2023

40-50%

50-60%

13-14
9%
15-16
5%
16-17
Annual Growth Rate
Capacity: million 12-inch equivalent wafers

> 7nm

≤ 7nm

2023 wafer shipment is expected to be 14-15 million 12-inch
equivalent wafers.

We are increasing our capacity beyond Taiwan toexpand our future growth potential, to reach for
global talent, and to further increase our customer
trust. As we expand our global footprint, andrecruit people from around the world, our priority
is to identify, attract and hire talent whose corevalues and principles are aligned with TSMC’s,so that we can establish TSMC culture in all our
employees, no matter where we operate.
We recognize the increasingly important role of
TSMC in the global semiconductor industry, ourimpact to many of the world’s economies, andthe responsibilities that come with our position.
We remain steadfast to our dedicated foundrybusiness model, and will continue to work as One
Team to support all the IC innovators and enable
their success. We will hold ourselves to rigorous
standards of corporate governance, and adhere
to our core values of Integrity, Commitment,
Innovation and Customer Trust, while pursuing a sustainable future. We are honored to earn your trust in TSMC through thechallenges of 2022. We are more excited about our future, and are even more firmly committed to earning good returns forour shareholders in the years to come.

We are increasing our investments in R&D, to continue to extend our overall competitiveness and technology leadership.
With our leadership in both leading edge process technologies and 3DIC solutions, TSMC’s technology cadence
remains constant, to deliver the value of our technology platform, and to help our customers to enhance their productcompetitiveness and to grow their markets well into the future.
We continue to focus on optimizing our manufacturing operations to drive greater efficiency and productivity, including“digitalization” of our fabs, to support high volume ramp of N3 in 2023 and beyond.
Mark Liu
Chairman

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C.C. Wei
Chief Executive Officer011