5.1 Business Activities
5.1.1 Business Scope
As the founder and a leader of the dedicated semiconductor
foundry segment, TSMC provides a full range of integrated
semiconductor foundry services, including leading advanced
process, specialty technologies, advanced mask technologies,
TSMC 3DFabricTM advanced packaging and silicon stacking
technologies, excellent manufacturing productivity and quality,
as well as comprehensive design ecosystem support, to meeta growing variety of customer needs. The Company strives toprovide unparalleled overall value to its customers and views
customer success as TSMC’s own success. As a result, TSMC
has gained customer trust from around the world and has
experienced strong growth and success of its own.
In 2022, TSMC developed or introduced the following
technologies:
Logic Technology
2nm (N2) technology development is on track and making
good progress. N2 technology features TSMC’s first
generation of nanosheet transistor technology with full-node
strides in performance and power consumption. Volume
production is expected in 2025.
● 3nm fin field-effect transistor (FinFET) (N3) technology started
volume production in the second half of 2022 as planned.
● N3E technology, an enhanced version of N3 technology, willcontinue to provide industry-leading advantages for both
mobile communication and high-performance computing(HPC) applications. Volume production is expected in thesecond half of 2023.
● 4nm FinFET (N4) technology, an enhanced version of 5nm
FinFET (N5) technology, started volume production in 2022.
● 4nm FinFET Plus (N4P) technology development is on trackand making good progress. Customer product tape-outs
were received in 2022 and volume production is expected in2023.
● N4X technology, introduced in 2021, is TSMC’s firsthigh performance computing (HPC)-focused technology,
representing the ultimate performance and maximum clock
frequencies in TSMC’s 5-nanometer family. It is expected toreceive customer tape-outs in 2023.
● 

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5nm FinFET Plus (N5P) technology, a performance-enhanced
version of 5nm technology (N5), entered its second year ofvolume production in 2022 for customers’ smartphone and
HPC products.
● 6nm

FinFET (N6) technology entered its third year of volume
production in 2022 and was widely adopted for customers’smartphone, HPC, and consumer electronics products.
● 7nm

FinFET (N7) and 7nm FinFET plus (N7+), whichhave been in volume production for customers’ 5G andhigh-performance computing products for several years,
entered their second year of volume production forcustomers’ consumer electronics and automotive products in
2022.
TM technology, which leverages TSMC’s 12nm FinFET● N12e
compact plus (12FFC+) baseline, started volume production
in 2021. Following this, N12eTM technology introduced
innovative low-leakage input/output (IO) devices in 2022 andis planned to start risk production in 2023.
● 22nm
ultra-low leakage (22ULL) technology introduced newenhanced low leakage in 2021 and has been applied to IoTproducts since 2022.
● 

Specialty Technology
5nm FinFET Automotive (N5A) technology, an automotive
qualified version of 5nm technology (N5) with automotive
design enablement platform, completed technology and
IP AEC-Q100 qualification and certified by ISO 26262:
Functional Safety – Road Vehicles Standard in 2022.
Customer product tape-outs are expected to start in 2023.
● N6
radio frequency (N6 RF) technology received multiple
customer product tape-outs in 2022. In addition, the second
generation N6 radio frequency (N6 RF+) technology is underdevelopment, and its process design kit (PDK) is expected tobe completed in 2023.
● 12FFC+
RF technology version 1.0 simulation program withintegrated circuit emphasis (SPICE) model and PDK werereleased in 2022. This technology was developed on the same
logic process platform as N12eTM technology and targets
IoT wireless connectivity applications and the second wave
mobile RF customers.
● 16FFC
FinFET compact (16FFC) RF technology received
multiple customer tape-outs in 2021. The development of its
enhanced version (Enhancement I/II) was completed in 2022
to support applications such as 28/39/47GHz mmWave RF
front-end module and 77GHz/79GHz automotive radar.
● 

16FFC embedded magnetoresistive random access memory(MRAM) technology completed reliability qualificationin 2022, with one million cycles endurance and reflow
capability. This technology is ready for production and is
expected to pass AEC-Q100 Grade-1 reliability qualification in2023.
● 22ULL and 28ULL embedded resistive random access memory(RRAM) technologies, TSMC’s second generation of RRAM
solutions, featured balanced cost and reliability. Several
customers qualified products with these technologies andstarted volume production in 2022.
● 40nm Silicon on Insulator (N40SOI) technology on 12-inch
wafers, which provides industry-leading competitive
advantages, received multiple customer tape-outs in 2021
and started volume production in 2022.
● 6-inch gallium nitride (GaN) on silicon technology successfully
passed customer product quality and reliability qualification.
In 2022, this technology was widely adopted in power
supplies for various consumer electronic devices featuringhigh power efficiency and small footprint. 8-inch GaN on
Silicon technology development is on track and is expected tobe ready in 2025 to further support automotive applications.
● CMOS image sensor (CIS) technology was enhanced andmoved to the next generation to further strengthen thecapabilities of advanced smartphone cameras. In 2022,
TSMC continually helped customers roll out products withthe world’s smallest pixel size. In addition, TSMC successfullycompleted technology development of the world’s first
three-wafer-stacked global shutter image sensor and it isready for production.
● For silicon photonics technology, TSMC is developing an
innovative 3D photonics stack technology – compact universal
photonics engine (COUPE), which can integrate silicon
photonics chip and electrical control chip into a single-chip
photonic engine. This photonics engine can be co-packaged
with a high performance computing chip to provide low
power and high speed data transmission. In 2022, several
test chips were taped out for early evaluation to lay a solid
foundation for future volume production.
● 

TSMC 3DFabricTM - TSMC Advanced Packaging and 3D
Silicon Stacking Technologies● TSMC-SoIC® (System on Integrated Chip) Chip-on-Wafer(CoW) technology successfully entered volume production
in 2022. Stacking SRAM chips on logic wafers through
CoW technology demonstrates significant performance
improvement.

TSMC-SoIC® Wafer-on-Wafer (WoW) technology
demonstrated superb system performance enhancement
for high performance computing (HPC) products in 2022
by stacking 7nm logic wafer on deep trench capacitor (DTC)
wafer.
● Chip on wafer on substrate with silicon interposer(CoWoS®-S) technology that integrates multiple
system-on-chip (SoC) chips, second generation highbandwidth memory (HBM2E) stacks, and a 3-reticle size
silicon interposer that features embedded deep trenchcapacitor (eDTC) successfully started volume production forcustomer HPC products in 2022.
● Chip on wafer on substrate with redistribution layerinterposer (CoWoS®-R) technology featuring redistribution
layer (RDL) interposer for better signal integrity for HPC
applications successfully started risk production in 2022 andis expected to start volume production in 2023.
● Integrated Fan-Out on Substrate (InFO_oS) technologythat integrates multiple SoC chips in a 2-reticle size fan-out
package on a >90mmx90mm substrate successfully enteredvolume production in 2022.
● Integrated Fan-Out with local silicon interconnect (InFO_LSI)
technology, which integrates 5nm SoCs with ultra-highdensity die-to-die interconnects for high performancecomputing products, successfully started volume production
in 2022.
● Fine pitch copper (Cu) bump technology for flip chippackaging on 4nm silicon successfully started volume
production in 2022.
● 

5.1.2 Customer Applications
TSMC manufactured 12,698 different products for 532
customers in 2022. These chips were used across a broad
spectrum of electronic applications, including computersand peripherals, information appliances, wired and wirelesscommunication systems, high-performance computing servers
and data centers, automotive and industrial equipment, as wellas consumer electronics such as digital TVs, game consoles,
digital cameras, AI-enabled IoT and wearables, and many otherdevices and applications.
The rapid ongoing evolution of end products prompts
customers to pursue product differentiation using TSMC’s
innovative technologies and services and, at the same time,spurs TSMC’s own development of technology. As always,
TSMC believes success depends on leading rather thanfollowing industry trends.

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Unit: Shipments (thousand of 12-inch equivalent wafers) / Net Revenue (NT$ thousands)

2022

Shipments
Wafer

Others (Note 2)

Total

Shipments

2021
Net Revenue

Shipments

Net Revenue

Domestic (Note 1)

2,324

202,075,489

2,562

172,814,551

Export12,9291,789,780,458

11,6171,232,485,722

Domestic (Note 1)

N/A

16,668,631

N/A

13,055,166

ExportN/A

255,366,714

N/A

169,059,598

Domestic (Note 1)

2,324

218,744,120

2,562

185,869,717

Export12,9292,045,147,172

11,6171,401,545,320

In 2022, TSMC maintained strong partnerships with many
world-class research institutions, including SRC in the U.S.
and IMEC in Belgium. The Company also continued to expand
research collaboration with leading universities throughout
the world for two major purposes: the advancement ofsemiconductor technologies and the nurturing of human talent
for the future.
Amount: NT$ thousands

124,734,755

Note 1: Domestic means sales to Taiwan.
Note 2: Others mainly include revenue associated with packaging and testing services, mask making, design services, and royalties.

5.1.4 Production in 2022 and 2021
Unit: Capacity / Output (million 12-inch equivalent wafers) / Amount (NT$ millions)

WafersYear

Capacity

OutputAmount

2022

15-16

15-16

854,900

2021

13-14

14-15

791,459

25,985,796

5.2 Technology Leadership5.2.1 R&D Organization and Investment
In 2022, TSMC continued to invest in research and development, with total R&D expenditures amounting to 7.2% of revenue, alevel that equals or exceeds the R&D investment of many other leading high-tech companies.

2021
2022
			

01/01/2023~
02/28/2023

5.2.2 R&D Accomplishments in 2022
Faced with the continuous challenge to significantly scale up semiconductor computing power every two years, thereby extending
Moore’s Law, the Company has focused its R&D efforts on contributing to customers’ product success by offering leading-edge
technologies and design solutions. In 2022, the Company successfully started risk production of N3E, an enhanced version of
N3 technology; while the development of 2nm, the leading-edge technology in the semiconductor industry at this time, moved
into baseline setup and the yield learning stage. Furthermore, the Company’s research efforts continued pushing forward with
exploratory studies for nodes beyond 2nm.
In addition to complementary metal oxide semiconductor (CMOS) logic, TSMC conducts R&D on a wide range of othersemiconductor technologies that provide the functionality required by customers for mobile SoC and other applications. Highlights
in 2022 included:
The Company’s integrated interconnect and packaging solution, the 3DFabricTM, showed significant progress by completing
certification of HBM3 (third generation HBM) on CoWoS-S; qualifying InFO_PoP Gen-8 for mobile applications and enhanced
thermal performance; and developing on schedule the next-generation InFO_PoP with backside redistribution layers (RDL).
● In specialty technologies, examples of progress included: improving figure-of-merit of 5V devices of 55nm bipolar-CMOS-DMOS(BCD) technology and extended 0.13μm BCD technology to support 55V in automotive applications; qualifying next generationmonolithic CMOS-MEMS technology with highly reliable 6-axis inertial measurement unit (IMU); starting risk-production of theworld’s smallest chips of voltage domain global shutter CMOS image sensors with 3-wafer stack technology; and demonstratingnext generation MRAM with smaller cell size, faster writing speed and more power saving for use in MCU, AR/VR/edge-AI
applications.
● 

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demonstrated good performance with expected wafer yield. In
2023, TSMC R&D will continue to pursue extreme ultraviolet(EUV) technology development, mask pellicle research, andcost reduction for 2nm technology. In the future, TSMC R&D
will continue to develop leading-edge technology with next
generation EUV scanners to extend Moore’s Law.
Mask Technology
In 2022, R&D focused on improving critical dimension, patternfidelity, overlay performance and defect reduction of EUV
masks yields, exposure durability and wafer productivity by EUV
photoresist and absorber material improvement, multibeam
writer fine-tunning, process recipe modification, andintroducing dry clean and inspection deep learning to meetthe lithography requirements of the 3nm node. Continuous
advancement was made for EUV mask technology bydevelopment of new mask materials and new mask processes
for nodes at 2nm and beyond.

● 

R&D Expenditures
163,262,208

5.1.3 Consolidated Shipments and Net Revenue in 2022 and 2021

Highlights● 3nm Technology
In 2022, TSMC established platform support of N3E technology
for both HPC and SOC applications, started risk production,and planned to launch volume production in the second halfof 2023.
2nm Technology
Also in 2022, TSMC’s 2nm technological development focusedon baseline setup, yield learning, transistor and interconnect
R/C performance improvement, and reliability evaluation.
During the year, major customers completed IP design andstarted silicon validation. TSMC also developed low resistance
RDL and super high performance metal-insulator-metal (MiM)
capacitors to further boost performance.

● 

Lithography Technology
The Company’s R&D in lithography in 2022 focused on
3nm volume production, 2nm technology development,
and preparation for the next generation. In 2nm, enhanced
variation control, material quality, and defect reduction● Integrated Interconnect and Packaging
TSMC has named its fine pitch chip-to-chip connection
leveraging existing wafer processes 3DFabricTM, which consistsof both wafer-level frontend and backend technologies. The
Company’s frontend technologies, or TSMC-SoIC® (System on
Integrated Chips), enables leading-edge silicon for 3D silicon
stacking. TSMC’s advanced backend technologies includes
CoWoS® with chips placed onto pre-made RDLs and InFO
with chips embedded before interconnection. The Company’s
3DFabric offers the ultimate flexibility in product design withintegrated frontend and backend technologies to meet futurecomputing systems integration scaling needs.
3DIC and TSMC-SoIC®
TSMC-SoIC® is an innovative wafer-level frontend 3DIC
chip stacking platform with outstanding bonding density,interconnect bandwidth, power efficiency, and thin profile.
It extends Moore’s Law through system-level scaling withsustainable performance gains and corresponding costbenefits. SoIC integrated chips can be subsequently assembled
by using conventional packages or TSMC’s new 3DFabricTM
technologies, such as CoWoS® or InFO, for next generation
HPC, AI and mobile applications. Currently, several SoIC
product tape-outs are under verification. The Company is alsoplanning the next generation of SoIC platform with more
bandwidth improvement at a competitive cost. TSMC willcontinue pursue SoIC technological improvements and to
co-optimize with the Company’s advanced silicon technologies
for further gains in transistor density, and system power/
performance/area and cost.
● 

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CoWoS®
CoWoS® with Si interposer is the leading 2.5D technology forhigh-end HPC and AI product applications. The technology
features a Si interposer with sub-micron routing layers andintegrated capacitors (iCaps) so that various chiplets such as
SoC and high bandwidth memory (HBM) can be placed on it.
The new third generation HBM3 was certified on CoWoS-S in
2022. In parallel, CoWoS-L with multiple local Si interconnects(LSIs) embedded in an organic interposer are being developed.
Compared with CoWoS-S, CoWoS-L dramatically improved thesize limitation of a Si interposer and enabled more features in
an interposer to boost overall system performance.
● 

InFO
In 2022, TSMC continued its industry leadership in
high-volume manufacturing of InFO_PoP Gen-7 packaging
for mobile applications. InFO_PoP Gen-8 was also successfully
qualified for mobile applications and displayed enhanced
thermal performance. InFO-oS Gen-4 qualified in 2022 andoffers more chip-partition integration, larger package size andhigher bandwidth. Based on standard InFO_PoP structure,
InFO_M_PoP Gen-1, which integrates different functional chips
suitable for wearable applications, was developed and qualified
in 2022. The next-generation InFO_PoP is being developed onscheduled to provide backside RDL for integrated commodityof low power DDR DRAM technology (LPDDR).

● 

Advanced Interconnect
TSMC provides unique interconnect technologies for
its customers to design competitive products. In 2022,
innovations on metallization enabled both line and via
resistance reduction. In addition, development of novel
materials also provided capacitance reduction. Those creative
solutions deliver better chip performance with lower cost.

● 

Corporate ResearchInnovation in low-dimensional devices and materials continues
to drive higher performance and reduced power consumptionin advanced logic technologies. In 2022, TSMC stayed at theforefront of 2D transistor research. At the 2022 Symposia
on VLSI Technology and Circuits, TSMC demonstrated anovel wafer-scale semi-automated dry transfer process formonolayer (1L) chemical vapor deposition (CVD) 2D WS2
utilizing the weakly coupled interface between semimetal (Bi)and 2D WS2. Using this semimetal-assisted transfer process,
TSMC showcased a record high on current and a record low
contact resistance for wafer-scale 1L CVD WS2 transistors. At

098

the 2022 International Electron Device Meeting (IEDM), TSMC
successfully integrated Hf-based atomic layer deposition (ALD)
higher-k dielectrics with CVD-grown monolayer (1L) MoS2 tobuild top-gate 2D nFET with equivalent oxide thickness (EOT)of ~1nm with a nearly ideal subthreshold swing of 68 mV/dec.
Also at the 2022 IEDM, TSMC demonstrated the first successful
integration of monolayer MoS2 nanosheet (NS) FET in agate-all-around configuration. The successful demonstrationof MoS2 NS with high performance and of the stacked NS
modules further clarifies the value proposition in 2D materials
for transistor scaling.

Power IC/Bipolar-CMOS-DMOS (BCD)
TSMC continued to increase its 12-inch BCD technology
competitiveness in 2022. The figure of merit of 5V devicesof 55nm BCD technology was enhanced, targeting powerswitches for portable devices. The Company plans to further
develop 28V and 5-16V for the 40nm BCD 20/24V technology
platform. The 22nm BCD technology offers 5V to 20V devices
that are in reliability certification stage and has also extended
0.13μm BCD technology to support 55V in automotive
applications.

● 

TSMC continues to research emerging high-density,
non-volatile memory devices and hardware accelerators for AI
and HPC applications. At the 2022 International Solid-State
Circuits Conference (ISSCC), TSMC demonstrated a 40nm
phase change memory (PCM) compute-in-memory macrowith a hybrid SLC and MLC configuration. Combining an
input-reordering scheme to enhance sparsity, the 2Mb-cell
design achieved state of the art energy efficiency. At the2022 IEDM, TSMC had previously introduced a new approach
towards forming-free chalcogenide selectors, where extra
defects were introduced to assist the forming process andreduce the forming voltage. Forming-free low voltage selectors
based on SiNGeCTe (SNGCT) chalcogenide were demonstrated
along with excellent endurance characteristics over 1010 cycles.

Micro-Electromechanical Systems (MEMS)
In 2022, TSMC implemented qualified piezoelectric microelectromechanical systems (MEMS) technology for mass
production of MEMS speakers with high audio quality andfast response. In parallel, TSMC’s capacitive micro-machined
ultrasonic transducer (CMUT) MEMS technology was qualified
for medical ultrasound imaging transducer chips with highimage quality and low cost and entered the mass production
stage. In addition, TSMC’s next generation monolithic
CMOS-MEMS technology was qualified in 2022 to produce
highly reliable 6-axis inertial measurement unit (IMU) for
automotive safety and autonomous driving. Future plansinclude the development of next-generation high-sensitivity
piezoelectric microphones, total solutions for high SNR
automotive 6-axis IMU, and medical single chip ultrasoundprobe applications.

Specialty Technologies
TSMC offers a broad array of technologies to address a wide
range of applications:● 

Mixed Signal/Radio Frequency (MS/RF)
The confinement caused by the COVID-19 pandemic overthe past two years triggered a growing demand for MS/
RF chips in wireless connectivity, such as applications in 5G
communications, WiFi7, IoT, and so on. In 2022, TSMC
continued to enhance RF design-technology co-optimization(DTCO) to a systematic methodology by bridging the validation
between key process knob/device option/layout optimization
and benchmarking circuit performance, and applied theseresults to RF technology to provide best performance/
power/cost-tradeoffs solutions, such as 6nm/12nm FFC+
for transceiver designs, 16nm/28nm HPC+ for 5G mmWave
frontend module (FEM) designs, and enhanced 40nm special
process for 5G RF FEM designs.

Embedded Flash/Emerging Memory
TSMC reached several major milestones in embedded
non-volatile memory (NVM) technologies in 2022. At the
28nm node, the Company’s embedded flash development for
high-performance (HP) mobile computing and HP low-leakage
platforms maintained a stable high yield consumer electronics
grade for mass production, achieved the highest automotive
grade-0 qualification, and are scheduled for productqualification in 2023. TSMC also offered RRAM as a low-costembedded NVM solution for the price sensitive IoT market. The
Company’s 40nm & 28nm nodes entered mass production,
while the 22nm node was ready for production.

● 
● 

● 

risk-producing the world’s smallest voltage domain global
shutter CMOS image sensor chips with 3-wafer stack
technology for NIR/security camera market; (3) completing thetechnology transfer of silicon direct time-of-flight single photon
avalanche diode (SPAD) process to a manufacturing fab for
3D distance sensing applications; and (4) proceeding with risk
production of stacked CMOS image sensors with N22 logic
wafers as image signal processing units for high-dynamic range
automotive imaging applications.

Gallium Nitride (GaN)
TSMC’s first generation of 650V enhanced GaN high electron
mobility transistors (E-HEMT) went into mass production
in 2022. In order to fill customer demand, TSMC tripled its
production capacity from 2021 levels. Further, to support theCompany’s leading position in the GaN power transistor field,
the second generation of 650V and 100V power E-HEMT
entered the final reliability assessment stage and will start
production in 2023. For GaN transistors application in theautomotive electronics market, the third generation 650V
power E-HEMT development was developed to be delivered in
2025.
Complementary Metal-Oxide-Semiconductor (CMOS)
Image Sensors
In 2022, TSMC made several major technical advances in
CMOS image sensor technology including: (1) starting risk
production of a new sub-micron pixel technology with
16% pixel area reduction for mobile imaging market; (2)● The Company also enjoyed several major accomplishments inembedded MRAM technology, including TSMC’s 16nm node
for automotive applications, which is expected to achieve
technical qualification in 2023. TSMC also had demonstrated
an advancement in next generation memory cells with smaller
cell size, faster writing speed and more power saving to meetthe requirements for MCU, AR/VR/edge-AI applications.
5.2.3 Technology Platform
TSMC provides customers with advanced technology
platforms that include the comprehensive infrastructureneeded to optimize design productivity and cycle times. These
include: electronic design automation (EDA) design flows;
silicon-proven libraries and IP; and simulation and verification
design kits, also known as process design kits (PDKs), andtechnology files.
For the latest advanced technologies such as 3nm, 4nm, 5nm
and TSMC 3DFabricTM, the Company provides EDA tools,
features and IP solutions for adoption at various design stages
by customers for system innovation to meet their productrequirements. To help customers plan new product tape-outs
incorporating library/IP from the Company’s Open Innovation

099

Platform® (OIP) ecosystem, the OIP ecosystem features aportal to connect customers to solution providers from 16
EDA partners, six Cloud partners, 37 IP partners, 23 design
center alliance (DCA) and eight value chain aggregator (VCA)
partners, as well as 19 inaugural partners with 3DIC expertisefor the new 3DFabric Alliance, which was officially announcedin October 2022 during TSMC’s North American OIP Ecosystem
Forum in Santa Clara, California.
5.2.4 Design Enablement
TSMC’s technology platforms provide a solid foundation tofacilitate the design process. Customers can design using
the Company’s internally developed IP and tools or use tools
available from TSMC’s OIP partners.
Tech Files and PDKs
EDA tool certification, an essential element for IP and customer
designs to ensure that features meet TSMC process technology
requirements, can be found on TSMC-OnlineTM. Corresponding
tech files and PDKs are available for customers to download
and use with certified EDA tools. TSMC provides a broad rangeof PDKs for digital logic, mixed-signal, radio frequency (RF),high-voltage driver, CMOS image sensor (CIS) and embedded
flash technologies across a range of nodes from 0.5µm to
3nm. In addition, the Company provides tech files for design
rule checking (DRC), layout verification of schematic (LVS),
resistance-capacitance (RC) extraction, automatic place androute, and a layout editor to ensure that process technology
information is accurately represented in EDA tools. By 2022,
TSMC had provided customers more than 43,000 tech files and2,900 PDKs.
Library and IP
Silicon intellectual property (IP) is the basic building block of
IC designs. Various IP types are available to support different
customer design applications including: foundation, analog/
mixed-signal, embedded memory, interface and soft IP. TSMC
and its alliance partners offer customers a rich portfolio of
reusable IPs, which are building blocks for many circuit designs.
To support 3DIC customer needs, TSMC introduced 3DIC IP
in 2019. By 2022, the Company had expanded its library andsilicon IP portfolio to contain more than 55,000 items, a 37.5%
increase over 2021.
Design Methodology and Flow
Design reference flows are built on top of certified EDA tools
to provide additional design flow methodology innovations

100

that can help boost productivity. In 2022, TSMC released N3E
HPC, mobile and custom design reference flows through OIP
collaboration and announced the availability for customer
adoption of design applications in mobile and HPC platforms.
In addition to process technology advancements, the Company
released the design reference flows for analog design
migration, N16 mmWave and N6 RF sub-6G technologies,
and continued to develop and offer TSMC 3DFabricTM design
solutions for both 3D chip stacking and 2.5D advanced
packaging technologies, including solutions to support the
3DbloxTM standard to unify EDA tool solutions to reduce
3DIC design complexity, thus helping customers to effectively
improve productivity in their system-level designs. These designreference flows feature FinFET-specific and 3DFabricTM design
solutions to optimize PPA (performance, power and area).
5.2.5 Intellectual Property
For a long time, TSMC has been protecting R&D innovation andoperation development by way of utilizing patents and trade
secrets as dual tracks under the established comprehensive
IP management system, encouraging Company’s innovation
culture, and strengthening Company’s competitive strengths so
as to fulfill the Company’s ESG vision. TSMC’s General Counsel
updates the Board of Directors on the status of the intellectual
property management scheme.
TSMC’s comprehensive patent management system includes:
Patent management strategies, such as Global patent
deployment, Exploratory invention mining, Patent portfolio
expansion, and Patent exploitation and exercise; and Patent
management rules, such as Tier-based IP evaluation, Patentcompetition rewards, Educational patent promotion, andPatent professional training. We have established technologicalpatent road maps by way of innovative patent strategy,
strict management and risk-control measures; analyzed andmonitored competitors by using intelligent patent maps;
conducted core technology mining through invention
workshops; expanded patent families on key technologies; filed
and maintained patents by tier-based management, further
enhanced patent protection through quality control on patentapplications and continued to construct massive global patentportfolio with high quality; and, diversified exploitation ofpatent assets. In terms of patent filings, TSMC has accumulated
more than 85,000 patent applications worldwide as of endof 2022, including 8,500+ applications filed in 2022. TSMC
ranked No.2 among global US patent applicants, and No.1
among patent applicants in Taiwan. In terms of patent grants,

TSMC has accumulated 56,000+ patents worldwide as of endof 2022, including more than 5,500 global patents received.
TSMC ranked No.3 among U.S. Patentees, and No.1 among
patent patentees in Taiwan. In terms of patent quality, theallowance rate of TSMC’s U.S. applications approached 100%.
Turning to trade secret management and strategy, as thepioneer of institutionalized trade secret registration systems
since 2013, TSMC continues to develop and innovate trade
secret management. The Trade Secret Registration System (TSR)
keeps daily records of TSMC employees’ wealth of inventions
and innovations at work and encourages further innovations intargeted technical fields with tailored initiatives. For example,
2021’s promotion of trade secret registration coverage formass production fabs of advanced processes in N3, N5, andN7 met with great success, and 100% of all eligible engineers
involved in such processes completed trade secret registration.
Then in, 2022, TSMC further encouraged “Manufacturing
Excellence” in trade secret registrations by ensuring that
accumulation of the Company’s competitive advantages
stemming from “technology leadership” and “manufacturing
excellence” had appropriate documentation in TSR. The wealthof innovations contained in TSR also act as valuable sources
for patent mining. TSR also includes business-related trade
secrets such as capacity planning and pricing strategies. By
integrating TSR with the company’s contract management
system and human resource system, TSMC further bolsters its
competitiveness. TSMC also identifies and rewards impactful
and high-quality innovations at its annual Golden Trade
Secret Award ceremony. With implementations of intelligent
automation and artificial intelligence, TSMC has created aculture that fosters innovation. Between 2013 and 2022, TSMC
has presented 2,279 trade secrets with the Golden Trade SecretAward, and the TSR has exceeded 241,740 registered trade
secrets as of 2022.
In 2022, TSMC adopted the following innovative measuresof trade secret management to fulfill its vision of sustainablebusiness: (1) Create an “Encourage Green Trade Secret
Registration, Sharing, and Incentive Guidance” to support
TSMC employees in registering green trade secrets and engage
in sharing and dissemination of green innovations with the
public while complying with company policies on confidential
information protection, and (2) Establish the “Trade Secret
Registration System Alumni Association” to selflessly share
TSMC’s experience in and methodologies of building TSR
and intelligent management. In doing so, TSMC expands its
cross-industry promotion of TSR, continually promotes publicwelfare, and increases the awareness and understanding oftrade secret management and its effectiveness.
TSMC received a AAA (the highest tier) certificate by Taiwan
Intellectual Property Management System (TIPS) in December
2021, and the valid period will expire after December 31,
2024.
TSMC’s IP team works closely with technical teams from R&D
in early stage to mass production, and actively constructs
IP portfolio for each key innovative technology, including
the latest 3nm and 2nm technology nodes, so as to ensure
Company’s technology leadership in semiconductor field;
TSMC’s revenue reached historical highs for 13 consecutive
years, and we utilize patents and trade secrets as dual tracks tosuccessfully protect Company’s main business including process
technologies, designs, manufacturing and sales, and have been
strategically utilized for defense and cross-license negotiation,
so as to secure freedom of business operation worldwide.
5.2.6 TSMC University Collaboration Programs
In recent years TSMC has collaborated closely with a numberof prestigious universities in Taiwan to carry out a variety ofjoint research projects. These collaborations encourage more
university professors to conduct leading-edge semiconductor
research in areas such as novel devices, process and materials
technologies, semiconductor manufacturing and engineering,and specialty technologies for electronic applications. At
the same time, these projects provide hands-on training forinterested students to prepare for joining the semiconductor
industry after graduation. Back in 2013, TSMC establishedresearch centers at four top universities in Taiwan: National
Yang Ming Chiao Tung University, National Taiwan University,
National Cheng Kung University and National Tsing Hua
University. In the past nine years, a total of 245 professors
and more than 3,600 students with backgrounds in thedisciplines of electronics, physics, materials, chemistry, chemicalengineering, and mechanical engineering have joined theresearch centers. In 2022, TSMC has also proactively supported
the establishment of national academies at National Taiwan
University, National Cheng Kung University, National Tsing
Hua University, National Yang Ming Chiao Tung University,
National Sun Yet San University, and National Chung Hsing
University. In 2019, the Company jointly launched the
TSMC-NTHU Semiconductor Program to enhance the quality
and number of domestic semiconductor students and attract
more outstanding students to a career in the semiconductor

101

industry. In 2022, the list of school partners had grown to nine
universities, including National Taiwan University, National
Cheng Kung University, National Yang Ming Chiao Tung
University, National Taipei University of Technology, National
Taiwan University of Science and Technology, National Central
University, National Sun Yet San University, and National
Chung Hsing University, and had attracted more than 4,000
students to enroll in the program. In addition, TSMC haslong conducted strategic research projects at top overseas
universities such as Stanford, MIT, UC Berkeley and so on,
focusing on innovative capabilities in transistors, interconnect,
materials, device simulation and circuit design.

applications. TSMC research continues to develop novel
materials, processes, devices and memories that may be
adopted in the long run, ten years and beyond. The Company
also continues to collaborate with external research bodies
from academia and industry consortia alike with the goal ofgaining early awareness and adoption of future cost-effective
technologies and manufacturing solutions for its customers.
With a highly competent and dedicated R&D team andunwavering commitment to innovation, TSMC is confident
in its ability to drive future business growth and profitability
for years to come by delivering competitive semiconductor
technologies to its customers.

TSMC University Shuttle Program
The TSMC University Shuttle Program was established toprovide professors at leading research universities worldwide
with access to the advanced silicon process technologies
needed to develop innovative circuit design concepts. In 2022,
despite the continued spread of COVID-19 and the ongoing
global chip shortage, TSMC continued the University Shuttle
Program that links motivated professors and graduate students
with enthusiastic managers at TSMC in order to promote
excellence in the development of advanced silicon design
technologies and to nurture new generations of engineering
talents in the semiconductor field. The University Shuttle
Program provides access to TSMC silicon process technologies
for digital and analog/mixed-signal circuits, RF designs,
non-volatile memory design and ultra-low power designs.
TSMC and the University Shuttle Program participants enjoy
win-win collaboration through the program, which allows
graduate students to implement exciting designs and achieve
silicon proof points for innovation in various end-applications.

Summary of TSMC’s Major Future R&D Projects

5.2.7 Future R&D Plans
To maintain its technology leadership, TSMC plans to continue
investing heavily in R&D. While TSMC’s 3nm and 2nm
advanced CMOS logic nodes are progressing through thedevelopment pipeline, the Company’s reinforced exploratory
R&D work is focused on beyond-2nm nodes and on areas suchas 3D transistors, new memories and low-R interconnect, toestablish a solid foundation to feed into future technology
platforms. TSMC’s 3DFabricTM advanced packaging R&D isdeveloping innovations in subsystem integration to further
augment advanced CMOS logic applications. The Company
maintains its intensified focus on new specialty technologies
such as RF and 3D intelligent sensors for 5G and smart IoT

102

Project Name

Description

3nm logic technology platform andapplications

3D CMOS technology platform for SoC

2nm and beyond logic technology platform
and applications

3D CMOS technology platform for SoC

3DIC

Cost-effective solutions with better form factor
and performance for 3DIC integration

Next-generation lithography

Next-generation EUV lithography and related
patterning technology to extend Moore’s Law

Long-term researchSpecialty SoC technology (including new NVM,
MEMS, RF, analog) and transistors with 8 to
10 years horizon

The projects above account for roughly 80% of the total R&D budget for 2023. Total R&D budget isestimated to be around 8% of 2023 revenue.

5.3 Manufacturing Excellence
5.3.1 GIGAFAB® Facilities
Maintaining reliable production capacity is a key TSMC
manufacturing strategy. The Company currently operates
four 12-inch GIGAFAB® facilities: Fabs 12, 14, 15 and 18.
The combined capacity of these four facilities exceeded 11
million 12-inch wafers in 2022, while producing 0.13μm,
90nm, 65nm, 40nm, 28nm, 16nm, 7nm and 5nm process
technologies, and their sub-nodes. 3nm technology has
successfully entered volume production in Fab 18 with goodyield in the second half of 2022. Capacity has been expanded
at Fab 12 for R&D work on leading-edge manufacturing
technologies including current support for the development of
2nm nodes and beyond.
TSMC GIGAFAB® facilities are coordinated by a centralized
management system known as super manufacturing
platform (SMP) to provide customers with consistent quality

and reliability, improved flexibility to cope with demand
fluctuations, and faster yield learning and time-to-volume
production, as well as lower-cost product requalification.
5.3.2 Engineering Performance Optimization
As advanced technology continues to evolve and IC geometry
keeps shrinking, the need for tighter manufacturing process
and quality control becomes extremely challenging. TSMC hastailored its manufacturing infrastructure to handle a diversified
product portfolio that uses strict process control to meettightened specs and higher product quality, performanceand reliability requirements. TSMC’s process control systems
are integrated with numerous intelligent functions to achieve
excellence in both quality and manufacturing. Throughintelligent detection, smart diagnosis, and cognitive action,
the Company produces remarkable yield enhancement, quality
assurance, workflow improvement, fault detection, cost
reductions, all while shortening the R&D cycle.
To meet 5G’s stricter quality requirements for mobile, highperformance computing (HPC), automotive and the Internetof Things (IoT), TSMC is implementing artificial intelligence(AI) and machine learning technologies, and has developed
systems for precise fault detection and classification, intelligent
advanced equipment and process control to ensure theconsistency of tool matching and process stability. TSMC
combines intelligent process variation detection with foundryknow-how to identify potential defects and minimize theconvergence of process variation through self-diagnosis andcognitive action. As the result, each chip can be precisely
controlled at the nanometer level to produce the highest
quality wafers for customers.
5.3.3 Agile and Intelligent Operations
The Company’s use of sophisticated, agile and intelligent
operating systems drives manufacturing excellence. TSMC
has integrated intelligent process experience, machine
tuning, manufacturing know-how, and artificial intelligence
technologies to create an intelligent manufacturing
environment. Intelligent manufacturing technologies are widely
applied to enhance lean manufacturing, boost employee andequipment productivity, and improve process and equipment
control, quality control, and robotic control. The end result isreal-time information analysis, improved forecast capability,
maximum cost effectiveness, and accelerated innovation.

TSMC has also integrated new applications such as intelligent
mobile devices, IoT, edge computing, and mobile robot, withintelligent automated material handling systems (AMHS) toconsolidate wafer manufacturing data collection and analysis,
utilize manufacturing resources efficiently, and maximize
manufacturing effectiveness. TSMC continues to intellectualize
semiconductor production through AI that processes massive
amounts of production data to achieve agile and intelligent
operations. In addition, TSMC has implemented augmented
reality (AR) technology to improve equipment installation
efficiency and assist equipment engineers to diagnose remotely
during the COVID-19 pandemic.
5.3.4 Digital Transformation
To meet the strong, pent-up demand for wafers during
the ongoing pandemic era, TSMC continues to implement
technology to transform the “automated fab” into the“intelligent fab,” with simultaneous improvement in productquality, equipment capacity, and personnel effectiveness.
Intelligent fabs have integrated the domain knowledge ofsemiconductor manufacturing, kept the system self-learning,and expanded the application of AI and machine learning,which includes dispatching, equipment tuning, process control,
equipment diagnosis and maintenance, and quality inspection.
As a result, today’s engineers have been freed up to focus onproblem solving. This digital transformation platform breaks
through the limitations of the physical workplace, combines
the expertise of those in different locations, and makes
centralized management of global manufacturing a reality.
5.3.5 Raw Materials and Supply Chain Management
In 2022, TSMC continued to review and resolve, together with
suppliers, supply issues and quality issues as well as potential
supply chain risks through the collaboration of teams formed
by fab operations, quality control and business organizations.
TSMC also worked with suppliers to further advance material
and process innovation, improve quality and create recycling
savings with benefits from win-win solutions.

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Raw Materials Supply

5.3.6 Quality and Reliability (Q&R)

Major Materials

Major SuppliersMarket Status

Raw Wafers

FST
GlobalWafers
SEH
Siltronic
SK siltron
SUMCO

These 6 suppliers together provide over 90% of the world’s
raw wafer supply.

Procurement Strategy
TSMC’s suppliers of silicon wafers are required to pass stringent quality certification
procedures.
TSMC procures wafers from multiple sources to ensure adequate supplies for volume
manufacturing and to appropriately manage supply risk.
Raw wafer quality enhancement programs are in place to support TSMC’s technology
advancement.
TSMC regularly reviews the quality, delivery, cost, sustainability and service performanceof its wafer suppliers. The results of these reviews are incorporated into subsequentpurchasing decisions.
A periodic audit of each wafer supplier’s quality assurance system ensures that TSMC
can maintain the highest quality in its own products.
TSMC takes various approaches with suppliers to better manage the cost and supply.

●

●

●

●

●

TSMC strives to provide excellence in semiconductor
manufacturing services to all its customers worldwide. The
Company is dedicated to providing outstanding quality in every
facet of its business and maintains a culture of continuous
improvement to assure customer satisfaction. TSMC
implements containment and preventive measures to protect
customers from potential product defects.

●Chemicals

Lithographic
Materials

Gases

Slurry, Pad, Disk

Air Liquide
BASF
DuPontEntegris
Fujifilm Electronic Materials
Kanto PPC
Kuang Ming
Merck
RASA
Shiny
Tokuyama
Wah Lee

These 12 companies are the major worldwide suppliers ofchemicals.

3M
Fujifilm Electronic Materials
JSR
NissanShin-Etsu Chemical
Sumitomo Chemical
T.O.K.

These 7 companies are the major worldwide suppliers oflithographic materials.

Air Liquide
Air Products
Central Glass
Entegris
Linde LienHwa
Praxair
SK Materials
Taiwan Material Technology
Nippon Sanso Taiwan

These 9 companies are the major worldwide suppliers ofspecialty gases.

3M
AGC
Cabot Microelectronics
DuPontFujiboFujifilm Electronic Materials
Fujimi

These 7 companies are the major worldwide suppliers of
CMP (Chemical Mechanical Polishing) materials.

Most suppliers have located their new operations closer to TSMC’s major
manufacturing facilities, thereby significantly improving procurement logistics andreducing supply risk
All supplied products are regularly reviewed to ensure that TSMC’s specifications are
met and product quality is satisfactory.
TSMC encourages and engages with chemical suppliers to implement innovative green
solutions for waste reduction

●

●

●

TSMC works closely with suppliers to develop materials that meet all application andcost requirements.
TSMC and suppliers periodically conduct programs to improve their quality, delivery,sustainability and green policies, and jointly set improvement programs and monitor
progress to ensure continuous improvement in TSMC’s supply chain.
Some major suppliers have relocated or plan to establish new manufacturing sites
closer to TSMC’s major manufacturing facilities, thereby significantly improving
procurement logistics and reducing supply risks.

●

●

●

The majority of these suppliers have facilities in multiple geographic locations, which
minimizes supply risk for TSMC.
TSMC conducts periodic audits to ensure that the suppliers meet TSMC’s standards.

●●

TSMC works closely with suppliers to develop materials that meet all application andcost requirements.
TSMC and suppliers periodically conduct programs to improve their quality, delivery,sustainability and green policy, and jointly set improvement programs and monitor
progress to ensure continuous improvement in TSMC’s supply chain.
Most suppliers have relocated or plan to establish new manufacturing sites closer to
TSMC’s major manufacturing facilities, thereby significantly improving procurement
logistics and reducing supply risks.

●

●

●

Suppliers Accounting for at Least 10% of Annual Consolidated Net Procurement
Unit: NT$ thousands

2022

2021

Procurement Amount

As % of 2022 Total
Net Procurement

Procurement Amount

As % of 2021 Total
Net Procurement

Company A

18,259,301

20%

None

14,469,081

20%

Company B

16,120,039

18%

None

13,352,067

19%

None

Company C

N/A

N/A

None

7,784,013

11%

None

Others56,546,611

62%-

35,181,148

50%-

Total Net Procurement

90,925,951

100%

-

70,786,309

100%

-

Supplier

Relation to TSMC

Relation to TSMC
None

Reason for Increase or Decrease: The changes of procurement amount and percentage were mainly due to customer productdemand change.

● 

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In the technology development stage, the Q&R organization
helps customers design in superior product reliability. In
2022, Q&R worked continuously with R&D in advanced
logic, specialty and advanced packaging technologies
throughout development and qualification stages to ensure
meeting commitments to customers with respect to device
characteristics, process yield and product reliability.
For advanced logic technology, in 2022 Q&R focused on
certifying technology quality and reliability for risk productionof 3nm FinFET. For specialty technologies, Q&R successfullycompleted IP qualification of consumer grade 22nm
embedded RRAM (resistive random access memory). In
Bipolar-CMOS-DMOS (BCD) technologies, Q&R qualified 40nm
BCD with 20/24V applications. In addition, TSMC’s advanced
packaging solutions enabled system improvement of the wafer
level process by integrating the frontend wafer process and thebackend chip packaging. In 2022, Q&R achieved qualificationof the TSMC 3DFabricTM technology platform and successfully
qualified the first SoIC, WoW and CoWoS® technologies
for HPC products to provide better system-level integration
through heterogeneous chip package interaction.
To continuously reduce product defects, enhance processcontrols, facilitate early detection of abnormalities and prevent
quality problems in general, Q&R collaborates with otheroperational entities to establish real-time defense systems using
advanced statistical methods and quality tools. Q&R and theCompany’s fabs have also worked together on enhancements
for automotive product quality improvement, including design
rule implementation and migration to Automotive Quality
System 2.0. This covers process capability requirements totighten in-line and wafer acceptance testing in fabs and thehandling of maverick wafers and lots. Q&R also provides
dedicated resources for field/line return analysis and timely
physical failure analysis (PFA) for process improvement to meet
automotive customers’ stringent defective parts per million(DPPM) requirements.

To stimulate employee problem-solving and develop related
quality systems and methodologies, Q&R held several
company-wide symposia and training programs on total
quality excellence (TQE) in 2022. Furthermore, several digitaltransformation projects were completed in the areas of raw
materials management, statistical process control (SPC),
metrology and laboratory analysis by leveraging machinelearning and artificial intelligence to achieve TSMC’s goalof digital transformation. In these endeavors, Q&R had
the capability of intelligent quality defense and remotemanagement of manufacturing to overcome the impact of the
COVID-19 pandemic, making seamless quality control across its
worldwide fab network a reality. In 2023, Q&R will continue toenhance employee capabilities by promoting quality methods
and professional trainings and applying artificial intelligence toenhance TSMC competitiveness.
Q&R is committed to green manufacturing, responsible
supply chain and sustainable management practices. In 2021,
Q&R set up a new advanced chemical laboratory to enhancecontinuous quality monitoring of raw materials. This helped
R&D make significant innovations in materials and it provided
services to enhance the technologies in the industry supply
chain. Q&R collaborates with the corporate ESH organization
to ask suppliers to declare that their materials to ensurecompliance with international regulation for carcinogenic,
mutagenic and reprotoxic (CMR) substances and to classify all
risky materials and carry out test sampling. In 2020, Q&R had
100% inspection capability for CMR substances and shared
its inspection methods and capabilities with major material
suppliers to enhance the monitoring of hazardous substancesand control capability in the supply chain. Furthermore, in
2021 Q&R assisted TSMC subsidiaries in setting up inspection
capability for hazardous substances to enhance corresponding
monitoring and control capability for industry supply chain.
In 2022, Q&R continuously provided state-of-the-art material
analysis and applied best knowledge management methods toassist capacity expansion and technology enhancement of new
raw material production lines or to assist new suppliers withthe fundamentals to optimize the balance between quality
and capacity. All the efforts above have supported TSMC innavigating through geo-political turmoil to achieve continuous
growth in 2022.
Q&R also worked with manufacturing teams on recycling andreuse of chemical acids and enabled several recycled chemicals
to achieve the quality level for electronic grade in 2021. In
2022, Q&R continued sharing its technical knowledge to assist

105

chemical suppliers in developing further recycling and reuseprojects and worked with Company operations to implement
engineering validation for recycling chemicals to meet TSMC’s
quality requirements and environmental sustainability. Q&R
is also committed to the continual improvement of local
supply chains and developing local talent. In 2022, Q&R again
collaborated with Semiconductor Equipment and Materials
International (SEMI) to hold the fourth Strategic Materials
Conference (SMC) in Taiwan to motivate talented domestic
personnel and share win-win strategies for technology
and sustainable development, environmental, social, andgovernance (ESG) objectives both within TSMC and industry
wide to elevate the competitiveness of the local supply chain.
TSMC fully supports continuous improvement programs tostrengthen the work culture, improve product quality andproduction efficiency, reduce production costs, and enhancecustomer satisfaction. These programs encourage colleagues
to strive for excellence, drive cross-departmental observationand learning, and enhance their innovative, problem-solving
abilities – all traits that greatly contribute to achieving a
win-win outcome of honing TSMC’s competitive edge
and building customer satisfaction. In addition to internalcross-organizational learning and exchange, TSMC participatesin the Taiwan Continuous Improvement Competition topromote the development of other local industries by sharing
its experience, and to enhance the problem-solving andinnovation ability of its colleagues by observing improvement
methods of other industries. In 2022, TSMC’s outstanding
performance was recognized with six gold, four silver and three“best improvement and innovation” awards. At the same time,
Q&R coached domestic material suppliers to participate in thecompetition for local suppliers’ quality culture and capability
enhancement. In 2022, despite COVID-19 restrictions affecting
suppliers› resources and willingness, Q&R encouraged 76% of
TSMC’s material suppliers to participate in the competition topromote a quality culture of continuous improvement. In theend, 16% of these suppliers were finalists with four gold, threesilver and four bronze awards. In addition, in order to enable
new employees to understand and integrate into TSMC’s
quality culture more quickly, Q&R added quality culture courses
to the newcomer training program at the beginning of 2022.
So far, more than 12,000 new employees have completed thetraining.
Thanks to qualification in technology development, real-time
defense systems and innovative applications in semiconductor
manufacturing services, as well as its continuous quality

106

improvement culture, TSMC had no major product recallsin 2022. Meanwhile, a third-party audit verified theeffectiveness of the Company’s quality management systems
in compliance with IATF 16949: 2016 and IECQ QC 080000:
2017 requirements. In 2022, TSMC’s four backend fabs also
continually passed the certification of American National
Standards Institute ANSI/ESD (Electrostatic Discharge) S20.20
standard. Regular customer feedback indicates that products
shipped from TSMC have consistently met or exceeded all
field quality and reliability requirements. In these ways,
TSMC helps customers improve time-to-market delivery andcompetitiveness with excellent, reliable products for the five
major growth markets the Company serves: high performancecomputing (HPC), mobile communications, the Internet ofThings (IoT), automotive and digital consumer electronics.

5.4 Customer Trust
5.4.1 Customers
TSMC’s customers make a wide variety of products thatdeliver excellent performance across the semiconductor
industry. Customers include fabless semiconductor companies,
system companies, and integrated device manufacturers
such as Advanced Micro Devices, Inc., Amazon Web Services,
Inc., Broadcom Inc., Intel Corporation, MediaTek Inc.,NVIDIA Corporation, NXP Semiconductors N.V., Qualcomm
Incorporated, Renesas Electronics Corporation, Sony
Semiconductor Solutions Corporation, STMicroelectronics N.V.
and many more worldwide.

data availability and accessibility and providing customers with accurate up-to-date information at each stage of design process.
Engineering collaboration includes engineering lots, wafer yields and wafer acceptance test analysis, as well as quality and reliability
data. Logistics collaboration includes information on wafer fabrication, backend processes, and order shipments.
Customer Satisfaction
To ensure customer satisfaction, TSMC must fully comprehend its customers’ needs. To this end, the Company appoints third-party
consulting firms to conduct annual customer satisfaction surveys (ACSS) with majority of existing customers either via online surveys
or direct interviews. In addition to the survey, TSMC also conducts quarterly business reviews (QBRs) with customers to collect their
feedback on a regular basis. Customer feedback is routinely reviewed, analyzed and then used to develop appropriate improvement
plans, all in all becoming an integral part of the customer satisfaction process. Through surveys and feedback reviews, TSMC is able
to closely interact with customers, provide better services, and enhance the quality of customer collaboration.
Customer Information Protection
TSMC complies with applicable regulations and international standards in terms of customer information protection and hasreceived ISO 27001 international information security certification. Relevant proprietary information protection policies and standard
work process are established to ensure only authorized personnel can access the engineering and production data of a specificcustomer.
Customers Accounting for at Least 10% of Annual Consolidated Net Revenue
Unit: NT$ thousands

2022
Customer

2021

Net Revenue

As % of 2022 Total
Net Revenue

Net Revenue

As % of 2021 Total
Net Revenue

Customer A

529,649,200

23%

Customer B

N/A

N/A

None

405,402,955

26%

None

None

153,740,831

10%

None

Others1,734,242,092

77%-

1,028,271,251

64%-

Total Net Revenue

2,263,891,292

100%

-

1,587,415,037

100%

-

Relation to TSMC

Relation to TSMC

Reason for increase or decrease: The changes of sales amount and percentage were mainly due to customer product demandchange.

● 

Customer Service
TSMC is committed to providing the best possible service,
which is critical to customer satisfaction, retention, relationshipenhancement and attracting new customers. TSMC hasestablished a dedicated service team that strives to provide
world-class services to support customers in product design,mask making, wafer manufacturing, and backend services,hence TSMC can increase customer satisfaction and win
customer trust in order to maintain sales and profitability of
the company.
To improve customer interaction on a real-time basis,
TSMC-OnlineTM offers a suite of web-based applications toprovide more proactive customer service and support in design,
engineering and logistics. Customers thus have 24-7 access tocritical information and are able to create customized reports.
TSMC-OnlineTM facilitates design collaboration by maintaining

5.4.2 Open Innovation Platform® Initiative
At TSMC, innovation has always been an exciting challenge. Competition continues to intensify in the face of increasing industry
consolidation and the commoditization of technology at more mature, conventional levels, and thus semiconductor companies
must find ways to keep innovating in order to survive and prosper. One way to promote innovation is through active collaboration
with external partners. At TSMC this is known as Open Innovation®, an “outside in” approach to complement traditional “insideout” methods. TSMC has chosen this path to stimulate innovation via its OIP initiative, which is a key part of the TSMC Grand
Alliance.
The OIP initiative is a comprehensive design technology infrastructure that encompasses all critical IC implementation areas tolower design barriers and improve first-time silicon success. OIP promotes the speedy implementation of innovation within thesemiconductor design community and its ecosystem partners using TSMC’s and partners’ IP and process technology in design
implementation and backend services.
Crucial to OIP are ecosystem interfaces and collaborative components initiated and supported by TSMC to empower innovation
throughout the supply chain and, in turn, drive the creation and sharing of new revenue and profits. TSMC’s active accuracy

107

assurance (AAA) initiative is key to OIP, providing the
precision and quality required by the ecosystem interfaces andcollaborative components.
TSMC’s Open Innovation® model brings together the creative
thinking of customers and partners under the common goal ofshortening each of the following: design time, time to volume
production, time to market and, ultimately, time to revenue.
The model features:
The foundry segment’s earliest and most comprehensive
electronic design automation (EDA) certification program,delivering timely design tool enhancement required by newprocess technologies.
● The foundry segment’s largest, most comprehensive andmost robust silicon-proven IP (intellectual properties) andlibrary portfolio.
● Alliances that enable semiconductor designing in the Cloudfor the benefit of scalability, agility and flexibility to meetdifferent customer demand in work models.
● Alliances that provide design services to support customer
demand regarding resources and capabilities, depending
upon the various scope and requirements in thesemiconductor design stages and value chain.
● Alliances to enable customers’ system-level designs for
integrating multiple chips/chiplets in 3D stacking andadvanced packaging.
● Participants consisting of 16 EDA partners, six Cloud partners,
37 IP partners, 23 design center alliance (DCA) partners, eightvalue chain aggregator (VCA) partners and 19 partners in the
new 3DFabric Alliance. TSMC and partners work together
proactively and engage much earlier and deeper than everbefore in order to address the mounting design challenges ofadvanced technology nodes. Through this early and intensive
collaboration, TSMC’s OIP is able to deliver the needed design
infrastructure with timely enhancement of EDA tools, early
availability of critical IPs and quality design services whencustomers need them. Taking full advantage of the process
technologies once they reach production-ready maturity is
critical to customers’ success. Hence, this helps achieve design
technology co-optimization (DTCO) among TSMC process
technologies, OIP design solutions and customer productdesigns.
● A partner management portal, which facilitatescommunication with ecosystem partners for efficient businessproductivity. Designed with a highly intuitive interface, thisportal can be accessed via a direct link from TSMC-OnlineTM.
● 

108

The in-person OIP Ecosystem Forum held by TSMC in
October 2022 after the forum had been held online thepast two years due to COVID-19 pandemic. This annual
event demonstrates how TSMC and its ecosystem partners
jointly develop design solutions on top of TSMC’s advanced
technologies. At the forum, TSMC made key presentations
on its TSMC FinFlexTM innovation that combines bothprocess and design co-optimization for 3nm technologythat continues the full-node power performance area (PPA)
scaling trend together with the offering of high-density
and high-performance libraries and design solutions forthe support of smartphone and HPC design applications.
The Company also made presentations on the readinessof analog cell that can help boost analog IP yield, with thedesign solutions in 5nm, 4nm and 3nm to enable EDA anddesign flow automation to support analog design migration.
Other presentation topics included: enhanced automotive
design enablement platform (ADEP) with design solutions
and ecosystems readily available in 16nm, 7nm, 5nm and 3D
chip stacking and 2.5D advanced packaging design solutions
together with EDA tools that support 3DbloxTM ready tofacilitate integration of multiple chips/chiplets in customer’ssystem-level designs using TSMC 3DFabricTM technologies,
which include TSMC-SoIC®, InFO (Integrated FanOut) and
CoWoS® (Chip on Wafer on Substrate). The availability of
the aforementioned design ecosystem solutions will help
customers successfully pursue opportunities in all major
markets: high performance computing, mobile, the IoT,
automotive and digital consumer electronics.

● 

5.5 Information Security Management

risk management, and strengthening information security
through regular compliance audits. The head of CIS leads andcollaborates with the security task force, “PIP and Cybersecurity
Committee”, and “IT Security Committee” to plan andimplement security management activities and reports to
the Audit Committee every six months on the performanceand effectiveness of information security management. The
Audit Committee Chairperson also reports to the Board of
Directors on the implementation status of information security
management. The PIP and Cybersecurity Committee is chairedby the Senior Vice President of Information Technology andMaterials Management & Risk Management; vice presidentsof legal, human resources, R&D, and operations are also
members of this Committee, which meets quarterly to review
and formulate information security policies to ensure TSMC canfulfill its goals and commitment in this aspect.
In 2022, TSMC assigned the Senior Vice President ofInformation Technology and Materials Management & Risk
Management as the Chief Information Security Officer (CISO) in
charge of information security risk management to review theeffectiveness of security policy, procedures and cybersecurity
measures.
Corporate Information Security Organization Structure
Board of Directors

Audit Committee

5.5.1 Information Security Policy and Organization
TSMC is committed to information security and confidentiality
protection for its customers, shareholders, and partners. To
this end, the Company has formulated, implemented andregularly updated rigorous cybersecurity policies, procedures
and measures to achieve information security and confidential
information protection, as reflected in TSMC’s “Information
Security Declaration.”
Top TSMC executives are involved in planning the direction andimplementation of this information security strategy with thegoal of achieving optimum information security management.
The Company has established a dedicated organization,
Corporate Information Security (CIS), which is in charge of
information security policy formulation, implementation,

PIP & Cybersecurity
Committee
Corporate Information
Security Organization
IT Security Committee

5.5.2 Information Security Management Strategy andResources
To achieve TSMC’s information security management goals
and maintain competitiveness, the corporate information
security organization actively strengthens security andconfidential information protection mechanisms. CIS sets
clear policy, procedures and guidelines and continuously
enhances the Company’s management systems andimplements comprehensive risk controls. In addition, CIS
regularly performs information security risk assessments
and sets priorities based on the impact and probability of arisk, as well as the cost of reducing such risk. CIS uses theplan-do-check-act (PDCA) methodology to continuously
enhance multi-layer information security defenses and establish
key performance indicators (KPIs) for information security. In
2022, TSMC invested in excess of NT$1 billion to strengthen
information security, employing more than 500 employees for
information security-related activities, with more than 1,000
external security personnel engaged in the physical aspects of
information security services.
5.5.3 Information Security Incident Handling and
Notification
TSMC has established enterprise risk management mechanisms
and procedures to handle information security incidents.
The mechanisms and procedures define relevant processes
and measures for incident notification, designation of
personnel responsible for handling material information
security incidents, and assessment of losses suffered as well as
additional measures needed, evaluation of information security
risks to the Company’s financial and operations, and proposed
countermeasures to mitigate these risks. For the year 2022 andas of the date of this Annual Report, TSMC has not suffered
any financial losses nor operational impact due to material
information security incidents.

5.6 Human Capital
Human capital is TSMC’s most treasured asset. The Company
strives to provide employees with meaningful work content,
continuous learning, a safe and pleasant work environmentthat is both diverse and inclusive, and high-quality
compensation and benefits. TSMC goes beyond this, by actively
encouraging employees to nurture and enjoy a healthy family
life, develop personal interests, expand social participation,
and, in general, live a happy life.

1095.6.1 Human Rights Policy and Specific Actions
TSMC believes that respecting human rights and promoting
a decent work environment are important throughout theCompany and its supply chain. TSMC abides by local laws andregulations in all countries and regions where we operate,
and upholds the human rights of all workers, including
regular, contract and temporary employees, and interns.
We also require our suppliers to act in the same fashion,
as addressing human rights issue in complex supply chainsis a shared responsibility. We support the UN Universal
Declaration of Human Rights (UDHR), and are committed totreating all workers with dignity and respect as understoodby international human rights standards, including The
International Bill of Human Rights, The International Labour
Organization’s (ILO) Declaration on Fundamental Principles
and Rights at Work, The UN Guiding Principles on Businessand Human Rights (UNGPs), The OECD Guidelines forMultinational Enterprises and The Ten Principles of The United
Nations Global Compact (UNGC). We also align our actions
with the Responsible Business Alliance (RBA) Code of Conduct.
The guiding principles for TSMC’s human right policy are as
follows, and TSMC’s Supplier Code of Conduct requires all of
our suppliers to follow the same standards.
Guiding Principles● Embed respect for economic, social, cultural, civil, andpolitical rights, as well as the right to development, in theway we operate● Provide a safe and secure work environment that is free ofharassment● Eliminate unlawful discrimination and ensure equality in theworkplace● Zero tolerance for child labor● Forbid forced labor● Commit to responsible sourcing of minerals● Protect labor rights of vulnerable groups or marginalizedgroups such as indigenous peoples, women, migrant
workers, contracted labor and persons with disabilities● Comply with all applicable wage laws and regulations, andlegal limits to working hours● Provide fair living wage and pay in full and on time with pay
slips to state legitimate deductions● Enable a communication-friendly environment and maintainan open-style management system● Support the physical and psychological well-being of
employees, and the balance between work and life

110

Make diverse open dialogue channels available forstakeholders such as suppliers, business partners, and others
to report concerns or suspected violations to the Company,
including ways to report anonymously● Monitorand assess relevant risks, practices, and impacts
regularly to respond to evolving situations and stakeholders’
needs
● 

In 2022, the Company used the Responsible Business Alliance’s
Self-Assessment Questionnaire (SAQ) to identify the greatest
risks regarding “labor, health and safety, environment, andethics” matters and to formulate substantive actions andmanagerial response. The SAQ scores of each of TSMC’s
operating fabs were in the low risk range, defined as 88 points
or above.
In 2022, TSMC conducted multiple human rights protection
training courses, including plant safety and health, emergency
response, first-aid personnel training, friendly workplace, etc.
The total training hours are 205,342.1 hours, and a total of
70,008 employees have completed the training, accounting
for 95.7% of the total number of employees, and the total
number of participants reached 190,312. Among them, inorder to implement the human rights policy, TSMC promotes
the “Understand TSMC Human Rights Policy, create a Friendly
Workplace, and eliminate Sexual Harassment” course. 63,550
employees have completed the training, and the passing rateof the post-training test is 100%.
TSMC abides by the rights granted to workers by laws andregulations, and respects the freedom of collective consultation
and assembly and association of all employees. The company
will not interfere or intervene. TSMC holds Silicon Garden
Meeting, aka Labor-Management meeting on a regularbasis, listens to employees’ opinions and makes timely andappropriate responses through a diversified and comprehensive
internal communication framework, in order to strengthen thegood communication between the company’s management
team and employees and ensure a harmonious employee
relationship.
5.6.2 Diversity and Inclusion
TSMC believes that a diverse management and talent structure
will contribute to the company’s competitive advantage andsustainable development. Through the implementation of the“Diversity and Inclusion Statement”, TSMC actively establishes
an open management model, creates an inclusive working

environment, and encourages different talents to join thesemiconductor industry, so that the industry can maximize thebenefits of diverse talent resources.
TSMC has officially established an employee resource group(ERG) – “Women@tsmc” in the middle of 2022. It provides
a platform for female colleagues to support each other,strengthens the company’s internal network, and encourages
women colleagues to realize their potentials. In 2022, the“Inclusive Leadership Workshop” was also held to support
senior executives to understand the connotation of Diversity& Inclusion, understand unconscious bias, and promote an
inclusive and friendly workplace. By the end of 2022, thetraining completion rate of senior executives reached 81%. In
the same year, the Research and Development organization
took the lead in formally establishing the “Diversity andInclusion Committee”, turning the company’s goals into
concrete actions and promoting the innovative value of
diversity and inclusion.

Female Ratio in Management
12/31/2021

12/31/2022

02/28/2023

Female Ratio in Junior Management

13.4%

13.6%

13.6%

Female Ratio in Senior Management

12.5%

13.0%

13.2%

Female Ratio in Top Management

8.3%

6.1%

6.1%

Note: Junior management positions include first-line managers; top management positions include vicepresidents and higher as well as CEO.

5.6.4 Recruitment
A common vision and values shared by the Company’s
employees are key to TSMC’s growth and success. As forrecruitment of new employees, the Company is committed
to finding and hiring top-notch professionals in all positions.
TSMC is an equal opportunity employer and practices open
and fair recruitment. The Company evaluates all candidates
according to their qualifications relative to each position
without regard to race, gender, age, religion, nationality orpolitical affiliation but instead with an emphasis on integrity
and ability.

5.6.3 Workforce Structure
At the end of 2022, TSMC had 73,090 employees worldwide,
including 7,295 managers, 35,189 professionals, 8,665
assistants and 21,941 technicians. The following two tables
summarize the makeup of TSMC’s workforce and the female
portion of management as of the end of February 2023:
Workforce Structure

Job

Gender

5.6.5 Talent Development
12/31/2021

12/31/2022

02/28/2023

Managers

6,635

7,295

7,373

Professionals

31,92035,18935,174

AssistantEngineer/Clerical

6,620

8,665

8,767

Technicians

19,977

21,941

22,00565,15273,09073,319

Total
Male

64.6%

65.6%

65.6%

Female

35.4%

34.4%

34.4%

Ph.D.

4.1%

3.8%

3.9%

Master’s

47.3%

47.2%

47.0%

Bachelor’s

27.6%

29.3%

29.4%

Other Higher
Education

8.9%

8.4%

8.4%

High School

12.0%

11.3%

11.3%

Average Age

36.0

35.7

35.9

Average Years of Service

8.6

8.3

8.4

Education

TSMC adheres to its core values and continues to move
forward with a lofty vision. The Company has long attracted
new blood both in Taiwan and overseas. To ensure the talent it
needs for the continuous growth, TSMC expanded its recruiting
channels and employed over 12,000 employees worldwide in
2022.

Employees are TSMC’s most important asset. In addition tocreating a diverse and inclusive workplace environment thatencourages employees to learn and develop their strengths,
TSMC also attaches great importance to the early andcontinuous development of the capabilities of all employees.
In this regard, the Company integrates internal and external
resources, provides challenging, meaningful and interesting
work in a world-class workplace and creates a continuous,
diverse learning environment. In addition, the Company
has initiated the TSMC Employee Training and Education
Procedures to ensure that the employees and the Company
can grow together with “goals, plan and discipline” so as tobecome a force to uplift the society.
TSMC intends to expand global operations and pursue
sustainable growth, and talent development is crucial to thecompletion of these strategic goals. Therefore, the Company
selects and cultivates talented employees based on the “TSMC

111

及最大的專業積體電路技術
及製造服務業者

儲備員工未來能力

釋放員工潛能與創新人才發展策略

Talent Development Model” to support the Company’s sustainability, and follows two strategies for talent development: “Equipping
促動員工自主學習、準備員工未來所需的能力、
Employees with Future Capabilities” – preparing employees with the skills for the future and build a talent pool, and “Unleashing
為公司與社會創造正向影響
建構人才梯隊
Employees’ Potentials and Innovation” encouraging and enabling self-learning and continuous innovation to create positive impact
to the company and the society. As for the approach of talent development, the Company initiates ability-based learning programs,
能力導向的多元且彈性的各職級的訓練與
focusing on the core traitsof character, perseverance,
resilience, initiative, innovation,
judgment, broadness of mind and breadth/
學習模組
學習方式
發展計劃
depth of knowledge anddevelop the leadership, professionaland general skills according
to different positions, 學習動能培養
professionaland organization 台積人才發展架構
diagnosis needs. Meanwhile,through diverse and versatilelearning
approach, including experiential learning&
70/20/10法則、混成學習&
系統化學習藍圖(accounting for 70%),組織發展診斷
feedback and guidance (accountingfor 20%), education and training (accounting for 10%), blended learning
AI自適應學習and future AI adaptive learning, together with training and development programs at all levels, comprehensively and systematicallyplan and develop the capabilities required by all employees. In this way, to cultivate the learning momentum, support employees’
and the Company’s continuous growth and breakthrough.
TSMC Talent Development Model

TSMC Vision

Company Sustainability

Be the most advanced andlargest technology and foundry
services provider

Equip employeeswith future capabilities
Prepare employees withthe skills for the future and build
a talent pool

Unleash employees’
potential & innovation

Talent Development Strategy

Enable self-learning and create
positive impact to the company
and the society

Ability-based
Learning Program

Diverse & Versatile
Learning Approach

TSMC People Development
Framework & organization
development diagnosis

70/20/10 principle, blended
learning, & AI adaptive learning

Training & Development
Programs at all levels
Systematic learning roadmap

Learning Momentum
Cultivation

In 2022, TSMC conducted over more than 3,700 classroom training sessions, over more than 8,500 virtual classroom training
sessions, and provided over 5.07 million hours of training with a total of more than 2.51 million attendees participating. The
average annual training time per employee increased to 69.5 hours, an increase of 42% over the previous year. TSMC training
expense reached NT$968 million and the average training cost per employee is about NT$13,000, a 5.6-fold increase from theprevious year (Note).
5.6.6 Competitive Overall Compensation
In order to develop the most effective compensation strategies, TSMC reviews and selects benchmark companies annually andcollects market information on compensation data of the whole industry for competitiveness analysis.

TSMC’s compensation program includes a monthly salary,
performance bonuses based on quarterly business results, andprofit sharing based on annual results.
The purpose of the business performance bonus and profit
sharing programs is to reward employee contributions
appropriately, to encourage employees to work consistently
toward ensuring TSMC’s success, and to align employee
interests with those of TSMC’s shareholders so as to achieve
win-wins for the Company, shareholders and employees
alike. The Company determines the bonus and profit sharing
amounts based on operating results and domestic industry
practice. The amount and distribution of the employee bonuses
are recommended by the compensation committee to theBoard of Directors for approval. Individual rewards are basedon each employee’s job responsibility, contributions andperformance.
A similar approach is used in TSMC’s compensation programs
at subsidiaries. In addition to providing employees with alocally competitive base salary, annual bonuses are granted
as a part of total compensation, in line with local regulations,market practices and the overall operating performance ofeach subsidiary.
In addition to the competitive compensation describedabove, the Company has approved and implemented a global
employee stock purchase plan in 2022 which is available to all
regular employees of TSMC and its wholly owned subsidiaries.
Through this plan, Employees are encouraged to participate in
the Company’s long-term success.
TSMC believes that long-term ownership of Company sharesby corporate officers helps align their interests with thoseof all shareholders, and therefore, the Company formulated
Corporate Officer Shareholding Guidelines in 2020. The
required holding value of TSMC shares by the chairman, CEO,and other corporate officers is proportional to their annual
base salary: 18 times for the chairman and CEO, nine times forother officers in Taiwan facilities and VisEra, and three times
for overseas officers. Officers shall fulfill the required value
within three years of appointment and maintain the required
value for the entire period of employment. Furthermore, toattract and retain corporate executives and other critical talentand to link their compensation with shareholder interests andenvironmental, social, governance (ESG) achievements, TSMC
established employee restricted stock awards rules in 2021 and2022.

5.6.7 Employee Benefit System Superior to Statute
TSMC offers employee benefits that are superior to theapplicable statutes. In addition to twelve national holidays per
year, seven memorial days are also designated as holidays.
During the COVID-19 pandemic, to reduce the risk of infection
in public transportation and crowd gatherings, TSMC launcheda split work and work from home policy. The Company
provides employees with statuary labor insurance and national
health insurance as well as comprehensive paid groupinsurance plans. Coverage includes life insurance and insurance
for accidents, hospital coverage, cancer and critical illness
and business travel. There are also various employee self-paidgroup insurance plans available at lower prices for employee
family members. The group insurance coverage is extended
to employees on approved unpaid leave. To better support
new hires, TSMC offers one day of annual leave for every twomonths of service in the first year. Employees who need to takelong leaves of absence for military service or severe injuries canalso apply for unpaid leave, and then apply for reinstatement
after the expiration of the period. In addition, TSMC provides
pensions, financial assistance for emergencies, subsidies formarriage, childbirth and funerals, as well as discounts indesignated shops.
In accordance with local laws and regulations, TSMC provides
breastfeeding and breast milk collection rooms. To help
employees balance their personal and work lives, TSMC not
only offers parental leave but also provides a comprehensive
leave management system. The Company established the TSMC
childcare benefit program, to extend maternity leave from eight
to 12 weeks and paternity leave from five to ten days. It also
increased the maternity subsidy from NT$1,000 to NT$10,000
per child. TSMC has set up four on-site kindergartens for
employees in Taiwan, so that employees can work in apeaceful mind. In addition, a holiday STEAM campus has beenorganized to accompany the growth of employee’s children.
All TSMC facilities are equipped with 24-hour health centers,
where healthcare management professionals and appointed
onsite physicians provide quality services beyond those required
legally. The health centers work with hospitals and employee
assistance program service providers to offer comprehensive
support for the emotional and physical well-being of
employees. In addition to annual checkups for all employees,
in 2022 TSMC began providing employees with five advanced
checkup items upon completion of every five years of service.

Note: In order to align the definition of training expenses with international market research information (Training Magazine), including total training spending, outside products & services, and training staff payroll,starting from 2022, training staff payroll will be included in annual training expenses.

112

113

The Company encourages employees to exercise regularly bysubsidizing 59 clubs, improving exercise facilities, and holding
regular sports events to help employees find peers with similar
sports interests. Also to help employees balance their work andlife, TSMC provides:
Convenient onsite services and amenities such as in-fab
cafeterias, convenience stores, and other services● Comprehensive health management services, including in-fab
clinic services, post health-exam follow-up activities, andemployee assistance programs● Diverse employee welfare programs: leisure and art events;
encouraging employees to participate in hobby clubs;
vibrant sports centers and onsite preschool services tomeet employees’ needs for childcare; festival bonuses andemergency subsidies if and when needed● 

Vacation and insurance policies at TSMC’s overseas offices
are designed in compliance with local regulations. In China,
North America and Europe, TSMC provides more vacation days
to employees than legally required. In overseas offices, TSMC
offers a more comprehensive life and medical insurance thanrequired by local regulations and customs.
5.6.8 Diverse Employee Recognition
TSMC sponsors various internal award programs to recognize
employees for outstanding achievement, both individual andat a team level. With these award programs, TSMC aims toencourage continued employee development, which alsoenhances the Company’s competitive advantage.
The award programs include:
TSMC Academy: recognizes outstanding scientists andengineers whose individual technical capabilities have madesignificant contributions● TSMC Excellent Labor Award: recognizes technicians
whose outstanding performances have made significant
contributions● Total Quality Excellence: recognizes employees’ continuous
efforts in creating value at each fab● Service Award: recognizes and shows appreciation of senior
employees for their long-term commitment and dedication● Excellent Instructor Award: praises the outstanding
performance and contribution of internal instructors of
training courses for employees
● 

114

Apart from the recognitions above, there are function-wideawards dedicated to innovation, such as the Idea Forum, theTotal Quality Excellence Award and the ESG Award, which
recognize employee initiative and continuous implementationof innovative practices. In addition, TSMC encourages
employees to participate in external talent activities andcompetitions. In 2022, distinguished TSMC employees
continued to be recognized through a host of awards, such as
the Model Labor Award, the Excellent Young Engineers Award,
the Outstanding Engineer Award, the Taiwan Continuous
Improvement Awards, the National Manager Excellence Awardand the National Industrial Awards.
5.6.9 Employee Engagement
The Company encourages employees to maintain a healthy andwell-balanced life while pursuing their career goals effectively.
TSMC facilitates employee communication and provides
employee caring, benefit, rewards and recognition programs.
Employee Communication
TSMC values employee communication and is committed
to keeping communication channels open and transparent
between managers and employees, and amongst peers. The
Company is committed to ensuring that employees are able
to communicate openly and share ideas and concerns withmanagement regarding work conditions and management
practices without fear of recrimination, reprisal, intimidationor harassment. TSMC makes continuous efforts to listen to
employees and to facilitate mutual and timely employee
communication, through multiple channels and platforms,
which in turn fosters harmonious labor relations.
TSMC conducted face-to-face CEO dialogue sessions in
Hsinchu, Taichung, and Tainan, which allowed the employees
to make suggestions, express their thoughts and get direct
feedback from the CEO. In addition, the Company also
enlarged the scope of the labor-management meeting,transforming it into the “Silicon Garden Meeting,” which
helped all employees feel free to put forward their ideas so theCompany could take appropriate action.
TSMC supports a host of various communication channels
including:● Communication
meetings for various levels of managers andemployees, e.g. the executives communication meeting, skip
levels and communication meetings in individual functions/divisions

Quarterly Silicon Garden Meetings, aka Labor-Management meetings to provide business updates and discuss issues of concern
for employees● The biennial employee survey on core values taken to understand the Company’s implementation of core values and employees’commitment● The biennial global employee engagement survey taken to systematically understand the work experience of employees and toenhance employees’ engagement and sense of belonging in the Company● Periodic employee pulse surveys and service satisfaction surveys to selected employees with follow-up actions based on survey
findings● myTSMC employee portal, an internal website featuring the Founder’s, Chairman’s and CEO’s talks, corporate messages, executive
interviews, and other topics of interest to employees● eSilicon Garden, TSMC’s newsletter providing real-time updates on major activities of the Company as well as inspirational content
featuring outstanding teams or individuals● Three channels for reporting complaints regarding managerial, financial, auditing, ethics and business conduct issues:– T he whistleblower reporting system administered by the Audit Committee– T he irregular business conduct reporting system administered by the Ethic Committee– T he ombudsman system administered by a senior manager appointed by the CEO● The Employee Opinion Box, which provides an opportunity to submit suggestions or opinions regarding work and the overall work
environment● The Fab Caring Circle in each fab, which addresses issues related to employees’ work and personal life; the system is dedicatedmainly to the Company’s direct laborers● The sexual harassment investigation committee, a channel dedicated to ensuring a work environment free from the threat ofsexual harassment; the committee consists of three directors appointed by the CEO, one from human resources, one from legal
affairs, and the third from another organization● 

Employee Communication Channels
TSMC Internal Communication Structure

Employees

Face-to-Face Meeting•Chairman’s/CEO’s Communication Meeting•Silicon Garden Meeting (Labor-Management
Meeting)•Communication Meetings in Individual
Functions/Divisions•Functional Activity

Managers of All
LevelsEmployee Portal
Employee Survey
HR Area Service TeameSilicon Garden

Human Resources

Employee Voice Channels•Ombudsman System•Employee Opinion Box•Whistleblower Procedures•Fab Caring Circle•Ethic Report Channel•Sexual Harassment Investigation Committee•Employee Voices for Silicon Garden Meeting(Labor-Management Meeting)

System/Committee Chair

Board of Directors andManagement Team115

During 2022 and as of the date of this Annual Report, TSMC
has not incurred any labor-dispute related losses. However,
the Company was fined for the following labor inspection
results: NT$200,000 issued on 06/08/2022 for overtime
applications not being timely processed (Labor Standards Act
Article 24 Paragraph 1). NT$250,000 issued on 06/08/2022
for the extension of working hours combined with the regular
working hours exceeding permitted limit (Labor Standards Act
Article 32 Paragraph 2). NT$100,000 issued on 06/08/2022
for consecutive working days exceeding the permitted limit(Labor Standards Act Article 36 Paragraph 1). NT$300,000,
NT$250,000, and NT$40,000 issued on 09/02/2022 forovertime applications not being timely processed, the extensionof working hours combined with the regular working hours
exceeding permitted limit, and employees not having a
break for at least 30 minutes after having worked for four
consecutive hours (Labor Standards Act Article 24 Paragraph
1, Article 32 Paragraph 2, and Article 35). NT$350,000
issued on 10/26/2022 for overtime applications not being
timely processed (Labor Standards Act Article 24 Paragraph1). NT$300,000 issued on 10/26/2022 for the extension ofworking hours combined with the regular working hours
exceeding permitted limit (Labor Standards Act Article 32
Paragraph 2). NT$60,000 issued on 10/26/2022 for employees
not having a break for at least 30 minutes after having worked
for four consecutive hours (Labor Standards Act Article 35).
NT$50,000 issued on 12/07/2022 for the extension of working
hours combined with the regular working hours exceeding
permitted limit (Labor Standards Act Article 32 Paragraph 2).
NT$50,000 and NT$50,000 issued on 12/20/2022 for overtime
applications not being timely processed, and the extensionof working hours combined with the regular working hours
exceeding permitted limit (Labor Standards Act Article 24,
Article 32 Paragraph 2).
The Company has reviewed its working hour management
process and established indices to remind employees to apply
for overtime payment on time and for mangers to respondto such applications efficiently and in a timely fashion, and to
be more diligent about employee working hours as well as tostrengthen communication about these matters and relevant
policies.

116

5.6.10 Retention
Overall employee satisfaction with the Company was measured
in the biennial TSMC core values survey taken in 2022. The
survey scope included operations in Taiwan, China, North
America, Europe, Japan, and Korea. (VisEra was not included in
the survey due to its different industrial background.) A total of62,333 respondents represented a high response rate of 91%.
In this survey, 93% of participants said they were willing tocommit fully in their work to make TSMC even more successful,while 90% concurred with the statement that they were willingto contribute their talent and grow together with the Company
for the next five years.
TSMC’s employee turnover rate was 6.7% in 2022 compared
to 6.8% in 2021, both within a healthy range of 5% to 10%.
5.6.11 Retirement Policy
TSMC established its statutory defined benefit plan andsupervisory committee of labor retirement reserve according to
the Labor Standards Act, and also set up its statutory defined
contribution plan according to Labor Pension Act, which was
effective starting July 1, 2005. For each region, TSMC alsoestablished pension plans according to local standards andregulations. The previously mentioned supervisory committee
not only holds quarterly meetings but also supervises affairs inconnection with labor’s retirement reserve fund. To meet legal
requirements for disclosure of financial reporting and ensuresufficient funding levels, TSMC makes contributions based
statutory requirement and also engages an actuarial consulting
firm to assess the valuation of the defined benefit plan. Pleaserefer to page 43-46 of the attached financial report for details.
Thanks to the Company’s sound financial condition, it is able toensure the future viability employees’ retirement benefits andsolid pension contributions and payments, which encourages
employees to make long-term career plans with and further
deepen their commitment to TSMC.

5.7 Material Contracts
TSMC is not currently a party to any material contracts,
other than those entered into in the ordinary course of its
business. The Company’s “Significant Contingent Liabilities andUnrecognized Commitments” are disclosed in Annual Reportsection (II), Financial Statements, page 71-72.

117