# EDGAR Filing Document

**Accession Number:** 0001046179
**File Stem:** 0001046179-26-000024
**Filing Date:** 2026-2
**Character Count:** 530406
**Document Hash:** 0646e124136834774cdd2a6fc58a43df
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001046179-26-000024.hdr.sgml**: 20260226

**ACCESSION NUMBER**: 0001046179-26-000024

**CONFORMED SUBMISSION TYPE**: 6-K

**PUBLIC DOCUMENT COUNT**: 5

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260226

**DATE AS OF CHANGE**: 20260226

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD
- **CENTRAL INDEX KEY:** 0001046179
- **STANDARD INDUSTRIAL CLASSIFICATION:** SEMICONDUCTORS & RELATED DEVICES [3674]
- **ORGANIZATION NAME:** 04 Manufacturing
- **EIN:** 000000000
- **STATE OF INCORPORATION:** F5
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 6-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-14700
- **FILM NUMBER:** 26681449

**BUSINESS ADDRESS:**
- **STREET 1:** NO. 8, LI-HSIN ROAD 6
- **STREET 2:** HSINCHU SCIENCE PARK
- **CITY:** HSINCHU
- **STATE:** F5
- **ZIP:** 300-096
- **BUSINESS PHONE:** 886-3-5636688

**MAIL ADDRESS:**
- **STREET 1:** NO. 8, LI-HSIN ROAD 6
- **STREET 2:** HSINCHU SCIENCE PARK
- **CITY:** HSINCHU
- **STATE:** F5
- **ZIP:** 300-096

1934 Act Registration No. 1-14700

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

_____________________________

**FORM 6-K**

_____________________________

**REPORT OF FOREIGN PRIVATE ISSUER**

**PURSUANT TO RULE 13a-16 OR 15d-16 UNDER**

**THE SECURITIES EXCHANGE ACT OF 1934**

**For the month of February 2026**

**(Commission File Number: 001-14700)**

_____________________________

**Taiwan Semiconductor Manufacturing Company Limited**

**(Translation of Registrant's Name Into English)**

_____________________________

**No. 8, Li-Hsin Road 6**

**Hsinchu Science Park**

**Hsinchu 300-096, Taiwan**

**Republic of China**

**(Address of Principal Executive Offices)**

_____________________________

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ⌧&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Form 40-F □

Indicate by check mark if the registrant is submitting the Form 6-K in papers as permitted by Regulation S-T Rule 101(b)(1): □

Indicate by check mark if the registrant is submitting the Form 6-K in papers as permitted by Regulation S-T Rule 101(b)(7): □

------

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| |
|:---|
| **SIGNATURES** |
| Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. |

---

---

| | | |
|:---|:---|:---|
| | Taiwan Semiconductor Manufacturing Company Limited | Taiwan Semiconductor Manufacturing Company Limited |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date: February 26, 2026 | By | &nbsp;&nbsp;&nbsp;&nbsp;/s/ Wendell Huang |
| | | &nbsp;&nbsp;&nbsp;&nbsp;Wendell Huang |
| | | &nbsp;&nbsp;&nbsp;&nbsp;Senior Vice President and Chief Financial Officer |

---

------

**Exhibits**

---

| | |
|:---|:---|
| **Exhibit Number** | **Exhibit Description** |
| 99.1 | <u>[Consolidated Financial Statements for the Years Ended December 31, 202](a2025q4consolidatedreport-.htm)[5](a2025q4consolidatedreport-.htm)[and 202](a2025q4consolidatedreport-.htm)[4](a2025q4consolidatedreport-.htm)[and Independent Auditors' Report pursuant to International Financial Reporting Standards adopted by ROC ("Taiwan-IFRSs")](a2025q4consolidatedreport-.htm)</u> |
| 99.2 | <u>[Parent Company Only Financial Statements for the Years Ended December 31, 202](a2025q4standalonefinancial.htm)[5](a2025q4standalonefinancial.htm)[and 202](a2025q4standalonefinancial.htm)[4](a2025q4standalonefinancial.htm)[and Independent Auditors' Report pursuant to International Financial Reporting Standards adopted by ROC ("Taiwan-IFRSs")](a2025q4standalonefinancial.htm)</u> |

---

## Exhibit 99.1

<u>English Translation of Financial Statements Originally Issued in Chinese</u>

ㄅㄡ

**Taiwan Semiconductor Manufacturing** 

**Company Limited and Subsidiaries**

**Consolidated Financial Statements for the**

**Years Ended December 31, 2025 and 2024 and** 

**Independent Auditors' Report**

**REPRESENTATION LETTER**

The companies required to be included in the consolidated financial statements of affiliates in

accordance with the "Criteria Governing Preparation of Affiliation Reports, Consolidated Business

Reports and Consolidated Financial Statements of Affiliated Enterprises" for the year ended

December 31, 2025 are all the same as the companies required to be included in the consolidated

financial statements of parent and subsidiary companies as provided in International Financial

Reporting Standard 10 "Consolidated Financial Statements". Relevant information that should be

disclosed in the consolidated financial statements of affiliates has all been disclosed in the

consolidated financial statements of parent and subsidiary companies. Hence, Taiwan

Semiconductor Manufacturing Company Limited and Subsidiaries do not prepare a separate set of

consolidated financial statements of affiliates.

Very truly yours,

TAIWAN SEMICONDUCTOR MANUFACTURING COMPANY LIMITED

By

C.C. Wei

Chairman

February 10, 2026

勤業眾信

勤業眾信聯合會計師事務所

110016 台北市信義區松仁路100號20樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110016, Taiwan

Tel :+886 (2) 2725-9988

Fax:+886 (2) 4051-6888

www.deloitte.com.tw

**INDEPENDENT AUDITORS' REPORT**

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Limited

**Opinion**

We have audited the accompanying consolidated financial statements of Taiwan Semiconductor Manufacturing

Company Limited and its subsidiaries (the "Company"), which comprise the consolidated balance sheets as of

December 31, 2025 and 2024, and the consolidated statements of comprehensive income, changes in equity and

cash flows for the years then ended, and notes to the consolidated financial statements, including material

accounting policy information (collectively referred to as the "consolidated financial statements").

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the

consolidated financial position of the Company as of December 31, 2025 and 2024, and its consolidated financial

performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing

the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS),

International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed

and issued into effect by the Financial Supervisory Commission of the Republic of China.

**Basis for Opinion** 

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and Attestation

Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of China. Our

responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the

Consolidated Financial Statements section of our report. We are independent of the Company in accordance with

The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled

our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

**Key Audit Matters** 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the

consolidated financial statements for the year ended December 31, 2025. These matters were addressed in the

context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we

do not provide a separate opinion on these matters.

Key audit matter for the Company's consolidated financial statements for the year ended December 31, 2025 is

stated as follows:

<u>Property, plant and equipment (PP&E) – commencement of depreciation related to PP&E classified as equipment</u> 

<u>under installation and construction in progress (EUI/CIP)</u>

Refer to Notes 4, 5 and 14 to the consolidated financial statements.

The Company's evaluation of when to commence depreciation of EUI/CIP involves determining when the assets are

available for their intended use. The criteria the Company uses to determine whether EUI/CIP are available for their

intended use involves subjective judgments and assumptions about the conditions necessary for the assets to be

capable of operating in the intended manner. Changes in these assumptions could have a significant impact on when

depreciation is recognized.

Given the subjectivity in determining the date to commence depreciation of EUI/CIP, performing audit procedures

to evaluate the reasonableness of the Company's judgments and assumptions required a high degree of auditor

judgment. Consequently, the validity of commencement of depreciation related to PP&E classified as EUI/CIP is

identified as a key audit matter.

Our audit procedures related to the evaluation of when to commence depreciation of EUI/CIP included the

following, among others:

1. We read the Company's policy and understood the criteria used to determine when to commence depreciation.

2. We tested the effectiveness of the controls over the evaluation of when to commence depreciation of EUI/CIP.

3. We sampled the year-end balance of EUI/CIP and performed the following for each selection:

a.Evaluated whether the selection did not meet the criteria specified by the Company for commencement of

depreciation.

b.Observed the assets and evaluated their status.

4. We sampled and evaluated whether the selection of EUI/CIP met the criteria specified by the Company for

commencement of depreciation during the year.

5. We sampled and evaluated whether the selection of EUI/CIP met the criteria specified by the Company for

commencement of depreciation subsequent to year end.

**Other Matter**

We have also audited the parent company only financial statements of Taiwan Semiconductor Manufacturing

Company Limited as of and for the years ended December 31, 2025 and 2024 on which we have issued an

unmodified opinion.

**Responsibilities of Management and Those Charged with Governance for the Consolidated Financial** 

**Statements** 

Management is responsible for the preparation and fair presentation of the consolidated financial statements in

accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS,

IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of

China, and for such internal control as management determines is necessary to enable the preparation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company's ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or

has no realistic alternative but to do so.

Those charged with governance (including members of the Audit and Risk Committee) are responsible for

overseeing the Company's financial reporting process.

**Auditors' Responsibilities for the Audit of the Consolidated Financial Statements** 

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole

are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with the Standards on Auditing of the Republic of China will always detect a material misstatement

when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the

aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of

these consolidated financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement

resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,

intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

Company's internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and

related disclosures made by management.

4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on

the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Company's ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the

consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions

are based on the audit evidence obtained up to the date of our auditors' report. However, future events or

conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the

disclosures, and whether the consolidated financial statements represent the underlying transactions and events

in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business

activities within the Company to express an opinion on the consolidated financial statements. We are

responsible for the direction, supervision and performance of the group audit. We remain solely responsible for

our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that we

identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most

significance in the audit of the consolidated financial statements for the year ended December 31, 2025 and are

therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes

public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not

be communicated in our report because the adverse consequences of doing so would reasonably be expected to

outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors' report are Shih Tsung Wu and Shang

![signa.jpg](signa.jpg)

Chih Lin.

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 10, 2026

*<u>Notice to Readers</u>*

*The accompanying consolidated financial statements are intended only to present the consolidated financial* 

*position, financial performance and cash flows in accordance with accounting principles and practices generally* 

*accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices* 

*to audit such consolidated financial statements are those generally applied in the Republic of China.*

*For the convenience of readers, the independent auditors' report and the accompanying consolidated financial* 

*statements have been translated into English from the original Chinese version prepared and used in the Republic* 

*of China. If there is any conflict between the English version and the original Chinese version or any difference in* 

*the interpretation of the two versions, the Chinese-language independent auditors' report and consolidated* 

*financial statements shall prevail.* 

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED BALANCE SHEETS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| **ASSETS** |  |  |  |  |
| CURRENT ASSETS |  |  |  |  |
| Cash and cash equivalents (Note 6) | $2767856402 | 35 | $2127627043 | 32 |
| Financial assets at fair value through profit or loss (Note 7) | 100200 | - | 207700 | - |
| Financial assets at fair value through other comprehensive income (Note 8) | 175692690 | 2 | 192202657 | 3 |
| Financial assets at amortized cost (Note 9) | 124945519 | 2 | 101971322 | 1 |
| Hedging financial assets (Note 10) | - | - | 10959 | - |
| Notes and accounts receivable, net (Note 11) | 279051553 | 3 | 270683235 | 4 |
| Receivables from related parties (Note 33) | 2739500 | - | 1404473 | - |
| Other receivables from related parties (Note 33) | 268115 | - | 251 | - |
| Inventories (Notes 5 and 12) | 288109485 | 4 | 287868810 | 4 |
| Other financial assets (Notes 29, 30 and 34) | 59702922 | 1 | 63138316 | 1 |
| Other current assets (Notes 29 and 30) | 118664431 | 1 | 43237354 | 1 |
| Total current assets | 3817130817 | 48 | 3088352120 | 46 |
| NONCURRENT ASSETS |  |  |  |  |
| Financial assets at fair value through profit or loss (Note 7) | 15032128 | - | 15199842 | - |
| Financial assets at fair value through other comprehensive income (Note 8) | 8797170 | - | 7822884 | - |
| Financial assets at amortized cost (Note 9) | 110507804 | 1 | 88596542 | 1 |
| Investments accounted for using equity method (Note 13) | 38033271 | 1 | 37421105 | 1 |
| Property, plant and equipment (Notes 5, 14 and 29) | 3691840916 | 47 | 3234980070 | 48 |
| Right-of-use assets (Notes 5 and 15) | 43918910 | 1 | 40128391 | 1 |
| Intangible assets (Notes 5 and 16) | 24952615 | - | 26282520 | 1 |
| Deferred income tax assets (Notes 5 and 25) | 62940253 | 1 | 65943300 | 1 |
| Refundable deposits | 4242553 | - | 5495862 | - |
| Other noncurrent assets (Notes 29 and 30) | 115627441 | 1 | 81715364 | 1 |
| Total noncurrent assets | 4115893061 | 52 | 3603585880 | 54 |
| TOTAL | $7933023878 | 100 | $6691938000 | 100 |
| **LIABILITIES AND EQUITY** |  |  |  |  |
| CURRENT LIABILITIES |  |  |  |  |
| Financial liabilities at fair value through profit or loss (Note 7) | $3083883 | - | $466539 | - |
| Hedging financial liabilities (Note 10) | 817 | - | - | - |
| Accounts payable | 82551595 | 1 | 72800558 | 1 |
| Payables to related parties (Note 33) | 1778730 | - | 1426001 | - |
| Salary and bonus payable | 63872882 | 1 | 47451509 | 1 |
| Accrued profit sharing bonus to employees and compensation to directors (Note 28) | 103355278 | 1 | 70871150 | 1 |
| Payables to contractors and equipment suppliers | 177730306 | 2 | 192635173 | 3 |
| Cash dividends payable (Note 20) | 285258060 | 4 | 220418821 | 3 |
| Income tax payable (Notes 5 and 25) | 202337872 | 2 | 147438423 | 2 |
| Long-term liabilities - current portion (Notes 17, 18 and 30) | 136925710 | 2 | 59857879 | 1 |
| Accrued expenses and other current liabilities (Notes 5, 15, 21 and 30) | 401124156 | 5 | 451158911 | 7 |
| Total current liabilities | 1458019289 | 18 | 1264524964 | 19 |
| NONCURRENT LIABILITIES |  |  |  |  |
| Bonds payable (Notes 17 and 30) | 856227503 | 11 | 926604506 | 14 |
| Long-term bank loans (Notes 18 and 30) | 39834496 | 1 | 31824386 | - |
| Deferred income tax liabilities (Notes 5 and 25) | 3888795 | - | 3988482 | - |
| Lease liabilities (Notes 15) | 31594992 | - | 28755342 | - |
| Net defined benefit liability (Note 19) | 6012286 | - | 7580657 | - |
| Guarantee deposits | 764178 | - | 845581 | - |
| Others (Note 21) | 75887056 | 1 | 104238217 | 2 |
| Total noncurrent liabilities | 1014209306 | 13 | 1103837171 | 16 |
| Total liabilities | 2472228595 | 31 | 2368362135 | 35 |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT  |  |  |  |  |
| Capital stock (Note 20) | 259325245 | 3 | 259327332 | 4 |
| Capital surplus (Notes 20 and 27) | 73445601 | 1 | 73260765 | 2 |
| Retained earnings (Note 20) |  |  |  |  |
| Appropriated as legal capital reserve | 311146899 | 4 | 311146899 | 4 |
| Appropriated as special capital reserve | 87284496 | 1 | - | - |
| Unappropriated earnings | 4705070165 | 59 | 3606105124 | 54 |
|  | 5103501560 | 64 | 3917252023 | 58 |
| Others (Notes 20 and 27) | (16676412) | - | 38705047 | - |
| Equity attributable to shareholders of the parent | 5419595994 | 68 | 4288545167 | 64 |
| NON - CONTROLLING INTERESTS | 41199289 | 1 | 35030698 | 1 |
| Total equity | 5460795283 | 69 | 4323575865 | 65 |
| TOTAL  | $7933023878 | 100 | $6691938000 | 100 |

---

The accompanying notes are an integral part of the consolidated financial statements.

(Continued)

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** |
| **(In Thousands of New Taiwan Dollars, Except Earnings Per Share)** |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| NET REVENUE (Notes 5, 21, 33 and 39) | $3809054272 | 100 | $2894307699 | 100 |
| COST OF REVENUE (Notes 5, 12, 28, 33 and 36) | 1527760293 | 40 | 1269954135 | 44 |
| GROSS PROFIT | 2281293979 | 60 | 1624353564 | 56 |
| OPERATING EXPENSES (Notes 5, 28 and 33) |  |  |  |  |
| Research and development | 246427264 | 7 | 204181823 | 7 |
| General and administrative | 82304290 | 2 | 83744968 | 3 |
| Marketing | 16918076 | - | 13143524 | - |
| Total operating expenses | 345649630 | 9 | 301070315 | 10 |
| OTHER OPERATING INCOME AND EXPENSES, NET <br>(Notes 14, 28 and 36)<br>| 447328 | - | (1230199) | - |
| INCOME FROM OPERATIONS (Note 39) | 1936091677 | 51 | 1322053050 | 46 |
| NON-OPERATING INCOME AND EXPENSES |  |  |  |  |
| Share of profits of associates | 5496594 | - | 4879367 | - |
| Interest income (Note 22) | 105739081 | 3 | 87213399 | 3 |
| Other income | 591729 | - | 566879 | - |
| Foreign exchange gain, net (Note 37) | 13831351 | - | 10000653 | - |
| Finance costs (Note 23) | (12370387) | - | (10495320) | - |
| Other gains and losses, net (Note 24) | (7717205) | - | (8379393) | - |
| Total non-operating income and expenses | 105571163 | 3 | 83785585 | 3 |
| INCOME BEFORE INCOME TAX | 2041662840 | 54 | 1405838635 | 49 |
| INCOME TAX EXPENSE (Notes 5 and 25) | 326266060 | 9 | 233406876 | 8 |
| NET INCOME | 1715396780 | 45 | 1172431759 | 41 |
| OTHER COMPREHENSIVE INCOME (LOSS) (Notes 5, <br>19, 20 and 25)<br>|  |  |  |  |
| Items that will not be reclassified subsequently to profit <br>or loss:<br>|  |  |  |  |
| Remeasurement of defined benefit obligation | (693271) | - | 144365 | - |
| Unrealized gain on investments in equity instruments <br>at fair value through other comprehensive income<br>| 745272 | - | 5091916 | - |
| Gain (loss) on hedging instruments | (31030) | - | 5041 | - |
| Share of other comprehensive loss of associates | (113192) | - | (69435) | - |
| Income tax benefit (expense) related to items that will <br>not be reclassified subsequently<br>| 138654 | - | (38869) | - |
|  | 46433 | - | 5133018 | - |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME** |
| **(In Thousands of New Taiwan Dollars, Except Earnings Per Share)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| Items that may be reclassified subsequently to profit or <br>loss:<br>|  |  |  |  |
| Exchange differences arising on translation of foreign <br>operations<br>| $(60951662) | (1) | $64299685 | 2 |
| Unrealized gain on investments in debt instruments at <br>fair value through other comprehensive income<br>| 4688956 | - | 1949865 | - |
| Loss on hedging instruments | (81229) | - | (80198) | - |
| Share of other comprehensive income (loss) of <br>associates<br>| (29017) | - | 283276 | - |
|  | (56372952) | (1) | 66452628 | 2 |
| Other comprehensive income (loss), net of income tax | (56326519) | (1) | 71585646 | 2 |
| TOTAL COMPREHENSIVE INCOME | $1659070261 | 44 | $1244017405 | 43 |
| NET INCOME ATTRIBUTABLE TO: |  |  |  |  |
| Shareholders of the parent | $1717882627 | 45 | $1173267703 | 41 |
| Non-controlling interests | (2485847) | - | (835944) | - |
|  | $1715396780 | 45 | $1172431759 | 41 |
| TOTAL COMPREHENSIVE INCOME <br>ATTRIBUTABLE TO:<br>|  |  |  |  |
| Shareholders of the parent | $1661253891 | 44 | $1245836616 | 43 |
| Non-controlling interests | (2183630) | - | (1819211) | - |
|  | $1659070261 | 44 | $1244017405 | 43 |
| EARNINGS PER SHARE (NT$, Note 26) |  |  |  |  |
| Basic earnings per share | $66.26 |  | $45.25 |  |
| Diluted earnings per share | $66.25 |  | $45.25 |  |

---

The accompanying notes are an integral part of the consolidated financial statements. (Concluded)

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** | **Equity Attributable to Shareholders of the Parent** |  |  |
|  |  |  |  |  |  |  |  | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |  |  |
|  | **Capital Stock - Common Stock** | **Capital Stock - Common Stock** |  | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Foreign**<br>**Currency**<br>**Translation**<br>**Reserve** | **Unrealized**<br>**Gain (Loss) on**<br>**Financial**<br>**Assets at Fair**<br>**Value Through**<br>**Other**<br>**Comprehensive**<br>**Income** | **Gain (Loss) on**<br>**Hedging**<br>**Instruments** | **Unearned** <br>**Stock-Based**<br>**Employee**<br>**Compensation** |  |  |  |  |  |
|  | **Shares** |  |  | **Legal Capital** | **Special Capital** | **Unappropriated** |  | **Foreign**<br>**Currency**<br>**Translation**<br>**Reserve** | **Unrealized**<br>**Gain (Loss) on**<br>**Financial**<br>**Assets at Fair**<br>**Value Through**<br>**Other**<br>**Comprehensive**<br>**Income** | **Gain (Loss) on**<br>**Hedging**<br>**Instruments** | **Unearned** <br>**Stock-Based**<br>**Employee**<br>**Compensation** | **Total** | **Treasury** <br>**Stock** | **Total** | **Non-controlling**<br>**Interests** | **Total**<br>**Equity** |
|  | **(In Thousands)** | **Amount** | **Capital Surplus** | **Reserve** | **Reserve** | **Earnings** | **Total** | **Foreign**<br>**Currency**<br>**Translation**<br>**Reserve** | **Unrealized**<br>**Gain (Loss) on**<br>**Financial**<br>**Assets at Fair**<br>**Value Through**<br>**Other**<br>**Comprehensive**<br>**Income** | **Gain (Loss) on**<br>**Hedging**<br>**Instruments** | **Unearned** <br>**Stock-Based**<br>**Employee**<br>**Compensation** | **Total** | **Treasury** <br>**Stock** | **Total** | **Non-controlling**<br>**Interests** | **Total**<br>**Equity** |
| BALANCE, JANUARY 1, 2024 | 25932071 | $259320710 | $69876381 | $311146899 | $- | $2846883893 | $3158030792 | $(25316769) | $(4099928) | $1395875 | $(293434) | $(28314256) | $- | $3458913627 | $24349220 | $3483262847 |
| Appropriations of earnings  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash dividends to shareholders | - | - | - | - | - | (414915586) | (414915586) | - | - | - | - | - | - | (414915586) | - | (414915586) |
| Total | - | - | - | - | - | (414915586) | (414915586) | - | - | - | - | - | - | (414915586) | - | (414915586) |
| Net income  | - | - | - | - | - | 1173267703 | 1173267703 | - | - | - | - | - | - | 1173267703 | (835944) | 1172431759 |
| Other comprehensive income (loss), net of income tax | - | - | - | - | - | 126040 | 126040 | 65579764 | 6948818 | (85709) | - | 72442873 | - | 72568913 | (983267) | 71585646 |
| Total comprehensive income (loss) | - | - | - | - | - | 1173393743 | 1173393743 | 65579764 | 6948818 | (85709) | - | 72442873 | - | 1245836616 | (1819211) | 1244017405 |
| Employee restricted shares retired | (1402) | (14018) | 14018 | - | - | 19934 | 19934 | - | - | - | - | - | - | 19934 | - | 19934 |
| Share-based payment arrangements | 5313 | 53130 | 2584257 | - | - | - | - | - | - | - | (1414645) | (1414645) | - | 1222742 | - | 1222742 |
| Treasury stock acquired | - | - | - | - | - | - | - | - | - | - | - | - | (3089177) | (3089177) | - | (3089177) |
| Treasury stock retired | (3249) | (32490) | (7080) | - | - | (3049607) | (3049607) | - | - | - | - | - | 3089177 | - | - | - |
| Disposal of investments in equity instruments at fair value <br>through other comprehensive income<br>| - | - | - | - | - | 3772747 | 3772747 | - | (4009066) | - | - | (4009066) | - | (236319) | 236319 | - |
| Basis adjustment for gain on hedging instruments | - | - | - | - | - | - | - | - | - | 141 | - | 141 | - | 141 | - | 141 |
| Adjustments to share of changes in equities of associates | - | - | 870000 | - | - | - | - | - | - | - | - | - | - | 870000 | - | 870000 |
| From difference between the consideration received and the <br>carrying amount of the subsidiaries' net assets during <br>actual disposal<br>| - | - | 5284 | - | - | - | - | - | - | - | - | - | - | 5284 | (4263) | 1021 |
| From share of changes in equities of subsidiaries | - | - | (90978) | - | - | - | - | - | - | - | - | - | - | (90978) | 6918796 | 6827818 |
| Donation from shareholders  | - | - | 8883 | - | - | - | - | - | - | - | - | - | - | 8883 | 64 | 8947 |
| Increase in non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 5349773 | 5349773 |
| BALANCE, DECEMBER 31, 2024 | 25932733 | 259327332 | 73260765 | 311146899 | - | 3606105124 | 3917252023 | 40262995 | (1160176) | 1310307 | (1708079) | 38705047 | - | 4288545167 | 35030698 | 4323575865 |
| Appropriations of earnings  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Special capital reserve | - | - | - | - | 87284496 | (87284496) | - | - | - | - | - | - | - | - | - | - |
| Cash dividends to shareholders | - | - | - | - | - | (531618438) | (531618438) | - | - | - | - | - | - | (531618438) | - | (531618438) |
| Total | - | - | - | - | 87284496 | (618902934) | (531618438) | - | - | - | - | - | - | (531618438) | - | (531618438) |
| Net income  | - | - | - | - | - | 1717882627 | 1717882627 | - | - | - | - | - | - | 1717882627 | (2485847) | 1715396780 |
| Other comprehensive income (loss), net of income tax | - | - | - | - | - | (559857) | (559857) | (61282139) | 5308767 | (95507) | - | (56068879) | - | (56628736) | 302217 | (56326519) |
| Total comprehensive income (loss) | - | - | - | - | - | 1717322770 | 1717322770 | (61282139) | 5308767 | (95507) | - | (56068879) | - | 1661253891 | (2183630) | 1659070261 |
| Employee restricted shares retired | (209) | (2087) | 2087 | - | - | 4007 | 4007 | - | - | - | - | - | - | 4007 | - | 4007 |
| Share-based payment arrangements | - | - | (21859) | - | - | - | - | - | - | - | 1231078 | 1231078 | - | 1209219 | - | 1209219 |
| Disposal of investments in equity instruments at fair value <br>through other comprehensive income<br>| - | - | - | - | - | 541198 | 541198 | - | (557108) | - | - | (557108) | - | (15910) | 15910 | - |
| Basis adjustment for gain on hedging instruments | - | - | - | - | - | - | - | - | - | 13450 | - | 13450 | - | 13450 | - | 13450 |
| Adjustments to share of changes in equities of associates | - | - | 192854 | - | - | - | - | - | - | - | - | - | - | 192854 | - | 192854 |
| From share of changes in equities of subsidiaries | - | - | (14959) | - | - | - | - | - | - | - | - | - | - | (14959) | 7994 | (6965) |
| Donation from shareholders  | - | - | 26713 | - | - | - | - | - | - | - | - | - | - | 26713 | 67 | 26780 |
| Increase in non-controlling interests | - | - | - | - | - | - | - | - | - | - | - | - | - | - | 8328250 | 8328250 |
| BALANCE, DECEMBER 31, 2025 | 25932524 | $259325245 | $73445601 | $311146899 | $87284496 | $4705070165 | $5103501560 | $(21019144) | $3591483 | $1228250 | $(477001) | $(16676412) | $- | $5419595994 | $41199289 | $5460795283 |

---

The accompanying notes are an integral part of the consolidated financial statements.

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Income before income tax | $2041662840 | $1405838635 |
| Adjustments for: |  |  |
| Depreciation expense | 679683958 | 653610486 |
| Amortization expense | 8412412 | 9186149 |
| Expected credit losses recognized (reversal) on investments in debt  | (3946) | 49907 |
| Finance costs | 12370387 | 10495320 |
| Share of profits of associates | (5496594) | (4879367) |
| Interest income | (105739081) | (87213399) |
| Share-based compensation | 1246070 | 1242719 |
| Loss on disposal or retirement of property, plant and equipment, net | 1581001 | 2597927 |
| Loss on disposal or retirement of intangible assets, net | 4548 | 34 |
| Impairment loss on property, plant and equipment | 782005 | 1150485 |
| Loss (gain) on financial instruments at fair value through profit or loss, net | (353087) | 137694 |
| Loss from disposal of subsidiary | 167986 | - |
| Loss on disposal of investments in debt instruments at fair value through <br>other comprehensive income, net<br>| 200194 | 683117 |
| Gain on disposal of investments accounted for using equity method, net | - | (7126) |
| Loss on foreign exchange, net | 4308948 | 4576295 |
| Dividend income | (591729) | (566879) |
| Others | 1049215 | (435644) |
| Changes in operating assets and liabilities: |  |  |
| Financial instruments at fair value through profit or loss | 8436241 | 842623 |
| Notes and accounts receivable, net | (8368318) | (69369394) |
| Receivables from related parties | (1335027) | (780022) |
| Other receivables from related parties | (267864) | 71620 |
| Inventories | (240675) | (36871722) |
| Other financial assets | 64524848 | (2377515) |
| Other current assets | (74620318) | (15537261) |
| Other noncurrent assets | (38798107) | (3862018) |
| Accounts payable | 9751037 | 17073801 |
| Payables to related parties | 352732 | (140299) |
| Salary and bonus payable | 16421373 | 14250946 |
| Accrued profit sharing bonus to employees and compensation to directors | 32484128 | 20154206 |
| Accrued expenses and other current liabilities | (103215542) | 74659388 |
| Other noncurrent liabilities | 385084 | 16768683 |
| Net defined benefit liability | (2261642) | (1532202) |
| Cash generated from operations | 2542533077 | 2009817187 |
| Income taxes paid | (267557452) | (183640119) |
| Net cash generated by operating activities | 2274975625 | 1826177068 |
|  |  | (Continued) |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Acquisitions of: |  |  |
| Financial instruments at fair value through profit or loss | $(260086) | $(1178766) |
| Financial assets at fair value through other comprehensive income | (66823227) | (87787521) |
| Financial assets at amortized cost | (188288632) | (151656371) |
| Hedging financial instruments | (631620) | - |
| Investments accounted for using equity method | - | (3738753) |
| Property, plant and equipment | (1272410529) | (956006536) |
| Intangible assets | (10146942) | (8875660) |
| Proceeds from disposal or redemption of: |  |  |
| Financial assets at fair value through other comprehensive income | 80052393 | 67684556 |
| Financial assets at amortized cost | 138203740 | 118350898 |
| Property, plant and equipment  | 797045 | 894573 |
| Intangible assets | - | 57182 |
| Derecognition of derivative financial instruments | (5703098) | - |
| Proceeds from return of capital of investments in equity instruments at fair <br>value through other comprehensive income<br>| 101486 | 325952 |
| Derecognition of hedging financial instruments | 566873 | 118320 |
| Interest received | 98954730 | 76434070 |
| Proceeds from government grants - property, plant and equipment | 76258790 | 75163982 |
| Proceeds from government grants - others | - | 267 |
| Other dividends received | 635098 | 541803 |
| Dividends received from investments accounted for using equity method | 3304492 | 2965201 |
| Increase in prepayments for leases  | (39840) | (99427) |
| Refundable deposits paid | (420179) | (1304815) |
| Refundable deposits refunded | 1456099 | 3268276 |
| Net cash used in investing activities | (1144393407) | (864842769) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Increase (decrease) in hedging financial liabilities - bank loans | 335106 | (26496570) |
| Proceeds from issuance of bonds | 86900000 | 34300000 |
| Repayment of bonds | (54310000) | (7000000) |
| Proceeds from long-term bank loans | 10658400 | 30897000 |
| Repayment of long-term bank loans | (2710000) | (2295556) |
| Payments for transaction costs attributable to the issuance of bonds | (90308) | (35681) |
| Treasury stock acquired | - | (3089177) |
| Repayment of the principal portion of lease liabilities | (3496528) | (2873640) |
| Interest paid | (19128799) | (18751233) |
| Guarantee deposits received | 3000 | 4990 |
| Guarantee deposits refunded | (48549) | (93332) |
| Cash dividends | (466779199) | (363055226) |
| Disposal of ownership interests in subsidiaries (without losing control) | - | 1021 |
| Donation from shareholders | 26780 | 8947 |
| Increase in non-controlling interests | 8295405 | 12177547 |
| Net cash used in financing activities | (440344692) | (346300910) |
|  |  | (Continued) |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH <br>EQUIVALENTS<br>| $(50008167) | $47165901 |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 640229359 | 662199290 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 2127627043 | 1465427753 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | $2767856402 | $2127627043 |
| The accompanying notes are an integral part of the consolidated financial statements. | The accompanying notes are an integral part of the consolidated financial statements. | (Concluded) |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |
| **FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

**1. GENERAL**

Taiwan Semiconductor Manufacturing Company Limited (TSMC), a Republic of China (R.O.C.)

corporation, was incorporated on February 21, 1987. TSMC is a dedicated foundry in the semiconductor

industry which engages mainly in the manufacturing, sales, packaging, testing and computer-aided design

of integrated circuits and other semiconductor devices and the manufacturing of masks.

On September 5, 1994, TSMC's shares were listed on the Taiwan Stock Exchange (TWSE). On October 8,

1997, TSMC listed some of its shares of stock on the New York Stock Exchange (NYSE) in the form of

American Depositary Shares (ADSs).

The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu Science

Park, Taiwan. The principal operating activities of TSMC's subsidiaries are described in Note 4.

**2. THE AUTHORIZATION OF FINANCIAL STATEMENTS**

The accompanying consolidated financial statements were approved and authorized for issuance by the

Board of Directors on February 10, 2026.

**3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING**

**STANDARDS**

a.Initial application of the amendments to the International Financial Reporting Standards (IFRS),

International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC)

(collectively, "IFRS Accounting Standards") endorsed and issued into effect by the Financial

Supervisory Commission (FSC)

The initial application of the amendments to the IFRS Accounting Standards endorsed and issued into

effect by the FSC did not have a material impact on the accounting policies of TSMC and its

subsidiaries (collectively as the "Company").

b.The IFRS Accounting Standards issued by International Accounting Standards Board (IASB) and

endorsed by the FSC with effective date starting 2026

---

| | |
|:---|:---|
| **New, Amended and Revised Standards and Interpretations** | **Effective Date Issued** <br>**by IASB** <br>|
| Amendments to IFRS 9 and IFRS 7 "Amendments to the <br>Classification and Measurement of Financial Instruments" - the <br>amendments to the application guidance of classification of <br>financial assets<br>| January 1, 2026 |
| Annual Improvements to IFRS Accounting Standards - Volume 11 | January 1, 2026 |
| Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-<br>dependent Electricity"<br>| January 1, 2026 |

---

c.The IFRS Accounting Standards issued by IASB, but not yet endorsed and issued into effect by the FSC

---

| | |
|:---|:---|
| **New, Amended and Revised Standards and Interpretations** | **Effective Date Issued** <br>**by IASB** <br>|
| Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets <br>between an Investor and its Associate or Joint Venture"<br>| To be determined by IASB |
| IFRS 18 "Presentation and Disclosure in Financial Statements" | January 1, 2027 (Note) |

---

Note : On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January

1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the

endorsement of IFRS 18 by the FSC.

<u>IFRS 18 "Presentation and Disclosure in Financial Statements" and consequential amendments</u>

IFRS 18 will supersede IAS 1" Presentation of Financial Statements". The main changes comprise:

• Items of income and expenses included in the statement of profit or loss shall be classified into the

operating, investing, financing, income taxes and discontinued operations categories.

• The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit or

loss before financing and income taxes and profit or loss.

• Provides guidance to enhance the requirements of aggregation and disaggregation: The Company

shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from

individual transactions or other events and shall classify and aggregate them into groups based on

shared characteristics, so as to result in the presentation in the primary financial statements of line

items that have at least one similar characteristic. The Company shall disaggregate items with

dissimilar characteristics in the primary financial statements and in the notes. The Company labels

items as "other" only if it cannot find a more informative label.

In addition, a consequential amendment has been made to IAS 7 "Statement of Cash Flows", requiring

the Company to use operating profit or loss as the starting point when presenting cash flows from

operating activities under the indirect method.

Except for the above impact, as of the date the accompanying consolidated financial statements were

issued, the Company continues in evaluating other impacts of the above amended standards and on its

financial position and financial performance from the initial adoption of the aforementioned standards

or interpretations and related applicable period. The related impact will be disclosed when the Company

completes its evaluation.

**4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION**

For the convenience of readers, the accompanying consolidated financial statements have been translated

into English from the original Chinese version prepared and used in the R.O.C. If there is any conflict

between the English version and the original Chinese version or any difference in the interpretation of the

two versions, the Chinese-language consolidated financial statements shall prevail.

**Statement of Compliance**

The accompanying consolidated financial statements have been prepared in conformity with the

Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS Accounting

Standards endorsed by the FSC with the effective dates (collectively, "Taiwan-IFRS Accounting

Standards").

**Basis of Preparation** 

The accompanying consolidated financial statements have been prepared on the historical cost basis except

for financial instruments that are measured at fair values, as explained in the accounting policies below.

Historical cost is generally based on the fair value of the consideration given in exchange for the assets.

**Basis of Consolidation** 

<u>The basis of preparation and the basis for the consolidated financial statements</u>

The consolidated financial statements incorporate the financial statements of TSMC and entities controlled

by TSMC (its subsidiaries).

Income and expenses of subsidiaries acquired or disposed of are included in the consolidated statement of

comprehensive income from the effective date of acquisition and up to the effective date of disposal, as

appropriate. Total comprehensive income of subsidiaries is attributed to the shareholders of the parent and

to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting

policies into line with those used by the Company.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Changes in the Company's ownership interests in subsidiaries that do not result in the Company losing

control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the

Company's interests and the non-controlling interests are adjusted to reflect the changes in their relative

interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are

adjusted and the fair value of the consideration paid or received is recognized directly in equity and

attributed to shareholders of the parent.

When the Company loses control of a subsidiary, a gain or loss is recognized in profit or loss and is

calculated as the difference between:

a.the aggregate of the fair value of consideration received and the fair value of any retained interest at the

date when control is lost; and

b.the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any

non-controlling interest.

The Company shall account for all amounts recognized in other comprehensive income in relation to the

subsidiary on the same basis as would be required if the Company had directly disposed of the related assets

and liabilities.

The fair value of any investment retained in the former subsidiary at the date when control is lost is

regarded as the cost on initial recognition of an investment in an associate.

<u>The subsidiaries in the consolidated financial statements</u>

The detail information of the subsidiaries at the end of reporting period was as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **Establishment** | **Percentage of Ownership** | **Percentage of Ownership** |  |
| **Name of Investor** | **Name of Investee** | **Main Businesses and Products** | **and Operating** <br>**Location**<br>| **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>| **Note** |
| TSMC | TSMC North America | Sales and marketing of integrated <br>circuits and other semiconductor <br>devices<br>| San Jose, California, <br>U.S.A.<br>| 100% | 100% | - |
|  | TSMC Europe B.V. (TSMC <br>Europe)<br>| Customer service and supporting <br>activities<br>| Amsterdam, the <br>Netherlands<br>| 100% | 100% | a) |
|  | TSMC Japan Limited (TSMC <br>Japan)<br>| Customer service and supporting <br>activities<br>| Yokohama, Japan | 100% | 100% | a) |
|  | TSMC Design Technology <br>Japan, Inc. (TSMC JDC)<br>| Engineering support activities | Yokohama, Japan | 100% | 100% | a) |
|  | TSMC Japan 3DIC R&D <br>Center, Inc. (TSMC 3DIC)<br>| Engineering support activities | Yokohama, Japan | 100% | 100% | a) |
|  | TSMC Korea Limited (TSMC <br>Korea)<br>| Customer service and supporting <br>activities<br>| Seoul, Korea | 100% | 100% | a) |
|  | TSMC Partners, Ltd. (TSMC <br>Partners)<br>| Investing in companies involved in the <br>semiconductor design and <br>manufacturing, and other investment <br>activities<br>| Tortola, British Virgin <br>Islands<br>| 100% | 100% | - |
|  | TSMC Global Ltd. (TSMC <br>Global)<br>| Investment activities | Tortola, British Virgin <br>Islands<br>| 100% | 100% | - |
|  | TSMC China Company <br>Limited (TSMC China)<br>| Manufacturing, sales, testing and <br>computer-aided design of integrated <br>circuits and other semiconductor <br>devices<br>| Shanghai, China | 100% | 100% | - |
|  | TSMC Nanjing Company <br>Limited (TSMC Nanjing)<br>| Manufacturing, sales, testing and <br>computer-aided design of integrated <br>circuits and other semiconductor <br>devices<br>| Nanjing, China | 100% | 100% | - |
|  | VisEra Technologies <br>Company Ltd. (VisEra Tech)<br>| Research, design, development, <br>manufacturing, sales, packaging and <br>test of color filter<br>| Hsinchu, Taiwan | 67% | 67% | - |
|  | TSMC Arizona Corporation <br>(TSMC Arizona)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Phoenix, Arizona, <br>U.S.A.<br>| 100% | 100% | - |
|  | Japan Advanced <br>Semiconductor <br>Manufacturing, Inc. (JASM)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Kumamoto, Japan | 73% | 73% | - |
|  | European Semiconductor <br>Manufacturing Company <br>(ESMC) GmbH (ESMC)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Dresden, Germany | 70% | 70% | - |
|  | VentureTech Alliance Fund II, <br>L.P. (VTAF II)<br>| Investing in technology start-up <br>companies<br>| Cayman Islands | - | 98% | b), c) |
|  | VentureTech Alliance Fund <br>III, L.P. (VTAF III)<br>| Investing in technology start-up <br>companies<br>| Cayman Islands | - | 98% | b), c) |
|  | Emerging Fund, L.P. <br>(Emerging Fund)<br>| Investing in technology start-up <br>companies<br>| Cayman Islands | 99.9% | 99.9% | b) |
| TSMC Partners | TSMC Development, Inc. <br>(TSMC Development)<br>| Investing in companies involved in <br>semiconductor manufacturing<br>| Delaware, U.S.A. | 100% | 100% | - |
|  | TSMC Technology, Inc. <br>(TSMC Technology)<br>| Engineering support activities | Delaware, U.S.A. | 100% | 100% | a) |
|  | TSMC Design Technology <br>Canada Inc. (TSMC Canada)<br>| Engineering support activities | Ontario, Canada | 100% | 100% | a) |
| VTAF III | Growth Fund Limited (Growth <br>Fund)<br>| Investing in technology start-up <br>companies<br>| Cayman Islands | - | 100% | b), c) |
| TSMC Development | TSMC Washington, LLC <br>(TSMC Washington)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Washington, U.S.A. | 100% | 100% | - |

---

Note a:This is an immaterial subsidiary for which the consolidated financial statements are neither reviewed nor audited by the Company's independent auditors.

Note b: This is an immaterial subsidiary for which the consolidated financial statements for the year ended, are audited by the Company's independent auditors.

Note c:VTAF II/VTAF III and the Growth Fund have completed the liquidation procedures respectively in the first quarter and the second quarter of 2025.

**Foreign Currencies**

The financial statements of each individual consolidated entity were expressed in the currency which

reflected its primary economic environment (functional currency). The functional currency of TSMC and

presentation currency of the consolidated financial statements are both New Taiwan Dollars (NT$). In

preparing the consolidated financial statements, the operating results and financial positions of each

consolidated entity are translated into NT$.

In preparing the financial statements of each individual consolidated entity, transactions in currencies other

than the entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing

at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign

currencies are retranslated at the rates prevailing at that date. Such exchange differences are recognized in

profit or loss in the year in which they arise. Non-monetary items measured at fair value that are

denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was

determined. Exchange differences arising on the retranslation of non-monetary items are included in profit

or loss for the year except for exchange differences arising on the retranslation of non-monetary items in

respect of which gains and losses are recognized directly in other comprehensive income, in which case, the

exchange differences are also recognized directly in other comprehensive income. Non-monetary items that

are measured in terms of historical cost in foreign currencies are not retranslated.

For the purposes of presenting consolidated financial statements, the assets and liabilities of the Company's

foreign operations are translated into NT$ using exchange rates prevailing at the end of each reporting

period. Income and expense items are translated at the average exchange rates for the period. Exchange

differences arising, if any, are recognized in other comprehensive income and accumulated in equity

(attributed to non-controlling interests as appropriate).

**Classification of Current and Noncurrent Assets and Liabilities**

Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or

consumed within one year from the end of the reporting period. Current liabilities are obligations incurred

for trading purposes and obligations expected to be settled within one year from the end of the reporting

period. Assets and liabilities that are not classified as current are noncurrent assets and liabilities,

respectively.

**Cash Equivalents**

Cash equivalents, for the purpose of meeting short-term cash commitments, consist of highly liquid time

deposits and investments that are readily convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value.

**Financial Instruments**

Financial assets and liabilities shall be recognized when the Company becomes a party to the contractual

provisions of the instruments.

Financial assets and liabilities are initially recognized at fair values. Transaction costs that are directly

attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets

and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of

the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly

attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are

recognized immediately in profit or loss.

**Financial Assets**

The classification of financial assets depends on the nature and purpose of the financial assets and is

determined at the time of initial recognition. Regular way purchases or sales of financial assets are

recognized and derecognized on a trade date or settlement date basis for which financial assets were

classified in the same way, respectively. Regular way purchases or sales are purchases or sales of financial

assets that require delivery of assets within the time frame established by regulation or convention in the

marketplace.

a.Category of financial assets and measurement

Financial assets are classified into the following categories: financial assets at FVTPL, investments in

debt instruments and equity instruments at FVTOCI, and financial assets at amortized cost.

1)Financial asset at FVTPL

For certain financial assets which include debt instruments that do not meet the criteria of amortized

cost or FVTOCI, it is mandatorily required to measure them at FVTPL. Any gain or loss arising

from remeasurement is recognized in profit or loss. The net gain or loss recognized in profit or loss

incorporates any interest earned on the financial asset.

2)Investments in debt instruments at FVTOCI

Debt instruments with contractual terms specifying that cash flows are solely payments of principal

and interest on the principal amount outstanding, together with objective of collecting contractual

cash flows and selling the financial assets, are measured at FVTOCI.

Interest income calculated using the effective interest method, foreign exchange gains and losses

and impairment gains or losses on investments in debt instruments at FVTOCI are recognized in

profit or loss. Other changes in the carrying amount of these debt instruments are recognized in

other comprehensive income and will be reclassified to profit or loss when these debt instruments

are disposed.

3)Investments in equity instruments at FVTOCI

On initial recognition, the Company may irrevocably designate investments in equity investments

that is not held for trading as at FVTOCI.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains

and losses arising from changes in fair value recognized in other comprehensive income and

accumulated in other equity.

Dividends on these investments in equity instruments at FVTOCI are recognized in profit or loss

when the Company's right to receive the dividends is established, unless the Company's rights

clearly represent a recovery of part of the cost of the investment.

4)Measured at amortized cost

Cash and cash equivalents, commercial paper, debt instrument investments, notes and accounts

receivable (including related parties), other receivables, refundable deposits and temporary

payments (including those classified under other current assets and other noncurrent assets) are

measured at amortized cost.

Debt instruments with contractual terms specifying that cash flows are solely payments of principal

and interest on the principal amount outstanding, together with objective of holding financial assets

in order to collect contractual cash flows, are measured at amortized cost.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at

amortized cost, which equals to carrying amount determined by the effective interest method less

any impairment loss.

b.Impairment of financial assets

At the end of each reporting period, a loss allowance for expected credit loss is recognized for financial

assets at amortized cost (including accounts receivable) and for investments in debt instruments that are

measured at FVTOCI.

The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit

losses. For financial assets at amortized cost and investments in debt instruments that are measured at

FVTOCI, when the credit risk on the financial instrument has not increased significantly since initial

recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting from

possible default events of a financial instrument within 12 months after the reporting date. If, on the

other hand, there has been a significant increase in credit risk since initial recognition, a loss allowance

is recognized at an amount equal to expected credit loss resulting from all possible default events over

the expected life of a financial instrument.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a

corresponding adjustment to their carrying amount through a loss allowance account, except for

investments in debt instruments that are measured at FVTOCI, for which the loss allowance is

recognized in other comprehensive income and does not reduce the carrying amount of the financial

asset.

c.Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the

financial asset expire, or when it transfers the financial asset and substantially all the risks and rewards

of ownership of the financial asset to another entity.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the asset's

carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.

On derecognition of an investment in a debt instrument at FVTOCI, the difference between the asset's

carrying amount and the sum of the consideration received and receivable and the cumulative gain or

loss that had been recognized in other comprehensive income is recognized in profit or loss. However,

on derecognition of an investment in an equity instrument at FVTOCI, the cumulative gain or loss that

had been recognized in other comprehensive income is transferred directly to retained earnings, without

recycling through profit or loss.

**Financial Liabilities and Equity Instruments**

<u>Classification as debt or equity</u>

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity

in accordance with the substance of the contractual arrangements and the definitions of a financial liability

and an equity instrument.

<u>Equity instruments</u>

An equity instrument is any contract that evidences a residual interest in the assets of an entity after

deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds

received, net of direct issue costs.

<u>Financial liabilities</u>

Financial liabilities are subsequently measured either at amortized cost using effective interest method or at

FVTPL.

Financial liabilities are classified as at fair value through profit or loss when the financial liability is either

held for trading or is designated as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses

arising on remeasurement recognized in profit or loss.

Financial liabilities other than those held for trading purposes and designated as at FVTPL are subsequently

measured at amortized cost at the end of each reporting period.

<u>Derecognition of financial liabilities</u>

The Company derecognizes financial liabilities when, and only when, the Company's obligations are

discharged, cancelled or they expire. The difference between the carrying amount of the financial liability

derecognized and the consideration paid and payable is recognized in profit or loss.

**Derivative Financial Instruments**

Derivative financial instruments are initially recognized at fair value at the date the derivative contracts are

entered into and are subsequently remeasured to their fair value at the end of each reporting period. The

resulting gain or loss is recognized in profit or loss immediately unless the derivative financial instrument is

designated and effective as a hedging instrument, in which event the timing of the recognition in profit or

loss depends on the nature of the hedge relationship.

**Hedge Accounting**

a.Fair value hedge

The Company designates certain hedging instruments, such as interest rate futures contracts, to partially

hedge against the fair value change caused by interest rates fluctuation in the Company's fixed income

investments. Changes in the fair value of hedging instruments that are designated and qualify as fair

value hedges are recognized in profit or loss immediately, together with any changes in the fair value of

the hedged items that are attributable to the hedged risk.

b.Cash flow hedge

The Company designates certain hedging instruments, such as forward exchange contracts and bank

deposits denominated in foreign currency, to partially hedge its foreign exchange rate risks associated

with certain highly probable forecast transactions (e.g. capital expenditures). The effective portion of

changes in the fair value of hedging instruments is recognized in other comprehensive income. When

forecast transactions actually take place, the accumulated gains or losses that were recognized in other

comprehensive income are transferred from equity to the initial cost of the hedged items, or reclassified

to finance costs of hedged items in the same period or periods during which the hedged expected future

cash flows affect profit or loss. The gains or losses from hedging instruments relating to the ineffective

portion are recognized immediately in profit or loss.

The Company prospectively discontinues hedge accounting only when the hedging relationship ceases

to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated

or exercised.

c.Hedges of net investments in foreign operations

The Company designates certain hedging instruments, such as bank loans denominated in foreign

currency, as a hedge of net investments in foreign operations to manage the exchange differences

arising on translation of foreign operations due to currency fluctuations. Any gains or losses on the

hedging instrument relating to the effective portion of the hedge are recognized in other comprehensive

income and accumulated under the heading of foreign currency translation reserve. The gains or losses

relating to the ineffective portion are recognized immediately in profit or loss.

The gains and losses on the hedging instrument relating to the effective portion of the hedge, which

were accumulated in the foreign currency translation reserve, are reclassified to profit or loss on the

disposal or partial disposal of a foreign operation.

**Inventories**

Inventories are stated at the lower of cost or net realizable value. Inventories are recorded at standard cost

and adjusted to approximate weighted-average cost at the end of the reporting period. Net realizable value

represents the estimated selling price of inventories less all estimated costs of completion and costs

necessary to make the sale.

**Investments Accounted for Using Equity Method**

Investments accounted for using the equity method are investments in associates.

An associate is an entity over which the Company has significant influence and that is neither a subsidiary

nor a joint venture. Significant influence is the power to participate in the financial and operating policy

decisions of the investee but is not control or joint control over those policies.

The operating results and assets and liabilities of associates are incorporated in these consolidated financial

statements using the equity method of accounting. Under the equity method, an investment in an associate

is initially recognized in the consolidated statements of financial position at cost and adjusted thereafter to

recognize the Company's share of profit or loss and other comprehensive income of the associate as well as

the distribution received. The Company also recognizes its share in the changes in the equities of associates.

Any excess of the cost of acquisition over the Company's share of the net fair value of the identifiable

assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is recognized

as goodwill, which is included within the carrying amount of the investment. Any excess of the Company's

share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of

acquisition, after reassessment, is recognized immediately in profit or loss.

When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment

as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs to

sell) with its carrying amount. Any impairment loss recognized forms part of the carrying amount of the

investment. Any reversal of that impairment loss is recognized to the extent that the recoverable amount of

the investment subsequently increases.

The Company discontinues the use of the equity method from the date when the Company ceases to have

significant influence over an associate. When the Company retains an interest in the former associate, the

Company measures the retained interest at fair value at that date. The difference between the carrying

amount of the associate at the date the equity method was discontinued, and the fair value of any retained

interest and any proceeds from disposing of a part interest in the associate is included in the determination

of the gain or loss on disposal of the associate. In addition, the Company shall account for all amounts

recognized in other comprehensive income in relation to that associate on the same basis as would be

required if the associate had directly disposed of the related assets or liabilities. If the Company's ownership

interest in an associate is reduced as a result of disposal, but the investment continues to be an associate, the

Company should reclassify to profit or loss only a proportionate amount of the gain or loss previously

recognized in other comprehensive income.

When the Company subscribes to additional shares in an associate at a percentage different from its existing

ownership percentage, the resulting carrying amount of the investment differs from the amount of the

Company's proportionate interest in the net assets of the associate. The Company records such a difference

as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the

Company's ownership interest is reduced due to the additional subscription to the shares of associate by

other investors, the proportionate amount of the gains or losses previously recognized in other

comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis as

would be required if the associate had directly disposed of the related assets or liabilities.

When a consolidated entity transacts with an associate, profits and losses resulting from the transactions

with the associate are recognized in the Company's consolidated financial statements only to the extent of

interests in the associate that are not owned by the Company.

**Property, Plant and Equipment**

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment. Costs include any incremental costs that are directly attributable to the construction, acquisition

of the item of property, plant and equipment or borrowing costs eligible for capitalization.

Property, plant and equipment in the course of construction for production, supply or administrative

purposes are carried at cost, less any recognized impairment loss. Such assets are classified to the

appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation of these assets, on the same basis as other identical categories of property, plant and

equipment, commences when the assets are available for their intended use.

Depreciation is recognized so as to write off the cost of the assets less their residual values over their useful

lives, and it is computed using the straight-line method mainly over the following estimated useful lives:

land improvements - 10 to 20 years; buildings (assets used by the Company and assets subject to operating

leases) - 10 to 20 years; machinery and equipment (assets used by the Company and assets subject to

operating leases) - 5 years; and office equipment - 5 years. The estimated useful lives, residual values and

depreciation method are reviewed at the end of each reporting period, with the effect of any changes in

estimates accounted for on a prospective basis. Land is not depreciated.

An item of property, plant and equipment is derecognized upon disposal or when no future economic

benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal

or retirement of an item of property, plant and equipment is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognized in profit or loss.

**Leases**

For a contract that contains a lease component and non-lease component, the Company may elect to account

for the lease and non-lease components as a single lease component.

<u>The Company as lessor</u>

Rental income from operating lease is recognized on a straight-line basis over the term of the lease.

<u>The Company as lessee</u>

Except for payments for low-value asset leases and short-term leases (leases of machinery and equipment

and others) which are recognized as expenses on a straight-line basis, the Company recognizes right-of-use

assets and lease liabilities for all leases at the commencement date of the lease.

Right-of-use assets are measured at cost. The cost of right-of-use assets comprises the initial measurement

of lease liabilities adjusted for lease payments and initial direct costs made at or before the commencement

date, plus an estimate of costs needed to restore the underlying assets. Subsequent measurement is

calculated as cost less accumulated depreciation and accumulated impairment loss and adjusted for changes

in lease liabilities as a result of lease term modifications or other related factors. Right-of-use assets are

presented separately in the consolidated balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the

earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. If the lease

transfers ownership of the underlying assets to the Company by the end of the lease terms or if the cost of

right-of-use assets reflects that the Company will exercise a purchase option, the Company depreciates the

right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

Lease liabilities are measured at the present value of the lease payments. Lease payments comprise fixed

payments, variable lease payments which depend on an index or a rate and the exercise price of a purchase

option if the Company is reasonably certain to exercise that option. The lease payments are discounted

using the lessee's incremental borrowing rates.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with

interest expense recognized over the lease terms. When there is a change in a lease term, a change in future

lease payments resulting from a change in an index or a rate used to determine those payments, or a change

in the assessment of an option to purchase an underlying asset, the Company remeasures the lease liabilities

with a corresponding adjustment to the right-of-use assets. Lease liabilities are presented on a separate line

in the consolidated balance sheets.

**Intangible Assets**

<u>Goodwill</u>

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of

the business less accumulated impairment losses, if any.

<u>Other intangible assets</u>

Other separately acquired intangible assets with finite useful lives are carried at cost less accumulated

amortization and accumulated impairment losses. Amortization is recognized using the straight-line method

over the following estimated useful lives: Technology license fees - the estimated life of the technology or

the term of the technology transfer contract; software and system design costs - 3 years or contract period;

patent and others - the economic life or contract period. The estimated useful life and amortization method

are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted

for on a prospective basis.

**Impairment of Tangible Assets, Right-of-use Assets and Intangible Assets**

<u>Goodwill</u>

Goodwill is not amortized and instead is tested for impairment annually, or more frequently when there is

an indication that the cash generating unit may be impaired. For the purpose of impairment testing,

goodwill is allocated to each of the Company's cash-generating units or groups of cash-generating units that

are expected to benefit from the synergies of the combination. If the recoverable amount of a cash-

generating unit is less than its carrying amount, the difference is allocated first to reduce the carrying

amount of any goodwill allocated to such cash generating unit and then to the other assets of the cash

generating unit pro rata based on the carrying amount of each asset in the cash generating unit. Any

impairment loss for goodwill is recognized directly in profit or loss. An impairment loss recognized for

goodwill is not reversed in subsequent periods.

<u>Tangible assets, right-of-use assets and other intangible assets</u>

At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets

(property, plant and equipment), right-of-use assets and other intangible assets to determine whether there is

any indication that those assets have suffered an impairment loss. If any such indication exists, the

recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When

it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the

recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and

consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-

generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a

reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,

the estimated future cash flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks specific to the asset for which

the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying

amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An

impairment loss is recognized immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit

is increased to the revised estimate of its recoverable amount, but the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been recognized for

the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized immediately

in profit or loss.

**Revenue Recognition**

The Company recognizes revenue when performance obligations are satisfied. The performance obligations

are satisfied when customers obtain control of the promised goods, which is generally when the goods are

delivered to the customers' specified locations.

Revenue from sale of goods is measured at the fair value of the consideration received or receivable.

Revenue is reduced for estimated customer returns, rebates and other similar allowances. Estimated sales

returns and other allowances is generally made and adjusted based on historical experience and the

consideration of varying contractual terms to recognize refund liabilities, which is classified under accrued

expenses and other current liabilities.

In principle, payment term granted to customers is due 30 days from the invoice date or 15 days from the

end of the month of when the invoice is issued. Due to the short term nature of the receivables from sale of

goods with the immaterial discounted effect, the Company measures them at the original invoice amounts

without discounting.

**Employee Benefits**

<u>Short-term employee benefits</u>

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount

of the benefits expected to be paid in exchange for service rendered by employees.

<u>Retirement benefits</u>

For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an expense

when the employees have rendered service entitling them to the contribution. For defined benefit retirement

benefit plans, the cost of providing benefit is recognized based on actuarial calculations.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit

retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including

current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee

benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the

return on plan assets (excluding interest), is recognized in other comprehensive income in the period in

which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in

retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability represents the actual deficit in the Company's defined benefit plan.

**Treasury Stock** 

Treasury stock represents the outstanding shares that the Company buys back from market, which is stated

at cost and shown as a deduction in shareholders' equity. When the Company retires treasury stock, the

treasury stock account is reduced and the common stock as well as the capital surplus - additional paid-in

capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds the sum of the

par value and additional paid-in capital, the difference is charged to capital surplus - treasury stock

transactions and to retained earnings for any remaining amount.

**Share-based payment arrangements**

a.Equity-settled share-based payment arrangements

Restricted shares for employees are expensed on a straight-line basis over the vesting period, based on

the fair value at the grant date and the Company's best estimate of the number expected to ultimately

vest, with a corresponding increase in other equity - unearned stock-based employee compensation.

When restricted shares for employees are issued, other equity - unearned stock-based employee

compensation is recognized on the grant date, with a corresponding increase in capital surplus -

restricted shares for employees. Dividends paid to employees on restricted shares which do not need to

be returned if employees resign in the vesting period are recognized as expenses upon the dividend

declaration with a corresponding adjustment in retained earnings.

At the end of each reporting period, the Company revises its estimate of the number of restricted shares

for employees that are expected to vest. The impact from such revision is recognized in profit or loss so

that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to capital

surplus - restricted shares for employees.

b.Cash-settled share-based payment arrangements

For cash-settled share-based payments, a liability is recognized for the services acquired, measured at

the fair value of the liability incurred. At the end of each reporting period until the liability is settled,

and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value

recognized in profit or loss.

**Taxation**

Income tax expense represents the sum of the tax currently payable and deferred tax.

<u>Current tax</u>

Income tax on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries) is

expensed in the year the shareholders approved the appropriation of earnings which is the year subsequent

to the year the earnings are generated.

Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.

<u>Deferred tax</u>

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities

in the consolidated financial statements and the corresponding tax bases used in the computation of taxable

profit. Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax

assets are generally recognized for all deductible temporary differences, net operating loss carryforwards

and tax credits arising from purchases of machinery and equipment and research and development

expenditures to the extent that it is probable that taxable profits will be available against which those

deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in

subsidiaries and associates, except where the Company is able to control the reversal of the temporary

difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with such investments are only

recognized to the extent that it is probable that there will be sufficient taxable profits against which to

utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of

the deferred tax asset to be recovered. The deferred tax assets which originally not recognized is also

reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient

taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in

which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been enacted

or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and

assets reflects the tax consequences that would follow from the manner in which the Company expects, at

the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

<u>Current and deferred tax for the year</u>

Current and deferred tax are recognized in profit or loss, except when they relate to items that are

recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax

are also recognized in other comprehensive income or directly in equity, respectively.

**Government Grants**

Government grants are not recognized until there is reasonable assurance that the Company will comply

with the conditions attaching to them and that the grants will be received.

Government grants whose primary condition is that the Company should purchase, construct or otherwise

acquire noncurrent assets (mainly including land use right and depreciable assets) are recognized as a

deduction from the carrying amount of the related assets and recognized as a reduced depreciation or

amortization charge in profit or loss over the contract period or useful lives of the related assets.

Government grants that are receivables as compensation for expenses already incurred are deducted from

incurred expenses in the period in which they become receivables.

**5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND** 

**UNCERTAINTY**

In the application of the aforementioned Company's accounting policies, the Company is required to make

judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not

readily apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant. Actual results may differ from these

estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the year in which the estimate is revised if the revision affects only that year, or

in the year of the revision and future years if the revision affects both current and future years.

**<u>Material Accounting Judgments</u>**

**Revenue Recognition**

The Company recognizes revenue when the conditions described in Note 4 are satisfied.

**Commencement of Depreciation Related to Property, Plant and Equipment Classified as Equipment** 

**under Installation and Construction in Progress (EUI/CIP)**

As described in Note 4, commencement of depreciation related to EUI/CIP involves determining when the

assets are available for their intended use. The criteria the Company uses to determine whether EUI/CIP are

available for their intended use involves subjective judgments and assumptions about the conditions

necessary for the assets to be capable of operating in the intended manner.

**<u>Key Sources of Estimation and Uncertainty</u>**

**Estimation of Sales Returns and Allowances**

Sales returns and other allowance is estimated and recorded based on historical experience and in

consideration of different contractual terms. The amount is deducted from revenue in the same period the

related revenue is recorded. The Company periodically reviews the reasonableness of the estimates.

**Valuation of Inventory**

Inventories are stated at the lower of cost or net realizable value, and the Company uses estimate to

determine the net realizable value of inventory at the end of each reporting period.

The Company estimates the net realizable value of inventory for normal waste, obsolescence and

unmarketable items at the end of reporting period and then writes down the cost of inventories to net

realizable value. The net realizable value of the inventory is determined mainly based on assumptions of

future demand within a specific time horizon.

**Impairment of Tangible Assets, Right-of-use Assets and Intangible Assets Other than Goodwill**

In the process of evaluating the potential impairment of tangible assets, right-of-use assets and intangible

assets other than goodwill, the Company determines the independent cash flows, useful lives, expected

future revenue and expenses related to the specific asset groups with the consideration of the nature of

semiconductor industry. Any change in these estimates based on changed economic conditions or business

strategies could result in significant impairment charges or reversal in future years.

**Realization of Deferred Income Tax Assets**

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be

available against which those deferred tax assets and unused tax losses can be utilized. Assessment of the

realization of the deferred tax assets requires subjective judgment and estimate, including the future revenue

growth and profitability, tax holidays, the amount of tax credits can be utilized and feasible tax planning

strategies. Any changes in the global economic environment, the industry trends and relevant laws and

regulations could result in significant adjustments to the deferred tax assets.

**6. CASH AND CASH EQUIVALENTS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Cash and deposits in banks | $2761829868 | $2120674818 |
| Government bonds/Agency bonds | 2627142 | - |
| Money market funds | 2056733 | 2826701 |
| Repurchase agreements | 1342659 | 2126975 |
| Commercial paper | - | 1998549 |
|  | $2767856402 | $2127627043 |

---

Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts

of cash and were subject to an insignificant risk of changes in value.

**7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Financial assets</u> |  |  |
| Convertible preferred stocks | $13608819 | $14181839 |
| Mutual funds | 1297533 | 886931 |
| Simple agreement for future equity | 125776 | 131072 |
| Forward exchange contracts | 100200 | 207700 |
|  | $15132328 | $15407542 |
| Current | $100200 | $207700 |
| Noncurrent | 15032128 | 15199842 |
|  | $15132328 | $15407542 |
| <u>Financial liabilities</u> |  |  |
| Forward exchange contracts | $3083883 | $466539 |

---

The Company entered into forward exchange contracts to manage exposures due to fluctuations of foreign

exchange rates. These forward exchange contracts did not meet the criteria for hedge accounting. Therefore,

the Company did not apply hedge accounting treatment for these forward exchange contracts.

Outstanding forward exchange contracts consisted of the following:

---

| | | |
|:---|:---|:---|
|  |  | **Contract Amount** |
|  | **Maturity Date** | **(In Thousands)** |
| <u>December 31, 2025</u> |  |  |
| Sell US$ | January 2026 to March 2026 | US$9,234,000 |
| Sell JPY | January 2026 | JPY6,095,977 |
| <u>December 31, 2024</u> |  |  |
| Sell US$ | January 2025 to March 2025 | US$3,331,445 |
| Sell JPY | January 2025 | JPY45,233,963 |

---

**8. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Investments in debt instruments at FVTOCI |  |  |
| Corporate bonds | $88636098 | $108612082 |
| Agency mortgage-backed securities | 49150771 | 46611373 |
| Government bonds/Agency bonds | 25437560 | 20645877 |
| Asset-backed securities | 8512188 | 11490511 |
|  | 171736617 | 187359843 |
| Investments in equity instruments at FVTOCI |  |  |
| Non-publicly traded equity investments | 8797170 | 7822884 |
| Publicly traded stocks | 3956073 | 4842814 |
|  | 12753243 | 12665698 |
|  | $184489860 | $200025541 |
| Current | $175692690 | $192202657 |
| Noncurrent | 8797170 | 7822884 |
|  | $184489860 | $200025541 |

---

These investments in equity instruments are held for medium to long-term purposes and therefore are

accounted for as financial assets at FVTOCI. For dividends recognized from these investments, please refer

to consolidated statements of cash flows. All of the dividends are mainly from investments held at the end

of the reporting period.

For the years ended December 31, 2025 and 2024, as the Company adjusted its investment portfolio, equity

investments designated at FVTOCI were divested for NT$940,822 thousand and NT$6,189,982 thousand,

respectively. The related other equity-unrealized gain/loss on financial assets at FVTOCI of NT$541,198

thousand and NT$3,772,747 thousand were transferred to increase retained earnings, respectively.

As of December 31, 2025 and 2024, the cumulative loss allowance for expected credit loss of NT$43,815

thousand and NT$63,092 thousand was recognized under investments in debt instruments at FVTOCI,

respectively. Refer to Note 32 for information relating to the credit risk management and expected credit

loss.

**9. FINANCIAL ASSETS AT AMORTIZED COST**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Corporate bonds | $231374019 | $172091958 |
| Government bonds/Agency bonds | 4213491 | 4379527 |
| Commercial paper | - | 14221737 |
| Less: Allowance for impairment loss | (134187) | (125358) |
|  | $235453323 | $190567864 |
|  |  | (Continued) |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Current | $124945519 | $101971322 |
| Noncurrent | 110507804 | 88596542 |
|  | $235453323 | $190567864 |
|  |  | (Concluded) |

---

Refer to Note 32 for information relating to credit risk management and expected credit loss for financial

assets at amortized cost.

**10. HEDGING FINANCIAL INSTRUMENTS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Financial assets - current</u> |  |  |
| Fair value hedges |  |  |
| Interest rate futures contracts  | $- | $10959 |
| <u>Financial liabilities - current</u> |  |  |
| Fair value hedges |  |  |
| Interest rate futures contracts  | $817 | $- |

---

<u>Fair value hedge</u>

The Company entered into interest rate futures contracts, which are used to partially hedge against the fair

value changes caused by interest rate fluctuation in the Company's fixed income investments. The hedge

ratio is adjusted in response to the changes in the financial market and capped at 100%.

On the basis of economic relationships, the value of the interest rate futures contracts and the value of the

hedged financial assets change in opposite directions in response to movements in interest rates.

The main source of hedge ineffectiveness in these hedging relationships is the credit risk of the hedged

financial assets, which is not reflected in the fair value of the interest rate futures contracts. No other

sources of ineffectiveness have emerged from these hedging relationships during the hedging period.

Amount of hedge ineffectiveness recognized in profit or loss is classified under other gains and losses, net.

The following tables summarize the information relating to the hedges of interest rate risks.

<u>December 31, 2025</u>

---

| | | |
|:---|:---|:---|
| **Hedging Instruments** | **Contract Amount**<br>**(US$ in Thousands)**<br>| **Maturity** |
| Interest rate futures contracts - US Treasury <br>futures<br>| US$23,700 | March 2026 |

---

---

| | | |
|:---|:---|:---|
| **Hedged Items** | **Asset Carrying** <br>**Amount**<br>| **Accumulated Amount of**<br>**Fair Value Hedge** <br>**Adjustments**<br>|
| Financial assets at FVTOCI | $711878 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$817  |

---

<u>December 31, 2024</u>

---

| | | |
|:---|:---|:---|
| **Hedging Instruments** | **Contract Amount**<br>**(US$ in Thousands)**<br>| **Maturity** |
| Interest rate futures contracts - US Treasury <br>futures<br>| US$40,400 | March 2025 |

---

---

| | | |
|:---|:---|:---|
| **Hedged Items** | **Asset Carrying** <br>**Amount**<br>| **Accumulated Amount of**<br>**Fair Value Hedge** <br>**Adjustments**<br>|
| Financial assets at FVTOCI | $3129235 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$(10959)  |

---

The effect for the years ended December 31, 2025 and 2024 is detailed below:

---

| | | |
|:---|:---|:---|
| **Hedging Instruments/Hedged Items** | **Change in Value Used for** <br>**Calculating Hedge Ineffectiveness** | **Change in Value Used for** <br>**Calculating Hedge Ineffectiveness** |
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Hedging Instruments |  |  |
| Interest rate futures contracts - US Treasury futures | $(45747) | $174128 |
| Hedged Items |  |  |
| Financial assets at FVTOCI | 45747 | (174128) |
|  | $- | $- |

---

<u>Cash flow hedge</u>

The Company has designated the bank deposits denominated in foreign currency and forward exchange

contracts to partially hedge foreign exchange rate risks associated with certain highly probable forecast

transactions (capital expenditures). The hedge ratio is adjusted in response to the changes in the financial

market and capped at 100%. The forward exchange contracts and foreign currency deposits have maturities

of 12 months or less.

On the basis of economic relationships, the Company expects that the value of forward exchange contracts

and the foreign currency deposits will move in opposite directions to the value of hedged transactions in

response to foreign exchange rates movements.

The main source of hedge ineffectiveness in these hedging relationships is driven by the effect of the

counterparty's own credit risk on the fair value of forward exchange contracts and foreign currency

deposits. No other sources of ineffectiveness have emerged from these hedging relationships during the

hedging period. Refer to Note 20 (d) for gain or loss arising from changes in the fair value of hedging

instruments and hedged item affects profit or loss, and the amount transferred to initial carrying amount of

hedged items.

The effect for the years ended December 31, 2025 and 2024 is detailed below:

---

| | | |
|:---|:---|:---|
| **Hedging Instruments/Hedged Items** | **Change in Value Used for**<br>**Calculating Hedge**<br>**Ineffectiveness** | **Change in Value Used for**<br>**Calculating Hedge**<br>**Ineffectiveness** |
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Hedging Instruments |  |  |
| Forward exchange contracts | $- | $5041 |
| Foreign currency deposits  | $(31030) | $- |
| Hedged Items |  |  |
| Forecast transaction (capital expenditures) | $31030 | $(5041) |

---

<u>Hedges of net investments in foreign operations</u>

TSMC has designated the bank loans denominated in foreign currency as a hedge of net investments in

foreign operations to manage its foreign currency risk arising from investment in overseas subsidiaries.

The main source of hedge ineffectiveness in these hedging relationships is driven by the material difference

between the notional amount of bank loans denominated in foreign currency and the net investment in

foreign operations. No other sources of ineffectiveness have emerged from these hedging relationships

during the hedging period. Refer to Note 20 (d) for gain or loss arising from changes in the fair value of

hedging instruments.

The effect for the years ended December 31, 2025 and 2024 is detailed below:

---

| | | |
|:---|:---|:---|
|  | **Change in Value Used for** <br>**Calculating Hedge**<br>**Ineffectiveness** | **Change in Value Used for** <br>**Calculating Hedge**<br>**Ineffectiveness** |
| **Hedging Instruments/Hedged Items** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Hedging Instruments |  |  |
| Bank loans | $335106 | $793830 |
| Hedged Items |  |  |
| Net investments in foreign operations | $(335106) | $(793830) |

---

**11. NOTES AND ACCOUNTS RECEIVABLE, NET**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| At amortized cost |  |  |
| Notes and accounts receivable | $271835077 | $265223660 |
| Less: Loss allowance | (478617) | (453009) |
|  | 271356460 | 264770651 |
| At FVTOCI | 7695093 | 5912584 |
|  | $279051553 | $270683235 |

---

The Company signed a contract with the bank to sell certain accounts receivable without recourse and

transaction cost required. These accounts receivable are classified as at FVTOCI because they are held

within a business model whose objective is achieved by both collecting contractual cash flows and selling

financial assets.

In principle, the payment term granted to customers is due 30 days from the invoice date or 15 days from

the end of the month when the invoice is issued. Aside from recognizing impairment loss for credit-

impaired accounts receivable, the Company recognizes loss allowance based on the expected credit loss

ratio of customers by different risk levels with consideration of factors of historical loss ratios and

customers' financial conditions, competitiveness and business outlook. For accounts receivable past due

over 90 days without collaterals or guarantees, the Company recognizes loss allowance at full amount.

<u>Aging analysis of notes and accounts receivable</u>

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Not past due | $263766991 | $255669647 |
| Past due |  |  |
| Past due within 30 days | 15762377 | 15464122 |
| Past due over 31 days | 802 | 2475 |
| Less: Loss allowance | (478617) | (453009) |
|  | $279051553 | $270683235 |

---

All of the Company's accounts receivable classified as at FVTOCI were not past due.

<u>Movements of the loss allowance for accounts receivable</u>

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $453009 | $531554 |
| Provision (Reversal) | 25628 | (78618) |
| Effect of exchange rate changes | (20) | 73 |
| Balance, end of year | $478617 | $453009 |

---

For the years ended December 31, 2025 and 2024, the changes in loss allowance were mainly due to the

variations in the balance of accounts receivable of different risk levels.

**12. INVENTORIES**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Finished goods | $29412948 | $35177009 |
| Work in process | 188014421 | 181198808 |
| Raw materials | 45863351 | 46449249 |
| Supplies and spare parts | 24818765 | 25043744 |
|  | $288109485 | $287868810 |

---

Write-down of inventories to net realizable value (excluding earthquake losses) and reversal of write-down

of inventories resulting from the increase in net realizable value were included in the cost of revenue, which

were as follows. Please refer to related earthquake losses in Note 36.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Net inventory losses | $2125914 | $888682 |

---

**13. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD**

Associates consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Place of** | **Carrying Amount** | **Carrying Amount** | **% of Ownership and Voting Rights Held** <br>**by the Company** | **% of Ownership and Voting Rights Held** <br>**by the Company** |
| **Name of Associate** | **Principal Activities** | **Incorporation and** <br>**Operation**<br>| **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>| **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Vanguard International <br>Semiconductor <br>Corporation (VIS)<br>| Manufacturing, sales, packaging, <br>testing and computer-aided design of <br>integrated circuits and other <br>semiconductor devices and the <br>manufacturing and design service of <br>masks<br>| Hsinchu, Taiwan | $18166267 | $18300373 | 28% | 28% |
| Systems on Silicon <br>Manufacturing Company <br>Pte Ltd. (SSMC)<br>| Manufacturing and sales of integrated <br>circuits and other semiconductor <br>devices<br>| Singapore | 12419167 | 11387185 | 39% | 39% |
|  |  |  |  |  |  | (Continued) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Place of** | **Carrying Amount** | **Carrying Amount** | **% of Ownership and Voting Rights Held** <br>**by the Company** | **% of Ownership and Voting Rights Held** <br>**by the Company** |
| **Name of Associate** | **Principal Activities** | **Incorporation and** <br>**Operation**<br>| **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>| **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Xintec Inc. (Xintec) | Wafer level chip size packaging and <br>wafer level post passivation <br>interconnection service<br>| Taoyuan, Taiwan | $4495255 | $4220609 | 41% | 41% |
| Global Unichip Corporation <br>(GUC) | Researching, developing, <br>manufacturing, testing and marketing <br>of integrated circuits | Hsinchu, Taiwan | 2952582 | 3512938 | 35% | 35% |
| Global Unichip Corporation <br>(GUC) | Researching, developing, <br>manufacturing, testing and marketing <br>of integrated circuits | Hsinchu, Taiwan |  |  |  |  |
|  |  |  | $38033271 | $37421105 |  |  |
|  |  |  |  |  |  | (Concluded) |

---

As of December 31, 2025 and 2024, no investments in associates are individually material to the Company.

Please refer to the consolidated statements of comprehensive income for recognition of share of both profit

(loss) and other comprehensive income (loss) of associates that are not individually material.

The market prices of the associates' ownership held by the Company in publicly traded stocks calculated

base on the closing price are summarized as follows. The closing price represents the quoted price in active

markets, the level 1 fair value measurement.

---

| | | |
|:---|:---|:---|
| **Name of Associate** | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| GUC | $99211700 | $63495488 |
| VIS | $46667928 | $50620261 |
| Xintec | $15468187 | $22033821 |

---

**14. PROPERTY, PLANT AND EQUIPMENT**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Assets used by the Company | $3690642070 | $3234778389 |
| Assets subject to operating leases | 1198846 | 201681 |
|  | $3691840916 | $3234980070 |

---

<u>Assets used by the Company</u>

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Land and Land** <br>**Improvements**<br>| **Buildings** | **Machinery and** <br>**Equipment**<br>| **Office** <br>**Equipment**<br>| **Equipment under** <br>**Installation and** <br>**Construction in** <br>**Progress**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |  |
| Balance at January 1, 2025 | $13054161 | $959133864 | $5852202689 | $105434750 | $1080284237 | $8010109701 |
| Additions | 331489 | 248048391 | 451764917 | 21154083 | 439678870 | 1160977750 |
| Disposals or retirements | - | (164101) | (56155040) | (1768409) | - | (58087550) |
| Reclassification | - | (1181470) | - | - | - | (1181470) |
| Effect of exchange rate changes | 60122 | (13974864) | (11134850) | (556304) | (966897) | (26572793) |
| Balance at December 31, 2025 | $13445772 | $1191861820 | $6236677716 | $124264120 | $1518996210 | $9085245638 |
|  |  |  |  |  |  | (Continued) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Land and Land** <br>**Improvements**<br>| **Buildings** | **Machinery and** <br>**Equipment**<br>| **Office** <br>**Equipment**<br>| **Equipment under** <br>**Installation and** <br>**Construction in** <br>**Progress**<br>| **Total** |
| Accumulated depreciation and <br>impairment<br>|  |  |  |  |  |  |
| Balance at January 1, 2025 | $608531 | $440369241 | $4262882850 | $70679950 | $790740 | $4775331312 |
| Additions | 19744 | 71348050 | 590058063 | 13943195 | - | 675369052 |
| Disposals or retirements | - | (107649) | (53440071) | (1760469) | - | (55308189) |
| Reclassification | - | (127932) | - | - | - | (127932) |
| Impairment losses (reversed) | - | 1459 | 1571286 | - | (790740) | 782005 |
| Effect of exchange rate changes | (24419) | (188843) | (1150606) | (78812) | - | (1442680) |
| Balance at December 31, 2025 | $603856 | $511294326 | $4799921522 | $82783864 | $- | $5394603568 |
| Carrying amounts at December 31, <br>2025<br>| $12841916 | $680567494 | $1436756194 | $41480256 | $1518996210 | $3690642070 |
| <u>Cost</u> |  |  |  |  |  |  |
| Balance at January 1, 2024 | $7621997 | $817822975 | $5384985648 | $99825084 | $908289751 | $7218545455 |
| Additions | 5542937 | 141097129 | 490799015 | 13719182 | 147349074 | 798507337 |
| Disposals or retirements | (278309) | (119819) | (34140462) | (8334071) | - | (42872661) |
| Reclassification  | - | (197752) | 56487 | - | - | (141265) |
| Effect of exchange rate changes | 167536 | 531331 | 10502001 | 224555 | 24645412 | 36070835 |
| Balance at December 31, 2024 | $13054161 | $959133864 | $5852202689 | $105434750 | $1080284237 | $8010109701 |
| Accumulated depreciation and <br>impairment<br>|  |  |  |  |  |  |
| Balance at January 1, 2024 | $558074 | $387013911 | $3699008492 | $66749979 | $790740 | $4154121196 |
| Additions | 13577 | 52205135 | 585635125 | 12047479 | - | 649901316 |
| Disposals or retirements | - | (114665) | (30823269) | (8332458) | - | (39270392) |
| Reclassification  | - | (14367) | 53721 | - | - | 39354 |
| Impairment losses | - | 47539 | 1102946 | - | - | 1150485 |
| Effect of exchange rate changes | 36880 | 1231688 | 7905835 | 214950 | - | 9389353 |
| Balance at December 31, 2024 | $608531 | $440369241 | $4262882850 | $70679950 | $790740 | $4775331312 |
| Carrying amounts at December 31, <br>2024<br>| $12445630 | $518764623 | $1589319839 | $34754800 | $1079493497 | $3234778389 |
|  |  |  |  |  |  | (Concluded) |

---

The significant part of the Company's buildings includes main plants, mechanical and electrical power

equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of 20

years, 10 years and 10 years, respectively.

In the first quarter of 2025 and second quarter of 2024, the Company recognized impairment losses due to

partial plant facilities and machinery and equipment damage caused by earthquakes, which rendered them

unusable. Please refer to the related earthquake losses in Note 36.

The Company assesses impairment and recognizes impairment losses or reversal gains based on the asset's

usage status and expected usage plan. These are recorded under other operating income and expenses.

Information about capitalized interest is set out in Note 23.

**15. LEASE ARRANGEMENTS**

a.Right-of-use assets

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Carrying amounts</u> |  |  |
| Land | $39873344 | $36980971 |
| Buildings | 4005321 | 3103902 |
| Office equipment | 40245 | 43518 |
|  | $43918910 | $40128391 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Additions to right-of-use assets | $9115188 | $4579647 |
| Depreciation of right-of-use assets |  |  |
| Land | $3001993 | $2541876 |
| Buildings | 1233455 | 1114297 |
| Office equipment | 23084 | 23334 |
|  | $4258532 | $3679507 |

---

b.Lease liabilities

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Carrying amounts</u> |  |  |
| Current portion (classified under accrued expenses and other <br>current liabilities)<br>| $3833015 | $3049032 |
| Noncurrent portion | 31594992 | 28755342 |
|  | $35428007 | $31804374 |

---

Ranges of discount rates for lease liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Land | 0.39%-3.50% | 0.39%-2.30% |
| Buildings | 0.40%-6.52% | 0.40%-6.52% |
| Office equipment | 0.28%-6.46% | 0.28%-6.46% |

---

c.Material terms of right-of-use assets

The Company leases land and buildings mainly for the use of plants and offices with lease terms of 1 to

36. The lease contracts for land located in the R.O.C. specify that lease payments will be adjusted every

2 years on the basis of changes in announced land value prices. The Company does not have purchase

options to acquire the leasehold land and buildings at the end of the lease terms.

d.Other lease information

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Total cash outflow for leases | $4186207 | $3415463 |

---

**16. INTANGIBLE ASSETS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Technology** <br>**License Fees**<br>| **Software and** <br>**System Design** <br>**Costs**<br>| **Patent and** <br>**Others**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |
| Balance at January 1, 2025 | $6070864 | $28566518 | $53279044 | $13133519 | $101049945 |
| Additions | - | 1218118 | 5846742 | 317492 | 7382352 |
| Disposals or retirements | - | (82470) | (667707) | (74922) | (825099) |
| Effect of exchange rate changes | (179782) | 255 | (6695) | (39004) | (225226) |
| Balance at December 31, 2025 | $5891082 | $29702421 | $58451384 | $13337085 | $107381972 |
| Accumulated amortization and <br>&nbsp;&nbsp;&nbsp;&nbsp;impairment<br>|  |  |  |  |  |
| Balance at January 1, 2025 | $- | $23186748 | $40100685 | $11479992 | $74767425 |
| Additions | - | 1408633 | 6447363 | 556416 | 8412412 |
| Disposals or retirements | - | (82470) | (663159) | - | (745629) |
| Effect of exchange rate changes | - | 255 | (5437) | 331 | (4851) |
| Balance at December 31, 2025 | $- | $24513166 | $45879452 | $12036739 | $82429357 |
| Carrying amounts at December 31, <br>2025<br>| $5891082 | $5189255 | $12571932 | $1300346 | $24952615 |
|  |  |  |  |  | (Continued) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Technology** <br>**License Fees**<br>| **Software and** <br>**System Design** <br>**Costs**<br>| **Patent and** <br>**Others**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |
| Balance at January 1, 2024 | $5796438 | $26221351 | $49317031 | $12347434 | $93682254 |
| Additions | - | 2378392 | 9166377 | 977434 | 12522203 |
| Disposals or retirements | - | (32460) | (5235383) | (210570) | (5478413) |
| Effect of exchange rate changes | 274426 | (765) | 31019 | 19221 | 323901 |
| Balance at December 31, 2024 | $6070864 | $28566518 | $53279044 | $13133519 | $101049945 |
| Accumulated amortization and <br>&nbsp;&nbsp;&nbsp;&nbsp;impairment<br>|  |  |  |  |  |
| Balance at January 1, 2024 | $- | $20490070 | $39846671 | $10578769 | $70915510 |
| Additions | - | 2729998 | 5470204 | 985947 | 9186149 |
| Disposals or retirements | - | (32460) | (5235349) | (102000) | (5369809) |
| Effect of exchange rate changes | - | (860) | 19159 | 17276 | 35575 |
| Balance at December 31, 2024 | $- | $23186748 | $40100685 | $11479992 | $74767425 |
| Carrying amounts at December 31, <br>2024<br>| $6070864 | $5379770 | $13178359 | $1653527 | $26282520 |
|  |  |  |  |  | (Concluded) |

---

The Company's goodwill has been tested for impairment at the end of the annual reporting period and the

recoverable amount is determined based on the value in use. The value in use was calculated based on the

cash flow forecast from the financial budgets covering the future five-year period, and the Company used

annual discount rates of 9.5% and 9.3% in its test of impairment as of December 31, 2025 and 2024,

respectively, to reflect the relevant specific risk in the cash-generating unit.

For the years ended December 31, 2025 and 2024, the Company did not recognize any impairment loss on

goodwill.

**17. BONDS PAYABLE**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Domestic unsecured bonds | $538388000 | $478536000 |
| Overseas unsecured bonds | 455938000 | 507904000 |
| Less: Discounts on bonds payable | (2292509) | (2687615) |
| Less: Current portion | (135805988) | (57147879) |
|  | $856227503 | $926604506 |

---

The major terms of domestic unsecured bonds are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| NT$ unsecured <br>&nbsp;&nbsp;&nbsp;&nbsp;bonds<br>|  |  |  |  |
| 109-1<br> A | March 2020 to <br>March 2025<br>| $3000000 | 0.58% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | March 2020 to <br>March 2027<br>| 10500000 | 0.62% | The same as above |
| C | March 2020 to <br>March 2030<br>| 10500000 | 0.64% | The same as above |
| 109-2<br> A | April 2020 to April <br>2025<br>| 5900000 | 0.52% | The same as above |
| B | April 2020 to April <br>2027<br>| 10400000 | 0.58% | The same as above |
| C | April 2020 to April <br>2030<br>| 5300000 | 0.60% | The same as above |
| 109-3<br> A | May 2020 to May <br>2025<br>| 4500000 | 0.55% | The same as above |
| B | May 2020 to May <br>2027<br>| 7500000 | 0.60% | The same as above |
| C | May 2020 to May <br>2030<br>| 2400000 | 0.64% | The same as above |
| 109-4<br> A | July 2020 to July <br>2025<br>| 5700000 | 0.58% | Two equal installments <br>in last two years; <br>interest payable <br>annually<br>|
| B | July 2020 to July <br>2027<br>| 6300000 | 0.65% | The same as above |
| C | July 2020 to July <br>2030<br>| 1900000 | 0.67% | The same as above |
| 109-5<br> A | September 2020 to <br>September 2025<br>| 4800000 | 0.50% | The same as above |
| B | September 2020 to <br>September 2027<br>| 8000000 | 0.58% | The same as above |
| C | September 2020 to <br>September 2030<br>| 2800000 | 0.60% | The same as above |
| 109-6<br>(Green bond)<br>A | December 2020 to <br>December 2025<br>| 1600000 | 0.40% | The same as above |
| B | December 2020 to <br>December 2027<br>| 5600000 | 0.44% | The same as above |
| C | December 2020 to <br>December 2030<br>| 4800000 | 0.48% | The same as above |
| 109-7<br> A | December 2020 to <br>December 2025<br>| 1900000 | 0.36% | The same as above |
| B | December 2020 to <br>December 2027<br>| 10200000 | 0.41% | The same as above |
| C | December 2020 to <br>December 2030<br>| 6400000 | 0.45% | The same as above |
|  |  |  |  | (Continued) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 110-1<br> A | March 2021 to <br>March 2026<br>| $4800000 | 0.50% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | March 2021 to <br>March 2028<br>| 11400000 | 0.55% | The same as above |
| C | March 2021 to <br>March 2031<br>| 4900000 | 0.60% | The same as above |
| 110-2<br> A | May 2021 to May <br>2026<br>| 5200000 | 0.50% | The same as above |
| B | May 2021 to May <br>2028<br>| 8400000 | 0.58% | The same as above |
| C | May 2021 to May <br>2031<br>| 5600000 | 0.65% | The same as above |
| 110-3<br> A | June 2021 to June <br>2026<br>| 6900000 | 0.52% | The same as above |
| B | June 2021 to June <br>2028<br>| 7900000 | 0.58% | The same as above |
| C | June 2021 to June <br>2031<br>| 4900000 | 0.65% | The same as above |
| 110-4<br> A | August 2021 to <br>August 2025<br>| 4000000 | 0.485% | The same as above |
| B | August 2021 to <br>August 2026<br>| 8000000 | 0.50% | The same as above |
| C | August 2021 to <br>August 2028<br>| 5400000 | 0.55% | The same as above |
| D | August 2021 to <br>August 2031<br>| 4200000 | 0.62% | The same as above |
| 110-6<br> A | October 2021 to <br>April 2026<br>| 3200000 | 0.535% | The same as above |
| B | October 2021 to <br>October 2026<br>| 6900000 | 0.54% | The same as above |
| C | October 2021 to <br>October 2028<br>| 4600000 | 0.60% | The same as above |
| D | October 2021 to <br>October 2031<br>| 1600000 | 0.62% | The same as above |
| 110-7<br> A | December 2021 to <br>December 2026<br>| 7700000 | 0.65% | The same as above |
| B | December 2021 to <br>June 2027<br>| 3500000 | 0.675% | The same as above |
| C | December 2021 to <br>December 2028<br>| 5500000 | 0.72% | The same as above |
| 111-1<br>(Green bond)<br>A | January 2022 to <br>January 2027<br>| 2100000 | 0.63% | The same as above |
| B | January 2022 to <br>January 2029<br>| 3300000 | 0.72% | The same as above |
|  |  |  |  | (Continued) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 111-2 | A | March 2022 to <br>September 2026<br>| $3000000 | 0.84% | Bullet repayment; <br>interest payable <br>annually<br>|
|  | B | March 2022 to <br>March 2027<br>| 9600000 | 0.85% | The same as above |
|  | C | March 2022 to <br>March 2029<br>| 1600000 | 0.90% | The same as above |
| 111-3 <br>(Green bond)<br>| - | May 2022 to May <br>2027<br>| 6100000 | 1.50% | The same as above |
| 111-4 <br>(Green bond)<br>| A | July 2022 to July <br>2026<br>| 1200000 | 1.60% | The same as above |
|  | B | July 2022 to July <br>2027<br>| 10100000 | 1.70% | The same as above |
|  | C | July 2022 to July <br>2029<br>| 1200000 | 1.75% | The same as above |
|  | D | July 2022 to July <br>2032<br>| 1400000 | 1.95% | The same as above |
| 111-5  | A | August 2022 to <br>June 2027<br>| 2000000 | 1.65% | The same as above |
|  | B | August 2022 to <br>August 2027<br>| 8900000 | 1.65% | The same as above |
|  | C | August 2022 to <br>August 2029<br>| 2200000 | 1.65% | The same as above |
|  | D | August 2022 to <br>August 2032<br>| 2500000 | 1.82% | The same as above |
| 111-6 <br>(Green bond)<br>| A | October 2022 to <br>October 2027<br>| 5700000 | 1.75% | The same as above |
|  | B | October 2022 to <br>October 2029<br>| 1000000 | 1.80% | The same as above |
|  | C | October 2022 to <br>October 2032<br>| 3500000 | 2.00% | The same as above |
| 112-1<br>(Green bond)<br>| A | March 2023 to <br>March 2028<br>| 12200000 | 1.54% | The same as above |
|  | B | March 2023 to <br>March 2030<br>| 2300000 | 1.60% | The same as above |
|  | C | March 2023 to <br>March 2033<br>| 4800000 | 1.78% | The same as above |
| 112-2<br>(Green bond)<br>| A | May 2023 to May <br>2028<br>| 13100000 | 1.60% | The same as above |
|  | B | May 2023 to May <br>2030<br>| 2300000 | 1.65% | The same as above |
|  | C | May 2023 to May <br>2033<br>| 5300000 | 1.82% | The same as above |
|  |  |  |  |  | (Continued) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 112-3 | A | June 2023 to June <br>2028<br>| $11400000 | 1.60% | Bullet repayment; <br>interest payable <br>annually<br>|
|  | B | June 2023 to June <br>2030<br>| 2600000 | 1.65% | The same as above |
|  | C | June 2023 to June <br>2033<br>| 6000000 | 1.80% | The same as above |
| 112-4 | A | August 2023 to <br>August 2028<br>| 7300000 | 1.60% | The same as above |
|  | B | August 2023 to <br>August 2030<br>| 700000 | 1.65% | The same as above |
|  | C | August 2023 to <br>August 2033<br>| 7900000 | 1.76% | The same as above |
| 112-5 | A | October 2023 to <br>October 2028<br>| 4300000 | 1.62% | The same as above |
|  | B | October 2023 to <br>October 2033<br>| 5500000 | 1.76% | The same as above |
| 113-1<br>(Green bond)<br>| A | March 2024 to <br>March 2029<br>| 12000000 | 1.64% | The same as above |
|  | B | March 2024 to <br>March 2034<br>| 10800000 | 1.76% | The same as above |
| 113-2<br>(Green bond)<br>| A | May 2024 to May <br>2029<br>| 4900000 | 1.98% | The same as above |
|  | B | May 2024 to May <br>2034<br>| 6600000 | 2.10% | The same as above |
| 114-1<br>(Green bond)<br>| A | March 2025 to <br>March 2030<br>| 12000000 | 1.90% | The same as above |
|  | B | March 2025 to <br>March 2035<br>| 7200000 | 2.05% | The same as above |
| 114-2<br>(Green bond)<br>| A | June 2025 to June <br>2030<br>| 12500000 | 1.92% | The same as above |
|  | B | June 2025 to June <br>2035<br>| 1600000 | 2.05% | The same as above |
| 114-3<br>(Green bond)<br>| A | July 2025 to July <br>2030<br>| 8300000 | 1.92% | The same as above |
|  | B | July 2025 to July <br>2035<br>| 4000000 | 2.05% | The same as above |
| 114-4 | A | September 2025 to <br>September 2030<br>| 13800000 | 1.66% | The same as above |
|  | B <br>(Green <br>bond)<br>| September 2025 to <br>September 2035<br>| 4000000 | 1.73% | The same as above |
|  |  |  |  |  | (Continued) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 114-5<br>(Green bond)<br>A | November 2025 to <br>November 2030<br>| $14000000 | 1.50% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | November 2025 to <br>November 2032<br>| 3000000 | 1.53% | The same as above |
| C | November 2025 to <br>November 2035<br>| 6500000 | 1.58% | The same as above |
|  |  |  |  | (Concluded) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>**(US$** <br>**in Thousands)**<br>| **Coupon** <br>**Rate**<br>| **Repayment and**<br>**Interest Payment**<br>|
| US$ unsecured <br>&nbsp;&nbsp;&nbsp;&nbsp;bonds<br>|  |  |  |  |  |
| 109-1 | - | September 2020 to <br>September 2060<br>| US$1,000,000 | 2.70% | Bullet repayment <br>(callable on the 5th <br>anniversary of the <br>issue date and every <br>anniversary thereafter); <br>interest payable <br>annually<br>|
| 110-5 | - | September 2021 to <br>September 2051<br>| 1000000 | 3.10% | The same as above |

---

The major terms of overseas unsecured bonds are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Issuance Period** | **Total Issue Amount** <br>**(US$** <br>**in Thousands)**<br>| **Coupon** <br>**Rate**<br>| **Repayment and Interest Payment** |
| September 2020 <br>to September <br>2025<br>| US$1,000,000 | 0.75% | Bullet repayment (callable at any time, in <br>whole or in part, at the relevant redemption <br>price according to relevant agreements); <br>interest payable semi-annually<br>|
| September 2020 <br>to September <br>2027<br>| 750000 | 1.00% | The same as above |
| September 2020 <br>to September <br>2030<br>| 1250000 | 1.375% | The same as above |
| April 2021 to <br>April 2026<br>| 1100000 | 1.25% | The same as above |
| April 2021 to <br>April 2028<br>| 900000 | 1.75% | The same as above |
| April 2021 to <br>April 2031<br>| 1500000 | 2.25% | The same as above |
|  |  |  | (Continued) |

---

---

| | | | |
|:---|:---|:---|:---|
| **Issuance Period** | **Total Issue Amount** <br>**(US$** <br>**in Thousands)**<br>| **Coupon** <br>**Rate**<br>| **Repayment and Interest Payment** |
| October 2021 to <br>October 2026<br>| US$1,250,000 | 1.75% | Bullet repayment (callable at any time, in <br>whole or in part, at the relevant redemption <br>price according to relevant agreements); <br>interest payable semi-annually<br>|
| October 2021 to <br>October 2031<br>| 1250000 | 2.50% | The same as above |
| October 2021 to <br>October 2041<br>| 1000000 | 3.125% | The same as above |
| October 2021 to <br>October 2051<br>| 1000000 | 3.25% | The same as above |
| April 2022 to <br>April 2027<br>| 1000000 | 3.875% | The same as above |
| April 2022 to <br>April 2029<br>| 500000 | 4.125% | The same as above |
| April 2022 to <br>April 2032<br>| 1000000 | 4.25% | The same as above |
| April 2022 to <br>April 2052<br>| 1000000 | 4.50% | The same as above |
| July 2022 to July <br>2027<br>| 400000 | 4.375% | The same as above |
| July 2022 to July <br>2032<br>| 600000 | 4.625% | The same as above |
|  |  |  | (Concluded) |

---

**18. LONG-TERM BANK LOANS**

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| NT$ unsecured loans | $1700833 | $4410833 |
| JPY unsecured loans | 39253500 | 30124800 |
| Less: Discounts on government grants | (115) | (1247) |
| Less: Current portion | (1119722) | (2710000) |
|  | $39834496 | $31824386 |
| Loan content |  |  |
| Annual interest rate | 0.79%-1.78% | 0.13%-1.78% |
| Maturity date | Due by December <br>2030<br>| Due by December <br>2030<br>|

---

The long-term bank loans of the Company are used for plants setup, procurement of machinery and

equipment, and operating capital. The partial long-term bank loans are with preferential interest rates

subsidized by the government, and the loans are used to fund capital expenditure qualifying for the subsidy.

The Company is required to maintain certain financial covenants during the borrowing period, including the

annual equity of the subsidiary receiving the loan not to fall below a specific amount; its debt-to-equity ratio

must not exceed a certain ratio; and the ratio of the Company's annual debt to earnings before interest,

taxes, depreciation, and amortization (EBITDA) not to exceed a certain multiple.

**19. RETIREMENT BENEFIT PLANS**

a.Defined contribution plans

The plan under the R.O.C. Labor Pension Act (the "Act") is deemed a defined contribution plan.

Pursuant to the Act, TSMC and VisEra Tech have made monthly contributions equal to 6% of each

employee's monthly salary to employees' pension accounts. Furthermore, TSMC North America,

TSMC Europe, TSMC Japan, TSMC JDC, TSMC 3DIC, TSMC China, TSMC Nanjing, TSMC

Arizona, JASM, ESMC, TSMC Technology and TSMC Canada also make monthly contributions at

certain percentages of the basic salary of their employees. Accordingly, the Company recognized

expenses of NT$6,707,459 thousand and NT$5,932,269 thousand for the years ended December 31,

2025 and 2024, respectively.

b.Defined benefit plans

TSMC has defined benefit plans under the R.O.C. Labor Standards Law that provide benefits based on

an employee's length of service and average monthly salary for the six-month period prior to retirement.

The Company contributes an amount equal to 2% of salaries paid each month to their respective pension

funds (the Funds), which are administered by the Labor Pension Fund Supervisory Committee (the

Committee) and deposited in the Committee's name in the Bank of Taiwan. Before the end of each

year, the Company assesses the balance in the Funds. If the amount of the balance in the Funds is

inadequate to pay retirement benefits for employees who conform to retirement requirements in the next

year, the Company is required to fund the difference in one appropriation that should be made before

the end of March of the next year. The Funds are operated and managed by the government's designated

authorities; as such, the Company does not have any right to intervene in the investments of the Funds.

Amounts recognized in respect of these defined benefit plans were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Current service cost | $150593 | $153020 |
| Net interest expense | 106331 | 122660 |
| Components of defined benefit costs recognized in profit or loss | 256924 | 275680 |
| Remeasurement on the net defined benefit liability: |  |  |
| Return on plan assets (excluding amounts included in net <br>interest expense)<br>| (764266) | (774583) |
| Actuarial loss arising from experience adjustments | 539527 | 911752 |
| Actuarial loss arising from changes in demographic <br>assumptions<br>| 581499 | - |
| Actuarial (gain) loss arising from changes in financial <br>assumptions<br>| 336511 | (281534) |
| Components of defined benefit costs recognized in other <br>comprehensive income<br>| 693271 | (144365) |
| Total | $950195 | $131315 |

---

The pension costs of the aforementioned defined benefit plans were recognized in profit or loss by the

following categories:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Cost of revenue | $169175 | $178507 |
| Research and development expenses | 69532 | 75259 |
| General and administrative expenses | 15148 | 18424 |
| Marketing expenses | 3069 | 3490 |
|  | $256924 | $275680 |

---

The amounts arising from the defined benefit obligation of the Company were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Present value of defined benefit obligation | $19339129 | $18332160 |
| Fair value of plan assets | (13326843) | (10751503) |
| Net defined benefit liability | $6012286 | $7580657 |

---

Movements in the present value of the defined benefit obligation were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $18332160 | $17995066 |
| Current service cost | 150593 | 153020 |
| Interest expense | 281084 | 242788 |
| Remeasurement: |  |  |
| Actuarial loss arising from experience adjustments | 539527 | 911752 |
| Actuarial (gain) loss arising from changes in financial <br>assumptions<br>| 336511 | (281534) |
| Actuarial loss arising from changes in demographic <br>assumptions<br>| 581499 | - |
| Benefits paid from plan assets | (803342) | (679084) |
| Benefits paid directly by the Company | (78903) | (9848) |
| Balance, end of year | $19339129 | $18332160 |

---

Movements in the fair value of the plan assets were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $10751503 | $8737842 |
| Interest income | 174753 | 120128 |
| Remeasurement: |  |  |
| Return on plan assets (excluding amounts included in net <br>interest expense)<br>| 764266 | 774583 |
| Contributions from employer | 2439663 | 1798034 |
| Benefits paid from plan assets | (803342) | (679084) |
| Balance, end of year | $13326843 | $10751503 |

---

The fair value of the plan assets by major categories at the end of reporting period was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Cash | $1652528 | $1569719 |
| Equity instruments | 8223995 | 6245548 |
| Debt instruments | 3450320 | 2936236 |
|  | $13326843 | $10751503 |

---

The actuarial valuations of the present value of the defined benefit obligation were carried out by

qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

---

| | | |
|:---|:---|:---|
|  | **Measurement Date** | **Measurement Date** |
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Discount rate | 1.40% | 1.60% |
| Future salary increase rate | 4.00% | 4.00% |

---

Through the defined benefit plans under the R.O.C. Labor Standards Law, the Company is exposed to

the following risks:

1)Investment risk: The pension funds are invested in equity and debt securities, bank deposits, etc.

The investment is conducted at the discretion of the government's designated authorities or under

the mandated management. However, under the R.O.C. Labor Standards Law, the rate of return on

assets shall not be less than the average interest rate on a two-year time deposit published by the

local banks and the government is responsible for any shortfall in the event that the rate of return is

less than the required rate of return.

2)Interest risk: A decrease in the government bond interest rate will increase the present value of the

defined benefit obligation; however, this will be partially offset by an increase in the return on the

debt investments of the plan assets.

Assuming a hypothetical decrease in interest rate at the end of the reporting period contributed to a

decrease of 0.5% (and not below 0.0%) in the discount rate and all other assumptions were held

constant, the present value of the defined benefit obligation would increase by NT$883,727

thousand and NT$717,535 thousand as of December 31, 2025 and 2024, respectively.

3)Salary risk: The present value of the defined benefit obligation is calculated by reference to the

future salaries of plan participants. As such, an increase in the salary of the plan participants will

increase the present value of the defined benefit obligation.

Assuming the expected salary rate increases by 0.5% at the end of the reporting period and all other

assumptions were held constant, the present value of the defined benefit obligation would increase

by NT$857,260 thousand and NT$697,715 thousand as of December 31, 2025 and 2024,

respectively.

The sensitivity analysis presented above may not be representative of the actual change in the defined

benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one

another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit

obligation has been calculated using the projected unit credit method at the end of the reporting period,

which is the same as that applied in calculating the defined benefit obligation liability.

The Company expects to make contributions of NT$2,537,250 thousand to the defined benefit plans in

the next year starting from December 31, 2025. The weighted average duration of the defined benefit

obligation is 9 years.

**20. EQUITY**

a.Capital stock

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Authorized shares (in thousands) | 28050000 | 28050000 |
| Authorized capital | $280500000 | $280500000 |
| Issued and paid shares (in thousands) | 25932524 | 25932733 |
| Issued capital | $259325245 | $259327332 |

---

The par value of issued common shares is NT$10 per share. A holder of common shares has one vote

for each common share and is entitled to receive dividends.

The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock

options.

On September 1, 2024 and March 1, 2024, TSMC issued employee restricted stock awards (RSAs) for

its employees in a total of 2,353 thousand shares and 2,960 thousand shares, respectively, with a par

value of NT$10 per share. The aforementioned issuance of new shares was approved by the relevant

authority and the registration has been completed.

During the third quarter of 2025, the first quarter of 2025 and 2024, TSMC reclaimed 91 thousand, 118

thousand and 1,402 thousand employee restricted shares, respectively, that were unvested. On

November 11, 2025, May 13, 2025 and June 5, 2024, TSMC's Board of Directors resolved to cancel the

aforementioned shares. Subsequently, TSMC completed the registration for share cancellation. Refer to

Note 27 for information on RSAs.

On August 13, 2024, TSMC's Board of Directors resolved to cancel 3,249 thousand treasury shares.

Refer to Note 20(e) for further information.

As of December 31, 2025, TSMC's total issued and outstanding ADSs were 1,062,719 thousand units,

representing 5,313,593 thousand common shares.

b.Capital surplus

The categories of uses and the sources of capital surplus based on regulations were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| May be used to offset a deficit, distributed as cash dividends, or <br>transferred to share capital<br>|  |  |
| Additional paid-in capital | $26343550 | $24809704 |
| From merger | 22800434 | 22800434 |
| From convertible bonds | 8891257 | 8891257 |
| From difference between the consideration received and the <br>carrying amount of the subsidiaries' net assets during actual <br>disposal<br>| 8411566 | 8411566 |
| Donations - donated by shareholders | 11280 | 11275 |
| <u>May only be used to offset a deficit</u> |  |  |
| From share of changes in equities of subsidiaries | 4093999 | 4108958 |
| From share of changes in equities of associates  | 1365250 | 1172396 |
| Donations - unclaimed dividend | 105684 | 78976 |
| <u>May not be used for any purpose</u> |  |  |
| Employee restricted shares | 1422581 | 2976199 |
|  | $73445601 | $73260765 |

---

If such capital surplus is distributed as transferred to share capital, it is limited to a certain percentage of

the Company's paid-in capital each year.

c.Retained earnings and dividend policy

TSMC's Articles of Incorporation provide that, earnings distribution may be made on a quarterly basis

after the close of each quarter. Distribution of earnings by way of cash dividends should be approved by

TSMC's Board of Directors and reported to TSMC's shareholders in its meeting. When allocating

earnings, TSMC shall first estimate and reserve the taxes to be paid, offset its losses, set aside a legal

capital reserve at 10% of the remaining earnings (until the accumulated legal capital reserve equals

TSMC's paid-in capital), then set aside a special capital reserve in accordance with relevant laws or

regulations or as requested by the authorities in charge. Any balance left over shall be allocated

according to relevant laws and TSMC's Articles of Incorporation.

TSMC's Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash

dividend and/or stock dividend. However, distribution of earnings shall be made preferably by way of

cash dividend. Distribution of earnings may also be made by way of stock dividend, provided that the

ratio for stock dividend shall not exceed 50% of the total distribution.

The legal capital reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks

for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

Pursuant to existing regulations, the Company is required to set aside an additional special capital

reserve equivalent to the net debit balance of the other components of stockholders' equity, such as the

accumulated balance of the foreign currency translation reserve, the effectiveness of hedges of net

investments in foreign operations, unrealized valuation gain or loss from fair value through other

comprehensive income financial assets, gain or loss from changes in fair value of hedging instruments

in cash flow hedges, etc. For the subsequent decrease in the deduction amount to stockholders' equity,

any special reserve appropriated may be reversed to the extent that the net debit balance reverses.

The appropriations of 2025, 2024 and 2023 quarterly earnings have been approved by TSMC's Board of

Directors in its meeting, respectively. The appropriations and cash dividends per share were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2025** | **of 2025** | **of 2025** | **of 2025** |
| **Board of Directors in its** | **February 10,** | **November 11,** | **August 12,** | **May 13,** |
| **meeting** | **2026** | **2025** | **2025** | **2025** |
| Special capital reserve | $(71085085) | $(94270352) | $181554848 | $- |
| Cash dividends to shareholders | $155595147 | $155595147 | $129662913 | $129663078 |
| Cash dividends per share (NT$) | $6.00 | $6.00 | $5.00 | $5.00 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2024** | **of 2024** | **of 2024** | **of 2024** |
| **Board of Directors in its** | **February 12,** | **November 12,** | **August 13,** | **May 10,** |
| **meeting** | **2025** | **2024** | **2024** | **2024** |
| Special capital reserve | $- | $- | $- | $(28020822) |
| Cash dividends to shareholders | $116697300 | $116697300 | $103721521 | $103734517 |
| Cash dividends per share (NT$) | $4.50 | $4.50 | $4.00 | $4.00 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2023** | **of 2023** | **of 2023** | **of 2023** |
| **Board of Directors in its** | **February 6,** | **November 14,** | **August 8,** | **May 9,** |
| **meeting** | **2024** | **2023** | **2023** | **2023** |
| Special capital reserve | $28020822 | $(17228363) | $(6365562) | $3273452 |
| Cash dividends to shareholders | $90762248 | $90762248 | $77796213 | $77796213 |
| Cash dividends per share (NT$) | $3.50 | $3.50 | $3.00 | $3.00 |

---

The special capital reserve for 2025 is to be presented for approval in TSMC's shareholders' meeting to

be held on June 4, 2026 (expected).

The quarterly cash dividends per share is affected by the subsequent number of outstanding ordinary

shares, the information of the actual payout is available at the Market Observation Post System website.

d.Others

Changes in others were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  | **Foreign** <br>**Currency** <br>**Translation** <br>**Reserve**<br>| **Unrealized** <br>**Gain (Loss) on** <br>**Financial** <br>**Assets at** <br>**FVTOCI**<br>| **Gain (Loss) on** <br>**Hedging** <br>**Instruments**<br>| **Unearned** <br>**Stock-Based** <br>**Employee** <br>**Compensation**<br>| **Total** |
| Balance, beginning of year | $40262995 | $(1160176) | $1310307 | $(1708079) | $38705047 |
| Exchange differences arising on translation <br>of foreign operations<br>| (61588228) | - | - | - | (61588228) |
| Gain (loss) on hedging instruments <br>designated as hedges of net investments <br>in foreign operations<br>| 335106 | - | - | - | 335106 |
| Unrealized gain (loss) on financial assets <br>at FVTOCI<br>|  |  |  |  |  |
| Equity instruments | - | 744515 | - | - | 744515 |
| Debt instruments | - | 4505899 | - | - | 4505899 |
| Disposal of investments in equity <br>instruments at FVTOCI<br>| - | (557108) | - | - | (557108) |
| Cumulative unrealized gain (loss) of debt <br>instruments at FVTOCI transferred to <br>profit or loss due to disposal<br>| - | 200194 | - | - | 200194 |
| Loss allowance adjustments from debt <br>instruments at FVTOCI<br>| - | (17137) | - | - | (17137) |
| Gain (loss) arising on changes in the fair <br>value of hedging instruments and <br>hedged item affects profit or loss<br>| - | - | (112259) | - | (112259) |
| Transferred to initial carrying amount of <br>hedged items<br>| - | - | 13450 | - | 13450 |
| Share-based payment expenses recognized | - | - | - | 1231078 | 1231078 |
| Share of other comprehensive income <br>(loss) of associates<br>| (29017) | (124704) | 16752 | - | (136969) |
| Balance, end of year | $(21019144) | $3591483 | $1228250 | $(477001) | $(16676412) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Foreign** <br>**Currency** <br>**Translation** <br>**Reserve**<br>| **Unrealized** <br>**Gain (Loss) on** <br>**Financial** <br>**Assets at** <br>**FVTOCI**<br>| **Gain (Loss) on** <br>**Hedging** <br>**Instruments**<br>| **Unearned** <br>**Stock-Based**<br>**Employee** <br>**Compensation**<br>| **Total** |
| Balance, beginning of year | $(25316769) | $(4099928) | $1395875 | $(293434) | $(28314256) |
| Exchange differences arising on translation <br>of foreign operations<br>| 64502658 | - | - | - | 64502658 |
| Gain (loss) on hedging instruments <br>designated as hedges of net investments <br>in foreign operations<br>| 793830 | - | - | - | 793830 |
| Unrealized gain (loss) on financial assets <br>at FVTOCI<br>|  |  |  |  |  |
| Equity instruments | - | 5078380 | - | - | 5078380 |
| Debt instruments | - | 1254491 | - | - | 1254491 |
| Disposal of investments in equity <br>instruments at FVTOCI<br>| - | (4009066) | - | - | (4009066) |
|  |  |  |  |  | (Continued) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Foreign** <br>**Currency** <br>**Translation** <br>**Reserve**<br>| **Unrealized** <br>**Gain (Loss) on** <br>**Financial** <br>**Assets at** <br>**FVTOCI**<br>| **Gain (Loss) on** <br>**Hedging** <br>**Instruments**<br>| **Unearned** <br>**Stock-Based**<br>**Employee** <br>**Compensation**<br>| **Total** |
| Cumulative unrealized gain (loss) of debt <br>instruments at FVTOCI transferred to <br>profit or loss due to disposal<br>| $- | $683117 | $- | $- | $683117 |
| Loss allowance adjustments from debt <br>instruments at FVTOCI<br>| - | 12257 | - | - | 12257 |
| Gain (loss) arising on changes in the fair <br>value of hedging instruments and <br>hedged item affects profit or loss<br>| - | - | (75157) | - | (75157) |
| Transferred to initial carrying amount of <br>hedged items<br>| - | - | 141 | - | 141 |
| Issuance of employee restricted stock | - | - | - | (2637387) | (2637387) |
| Share-based payment expenses recognized | - | - | - | 1222742 | 1222742 |
| Share of other comprehensive income <br>(loss) of associates<br>| 290402 | (69431) | (10552) | - | 210419 |
| Other comprehensive income transferred <br>to profit or loss due to decline of equity <br>method<br>| (7126) | - | - | - | (7126) |
| Income tax effect | - | (9996) | - | - | (9996) |
| Balance, end of year | $40262995 | $(1160176) | $1310307 | $(1708079) | $38705047 |
|  |  |  |  |  | (Concluded) |

---

The aforementioned other equity includes the changes in other equities of TSMC and TSMC's share of

its subsidiaries and associates.

e.Treasury stock

For TSMC's shareholders' interests, TSMC's Board of Directors approved a share buyback program on

June 5, 2024 to repurchase 3,249 thousand shares. TSMC has completed this share buyback program

during the second quarter of 2024. On August 13, 2024, TSMC's Board of Directors resolved to cancel

the 3,249 thousand shares and set September 1, 2024 as the record date for capital reduction. The

registration for share cancellation was completed on September 11, 2024.

**21. NET REVENUE**

a.Disaggregation of revenue from contracts with customers

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Product** | **2025** | **2024** |
| Wafer | $3272553470 | $2514461292 |
| Others | 536500802 | 379846407 |
|  | $3809054272 | $2894307699 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Geography** | **2025** | **2024** |
| Taiwan | $299445782 | $270413546 |
| United States | 2834692138 | 1992280443 |
| China | 327502739 | 331673315 |
| Japan | 150427931 | 144239882 |
| Europe, the Middle East and Africa | 126584061 | 102760879 |
| Others | 70401621 | 52939634 |
|  | $3809054272 | $2894307699 |

---

The Company categorized the net revenue mainly based on the countries where the customers are

headquartered.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Platform** | **2025** | **2024** |
| High Performance Computing | $2192931014 | $1476890566 |
| Smartphone | 1110816364 | 1005130484 |
| Internet of Things | 191046793 | 165516214 |
| Automotive | 186666990 | 139323096 |
| Digital Consumer Electronics | 47996476 | 47960415 |
| Others | 79596635 | 59486924 |
|  | $3809054272 | $2894307699 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Resolution** | **2025** | **2024** |
| 3-nanometer | $794341375 | $459530166 |
| 5-nanometer | 1179907181 | 861318861 |
| 7-nanometer | 459258062 | 416790303 |
| 16-nanometer | 215722121 | 202383718 |
| 20-nanometer | 4304867 | 4077241 |
| 28-nanometer | 225134161 | 188155011 |
| 40/45-nanometer | 95582674 | 108468215 |
| 65-nanometer | 120399264 | 93120068 |
| 90-nanometer | 21358729 | 21509306 |
| 0.11/0.13 micron | 48846156 | 52442826 |
| 0.15/0.18 micron | 88293741 | 90796791 |
| 0.25 micron and above | 19405139 | 15868786 |
| Wafer revenue | $3272553470 | $2514461292 |

---

b.Contract balances

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>| **January 1,** <br>**2024**<br>|
| Contract liabilities (classified under accrued <br>expenses and other current liabilities)<br>| $49954384 | $89435361 | $52736430 |

---

The changes in the contract liability balances primarily result from the timing difference between the

satisfaction of performance obligation and the customer's payment.

The Company recognized revenue from the beginning balance of contract liability, which amounted to

NT$57,567,091 and NT$51,578,433 for the years ended December 31, 2025 and 2024, respectively.

c.Temporary receipts from customers

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Current portion (classified under accrued expenses and other <br>current liabilities)<br>| $146559275 | $198602570 |
| Noncurrent portion (classified under other noncurrent <br>liabilities)<br>| 43298936 | 92499262 |
|  | $189858211 | $291101832 |

---

The Company's temporary receipts from customer are payments made by customers to the Company to

retain the Company's capacity. When the terms and conditions set forth in the agreements are

subsequently satisfied, the treatment of temporary receipts, either by refund or by accounts receivable

offsetting, will be determined by mutual consent.

d.Refund liabilities

Estimated sales returns and other allowances is made and adjusted based on historical experience and

the consideration of varying contractual terms. As of December 31, 2025 and 2024, the aforementioned

refund liabilities amounted to NT$79,293,379 and NT$63,185,197 (classified under accrued expenses

and other current liabilities), respectively.

**22. INTEREST INCOME**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Interest income |  |  |
| Cash and cash equivalents | $86642964 | $72126247 |
| Financial assets at amortized cost | 10182766 | 8458156 |
| Financial assets at FVTOCI  | 7301519 | 6628996 |
| Government grants receivable | 1611832 | - |
|  | $105739081 | $87213399 |

---

**23. FINANCE COSTS**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Interest expense |  |  |
| Corporate bonds | $19148157 | $19278120 |
| Lease liabilities | 453631 | 373383 |
| Bank loans | 378479 | 150752 |
| Others | 5971 | 3352 |
| Less: Capitalized interest under property, plant and equipment | (7615851) | (9310287) |
|  | $12370387 | $10495320 |

---

Information about capitalized interest is as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Capitalization rate | 1.32%-3.34% | 1.20%-3.34% |

---

**24. OTHER GAINS AND LOSSES, NET**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Loss on disposal of financial assets, net |  |  |
| Investments in debt instruments at FVTOCI | $(200194) | $(683117) |
| Gain on disposal of investments accounted for using equity <br>method, net<br>| - | 7126 |
| Loss on disposal of subsidiaries | (167986) | - |
| Loss on financial instruments at FVTPL, net | (8083154) | (8204688) |
| Reversal of (provision for) expected credit loss of financial assets |  |  |
| Investments in debt instruments at FVTOCI | 17137 | (12257) |
| Financial assets at amortized cost | (13191) | (37650) |
| Other gains, net | 730183 | 551193 |
|  | $(7717205) | $(8379393) |

---

**25. INCOME TAX**

a.Income tax expense recognized in profit or loss

Income tax expense consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Current income tax expense  |  |  |
| Current tax expense recognized in the current year | $336146212 | $238079019 |
| Income tax adjustments on prior years | (12690029) | (7229862) |
| Other income tax adjustments | 126657 | 371403 |
|  | 323582840 | 231220560 |
| Deferred income tax expense (benefit) |  |  |
| The origination and reversal of temporary differences | 6472803 | 915964 |
| Income tax adjustments on prior years | (65124) | 3925320 |
| Operating loss carryforward | (3724459) | (2654968) |
|  | 2683220 | 2186316 |
| Income tax expense recognized in profit or loss | $326266060 | $233406876 |

---

A reconciliation of income before income tax and income tax expense recognized in profit or loss was

as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Income before tax | $2041662840 | $1405838635 |
| Income tax expense at the statutory rate | 414948107 | 280827733 |
| Tax effect of adjusting items: |  |  |
| Adjusting items in determining taxable income  | (23177516) | (5647246) |
| Additional income tax on unappropriated earnings | - | 6483623 |
| Unrecognized deductible temporary differences | - | 729232 |
| Unrecognized operating loss carryforward | 6637745 | 2263127 |
| The origination and reversal of temporary differences | 6472803 | 915964 |
| Operating loss carryforward | (3724459) | (2654968) |
| Income tax credits | (62262124) | (46577450) |
|  | 338894556 | 236340015 |
| Income tax adjustments on prior years | (12755153) | (3304542) |
| Other income tax adjustments | 126657 | 371403 |
| Income tax expense recognized in profit or loss | $326266060 | $233406876 |

---

For the years ended December 31, 2025 and 2024, the Company applied a tax rate of 20% for entities

subject to the R.O.C. Income Tax Law; for other jurisdictions, taxes are calculated using the applicable

tax rate for each individual jurisdiction.

b.Deferred income tax balance

The analysis of deferred income tax assets and liabilities was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Deferred income tax assets</u> |  |  |
| Temporary differences |  |  |
| Depreciation | $25924020 | $33319836 |
| Refund liability | 16438718 | 13274374 |
| Unrealized exchange losses | 6094374 | 9078242 |
| Others  | 8418044 | 7656403 |
| Operating loss carryforward | 6065097 | 2614445 |
|  | $62940253 | $65943300 |
| <u>Deferred income tax liabilities</u> |  |  |
| Temporary differences |  |  |
| Subsidiary's projected earnings distribution | $(3860196) | $(3925320) |
| Others | (28599) | (63162) |
|  | $(3888795) | $(3988482) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  |  | **Recognized in** | **Recognized in** |  |  |
|  | **Balance,** <br>**Beginning of** <br>**Year**<br>| **Profit or Loss** | **Other** <br>**Comprehensive** <br>**Income**<br>| **Effect of** <br>**Exchange Rate** <br>**Changes**<br>| **Balance, End of** <br>**Year**<br>|
| <u>Deferred income tax assets</u> |  |  |  |  |  |
| Temporary differences |  |  |  |  |  |
| Depreciation | $33319836 | $(7366594) | $- | $(29222) | $25924020 |
| Refund liability | 13274374 | 3165922 | - | (1578) | 16438718 |
| Unrealized exchange losses | 9078242 | (2983868) | - | - | 6094374 |
| Others | 7656403 | 677275 | 138654 | (54288) | 8418044 |
| Operating loss carryforward | 2614445 | 3724459 | - | (273807) | 6065097 |
|  | $65943300 | $(2782806) | $138654 | $(358895) | $62940253 |
| <u>Deferred income tax liabilities</u> |  |  |  |  |  |
| Temporary differences |  |  |  |  |  |
| Subsidiary's projected earning <br>distribution<br>| $(3925320) | $65124 | $- | $- | $(3860196) |
| Others | (63162) | 34462 | - | 101 | (28599) |
|  | $(3988482) | $99586 | $- | $101 | $(3888795) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  |  | **Recognized in** | **Recognized in** |  |  |
|  | **Balance,** <br>**Beginning of** <br>**Year**<br>| **Profit or Loss** | **Other** <br>**Comprehensive** <br>**Income**<br>| **Effect of** <br>**Exchange Rate** <br>**Changes**<br>| **Balance, End of** <br>**Year**<br>|
| <u>Deferred income tax assets</u> |  |  |  |  |  |
| Temporary differences |  |  |  |  |  |
| Depreciation | $41094712 | $(7787586) | $- | $12710 | $33319836 |
| Refund liability | 9414971 | 3856774 | - | 2629 | 13274374 |
| Unrealized exchange losses | 7100019 | 1978223 | - | - | 9078242 |
| Others | 6566085 | 1045037 | (38869) | 84150 | 7656403 |
| Operating loss carryforward | - | 2654968 | - | (40523) | 2614445 |
|  | $64175787 | $1747416 | $(38869) | $58966 | $65943300 |
| <u>Deferred income tax liabilities</u> |  |  |  |  |  |
| Temporary differences |  |  |  |  |  |
| Subsidiary's projected earning <br>distribution<br>| $- | $(3925320) | $- | $- | $(3925320) |
| Others | (53856) | (8412) | - | (894) | (63162) |
|  | $(53856) | $(3933732) | $- | $(894) | $(3988482) |

---

c.The operating loss carryforward and deductible temporary differences for which no deferred income tax

assets have been recognized

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Operating loss carryforward-No expiry date | $32143719 | $11896888 |
| Deductible temporary differences | $64904467 | $83705608 |

---

d.The information of unrecognized deferred income tax liabilities associated with investments

As of December 31, 2025 and 2024, the aggregate taxable temporary differences associated with

investments in subsidiaries not recognized as deferred income tax liabilities amounted to

NT$329,889,192 thousand and NT$327,787,523 thousand, respectively.

e.Income tax examination

The tax authorities have examined income tax returns of TSMC through 2023. All investment tax credit

adjustments assessed by the tax authorities have been recognized accordingly.

**26. EARNINGS PER SHARE**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Basic EPS | $66.26 | $45.25 |
| Diluted EPS | $66.25 | $45.25 |

---

EPS is computed as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Basic EPS |  |  |
| Net income available to common shareholders of the parent | $1717882627 | $1173267703 |
| Weighted average number of common shares outstanding used in <br>the computation of basic EPS (in thousands)<br>| 25928262 | 25927556 |
| Basic EPS (in dollars) | $66.26 | $45.25 |
| Diluted EPS |  |  |
| Net income available to common shareholders of the parent | $1717882627 | $1173267703 |
| Weighted average number of common shares outstanding used in <br>the computation of basic EPS (in thousands)<br>| 25928262 | 25927556 |
| Effects of all dilutive potential common shares (in thousands) | 2295 | 2089 |
| Weighted average number of common shares used in the <br>computation of diluted EPS (in thousands)<br>| 25930557 | 25929645 |
| Diluted EPS (in dollars) | $66.25 | $45.25 |

---

**27. SHARE-BASED PAYMENT ARRANGEMENTS** 

a.Equity-settled share-based payment- RSAs

The RSAs in each year are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
| Resolution Date of TSMC's <br>shareholders in its meeting<br>| June 4, 2024 | June 6, 2023 | June 8, 2022 | July 26, 2021 |
| Resolution Date of TSMC's Board of <br>Directors in its meeting<br>| August 13, 2024 | February 6, 2024 | February 14, 2023 | February 15, 2022 |
| Issuance of stocks (in thousands) | 2353 | 2960 | 2110 | 1387 |
| Available for issuance (in thousands) | 1832 | - | - | - |
| Eligible employees | Executive officers | Executive officers | Executive officers | Executive officers |
| Grant date/Issuance date | September 1, 2024 | March 1, 2024 | March 1, 2023 | March 1, 2022 |

---

Vesting conditions of the aforementioned arrangement are as follow:

1)The RSAs granted to eligible employees can only be vested if

• the employee remains employed by the Company on the last date of each vesting period;

• during the vesting period, the employee may not breach any agreement with the Company or

violate the Company's work rules; and

• certain employee performance metrics and TSMC's business performance metrics are met.

2)The maximum percentage of granted RSAs that may be vested each year shall be as follows: one-

year anniversary of the grant: 50%; two-year anniversary of the grant: 25%; and three-year

anniversary of the grant: 25%; provided that the actual percentage and number of the RSAs to be

vested in each year will be calculated based on the achievement of TSMC's business performance

metrics.

3)For eligible executive officers of TSMC: The maximum number of RSAs that may be vested in

each year will be set as 110%, among which 100% will be subject to a calculation based on

TSMC's relative Total Shareholder Return ("TSR", including capital gains and dividends)

achievement to determine the number of RSAs to be vested; this number will be further subject to a

modifier to increase or decrease up to 10% based on the Compensation and People Development

Committee's evaluation of TSMC's Environmental, Social, and Governance ("ESG") achievements.

The number of shares so calculated should be rounded down to the nearest integral.

---

| | |
|:---|:---|
| **TSMC's TSR relative to the** <br>**TSR of S&P 500 IT Index**<br>| **Ratio of Shares to be Vested** |
| Above the Index by X percentage points | 50% + X \* 2.5%, with the maximum of 100% |
| Equal to the Index | 50% |
| Below the Index by X percentage points | 50% - X \* 2.5%, with the minimum of 0% |

---

4)Restrictions imposed on the employees' rights in the RSAs before the vesting conditions are

fulfilled:

• During each vesting period, no employee granted RSAs, except for inheritance, may sell,

pledge, transfer, give to another person, create any encumbrance on, or otherwise dispose of,

any shares under the unvested RSAs.

• Before the vesting conditions are fulfilled, the attendance, proposal rights, speech rights, voting

rights and etc. shall be exercised by the engaged trustee/custodian on the employee's behalf.

Any other shareholder rights including but not limited to the entitlement to any distribution

regarding dividends, bonuses and capital reserve, and the subscription right of the new shares

issued for any capital increase, are the same as those of holders of common shares of TSMC.

5)Details of granted RSAs in each year are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
|  | **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>|
| Balance, beginning of year | 2353 | 2960 | 1055 | 347 |
| Vested shares | (1102) | (1406) | (501) | (330) |
| Canceled shares | (91) | (74) | (27) | (17) |
| Balance, end of year | 1160 | 1480 | 527 | - |
| Weighted-average fair value of <br>RSAs (in dollars)<br>| $662.42 | $364.43 | $277.71 | $325.81 |

---

The RSAs in each year are measured at fair value at grant date by using the binominal tree

approach. Relevant information is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
|  | **September 1, 2024** | **March 1, 2024** | **March 1, 2023** | **March 1, 2022** |
| Stock price at measurement <br>date (in dollars)<br>| $944 | $689 | $511 | $604 |
| Expected price volatility | 25.51%-29.87% | 24.77%-26.12% | 29.34%-32.11% | 25.34%-28.28% |
| Expected life | 1-3 years | 1-3 years | 1-3 years | 1-3 years |
| Risk-free interest rate | 1.40% | 1.16% | 1.06% | 0.57% |

---

Refer to Note 28 for the compensation costs of the RSAs recognized by TSMC.

b.Cash-settled share-based payment arrangements

The cash-settled share-based payment arrangements in each year are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2023 Plan** | **2022 Plan** | **2021 Plan** |
| Resolution Date of TSMC's Board of <br>Directors in its meeting<br>| February 6,<br>2024<br>| February 14,<br>2023<br>| February 15,<br>2022<br>|
| Issuance of units (in thousands) (Note) | 550 | 400 | 236 |
| Grant date | March 1, 2024 | March 1, 2023 | March 1, 2022 |

---

Note:One unit of the right represents a right to the market value of one TSMC's common share when

vested.

The vesting conditions and the ratio of units to be vested for key management personnel of the plan are

the same as the aforementioned RSAs.

The fair value of compensation costs for the cash-settled share-based payment was measured by using

binominal tree approach and will be measured at each reporting period until settlement. Relevant

information is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2025** | **2024** | **2024** | **2024** |
|  | **2023 Plan** | **2022 Plan** | **2023 Plan** | **2022 Plan** | **2021 Plan** |
| Stock price at measurement date <br>(in dollars)<br>| $1510 | $1510 | $1090 | $1090 | $1090 |
| Expected price volatility | 23.67%-30.35% | 23.67%-30.35% | 25.61%-30.78% | 25.61%-30.78% | 25.61%-30.78% |
| Residual life | 1-2 years | 1 year | 1-3 years | 1-2 years | 1 year |
| Risk-free interest rate | 1.22% | 1.20% | 1.45% | 1.41% | 1.37% |

---

Refer to Note 28 for the compensation costs of the cash-settled share-based payment recognized by

TSMC. As of December 31, 2025 and 2024, the liabilities under cash-settled share-based payment

arrangement amounted to NT$330,836 thousand and NT$455,728 thousand, respectively.

**28. ADDITIONAL INFORMATION OF EXPENSES BY NATURE**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| a.Depreciation of property, plant and equipment and right-of-use <br>assets<br>|  |  |
| Recognized in cost of revenue | $638013540 | $616390408 |
| Recognized in operating expenses | 41614044 | 37190415 |
| Recognized in other operating income and expenses | 56374 | 29663 |
|  | $679683958 | $653610486 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| b.Amortization of intangible assets |  |  |
| Recognized in cost of revenue | $5361977 | $6342310 |
| Recognized in operating expenses | 3050435 | 2843839 |
|  | $8412412 | $9186149 |
| c.Employee benefits expenses |  |  |
| Post-employment benefits  |  |  |
| Defined contribution plans | $6707459 | $5932269 |
| Defined benefit plans | 256924 | 275680 |
|  | 6964383 | 6207949 |
| Share-based payments |  |  |
| Equity-settled | 1246070 | 1242719 |
| Cash-settled | 304140 | 403486 |
|  | 1550210 | 1646205 |
| Other employee benefits | 387600296 | 293967896 |
|  | $396114889 | $301822050 |
| Employee benefits expense summarized by function |  |  |
| Recognized in cost of revenue | $235604067 | $163657133 |
| Recognized in operating expenses | 160510822 | 138164917 |
|  | $396114889 | $301822050 |

---

According to TSMC's Articles of Incorporation, TSMC shall allocate compensation to directors and profit

sharing bonus to employees of TSMC not more than 0.3% and not less than 1% of annual profits during the

period, respectively (among which not less than 30% as profit sharing bonuses to entry-level employees).

TSMC accrued profit sharing bonus to employees based on a percentage of net income before income tax,

profit sharing bonus to employees and compensation to directors during the period; compensation to

directors was expensed based on estimated amount payable. If there is a change in the proposed amounts

after the annual consolidated financial statements are authorized for issue, the differences are recorded as a

change in accounting estimate. Accrued profit sharing bonus to employees is illustrated below:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Profit sharing bonus to employees | $103072958 | $70296283 |

---

TSMC's accrued profit sharing bonus to employees and compensation to directors 2025, 2024 and 2023 are

illustrated below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** | **2023** |
| Profit sharing bonus to employees | $103072958 | $70296283 | $50090533 |
| Compensation to directors | $156305 | $358989 | $551955 |

---

There is no significant difference between the aforementioned amounts and the amounts charged against

earnings of 2025, 2024 and 2023, respectively.

The information about the appropriations of TSMC's profit sharing bonus to employees and compensation

to directors is available at the Market Observation Post System website.

**29. GOVERNMENT GRANTS**

Subsidiaries such as TSMC Arizona, ESMC, JASM and TSMC Nanjing received subsidies from the

governments of the United States, Germany, Japan and China, respectively, for local plant setup and

operation, which were mainly used to subsidize the purchase costs of property, plant and equipment, as well

as partial costs and expenses incurred from plant construction and production. For the years ended

December 31, 2025 and 2024, TSMC received a total of NT$76,258,790 thousand and NT$75,164,249

thousand as government grants respectively.

The aforementioned subsidiaries have signed grant agreements with the local government. The agreements

include the construction timelines and other conditions that must be complied with. TSMC Arizona is also

eligible to apply for a 25% investment grant for its qualified investments.

**30. CASH FLOW INFORMATION**

a.Non-cash transactions

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Additions of property, plant and equipment | $1160977750 | $798507337 |
| Changes in other receivables | 93113184 | 140289660 |
| Exchange of assets | (169549) | (109273) |
| Changes in payables to contractors and equipment suppliers | 12550400 | (17988093) |
| Changes in accrued expenses and other current liabilities | 13585625 | 44612151 |
| Transferred to initial carrying amount of hedged items | (31030) | 5041 |
| Capitalized interests | (7615851) | (9310287) |
| Payments for acquisition of property, plant and equipment | $1272410529 | $956006536 |

---

b.Reconciliation of liabilities arising from financing activities

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Non-cash Changes** | **Non-cash Changes** |  |
|  | **Balance as of**<br> **January 1,**<br>**2025**<br>| **Financing Cash** <br>**Flow**<br>| **Foreign** <br>**Exchange** <br>**Movement**<br>| **Other Changes**<br>**(Note)**<br>| **Balance as of** <br>**December 31,**<br>**2025**<br>|
| Bonds payable | $983752385 | $32499692 | $(24602630) | $384044 | $992033491 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Non-cash Changes** | **Non-cash Changes** |  |
|  | **Balance as of**<br>**January 1,**<br>**2024**<br>| **Financing Cash** <br>**Flow**<br>| **Foreign** <br>**Exchange** <br>**Movement**<br>| **Other Changes**<br>**(Note)**<br>| **Balance as of** <br>**December 31,**<br>**2024**<br>|
| Bonds payable | $920897553 | $27264319 | $35202758 | $387755 | $983752385 |

---

Note:Other changes include amortization of bonds payable.

**31. CAPITAL MANAGEMENT**

The objective of the Company's capital management is to maintain a capital structure that ensures liquidity

and supports a solid investment grade credit rating. The capital structure includes both debt and equity. The

Company adjusts its capital structure mainly through changes in the level of debt and adjustments of

dividend payout to shareholders.

The Company's capital management policy remained unchanged in 2025. TSMC's current credit ratings are

AA- from S&P Global Ratings and Aa3 from Moody's, same as those as of December 31, 2024.

**32. FINANCIAL INSTRUMENTS**

a.Categories of financial instruments

---

| | | |
|:---|:---|:---|
|  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| Financial assets |  |  |
| FVTPL  | $15132328 | $15407542 |
| FVTOCI (Note 1) | 192184953 | 205938125 |
| Hedging financial assets | - | 10959 |
| Amortized cost (Note 2) | 3368760773 | 2721319255 |
|  | $3576078054 | $2942675881 |
| Financial liabilities |  |  |
| FVTPL | $3083883 | $466539 |
| Hedging financial liabilities | 817 | - |
| Amortized cost (Note 3) | 1974710221 | 1963297264 |
|  | $1977794921 | $1963763803 |

---

Note 1:Including notes and accounts receivable (net), equity and debt investments.

Note 2:Including cash and cash equivalents, financial assets at amortized cost, notes and accounts

receivable (including related parties), other receivables, refundable deposits and temporary

payments (including those classified under other current assets and other noncurrent assets).

Note 3:Including accounts payable (including related parties), payables to contractors and equipment

suppliers, cash dividends payable, accrued expenses and other current liabilities, bonds

payable, long-term bank loans, guarantee deposits and other noncurrent liabilities.

b.Financial risk management objectives

The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit

risk and liquidity risk with the objective to reduce the potentially adverse effects the market

uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by the Audit and Risk Committee and/or Board

of Directors in accordance with procedures required by relevant regulations or internal controls. During

the implementation of such plans, the Company must comply with certain treasury procedures that

provide guiding principles for overall financial risk management and segregation of duties.

c.Market risk

The Company is exposed to the financial market risks, primarily changes in foreign currency exchange

rates, interest rates and equity prices. A portion of these risks is hedged.

<u>Foreign currency risk</u>

Substantially all the Company's sales are denominated in U.S. dollars and over half of its capital

expenditures are denominated in currencies other than NT dollars, primarily in U.S. dollars, Japanese

yen and Euros. As a result, any significant fluctuations to its disadvantage in the exchanges rate of NT

dollar against such currencies, in particular a weakening of U.S. dollar against NT dollar, would have an

adverse impact on the revenue and operating profit as expressed in NT dollars. The Company uses

foreign currency derivative contracts, such as currency forwards or currency swaps, and non-derivative

financial instruments, such as foreign currency denominated debts and foreign currency deposits, to

protect against currency exchange rate risks associated with non-NT dollar-denominated monetary

assets and liabilities, net investments in foreign operations, and certain forecasted transactions. These

hedges reduce, but do not entirely eliminate, the effect of foreign currency exchange rate movements on

the assets and liabilities.

Based on a sensitivity analysis performed on the Company's total monetary assets and liabilities for the

years ended December 31, 2025 and 2024, a hypothetical adverse foreign currency exchange rate

change of 10% would have decreased its net income by NT$1,986,507 thousand and NT$1,906,338

thousand, respectively, after taking into account hedges and offsetting positions.

<u>Interest rate risk</u>

The Company is exposed to interest rate risks primarily in relation to its investment portfolio and

outstanding debt. Changes in interest rates affect the interest earned on the Company's cash and cash

equivalents and fixed income securities, the fair value of those securities, as well as the interest paid on

its debt.

The majority of the Company's fixed income investments are fixed-rate securities, which are classified

as financial assets at FVTOCI or at amortized cost. For those fixed income investments classified as

financial assets at FVTOCI, changes in their fair value are recognized through other comprehensive

income; for those classified as financial assets at amortized cost, changes in their fair value are not

reflected in the carrying amount. Both classifications recognized in profit or loss if the assets are sold.

Based on a sensitivity analysis performed on the Company's fixed income investments at the end of the

reporting period, interest rates increase of 100 basis points (1.00%) across all maturities would have

decreased the Company's other comprehensive income by NT$4,081,048 thousand and NT$4,500,899

thousand for the years ended December 31, 2025 and 2024, respectively.

The majority of the Company's debt is fixed-rate and measured at amortized cost and as such, changes

in interest rates would not affect future cash flows or the carrying amount.

The Company has entered and may in the future enter into interest rate derivatives to partially hedge the

interest rate risk on its fixed income investments and anticipated debt issuance. However, these hedges

can offset only a limited portion of the financial impact from movements in interest rates.

<u>Other price risk</u>

The Company is exposed to convertible preferred stocks, equity instrument investments, and other

investments price risk arising from financial assets at FVTPL and FVTOCI.

Assuming a hypothetical decrease of 10% in prices of the investments mentioned above at the end of

the reporting period, the net income would have decreased by NT$1,202,570 thousand and

NT$1,215,987 thousand for the years ended December 31, 2025 and 2024, respectively, and the other

comprehensive income would have decreased by NT$1,020,259 thousand and NT$1,013,256 thousand

for the years ended December 31, 2025 and 2024, respectively.

d.Credit risk management

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in

financial losses to the Company. The Company is exposed to credit risks from operating activities,

primarily accounts receivable, and from investing activities, primarily deposits, fixed-income

investments and other financial instruments with banks. Credit risk is managed separately for business

related and financial related exposures. As of the end of the reporting period, the Company's maximum

credit risk exposure is equal to the carrying amount of financial assets.

<u>Business related credit risk</u>

The Company's accounts receivable are from its customers worldwide. The majority of the Company's

outstanding accounts receivable are not covered by collaterals or guarantees. While the Company has

procedures to monitor and manage credit risk exposure on accounts receivable, there is no assurance

such procedures will effectively eliminate losses resulting from its credit risk. This risk is heightened

during periods when economic conditions worsen.

As of December 31, 2025 and 2024, the Company's ten largest customers accounted for 84% and 93%

of accounts receivable, respectively. The Company considers the concentration of credit risk for the

remaining accounts receivable not material.

<u>Financial credit risk</u>

The Company mitigates its financial credit risk by selecting counterparties with investment grade credit

ratings and by limiting the exposure to any individual counterparty. The Company regularly monitors

and reviews the limit applied to counterparties and adjusts the limit according to market conditions and

the credit standing of the counterparties.

The objective of the Company's investment policy is to achieve a return that will allow the Company to

preserve principal and support liquidity requirements. The policy generally requires securities to be

investment grade and limits the amount of credit exposure to any one issuer. The Company assesses

whether there has been a significant increase in credit risk in the invested securities since initial

recognition by reviewing changes in external credit ratings, financial market conditions and material

information of the issuers.

The Company assesses the 12-month expected credit loss and lifetime expected credit loss based on the

probability of default and loss given default provided by external credit rating agencies. The current

credit risk assessment policies are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Category** | **Description** | **Basis for Recognizing** <br>**Expected Credit Loss**<br>| **Expected** <br>**Credit Loss** <br>**Ratio**<br>|
| Performing | Credit rating is investment grade on <br>valuation date<br>| 12 months expected credit <br>loss<br>| 0-0.1% |
| Doubtful | Credit rating is non-investment <br>grade on valuation date<br>| Lifetime expected credit <br>loss-not credit impaired<br>| - |
| In default | Credit rating is CC or below on <br>valuation date<br>| Lifetime expected credit <br>loss-credit impaired<br>| - |
| Write-off | There is evidence indicating that the <br>debtor is in severe financial <br>difficulty and the Company has no <br>realistic prospect of recovery <br>| Amount is written off | - |

---

For the years ended December 31, 2025 and 2024, The expected credit loss decreased NT$10,449

thousand and increased NT$58,477 thousand, respectively. The changes were mainly due to adjusted

investment portfolio and fluctuations in exchange rates.

e.Liquidity risk management

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its

business operations over the next 12 months. The Company manages its liquidity risk by maintaining

adequate cash and cash equivalents, financial assets at FVTOCI-current, financial assets at amortized

cost-current and sufficient cost-efficient funding.

The table below summarizes the maturity profile of the Company's financial liabilities based on

contractual undiscounted payments, including principal and interest.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than** <br>**1 Year**<br>| **1-3 Years** | **3-5 Years** | **More Than** <br>**5 Years**<br>| **Total** |
| <u>December 31, 2025</u> |  |  |  |  |  |
| <u>Non-derivative financial liabilities</u> |  |  |  |  |  |
| Accounts payable (including related <br>parties)<br>| $84330325 | $- | $- | $- | $84330325 |
| Payables to contractors and <br>equipment suppliers<br>| 177730306 | - | - | - | 177730306 |
| Accrued expenses and other current <br>liabilities<br>| 344034962 | - | - | - | 344034962 |
| Bonds payable | 155291157 | 310496642 | 209405344 | 512306851 | 1187499994 |
| Long-term bank loans | 1530435 | 11349870 | 29477805 | - | 42358110 |
| Lease liabilities (including those <br>classified under accrued <br>expenses and other current <br>liabilities) (Note)<br>| 4381382 | 6573701 | 5804479 | 22709939 | 39469501 |
| Others | - | 35208665 | 6060461 | 8333478 | 49602604 |
|  | 767298567 | 363628878 | 250748089 | 543350268 | 1925025802 |
| <u>Derivative financial instruments</u> |  |  |  |  |  |
| Forward exchange contracts |  |  |  |  |  |
| Outflows | 279876485 | - | - | - | 279876485 |
| Inflows | (276880302) | - | - | - | (276880302) |
|  | 2996183 | - | - | - | 2996183 |
|  | $770294750 | $363628878 | $250748089 | $543350268 | $1928021985 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than** <br>**1 Year**<br>| **1-3 Years** | **3-5 Years** | **More Than** <br>**5 Years**<br>| **Total** |
| <u>December 31, 2024</u> |  |  |  |  |  |
| <u>Non-derivative financial liabilities</u> |  |  |  |  |  |
| Accounts payable (including related <br>parties)<br>| $74226559 | $- | $- | $- | $74226559 |
| Payables to contractors and <br>equipment suppliers<br>| 192635173 | - | - | - | 192635173 |
| Accrued expenses and other current <br>liabilities<br>| 358165686 | - | - | - | 358165686 |
| Bonds payable | 76460812 | 335240849 | 197389127 | 587602550 | 1196693338 |
| Long-term bank loans | 2935154 | 2275524 | 27044881 | 3151180 | 35406739 |
| Lease liabilities (including those <br>classified under accrued <br>expenses and other current <br>liabilities) (Note)<br>| 3483523 | 5794816 | 4826752 | 20782694 | 34887785 |
| Others | - | 86979515 | 11737085 | - | 98716600 |
|  | 707906907 | 430290704 | 240997845 | 611536424 | 1990731880 |
| <u>Derivative financial instruments</u> |  |  |  |  |  |
| Forward exchange contracts |  |  |  |  |  |
| Outflows | 109525448 | - | - | - | 109525448 |
| Inflows | (109251526) | - | - | - | (109251526) |
|  | 273922 | - | - | - | 273922 |
|  | $708180829 | $430290704 | $240997845 | $611536424 | $1991005802 |

---

Note:Information about the maturity analysis for lease liabilities more than 5 years:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **5-10 Years** | **10-15 Years** | **15-20 Years** | **More Than** <br>**20 Years**<br>| **Total** |
| <u>December 31, 2025</u> |  |  |  |  |  |
| Lease liabilities | $10974203 | $7513615 | $4002476 | $219645 | $22709939 |
| <u>December 31, 2024</u> |  |  |  |  |  |
| Lease liabilities | $10296927 | $6821624 | $3547316 | $116827 | $20782694 |

---

f.Fair value of financial instruments

1)Fair value measurements recognized in the consolidated balance sheets

Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value

is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active

markets for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices

included within Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include inputs

for the asset or liability that are not based on observable market data (unobservable inputs).

The timing of transfers between levels within the fair value hierarchy is at the end of reporting

period.

2)Fair value of financial instruments that are measured at fair value on a recurring basis

<u>Fair value hierarchy</u>

The following table presents the Company's financial assets and liabilities measured at fair value on

a recurring basis:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| <u>Financial assets at FVTPL</u> |  |  |  |  |
| Convertible preferred stocks | $- | $- | $13608819 | $13608819 |
| Mutual funds | - | - | 1297533 | 1297533 |
| Simple agreement for future equity | - | - | 125776 | 125776 |
| Forward exchange contracts | - | 100200 | - | 100200 |
|  | $- | $100200 | $15032128 | $15132328 |
|  |  |  |  | (Continued) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| <u>Financial assets at FVTOCI</u> |  |  |  |  |
| Investments in debt instruments |  |  |  |  |
| Corporate bonds | $- | $88636098 | $- | $88636098 |
| Agency mortgage-backed securities | - | 49150771 | - | 49150771 |
| Government bonds/Agency bonds | 25437560 | - | - | 25437560 |
| Asset-backed securities | - | 8512188 | - | 8512188 |
| Investments in equity instruments |  |  |  |  |
| Non-publicly traded equity investments | - | - | 8797170 | 8797170 |
| Publicly traded stocks | 3956073 | - | - | 3956073 |
| Notes and accounts receivable, net | - | 7695093 | - | 7695093 |
|  | $29393633 | $153994150 | $8797170 | $192184953 |
| <u>Financial liabilities at FVTPL</u> |  |  |  |  |
| Forward exchange contracts | $- | $3083883 | $- | $3083883 |
| <u>Hedging financial liabilities</u> |  |  |  |  |
| Fair value hedges |  |  |  |  |
| Interest rate futures contracts | $817 | $- | $- | $817 |
|  |  |  |  | (Concluded) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| <u>Financial assets at FVTPL</u> |  |  |  |  |
| Convertible preferred stocks | $- | $- | $14181839 | $14181839 |
| Mutual funds | - | - | 886931 | 886931 |
| Forward exchange contracts  | - | 207700 | - | 207700 |
| Simple agreement for future equity | - | - | 131072 | 131072 |
|  | $- | $207700 | $15199842 | $15407542 |
| <u>Financial assets at FVTOCI</u> |  |  |  |  |
| Investments in debt instruments |  |  |  |  |
| Corporate bonds | $- | $108612082 | $- | $108612082 |
| Agency mortgage-backed securities | - | 46611373 | - | 46611373 |
| Government bonds/Agency bonds | 20645877 | - | - | 20645877 |
| Asset-backed securities | - | 11490511 | - | 11490511 |
| Investments in equity instruments |  |  |  |  |
| Non-publicly traded equity investments | - | - | 7822884 | 7822884 |
| Publicly traded stocks | 4842814 | - | - | 4842814 |
| Notes and accounts receivable, net | - | 5912584 | - | 5912584 |
|  | $25488691 | $172626550 | $7822884 | $205938125 |
| <u>Hedging financial assets</u> |  |  |  |  |
| Fair value hedges |  |  |  |  |
| Interest rate futures contracts | $10959 | $- | $- | $10959 |
|  |  |  |  | (Continued) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| <u>Financial liabilities at FVTPL</u> |  |  |  |  |
| Forward exchange contracts | $- | $466539 | $- | $466539 |
|  |  |  |  | (Concluded) |

---

<u>Reconciliation of Level 3 fair value measurements of financial assets</u>

The financial assets measured at Level 3 fair value were financial assets at FVTPL and equity

investments classified as financial assets at FVTOCI. Reconciliations for the years ended December

31, 2025 and 2024 are as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $23022726 | $20849566 |
| Additions | 915360 | 2007343 |
| Recognized in profit or loss | 353087 | (137694) |
| Recognized in other comprehensive income or loss | 1251874 | (499041) |
| Disposals and proceeds from return of capital of investments | (750456) | (347769) |
| Transfers out of level 3 (Note) | (89730) | (164860) |
| Effect of exchange rate changes | (873563) | 1315181 |
| Balance, end of year | $23829298 | $23022726 |

---

Note:The transfer from level 3 to level 1 is because quoted prices (unadjusted) in active markets

data became available for the equity investments.

<u>Valuation techniques and assumptions used in Level 2 fair value measurement</u>

The fair values of financial assets and financial liabilities are determined as follows:

• The fair values of corporate bonds, agency bonds, agency mortgage-backed securities, asset-

backed securities and government bonds are determined by quoted market prices provided by

third party pricing services.

• The fair values of forward exchange contracts are measured using forward rates and discount

rates derived from quoted market prices.

• The fair value of accounts receivable classified as at FVTOCI is determined by the present

value of future cash flows based on the discount rate that reflects the credit risk of

counterparties.

<u>Valuation techniques and assumptions used in Level 3 fair value measurement</u>

The fair values of convertible preferred stocks, convertible bonds, simple agreement for future

equity, mutual funds and non-publicly traded equity investments are mainly determined by using

the asset approach, income approach or market approach.

The asset approach takes into account the net asset value measured at the fair value. On

December 31, 2025, and 2024, the Company uses unobservable inputs derived from discount for

lack of marketability of 10%. When other inputs remain equal, the fair value will decrease by

NT$64,123 thousand and NT$56,163 thousand, respectively, if discounts for lack of marketability

increase by 1%.

The income approach utilizes discounted cash flows to determine the present value of the expected

future economic benefits that will be derived from the investment. On December 31, 2025, and

2024, the Company mainly uses unobservable inputs, which include expected returns, discount rate

of 8.9% and 8.6%, respectively and discount for lack of marketability of 20%. With other inputs

remain equal, if discount rate increases by 1%, the fair value will decrease by NT$1,812,408

thousand and NT$1,606,927 thousand, respectively; if discount for lack of marketability increases

by 1%, the fair value will decrease by NT$133,626 thousand and NT$140,819 thousand,

respectively.

For the remaining few investments, the market approach is used to arrive at their fair values, for

which the recent financing activities of investees, the market transaction prices of the similar

companies and market conditions are considered.

3)Fair value of financial instruments that are not measured at fair value

Except as detailed in the following table, the Company considers that the carrying amounts of

financial instruments in the consolidated financial statements that are not measured at fair value

approximate their fair values.

<u>Fair value hierarchy</u>

The table below sets out the fair value hierarchy for the Company's financial assets and liabilities

which are not required to be measured at fair value:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Carrying**  | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **Amount** | **Level 1** | **Level 2** | **Total** |
| <u>Financial assets</u> |  |  |  |  |
| Financial assets at amortized costs |  |  |  |  |
| Corporate bonds | $231239832 | $- | $232259166 | $232259166 |
| Government bonds/Agency bonds | 4213491 | 4284607 | - | 4284607 |
|  | $235453323 | $4284607 | $232259166 | $236543773 |
| <u>Financial liabilities</u> |  |  |  |  |
| Financial liabilities at amortized <br>costs<br>|  |  |  |  |
| Bonds payable | $992033491 | $- | $939475287 | $939475287 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Carrying**  | **Fair Value** | **Fair Value** | **Fair Value** |
|  | **Amount** | **Level 1** | **Level 2** | **Total** |
| <u>Financial assets</u> |  |  |  |  |
| Financial assets at amortized costs |  |  |  |  |
| Corporate bonds | $171980179 | $- | $172518474 | $172518474 |
| Commercial paper | 14208158 | - | 14222713 | 14222713 |
| Government bonds/Agency bonds | 4379527 | 4353434 | - | 4353434 |
|  | $190567864 | $4353434 | $186741187 | $191094621 |
| <u>Financial liabilities</u> |  |  |  |  |
| Financial liabilities at amortized <br>costs<br>|  |  |  |  |
| Bonds payable | $983752385 | $- | $900344663 | $900344663 |

---

<u>Valuation techniques and assumptions used in Level 2 fair value measurement</u>

The fair values of corporate bonds, the Company's bonds payable and agency bonds are determined

by quoted market prices provided by third party pricing services.

The fair value of commercial paper is determined by the present value of future cash flows based on

the discounted curves that are derived from the quoted market prices.

**33. RELATED PARTY TRANSACTIONS**

Intercompany balances and transactions between TSMC and its subsidiaries, which are related parties of

TSMC, have been eliminated upon consolidation; therefore, those items are not disclosed in this note. The

following is a summary of significant transactions between the Company and other related parties:

a.Related party name and categories

---

| | |
|:---|:---|
| **Related Party Name** | **Related Party Categories** |
| GUC and its subsidiaries (GUC) | Associates |
| VIS and its subsidiaries (VIS) | Associates |
| SSMC | Associates |
| Xintec | Associates |
| TSMC Charity Foundation | Other related parties |
| TSMC Education and Culture Foundation | Other related parties |

---

b.Net revenue

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Years Ended December 31** | **Years Ended December 31** |
|  |  | **2025** | **2024** |
| <u>Item</u> | <u>Related Party Categories</u> |  |  |
| Sales revenue | Associates | $33226357 | $15034149 |

---

c.Purchases

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| <u>Related Party Categories</u> |  |  |
| Associates | $4991607 | $4619621 |

---

d.Receivables from related parties

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name</u> |  |  |
| Receivables from related parties | GUC | $1651010 | $610027 |
|  | VIS | 945224 | 626638 |
|  | Others | 143266 | 167808 |
|  |  | $2739500 | $1404473 |
| Other receivables from related <br>parties | VIS | $267808 | $- |
| Other receivables from related <br>parties | SSMC | 307 | 251 |
|  |  | $268115 | $251 |

---

e.Payables to related parties

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name</u> |  |  |
| Payables to related parties | Xintec | $1298672 | $987992 |
|  | SSMC  | 374088 | 308424 |
|  | Others | 105970 | 129585 |
|  |  | $1778730 | $1426001 |

---

f.Accrued expenses and other current liabilities

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,**<br>**2025**<br>| **December 31,**<br>**2024**<br>|
| <u>Item</u> | <u>Related Party Categories</u> |  |  |
| Temporary receipts | Associates | $638804 | $4271492 |

---

g.Others

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Years Ended December 31** | **Years Ended December 31** |
|  |  | **2025** | **2024** |
| <u>Item</u> | <u>Related Party Categories</u> |  |  |
| Manufacturing expenses | Associates | $5448254 | $5232777 |

---

The sales prices and payment terms to related parties were not significantly different from those of sales

to third parties. For other related party transactions, price and terms were determined in accordance with

mutual agreements.

The Company leased factory and office from associates. The lease terms and prices were both

determined in accordance with mutual agreements. The rental expenses were paid to associates

monthly; the related expenses were both classified under manufacturing expenses.

h.Compensation of key management personnel

The compensation to directors and other key management personnel were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Short-term employee benefits | $5332419 | $4447508 |
| Post-employment benefits | 3269 | 3830 |
| Share-based payments | 3888675 | 1357432 |
|  | $9224363 | $5808770 |

---

The compensation to directors and other key management personnel were determined by the

Compensation and People Development Committee of TSMC in accordance with the individual

performance and market trends.

**34. PLEDGED ASSETS**

The Company provided certificate of deposits recorded in other financial assets as collateral mainly for

building lease agreements. As of December 31, 2025 and 2024, the aforementioned other financial assets

amounted to NT$129,385 thousand and NT$132,077 thousand, respectively.

**35. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS**

Significant contingent liabilities and unrecognized commitments of the Company as of the end of the

reporting period, excluding those disclosed in other notes, were as follows:

a.Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C.

Government or its designee approved by TSMC can use up to 35% of TSMC's capacity provided

TSMC's outstanding commitments to its customers are not prejudiced. The term of this agreement is for

five years beginning from January 1, 1987 and is automatically renewed for successive periods of five

years unless otherwise terminated by either party with one year prior notice. As of the end of reporting

period, the R.O.C. Government did not invoke such right.

b.Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March 30,

1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in

Singapore. TSMC's equity interest in SSMC was 32%. Nevertheless, in September 2006, Philips spun-

off its semiconductor subsidiary which was renamed as NXP B.V. Further, TSMC and NXP B.V.

purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according to the

Shareholders Agreement on November 15, 2006. After the purchase, TSMC and NXP B.V. currently

own approximately 39% and 61% of the SSMC shares, respectively. TSMC and NXP B.V. are required,

in the aggregate, to purchase at least 70% of SSMC's capacity, but TSMC alone is not required to

purchase more than 28% of the capacity. If any party defaults on the commitment and the capacity

utilization of SSMC falls below a specific percentage of its capacity, the defaulting party is required to

compensate SSMC for all related unavoidable costs. There was no default from the aforementioned

commitment as of the end of reporting period.

c.In February 2025, Longitude Licensing Ltd. and Marlin Semiconductor Limited (collectively, "Marlin")

filed complaints with the U.S. International Trade Commission ("ITC") and the U.S. District Court for

the Eastern District of Texas alleging that TSMC and its customers infringe five U.S. patents. The ITC

instituted an investigation on March 21, 2025 and the lawsuit in the Eastern District Court for Texas

was statutorily stayed on April 23, 2025 pending the ITC investigation.Marlin dropped 2 asserted

patents in the ITC investigation in October and November 2025. The outcome cannot be determined,

and we cannot make a reliable estimate of the contingent liability at this time.

d.TSMC entered into long-term purchase agreements of materials and supplies, manufacturing services

and agreements of waste disposal with multiple suppliers. The relative minimum fulfillment quantity

and price are specified in the agreements.

e.TSMC entered into long-term purchase agreement of equipment and maintenance service. The relative

fulfillment period, quantity and price are specified in the agreement.

f.TSMC entered into long-term energy purchase agreements with multiple suppliers. The relative

fulfillment period, quantity and price are specified in the agreements.

g.Amounts available under unused letters of credit as of December 31, 2025 and 2024 were NT$438,643

thousand and NT$489,882 thousand, respectively.

h.The company entrusted financial institutions to provide performance guarantees mainly for import and

export of goods, lease agreement and apply for subsidy. As of December 31, 2025 and 2024, the

aforementioned guarantee amounted to NT$23,375,215 thousand and NT$10,315,609 thousand,

respectively.

**36. SIGNIFICANT LOSS FROM DISASTER**

In January 2025, several earthquakes struck Taiwan. The resulting damage was mostly to inventories,

machinery and equipment. In the first quarter of 2025, the Company recognized related earthquake losses to

be approximately NT$5.3 billion, net of insurance claim. Such losses were primarily included in the cost of

revenue and other operating income and expenses in net amounts.

On April 3, 2024, an earthquake struck Taiwan. The resulting damage was mostly to inventories, plant

facilities and machinery and equipment. In the second quarter of 2024, the Company recognized related

earthquake losses to be approximately NT$3 billion, net of insurance claim. Such losses were primarily

included in the cost of revenue and other operating income and expenses in net amounts.

**37. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND** 

**LIABILITIES**

The following information was summarized according to the foreign currencies other than the functional

currency of the Company. The exchange rates disclosed were used to translate the foreign currencies into

the functional currency. The significant financial assets and liabilities denominated in foreign currencies

were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Foreign** <br>**Currencies**<br>**(In Thousands)**<br>| **Exchange Rate** <br>**(Note 1)** | **Exchange Rate** <br>**(Note 1)** | **Carrying** <br>**Amount**<br>**(In Thousands)**<br>|
| <u>December 31, 2025</u> |  |  |  |  |
| <u>Financial assets</u> |  |  |  |  |
| Monetary items |  |  |  |  |
| USD | $20847509 | 31.444 |  | $655529057 |
| EUR | 1110573 | 37.003 |  | 41094543 |
| JPY | 132541455 | 0.2013 |  | 26680595 |
| <u>Financial liabilities</u> |  |  |  |  |
| Monetary items |  |  |  |  |
| USD | 12688419 | 31.444 |  | 398974654 |
| EUR | 1016157 | 37.003 |  | 37600861 |
| JPY | 131018646 | 0.2013 |  | 26374053 |
| <u>December 31, 2024</u> |  |  |  |  |
| <u>Financial assets</u> |  |  |  |  |
| Monetary items |  |  |  |  |
| USD | 18726635 | 32.768 |  | 613634377 |
| EUR | 596978 | 34.102 |  | 20358132 |
| EUR | 169266 | 1.041 | (Note 2) | 5772303 |
| JPY | 128926508 | 0.2092 |  | 26971425 |
| <u>Financial liabilities</u> |  |  |  |  |
| Monetary items |  |  |  |  |
| USD | 16255804 | 32.768 |  | 532670186 |
| EUR | 821105 | 34.102 |  | 28001335 |
| EUR | 168550 | 1.041 | (Note 2) | 5747886 |
| JPY | 129345682 | 0.2092 |  | 27059117 |

---

Note 1:Except as otherwise noted, exchange rate represents the number of NT dollar for which one

foreign currency could be exchanged.

Note 2:The exchange rate represents the number of U.S. dollar for which one Euro could be exchanged.

Please refer to the consolidated statements of comprehensive income for the total of realized and unrealized

foreign exchange gain and loss for the years ended December 31, 2025 and 2024, respectively. Since there

were varieties of foreign currency transactions and functional currencies within the subsidiaries of the

Company, the Company was unable to disclose foreign exchange gain (loss) towards each foreign currency

with significant impact.

**38. ADDITIONAL DISCLOSURES**

Following are the additional disclosures required by the Securities and Futures Bureau for TSMC:

a.Financings provided: See Table 1 attached;

b.Endorsement/guarantee provided: See Table 2 attached;

c.Marketable securities held (excluding investments in subsidiaries and associates): there are no

significant securities that need to be listed separately;

d.Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in capital:

See Table 3 attached;

e.Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:

See Table 4 attached;

f.Others: The business relationship between the parent and the subsidiaries and significant transactions

between them: See Table 5 attached;

g.Names, locations, and related information of investees over which TSMC exercises significant influence

(excluding information on investment in mainland China): See Table 6 attached;

h.Information on investment in mainland China

1)The name of the investee in mainland China, the main businesses and products, its issued capital,

method of investment, information on inflow or outflow of capital, percentage of ownership,

income (losses) of the investee, share of profits/losses of investee, ending balance, amount received

as dividends from the investee, and the limitation on investee: See Table 7 attached.

2)Significant direct or indirect transactions with the investee, its prices and terms of payment,

unrealized gain or loss, and other related information which is helpful to understand the impact of

investment in mainland China on financial reports: See Table 5 attached.

**39. OPERATING SEGMENTS INFORMATION**

a.Operating segments, segment revenue and operating results

TSMC's chief operating decision makers periodically review operating results, focusing on operating

income generated by foundry segment. Operating results are used for resource allocation and/or

performance assessment. As a result, the Company has only one operating segment, the foundry

segment. The foundry segment engages mainly in the manufacturing, sales, packaging, testing and

computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of

masks.

The basis for the measurement of income from operations is the same as that for the preparation of

financial statements. Please refer to the consolidated statements of comprehensive income for the

related segment revenue and operating results.

b.Geographic and major customers' information were as follows:

1)Geographic information

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
| **Noncurrent Assets** | **2025** | **2024** |
| Taiwan | $3102343043 | $2613112149 |
| United States | 540057427 | 541836347 |
| Japan | 117403224 | 126600621 |
| China | 65019872 | 82405764 |
| Europe, the Middle East and Africa | 51515151 | 19150044 |
| Others | 1165 | 1420 |
|  | $3876339882 | $3383106345 |

---

Noncurrent assets include property, plant and equipment, right-of-use assets, intangible assets and

other noncurrent assets.

2)Major customers representing at least 10% of net revenue

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| Customer A | $726974278 | 19 | $352271213 | 12 |
| Customer B | 645178671 | 17 | 624345477 | 22 |

---

**<u>TABLE 1</u>**

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **FINANCINGS PROVIDED**  |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Financing** <br>**Company** | **Counterparty** | **Financial Statement** <br>**Account** | **Related** <br>**Party** | **Maximum** <br>**Balance for the** <br>**Period (Foreign** <br>**Currencies in** <br>**Thousands) (Note 3)** | **Ending Balance** <br>**(Foreign Currencies** <br>**in Thousands)** <br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Interest Rate** | **Nature for Financing** | **Transaction** <br>**Amounts** | **Reason for** <br>**Financing** | **Allowance for Bad** <br>**Debt** | **Collateral** | **Collateral** | **Financing Limits** <br>**for Each** <br>**Borrowing** <br>**Company**<br>**(Notes 1 and 2)** | **Financing** <br>**Company's Total** <br>**Financing Amount** <br>**Limits** <br>**(Notes 1 and 2)** |
| **No.** | **Financing** <br>**Company** | **Counterparty** | **Financial Statement** <br>**Account** | **Related** <br>**Party** | **Maximum** <br>**Balance for the** <br>**Period (Foreign** <br>**Currencies in** <br>**Thousands) (Note 3)** | **Ending Balance** <br>**(Foreign Currencies** <br>**in Thousands)** <br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Interest Rate** | **Nature for Financing** | **Transaction** <br>**Amounts** | **Reason for** <br>**Financing** | **Allowance for Bad** <br>**Debt** | **Item** | **Value** | **Financing Limits** <br>**for Each** <br>**Borrowing** <br>**Company**<br>**(Notes 1 and 2)** | **Financing** <br>**Company's Total** <br>**Financing Amount** <br>**Limits** <br>**(Notes 1 and 2)** |
| 1 | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | $41142000 | $15295580 | $15295580 | 1.50% | The need for long-term <br>financing | $- | Operating capital | $- | - | $- | $122744745 | $122744745 |
|  | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | (RMB 6,000,000)& | (RMB 3,400,000)  | (RMB 3,400,000)  |  | The need for long-term <br>financing |  |  |  |  |  |  |  |
|  | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | (US$450,000)  |  |  |  | The need for long-term <br>financing |  |  |  |  |  |  |  |
| 2 | TSMC <br>Development | TSMC <br>Washington | Other receivables from <br>related parties | Yes | 1886640 | 1886640 | 1886640 | - | The need for short-term <br>financing | - | Operating capital | - | - | - | 33875210 | 33875210 |
|  | TSMC <br>Development | TSMC <br>Washington | Other receivables from <br>related parties | Yes | (US$60,000)  | (US$60,000)  | (US$60,000)  |  | The need for short-term <br>financing |  |  |  |  |  |  |  |
| Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. |
| Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. |
| Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |

---

**<u>TABLE 2</u>**

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **ENDORSEMENTS/GUARANTEES PROVIDED** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Endorsement/**<br>**Guarantee** <br>**Provider** | **Guaranteed Party** | **Guaranteed Party** | **Limits on** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Provided to Each** <br>**Guaranteed** <br>**Party**<br>**(Notes 1 and 2)** | **Maximum** <br>**Balance** <br>**for the Period**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Ending Balance**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(US$ in** <br>**Thousands)** | **Amount of** <br>**Endorsement/** <br>**Guarantee** <br>**Collateralized by** <br>**Properties** | **Ratio of** <br>**Accumulated** <br>**Endorsement/** <br>**Guarantee to Net** <br>**Equity per** <br>**Latest Financial** <br>**Statements** | **Maximum** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Allowable**<br>**(Notes 1 and 2)** | **Guarantee**<br>**Provided by**<br>**Parent** <br>**Company** | **Guarantee**<br>**Provided by**<br>**A Subsidiary** | **Guarantee**<br>**Provided to** <br>**Subsidiaries** <br>**in Mainland** <br>**China** |
| **No.** | **Endorsement/**<br>**Guarantee** <br>**Provider** | **Name** | **Nature of** <br>**Relationship**<br>| **Limits on** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Provided to Each** <br>**Guaranteed** <br>**Party**<br>**(Notes 1 and 2)** | **Maximum** <br>**Balance** <br>**for the Period**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Ending Balance**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(US$ in** <br>**Thousands)** | **Amount of** <br>**Endorsement/** <br>**Guarantee** <br>**Collateralized by** <br>**Properties** | **Ratio of** <br>**Accumulated** <br>**Endorsement/** <br>**Guarantee to Net** <br>**Equity per** <br>**Latest Financial** <br>**Statements** | **Maximum** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Allowable**<br>**(Notes 1 and 2)** | **Guarantee**<br>**Provided by**<br>**Parent** <br>**Company** | **Guarantee**<br>**Provided by**<br>**A Subsidiary** | **Guarantee**<br>**Provided to** <br>**Subsidiaries** <br>**in Mainland** <br>**China** |
| 0 | TSMC | TSMC North <br>America | Subsidiary | $2167838398 | $2616559 | $2616559 | $2616559 | $- | 0.05% | $2167838398 | Yes | No | No |
| 0 |  | TSMC North <br>America | Subsidiary |  | (US$83,213) | (US$83,213) | (US$83,213) |  |  |  |  |  |  |
|  |  | TSMC Global | Subsidiary | 2167838398 | 235830000 | 204386000 | 204386000 | - | 3.77% | 2167838398 | Yes | No | No |
|  |  | TSMC Global | Subsidiary |  | (US$7,500,000) | (US$6,500,000) | (US$6,500,000) |  |  |  |  |  |  |
|  |  | TSMC Arizona | Subsidiary | 2167838398 | 471578859 | 471476919 | 343737521 | - | 8.70% | 2167838398 | Yes | No | No |
|  |  | TSMC Arizona | Subsidiary |  | (US$14,997,420) | (US$14,994,178) | (US$10,931,736) |  |  |  |  |  |  |
| 1 | TSMC Japan | TSMC JDC | The same parent <br>company | 322906 | 265716 | - | - | - | - | 322906 | No | No | No |
| 1 |  | TSMC JDC | The same parent <br>company |  | (JPY 1,320,000) |  |  |  |  |  |  |  |  |
| Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. |
| Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. |
| Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |

---

**<u>TABLE 3</u>**

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Company Name** | **Related Party** | **Nature of Relationships** | **Transaction Details** | **Transaction Details** | **Transaction Details** | **Transaction Details** | **Abnormal Transaction** | **Abnormal Transaction** | **Notes/Accounts Payable or** <br>**Receivable** | **Notes/Accounts Payable or** <br>**Receivable** | **Note** |
| **Company Name** | **Related Party** | **Nature of Relationships** | **Purchases/**<br>**Sales**<br>| **Amount**<br>**(Foreign Currencies** <br>**in Thousands)**<br>| **% to** <br>**Total**<br>| **Payment Terms** | **Unit Price** | **Payment Terms** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)**<br>| **% to** <br>**Total**<br>| **Note** |
| TSMC | TSMC North America | Subsidiary | Sales | $2931832801  | 77 | Net 30 days from invoice date <br>(Note)<br>| - | - | $206855118  | 81 |  |
|  | TSMC Arizona | Subsidiary | Sales | 1558414  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 86254  | - |  |
|  | JASM | Subsidiary | Sales | 1026858  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 396245  | - |  |
|  | TSMC Nanjing | Subsidiary | Sales | 158188  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 7430  | - |  |
|  | GUC | Associate | Sales | 6014200  | - | Net 30 days from invoice date | - | - | 387902  | - |  |
|  | VIS | Associate | Sales | 1467380  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 945224  | - |  |
|  | SSMC | Associate | Sales | 299174  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 97263  | - |  |
|  | TSMC Nanjing | Subsidiary | Purchases | 73652776  | 27 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (2934085) | 3 |  |
|  | TSMC Arizona | Subsidiary | Purchases | 67096542  | 25 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (9127301) | 10 |  |
|  | TSMC China | Subsidiary | Purchases | 26581060  | 10 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (2261531) | 2 |  |
|  | TSMC Washington | Indirect subsidiary | Purchases | 7233381  | 3 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (578662) | 1 |  |
|  | SSMC | Associate | Purchases | 4113439  | 2 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (374089) | - |  |
|  | VIS | Associate | Purchases | 878168  | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (91947) | - |  |
| TSMC North America | GUC | Associate of TSMC | Sales | 25079357  | 1 | Net 30 days from invoice date | - | - | 1263109  | 1 |  |
| TSMC North America |  |  |  | (US$805,964) |  |  |  |  | (US$40,170) |  |  |
| VisEra Tech | Xintec | Associate of TSMC | Sales | 366246  | 4 | Net 60 days from the end of the <br>month of when invoice is issued<br>| - | - | 46003  | 4 |  |

---

Note:The tenor is determined by the payment terms granted to its clients by TSMC North America.

**<u>TABLE 4</u>**

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL**  |
| **December 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Company Name** | **Related Party** | **Nature of Relationships** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)** | **Turnover Days** <br>**(Note 1)** | **Overdue** | **Overdue** | **Amounts Received in** <br>**Subsequent Period** | **Allowance for**<br>**Bad Debts** |
| **Company Name** | **Related Party** | **Nature of Relationships** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)** | **Turnover Days** <br>**(Note 1)** | **Amount** | **Action Taken** | **Amounts Received in** <br>**Subsequent Period** | **Allowance for**<br>**Bad Debts** |
| TSMC | TSMC North America | Subsidiary | $210872604 | 26 | $- | - | $- | $- |
|  | JASM | Subsidiary | 397110 | Note 2 | - | - | - | - |
|  | VIS | Associate | 1213033 | Note 2 | - | - | - | - |
|  | GUC | Associate | 387902 | 25 | - | - | - | - |
| TSMC North America | TSMC | Parent company | 149819 | Note 2 | - | - | - | - |
|  |  |  | (US$4,765) |  |  |  |  |  |
|  | GUC | Associate of TSMC | 1263109 | 10 | - | - | - | - |
|  |  |  | (US$40,170) |  |  |  |  |  |
| TSMC Europe | TSMC | Parent company | 112840 | Note 2 | - | - | - | - |
|  |  |  | (EUR3,049) |  |  |  |  |  |
| TSMC China | TSMC | Parent company | 2261531 | 27 | - | - | - | - |
| TSMC China |  |  | (RMB502,702) |  |  |  |  |  |
| TSMC China | TSMC Nanjing | The same parent company | 15388856 | Note 2 | - | - | - | - |
| TSMC China |  |  | (RMB3,420,734) |  |  |  |  |  |
| TSMC Nanjing | TSMC | Parent company | 2934085 | 18 | - | - | - | - |
| TSMC Nanjing |  |  | (RMB652,200) |  |  |  |  |  |
| TSMC Arizona | TSMC | Parent company | 9127301 | 26 | - | - | - | - |
|  |  |  | (US$290,272) |  |  |  |  |  |
| TSMC Technology | TSMC | The ultimate parent of the Company | 1248835 | Note 2 | - | - | - | - |
|  |  |  | (US$39,716) |  |  |  |  |  |
| TSMC Development | TSMC Washington | Subsidiary | 1886640 | Note 2 | - | - | - | - |
|  |  |  | (US$60,000) |  |  |  |  |  |
| TSMC Washington | TSMC | The ultimate parent of the Company | 578662 | 27 | - | - | - | - |
|  |  |  | (US$18,403) |  |  |  |  |  |

---

Note 1:The calculation of turnover days excludes other receivables from related parties.

Note 2:The ending balance is primarily consisted of royalty receivables and other receivables, which is not applicable for the calculation of turnover days.

**<u>TABLE 5</u>**

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **INTERCOMPANY RELATIONSHIPS AND SIGNIFICANT INTERCOMPANY TRANSACTIONS** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars)** |

---

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Company Name** | **Counterparty** | **Nature of** <br>**Relationship**<br>**(Note 1)** | **Intercompany Transactions** | **Intercompany Transactions** | **Intercompany Transactions** | **Intercompany Transactions** |
| **No.** | **Company Name** | **Counterparty** | **Nature of** <br>**Relationship**<br>**(Note 1)** | **Financial Statements Item** | **Amount** | **Terms**<br>**(Note 2)**<br>| **Percentage of** <br>**Consolidated** <br>**Net Revenue** <br>**or Total Assets**<br>|
| 0 | TSMC | TSMC North America | 1 | Sales revenue | $2931832801 | － | 77% |
|  |  |  |  | Receivables from related parties | 206855118 | － | 3% |
|  |  |  |  | Accrued expenses and other current liabilities | 83105600 | － | 1% |
|  |  |  |  | Other noncurrent liabilities | 23553166 | － | - |
|  |  | TSMC China | 1 | Purchases | 26581060 | － | 1% |
|  |  | TSMC Nanjing | 1 | Purchases | 73652776 | － | 2% |
|  |  | TSMC Arizona | 1 | Purchases | 67096542 | － | 2% |

---

Note 1:No. 1 represents the transactions from parent company to subsidiary.

Note 2:The sales prices and payment terms of intercompany sales are not significantly different from those to third parties. For other intercompany transactions, prices and terms are determined in accordance with mutual agreements.

**<u>TABLE 6</u>**

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Investor Company** | **Investee Company** | **Location** | **Main Businesses and Products** | **Original Investment Amount** | **Original Investment Amount** | **Balance as of December 31, 2025** | **Balance as of December 31, 2025** | **Balance as of December 31, 2025** | **Net Income** <br>**(Losses) of the** <br>**Investee**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Share of** <br>**Profits/Losses** <br>**of Investee**<br>**(Note 1)**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Note** |
| **Investor Company** | **Investee Company** | **Location** | **Main Businesses and Products** | **December 31,** <br>**2025**<br>**(Foreign**<br>**Currencies in**<br>**Thousands)**<br>| **December 31,** <br>**2024**<br>**(Foreign**<br>**Currencies in**<br>**Thousands)**<br>| **Shares (In** <br>**Thousands)**<br>| **Percentage of** <br>**Ownership**<br>| **Carrying** <br>**Value** <br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>| **Net Income** <br>**(Losses) of the** <br>**Investee**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Share of** <br>**Profits/Losses** <br>**of Investee**<br>**(Note 1)**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Note** |
| TSMC | TSMC Global | Tortola, British Virgin Islands | Investment activities | $1178213709 | $616839509 | 37 | 100 | $1351374238 | $51520610 | $51520610 | Subsidiary |
|  | TSMC Arizona | Phoenix, Arizona, U.S.A. | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 672616510 | 565786810 | 21250 | 100 | 644037295 | 16141125 | 14599365 | Subsidiary |
|  | TSMC Partners | Tortola, British Virgin Islands | Investing in companies involved in the semiconductor design and <br>manufacturing, and other investment activities<br>| 31456130 | 31456130 | 988268 | 100 | 75809127 | 2172398 | 2172398 | Subsidiary |
|  | JASM | Kumamoto, Japan | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 68384148 | 68384148 | 3011 | 73 | 48148122 | (9767064) | (7095772) | Subsidiary |
|  | ESMC | Dresden, Germany | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 38221667 | 18112326 | 805 | 70 | 39474813 | (688621) | (482035) | Subsidiary |
|  | VIS | Hsinchu, Taiwan | Manufacturing, sales, packaging, testing and computer-aided design of <br>integrated circuits and other semiconductor devices and the <br>manufacturing and design service of masks<br>| 13919430 | 13919430 | 506709 | 28 | 18166267 | 7907503 | 2172713 | Associate |
|  | SSMC | Singapore | Manufacturing and sales of integrated circuits and other semiconductor <br>devices<br>| 5120028 | 5120028 | 314 | 39 | 12419167 | 3752313 | 1455522 | Associate |
|  | VisEra Tech | Hsinchu, Taiwan | Research, design, development, manufacturing, sales, packaging and <br>test of color filter<br>| 4224082 | 4224082 | 213619 | 67 | 11921700 | 1273995 | 803176 | Subsidiary |
|  | TSMC North America | San Jose, California, U.S.A. | Sales and marketing of integrated circuits and other semiconductor <br>devices<br>| 333718 | 333718 | 11000 | 100 | 8770383 | 1194222 | 1194222 | Subsidiary |
|  | Xintec | Taoyuan, Taiwan | Wafer level chip size packaging and wafer level post passivation <br>interconnection service<br>| 1988317 | 1988317 | 111282 | 41 | 4495255 | 1353534 | 555073 | Associate |
|  | Emerging Fund | Cayman Islands | Investing in technology start-up companies | 3014372 | 2688915 | - | 99.9 | 4138575 | 158117 | 157959 | Subsidiary |
|  | GUC | Hsinchu, Taiwan | Researching, developing, manufacturing, testing and marketing of <br>integrated circuits<br>| 386568 | 386568 | 46688 | 35 | 2952582 | 3769566 | 1313286 | Associate |
|  | TSMC 3DIC | Yokohama, Japan | Engineering support activities | 1144356 | 1144356 | 49 | 100 | 1502144 | 216635 | 216635 | Subsidiary |
|  | TSMC Europe | Amsterdam, the Netherlands | Customer service and supporting activities | 15749 | 15749 | - | 100 | 767420 | 77134 | 77134 | Subsidiary |
|  | TSMC JDC | Yokohama, Japan | Engineering support activities | 410680 | 410680 | 15 | 100 | 433326 | 31851 | 31851 | Subsidiary |
|  | TSMC Japan | Yokohama, Japan | Customer service and supporting activities | 83760 | 83760 | 6 | 100 | 129152 | 5123 | 5123 | Subsidiary |
|  | TSMC Korea | Seoul, Korea | Customer service and supporting activities | 13656 | 13656 | 80 | 100 | 44447 | 1670 | 1670 | Subsidiary |
|  | VTAF III (Note 3) | Cayman Islands | Investing in technology start-up companies | - | 561975 | - | - | - | 445 | 436 | Subsidiary |
| TSMC Partners | TSMC Development | Delaware, U.S.A. | Investing in companies involved in semiconductor manufacturing | 18455704 | 18455704 | - | 100 | 38469935 | 114205 | Note 2 | Subsidiary |
|  |  |  |  | (US$586,939) | (US$586,939) |  |  | (US$1,223,443) | (US$3,617) |  |  |
|  | TSMC Technology | Delaware, U.S.A. | Engineering support activities | 449084 | 449084 | - | 100 | 1911742 | 408763 | Note 2 | Subsidiary |
|  |  |  |  | (US$14,282) | (US$14,282) |  |  | (US$60,798) | (US$13,211) |  |  |
|  | TSMC Canada | Ontario, Canada | Engineering support activities | 72321 | 72321 | 2300 | 100 | 472275 | 44729 | Note 2 | Subsidiary |
|  |  |  |  | (US$2,300) | (US$2,300) |  |  | (US$15,020) | (US$1,439) |  |  |
| VTAF III | Growth Fund (Note 3) | Cayman Islands | Investing in technology start-up companies | - | 38862 | - | - | - | 445 | Note 2 | Subsidiary |
|  |  |  |  |  | (US$1,236) |  |  |  | (US$14) |  |  |
| TSMC Development | TSMC Washington | Washington, U.S.A. | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| - | - | 293637 | 100 | 4571303 | (401529) | Note 2 | Subsidiary |
|  |  |  |  |  |  |  |  | (US$145,379) | (US$(12888)) |  |  |

---

Note 1:The share of profits/losses of investee includes the effect of unrealized gross profit on intercompany transactions.

Note 2:The share of profits/losses of the investee company is not reflected herein as such amount is already included in the share of profits/losses of the investor company.

Note 3:VTAF III and the Growth Fund have completed the liquidation procedures respectively in the first quarter and the second quarter of 2025.

**<u>TABLE 7</u>**

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| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited and Subsidiaries** |
| **INFORMATION ON INVESTMENT IN MAINLAND CHINA** |
| **FOR YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Investee Company** | **Main Businesses and** <br>**Products** | **Total Amount of** <br>**Paid-in Capital** <br>**(RMB in Thousands)** | **Method of** <br>**Investment** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**January 1, 2025** <br>**(US$ in Thousands)** | **Investment Flows** | **Investment Flows** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**December 31,** <br>**2025 (US$ in** <br>**Thousands)** | **Net Income** <br>**(Losses) of the** <br>**Investee** <br>**Company** | **Percentage of** <br>**Ownership** | **Share of** <br>**Profits/Losses** | **Carrying** <br>**Amount** <br>**as of** <br>**Balance as of** <br>**December 31,** <br>**2025** | **Accumulated** <br>**Inward** <br>**Remittance of** <br>**Earnings as of** <br>**December 31,** <br>**2025** |
| **Investee Company** | **Main Businesses and** <br>**Products** | **Total Amount of** <br>**Paid-in Capital** <br>**(RMB in Thousands)** | **Method of** <br>**Investment** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**January 1, 2025** <br>**(US$ in Thousands)** | **Outflow**<br>**(US$ in** <br>**Thousands)**<br>| **Inflow** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**December 31,** <br>**2025 (US$ in** <br>**Thousands)** | **Net Income** <br>**(Losses) of the** <br>**Investee** <br>**Company** | **Percentage of** <br>**Ownership** | **Share of** <br>**Profits/Losses** | **Carrying** <br>**Amount** <br>**as of** <br>**Balance as of** <br>**December 31,** <br>**2025** | **Accumulated** <br>**Inward** <br>**Remittance of** <br>**Earnings as of** <br>**December 31,** <br>**2025** |
| TSMC China | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | $18939667 | (Note 1) | $18939667 | $- | $- | $18939667 | $11571415 | 100% | $11638257 | $122572394 | $- |
| TSMC China | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | (RMB 4,502,080) |  | (US$596,000) |  |  | (US$596,000) |  |  | (Note 2) |  |  |
| TSMC Nanjing | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | 30521412 | (Note 1) | 30521412 | - | - | 30521412 | 27605732 | 100% | 27453918 | 145609673 | - |
| TSMC Nanjing | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | (RMB 6,650,119) |  | (US$1,000,000) |  |  | (US$1,000,000) |  |  | (Note 2) |  |  |

---

---

| | | |
|:---|:---|:---|
| **Accumulated Investment in Mainland China** <br>**as of December 31, 2025** <br>**(US$ in Thousands)**<br>| **Investment Amounts Authorized by**<br>**Investment Commission, MOEA**<br>**(US$ in Thousands)**<br>| **Upper Limit on Investment** |
| $49461079 | $119412667 | $3276477170 |
| (US$1,596,000) | (US$3,596,000) | (Note 3) |

---

Note 1:TSMC directly invested US$596,000 thousand in TSMC China and US$1,000,000 thousands in TSMC Nanjing.

Note 2:Amount was recognized based on the audited financial statements.

Note 3:The upper limit on investment in mainland China is determined by sixty percent (60%) of the Company's consolidated net worth.

## Exhibit 99.2

<u>English Translation of Financial Statements Originally Issued in Chinese</u>

**Taiwan Semiconductor Manufacturing** 

**Company Limited**

**Parent Company Only Financial Statements for the**

**Years Ended December 31, 2025 and 2024 and** 

**Independent Auditors' Report**

勤業眾信

勤業眾信聯合會計師事務所

110016 台北市信義區松仁路100號20樓

Deloitte & Touche

20F, Taipei Nan Shan Plaza

No. 100, Songren Rd.,

Xinyi Dist., Taipei 110016, Taiwan

Tel :+886 (2) 2725-9988

Fax:+886 (2) 4051-6888

www.deloitte.com.tw

**INDEPENDENT AUDITORS' REPORT**

The Board of Directors and Shareholders

Taiwan Semiconductor Manufacturing Company Limited

**Opinion**

We have audited the accompanying parent company only financial statements of Taiwan Semiconductor

Manufacturing Company Limited (the "Company"), which comprise the parent company only balance sheets as

of December 31, 2025 and 2024, and the parent company only statements of comprehensive income, changes in

equity and cash flows for the years then ended, and notes to the parent company only financial statements,

including material accounting policy information (collectively referred to as the "parent company only financial

statements").

In our opinion, the accompanying parent company only financial statements present fairly, in all material

respects, the parent company only financial position of the Company as of December 31, 2025 and 2024, and

its parent company only financial performance and its parent company only cash flows for the years then ended

in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

**Basis for Opinion**

We conducted our audits in accordance with the Regulations Governing Financial Statement Audit and

Attestation Engagements of Certified Public Accountants and the Standards on Auditing of the Republic of

China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the

Audit of the Parent Company Only Financial Statements section of our report. We are independent of the

Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic

of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

**Key Audit Matters**

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of

the parent company only financial statements for the year ended December 31, 2025. These matters were

addressed in the context of our audit of the parent company only financial statements as a whole, and in

forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter for the Company's parent company only financial statements for the year ended December 31,

2025 is stated as follows:

<u>Property, plant and equipment (PP&E) – commencement of depreciation related to PP&E classified as</u> 

<u>equipment under installation and construction in progress (EUI/CIP)</u>

Refer to Notes 4, 5 and 13 to the parent company only financial statements.

The Company's evaluation of when to commence depreciation of EUI/CIP involves determining when the

assets are available for their intended use. The criteria the Company uses to determine whether EUI/CIP are

available for their intended use involves subjective judgments and assumptions about the conditions necessary

for the assets to be capable of operating in the intended manner. Changes in these assumptions could have a

significant impact on when depreciation is recognized.

Given the subjectivity in determining the date to commence depreciation of EUI/CIP, performing audit

procedures to evaluate the reasonableness of the Company's judgments and assumptions required a high degree

of auditor judgment. Consequently, the validity of commencement of depreciation related to PP&E classified as

EUI/CIP is identified as a key audit matter.

Our audit procedures related to the evaluation of when to commence depreciation of EUI/CIP included the

following, among others:

1. We read the Company's policy and understood the criteria used to determine when to commence

depreciation.

2. We tested the effectiveness of the controls over the evaluation of when to commence depreciation of EUI/

CIP.

3. We sampled the year-end balance of EUI/CIP and performed the following for each selection:

a.Evaluated whether the selection did not meet the criteria specified by the Company for commencement

of depreciation.

b.Observed the assets and evaluated their status.

4. We sampled and evaluated whether the selection of EUI/CIP met the criteria specified by the Company for

commencement of depreciation during the year.

5. We sampled and evaluated whether the selection of EUI/CIP met the criteria specified by the Company for

commencement of depreciation subsequent to year end.

**Responsibilities of Management and Those Charged with Governance for the Parent Company Only** 

**Financial Statements**

Management is responsible for the preparation and fair presentation of the parent company only financial

statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities

Issuers, and for such internal control as management determines is necessary to enable the preparation of parent

company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only financial statements, management is responsible for assessing the

Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern

and using the going concern basis of accounting unless management either intends to liquidate the Company or

to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including members of the Audit and Risk Committee) are responsible for

overseeing the Company's financial reporting process.

**Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements**

Our objectives are to obtain reasonable assurance about whether the parent company only financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report

that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit

conducted in accordance with the Standards on Auditing of the Republic of China will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users

taken on the basis of these parent company only financial statements.

As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise

professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the parent company only financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain

audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting

a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may

involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of

the Company's internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates

and related disclosures made by management.

4. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditors' report to the related

disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify

our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report.

However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the parent company only financial statements,

including the disclosures, and whether the parent company only financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or

business activities within the Company to express an opinion on the parent company only financial

statements. We are responsible for the direction, supervision and performance of the group audit. We

remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that

we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical

requirements regarding independence, and to communicate with them all relationships and other matters that

may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of

most significance in the audit of the parent company only financial statements for the year ended December 31,

2025 and are therefore the key audit matters. We describe these matters in our auditors' report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine

that a matter should not be communicated in our report because the adverse consequences of doing so would

reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audits resulting in this independent auditors' report are Shih Tsung Wu and

Shang Chih Lin.

![signv2.jpg](signv2.jpg)

Deloitte & Touche

Taipei, Taiwan

Republic of China

February 10, 2026

*<u>Notice to Readers</u>*

*The accompanying parent company only financial statements are intended only to present the financial* 

*position, financial performance and cash flows in accordance with accounting principles and practices* 

*generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures* 

*and practices to audit such parent company only financial statements are those generally applied in the* 

*Republic of China.*

*For the convenience of readers, the independent auditors' report and the accompanying parent company only* 

*financial statements have been translated into English from the original Chinese version prepared and used in* 

*the Republic of China. If there is any conflict between the English version and the original Chinese version or* 

*any difference in the interpretation of the two versions, the Chinese-language independent auditors' report and* 

*parent company only financial statements shall prevail.*

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY BALANCE SHEETS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
| **ASSETS** | **Amount** | **%** | **Amount** | **%** |
| CURRENT ASSETS |  |  |  |  |
| Cash and cash equivalents (Note 6) | $1067035432 | 15 | $1035061499 | 17 |
| Financial assets at fair value through profit or loss (Note 7) | 54890 | - | 13174 | - |
| Financial assets at amortized cost (Note 8) | - | - | 14208158 | - |
| Notes and accounts receivable, net (Note 10) | 46702679 | 1 | 39497003 | 1 |
| Receivables from related parties (Note 30) | 208783038 | 3 | 210300175 | 4 |
| Other receivables from related parties (Note 30) | 4325893 | - | 5313087 | - |
| Inventories (Notes 5 and 11) | 252320369 | 3 | 270716472 | 4 |
| Other financial assets | 15334569 | - | 4927482 | - |
| Other current assets | 36398294 | - | 29528046 | 1 |
| Total current assets | 1630955164 | 22 | 1609565096 | 27 |
| NONCURRENT ASSETS |  |  |  |  |
| Financial assets at fair value through other comprehensive income | 1086940 | - | 1058347 | - |
| Investments accounted for using equity method (Note 12) | 2492766080 | 34 | 1758587882 | 29 |
| Property, plant and equipment (Notes 5 and 13) | 2991673431 | 41 | 2537292611 | 42 |
| Right-of-use assets (Notes 5 and 14) | 41870717 | 1 | 37899147 | 1 |
| Intangible assets (Notes 5 and 15) | 19574877 | - | 20452082 | - |
| Deferred income tax assets (Notes 5 and 23) | 53147642 | 1 | 60178345 | 1 |
| Refundable deposits | 3836610 | - | 3783511 | - |
| Other noncurrent assets | 41302872 | 1 | 8432279 | - |
| Total noncurrent assets | 5645259169 | 78 | 4427684204 | 73 |
| TOTAL | $7276214333 | 100 | $6037249300 | 100 |
| **LIABILITIES AND EQUITY** |  |  |  |  |
| CURRENT LIABILITIES |  |  |  |  |
| Financial liabilities at fair value through profit or loss (Note 7) | $3070087 | - | $439110 | - |
| Accounts payable | 74198152 | 1 | 64054077 | 1 |
| Payables to related parties (Note 30) | 18524963 | - | 10137811 | - |
| Salary and bonus payable | 48967710 | 1 | 37440411 | 1 |
| Accrued profit sharing bonus to employees and compensation to directors (Note 26) | 103097239 | 1 | 70520129 | 1 |
| Payables to contractors and equipment suppliers | 168648840 | 2 | 150280751 | 3 |
| Cash dividends payable (Note 18) | 285258060 | 4 | 220418821 | 4 |
| Income tax payable (Notes 5 and 23) | 201492741 | 3 | 146420994 | 2 |
| Long-term liabilities - current portion (Notes 16 and 27) | 61940126 | 1 | 24397381 | - |
| Accrued expenses and other current liabilities (Notes 5, 14, 19, 27 and 30) | 340755301 | 5 | 449236841 | 7 |
| Total current liabilities | 1305953219 | 18 | 1173346326 | 19 |
| NONCURRENT LIABILITIES |  |  |  |  |
| Bonds payable (Notes 16 and 27) | 476131202 | 7 | 453839281 | 8 |
| Deferred income tax liabilities (Notes 5 and 23) | 3860196 | - | 3925320 | - |
| Lease liabilities (Note 14) | 30289119 | - | 27206865 | 1 |
| Net defined benefit liability (Note 17) | 6012286 | - | 7580657 | - |
| Guarantee deposits | 756871 | - | 837379 | - |
| Others (Notes 19 and 30) | 33615446 | 1 | 81968305 | 1 |
| Total noncurrent liabilities | 550665120 | 8 | 575357807 | 10 |
| Total liabilities | 1856618339 | 26 | 1748704133 | 29 |
| EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT  |  |  |  |  |
| Capital stock (Note 18) | 259325245 | 3 | 259327332 | 4 |
| Capital surplus (Notes 18 and 25) | 73445601 | 1 | 73260765 | 2 |
| Retained earnings (Note 18) |  |  |  |  |
| Appropriated as legal capital reserve | 311146899 | 4 | 311146899 | 5 |
| Appropriated as special capital reserve | 87284496 | 1 | - | - |
| Unappropriated earnings | 4705070165 | 65 | 3606105124 | 60 |
|  | 5103501560 | 70 | 3917252023 | 65 |
| Others (Notes 18 and 25) | (16676412) | - | 38705047 | - |
| Total equity | 5419595994 | 74 | 4288545167 | 71 |
| TOTAL  | $7276214333 | 100 | $6037249300 | 100 |

---

The accompanying notes are an integral part of the parent company only financial statements.

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME** |
| **(In Thousands of New Taiwan Dollars, Except Earnings Per Share)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| NET REVENUE (Notes 5, 19 and 30) | $3784388760 | 100 | $2880383350 | 100 |
| COST OF REVENUE (Notes 5, 11, 26, 30 and 32) | 1564313067 | 41 | 1306140916 | 45 |
| GROSS PROFIT | 2220075693 | 59 | 1574242434 | 55 |
| OPERATING EXPENSES (Notes 5, 26 and 30) |  |  |  |  |
| Research and development | 237020711 | 7 | 198449799 | 7 |
| General and administrative | 68029114 | 2 | 50832908 | 2 |
| Marketing | 7871571 | - | 6264188 | - |
| Total operating expenses | 312921396 | 9 | 255546895 | 9 |
| OTHER OPERATING INCOME AND EXPENSES, NET <br>(Notes 13, 26 and 32)<br>| (663339) | - | (1549447) | - |
| INCOME FROM OPERATIONS | 1906490958 | 50 | 1317146092 | 46 |
| NON-OPERATING INCOME AND EXPENSES |  |  |  |  |
| Share of profits of subsidiaries and associates (Note 12) | 107791541 | 3 | 66000702 | 2 |
| Interest income (Note 20) | 28458200 | 1 | 27338300 | 1 |
| Other income | 215960 | - | 199890 | - |
| Foreign exchange gain, net (Note 33) | 13418209 | - | 9988417 | - |
| Finance costs (Note 21) | (4354189) | - | (5400986) | - |
| Other gains and losses, net (Note 22) | (8030997) | - | (7663446) | - |
| Total non-operating income and expenses | 137498724 | 4 | 90462877 | 3 |
| INCOME BEFORE INCOME TAX | 2043989682 | 54 | 1407608969 | 49 |
| INCOME TAX EXPENSE (Notes 5 and 23) | 326107055 | 9 | 234341266 | 8 |
| NET INCOME | 1717882627 | 45 | 1173267703 | 41 |
| OTHER COMPREHENSIVE INCOME (LOSS) (Notes 5, <br>12, 17, 18 and 23)<br>|  |  |  |  |
| Items that will not be reclassified subsequently to profit or <br>loss:<br>|  |  |  |  |
| Remeasurement of defined benefit obligation | (693271) | - | 144365 | - |
| Unrealized gain on investments in equity instruments at <br>fair value through other comprehensive income<br>| 28593 | - | 97396 | - |
| Gain (loss) on hedging instruments | (31030) | - | 5041 | - |
| Share of other comprehensive income of subsidiaries and <br>associates<br>| 602730 | - | 4911549 | - |
| Income tax benefit (expense) related to items that will <br>not be reclassified subsequently<br>| 138654 | - | (38869) | - |
|  | 45676 | - | 5119482 | - |
| (Continued) | (Continued) | (Continued) | (Continued) | (Continued) |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY STATEMENTS OF COMPREHENSIVE INCOME** |
| **(In Thousands of New Taiwan Dollars, Except Earnings Per Share)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2025** | **2025** | **2024** | **2024** |
|  | **Amount** | **%** | **Amount** | **%** |
| Items that may be reclassified subsequently to profit or <br>loss:<br>|  |  |  |  |
| Exchange differences arising on translation of foreign <br>operations<br>| $(61273206) | (2) | $65330074 | 2 |
| Share of other comprehensive income of subsidiaries and <br>associates<br>| 4598794 | - | 2119357 | - |
|  | (56674412) | (2) | 67449431 | 2 |
| Other comprehensive income (loss), net of income tax | (56628736) | (2) | 72568913 | 2 |
| TOTAL COMPREHENSIVE INCOME | $1661253891 | 43 | $1245836616 | 43 |
| EARNINGS PER SHARE (NT$, Note 24) |  |  |  |  |
| Basic earnings per share | $66.26 |  | $45.25 |  |
| Diluted earnings per share | $66.25 |  | $45.25 |  |

---

The accompanying notes are an integral part of the parent company only financial statements. (Concluded)

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY STATEMENTS OF CHANGES IN EQUITY** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  |  | **Others** | **Others** | **Others** | **Others** | **Others** |  |  |
|  | **Capital Stock - Common Stock** | **Capital Stock - Common Stock** |  | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Retained Earnings** | **Foreign**<br>**Currency**<br>**Translation**<br>**Reserve** | **Unrealized**<br>**Gain (Loss) on**<br>**Financial**<br>**Assets at Fair**<br>**Value Through**<br>**Other**<br>**Comprehensive**<br>**Income** | **Gain (Loss) on**<br>**Hedging**<br>**Instruments** | **Unearned**<br>**Stock-Based**<br>**Employee**<br>**Compensation** | **Total** |  |  |
|  | **Shares**<br>**(In Thousands)**<br>| **Amount** | **Capital Surplus** | **Legal Capital**<br>**Reserve**<br>| **Special Capital**<br>**Reserve**<br>| **Unappropriated**<br>**Earnings**<br>| **Total** | **Foreign**<br>**Currency**<br>**Translation**<br>**Reserve** | **Unrealized**<br>**Gain (Loss) on**<br>**Financial**<br>**Assets at Fair**<br>**Value Through**<br>**Other**<br>**Comprehensive**<br>**Income** | **Gain (Loss) on**<br>**Hedging**<br>**Instruments** | **Unearned**<br>**Stock-Based**<br>**Employee**<br>**Compensation** | **Total** | **Treasury** <br>**Stock**<br>| **Total**<br>**Equity**<br>|
| BALANCE, JANUARY 1, 2024 | 25932071 | $259320710 | $69876381 | $311146899 | $- | $2846883893 | $3158030792 | $(25316769) | $(4099928) | $1395875 | $(293434) | $(28314256) | $- | $3458913627 |
| Appropriations of earnings  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Cash dividends to shareholders | - | - | - | - | - | (414915586) | (414915586) | - | - | - | - | - | - | (414915586) |
| Total | - | - | - | - | - | (414915586) | (414915586) | - | - | - | - | - | - | (414915586) |
| Net income  | - | - | - | - | - | 1173267703 | 1173267703 | - | - | - | - | - | - | 1173267703 |
| Other comprehensive income (loss), net of income tax | - | - | - | - | - | 126040 | 126040 | 65579764 | 6948818 | (85709) | - | 72442873 | - | 72568913 |
| Total comprehensive income (loss) | - | - | - | - | - | 1173393743 | 1173393743 | 65579764 | 6948818 | (85709) | - | 72442873 | - | 1245836616 |
| Employee restricted shares retired | (1402) | (14018) | 14018 | - | - | 19934 | 19934 | - | - | - | - | - | - | 19934 |
| Share-based payment arrangements | 5313 | 53130 | 2584257 | - | - | - | - | - | - | - | (1414645) | (1414645) | - | 1222742 |
| Treasury stock acquired | - | - | - | - | - | - | - | - | - | - | - | - | (3089177) | (3089177) |
| Treasury stock retired | (3249) | (32490) | (7080) | - | - | (3049607) | (3049607) | - | - | - | - | - | 3089177 | - |
| Disposal of investments in equity instruments at fair value through other <br>comprehensive income<br>| - | - | - | - | - | 3772747 | 3772747 | - | (4009066) | - | - | (4009066) | - | (236319) |
| Basis adjustment for gain on hedging instruments | - | - | - | - | - | - | - | - | - | 141 | - | 141 | - | 141 |
| Adjustments to share of changes in equities of associates | - | - | 870000 | - | - | - | - | - | - | - | - | - | - | 870000 |
| From difference between the consideration received and the carrying amount <br>of the subsidiaries' net assets during actual disposal<br>| - | - | 5284 | - | - | - | - | - | - | - | - | - | - | 5284 |
| From share of changes in equities of subsidiaries | - | - | (90978) | - | - | - | - | - | - | - | - | - | - | (90978) |
| Donation from shareholders  | - | - | 8883 | - | - | - | - | - | - | - | - | - | - | 8883 |
| BALANCE, DECEMBER 31, 2024 | 25932733 | 259327332 | 73260765 | 311146899 | - | 3606105124 | 3917252023 | 40262995 | (1160176) | 1310307 | (1708079) | 38705047 | - | 4288545167 |
| Appropriations of earnings  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Special capital reserve | - | - | - | - | 87284496 | (87284496) | - | - | - | - | - | - | - | - |
| Cash dividends to shareholders | - | - | - | - | - | (531618438) | (531618438) | - | - | - | - | - | - | (531618438) |
| Total | - | - | - | - | 87284496 | (618902934) | (531618438) | - | - | - | - | - | - | (531618438) |
| Net income  | - | - | - | - | - | 1717882627 | 1717882627 | - | - | - | - | - | - | 1717882627 |
| Other comprehensive income (loss), net of income tax | - | - | - | - | - | (559857) | (559857) | (61282139) | 5308767 | (95507) | - | (56068879) | - | (56628736) |
| Total comprehensive income (loss) | - | - | - | - | - | 1717322770 | 1717322770 | (61282139) | 5308767 | (95507) | - | (56068879) | - | 1661253891 |
| Employee restricted shares retired | (209) | (2087) | 2087 | - | - | 4007 | 4007 | - | - | - | - | - | - | 4007 |
| Share-based payment arrangements | - | - | (21859) | - | - | - | - | - | - | - | 1231078 | 1231078 | - | 1209219 |
| Disposal of investments in equity instruments at fair value through other <br>comprehensive income<br>| - | - | - | - | - | 541198 | 541198 | - | (557108) | - | - | (557108) | - | (15910) |
| Basis adjustment for gain on hedging instruments | - | - | - | - | - | - | - | - | - | 13450 | - | 13450 | - | 13450 |
| Adjustments to share of changes in equities of associates | - | - | 192854 | - | - | - | - | - | - | - | - | - | - | 192854 |
| From share of changes in equities of subsidiaries | - | - | (14959) | - | - | - | - | - | - | - | - | - | - | (14959) |
| Donation from shareholders  | - | - | 26713 | - | - | - | - | - | - | - | - | - | - | 26713 |
| BALANCE, DECEMBER 31, 2025 | 25932524 | $259325245 | $73445601 | $311146899 | $87284496 | $4705070165 | $5103501560 | $(21019144) | $3591483 | $1228250 | $(477001) | $(16676412) | $- | $5419595994 |

---

The accompanying notes are an integral part of the parent company only financial statements.

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| CASH FLOWS FROM OPERATING ACTIVITIES |  |  |
| Income before income tax | $2043989682 | $1407608969 |
| Adjustments for: |  |  |
| Depreciation expense | 613432596 | 625747423 |
| Amortization expense | 7984252 | 9129469 |
| Reversal of expected credit losses on investments in debt instruments | (13579) | (2551) |
| Finance costs | 4354189 | 5400986 |
| Share of profits of subsidiaries and associates | (107791541) | (66000702) |
| Interest income | (28458200) | (27338300) |
| Share-based compensation | 1213225 | 1242676 |
| Loss on disposal or retirement of property, plant and equipment, net | 1093208 | 2458920 |
| Gain on disposal or retirement of intangible assets, net | (1258) | (6206) |
| Impairment loss on property, plant and equipment | 633296 | 1102946 |
| Gain on disposal of investments accounted for using equity method, net | - | (7126) |
| Loss of disposal of subsidiary | 167986 | - |
| Loss (gain) on foreign exchange, net | 4920460 | (11760189) |
| Dividend income | (215960) | (199890) |
| Others | 1107314 | (458276) |
| Changes in operating assets and liabilities: |  |  |
| Financial instruments at fair value through profit or loss | 8134179 | 1029990 |
| Notes and accounts receivable, net | (7205676) | (5939724) |
| Receivables from related parties | 1517137 | (55038298) |
| Other receivables from related parties | 987194 | (938597) |
| Inventories | 18396103 | (32457277) |
| Other financial assets | (10278940) | (167618) |
| Other current assets | (6068586) | (19891135) |
| Other noncurrent assets | (34149903) | (3360036) |
| Accounts payable | 10144075 | 16410584 |
| Payables to related parties | 8375310 | 20011 |
| Salary and bonus payable | 11527299 | 9685669 |
| Accrued profit sharing bonus to employees and compensation to directors | 32577110 | 19877641 |
| Accrued expenses and other current liabilities | (159167274) | 115859695 |
| Other noncurrent liabilities | 3518593 | 10344601 |
| Net defined benefit liability | (2261642) | (1532202) |
| Cash generated from operations | 2418460649 | 2000821453 |
| Income taxes paid | (264129528) | (181322787) |
| Net cash generated by operating activities | 2154331121 | 1819498666 |
| (Continued) |  |  |

---

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **PARENT COMPANY ONLY STATEMENTS OF CASH FLOWS** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
| CASH FLOWS FROM INVESTING ACTIVITIES |  |  |
| Acquisitions of: |  |  |
| Financial assets at amortized cost | $(5998859) | $(44368311) |
| Hedging financial instruments | (631620) | - |
| Investments accounted for using equity method | - | (3738753) |
| Property, plant and equipment | (1045509843) | (644734446) |
| Intangible assets | (9877172) | (8053430) |
| Proceeds from disposal or redemption of: |  |  |
| Financial assets at amortized cost | 20340000 | 48840000 |
| Property, plant and equipment  | 2651999 | 1634456 |
| Intangible assets | - | 8323 |
| Derecognition of derivative financial instruments | (5544918) | - |
| Derecognition of hedging financial instruments | 600590 | - |
| Interest received | 28334951 | 26599749 |
| Other dividends received | 215960 | 199890 |
| Dividends received from investments accounted for using equity method | 4134651 | 5097471 |
| Refundable deposits paid | (403543) | (312809) |
| Refundable deposits refunded | 216207 | 278903 |
| Net cash used in investing activities | (1011471597) | (618548957) |
| CASH FLOWS FROM FINANCING ACTIVITIES |  |  |
| Increase (decrease) in hedging financial liabilities - bank loans | 335106 | (26496570) |
| Proceeds from issuance of bonds | 86900000 | 34300000 |
| Repayment of bonds | (24400000) | (7000000) |
| Payments for transaction costs attributable to the issuance of bonds | (90308) | (35681) |
| Treasury stock acquired | - | (3089177) |
| Repayment of the principal portion of lease liabilities | (2932532) | (2257534) |
| Interest paid | (6409298) | (5864077) |
| Guarantee deposits received | 3000 | 4677 |
| Guarantee deposits refunded | (47731) | (93242) |
| Cash dividends | (466779199) | (363055226) |
| Disposal of ownership interests in subsidiaries (without losing control) | - | 1021 |
| Payment of partial acquisition of interests in subsidiaries | (688946487) | (528037569) |
| Proceeds from partial disposal of interests in subsidiaries | 308227 | 946001 |
| Donation from shareholders | 26574 | 8752 |
| Net cash used in financing activities | (1102032648) | (900668625) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH <br>EQUIVALENTS<br>| (8852943) | 16076703 |
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 31973933 | 316357787 |
| CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 1035061499 | 718703712 |
| CASH AND CASH EQUIVALENTS, END OF YEAR | $1067035432 | $1035061499 |

---

The accompanying notes are an integral part of the parent company only financial statements.(Concluded)

---

| |
|:---|
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **NOTES TO PARENT COMPANY ONLY FINANCIAL STATEMENTS** |
| **FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

**1. GENERAL**

Taiwan Semiconductor Manufacturing Company Limited (the "Company" or "TSMC"), a Republic of

China (R.O.C.) corporation, was incorporated on February 21, 1987. The Company is a dedicated foundry

in the semiconductor industry which engages mainly in the manufacturing, sales, packaging, testing and

computer-aided design of integrated circuits and other semiconductor devices and the manufacturing of

masks.

On September 5, 1994, the Company's shares were listed on the Taiwan Stock Exchange (TWSE). On

October 8, 1997, the Company listed some of its shares of stock on the New York Stock Exchange

(NYSE) in the form of American Depositary Shares (ADSs).

The address of its registered office and principal place of business is No. 8, Li-Hsin Rd. 6, Hsinchu

Science Park, Taiwan.

**2. THE AUTHORIZATION OF FINANCIAL STATEMENTS**

The accompanying parent company only financial statements were approved and authorized for issuance

by the Board of Directors on February 10, 2026.

**3. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING**

**STANDARDS**

a.Initial application of the amendments to the International Financial Reporting Standards (IFRS),

International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations

(SIC) (collectively, "IFRS Accounting Standards") endorsed and issued into effect by the Financial

Supervisory Commission (FSC)

The initial application of the amendments to the IFRS Accounting Standards endorsed and issued into

effect by the FSC did not have a material impact on the accounting policies of the Company.

b.The IFRS Accounting Standards issued by International Accounting Standards Board (IASB) and

endorsed by the FSC with effective date starting 2026

---

| | |
|:---|:---|
| **New, Amended and Revised Standards and Interpretations** | **Effective Date Issued** <br>**by IASB** <br>|
| Amendments to IFRS 9 and IFRS 7 "Amendments to the <br>Classification and Measurement of Financial Instruments" - the <br>amendments to the application guidance of classification of <br>financial assets<br>| January 1, 2026 |
| Annual Improvements to IFRS Accounting Standards - Volume 11 | January 1, 2026 |
| Amendments to IFRS 9 and IFRS 7 "Contracts Referencing Nature-<br>dependent Electricity"<br>| January 1, 2026 |

---

c.The IFRS Accounting Standards issued by IASB, but not yet endorsed and issued into effect by the

FSC

---

| | |
|:---|:---|
| **New, Amended and Revised Standards and Interpretations** | **Effective Date Issued** <br>**by IASB** <br>|
| Amendments to IFRS 10 and IAS 28 "Sale or Contribution of Assets <br>between an Investor and its Associate or Joint Venture"<br>| To be determined by IASB |
| IFRS 18 "Presentation and Disclosure in Financial Statements" | January 1, 2027 (Note) |

---

Note : On September 25, 2025, the FSC announced that IFRS 18 will take effect starting from January

1, 2028. Domestic entities could elect to apply IFRS 18 for an earlier period after the

endorsement of IFRS 18 by the FSC.

<u>IFRS 18 "Presentation and Disclosure in Financial Statements" and consequential amendments</u>

IFRS 18 will supersede IAS 1" Presentation of Financial Statements". The main changes comprise:

• Items of income and expenses included in the statement of profit or loss shall be classified into the

operating, investing, financing, income taxes and discontinued operations categories.

• The statement of profit or loss shall present totals and subtotals for operating profit or loss, profit

or loss before financing and income taxes and profit or loss.

• Provides guidance to enhance the requirements of aggregation and disaggregation: The Company

shall identify the assets, liabilities, equity, income, expenses and cash flows that arise from

individual transactions or other events and shall classify and aggregate them into groups based on

shared characteristics, so as to result in the presentation in the primary financial statements of line

items that have at least one similar characteristic. The Company shall disaggregate items with

dissimilar characteristics in the primary financial statements and in the notes. The Company labels

items as "other" only if it cannot find a more informative label.

In addition, a consequential amendment has been made to IAS 7 "Statement of Cash Flows", requiring

the Company to use operating profit or loss as the starting point when presenting cash flows from

operating activities under the indirect method.

Except for the above impact, as of the date the accompanying parent company only financial

statements were issued, the Company continues in evaluating other impacts of the above amended

standards and on its financial position and financial performance from the initial adoption of the

aforementioned standards or interpretations and related applicable period. The related impact will be

disclosed when the Company completes its evaluation.

**4. SUMMARY OF MATERIAL ACCOUNTING POLICY INFORMATION**

For the convenience of readers, the accompanying parent company only financial statements have been

translated into English from the original Chinese version prepared and used in the R.O.C. If there is any

conflict between the English version and the original Chinese version or any difference in the

interpretation of the two versions, the Chinese-language parent company only financial statements shall

prevail.

**Statement of Compliance**

The accompanying parent company only financial statements have been prepared in conformity with the

Regulations Governing the Preparation of Financial Reports by Securities Issuers (the "Accounting

Standards Used in Preparation of the Parent Company Only Financial Statements").

**Basis of Preparation** 

The accompanying parent company only financial statements have been prepared on the historical cost

basis except for financial instruments that are measured at fair values, as explained in the accounting

policies below. Historical cost is generally based on the fair value of the consideration given in exchange

for the assets.

When preparing the parent company only financial statements, the Company account for subsidiaries and

associates by using the equity method. In order to agree with the amount of net income, other

comprehensive income and equity attributable to shareholders of the parent in the consolidated financial

statements, the differences of the accounting treatment between the parent company only basis and the

consolidated basis are adjusted under the heading of investments accounted for using equity method, share

of profits of subsidiaries and associates and share of other comprehensive income of subsidiaries and

associates in the parent company only financial statements.

**Foreign Currencies**

In preparing the parent company only financial statements, transactions in currencies other than the

entity's functional currency (foreign currencies) are recognized at the rates of exchange prevailing at the

dates of the transactions. At the end of each reporting period, monetary items denominated in foreign

currencies are retranslated at the rates prevailing at that date. Such exchange differences are recognized in

profit or loss in the year in which they arise. Non-monetary items measured at fair value that are

denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value

was determined. Exchange differences arising on the retranslation of non-monetary items are included in

profit or loss for the year except for exchange differences arising on the retranslation of non-monetary

items in respect of which gains and losses are recognized directly in other comprehensive income, in

which case, the exchange differences are also recognized directly in other comprehensive income. Non-

monetary items that are measured in terms of historical cost in foreign currencies are not retranslated.

For the purposes of presenting parent company only financial statements, the assets and liabilities of the

Company's foreign operations are translated into NT$ using exchange rates prevailing at the end of each

reporting period. Income and expense items are translated at the average exchange rates for the period.

Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in

equity.

**Classification of Current and Noncurrent Assets and Liabilities**

Current assets are assets held for trading purposes and assets expected to be converted to cash, sold or

consumed within one year from the end of the reporting period. Current liabilities are obligations incurred

for trading purposes and obligations expected to be settled within one year from the end of the reporting

period. Assets and liabilities that are not classified as current are noncurrent assets and liabilities,

respectively.

**Cash Equivalents**

Cash equivalents, for the purpose of meeting short-term cash commitments, consist of highly liquid time

deposits and investments that are readily convertible to known amounts of cash and which are subject to

an insignificant risk of changes in value.

**Financial Instruments**

Financial assets and liabilities shall be recognized when the Company becomes a party to the contractual

provisions of the instruments.

Financial assets and liabilities are initially recognized at fair values. Transaction costs that are directly

attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets

and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of

the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly

attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss

are recognized immediately in profit or loss.

**Financial Assets**

The classification of financial assets depends on the nature and purpose of the financial assets and is

determined at the time of initial recognition. Regular way purchases or sales of financial assets are

recognized and derecognized on a trade date or settlement date basis for which financial assets were

classified in the same way, respectively. Regular way purchases or sales are purchases or sales of financial

assets that require delivery of assets within the time frame established by regulation or convention in the

marketplace.

a.Category of financial assets and measurement

Financial assets are classified into the following categories: financial assets at FVTPL, investments in

equity instruments at FVTOCI and financial assets at amortized cost.

1)Financial asset at FVTPL

For certain financial assets which include debt instruments that do not meet the criteria of

amortized cost or FVTOCI, it is mandatorily required to measure them at FVTPL. Any gain or loss

arising from remeasurement is recognized in profit or loss. The net gain or loss recognized in profit

or loss incorporates any interest earned on the financial asset.

2)Investments in equity instruments at FVTOCI

On initial recognition, the Company may irrevocably designate investments in equity investments

that is not held for trading as at FVTOCI.

Investments in equity instruments at FVTOCI are subsequently measured at fair value with gains

and losses arising from changes in fair value recognized in other comprehensive income and

accumulated in other equity.

Dividends on these investments in equity instruments at FVTOCI are recognized in profit or loss

when the Company's right to receive the dividends is established, unless the Company's rights

clearly represent a recovery of part of the cost of the investment.

3)Measured at amortized cost

Cash and cash equivalents, commercial paper, notes and accounts receivable (including related

parties), other receivables, refundable deposits and temporary payments (including those classified

under other current assets and other noncurrent assets) are measured at amortized cost.

Subsequent to initial recognition, financial assets measured at amortized cost are measured at

amortized cost, which equals to carrying amount determined by the effective interest method less

any impairment loss.

b.Impairment of financial assets

At the end of each reporting period, a loss allowance for expected credit loss is recognized for

financial assets at amortized cost (including accounts receivable).

The loss allowance for accounts receivable is measured at an amount equal to lifetime expected credit

losses. For financial assets at amortized cost, when the credit risk on the financial instrument has not

increased significantly since initial recognition, a loss allowance is recognized at an amount equal to

expected credit loss resulting from possible default events of a financial instrument within 12 months

after the reporting date. If, on the other hand, there has been a significant increase in credit risk since

initial recognition, a loss allowance is recognized at an amount equal to expected credit loss resulting

from all possible default events over the expected life of a financial instrument.

The Company recognizes an impairment loss in profit or loss for all financial instruments with a

corresponding adjustment to their carrying amount through a loss allowance account.

c.Derecognition of financial assets

The Company derecognizes a financial asset only when the contractual rights to the cash flows from

the financial asset expire, or when it transfers the financial asset and substantially all the risks and

rewards of ownership of the financial asset to another entity.

On derecognition of a financial asset at amortized cost in its entirety, the difference between the

asset's carrying amount and the sum of the consideration received and receivable is recognized in

profit or loss. However, on derecognition of an investment in an equity instrument at FVTOCI, the

cumulative gain or loss that had been recognized in other comprehensive income is transferred directly

to retained earnings, without recycling through profit or loss.

**Financial Liabilities and Equity Instruments**

<u>Classification as debt or equity</u>

Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity

in accordance with the substance of the contractual arrangements and the definitions of a financial liability

and an equity instrument.

<u>Equity instruments</u>

An equity instrument is any contract that evidences a residual interest in the assets of an entity after

deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds

received, net of direct issue costs.

<u>Financial liabilities</u>

Financial liabilities are subsequently measured either at amortized cost using effective interest method or

at FVTPL.

Financial liabilities are classified as at fair value through profit or loss when the financial liability is either

held for trading or is designated as at fair value through profit or loss.

Financial liabilities at fair value through profit or loss are stated at fair value, with any gains or losses

arising on remeasurement recognized in profit or loss.

Financial liabilities other than those held for trading purposes and designated as at FVTPL are

subsequently measured at amortized cost at the end of each reporting period.

<u>Derecognition of financial liabilities</u>

The Company derecognizes financial liabilities when, and only when, the Company's obligations are

discharged, cancelled or they expire. The difference between the carrying amount of the financial liability

derecognized and the consideration paid and payable is recognized in profit or loss.

**Derivative Financial Instruments**

Derivative financial instruments are initially recognized at fair value at the date the derivative contracts are

entered into and are subsequently remeasured to their fair value at the end of each reporting period. The

resulting gain or loss is recognized in profit or loss immediately unless the derivative financial instrument

is designated and effective as a hedging instrument, in which event the timing of the recognition in profit

or loss depends on the nature of the hedge relationship.

**Hedge Accounting**

a.Cash flow hedge

The Company designates certain hedging instruments, such as forward exchange contracts and bank

deposits denominated in foreign currency, to partially hedge its foreign exchange rate risks associated

with certain highly probable forecast transactions (e.g. capital expenditures). The effective portion of

changes in the fair value of hedging instruments is recognized in other comprehensive income. When

forecast transactions actually take place, the accumulated gains or losses that were recognized in other

comprehensive income are transferred from equity to the initial cost of the hedged items. The gains or

losses from hedging instruments relating to the ineffective portion are recognized immediately in

profit or loss.

The Company prospectively discontinues hedge accounting only when the hedging relationship ceases

to meet the qualifying criteria; for instance, when the hedging instrument expires or is sold, terminated

or exercised.

b.Hedges of net investments in foreign operations

The Company designates certain hedging instruments, such as bank loans denominated in foreign

currency, as a hedge of net investments in foreign operations to manage the exchange differences

arising on translation of foreign operations due to currency fluctuations. Any gains or losses on the

hedging instrument relating to the effective portion of the hedge are recognized in other

comprehensive income and accumulated under the heading of foreign currency translation reserve.

The gains or losses relating to the ineffective portion are recognized immediately in profit or loss.

The gains and losses on the hedging instrument relating to the effective portion of the hedge, which

were accumulated in the foreign currency translation reserve, are reclassified to profit or loss on the

disposal or partial disposal of a foreign operation.

**Inventories**

Inventories are stated at the lower of cost or net realizable value. Inventories are recorded at standard cost

and adjusted to approximate weighted-average cost at the end of the reporting period. Net realizable value

represents the estimated selling price of inventories less all estimated costs of completion and costs

necessary to make the sale.

**Investments Accounted for Using Equity Method**

Investments accounted for using the equity method include investments in subsidiaries and associates.

<u>Investment in subsidiaries</u>

A subsidiary is an entity that is controlled by the Company.

Under the equity method, an investment in a subsidiary is initially recognized at cost and adjusted

thereafter to recognize the Company's share of profit or loss and other comprehensive income of the

subsidiary as well as the distribution received. The Company also recognized its share in the changes in

the equity of subsidiaries.

Changes in the Company's ownership interests in subsidiaries that do not result in the Company losing

control over the subsidiaries are accounted for as equity transactions. Any difference between the carrying

amount of the subsidiary and the fair value of the consideration paid or received is recognized directly in

equity.

When the Company loses control of a subsidiary, any retained investment of the former subsidiary is

measured at the fair value at that date. A gain or loss is recognized in profit or loss and calculated as the

difference between (a) the aggregate of the fair value of consideration received and the fair value of any

retained interest at the date when control is lost; and (b) the previous carrying amount of the investments

in such subsidiary. In addition, the Company shall account for all amounts previously recognized in other

comprehensive income in relation to the subsidiary on the same basis as would be required if the

subsidiary had directly disposed of the related assets and liabilities.

When the Company transacts with its subsidiaries, profits and losses resulting from the transactions with

the subsidiaries are recognized in the Company's parent company only financial statements only to the

extent of interests in the subsidiaries that are not owned by the Company.

<u>Investment in associates</u>

An associate is an entity over which the Company has significant influence and that is neither a subsidiary

nor a joint venture. Significant influence is the power to participate in the financial and operating policy

decisions of the investee but is not control or joint control over those policies.

The operating results and assets and liabilities of associates are incorporated in these parent company only

financial statements using the equity method of accounting. Under the equity method, an investment in an

associate is initially recognized in the statement of financial position at cost and adjusted thereafter to

recognize the Company's share of profit or loss and other comprehensive income of the associate as well

as the distribution received. The Company also recognizes its share in the changes in the equities of

associates.

Any excess of the cost of acquisition over the Company's share of the net fair value of the identifiable

assets, liabilities and contingent liabilities of an associate recognized at the date of acquisition is

recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the

Company's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over

the cost of acquisition, after reassessment, is recognized immediately in profit or loss.

When necessary, the entire carrying amount of the investment (including goodwill) is tested for

impairment as a single asset by comparing its recoverable amount (higher of value in use and fair value

less costs to sell) with its carrying amount. Any impairment loss recognized forms part of the carrying

amount of the investment. Any reversal of that impairment loss is recognized to the extent that the

recoverable amount of the investment subsequently increases.

When the Company subscribes to additional shares in an associate at a percentage different from its

existing ownership percentage, the resulting carrying amount of the investment differs from the amount of

the Company's proportionate interest in the net assets of the associate. The Company records such a

difference as an adjustment to investments with the corresponding amount charged or credited to capital

surplus. If the Company's ownership interest is reduced due to the additional subscription to the shares of

associate by other investors, the proportionate amount of the gains or losses previously recognized in other

comprehensive income in relation to that associate shall be reclassified to profit or loss on the same basis

as would be required if the associate had directly disposed of the related assets or liabilities.

When the Company transacts with an associate, profits and losses resulting from the transactions with the

associate are recognized in the Company's parent company only financial statements only to the extent of

interests in the associate that are not owned by the Company.

**Property, Plant and Equipment**

Property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment. Costs include any incremental costs that are directly attributable to the construction,

acquisition of the item of property, plant and equipment or borrowing costs eligible for capitalization.

Property, plant and equipment in the course of construction for production, supply or administrative

purposes are carried at cost, less any recognized impairment loss. Such assets are classified to the

appropriate categories of property, plant and equipment when completed and ready for intended use.

Depreciation of these assets, on the same basis as other identical categories of property, plant and

equipment, commences when the assets are available for their intended use.

Depreciation is recognized so as to write off the cost of the assets less their residual values over their

useful lives, and it is computed using the straight-line method mainly over the following estimated useful

lives: buildings (assets used by the Company and assets subject to operating leases) - 10 to 20 years;

machinery and equipment (assets used by the Company and assets subject to operating leases) - 5 years;

and office equipment - 5 years. The estimated useful lives, residual values and depreciation method are

reviewed at the end of each reporting period, with the effect of any changes in estimates accounted for on

a prospective basis. Land is not depreciated.

An item of property, plant and equipment is derecognized upon disposal or when no future economic

benefits are expected to arise from the continued use of the assets. Any gain or loss arising on the disposal

or retirement of an item of property, plant and equipment is determined as the difference between the sales

proceeds and the carrying amount of the asset and is recognized in profit or loss.

**Leases**

For a contract that contains a lease component and non-lease component, the Company may elect to

account for the lease and non-lease components as a single lease component.

<u>The Company as lessor</u>

Rental income from operating lease is recognized on a straight-line basis over the term of the lease.

<u>The Company as lessee</u>

Except for payments for low-value asset leases and short-term leases (leases of machinery and equipment

and others) which are recognized as expenses on a straight-line basis, the Company recognizes right-of-

use assets and lease liabilities for all leases at the commencement date of the lease.

Right-of-use assets are measured at cost. The cost of right-of-use assets comprises the initial measurement

of lease liabilities adjusted for lease payments and initial direct costs made at or before the commencement

date, plus an estimate of costs needed to restore the underlying assets. Subsequent measurement is

calculated as cost less accumulated depreciation and accumulated impairment loss and adjusted for

changes in lease liabilities as a result of lease term modifications or other related factors. Right-of-use

assets are presented separately in the parent company only balance sheets.

Right-of-use assets are depreciated using the straight-line method from the commencement dates to the

earlier of the end of the useful lives of the right-of-use assets or the end of the lease terms. If the lease

transfers ownership of the underlying assets to the Company by the end of the lease terms or if the cost of

right-of-use assets reflects that the Company will exercise a purchase option, the Company depreciates the

right-of-use assets from the commencement dates to the end of the useful lives of the underlying assets.

Lease liabilities are measured at the present value of the lease payments. Lease payments comprise fixed

payments, variable lease payments which depend on an index or a rate and the exercise price of a purchase

option if the Company is reasonably certain to exercise that option. The lease payments are discounted

using the lessee's incremental borrowing rates.

Subsequently, lease liabilities are measured at amortized cost using the effective interest method, with

interest expense recognized over the lease terms. When there is a change in a lease term, a change in

future lease payments resulting from a change in an index or a rate used to determine those payments, or a

change in the assessment of an option to purchase an underlying asset, the Company remeasures the lease

liabilities with a corresponding adjustment to the right-of-use assets. Lease liabilities are presented on a

separate line in the parent company only balance sheets.

**Intangible Assets**

<u>Goodwill</u>

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition

of the business less accumulated impairment losses, if any.

<u>Other intangible assets</u>

Other separately acquired intangible assets with finite useful lives are carried at cost less accumulated

amortization and accumulated impairment losses. Amortization is recognized using the straight-line

method over the following estimated useful lives: Technology license fees - the estimated life of the

technology or the term of the technology transfer contract; software and system design costs - 3 years or

contract period; patent and others - the economic life or contract period. The estimated useful life and

amortization method are reviewed at the end of each reporting period, with the effect of any changes in

estimate being accounted for on a prospective basis.

**Impairment of Tangible Assets, Right-of-use Assets and Intangible Assets**

<u>Goodwill</u>

Goodwill is not amortized and instead is tested for impairment annually, or more frequently when there is

an indication that the cash generating unit may be impaired. For the purpose of impairment testing,

goodwill is allocated to each of the Company's cash generating units or groups of cash-generating units

that are expected to benefit. If the recoverable amount of a cash-generating unit is less than its carrying

amount, the difference is allocated first to reduce the carrying amount of any goodwill allocated to such

cash generating unit and then to the other assets of the cash generating unit pro rata based on the carrying

amount of each asset in the cash generating unit. Any impairment loss for goodwill is recognized directly

in profit or loss. An impairment loss recognized for goodwill is not reversed in subsequent periods.

<u>Tangible assets, right-of-use assets and other intangible assets</u>

At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets

(property, plant and equipment), right-of-use assets and other intangible assets to determine whether there

is any indication that those assets have suffered an impairment loss. If any such indication exists, the

recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. When

it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the

recoverable amount of the cash-generating unit to which the asset belongs. When a reasonable and

consistent basis of allocation can be identified, corporate assets are also allocated to individual cash-

generating units, or otherwise they are allocated to the smallest group of cash-generating units for which a

reasonable and consistent allocation basis can be identified.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,

the estimated future cash flows are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the risks specific to the asset for which

the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying

amount, the carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An

impairment loss is recognized immediately in profit or loss.

When an impairment loss subsequently reverses, the carrying amount of the asset or a cash-generating unit

is increased to the revised estimate of its recoverable amount, but the increased carrying amount does not

exceed the carrying amount that would have been determined had no impairment loss been recognized for

the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized

immediately in profit or loss.

**Revenue Recognition**

The Company recognizes revenue when performance obligations are satisfied. The performance

obligations are satisfied when customers obtain control of the promised goods, which is generally when

the goods are delivered to the customers' specified locations.

Revenue from sale of goods is measured at the fair value of the consideration received or receivable.

Revenue is reduced for estimated customer returns, rebates and other similar allowances. Estimated sales

returns and other allowances is generally made and adjusted based on historical experience and the

consideration of varying contractual terms to recognize refund liabilities, which is classified under accrued

expenses and other current liabilities.

In principle, payment term granted to customers is due 30 days from the invoice date or 15 days from the

end of the month of when the invoice is issued. Due to the short term nature of the receivables from sale of

goods with the immaterial discounted effect, the Company measures them at the original invoice amounts

without discounting.

**Employee Benefits**

<u>Short-term employee benefits</u>

Liabilities recognized in respect of short-term employee benefits are measured at the undiscounted amount

of the benefits expected to be paid in exchange for service rendered by employees.

<u>Retirement benefits</u>

For defined contribution retirement benefit plans, payments to the benefit plan are recognized as an

expense when the employees have rendered service entitling them to the contribution. For defined benefit

retirement benefit plans, the cost of providing benefit is recognized based on actuarial calculations.

Defined benefit costs (including service cost, net interest and remeasurement) under the defined benefit

retirement benefit plans are determined using the Projected Unit Credit Method. Service cost (including

current service cost), and net interest on the net defined benefit liability (asset) are recognized as employee

benefits expense in the period they occur. Remeasurement, comprising actuarial gains and losses and the

return on plan assets (excluding interest), is recognized in other comprehensive income in the period in

which they occur. Remeasurement recognized in other comprehensive income is reflected immediately in

retained earnings and will not be reclassified to profit or loss.

Net defined benefit liability represents the actual deficit in the Company's defined benefit plan.

**Treasury Stock**

Treasury stock represents the outstanding shares that the Company buys back from market, which is stated

at cost and shown as a deduction in shareholders' equity. When the Company retires treasury stock, the

treasury stock account is reduced and the common stock as well as the capital surplus - additional paid-in

capital are reversed on a pro rata basis. When the book value of the treasury stock exceeds the sum of the

par value and additional paid-in capital, the difference is charged to capital surplus - treasury stock

transactions and to retained earnings for any remaining amount.

**Share-based payment arrangements**

a.Equity-settled share-based payment arrangements

Restricted shares for employees are expensed on a straight-line basis over the vesting period, based on

the fair value at the grant date and the Company's best estimate of the number expected to ultimately

vest, with a corresponding increase in other equity - unearned stock-based employee compensation.

When restricted shares for employees are issued, other equity - unearned stock-based employee

compensation is recognized on the grant date, with a corresponding increase in capital surplus -

restricted shares for employees. Dividends paid to employees on restricted shares which do not need to

be returned if employees resign in the vesting period are recognized as expenses upon the dividend

declaration with a corresponding adjustment in retained earnings.

At the end of each reporting period, the Company revises its estimate of the number of restricted

shares for employees that are expected to vest. The impact from such revision is recognized in profit or

loss so that the cumulative expenses reflect the revised estimate, with a corresponding adjustment to

capital surplus - restricted shares for employees.

b.Cash-settled share-based payment arrangements

For cash-settled share-based payments, a liability is recognized for the services acquired, measured at

the fair value of the liability incurred. At the end of each reporting period until the liability is settled,

and at the date of settlement, the fair value of the liability is remeasured, with any changes in fair value

recognized in profit or loss.

**Taxation**

Income tax expense represents the sum of the tax currently payable and deferred tax.

<u>Current tax</u>

Income tax on unappropriated earnings is expensed in the year the shareholders approved the

appropriation of earnings which is the year subsequent to the year the earnings are generated.

Adjustments of prior years' tax liabilities are added to or deducted from the current year's tax provision.

<u>Deferred tax</u>

Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities

in the parent company only financial statements and the corresponding tax bases used in the computation

of taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences.

Deferred tax assets are generally recognized for all deductible temporary differences, net operating loss

carryforwards and tax credits arising from purchases of machinery and equipment and research and

development expenditures to the extent that it is probable that taxable profits will be available against

which those deductible temporary differences can be utilized.

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in

subsidiaries and associates, except where the Company is able to control the reversal of the temporary

difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with such investments are

only recognized to the extent that it is probable that there will be sufficient taxable profits against which to

utilize the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to

the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of

the deferred tax asset to be recovered. The deferred tax assets which originally not recognized is also

reviewed at the end of each reporting period and recognized to the extent that it is probable that sufficient

taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the year in

which the liability is settled or the asset is realized, based on tax rates (and tax laws) that have been

enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax

liabilities and assets reflects the tax consequences that would follow from the manner in which the

Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets

and liabilities.

<u>Current and deferred tax for the year</u>

Current and deferred tax are recognized in profit or loss, except when they relate to items that are

recognized in other comprehensive income or directly in equity, in which case, the current and deferred

tax are also recognized in other comprehensive income or directly in equity, respectively.

**5. MATERIAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION AND**

**UNCERTAINTY**

In the application of the aforementioned Company's accounting policies, the Company is required to make

judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not

readily apparent from other sources. The estimates and associated assumptions are based on historical

experience and other factors that are considered to be relevant. Actual results may differ from these

estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting

estimates are recognized in the year in which the estimate is revised if the revision affects only that year,

or in the year of the revision and future years if the revision affects both current and future years.

**<u>Material Accounting Judgments</u>**

**Revenue Recognition**

The Company recognizes revenue when the conditions described in Note 4 are satisfied.

**Commencement of Depreciation Related to Property, Plant and Equipment Classified as Equipment** 

**under Installation and Construction in Progress (EUI/CIP)**

As described in Note 4, commencement of depreciation related to EUI/CIP involves determining when the

assets are available for their intended use. The criteria the Company uses to determine whether EUI/CIP

are available for their intended use involves subjective judgments and assumptions about the conditions

necessary for the assets to be capable of operating in the intended manner.

**<u>Key Sources of Estimation and Uncertainty</u>**

**Estimation of Sales Returns and Allowances**

Sales returns and other allowance is estimated and recorded based on historical experience and in

consideration of different contractual terms. The amount is deducted from revenue in the same period the

related revenue is recorded. The Company periodically reviews the reasonableness of the estimates.

**Valuation of Inventory**

Inventories are stated at the lower of cost or net realizable value, and the Company uses estimate to

determine the net realizable value of inventory at the end of each reporting period.

The Company estimates the net realizable value of inventory for normal waste, obsolescence and

unmarketable items at the end of reporting period and then writes down the cost of inventories to net

realizable value. The net realizable value of the inventory is determined mainly based on assumptions of

future demand within a specific time horizon.

**Impairment of Tangible Assets, Right-of-use Assets and Intangible Assets Other than Goodwill**

In the process of evaluating the potential impairment of tangible assets, right-of-use assets and intangible

assets other than goodwill, the Company determines the independent cash flows, useful lives, expected

future revenue and expenses related to the specific asset groups with the consideration of the nature of

semiconductor industry. Any change in these estimates based on changed economic conditions or business

strategies could result in significant impairment charges or reversal in future years.

**Realization of Deferred Income Tax Assets**

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be

available against which those deferred tax assets can be utilized. Assessment of the realization of the

deferred tax assets requires subjective judgment and estimate, including the future revenue growth and

profitability, tax holidays, the amount of tax credits can be utilized and feasible tax planning strategies.

Any changes in the global economic environment, the industry trends and relevant laws and regulations

could result in significant adjustments to the deferred tax assets.

**6. CASH AND CASH EQUIVALENTS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Cash and deposits in banks | $1065903440 | $1031883302 |
| Commercial paper | - | 1998549 |
| Repurchase agreements | 1131984 | 1179648 |
| Money market funds | 8 | - |
|  | $1067035432 | $1035061499 |

---

Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts

of cash and were subject to an insignificant risk of changes in value.

**7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Financial assets</u> |  |  |
| Forward exchange contracts | $54890 | $13174 |
| <u>Financial liabilities</u> |  |  |
| Forward exchange contracts | $3070087 | $439110 |

---

The Company entered into forward exchange contracts to manage exposures due to fluctuations of foreign

exchange rates. These forward exchange contracts did not meet the criteria for hedge accounting.

Therefore, the Company did not apply hedge accounting treatment for these forward exchange contracts.

Outstanding forward exchange contracts consisted of the following:

---

| | | |
|:---|:---|:---|
|  |  | **Contract Amount** |
|  | **Maturity Date** | **(In Thousands)** |
| <u>December 31, 2025</u> |  |  |
| Sell US$ | January 2026 to March 2026 | US$9,005,000 |
| <u>December 31, 2024</u> |  |  |
| Sell US$ | January 2025 to March 2025 | US$3,256,945 |

---

**8. FINANCIAL ASSETS AT AMORTIZED COST**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Commercial paper | $- | $14221737 |
| Less: Allowance for impairment loss | - | (13579) |
|  | $- | $14208158 |

---

Refer to Note 29 for information relating to the credit risk management and expected credit loss for

financial assets at amortized cost.

**9. HEDGING FINANCIAL INSTRUMENTS**

<u>Cash flow hedge</u>

The Company has designated the bank deposits denominated in foreign currency and forward exchange

contracts to partially hedge foreign exchange rate risks associated with certain highly probable forecast

transactions (capital expenditures). The hedge ratio is adjusted in response to the changes in the financial

market and capped at 100%. The forward exchange contracts and foreign currency deposits have

maturities of 12 months or less.

On the basis of economic relationships, the Company expects that the value of forward exchange contracts

and the foreign currency deposits will move in opposite directions to the value of hedged transactions in

response to foreign exchange rates movements.

The main source of hedge ineffectiveness in these hedging relationships is driven by the effect of the

counterparty's own credit risk on the fair value of forward exchange contracts and foreign currency

deposits. No other sources of ineffectiveness have emerged from these hedging relationships during the

hedging period. Refer to Note 18 (d) for gain or loss arising from changes in the fair value of hedging

instruments and the amount transferred to initial carrying amount of hedged items.

The effect for the years ended December 31, 2025 and 2024 is detailed below:

---

| | | |
|:---|:---|:---|
|  | **Change in Value Used for**<br>**Calculating Hedge Ineffectiveness** | **Change in Value Used for**<br>**Calculating Hedge Ineffectiveness** |
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Hedging Instruments/Hedged Items** | **2025** | **2024** |
| Hedging Instruments |  |  |
| Forward exchange contracts  | $- | $5041 |
| Foreign currency deposits | $(31030) | $- |
| Hedged Items |  |  |
| Forecast transaction (capital expenditures) | $31030 | $(5041) |

---

<u>Hedges of net investments in foreign operations</u>

The Company has designated the bank loans denominated in foreign currency as a hedge of net

investments in foreign operations to manage its foreign currency risk arising from investment in overseas

subsidiaries.

The main source of hedge ineffectiveness in these hedging relationships is driven by the material

difference between the notional amount of bank loans denominated in foreign currency and the net

investment in foreign operations. No other sources of ineffectiveness have emerged from these hedging

relationships during the hedging period. Refer to Note 18 (d) for gain or loss arising from changes in the

fair value of hedging instruments.

The effect for the years ended December 31, 2025 and 2024 is detailed below:

---

| | | |
|:---|:---|:---|
|  | **Change in Value Used for** <br>**Calculating Hedge**<br>**Ineffectiveness** | **Change in Value Used for** <br>**Calculating Hedge**<br>**Ineffectiveness** |
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Hedging Instruments/Hedged Items** | **2025** | **2024** |
| Hedging Instruments |  |  |
| Bank loans | $335106 | $793830 |
| Hedged Items |  |  |
| Net investments in foreign operations | $(335106) | $(793830) |

---

**10. NOTES AND ACCOUNTS RECEIVABLE, NET**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| At amortized cost |  |  |
| Notes and accounts receivable | $41975948 | $34036332 |
| Less: Loss allowance | (477512) | (451913) |
|  | 41498436 | 33584419 |
| At FVTOCI | 5204243 | 5912584 |
|  | $46702679 | $39497003 |

---

The Company signed a contract with the bank to sell certain accounts receivable without recourse and

transaction cost required. These accounts receivable are classified as at FVTOCI because they are held

within a business model whose objective is achieved by both collecting contractual cash flows and selling

financial assets.

In principle, the payment term granted to customers is due 30 days from the invoice date or 15 days from

the end of the month when the invoice is issued. Aside from recognizing impairment loss for credit-

impaired accounts receivable, the Company recognizes loss allowance based on the expected credit loss

ratio of customers by different risk levels with consideration of factors of historical loss ratios and

customers' financial conditions, competitiveness and business outlook. For accounts receivable past due

over 90 days without collaterals or guarantees, the Company recognizes loss allowance at full amount.

<u>Aging analysis of notes and accounts receivable</u>

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Not past due | $46831242 | $38633320 |
| Past due |  |  |
| Past due within 30 days | 348949 | 1315596 |
| Less: Loss allowance | (477512) | (451913) |
|  | $46702679 | $39497003 |

---

All of the Company's accounts receivable classified as at FVTOCI were not past due.

<u>Movements of the loss allowance for accounts receivable</u>

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $451913 | $530139 |
| Provision (Reversal) | 25599 | (78226) |
| Balance, end of year | $477512 | $451913 |

---

For the years ended December 31, 2025 and 2024, the changes in loss allowance were mainly due to the

variations in the balance of accounts receivable of different risk levels.

**11. INVENTORIES**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Finished goods | $26782971 | $33980459 |
| Work in process | 170000320 | 178296363 |
| Raw materials | 43318957 | 44017395 |
| Supplies and spare parts | 12218121 | 14422255 |
|  | $252320369 | $270716472 |

---

Write-down of inventories to net realizable value (excluding earthquake losses) and reversal of write-

down of inventories resulting from the increase in net realizable value were included in the cost of

revenue, which were as follows. Please refer to related earthquake losses in Note 32.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Net inventory losses (reversal of write-down of inventories) | $2887437 | $(79431) |

---

**12. INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD**

Investments accounted for using the equity method consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Subsidiaries | $2454732809 | $1721166777 |
| Associates | 38033271 | 37421105 |
|  | $2492766080 | $1758587882 |

---

a.Investments in subsidiaries

Subsidiaries consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Place of** | **Carrying Amount** | **Carrying Amount** | **Percentage of Ownership** | **Percentage of Ownership** |
| **Name of Associate** | **Principal Activities** | **Incorporation** <br>**and Operation**<br>| **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>| **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| TSMC Global Ltd. <br>(TSMC Global)<br>| Investment activities | Tortola, British <br>Virgin Islands<br>| $1351374238 | $772437954 | 100% | 100% |
| TSMC Arizona <br>Corporation (TSMC <br>Arizona)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Phoenix, Arizona, <br>U.S.A.<br>| 644037295 | 544359678 | 100% | 100% |
| TSMC Nanjing <br>Company Limited <br>(TSMC Nanjing)<br>| Manufacturing, sales, testing and <br>computer-aided design of <br>integrated circuits and other <br>semiconductor devices<br>| Nanjing, China | 145609673 | 116846280 | 100% | 100% |
| TSMC China <br>Company Limited <br>(TSMC China)<br>| Manufacturing, sales, testing and <br>computer-aided design of <br>integrated circuits and other <br>semiconductor devices<br>| Shanghai, China | 122572394 | 110272686 | 100% | 100% |
| TSMC Partners, Ltd. <br>(TSMC Partners)<br>| Investing in companies involved in <br>the design, manufacture, and <br>other related business in the <br>semiconductor industry and other <br>investment activities<br>| Tortola, British <br>Virgin Islands<br>| 75809127 | 76694630 | 100% | 100% |
| Japan Advanced <br>Semiconductor <br>Manufacturing, Inc. <br>(JASM)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Kumamoto, Japan | 48148122 | 57173512 | 73% | 73% |
| European <br>Semiconductor <br>Manufacturing <br>Company (ESMC) <br>GmbH (ESMC)<br>| Manufacturing, sales and testing of <br>integrated circuits and other <br>semiconductor devices<br>| Dresden, Germany | 39474813 | 17510070 | 70% | 70% |
| VisEra Technologies <br>Company Ltd. <br>(VisEra Tech)<br>| Research, design, development, <br>manufacturing, sales, packaging <br>and test of color filter<br>| Hsinchu, Taiwan | 11921700 | 12204760 | 67% | 67% |
| TSMC North America | Selling and marketing of integrated <br>circuits and other semiconductor <br>devices<br>| San Jose, California, <br>U.S.A.<br>| 8770383 | 7856923 | 100% | 100% |
| Emerging Fund, L.P. <br>(Emerging Fund)<br>| Investing in technology start-up <br>companies<br>| Cayman Islands | 4138575 | 3214022 | 99.9% | 99.9% |
| TSMC Japan 3DIC <br>R&D Center, Inc. <br>(TSMC 3DIC)<br>| Engineering support activities | Yokohama, Japan | 1502144 | 1343370 | 100% | 100% |
| TSMC Europe B.V. <br>(TSMC Europe)<br>| Customer service and supporting <br>activities<br>| Amsterdam, the <br>Netherlands<br>| 767420 | 631939 | 100% | 100% |
| TSMC Design <br>Technology Japan, <br>Inc. (TSMC JDC)<br>| Engineering support activities | Yokohama, Japan | 433326 | 418383 | 100% | 100% |
| TSMC Japan Limited <br>(TSMC Japan)<br>| Customer service and supporting <br>activities<br>| Yokohama, Japan | 129152 | 129226 | 100% | 100% |
| TSMC Korea Limited <br>(TSMC Korea)<br>| Customer service and supporting <br>activities<br>| Seoul, Korea | 44447 | 43764 | 100% | 100% |
| VentureTech Alliance <br>Fund III, L.P. <br>(VTAF III)<br>| Investing in technology start-up <br>technology companies<br>| Cayman Islands | - | 23334 | - | 98% |
| VentureTech Alliance <br>Fund II, L.P. <br>(VTAF II)<br>| Investing in technology start-up <br>technology companies<br>| Cayman Islands | - | 6246 | - | 98% |
|  |  |  | $2454732809 | $1721166777 |  |  |

---

The Company increased its investment in TSMC Global for the amount of NT$561,374,200 thousand

and NT$261,677,200 thousand in both of 2025 and 2024, respectively.

The Company increased its investment in TSMC Arizona for the amount of NT$106,829,700 thousand

and NT$236,121,500 thousand in both of 2025 and 2024, respectively.

The Company increased its investment in JASM for the amount of NT$15,754,106 thousand in 2024.

The Company increased its investment in ESMC for the amount of NT$20,109,341 thousand and

NT$13,299,041 thousand in both of 2025 and 2024, respectively.

VTAF II, VTAF III and Growth Fund have completed the liquidation procedures respectively in the

first quarter and the second quarter of 2025.

b.Investments in associates

Associates consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  | **Place of** | **Carrying Amount** | **Carrying Amount** | **% of Ownership and Voting** <br>**Rights Held by the Company** | **% of Ownership and Voting** <br>**Rights Held by the Company** |
| **Name of Associate** | **Principal Activities** | **Incorporation** <br>**and Operation**<br>| **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>| **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Vanguard <br>International <br>Semiconductor <br>Corporation <br>(VIS)<br>| Manufacturing, sales, <br>packaging, testing and <br>computer-aided design of <br>integrated circuits and other <br>semiconductor devices and <br>the manufacturing and <br>design service of masks<br>| Hsinchu, Taiwan | $18166267 | $18300373 | 28% | 28% |
| Systems on Silicon <br>Manufacturing <br>Company Pte <br>Ltd. (SSMC)<br>| Manufacturing and sales of <br>integrated circuits and other <br>semiconductor devices<br>| Singapore | 12419167 | 11387185 | 39% | 39% |
| Xintec Inc. <br>(Xintec)<br>| Wafer level chip size <br>packaging and wafer level <br>post passivation <br>| Taoyuan, Taiwan | 4495255 | 4220609 | 41% | 41% |
| Global Unichip <br>Corporation <br>(GUC)<br>| Researching, developing, <br>manufacturing, testing and <br>marketing of integrated <br>| Hsinchu, Taiwan | 2952582 | 3512938 | 35% | 35% |
|  |  |  | $38033271 | $37421105 |  |  |

---

As of December 31, 2025 and 2024, no investments in associates are individually material to the

Company. Please refer to the parent company only statements of comprehensive income for

recognition of share of both profit (loss) and other comprehensive income (loss) of associates that are

not individually material.

The market prices of the associates' ownership held by the Company in publicly traded stocks

calculated base on the closing price are summarized as follows. The closing price represents the

quoted price in active markets, the level 1 fair value measurement.

---

| | | |
|:---|:---|:---|
| **Name of Associate** | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| GUC | $99211700 | $63495488 |
| VIS | $46667928 | $50620261 |
| Xintec | $15468187 | $22033821 |

---

**13. PROPERTY, PLANT AND EQUIPMENT**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Assets used by the Company | $2991673422 | $2537292598 |
| Assets subject to operating leases | 9 | 13 |
|  | $2991673431 | $2537292611 |

---

<u>Assets used by the Company</u>

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Land** | **Buildings** | **Machinery and** <br>**Equipment**<br>| **Office** <br>**Equipment**<br>| **Equipment** <br>**under** <br>**Installation and** <br>**Construction in** <br>**Progress**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |  |
| Balance at January 1, 2025 | $3212000 | $814289467 | $5561479710 | $94303529 | $575842844 | $7049127550 |
| Additions | - | 56810759 | 280934655 | 12328762 | 718154856 | 1068229032 |
| Disposals or retirements | - | (161737) | (62784539) | (1448617) | - | (64394893) |
| Balance at December 31, 2025 | $3212000 | $870938489 | $5779629826 | $105183674 | $1293997700 | $8052961689 |
| Accumulated depreciation and <br>impairment<br>|  |  |  |  |  |  |
| Balance at January 1, 2025 | $- | $404675421 | $4041389852 | $64978939 | $790740 | $4511834952 |
| Additions | - | 50894740 | 547425136 | 11421410 | - | 609741286 |
| Disposals or retirements | - | (106703) | (59366464) | (1448100) | - | (60921267) |
| Impairment losses (reversed) | - | - | 1424036 | - | (790740) | 633296 |
| Balance at December 31, 2025 | $- | $455463458 | $4530872560 | $74952249 | $- | $5061288267 |
| Carrying amounts at December <br>31, 2025<br>| $3212000 | $415475031 | $1248757266 | $30231425 | $1293997700 | $2991673422 |
| <u>Cost</u> |  |  |  |  |  |  |
| Balance at January 1, 2024 | $3212000 | $758806526 | $5131811792 | $92701801 | $396791113 | $6383323232 |
| Additions | - | 55597044 | 467354678 | 9549218 | 179051731 | 711552671 |
| Disposals or retirements | - | (114103) | (37743247) | (7947490) | - | (45804840) |
| Reclassification | - | - | 56487 | - | - | 56487 |
| Balance at December 31, 2024 | $3212000 | $814289467 | $5561479710 | $94303529 | $575842844 | $7049127550 |
| Accumulated depreciation and <br>impairment<br>|  |  |  |  |  |  |
| Balance at January 1, 2024 | $- | $356622537 | $3510736003 | $61719223 | $790740 | $3929868503 |
| Additions | - | 48163277 | 563408071 | 11207118 | - | 622778466 |
| Disposals or retirements | - | (110393) | (33910889) | (7947402) | - | (41968684) |
| Reclassification | - | - | 53721 | - | - | 53721 |
| Impairment losses | - | - | 1102946 | - | - | 1102946 |
| Balance at December 31, 2024 | $- | $404675421 | $4041389852 | $64978939 | $790740 | $4511834952 |
| Carrying amounts at December <br>31, 2024<br>| $3212000 | $409614046 | $1520089858 | $29324590 | $575052104 | $2537292598 |

---

The significant part of the Company's buildings includes main plants, mechanical and electrical power

equipment and clean rooms, and the related depreciation is calculated using the estimated useful lives of

20 years, 10 years and 10 years, respectively.

In the first quarter of 2025 and second quarter of 2024, the Company recognized impairment losses due to

partial machinery and equipment damage caused by earthquakes, which rendered them unusable. Please

refer to the related earthquake losses in Note 32.

The Company assesses impairment and recognizes impairment losses or reversal gains based on the asset's

usage status and expected usage plan. These are recorded under other operating income and expenses.

Information about capitalized interest is set out in Note 21.

**14. LEASE ARRANGEMENTS** 

a.Right-of-use assets

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Carrying amounts</u> |  |  |
| Land | $39492131 | $36615988 |
| Buildings | 2357915 | 1262910 |
| Office equipment | 20671 | 20249 |
|  | $41870717 | $37899147 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Additions to right-of-use assets | $8624633 | $3809970 |
| Depreciation of right-of-use assets |  |  |
| Land | $2972023 | $2523492 |
| Buildings | 703268 | 421268 |
| Office equipment | 16015 | 16383 |
|  | $3691306 | $2961143 |

---

b.Lease liabilities

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Carrying amounts</u> |  |  |
| Current portion (classified under accrued expenses and other <br>current liabilities)<br>| $3241718 | $2497939 |
| Noncurrent portion | 30289119 | 27206865 |
|  | $33530837 | $29704804 |

---

(Continued)

Ranges of discount rates for lease liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Land | 0.39%~2.30% | 0.39%~2.30% |
| Buildings | 0.40%~2.04% | 0.40%~2.04% |
| Office equipment | 0.28%~1.80% | 0.28%~1.74% |

---

c.Material terms of right-of-use assets

The Company leases land and buildings mainly for the use of plants and offices with lease terms of 1

to 22 years. The lease contracts for land located in the R.O.C. specify that lease payments will be

adjusted every 2 years on the basis of changes in announced land value prices. The Company does not

have purchase options to acquire the leasehold land and buildings at the end of the lease terms.

d.Other lease information

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Total cash outflow for leases | $3574065 | $2807980 |

---

**15. INTANGIBLE ASSETS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Technology** <br>**License Fees**<br>| **Software and** <br>**System Design** <br>**Costs**<br>| **Patent and** <br>**Others**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |
| Balance at January 1, 2025 | $1567756 | $28545782 | $51369728 | $13132229 | $94615495 |
| Additions | - | 1218118 | 5693541 | 199937 | 7111596 |
| Disposals or retirements | - | - | (667413) | - | (667413) |
| Balance at December 31, 2025 | $1567756 | $29763900 | $56395856 | $13332166 | $101059678 |
| Accumulated amortization and <br>impairment<br>|  |  |  |  |  |
| Balance at January 1, 2025 | $- | $23166013 | $39442474 | $11554926 | $74163413 |
| Additions | - | 1408632 | 6019169 | 556451 | 7984252 |
| Disposals or retirements | - | - | (662864) | - | (662864) |
| Balance at December 31, 2025 | $- | $24574645 | $44798779 | $12111377 | $81484801 |
| Carrying amounts at December 31, <br>2025<br>| $1567756 | $5189255 | $11597077 | $1220789 | $19574877 |

---

(Continued)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Technology** <br>**License Fees**<br>| **Software and** <br>**System Design** <br>**Costs**<br>| **Patent and** <br>**Others**<br>| **Total** |
| <u>Cost</u> |  |  |  |  |  |
| Balance at January 1, 2024 | $1567756 | $26166275 | $47949736 | $12216770 | $87900537 |
| Additions | - | 2379507 | 8602555 | 923349 | 11905411 |
| Disposals or retirements | - | - | (5182563) | (7890) | (5190453) |
| Balance at December 31, 2024 | $1567756 | $28545782 | $51369728 | $13132229 | $94615495 |
| Accumulated amortization and <br>impairment<br>|  |  |  |  |  |
| Balance at January 1, 2024 | $- | $20436014 | $39211353 | $10569106 | $70216473 |
| Additions | - | 2729999 | 5413650 | 985820 | 9129469 |
| Disposals or retirements | - | - | (5182529) | - | (5182529) |
| Balance at December 31, 2024 | $- | $23166013 | $39442474 | $11554926 | $74163413 |
| Carrying amounts at December 31, <br>2024<br>| $1567756 | $5379769 | $11927254 | $1577303 | $20452082 |

---

(Concluded)

The Company's goodwill has been tested for impairment at the end of the annual reporting period and the

recoverable amount is determined based on the value in use. The value in use was calculated based on the

cash flow forecast from the financial budgets covering the future five-year period, and the Company used

annual discount rates of 9.5% and 9.3% in its test of impairment as of December 31, 2025 and 2024,

respectively, to reflect the relevant specific risk in the cash-generating unit.

For the years ended December 31, 2025 and 2024, the Company did not recognize any impairment loss on

goodwill.

**16. BONDS PAYABLE**

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Domestic unsecured bonds | $538388000 | $478536000 |
| Less: Discounts on bonds payable | (316672) | (299338) |
| Less: Current portion | (61940126) | (24397381) |
|  | $476131202 | $453839281 |

---

The major terms of domestic unsecured bonds are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| NT$ unsecured <br>&nbsp;&nbsp;&nbsp;&nbsp;bonds<br>|  |  |  |  |
| 109-1<br> A | March 2020 to <br>March 2025<br>| $3000000 | 0.58% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | March 2020 to <br>March 2027<br>| 10500000 | 0.62% | The same as above |
| C | March 2020 to <br>March 2030<br>| 10500000 | 0.64% | The same as above |

---

(Continued)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 109-2<br> A | April 2020 to April <br>2025<br>| $5900000 | 0.52% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | April 2020 to April <br>2027<br>| 10400000 | 0.58% | The same as above |
| C | April 2020 to April <br>2030<br>| 5300000 | 0.60% | The same as above |
| 109-3<br> A | May 2020 to May <br>2025<br>| 4500000 | 0.55% | The same as above |
| B | May 2020 to May <br>2027<br>| 7500000 | 0.60% | The same as above |
| C | May 2020 to May <br>2030<br>| 2400000 | 0.64% | The same as above |
| 109-4<br> A | July 2020 to July <br>2025<br>| 5700000 | 0.58% | Two equal installments <br>in last two years; <br>interest payable <br>annually<br>|
| B | July 2020 to July <br>2027<br>| 6300000 | 0.65% | The same as above |
| C | July 2020 to July <br>2030<br>| 1900000 | 0.67% | The same as above |
| 109-5<br> A | September 2020 to <br>September 2025<br>| 4800000 | 0.50% | The same as above |
| B | September 2020 to <br>September 2027<br>| 8000000 | 0.58% | The same as above |
| C | September 2020 to <br>September 2030<br>| 2800000 | 0.60% | The same as above |
| 109-6<br>(Green bond)<br>A | December 2020 to <br>December 2025<br>| 1600000 | 0.40% | The same as above |
| B | December 2020 to <br>December 2027<br>| 5600000 | 0.44% | The same as above |
| C | December 2020 to <br>December 2030<br>| 4800000 | 0.48% | The same as above |
| 109-7<br> A | December 2020 to <br>December 2025<br>| 1900000 | 0.36% | The same as above |
| B | December 2020 to <br>December 2027<br>| 10200000 | 0.41% | The same as above |
| C | December 2020 to <br>December 2030<br>| 6400000 | 0.45% | The same as above |
| 110-1<br> A | March 2021 to <br>March 2026<br>| 4800000 | 0.50% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | March 2021 to <br>March 2028<br>| 11400000 | 0.55% | The same as above |
| C | March 2021 to <br>March 2031<br>| 4900000 | 0.60% | The same as above |
| 110-2<br> A | May 2021 to May <br>2026<br>| 5200000 | 0.50% | The same as above |
| B | May 2021 to May <br>2028<br>| 8400000 | 0.58% | The same as above |
| C | May 2021 to May <br>2031<br>| 5600000 | 0.65% | The same as above |

---

(Continued)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 110-3 | A | June 2021 to June <br>2026<br>| $6900000 | 0.52% | Bullet repayment; <br>interest payable <br>annually<br>|
|  | B | June 2021 to June <br>2028<br>| 7900000 | 0.58% | The same as above |
|  | C | June 2021 to June <br>2031<br>| 4900000 | 0.65% | The same as above |
| 110-4 | A | August 2021 to <br>August 2025<br>| 4000000 | 0.485% | The same as above |
|  | B | August 2021 to <br>August 2026<br>| 8000000 | 0.50% | The same as above |
|  | C | August 2021 to <br>August 2028<br>| 5400000 | 0.55% | The same as above |
|  | D | August 2021 to <br>August 2031<br>| 4200000 | 0.62% | The same as above |
| 110-6 | A | October 2021 to <br>April 2026<br>| 3200000 | 0.535% | The same as above |
|  | B | October 2021 to <br>October 2026<br>| 6900000 | 0.54% | The same as above |
|  | C | October 2021 to <br>October 2028<br>| 4600000 | 0.60% | The same as above |
|  | D | October 2021 to <br>October 2031<br>| 1600000 | 0.62% | The same as above |
| 110-7 | A | December 2021 to <br>December 2026<br>| 7700000 | 0.65% | The same as above |
|  | B | December 2021 to <br>June 2027<br>| 3500000 | 0.675% | The same as above |
|  | C | December 2021 to <br>December 2028<br>| 5500000 | 0.72% | The same as above |
| 111-1<br>(Green bond)<br>| A | January 2022 to <br>January 2027<br>| 2100000 | 0.63% | The same as above |
|  | B | January 2022 to <br>January 2029<br>| 3300000 | 0.72% | The same as above |
| 111-2 | A | March 2022 to <br>September 2026<br>| 3000000 | 0.84% | The same as above |
|  | B | March 2022 to <br>March 2027<br>| 9600000 | 0.85% | The same as above |
|  | C | March 2022 to <br>March 2029<br>| 1600000 | 0.90% | The same as above |
| 111-3 <br>(Green bond)<br>| - | May 2022 to May <br>2027<br>| 6100000 | 1.50% | The same as above |
| 111-4 <br>(Green bond)<br>| A | July 2022 to July <br>2026<br>| 1200000 | 1.60% | The same as above |
|  | B | July 2022 to July <br>2027<br>| 10100000 | 1.70% | The same as above |
|  | C | July 2022 to July <br>2029<br>| 1200000 | 1.75% | The same as above |
|  | D | July 2022 to July <br>2032<br>| 1400000 | 1.95% | The same as above |

---

(Continued)

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Issuance** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 111-5 <br> A | August 2022 to June <br>2027<br>| $2000000 | 1.65% | Bullet repayment; <br>interest payable <br>annually<br>|
| B | August 2022 to <br>August 2027<br>| 8900000 | 1.65% | The same as above |
| C | August 2022 to <br>August 2029<br>| 2200000 | 1.65% | The same as above |
| D | August 2022 to <br>August 2032<br>| 2500000 | 1.82% | The same as above |
| 111-6 <br>(Green bond)<br>A | October 2022 to <br>October 2027<br>| 5700000 | 1.75% | The same as above |
| B | October 2022 to <br>October 2029<br>| 1000000 | 1.80% | The same as above |
| C | October 2022 to <br>October 2032<br>| 3500000 | 2.00% | The same as above |
| 112-1<br>(Green bond)<br>A | March 2023 to <br>March 2028<br>| 12200000 | 1.54% | The same as above |
| B | March 2023 to <br>March 2030<br>| 2300000 | 1.60% | The same as above |
| C | March 2023 to <br>March 2033<br>| 4800000 | 1.78% | The same as above |
| 112-2<br>(Green bond)<br>A | May 2023 to May <br>2028<br>| 13100000 | 1.60% | The same as above |
| B | May 2023 to May <br>2030<br>| 2300000 | 1.65% | The same as above |
| C | May 2023 to May <br>2033<br>| 5300000 | 1.82% | The same as above |
| 112-3<br> A | June 2023 to June <br>2028<br>| 11400000 | 1.60% | The same as above |
| B | June 2023 to June <br>2030<br>| 2600000 | 1.65% | The same as above |
| C | June 2023 to June <br>2033<br>| 6000000 | 1.80% | The same as above |
| 112-4<br> A | August 2023 to <br>August 2028<br>| 7300000 | 1.60% | The same as above |
| B | August 2023 to <br>August 2030<br>| 700000 | 1.65% | The same as above |
| C | August 2023 to <br>August 2033<br>| 7900000 | 1.76% | The same as above |
| 112-5<br> A | October 2023 to <br>October 2028<br>| 4300000 | 1.62% | The same as above |
| B | October 2023 to <br>October 2033<br>| 5500000 | 1.76% | The same as above |
| 113-1<br>(Green bond)<br>A | March 2024 to <br>March 2029<br>| 12000000 | 1.64% | The same as above |
| B | March 2024 to <br>March 2034<br>| 10800000 | 1.76% | The same as above |
| 113-2<br>(Green bond)<br>A | May 2024 to May <br>2029<br>| 4900000 | 1.98% | The same as above |
| B | May 2024 to May <br>2034<br>| 6600000 | 2.10% | The same as above |
| 114-1<br>(Green bond)<br>A | March 2025 to <br>March 2030<br>| 12000000 | 1.90% | The same as above |
| B | March 2025 to <br>March 2035<br>| 7200000 | 2.05% | The same as above |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>| **Coupon** <br>**Rate**<br>| **Repayment and** <br>**Interest Payment**<br>|
| 114-2<br>(Green bond)<br>| A | June 2025 to June <br>2030<br>| $12500000 | 1.92% | Bullet repayment; <br>interest payable <br>annually<br>|
|  | B | June 2025 to June <br>2035<br>| 1600000 | 2.05% | The same as above |
| 114-3<br>(Green bond)<br>| A | July 2025 to July <br>2030<br>| 8300000 | 1.92% | The same as above |
|  | B | July 2025 to July <br>2035<br>| 4000000 | 2.05% | The same as above |
| 114-4 | A | September 2025 to <br>September 2030<br>| 13800000 | 1.66% | The same as above |
|  | B <br>(Green bond)<br>| September 2025 to <br>September 2035<br>| 4000000 | 1.73% | The same as above |
| 114-5<br>(Green bond)<br>| A | November 2025 to <br>November 2030<br>| 14000000 | 1.50% | The same as above |
|  | B | November 2025 to <br>November 2032<br>| 3000000 | 1.53% | The same as above |
|  | C | November 2025 to <br>November 2035<br>| 6500000 | 1.58% | The same as above |
|  |  |  |  |  | (Concluded) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Issuance** | **Tranche** | **Issuance Period** | **Total Issue** <br>**Amount**<br>**(US$** <br>**in Thousands)**<br>| **Coupon** <br>**Rate**<br>| **Repayment and**<br>**Interest Payment**<br>|
| US$ unsecured <br>&nbsp;&nbsp;&nbsp;&nbsp;bonds<br>|  |  |  |  |  |
| 109-1 | - | September 2020 to <br>September 2060<br>| US$1,000,000 | 2.70% | Bullet repayment <br>(callable on the 5th <br>anniversary of the <br>issue date and every <br>anniversary <br>thereafter); interest <br>payable annually<br>|
| 110-5 | - | September 2021 to <br>September 2051<br>| 1000000 | 3.10% | The same as above |

---

**17. RETIREMENT BENEFIT PLANS**

a.Defined contribution plans

The plan under the R.O.C. Labor Pension Act (the "Act") is deemed a defined contribution plan.

Pursuant to the Act, the Company has made monthly contributions equal to 6% of each employee's

monthly salary to employees' pension accounts. Accordingly, the Company recognized expenses of

NT$5,174,306 thousand and NT$4,537,289 thousand for the years ended December 31, 2025 and

2024, respectively.

b.Defined benefit plans

The Company has defined benefit plans under the R.O.C. Labor Standards Law that provide benefits

based on an employee's length of service and average monthly salary for the six-month period prior to

retirement. The Company contributes an amount equal to 2% of salaries paid each month to their

respective pension funds (the Funds), which are administered by the Labor Pension Fund Supervisory

Committee (the Committee) and deposited in the Committee's name in the Bank of Taiwan. Before the

end of each year, the Company assesses the balance in the Funds. If the amount of the balance in the

Funds is inadequate to pay retirement benefits for employees who conform to retirement requirements

in the next year, the Company is required to fund the difference in one appropriation that should be

made before the end of March of the next year. The Funds are operated and managed by the

government's designated authorities; as such, the Company does not have any right to intervene in the

investments of the Funds.

Amounts recognized in respect of these defined benefit plans were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Current service cost | $150593 | $153020 |
| Net interest expense | 106331 | 122660 |
| Components of defined benefit costs recognized in profit or <br>loss<br>| 256924 | 275680 |
| Remeasurement on the net defined benefit liability: |  |  |
| Return on plan assets (excluding amounts included in net <br>interest expense)<br>| (764266) | (774583) |
| Actuarial loss arising from experience adjustments | 539527 | 911752 |
| Actuarial loss arising from changes in demographic <br>assumptions<br>| 581499 | - |
| Actuarial (gain) loss arising from changes in financial <br>assumptions<br>| 336511 | (281534) |
| Components of defined benefit costs recognized in other <br>comprehensive income<br>| 693271 | (144365) |
| Total | $950195 | $131315 |

---

The pension costs of the aforementioned defined benefit plans were recognized in profit or loss by the

following categories:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Cost of revenue | $169175 | $178507 |
| Research and development expenses | 69532 | 75259 |
| General and administrative expenses | 15148 | 18424 |
| Marketing expenses | 3069 | 3490 |
|  | $256924 | $275680 |

---

The amounts arising from the defined benefit obligation of the Company were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Present value of defined benefit obligation | $19339129 | $18332160 |
| Fair value of plan assets | (13326843) | (10751503) |
| Net defined benefit liability | $6012286 | $7580657 |

---

Movements in the present value of the defined benefit obligation were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $18332160 | $17995066 |
| Current service cost | 150593 | 153020 |
| Interest expense | 281084 | 242788 |
| Remeasurement: |  |  |
| Actuarial loss arising from experience adjustments | 539527 | 911752 |
| Actuarial (gain) loss arising from changes in financial <br>assumptions<br>| 336511 | (281534) |
| Actuarial loss arising from changes in demographic <br>assumptions<br>| 581499 | - |
| Benefits paid from plan assets | (803342) | (679084) |
| Benefits paid directly by the Company | (78903) | (9848) |
| Balance, end of year | $19339129 | $18332160 |

---

Movements in the fair value of the plan assets were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $10751503 | $8737842 |
| Interest income | 174753 | 120128 |
| Remeasurement: |  |  |
| Return on plan assets (excluding amounts included in net <br>interest expense)<br>| 764266 | 774583 |
| Contributions from employer | 2439663 | 1798034 |
| Benefits paid from plan assets | (803342) | (679084) |
| Balance, end of year | $13326843 | $10751503 |

---

The fair value of the plan assets by major categories at the end of reporting period was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Cash | $1652528 | $1569719 |
| Equity instruments | 8223995 | 6245548 |
| Debt instruments | 3450320 | 2936236 |
|  | $13326843 | $10751503 |

---

The actuarial valuations of the present value of the defined benefit obligation were carried out by

qualified actuaries. The principal assumptions of the actuarial valuation were as follows:

---

| | | |
|:---|:---|:---|
|  | **Measurement Date** | **Measurement Date** |
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Discount rate | 1.40% | 1.60% |
| Future salary increase rate | 4.00% | 4.00% |

---

Through the defined benefit plans under the R.O.C. Labor Standards Law, the Company is exposed to

the following risks:

1)Investment risk: The pension funds are invested in equity and debt securities, bank deposits, etc.

The investment is conducted at the discretion of the government's designated authorities or under

the mandated management. However, under the R.O.C. Labor Standards Law, the rate of return on

assets shall not be less than the average interest rate on a two-year time deposit published by the

local banks and the government is responsible for any shortfall in the event that the rate of return is

less than the required rate of return.

2)Interest risk: A decrease in the government bond interest rate will increase the present value of the

defined benefit obligation; however, this will be partially offset by an increase in the return on the

debt investments of the plan assets.

Assuming a hypothetical decrease in interest rate at the end of the reporting period contributed to a

decrease of 0.5% (and not below 0.0%) in the discount rate and all other assumptions were held

constant, the present value of the defined benefit obligation would increase by NT$883,727

thousand and NT$717,535 thousand as of December 31, 2025 and 2024, respectively.

3)Salary risk: The present value of the defined benefit obligation is calculated by reference to the

future salaries of plan participants. As such, an increase in the salary of the plan participants will

increase the present value of the defined benefit obligation.

Assuming the expected salary rate increases by 0.5% at the end of the reporting period and all

other assumptions were held constant, the present value of the defined benefit obligation would

increase by NT$857,260 thousand and NT$697,715 thousand as of December 31, 2025 and 2024,

respectively.

The sensitivity analysis presented above may not be representative of the actual change in the defined

benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one

another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit

obligation has been calculated using the projected unit credit method at the end of the reporting period,

which is the same as that applied in calculating the defined benefit obligation liability.

The Company expects to make contributions of NT$2,537,250 thousand to the defined benefit plans in

the next year starting from December 31, 2025. The weighted average duration of the defined benefit

obligation is 9 years.

**18. EQUITY**

a.Capital stock

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Authorized shares (in thousands) | 28050000 | 28050000 |
| Authorized capital | $280500000 | $280500000 |
| Issued and paid shares (in thousands) | 25932524 | 25932733 |
| Issued capital | $259325245 | $259327332 |

---

The par value of issued common shares is NT$10 per share. A holder of common shares has one vote

for each common share and is entitled to receive dividends.

The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock

options.

On September 1, 2024 and March 1, 2024, the Company issued employee restricted stock awards

(RSAs) for its employees in a total of 2,353 thousand shares and 2,960 thousand shares, respectively,

with a par value of NT$10 per share. The aforementioned issuance of new shares was approved by the

relevant authority and the registration has been completed.

During the third quarter of 2025, the first quarter of 2025 and 2024, TSMC reclaimed 91 thousand,

118 thousand and 1,402 thousand employee restricted shares, respectively, that were unvested. On

November 11, 2025, May 13, 2025 and June 5, 2024, the Company's Board of Directors resolved to

cancel the aforementioned shares. Subsequently, TSMC completed the registration for share

cancellation. Refer to 25 for information on RSAs.

On August 13, 2024, the Company's Board of Directors resolved to cancel 3,249 thousand treasury

shares. Refer to Note 18(e) for further information.

As of December 31, 2025, the Company's total issued and outstanding ADSs were 1,062,719 thousand

units, representing 5,313,593 thousand common shares.

b.Capital surplus

The categories of uses and the sources of capital surplus based on regulations were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| May be used to offset a deficit, distributed as cash dividends, <br>or transferred to share capital<br>|  |  |
| Additional paid-in capital | $26343550 | $24809704 |
| From merger | 22800434 | 22800434 |
| From convertible bonds | 8891257 | 8891257 |
| From difference between the consideration received and the <br>carrying amount of the subsidiaries' net assets during actual <br>disposal<br>| 8411566 | 8411566 |
| Donations - donated by shareholders | 11280 | 11275 |
| <u>May only be used to offset a deficit</u> |  |  |
| From share of changes in equities of subsidiaries | 4093999 | 4108958 |
| From share of changes in equities of associates  | 1365250 | 1172396 |
| Donations - unclaimed dividend | 105684 | 78976 |
| <u>May not be used for any purpose</u> |  |  |
| Employee restricted shares | 1422581 | 2976199 |
|  | $73445601 | $73260765 |

---

If such capital surplus is distributed as transferred to share capital, it is limited to a certain percentage

of the Company's paid-in capital each year.

c.Retained earnings and dividend policy

The Company's Articles of Incorporation provide that, earnings distribution may be made on a

quarterly basis after the close of each quarter. Distribution of earnings by way of cash dividends

should be approved by the Company's Board of Directors and reported to the Company's shareholders

in its meeting. When allocating earnings, the Company shall first estimate and reserve the taxes to be

paid, offset its losses, set aside a legal capital reserve at 10% of the remaining earnings (until the

accumulated legal capital reserve equals the Company's paid-in capital), then set aside a special

capital reserve in accordance with relevant laws or regulations or as requested by the authorities in

charge. Any balance left over shall be allocated according to relevant laws and the Company's Articles

of Incorporation.

The Company's Articles of Incorporation also provide that profits of the Company may be distributed

by way of cash dividend and/or stock dividend. However, distribution of earnings shall be made

preferably by way of cash dividend. Distribution of earnings may also be made by way of stock

dividend, provided that the ratio for stock dividend shall not exceed 50% of the total distribution.

The legal capital reserve may be used to offset a deficit, or be distributed as dividends in cash or stocks

for the portion in excess of 25% of the paid-in capital if the Company incurs no loss.

Pursuant to existing regulations, the Company is required to set aside an additional special capital

reserve equivalent to the net debit balance of the other components of stockholders' equity, such as the

accumulated balance of the foreign currency translation reserve, the effectiveness of hedges of net

investments in foreign operations, unrealized valuation gain or loss from fair value through other

comprehensive income financial assets and gain or loss from changes in fair value of hedging

instruments in cash flow hedges, etc. For the subsequent decrease in the deduction amount to

stockholders' equity, any special reserve appropriated may be reversed to the extent that the net debit

balance reverses.

The appropriations of 2025, 2024 and 2023 quarterly earnings have been approved by the Company's

Board of Directors in its meeting, respectively. The appropriations and cash dividends per share were

as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2025** | **of 2025** | **of 2025** | **of 2025** |
| **Board of Directors in its** | **February 10,** | **November 11,** | **August 12,** | **May 13,** |
| &nbsp;&nbsp;&nbsp;&nbsp;**meeting** | **2026** | **2025** | **2025** | **2025** |
| Special capital reserve | $(71085085) | $(94270352) | $181554848 | $- |
| Cash dividends to shareholders | $155595147 | $155595147 | $129662913 | $129663078 |
| Cash dividends per share (NT$) | $6.00 | $6.00 | $5.00 | $5.00 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2024** | **of 2024** | **of 2024** | **of 2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Board of Directors in its** | **February 12,** | **November 12,** | **August 13,** | **May 10,** |
| &nbsp;&nbsp;&nbsp;&nbsp;**meeting** | **2025** | **2024** | **2024** | **2024** |
| Special capital reserve | $- | $- | $- | $(28020822) |
| Cash dividends to shareholders | $116697300 | $116697300 | $103721521 | $103734517 |
| Cash dividends per share (NT$) | $4.50 | $4.50 | $4.00 | $4.00 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fourth Quarter** | **Third Quarter** | **Second Quarter** | **First Quarter** |
| **Resolution Date of TSMC's**  | **of 2023** | **of 2023** | **of 2023** | **of 2023** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Board of Directors in its** | **February 6,** | **November 14,** | **August 8,** | **May 9,** |
| &nbsp;&nbsp;&nbsp;&nbsp;**meeting** | **2024** | **2023** | **2023** | **2023** |
| Special capital reserve | $28020822 | $(17228363) | $(6365562) | $3273452 |
| Cash dividends to shareholders | $90762248 | $90762248 | $77796213 | $77796213 |
| Cash dividends per share (NT$) | $3.50 | $3.50 | $3.00 | $3.00 |

---

The special capital reserve for 2025 is to be presented for approval in the Company's shareholders'

meeting to be held on June 4, 2026 (expected).

The quarterly cash dividends per share is affected by the subsequent number of outstanding ordinary

shares, the information of the actual payout is available at the Market Observation Post System

website.

d.Others

Changes in others were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  | **Foreign** <br>**Currency** <br>**Translation** <br>**Reserve**<br>| **Unrealized** <br>**Gain (Loss) on** <br>**Financial** <br>**Assets at** <br>**FVTOCI**<br>| **Gain (Loss) on** <br>**Hedging** <br>**Instruments**<br>| **Unearned** <br>**Stock-Based** <br>**Employee** <br>**Compensation**<br>| **Total** |
| Balance, beginning of year | $40262995 | $(1160176) | $1310307 | $(1708079) | $38705047 |
| Exchange differences arising on translation <br>of foreign operations<br>| (61608312) | - | - | - | (61608312) |
| Gain (loss) on hedging instruments <br>designated as hedges of net investments <br>in foreign operations<br>| 335106 | - | - | - | 335106 |
| Unrealized gain (loss) on financial assets <br>at FVTOCI<br>|  |  |  |  |  |
| Equity instruments | - | 28593 | - | - | 28593 |
| Disposal of investments in equity <br>instruments at FVTOCI<br>| - | (557108) | - | - | (557108) |
| Gain (loss) arising on changes in the fair <br>value of hedging instruments<br>| - | - | (31030) | - | (31030) |
| Transferred to initial carrying amount of <br>hedged items<br>| - | - | 13450 | - | 13450 |
| Share-based payment expenses recognized | - | - | - | 1231078 | 1231078 |
| Share of other comprehensive income <br>(loss) of subsidiaries and associates<br>| (8933) | 5280174 | (64477) | - | 5206764 |
| Balance, end of year | $(21019144) | $3591483 | $1228250 | $(477001) | $(16676412) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Foreign** <br>**Currency** <br>**Translation** <br>**Reserve**<br>| **Unrealized** <br>**Gain (Loss) on** <br>**Financial** <br>**Assets at** <br>**FVTOCI**<br>| **Gain (Loss) on** <br>**Hedging** <br>**Instruments**<br>| **Unearned** <br>**Stock-Based**<br>**Employee** <br>**Compensation**<br>| **Total** |
| Balance, beginning of year | $(25316769) | $(4099928) | $1395875 | $(293434) | $(28314256) |
| Exchange differences arising on translation <br>of foreign operations<br>| 64536244 | - | - | - | 64536244 |
| Gain (loss) on hedging instruments <br>designated as hedges of net investments <br>in foreign operations<br>| 793830 | - | - | - | 793830 |
| Unrealized gain (loss) on financial assets <br>at FVTOCI<br>|  |  |  |  |  |
| Equity instruments | - | 97396 | - | - | 97396 |
| Disposal of investments in equity <br>instruments at FVTOCI<br>| - | (4009066) | - | - | (4009066) |
| Gain (loss) arising on changes in the fair <br>value of hedging instruments<br>| - | - | 5041 | - | 5041 |
| Transferred to initial carrying amount of <br>hedged items<br>| - | - | 141 | - | 141 |
| Issuance of employee restricted stock | - | - | - | (2637387) | (2637387) |
| Share-based payment expenses recognized | - | - | - | 1222742 | 1222742 |
| Share of other comprehensive income <br>(loss) of subsidiaries and associates<br>| 249690 | 6861418 | (90750) | - | 7020358 |
| Income tax effect | - | (9996) | - | - | (9996) |
| Balance, end of year | $40262995 | $(1160176) | $1310307 | $(1708079) | $38705047 |

---

The aforementioned other equity includes the changes in other equities of the Company and the

Company's share of its subsidiaries and associates.

e.Treasury stock

For the Company's shareholders' interests, the Company's Board of Directors approved a share

buyback program on June 5, 2024 to repurchase 3,249 thousand shares. The Company has completed

this share buyback program during the second quarter of 2024. On August 13, 2024, the Company's

Board of Directors resolved to cancel the 3,249 thousand shares and set September 1, 2024 as the

record date for capital reduction. The registration for share cancellation was completed on September

11, 2024.

**19. NET REVENUE**

a.Disaggregation of revenue from contracts with customers

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Product** | **2025** | **2024** |
| Wafer | $3255146998 | $2510017254 |
| Others | 529241762 | 370366096 |
|  | $3784388760 | $2880383350 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Geography** | **2025** | **2024** |
| Taiwan | $299445782 | $270413546 |
| United States | 2826188062 | 1986303602 |
| China | 327502739 | 331673315 |
| Japan | 135646991 | 144239882 |
| Europe, the Middle East and Africa | 126584061 | 102760879 |
| Others | 69021125 | 44992126 |
|  | $3784388760 | $2880383350 |

---

The Company categorized the net revenue mainly based on the countries where the customers are

headquartered.

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Platform** | **2025** | **2024** |
| High Performance Computing | $2185635278 | $1468508854 |
| Smartphone | 1094191863 | 1000995664 |
| Internet of Things | 191037402 | 164847295 |
| Automotive | 186345604 | 138885986 |
| Digital Consumer Electronics | 47879565 | 47850715 |
| Others | 79299048 | 59294836 |
|  | $3784388760 | $2880383350 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
| **Resolution** | **2025** | **2024** |
| 3-nanometer | $793771655 | $456947662 |
| 5-nanometer | 1179092880 | 859687087 |
| 7-nanometer | 458485675 | 416558462 |
| 16-nanometer | 215783533 | 202383587 |
| 20-nanometer | 4294513 | 4076441 |
| 28-nanometer | 210008919 | 188214493 |
| 40/45-nanometer | 95688151 | 108591498 |
| 65-nanometer | 120743718 | 93007404 |
| 90-nanometer | 21351286 | 21525204 |
| 0.11/0.13 micron | 48698641 | 52372598 |
| 0.15/0.18 micron | 88236071 | 90757845 |
| 0.25 micron and above | 18991956 | 15894973 |
| Wafer revenue | $3255146998 | $2510017254 |

---

b.Contract balances

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>| **January 1,** <br>**2024**<br>|
| Contract liabilities (classified under <br>accrued expenses and other current <br>liabilities)<br>| $34734928 | $81204467 | $47760098 |

---

The changes in the contract liability balances primarily result from the timing difference between the

satisfaction of performance obligation and the customer's payment.

The Company recognized revenue from the beginning balance of contract liability, which amounted to

NT$51,715,323 thousand and NT$46,809,520 thousand for the years ended December 31, 2025 and

2024, respectively.

c.Temporary receipts from customers

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Current portion (classified under accrued expenses and other <br>current liabilities)<br>| $145207051 | $198602570 |
| Noncurrent portion (classified under other noncurrent <br>liabilities)<br>| 26924438 | 75410459 |
|  | $172131489 | $274013029 |

---

The Company's temporary receipts from customer are payments made by customers to the Company

to retain the Company's capacity. When the terms and conditions set forth in the agreements are

subsequently satisfied, the treatment of temporary receipts, either by refund or by accounts receivable

offsetting, will be determined by mutual consent.

d.Refund liabilities

Estimated sales returns and other allowances is made and adjusted based on historical experience and

the consideration of varying contractual terms. As of December 31, 2025 and 2024, the

aforementioned refund liabilities amounted to NT$75,708,756 thousand and NT$60,197,285 thousand

(classified under accrued expenses and other current liabilities), respectively.

**20. INTEREST INCOME**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Interest income |  |  |
| Cash and cash equivalents | $28338796 | $27032709 |
| Financial assets at amortized cost | 119404 | 305591 |
|  | $28458200 | $27338300 |

---

(Continued)

**21. FINANCE COSTS**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Interest expense |  |  |
| Corporate bonds | $6764582 | $6057480 |
| Lease liabilities | 410214 | 331894 |
| Others | 25391 | 1271 |
| Less: Capitalized interest under property, plant and equipment | (2845998) | (989659) |
|  | $4354189 | $5400986 |

---

Information about capitalized interest is as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Capitalization rate | 1.32%-1.44% | 1.20%-1.32% |

---

**22. OTHER GAINS AND LOSSES, NET**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Gain (loss) on disposal of investments accounted for using equity <br>method, net<br>| $(167986) | $7126 |
| Loss on financial instruments at FVTPL, net | (8134179) | (7881159) |
| Reversal of expected credit loss for financial assets |  |  |
| Financial assets at amortized cost | 13579 | 2551 |
| Other gains, net | 257589 | 208036 |
|  | $(8030997) | $(7663446) |

---

**23. INCOME TAX**

a.Income tax expense recognized in profit or loss

Income tax expense consisted of the following:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Current income tax expense  |  |  |
| Current tax expense recognized in the current year | $332750114 | $235089738 |
| Income tax adjustments on prior years | (14137218) | (7144098) |
| Other income tax adjustments | 389926 | 331459 |
|  | 319002822 | 228277099 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Deferred income tax expense |  |  |
| Income tax adjustments on prior years | $(65124) | $3925320 |
| The origination and reversal of temporary differences | 7169357 | 2138847 |
|  | 7104233 | 6064167 |
| Income tax expense recognized in profit or loss | $326107055 | $234341266 |

---

(Concluded)

A reconciliation of income before income tax and income tax expense recognized in profit or loss was

as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Income before tax | $2043989682 | $1407608969 |
| Income tax expense at the statutory rate | $408797936 | $281521794 |
| Tax effect of adjusting items: |  |  |
| Adjusting items in determining taxable income | (13557812) | (6175639) |
| Additional income tax on unappropriated earnings | - | 6483623 |
| The origination and reversal of temporary differences | 7169357 | 2138847 |
| Income tax credits | (62490010) | (46740040) |
|  | 339919471 | 237228585 |
| Income tax adjustments on prior years | (14202342) | (3218778) |
| Other income tax adjustments | 389926 | 331459 |
| Income tax expense recognized in profit or loss | $326107055 | $234341266 |

---

For the years ended December 31, 2025 and 2024, the Company applied a tax rate of 20% subject to

the R.O.C. Income Tax Law.

b.Deferred income tax balance

The analysis of deferred income tax assets and liabilities was as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Deferred income tax assets</u> |  |  |
| Temporary differences |  |  |
| Depreciation | $24552052 | $32784174 |
| Refund liability | 16298641 | 13146474 |
| Unrealized exchange losses | 6094375 | 9078243 |
| Others  | 6202574 | 5169454 |
|  | $53147642 | $60178345 |
| <u>Deferred income tax liabilities</u> |  |  |
| Temporary differences |  |  |
| Subsidiary's projected earnings distribution | $(3860196) | $(3925320) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** |
|  |  | **Recognized in** | **Recognized in** |  |
|  | **Balance,** <br>**Beginning of** <br>**Year**<br>| **Profit or Loss** | **Other** <br>**Comprehensive** <br>**Income**<br>| **Balance,**<br> **End of Year**<br>|
| <u>Deferred income tax assets</u> |  |  |  |  |
| Temporary differences |  |  |  |  |
| Depreciation | $32784174 | $(8232122) | $- | $24552052 |
| Refund liability | 13146474 | 3152167 | - | 16298641 |
| Unrealized exchange losses | 9078243 | (2983868) | - | 6094375 |
| Others | 5169454 | 894466 | 138654 | 6202574 |
|  | $60178345 | $(7169357) | $138654 | $53147642 |
| <u>Deferred income tax liabilities</u> |  |  |  |  |
| Temporary differences |  |  |  |  |
| Subsidiary's projected earning <br>distribution<br>| $(3925320) | $65124 | $- | $(3860196) |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  |  | **Recognized in** | **Recognized in** |  |
|  | **Balance,** <br>**Beginning of** <br>**Year**<br>| **Profit or Loss** | **Other** <br>**Comprehensive** <br>**Income**<br>| **Balance,**<br> **End of Year**<br>|
| <u>Deferred income tax assets</u> |  |  |  |  |
| Temporary differences |  |  |  |  |
| Depreciation | $40726261 | $(7942087) | $- | $32784174 |
| Refund liability | 9348138 | 3798336 | - | 13146474 |
| Unrealized exchange losses | 7096229 | 1982014 | - | 9078243 |
| Others | 5185433 | 22890 | (38869) | 5169454 |
|  | $62356061 | $(2138847) | $(38869) | $60178345 |
| <u>Deferred income tax liabilities</u> |  |  |  |  |
| Temporary differences |  |  |  |  |
| Subsidiary's projected earning <br>distribution<br>| $- | $(3925320) | $- | $(3925320) |

---

c.The deductible temporary differences for which no deferred income tax assets have been recognized

As of December 31, 2025 and 2024, the aggregate deductible temporary differences for which no

deferred income tax assets have been recognized amounted to NT$64,904,467 thousand and

NT$52,979,425 thousand, respectively.

d.The information of unrecognized deferred income tax liabilities associated with investments

As of December 31, 2025 and 2024, the aggregate taxable temporary differences associated with

investments in subsidiaries not recognized as deferred income tax liabilities amounted to

NT$329,889,192 thousand and NT$327,787,523 thousand, respectively.

e.Income tax examination

The tax authorities have examined income tax returns of the Company through 2023. All investment

tax credit adjustments assessed by the tax authorities have been recognized accordingly.

**24. EARNINGS PER SHARE**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Basic EPS | $66.26 | $45.25 |
| Diluted EPS | $66.25 | $45.25 |

---

EPS is computed as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Basic EPS |  |  |
| Net income available to common shareholders | $1717882627 | $1173267703 |
| Weighted average number of common shares outstanding used <br>in the computation of basic EPS (in thousands)<br>| 25928262 | 25927556 |
| Basic EPS (in dollars) | $66.26 | $45.25 |
| Diluted EPS |  |  |
| Net income available to common shareholders | $1717882627 | $1173267703 |
| Weighted average number of common shares outstanding used <br>in the computation of basic EPS (in thousands)<br>| 25928262 | 25927556 |
| Effects of all dilutive potential common shares (in thousands) | 2295 | 2089 |
| Weighted average number of common shares used in the <br>computation of diluted EPS (in thousands)<br>| 25930557 | 25929645 |
| Diluted EPS (in dollars) | $66.25 | $45.25 |

---

**25. SHARE-BASED PAYMENT ARRANGEMENTS** 

a.Equity-settled share-based payment- RSAs

The RSAs in each year are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
| Resolution Date of TSMC's <br>shareholders in its meeting<br>| June 4, 2024 | June 6, 2023 | June 8, 2022 | July 26, 2021 |
| Resolution Date of TSMC's Board <br>of Directors in its meeting<br>| August 13, 2024 | February 6, 2024 | February 14, 2023 | February 15, 2022 |
| Issuance of stocks (in thousands) | 2353 | 2960 | 2110 | 1387 |
| Available for issuance (in <br>thousands)<br>| 1832 | - | - | - |
| Eligible employees | Executive officers | Executive officers | Executive officers | Executive officers |
| Grant date/Issuance date | September 1, 2024 | March 1, 2024 | March 1, 2023 | March 1, 2022 |

---

Vesting conditions of the aforementioned arrangement are as follow:

1)The RSAs granted to eligible employees can only be vested if

• the employee remains employed by the Company or the subsidiaries on the last date of each

vesting period;

• during the vesting period, the employee may not breach any agreement with the Company or

the subsidiaries or violate the Company's work rules; and

• certain employee performance metrics and the Company's or the subsidiaries' business

performance metrics are met.

2)The maximum percentage of granted RSAs that may be vested each year shall be as follows: one-

year anniversary of the grant: 50%; two-year anniversary of the grant: 25%; and three-year

anniversary of the grant: 25%; provided that the actual percentage and number of the RSAs to be

vested in each year will be calculated based on the achievement of the Company's business

performance metrics.

3)For eligible executive officers of the Company: The maximum number of RSAs that may be vested

in each year will be set as 110%, among which 100% will be subject to a calculation based on the

Company's relative Total Shareholder Return ("TSR", including capital gains and dividends)

achievement to determine the number of RSAs to be vested; this number will be further subject to

a modifier to increase or decrease up to 10% based on the Compensation and People Development

Committee evaluation of the Company's Environmental, Social, and Governance ("ESG")

achievements. The number of shares so calculated should be rounded down to the nearest integral.

---

| | |
|:---|:---|
| **The Company's TSR relative to the** <br>**TSR of S&P 500 IT Index**<br>| **Ratio of Shares to be Vested** |
| Above the Index by X percentage points | 50% + X \* 2.5%, with the maximum of 100% |
| Equal to the Index | 50% |
| Below the Index by X percentage points | 50% - X \* 2.5%, with the minimum of 0% |

---

4)Restrictions imposed on the employees' rights in the RSAs before the vesting conditions are

fulfilled:

• During each vesting period, no employee granted RSAs, except for inheritance, may sell,

pledge, transfer, give to another person, create any encumbrance on, or otherwise dispose of,

any shares under the unvested RSAs.

• Before the vesting conditions are fulfilled, the attendance, proposal rights, speech rights,

voting rights and etc. shall be exercised by the engaged trustee/custodian on the employee's

behalf. Any other shareholder rights including but not limited to the entitlement to any

distribution regarding dividends, bonuses and capital reserve, and the subscription right of the

new shares issued for any capital increase, are the same as those of holders of common shares

of the Company.

5)Details of granted RSAs in each year are as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
|  | **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>| **Number of Shares**<br>**(In Thousands)**<br>|
| Balance, beginning of year | 2353 | 2960 | 1055 | 347 |
| Vested shares | (1102) | (1406) | (501) | (330) |
| Canceled shares | (91) | (74) | (27) | (17) |
| Balance, end of year | 1160 | 1480 | 527 | - |
| Weighted-average fair value of <br>RSAs (in dollars)<br>| $662.42 | $364.43 | $277.71 | $325.81 |

---

The RSAs in each year are measured at fair value at grant date by using the binominal tree

approach. Relevant information is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2024 RSAs** | **2023 RSAs** | **2022 RSAs** | **2021 RSAs** |
|  | **September 1, 2024** | **March 1, 2024** | **March 1, 2023** | **March 1, 2022** |
| Stock price at measurement <br>date (in dollars)<br>| $944 | $689 | $511 | $604 |
| Expected price volatility | 25.51%-29.87% | 24.77%-26.12% | 29.34%-32.11% | 25.34%-28.28% |
| Expected life | 1-3 years | 1-3 years | 1-3 years | 1-3 years |
| Risk-free interest rate | 1.40% | 1.16% | 1.06% | 0.57% |

---

Refer to Note 26 for the compensation costs of the RSAs recognized by the Company.

b.Cash-settled share-based payment arrangements

The cash-settled share-based payment arrangements in each year are as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2023 Plan** | **2022 Plan** | **2021 Plan** |
| Resolution Date of the Company's Board of <br>Directors in its meeting<br>| February 6,<br>2024<br>| February 14,<br>2023<br>| February 15,<br>2022<br>|
| Issuance of units (in thousands) (Note) | 550 | 400 | 236 |
| Grant date | March 1, 2024 | March 1, 2023 | March 1, 2022 |

---

Note:One unit of the right represents a right to the market value of one the Company's common share

when vested.

The vesting conditions and the ratio of units to be vested for key management personnel of the plan

are the same as the aforementioned RSAs.

The fair value of compensation costs for the cash-settled share-based payment was measured by using

binominal tree approach and will be measured at each reporting period until settlement. Relevant

information is as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2025** | **2024** | **2024** | **2024** |
|  | **2023 Plan** | **2022 Plan** | **2023 Plan** | **2022 Plan** | **2021 Plan** |
| Stock price at measurement <br>date (in dollars)<br>| $1510 | $1510 | $1090 | $1090 | $1090 |
| Expected price volatility | 23.67%-30.35% | 23.67%-30.35% | 25.61%-30.78% | 25.61%-30.78% | 25.61%~30.78% |
| Residual life | 1-2 years | 1 year | 1-3 years | 1-2 years | 1 year |
| Risk-free interest rate | 1.22% | 1.20% | 1.45% | 1.41% | 1.37% |

---

Refer to Note 26 for the compensation costs of the cash-settled share-based payment recognized by the

Company. As of December 31, 2025 and 2024, the liabilities under cash-settled share-based payment

arrangement amounted toNT$330,836 thousand and NT$455,728 thousand, respectively.

**26. ADDITIONAL INFORMATION OF EXPENSES BY NATURE**

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| a.Depreciation of property, plant and equipment and right-of-<br>use assets<br>|  |  |
| Recognized in cost of revenue | $574475240 | $590881553 |
| Recognized in operating expenses | 38957352 | 34858056 |
| Recognized in other operating income and expenses | 4 | 7814 |
|  | $613432596 | $625747423 |
| b.Amortization of intangible assets |  |  |
| Recognized in cost of revenue | $4989782 | $6320646 |
| Recognized in operating expenses | 2994470 | 2808823 |
|  | $7984252 | $9129469 |
| c.Employee benefits expenses |  |  |
| Post-employment benefits  |  |  |
| Defined contribution plans | $5174306 | $4537289 |
| Defined benefit plans | 256924 | 275680 |
|  | 5431230 | 4812969 |
| Share-based payments |  |  |
| Equity-settled | 1213225 | 1242676 |
| Cash-settled | 304140 | 403486 |
|  | 1517365 | 1646162 |
| Other employee benefits | 333559549 | 248455483 |
|  | $340508144 | $254914614 |
| Employee benefits expense summarized by function |  |  |
| Recognized in cost of revenue | $207103346 | $152156491 |
| Recognized in operating expenses | 133404798 | 102758123 |
|  | $340508144 | $254914614 |

---

According to the Company's Articles of Incorporation, the Company shall allocate compensation to

directors and profit sharing bonus to employees of the Company not more than 0.3% and not less than 1%

of annual profits during the period, respectively (among which not less than 30% as profit sharing bonuses

to entry-level employees).

The Company accrued profit sharing bonus to employees based on a percentage of net income before

income tax, profit sharing bonus to employees and compensation to directors during the period;

compensation to directors was expensed based on estimated amount payable. If there is a change in the

proposed amounts after the annual parent company only financial statements are authorized for issue, the

differences are recorded as a change in accounting estimate. Accrued profit sharing bonus to employees is

illustrated below:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Profit sharing bonus to employees | $103072958 | $70296283 |

---

The Company's accrued profit sharing bonus to employees and compensation to directors 2025, 2024 and

2023 are illustrated below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** | **2023** |
| Profit sharing bonus to employees | $103072958 | $70296283 | $50090533 |
| Compensation to directors | $156305 | $358989 | $551955 |

---

There is no significant difference between the aforementioned amounts and the amounts charged against

earnings of 2025 ,2024 and 2023, respectively.

The information about the appropriations of the Company's profit sharing bonus to employees and

compensation to directors is available at the Market Observation Post System website.

**27. CASH FLOW INFORMATION**

a.Non-cash transactions

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Additions of property, plant and equipment | $1068229032 | $711552671 |
| Exchange of assets | (169549) | (109273) |
| Changes in payables to contractors and equipment suppliers | (19672612) | (65724334) |
| Transferred to initial carrying amount of hedged items | (31030) | 5041 |
| Capitalized interests | (2845998) | (989659) |
| Payments for acquisition of property, plant and equipment | $1045509843 | $644734446 |

---

b.Reconciliation of liabilities arising from financing activities

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Non-cash Changes** | **Non-cash Changes** |  |
|  | **Balance as of**<br> **January 1,**<br>**2025**<br>| **Financing Cash** <br>**Flow**<br>| **Foreign** <br>**Exchange** <br>**Movement**<br>| **Other Changes**<br>**(Note)**<br>| **Balance as of** <br>**December 31,** <br>**2025**<br>|
| Bonds payable | $478236662 | $62409692 | $(2645436) | $70410 | $538071328 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  |  | **Non-cash Changes** | **Non-cash Changes** |  |
|  | **Balance as of**<br>**January 1,**<br>**2024**<br>| **Financing Cash** <br>**Flow**<br>| **Foreign** <br>**Exchange** <br>**Movement**<br>| **Other Changes**<br>**(Note)**<br>| **Balance as of** <br>**December 31, 2024**<br>|
| Bonds payable | $446867565 | $27264319 | 4038045 | $66733 | $478236662 |

---

Note:Other changes include amortization of bonds payable.

**28. CAPITAL MANAGEMENT**

The objective of the Company's capital management is to maintain a capital structure that ensures liquidity

and supports a solid investment grade credit rating. The capital structure includes both debt and equity. The

Company adjusts its capital structure mainly through changes in the level of debt and adjustments of

dividend payout to shareholders.

The Company's capital management policy remained unchanged in 2025. TSMC's current credit ratings are

AA- from S&P Global Ratings and Aa3 from Moody's, same as those as of December 31, 2024.

**29. FINANCIAL INSTRUMENTS**

a.Categories of financial instruments

---

| | | |
|:---|:---|:---|
|  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| Financial assets |  |  |
| FVTPL  | $54890 | $13174 |
| FVTOCI (Note 1) | 6291183 | 6970931 |
| Amortized cost (Note 2) | 1365551783 | 1306159488 |
|  | $1371897856 | $1313143593 |
| Financial liabilities |  |  |
| FVTPL  | $3070087 | $439110 |
| Amortized cost (Note 3) | 1418165257 | 1370620974 |
|  | $1421235344 | $1371060084 |

---

Note 1:Including notes and accounts receivable (net) and equity investments.

Note 2:Including cash and cash equivalents, financial assets at amortized cost, notes and accounts

receivable (including related parties), other receivables, refundable deposits, and temporary

payments (including those classified under other current assets and other noncurrent assets).

Note 3:Including accounts payable (including related parties), payables to contractors and equipment

suppliers, cash dividends payable, accrued expenses and other current liabilities, bonds

payable, guarantee deposits and other noncurrent liabilities.

b.Financial risk management objectives

The Company manages its exposure to foreign currency risk, interest rate risk, equity price risk, credit

risk and liquidity risk with the objective to reduce the potentially adverse effects the market

uncertainties may have on its financial performance.

The plans for material treasury activities are reviewed by the Audit and Risk Committee and/or Board

of Directors in accordance with procedures required by relevant regulations or internal controls.

During the implementation of such plans, the Company must comply with certain treasury procedures

that provide guiding principles for overall financial risk management and segregation of duties.

c.Market risk

The Company is exposed to the financial market risks, primarily changes in foreign currency exchange

rates, interest rates and equity prices. A portion of these risks is hedged.

<u>Foreign currency risk</u>

Substantially all the Company's sales are denominated in U.S. dollars and over half of its capital

expenditures are denominated in currencies other than NT dollars, primarily in U.S. dollars, Japanese

yen and Euros. As a result, any significant fluctuations to its disadvantage in the exchanges rate of NT

dollar against such currencies, in particular a weakening of U.S. dollar against NT dollar, would have

an adverse impact on the revenue and operating profit as expressed in NT dollars. The Company uses

foreign currency derivative contracts, such as currency forwards or currency swaps, and non-derivative

financial instruments, such as foreign currency denominated debts and foreign currency deposits, to

protect against currency exchange rate risks associated with non-NT dollar-denominated monetary

assets and liabilities, net investments in foreign operations, and certain forecasted transactions. These

hedges reduce, but do not entirely eliminate, the effect of foreign currency exchange rate movements

on the assets and liabilities

Based on a sensitivity analysis performed on the Company's total monetary assets and liabilities for

the years ended December 31, 2025 and 2024, a hypothetical adverse foreign currency exchange rate

change of 10% would have decreased its net income by NT$1,945,331 thousand and NT$2,471,332

thousand, respectively, after taking into account hedges and offsetting positions.

<u>Interest rate risk</u>

The Company is exposed to interest rate risks primarily in relation to its bank deposits and outstanding

debt. Changes in interest rates affect the interest earned on the Company's bank deposits, as well as

the interest paid on its debt. Because all of the Company's bonds issued are fixed-rate and measured at

amortized cost, changes in interest rates would not affect the future cash flows or the carrying amount.

<u>Other price risk</u>

The Company is exposed to equity price risk arising from financial assets at FVTOCI.

Assuming a hypothetical decrease of 10% in prices of the equity investments at the end of the

reporting period for the years ended December 31, 2025 and 2024, the other comprehensive income

would have decreased by NT$86,955 thousand and NT$84,668 thousand, respectively.

d.Credit risk management

Credit risk refers to the risk that a counterparty may default on its contractual obligations resulting in

financial losses to the Company. The Company is exposed to credit risks from operating activities,

primarily accounts receivable, and from investing activities, primarily deposits, fixed-income

investments and other financial instruments with banks. Credit risk is managed separately for business

related and financial related exposures. As of the end of the reporting period, the Company's

maximum credit risk exposure is equal to the carrying amount of financial assets.

<u>Business related credit risk</u>

The Company's accounts receivable are from its customers worldwide. The majority of the

Company's outstanding accounts receivable are not covered by collaterals or guarantees. While the

Company has procedures to monitor and manage credit risk exposure on accounts receivable, there is

no assurance such procedures will effectively eliminate losses resulting from its credit risk. This risk is

heightened during periods when economic conditions worsen.

As of December 31, 2025 and 2024, the Company's ten largest customers accounted for 79% and 84%

of accounts receivable, respectively. The Company considers the concentration of credit risk for the

remaining accounts receivable not material.

<u>Financial credit risk</u>

The Company mitigates its financial credit risk by selecting counterparties with investment grade

credit ratings and by limiting the exposure to any individual counterparty. The Company regularly

monitors and reviews the limit applied to counterparties and adjusts the limit according to market

conditions and the credit standing of the counterparties.

The Company assesses the 12-month expected credit loss and lifetime expected credit loss based on

the probability of default and loss given default provided by external credit rating agencies. The

current credit risk assessment policies are as follows:

---

| | | | |
|:---|:---|:---|:---|
| **Category** | **Description** | **Basis for Recognizing** <br>**Expected Credit Loss**<br>| **Expected** <br>**Credit Loss** <br>**Ratio**<br>|
| Performing | Credit rating is investment grade on <br>valuation date<br>| 12 months expected credit <br>loss<br>| 0-0.1% |
| Doubtful | Credit rating is non-investment grade <br>on valuation date<br>| Lifetime expected credit <br>loss-not credit impaired<br>| - |
| In default | Credit rating is CC or below on <br>valuation date<br>| Lifetime expected credit <br>loss-credit impaired<br>| - |
| Write-off | There is evidence indicating that the <br>debtor is in severe financial <br>difficulty and the Company has no <br>realistic prospect of recovery <br>| Amount is written off | - |

---

For the years ended December 31, 2025 and 2024, the expected credit loss decreased NT$13,579

thousand and decrease NT$2,551 thousand, respectively. The changes were mainly due to adjusted

investment portfolio.

e.Liquidity risk management

The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund

its business operations over the next 12 months. The Company manages its liquidity risk by

maintaining adequate cash and cash equivalents, financial assets at amortized cost-current and

sufficient cost-efficient funding.

The table below summarizes the maturity profile of the Company's financial liabilities based on

contractual undiscounted payments, including principal and interest.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than** <br>**1 Year**<br>| **1-3 Years** | **3-5 Years** | **More Than** <br>**5 Years**<br>| **Total** |
| <u>December 31, 2025</u> |  |  |  |  |  |
| <u>Non-derivative financial liabilities</u> |  |  |  |  |  |
| Accounts payable (including related <br>parties)<br>| $92723115 | $- | $- | $- | $92723115 |
| Payables to contractors and <br>equipment suppliers<br>| 168648840 | - | - | - | 168648840 |
| Accrued expenses and other current <br>liabilities<br>| 299478937 | - | - | - | 299478937 |
| Bonds payable | 69338831 | 195356808 | 137889133 | 214886970 | 617471742 |
| Lease liabilities (including those <br>classified under accrued expenses <br>and other current liabilities) (Note)<br>| 3753257 | 5711960 | 5167272 | 22507850 | 37140339 |
| Others | - | 32504216 | 723890 | - | 33228106 |
|  | 633942980 | 233572984 | 143780295 | 237394820 | 1248691079 |
| <u>Derivative financial instruments</u> |  |  |  |  |  |
| Forward exchange contracts |  |  |  |  |  |
| Outflows | 271448689 | - | - | - | 271448689 |
| Inflows | (268430750) | - | - | - | (268430750) |
|  | 3017939 | - | - | - | 3017939 |
|  | $636960919 | $233572984 | $143780295 | $237394820 | $1251709018 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Less Than** <br>**1 Year**<br>| **1-3 Years** | **3-5 Years** | **More Than** <br>**5 Years**<br>| **Total** |
| <u>December 31, 2024</u> |  |  |  |  |  |
| <u>Non-derivative financial liabilities</u> |  |  |  |  |  |
| Accounts payable (including related <br>parties)<br>| $74191888 | $- | $- | $- | $74191888 |
| Payables to contractors and <br>equipment suppliers<br>| 150280751 | - | - | - | 150280751 |
| Accrued expenses and other current <br>liabilities<br>| 365027676 | - | - | - | 365027676 |
| Bonds payable | 30503009 | 164569011 | 133348645 | 228284664 | 556705329 |
| Lease liabilities (including those <br>classified under accrued expenses <br>and other current liabilities) (Note)<br>| 2895659 | 4998837 | 4397192 | 20373710 | 32665398 |
| Others | - | 80424861 | 1202936 | - | 81627797 |
|  | 622898983 | 249992709 | 138948773 | 248658374 | 1260498839 |
| <u>Derivative financial instruments</u> |  |  |  |  |  |
| Forward exchange contracts |  |  |  |  |  |
| Outflows | 97621287 | - | - | - | 97621287 |
| Inflows | (97162228) | - | - | - | (97162228) |
|  | 459059 | - | - | - | 459059 |
|  | $623358042 | $249992709 | $138948773 | $248658374 | $1260957898 |

---

Note:Information about the maturity analysis for lease liabilities more than 5 years:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **5-10 Years** | **10-15 Years** | **15-20 Years** | **More Than** <br>**20 Years**<br>| **Total** |
| <u>December 31, 2025</u> |  |  |  |  |  |
| Lease liabilities | $10791835 | $7497181 | $3999189 | $219645 | $22507850 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| <u>December 31, 2024</u> |  |  |  |  |  |
| Lease liabilities | $9910952 | $6805189 | $3540742 | $116827 | $20373710 |

---

f.Fair value of financial instruments

1)Fair value measurements recognized in the parent company only balance sheets

Fair value measurements are grouped into Levels 1 to 3 based on the degree to which the fair value

is observable:

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active

markets for identical assets or liabilities;

• Level 2 fair value measurements are those derived from inputs other than quoted prices

included within Level 1 that are observable for the asset or liability, either directly (i.e. as

prices) or indirectly (i.e. derived from prices); and

• Level 3 fair value measurements are those derived from valuation techniques that include

inputs for the asset or liability that are not based on observable market data (unobservable

inputs).

2)Fair value of financial instruments that are measured at fair value on a recurring basis

<u>Fair value hierarchy</u>

The following table presents the Company's financial assets and liabilities measured at fair value

on a recurring basis:

---

| | | | |
|:---|:---|:---|:---|
| **December 31, 2025** | | | |
|  | **Level 2** | **Level 3** | **Total** |
| <u>Financial assets at FVTPL</u> |  |  |  |
| Forward exchange contracts | $54890 | $- | $54890 |
| <u>Financial assets at FVTOCI</u> |  |  |  |
| Investments in equity instruments |  |  |  |
| Non-publicly traded equity investments | $- | $1086940 | $1086940 |
| Notes and accounts receivable, net | 5204243 | - | 5204243 |
|  | $5204243 | $1086940 | $6291183 |
| <u>Financial liabilities at FVTPL</u> |  |  |  |
| Forward exchange contracts | $3070087 | $- | $3070087 |

---

---

| | | | |
|:---|:---|:---|:---|
| **December 31, 2024** | | | |
|  | **Level 2** | **Level 3** | **Total** |
| <u>Financial assets at FVTPL</u> |  |  |  |
| Forward exchange contracts  | $13174 | $- | $13174 |
| <u>Financial assets at FVTOCI</u> |  |  |  |
| Investments in equity instruments |  |  |  |
| Non-publicly traded equity investments | $- | $1058347 | $1058347 |
| Notes and accounts receivable, net | 5912584 | - | 5912584 |
|  | $5912584 | $1058347 | $6970931 |
| <u>Financial liabilities at FVTPL</u> |  |  |  |
| Forward exchange contracts | $439110 | $- | $439110 |

---

<u>Reconciliation of Level 3 fair value measurements of financial assets</u>

The financial assets measured at Level 3 fair value were equity investments classified as financial

assets at FVTOCI. Reconciliations for the years ended December 31, 2025 and 2024 were as

follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Balance, beginning of year | $1058347 | $960950 |
| Recognized in other comprehensive income or loss | 28593 | 97397 |
| Balance, end of year | $1086940 | $1058347 |

---

<u>Valuation techniques and assumptions used in Level 2 fair value measurement</u>

The fair values of financial assets and financial liabilities are determined as follows:

• The fair values of forward exchange contracts are measured using forward exchange rates and

discount rates derived from quoted market prices.

• The fair value of accounts receivable classified as at FVTOCI is determined by the present

value of future cash flows based on the discount rate that reflects the credit risk of

counterparties.

<u>Valuation techniques and assumptions used in Level 3 fair value measurement</u>

The fair values of non-publicly traded equity investments are mainly determined by using the asset

approach or market approach.

The asset approach takes into account the net asset value measured at the fair value.

The market approach is used to arrive at their fair values, for which the recent financing activities

of investees, the market transaction prices of the similar companies and market conditions are

considered.

3)Fair value of financial instruments that are not measured at fair value

Except as detailed in the following table, the Company considers that the carrying amounts of

financial instruments in the parent company only financial statements that are not measured at fair

value approximate their fair values.

<u>Fair value hierarchy</u>

The table below sets out the fair value hierarchy for the Company's financial assets and liabilities

which are not required to be measured at fair value:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** |
|  | **Carrying**  | **Level 2** |
|  | **Amount** | **Fair Value** |
| <u>Financial liabilities</u> |  |  |
| Financial liabilities at amortized costs |  |  |
| Bonds payable | $538071328 | $513630359 |

---

---

| | | |
|:---|:---|:---|
|  | **December 31, 2024** | **December 31, 2024** |
|  | **Carrying**  | **Level 2** |
|  | **Amount** | **Fair Value** |
| <u>Financial assets</u> |  |  |
| Financial assets at amortized costs |  |  |
| Commercial paper | $14208158 | $14222713 |
| <u>Financial liabilities</u> |  |  |
| Financial liabilities at amortized costs |  |  |
| Bonds payable | $478236662 | $444114272 |

---

<u>Valuation techniques and assumptions used in Level 2 fair value measurement</u>

The fair value of the Company's bonds payable is determined by quoted market prices provided by

third party pricing services.

The fair value of commercial paper is determined by the present value of future cash flows based

on the discounted curves that are derived from the quoted market prices.

**30. RELATED PARTY TRANSACTIONS**

The significant transactions between the Company and its related parties, other than those disclosed in

other notes, are summarized as follows:

a.Related party name and categories

---

| | |
|:---|:---|
| **Related Party Name** | **Related Party Categories** |
| TSMC Arizona | Subsidiaries |
| TSMC China | Subsidiaries |
| TSMC Nanjing | Subsidiaries |
| JASM | Subsidiaries |
| ESMC | Subsidiaries |
| VisEra Tech | Subsidiaries |
| TSMC North America | Subsidiaries |
| TSMC 3DIC | Subsidiaries |
| TSMC Europe | Subsidiaries |
| TSMC JDC | Subsidiaries |
| TSMC Japan | Subsidiaries |
| TSMC Korea | Subsidiaries |
| TSMC Design Technology Canada Inc. (TSMC Canada) | Indirect Subsidiaries |
| TSMC Technology, Inc. (TSMC Technology) | Indirect Subsidiaries |
| TSMC Washington, LLC (TSMC Washington) | Indirect Subsidiaries |
| GUC and its subsidiaries (GUC) | Associates |
| VIS and its subsidiaries (VIS) | Associates |
| SSMC | Associates |
| Xintec | Associates |

---

b.Net revenue

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Years Ended December 31** | **Years Ended December 31** |
|  |  | **2025** | **2024** |
| <u>Item</u> | <u>Related Party Name/Categories</u> |  |  |
| Sales revenue | TSMC North America | $2931832801 | $2057313208 |
|  | Associates | 7780754 | 7080991 |
|  | Other subsidiaries | 2813382 | 1688771 |
|  |  | $2942426937 | $2066082970 |

---

c.Purchases

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| <u>Related Party Categories</u> |  |  |
| Subsidiaries | $174601114 | $104615531 |
| Associates | 4991607 | 4619621 |
|  | $179592721 | $109235152 |

---

d.Receivables from related parties

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name/Categories</u> |  |  |
| Receivables from related <br>parties | TSMC North America | $206855118 | $209056572 |
| Receivables from related <br>parties | Associates | 1430389 | 1120441 |
|  | Other subsidiaries | 497531 | 123162 |
|  |  | $208783038 | $210300175 |
| Other receivables from <br>related parties | TSMC North America | $4017486 | $5050233 |
| Other receivables from <br>related parties | Associates | 268115 | 251 |
|  | Other subsidiaries | 40292 | 262603 |
|  |  | $4325893 | $5313087 |

---

e.Payables to related parties

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name/Categories</u> |  |  |
| Payables to related parties | TSMC Arizona | $9127301 | $630869 |
|  | TSMC Nanjing | 2934085 | 4473370 |
|  | TSMC China | 2261532 | 1848450 |
|  | Other subsidiaries | 2423315 | 1759124 |
|  | Other associates | 1778730 | 1425998 |
|  |  | $18524963 | $10137811 |

---

f.Accrued expenses and other current liabilities

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name/Categories</u> |  |  |
| Temporary receipts | TSMC North America | $81506672 | $178396827 |
|  | Associates | 638804 | 672001 |
|  |  | $82145476 | $179068828 |

---

g.Other noncurrent liabilities

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,** <br>**2025**<br>| **December 31,** <br>**2024**<br>|
| <u>Item</u> | <u>Related Party Name</u> |  |  |
| Temporary receipts | TSMC North America | $23553166 | $71433597 |
|  | Associates | 393050 | 409600 |
|  |  | $23946216 | $71843197 |

---

h.Others

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Years Ended December 31** | **Years Ended December 31** |
|  |  | **2025** | **2024** |
| <u>Item</u> | <u>Related Party Categories</u> |  |  |
| Manufacturing expenses | Associates | $5442941 | $5221103 |
|  | Subsidiaries | 18367 | 17189 |
|  |  | $5461308 | $5238292 |
| Research and development <br>expenses | Subsidiaries | $9129882 | $7181542 |
| Research and development <br>expenses | Associates | 277221 | 397058 |
|  |  | $9407103 | $7578600 |

---

The sales prices and payment terms to related parties were not significantly different from those of

sales to third parties. For other related party transactions, price and terms were determined in

accordance with mutual agreements.

The Company leased factory and office from associates. The lease terms and prices were both

determined in accordance with mutual agreements. The rental expenses were paid to associates

monthly; the related expenses were both classified under manufacturing expenses.

The Company deferred the disposal gain or loss derived from sales of property, plant and equipment to

related parties using equity method, and then recognized such gain or loss over the depreciable lives of

the disposed assets.

i.Compensation of key management personnel

The compensation to directors and other key management personnel were as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended December 31** | **Years Ended December 31** |
|  | **2025** | **2024** |
| Short-term employee benefits | $5154980 | $4230478 |
| Post-employment benefits | 2748 | 3135 |
| Share-based payments | 3888675 | 1357432 |
|  | $9046403 | $5591045 |

---

The compensation to directors and other key management personnel were determined by the

Compensation and People Development Committee of the Company in accordance with the individual

performance and market trends.

**31. SIGNIFICANT CONTINGENT LIABILITIES AND UNRECOGNIZED COMMITMENTS**

Significant contingent liabilities and unrecognized commitments of the Company as of the end of the

reporting period, excluding those disclosed in other notes, were as follows:

a.Under a technical cooperation agreement with Industrial Technology Research Institute, the R.O.C.

Government or its designee approved by the Company can use up to 35% of the Company's capacity

provided the Company's outstanding commitments to its customers are not prejudiced. The term of

this agreement is for five years beginning from January 1, 1987 and is automatically renewed for

successive periods of five years unless otherwise terminated by either party with one year prior notice.

As of the end of reporting period, the R.O.C. Government did not invoke such right.

b.Under a Shareholders Agreement entered into with Philips and EDB Investments Pte Ltd. on March

30, 1999, the parties formed a joint venture company, SSMC, which is an integrated circuit foundry in

Singapore. The Company's equity interest in SSMC was 32%. Nevertheless, in September 2006,

Philips spun-off its semiconductor subsidiary which was renamed as NXP B.V. Further, the Company

and NXP B.V. purchased all the SSMC shares owned by EDB Investments Pte Ltd. pro rata according

to the Shareholders Agreement on November 15, 2006. After the purchase, the Company and NXP

B.V. currently own approximately 39% and 61% of the SSMC shares, respectively. The Company and

NXP B.V. are required, in the aggregate, to purchase at least 70% of SSMC's capacity, but the

Company alone is not required to purchase more than 28% of the capacity. If any party defaults on the

commitment and the capacity utilization of SSMC falls below a specific percentage of its capacity, the

defaulting party is required to compensate SSMC for all related unavoidable costs. There was no

default from the aforementioned commitment as of the end of reporting period.

c.In February 2025, Longitude Licensing Ltd. and Marlin Semiconductor Limited (collectively,

"Marlin") filed complaints with the U.S. International Trade Commission ("ITC") and the U.S.

District Court for the Eastern District of Texas alleging that the Company and its customers infringe

five U.S. patents. The ITC instituted an investigation on March 21, 2025 and the lawsuit in the Eastern

District Court for Texas was statutorily stayed on April 23, 2025 pending the ITC investigation.Marlin

dropped 2 asserted patents in the ITC investigation in October and November 2025. The outcome

cannot be determined, and we cannot make a reliable estimate of the contingent liability at this time.

d.The Company entered into long-term purchase agreements of materials and supplies, manufacturing

services and agreements of waste disposal with multiple suppliers. The relative minimum fulfillment

quantity and price are specified in the agreements.

e.The Company entered into long-term purchase agreement of equipment and maintenance service. The

relative fulfillment period, quantity and price are specified in the agreement.

f.The Company entered into long-term energy purchase agreements with multiple suppliers. The relative

fulfillment period, quantity and price are specified in the agreements.

g.As of the end of reporting period, the Company provided endorsement guarantees of NT$2,616,559

thousand to its subsidiary, TSMC North America, in respect of providing endorsement guarantees for

office leasing contract.

h.As of the end of reporting period, the Company provided a NT$235,830,000 thousand endorsement

guarantee for its subsidiary, TSMC Global, in respect of its issuance of US dollar-denominated senior

unsecured corporate bonds.

i.As of the end of reporting period, the Company provided a NT$471,578,859 thousand endorsement

guarantee for its subsidiary, TSMC Arizona, in respect of its issuance of US dollar-denominated senior

unsecured corporate bonds and operation needs.

j.The Company entrusted financial institutions to provide performance guarantees mainly for import and

export of goods and lease agreement. As of December 31, 2025 and 2024, the aforementioned

guarantee amounted to NT$9,218,256 thousand and NT$10,315,609 thousand, respectively.

**32. SIGNIFICANT LOSS FROM DISASTER**

In January 2025, several earthquakes struck Taiwan. The resulting damage was mostly to inventories,

machinery and equipment. In the first quarter of 2025, the Company recognized related earthquake losses

to be approximately NT$5.3 billion, net of insurance claim. Such losses were primarily included in the

cost of revenue and other operating income and expenses in net amounts.

On April 3, 2024, an earthquake struck Taiwan. The resulting damage was mostly to inventories,

machinery and equipment. In the second quarter of 2024, the Company recognized related earthquake

losses to be approximately NT$3 billion, net of insurance claim. Such losses were primarily included in

the cost of revenue and other operating income and expenses in net amounts.

**33. EXCHANGE RATE INFORMATION OF FOREIGN-CURRENCY FINANCIAL ASSETS AND**

**LIABILITIES**

The following information was summarized according to the foreign currencies other than the functional

currency of the Company. The exchange rates disclosed were used to translate the foreign currencies into

the functional currency. The significant financial assets and liabilities denominated in foreign currencies

were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Foreign**  |  | **Carrying**  |
|  | **Currencies** | **Exchange Rate**  | **Amount** |
|  | **(In Thousands)** | **(Note)** | **(In Thousands)** |
| <u>December 31, 2025</u> |  |  |  |
| <u>Financial assets</u> |  |  |  |
| Monetary items |  |  |  |
| USD | $19955387 | 31.444 | $627477202 |
| EUR | 1061338 | 37.003 | 39272688 |
| JPY | 125963643 | 0.2013 | 25356481 |
| <u>Financial liabilities</u> |  |  |  |
| Monetary items |  |  |  |
| USD | 11973221 | 31.444 | 376485962 |
| EUR | 965399 | 37.003 | 35722667 |
| JPY | 124677971 | 0.2013 | 25097676 |
| <u>December 31, 2024</u> |  |  |  |
| <u>Financial assets</u> |  |  |  |
| Monetary items |  |  |  |
| USD | 17852987 | 32.768 | 585006683 |
| EUR | 585645 | 34.102 | 19971653 |
| JPY | 116712205 | 0.2092 | 24416193 |
| <u>Financial liabilities</u> |  |  |  |
| Monetary items |  |  |  |
| USD | 15423526 | 32.768 | 505398116 |
| EUR | 732065 | 34.102 | 24964882 |
| JPY | 117290411 | 0.2092 | 24537154 |

---

Note: Exchange rate represents the number of NT dollar for which one foreign currency could be

exchanged.

Please refer to the parent company only statements of comprehensive income for the total of realized and

unrealized foreign exchange gain and loss for the years ended December 31, 2025 and 2024, respectively.

Since there were varieties of foreign currency transactions of the Company, the Company was unable to

disclose foreign exchange gain (loss) towards each foreign currency with significant impact.

**34. ADDITIONAL DISCLOSURES**

Following are the additional disclosures required by the Securities and Futures Bureau for the Company:

a.Financings provided: See Table 1 attached;

b.Endorsement/guarantee provided: See Table 2 attached;

c.Marketable securities held (excluding investments in subsidiaries and associates): there are no

significant securities that need to be listed separately;

d.Total purchases from or sales to related parties of at least NT$100 million or 20% of the paid-in

capital: See Table 3 attached;

e.Receivables from related parties amounting to at least NT$100 million or 20% of the paid-in capital:

See Table 4 attached;

f.Names, locations, and related information of investees over which the Company exercises significant

influence (excluding information on investment in mainland China): See Table 5 attached;

g.Information on investment in mainland China

1)The name of the investee in mainland China, the main businesses and products, its issued capital,

method of investment, information on inflow or outflow of capital, percentage of ownership,

income (losses) of the investee, share of profits/losses of investee, ending balance, amount received

as dividends from the investee, and the limitation on investee: See Table 6 attached.

2)Significant direct or indirect transactions with the investee, its prices and terms of payment,

unrealized gain or loss, and other related information which is helpful to understand the impact of

investment in mainland China on financial reports: See Note 30.

**35. OPERATING SEGMENTS INFORMATION**

The Company has provided the operating segments disclosure in the consolidated financial statements.

---

| |
|:---|
| **<u>TABLE 1</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **FINANCINGS PROVIDED**  |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Financing** <br>**Company** | **Counterparty** | **Financial Statement** <br>**Account** | **Related** <br>**Party** | **Maximum** <br>**Balance for the** <br>**Period (Foreign** <br>**Currencies in** <br>**Thousands) (Note 3)** | **Ending Balance** <br>**(Foreign Currencies** <br>**in Thousands)** <br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Interest Rate** | **Nature for Financing** | **Transaction** <br>**Amounts** | **Reason for** <br>**Financing** | **Allowance for Bad** <br>**Debt** | **Collateral** | **Collateral** | **Financing Limits** <br>**for Each** <br>**Borrowing** <br>**Company**<br>**(Notes 1 and 2)** | **Financing** <br>**Company's Total** <br>**Financing Amount** <br>**Limits** <br>**(Notes 1 and 2)** |
| **No.** | **Financing** <br>**Company** | **Counterparty** | **Financial Statement** <br>**Account** | **Related** <br>**Party** | **Maximum** <br>**Balance for the** <br>**Period (Foreign** <br>**Currencies in** <br>**Thousands) (Note 3)** | **Ending Balance** <br>**(Foreign Currencies** <br>**in Thousands)** <br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Interest Rate** | **Nature for Financing** | **Transaction** <br>**Amounts** | **Reason for** <br>**Financing** | **Allowance for Bad** <br>**Debt** | **Item** | **Value** | **Financing Limits** <br>**for Each** <br>**Borrowing** <br>**Company**<br>**(Notes 1 and 2)** | **Financing** <br>**Company's Total** <br>**Financing Amount** <br>**Limits** <br>**(Notes 1 and 2)** |
| 1 | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | $41142000 | $15295580 | $15295580 | 1.50% | The need for long-term <br>financing | $- | Operating capital | $- | - | $- | $122744745 | $122744745 |
|  | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | (RMB 6,000,000)& | (RMB 3,400,000)  | (RMB 3,400,000)  |  | The need for long-term <br>financing |  |  |  |  |  |  |  |
|  | TSMC China | TSMC Nanjing | Other receivables from <br>related parties | Yes | (US$450,000)  |  |  |  | The need for long-term <br>financing |  |  |  |  |  |  |  |
| 2 | TSMC <br>Development | TSMC <br>Washington | Other receivables from <br>related parties | Yes | 1886640 | 1886640 | 1886640 | - | The need for short-term <br>financing | - | Operating capital | - | - | - | 33875210 | 33875210 |
|  | TSMC <br>Development | TSMC <br>Washington | Other receivables from <br>related parties | Yes | (US$60,000)  | (US$60,000)  | (US$60,000)  |  | The need for short-term <br>financing |  |  |  |  |  |  |  |
| Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. | Note 1:The aggregate amount available for lending to TSMC Nanjing from TSMC China and the aggregate amount of lending from TSMC China shall not exceed the net worth of TSMC China. |
| Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. | Note 2:The aggregate amount available for lending to TSMC Washington from TSMC Development and the aggregate amount of lending from TSMC Development shall not exceed the net worth of TSMC Development. |
| Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |

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| |
|:---|
| **<u>TABLE 2</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **ENDORSEMENTS/GUARANTEES PROVIDED** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

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| | | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **No.** | **Endorsement/**<br>**Guarantee** <br>**Provider** | **Guaranteed Party** | **Guaranteed Party** | **Limits on** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Provided to Each** <br>**Guaranteed** <br>**Party**<br>**(Notes 1 and 2)** | **Maximum** <br>**Balance** <br>**for the Period**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Ending Balance**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(US$ in** <br>**Thousands)** | **Amount of** <br>**Endorsement/** <br>**Guarantee** <br>**Collateralized by** <br>**Properties** | **Ratio of** <br>**Accumulated** <br>**Endorsement/** <br>**Guarantee to Net** <br>**Equity per** <br>**Latest Financial** <br>**Statements** | **Maximum** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Allowable**<br>**(Notes 1 and 2)** | **Guarantee**<br>**Provided by**<br>**Parent** <br>**Company** | **Guarantee**<br>**Provided by**<br>**A Subsidiary** | **Guarantee**<br>**Provided to** <br>**Subsidiaries** <br>**in Mainland** <br>**China** |
| **No.** | **Endorsement/**<br>**Guarantee** <br>**Provider** | **Name** | **Nature of** <br>**Relationship**<br>| **Limits on** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Provided to Each** <br>**Guaranteed** <br>**Party**<br>**(Notes 1 and 2)** | **Maximum** <br>**Balance** <br>**for the Period**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Ending Balance**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>**(Note 3)** | **Amount Actually** <br>**Drawn**<br>**(US$ in** <br>**Thousands)** | **Amount of** <br>**Endorsement/** <br>**Guarantee** <br>**Collateralized by** <br>**Properties** | **Ratio of** <br>**Accumulated** <br>**Endorsement/** <br>**Guarantee to Net** <br>**Equity per** <br>**Latest Financial** <br>**Statements** | **Maximum** <br>**Endorsement/** <br>**Guarantee** <br>**Amount** <br>**Allowable**<br>**(Notes 1 and 2)** | **Guarantee**<br>**Provided by**<br>**Parent** <br>**Company** | **Guarantee**<br>**Provided by**<br>**A Subsidiary** | **Guarantee**<br>**Provided to** <br>**Subsidiaries** <br>**in Mainland** <br>**China** |
| 0 | TSMC | TSMC North <br>America | Subsidiary | $2167838398 | $2616559 | $2616559 | $2616559 | $- | 0.05% | $2167838398 | Yes | No | No |
| 0 |  | TSMC North <br>America | Subsidiary |  | (US$83,213) | (US$83,213) | (US$83,213) |  |  |  |  |  |  |
|  |  | TSMC Global | Subsidiary | 2167838398 | 235830000 | 204386000 | 204386000 | - | 3.77% | 2167838398 | Yes | No | No |
|  |  | TSMC Global | Subsidiary |  | (US$7,500,000) | (US$6,500,000) | (US$6,500,000) |  |  |  |  |  |  |
|  |  | TSMC Arizona | Subsidiary | 2167838398 | 471578859 | 471476919 | 343737521 | - | 8.70% | 2167838398 | Yes | No | No |
|  |  | TSMC Arizona | Subsidiary |  | (US$14,997,420) | (US$14,994,178) | (US$10,931,736) |  |  |  |  |  |  |
| 1 | TSMC Japan | TSMC JDC | The same parent <br>company | 322906 | 265716 | - | - | - | - | 322906 | No | No | No |
| 1 |  | TSMC JDC | The same parent <br>company |  | (JPY1,320,000) |  |  |  |  |  |  |  |  |
| Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. | Note 1:TSMC's individual endorsement/guarantee limits for TSMC North America, TSMC Global, and TSMC Arizona, as well as the total external endorsement/guarantee limits for TSMC and its subsidiaries, shall not exceed forty percent <br>(40%) of TSMC's net worth. |
| Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. | Note 2:The total amount of the endorsement/guarantee provided by TSMC Japan to TSMC JDC and the total amount of the endorsement/guarantee provided by TSMC Japan shall not exceed two hundred and fifty percent (250%) of TSMC <br>Japan's net worth. |
| Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. | Note 3:The maximum balance for the period and ending balance represent the amounts approved by the Board of Directors. |

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| |
|:---|
| **<u>TABLE 3</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **TOTAL PURCHASES FROM OR SALES TO RELATED PARTIES OF AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

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| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Company Name** | **Related Party** | **Nature of Relationships** | **Transaction Details** | **Transaction Details** | **Transaction Details** | **Transaction Details** | **Abnormal Transaction** | **Abnormal Transaction** | **Notes/Accounts Payable or** <br>**Receivable** | **Notes/Accounts Payable or** <br>**Receivable** | **Note** |
| **Company Name** | **Related Party** | **Nature of Relationships** | **Purchases/**<br>**Sales**<br>| **Amount**<br>**(Foreign Currencies** <br>**in Thousands)**<br>| **% to** <br>**Total**<br>| **Payment Terms** | **Unit Price** | **Payment Terms** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)**<br>| **% to** <br>**Total**<br>| **Note** |
| TSMC | TSMC North America | Subsidiary | Sales | $2931832801 | 77 | Net 30 days from invoice date <br>(Note)<br>| - | - | $206855118 | 81 |  |
|  | TSMC Arizona | Subsidiary | Sales | 1558414 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 86254 | - |  |
|  | JASM | Subsidiary | Sales | 1026858 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 396245 | - |  |
|  | TSMC Nanjing | Subsidiary | Sales | 158188 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 7430 | - |  |
|  | GUC | Associate | Sales | 6014200 | - | Net 30 days from invoice date | - | - | 387902 | - |  |
|  | VIS | Associate | Sales | 1467380 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 945224 | - |  |
|  | SSMC | Associate | Sales | 299174 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | 97263 | - |  |
|  | TSMC Nanjing | Subsidiary | Purchases | 73652776 | 27 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (2934085) | 3 |  |
|  | TSMC Arizona | Subsidiary | Purchases | 67096542 | 25 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (9127301) | 10 |  |
|  | TSMC China | Subsidiary | Purchases | 26581060 | 10 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (2261531) | 2 |  |
|  | TSMC Washington | Indirect subsidiary | Purchases | 7233381 | 3 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (578662) | 1 |  |
|  | SSMC | Associate | Purchases | 4113439 | 2 | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (374089) | - |  |
|  | VIS | Associate | Purchases | 878168 | - | Net 30 days from the end of the <br>month of when invoice is issued<br>| - | - | (91947) | - |  |
| TSMC North America | GUC | Associate of TSMC | Sales | 25079357 | 1 | Net 30 days from invoice date | - | - | 1263109 | 1 |  |
| TSMC North America |  |  |  | (US$805,964) |  |  |  |  | (US$40,170) |  |  |
| VisEra Tech | Xintec | Associate of TSMC | Sales | 366246 | 4 | Net 60 days from the end of the <br>month of when invoice is issued<br>| - | - | 46003 | 4 |  |

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Note:The tenor is determined by the payment terms granted to its clients by TSMC North America.

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| |
|:---|
| **<u>TABLE 4</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **RECEIVABLES FROM RELATED PARTIES AMOUNTING TO AT LEAST NT$100 MILLION OR 20% OF THE PAID-IN CAPITAL** |
| **DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Company Name** | **Related Party** | **Nature of Relationships** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)** | **Turnover Days** <br>**(Note 1)** | **Overdue** | **Overdue** | **Amounts Received in** <br>**Subsequent Period** | **Allowance for**<br>**Bad Debts** |
| **Company Name** | **Related Party** | **Nature of Relationships** | **Ending Balance**<br>**(Foreign Currencies** <br>**in Thousands)** | **Turnover Days** <br>**(Note 1)** | **Amount** | **Action Taken** | **Amounts Received in** <br>**Subsequent Period** | **Allowance for**<br>**Bad Debts** |
| TSMC | TSMC North America | Subsidiary | $210872604 | 26 | $- | - | $- | $- |
|  | JASM | Subsidiary | 397110 | Note 2 | - | - | - | - |
|  | VIS | Associate | 1213033 | Note 2 | - | - | - | - |
|  | GUC | Associate | 387902 | 25 | - | - | - | - |
| TSMC North America | TSMC | Parent company | 149819 | Note 2 | - | - | - | - |
|  |  |  | (US$4,765) |  |  |  |  |  |
|  | GUC | Associate of TSMC | 1263109 | 10 | - | - | - | - |
|  |  |  | (US$40,170) |  |  |  |  |  |
| TSMC Europe | TSMC | Parent company | 112840 | Note 2 | - | - | - | - |
|  |  |  | (EUR3,049) |  |  |  |  |  |
| TSMC China | TSMC | Parent company | 2261531 | 27 | - | - | - | - |
| TSMC China |  |  | (RMB502,702) |  |  |  |  |  |
| TSMC China | TSMC Nanjing | The same parent company | 15388856 | Note 2 | - | - | - | - |
| TSMC China |  |  | (RMB3,420,734) |  |  |  |  |  |
| TSMC Nanjing | TSMC | Parent company | 2934085 | 18 | - | - | - | - |
| TSMC Nanjing |  |  | (RMB652,200) |  |  |  |  |  |
| TSMC Arizona | TSMC | Parent company | 9127301 | 26 | - | - | - | - |
|  |  |  | (US$290,272) |  |  |  |  |  |
| TSMC Technology | TSMC | The ultimate parent of the Company | 1248835 | Note 2 | - | - | - | - |
|  |  |  | (US$39,716) |  |  |  |  |  |
| TSMC Development | TSMC Washington | Subsidiary | 1886640 | Note 2 | - | - | - | - |
|  |  |  | (US$60,000) |  |  |  |  |  |
| TSMC Washington | TSMC | The ultimate parent of the Company | 578662 | 27 | - | - | - | - |
|  |  |  | (US$18,403) |  |  |  |  |  |

---

Note 1:The calculation of turnover days excludes other receivables from related parties.

Note 2:The ending balance is primarily consisted of royalty receivables and other receivables, which is not applicable for the calculation of turnover days.

---

| |
|:---|
| **<u>TABLE 5</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **NAMES, LOCATIONS, AND RELATED INFORMATION OF INVESTEES OVER WHICH THE COMPANY EXERCISES SIGNIFICANT INFLUENCE (EXCLUDING INFORMATION ON INVESTMENT IN MAINLAND CHINA)** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Investor Company** | **Investee Company** | **Location** | **Main Businesses and Products** | **Original Investment Amount** | **Original Investment Amount** | **Balance as of December 31, 2025** | **Balance as of December 31, 2025** | **Balance as of December 31, 2025** | **Net Income** <br>**(Losses) of the** <br>**Investee**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Share of** <br>**Profits/Losses** <br>**of Investee**<br>**(Note 1)**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Note** |
| **Investor Company** | **Investee Company** | **Location** | **Main Businesses and Products** | **December 31,** <br>**2025**<br>**(Foreign**<br>**Currencies in**<br>**Thousands)**<br>| **December 31,** <br>**2024**<br>**(Foreign**<br>**Currencies in**<br>**Thousands)**<br>| **Shares (In** <br>**Thousands)**<br>| **Percentage of** <br>**Ownership**<br>| **Carrying** <br>**Value** <br>**(Foreign** <br>**Currencies in** <br>**Thousands)**<br>| **Net Income** <br>**(Losses) of the** <br>**Investee**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Share of** <br>**Profits/Losses** <br>**of Investee**<br>**(Note 1)**<br>**(Foreign** <br>**Currencies in** <br>**Thousands)** | **Note** |
| TSMC | TSMC Global | Tortola, British Virgin Islands | Investment activities | $1178213709 | $616839509 | 37 | 100 | $1351374238 | $51520610 | $51520610 | Subsidiary |
|  | TSMC Arizona | Phoenix, Arizona, U.S.A. | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 672616510 | 565786810 | 21250 | 100 | 644037295 | 16141125 | 14599365 | Subsidiary |
|  | TSMC Partners | Tortola, British Virgin Islands | Investing in companies involved in the semiconductor design and <br>manufacturing, and other investment activities<br>| 31456130 | 31456130 | 988268 | 100 | 75809127 | 2172398 | 2172398 | Subsidiary |
|  | JASM | Kumamoto, Japan | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 68384148 | 68384148 | 3011 | 73 | 48148122 | (9767064) | (7095772) | Subsidiary |
|  | ESMC | Dresden, Germany | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| 38221667 | 18112326 | 805 | 70 | 39474813 | (688621) | (482035) | Subsidiary |
|  | VIS | Hsinchu, Taiwan | Manufacturing, sales, packaging, testing and computer-aided design of <br>integrated circuits and other semiconductor devices and the <br>manufacturing and design service of masks<br>| 13919430 | 13919430 | 506709 | 28 | 18166267 | 7907503 | 2172713 | Associate |
|  | SSMC | Singapore | Manufacturing and sales of integrated circuits and other semiconductor <br>devices<br>| 5120028 | 5120028 | 314 | 39 | 12419167 | 3752313 | 1455522 | Associate |
|  | VisEra Tech | Hsinchu, Taiwan | Research, design, development, manufacturing, sales, packaging and <br>test of color filter<br>| 4224082 | 4224082 | 213619 | 67 | 11921700 | 1273995 | 803176 | Subsidiary |
|  | TSMC North America | San Jose, California, U.S.A. | Sales and marketing of integrated circuits and other semiconductor <br>devices<br>| 333718 | 333718 | 11000 | 100 | 8770383 | 1194222 | 1194222 | Subsidiary |
|  | Xintec | Taoyuan, Taiwan | Wafer level chip size packaging and wafer level post passivation <br>interconnection service<br>| 1988317 | 1988317 | 111282 | 41 | 4495255 | 1353534 | 555073 | Associate |
|  | Emerging Fund | Cayman Islands | Investing in technology start-up companies | 3014372 | 2688915 | - | 99.9 | 4138575 | 158117 | 157959 | Subsidiary |
|  | GUC | Hsinchu, Taiwan | Researching, developing, manufacturing, testing and marketing of <br>integrated circuits<br>| 386568 | 386568 | 46688 | 35 | 2952582 | 3769566 | 1313286 | Associate |
|  | TSMC 3DIC | Yokohama, Japan | Engineering support activities | 1144356 | 1144356 | 49 | 100 | 1502144 | 216635 | 216635 | Subsidiary |
|  | TSMC Europe | Amsterdam, the Netherlands | Customer service and supporting activities | 15749 | 15749 | - | 100 | 767420 | 77134 | 77134 | Subsidiary |
|  | TSMC JDC | Yokohama, Japan | Engineering support activities | 410680 | 410680 | 15 | 100 | 433326 | 31851 | 31851 | Subsidiary |
|  | TSMC Japan | Yokohama, Japan | Customer service and supporting activities | 83760 | 83760 | 6 | 100 | 129152 | 5123 | 5123 | Subsidiary |
|  | TSMC Korea | Seoul, Korea | Customer service and supporting activities | 13656 | 13656 | 80 | 100 | 44447 | 1670 | 1670 | Subsidiary |
|  | VTAF III (Note 3) | Cayman Islands | Investing in technology start-up companies | - | 561975 | - | - | - | 445 | 436 | Subsidiary |
| TSMC Partners | TSMC Development | Delaware, U.S.A. | Investing in companies involved in semiconductor manufacturing | 18455704 | 18455704 | - | 100 | 38469935 | 114205 | Note 2 | Subsidiary |
|  |  |  |  | (US$586,939) | (US$586,939) |  |  | (US$1,223,443) | (US$3,617) |  |  |
|  | TSMC Technology | Delaware, U.S.A. | Engineering support activities | 449084 | 449084 | - | 100 | 1911742 | 408763 | Note 2 | Subsidiary |
|  |  |  |  | (US$14,282) | (US$14,282) |  |  | (US$60,798) | (US$13,211) |  |  |
|  | TSMC Canada | Ontario, Canada | Engineering support activities | 72321 | 72321 | 2300 | 100 | 472275 | 44729 | Note 2 | Subsidiary |
|  |  |  |  | (US$2,300) | (US$2,300) |  |  | (US$15,020) | (US$1,439) |  |  |
| VTAF III | Growth Fund (Note 3) | Cayman Islands | Investing in technology start-up companies | - | 38862 | - | - | - | 445 | Note 2 | Subsidiary |
|  |  |  |  |  | (US$1,236) |  |  |  | (US$14) |  |  |
| TSMC Development | TSMC Washington | Washington, U.S.A. | Manufacturing, sales and testing of integrated circuits and other <br>semiconductor devices<br>| - | - | 293637 | 100 | 4571303 | (401529) | Note 2 | Subsidiary |
|  |  |  |  |  |  |  |  | (US$145,379) | (US$(12888)) |  |  |

---

Note 1:The share of profits/losses of investee includes the effect of unrealized gross profit on intercompany transactions.

Note 2:The share of profits/losses of the investee company is not reflected herein as such amount is already included in the share of profits/losses of the investor company.

Note 3:VTAF III and the Growth Fund have completed the liquidation procedures respectively in the first quarter and the second quarter of 2025.

---

| |
|:---|
| **<u>TABLE 6</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited and Investees** |
| **INFORMATION ON INVESTMENT IN MAINLAND CHINA** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(Amounts in Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Investee Company** | **Main Businesses and** <br>**Products** | **Total Amount of** <br>**Paid-in Capital** <br>**(RMB in Thousands)** | **Method of** <br>**Investment** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**January 1, 2025** <br>**(US$ in Thousands)** | **Investment Flows** | **Investment Flows** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**December 31,** <br>**2025 (US$ in** <br>**Thousands)** | **Net Income** <br>**(Losses) of the** <br>**Investee** <br>**Company** | **Percentage of** <br>**Ownership** | **Share of** <br>**Profits/Losses** | **Carrying** <br>**Amount** <br>**as of** <br>**Balance as of** <br>**December 31,** <br>**2025** | **Accumulated** <br>**Inward** <br>**Remittance of** <br>**Earnings as of** <br>**December 31,** <br>**2025** |
| **Investee Company** | **Main Businesses and** <br>**Products** | **Total Amount of** <br>**Paid-in Capital** <br>**(RMB in Thousands)** | **Method of** <br>**Investment** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**January 1, 2025** <br>**(US$ in Thousands)** | **Outflow**<br>**(US$ in** <br>**Thousands)**<br>| **Inflow** | **Accumulated** <br>**Outflow of** <br>**Investment from** <br>**Taiwan as of** <br>**December 31,** <br>**2025 (US$ in** <br>**Thousands)** | **Net Income** <br>**(Losses) of the** <br>**Investee** <br>**Company** | **Percentage of** <br>**Ownership** | **Share of** <br>**Profits/Losses** | **Carrying** <br>**Amount** <br>**as of** <br>**Balance as of** <br>**December 31,** <br>**2025** | **Accumulated** <br>**Inward** <br>**Remittance of** <br>**Earnings as of** <br>**December 31,** <br>**2025** |
| TSMC China | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | $18939667 | (Note 1) | $18939667 | $- | $- | $18939667 | $11571415 | 100% | $11638257 | $122572394 | $- |
| TSMC China | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | (RMB4,502,080) |  | (US$596,000) |  |  | (US$596,000) |  |  | (Note 2) |  |  |
| TSMC Nanjing | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | 30521412 | (Note 1) | 30521412 | - | - | 30521412 | 27605732 | 100% | 27453918 | 145609673 | - |
| TSMC Nanjing | Manufacturing, sales, <br>testing and <br>computer-aided <br>design of integrated <br>circuits and other <br>semiconductor <br>devices | (RMB6,650,119) |  | (US$1,000,000) |  |  | (US$1,000,000) |  |  | (Note 2) |  |  |

---

---

| | | |
|:---|:---|:---|
| **Accumulated Investment in Mainland China** <br>**as of December 31, 2025** <br>**(US$ in Thousands)**<br>| **Investment Amounts Authorized by**<br>**Investment Commission, MOEA**<br>**(US$ in Thousands)**<br>| **Upper Limit on Investment** |
| $49461079 | $119412667 | $3276477170 |
| (US$1,596,000) | (US$3,596,000) | (Note 3) |

---

Note 1: TSMC directly invested US$596,000 thousand in TSMC China and US$1,000,000 thousands in TSMC Nanjing.

Note 2: Amount was recognized based on the audited financial statements.

Note 3: The upper limit on investment in mainland China is determined by sixty percent (60%) of the Company's consolidated net worth.

**THE CONTENTS OF STATEMENTS OF MAJOR** 

**ACCOUNTING ITEMS**

---

| | |
|:---|:---|
| ITEM | STATEMENT INDEX |
| MAJOR ACCOUNTING ITEMS IN ASSETS, LIABILITIES AND <br>EQUITY <br>|  |
| STATEMENT OF CASH AND CASH EQUIVALENTS  | 1 |
| STATEMENT OF NOTES AND ACCOUNTS RECEIVABLE, <br>NET <br>| 2 |
| STATEMENT OF RECEIVABLES FROM RELATED PARTIES  | 3 |
| STATEMENT OF INVENTORIES  | 4 |
| STATEMENT OF CHANGES IN INVESTMENTS <br>ACCOUNTED FOR USING EQUITY METHOD<br>| 5 |
| STATEMENT OF CHANGES IN PROPERTY, PLANT AND <br>EQUIPMENT<br>| Note 13 |
| STATEMENT OF CHANGES IN ACCUMULATED <br>DEPRECIATION AND ACCUMULATED IMPAIRMENT OF <br>PROPERTY, PLANT AND EQUIPMENT <br>| Note 13 |
| STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS | 6 |
| STATEMENT OF CHANGES IN INTANGIBLE ASSETS | Note 15 |
| STATEMENT OF DEFERRED INCOME TAX ASSETS / <br>LIABILITIES<br>| Note 23 |
| STATEMENT OF ACCOUNTS PAYABLES | 7 |
| STATEMENT OF PAYABLES TO RELATED PARTIES  | 8 |
| STATEMENT OF PAYABLES TO CONTRACTORS AND <br>EQUIPMENT SUPPLIERS <br>| 9 |
| STATEMENT OF ACCRUED EXPENSES AND OTHER <br>CURRENT LIABILITIES <br>| 10 |
| STATEMENT OF BONDS PAYABLE  | 11 |
| STATEMENT OF LEASE LIABILITIES | 12 |
| MAJOR ACCOUNTING ITEMS IN PROFIT OR LOSS |  |
| STATEMENT OF NET REVENUE | 13 |
| STATEMENT OF COST OF REVENUE | 14 |
| STATEMENT OF OPERATING EXPENSES  | 15 |
| STATEMENT OF FINANCE COSTS | Note 21 |
| STATEMENT OF LABOR, DEPRECIATION AND <br>AMORTIZATION BY FUNCTION<br>| 16 |

---

---

| |
|:---|
| **<u>STATEMENT</u> <u>1</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF CASH AND CASH EQUIVALENTS**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | |
|:---|:---|:---|
| Item | Description | Amount |
| Cash |  |  |
| Petty cash |  | $670 |
| Cash in banks |  |  |
| Checking accounts and demand deposits |  | 1877647 |
| Foreign currency deposits | Including US$2,848,100 thousand <br>@31.444, JPY55,265,702 thousand <br>@0.2013 and EUR91,795 thousand <br>@37.003<br>| 104077322 |
| Time deposits | From 2025.07.15 to 2026.06.29, interest <br>rates at 0.63%-4.35%, including <br>NT$675,147,639 thousand, <br>US$7,470,000 thousand @31.444, <br>JPY70,017,775 thousand @0.2013 and <br>EUR968,000 thousand @37.003<br>| 959947801 |
| Cash equivalents |  |  |
| Repurchase agreements | Expired by 2026.01.16, interest rates at <br>4.18%<br>| 1131984 |
| Money market funds |  | 8 |
| Total |  | $1067035432 |

---

---

| |
|:---|
| **<u>STATEMENT</u> <u>2</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF NOTES AND ACCOUNTS RECEIVABLE, NET**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Client Name** | **Amount** |
| Client A | $21355904 |
| Client B | 5577827 |
| Client C | 4706863 |
| Client D | 2597710 |
| Client E | 2382943 |
| Others (Note) | 10558944 |
|  | 47180191 |
| Less: Allowance for doubtful accounts | (477512) |
| Total | $46702679 |

---

Note:The amount of individual client included in others does not exceed 5% of the account balance.

---

| |
|:---|
| **<u>STATEMENT</u> <u>3</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF RECEIVABLES FROM RELATED PARTIES**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Client Name** | **Amount** |
| TSMC North America | $206855118 |
| Others (Note) | 1927920 |
| Total | $208783038 |

---

Note:The amount of individual client included in others does not exceed 5% of the account balance.

---

| |
|:---|
| **<u>STATEMENT</u> <u>4</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF INVENTORIES**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | |
|:---|:---|:---|
|  | **Amount** | **Amount** |
| **Item** | **Cost** | **Net Realizable**<br>**Value**<br>|
| Finished goods | $26782971 | $105960493 |
| Work in process | 170000320 | 926545143 |
| Raw materials | 43318957 | 43318957 |
| Supplies and spare parts | 12218121 | 12218121 |
| Total | $252320369 | $1088042714 |

---

---

| |
|:---|
| **<u>STATEMENT</u> <u>5</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF CHANGES IN INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD**  |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

---

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | **Increase** |  |  |  |  |  |
|  |  |  |  |  |  |  | **(Decrease)** |  |  |  |  |  |
|  |  |  |  |  |  |  | **in Using the** |  |  |  | **Market Value or** | **Market Value or** |
|  | **Balance, January 1, 2025** | **Balance, January 1, 2025** | **Additions in Investment** | **Additions in Investment** | **Decrease in Investment** | **Decrease in Investment** | **Equity Method** | **Balance, December 31, 2025** | **Balance, December 31, 2025** | **Balance, December 31, 2025** | **Net Assets Value** | **Net Assets Value** |
|  | **Shares** |  | **Shares** |  | **Shares** |  | **Amount** | **Shares** |  |  | **Unit Price** |  |
| **Investees** | **(In Thousands)** | **Amount** | **(In Thousands)** | **Amount** | **(In Thousands)** | **Amount** | **(Note 2)** | **(In Thousands)** | **%** | **Amount** | **(NT$)** | **Amount** |
| Stocks |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Global | 19 | $772437954 | 18 | $561374200 | - | $- | $17562084 | 37 | 100 | $1351374238 | $- | $1351374238<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Arizona | 17850 | 544359678 | 3400 | 106829700 | - | - | (7152083) | 21250 | 100 | 644037295 | - | 645663984<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Partners | 988268 | 76694630 | - | - | - | - | (885503) | 988268 | 100 | 75809127 | - | 75934789<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;JASM | 3011 | 57173512 | - | - | - | - | (9025390) | 3011 | 73 | 48148122 | - | 48448598<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;ESMC | 735 | 17510070 | 70 | 20109341 | - | - | 1855402 | 805 | 70 | 39474813 | - | 39474813<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;VIS | 506709 | 18300373 | - | - | - | - | (134106) | 506709 | 28 | 18166267 | 92 (note 1) | 46667929<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;SSMC | 314 | 11387185 | - | - | - | - | 1031982 | 314 | 39 | 12419167 | - | 12205571<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;VisEra Tech | 213619 | 12204760 | - | - | - | - | (283060) | 213619 | 67 | 11921700 | 285 (note 1) | 60881415<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC North America | 11000 | 7856923 | - | - | - | - | 913460 | 11000 | 100 | 8770383 | - | 8770383<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;Xintec | 111282 | 4220609 | - | - | - | - | 274646 | 111282 | 41 | 4495255 | 139 (note 1) | 15468188<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;GUC | 46688 | 3512938 | - | - | - | - | (560356) | 46688 | 35 | 2952582 | 2125 (note 1) | 99211700<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC 3DIC | 49 | 1343370 | - | - | - | - | 158774 | 49 | 100 | 1502144 | - | 1502144<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Europe | - | 631939 | - | - | - | - | 135481 | - | 100 | 767420 | - | 767420<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC JDC | 15 | 418383 | - | - | - | - | 14943 | 15 | 100 | 433326 | - | 433326<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Japan | 6 | 129226 | - | - | - | - | (74) | 6 | 100 | 129152 | - | 129152<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Korea | 80 | 43764 | - | - | - | - | 683 | 80 | 100 | 44447 | - | 44447<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal |  | 1528225314 |  | 688313241 |  | - | 3906883 |  |  | 2220445438 |  | 2406978097 |
| Capital |  |  |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC Nanjing | - | 116846280 | - | - | - | - | 28763393 | - | 100 | 145609673 | - | 145943725<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;TSMC China | - | 110272686 | - | - | - | - | 12299708 | - | 100 | 122572394 | - | 122744745<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;Emerging Fund | - | 3214022 | - | 633246 | - | (307789) | 599096 | - | 99.9 | 4138575 | - | 4147607<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;VTAF II (Note3) | - | 6246 | - | - | - | (128619) | 122373 | - | - | - | - | -<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;VTAF III (Note3) | - | 23334 | - | - | - | (39804) | 16470 | - | - | - | - | -<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subtotal |  | 230362568 |  | 633246 |  | (476212) | 41801040 |  |  | 272320642 |  | 272836077 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total |  | $1758587882 |  | $688946487 |  | $(476212) | $45707923 |  |  | $2492766080 |  | $2679814174 |

---

Note 1: The unit price is calculated by closing price of the Taipei Exchange or the TWSE as of December 31, 2025.

Note 2: Mainly including share of profit or loss of subsidiaries and associates, share of other comprehensive income or loss of subsidiaries and associates, cash dividends received from subsidiaries and associates, etc.

Note 3: VTAF II and VTAF III have completed the liquidation procedures respectively in the first quarter of 2025.

---

| |
|:---|
| **<u>STATEMENT</u> <u>6</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF CHANGES IN RIGHT-OF-USE ASSETS**  |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Office** |  |
| **Item** | **Land** | **Buildings** | **Equipment** | **Total** |
| Cost |  |  |  |  |
| Balance at January 1, 2025 | $47535869 | $2686676 | $50962 | $50273507 |
| Additions  | 6793814 | 1813438 | 17381 | 8624633 |
| Deductions | (1058946) | (18754) | (15164) | (1092864) |
| Balance at December 31, 2025 | $53270737 | $4481360 | $53179 | $57805276 |
| Accumulated depreciation |  |  |  |  |
| Balance at January 1, 2025 | $10919881 | $1423766 | $30713 | $12374360 |
| Additions  | 2972023 | 703268 | 16015 | 3691306 |
| Deductions | (113298) | (3589) | (14220) | (131107) |
| Balance at December 31, 2025 | $13778606 | $2123445 | $32508 | $15934559 |
| Carrying amounts at December <br>31, 2025<br>| $39492131 | $2357915 | $20671 | $41870717 |

---

---

| |
|:---|
| **<u>STATEMENT</u> <u>7</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF ACCOUNTS PAYABLES**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Vendor Name** | **Amount** |
| Vendor A | $5506480 |
| Others (Note) | 68691672 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $74198152 |

---

Note:The amount of individual vendor included in others does not exceed 5% of the account balance.

---

| |
|:---|
| **<u>STATEMENT</u> <u>8</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF PAYABLES TO RELATED PARTIES**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Vendor Name** | **Amount** |
| TSMC Arizona | $9127301 |
| TSMC Nanjing | 2934085 |
| TSMC China | 2261532 |
| Xintec | 1298672 |
| TSMC Technology | 1248835 |
| Others (Note) | 1654538 |
| Total | $18524963 |

---

Note:The amount of individual vendor in others does not exceed 5% of the account balance.

---

| |
|:---|
| **<u>STATEMENT</u> <u>9</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF PAYABLES TO CONTRACTORS AND EQUIPMENT SUPPLIERS**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Vendor Name** | **Amount** |
| Vendor A | $29799065 |
| Vendor B | 27321659 |
| Vendor C | 10885531 |
| Vendor D | 8959351 |
| Others (Note) | 91683234 |
| Total | $168648840 |

---

Note:The amount of individual vendor included in others does not exceed 5% of the account balance.

---

| |
|:---|
| **<u>STATEMENT</u> <u>10</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | |
|:---|:---|
| **Item** | **Amount** |
| Temporary receipts from customers  | $145207051 |
| Refund liability | 75708756 |
| Contract liabilities | 34734928 |
| Others (Note) | 85104566 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | $340755301 |

---

Note:The amount of each item in others does not exceed 5% of the account balance.

(Continued)

---

| |
|:---|
| **STATEMENT 11** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF BONDS PAYABLE**  |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Amount** | **Amount** | **Amount** | **Amount** | **Amount** |  |
|  |  |  | **Interest**  | **Coupon**  |  | **Repayment** | **Balance,**  | **Premiums**  |  |  |
| **Bonds Name** | **Trustee** | **Issuance Date** | **Payment Date** | **Rate (%)** | **Total Amount** | **Paid** | **End of Year** | **(Discounts)** | **Carrying Value** | **Unamortized Repayment** |
| Domestic unsecured bonds-109-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.03.23 | On 03.23 annually | 0.58 | $3000000 | $3000000 | $- | $- | $- | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.03.23 | On 03.23 annually | 0.62 | 10500000 | - | 10500000 | (1929) | 10498071 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.03.23 | On 03.23 annually | 0.64 | 10500000 | - | 10500000 | (4651) | 10495349 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-109-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.04.15 | On 04.15 annually | 0.52 | 5900000 | 5900000 | - | - | - | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.04.15 | On 04.15 annually | 0.58 | 10400000 | - | 10400000 | (1961) | 10398039 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.04.15 | On 04.15 annually | 0.60 | 5300000 | - | 5300000 | (2359) | 5297641 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-109-3 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.05.29 | On 05.29 annually | 0.55 | 4500000 | 4500000 | - | - | - | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.05.29 | On 05.29 annually | 0.60 | 7500000 | - | 7500000 | (1571) | 7498429 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.05.29 | On 05.29 annually | 0.64 | 2400000 | - | 2400000 | (1124) | 2398876 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-109-4 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.07.14 | On 07.14 annually | 0.58 | 5700000 | 5700000 | - | - | - | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.07.14 | On 07.14 annually | 0.65 | 6300000 | - | 6300000 | (1042) | 6298958 | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.07.14 | On 07.14 annually | 0.67 | 1900000 | - | 1900000 | (858) | 1899142 | Two equal installments in last two years<br> Nil |
| Domestic unsecured bonds-109-5 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.09.03 | On 09.03 annually | 0.50 | 4800000 | 4800000 | - | - | - | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.09.03 | On 09.03 annually | 0.58 | 8000000 | - | 8000000 | (1487) | 7998513 | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.09.03 | On 09.03 annually | 0.60 | 2800000 | - | 2800000 | (1298) | 2798702 | Two equal installments in last two years<br> Nil |
| Domestic unsecured bonds-109-6 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.02 | On 12.02 annually | 0.40 | 1600000 | 1600000 | - | - | - | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.02 | On 12.02 annually | 0.44 | 5600000 | - | 5600000 | (1382) | 5598618 | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.02 | On 12.02 annually | 0.48 | 4800000 | - | 4800000 | (2548) | 4797452 | Two equal installments in last two years<br> Nil |
| Domestic unsecured bonds-109-7 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.29 | On 12.29 annually | 0.36 | 1900000 | 1900000 | - | - | - | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.29 | On 12.29 annually | 0.41 | 10200000 | - | 10200000 | (2408) | 10197592 | Two equal installments in last two years<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2020.12.29 | On 12.29 annually | 0.45 | 6400000 | - | 6400000 | (3173) | 6396827 | Two equal installments in last two years<br> Nil |
| Domestic US$ unsecured bonds-109-1 | Mega International Commercial Bank Co., Ltd. | 2020.09.22 | On 09.22 annually | 2.70 | 31444000 | - | 31444000 | (30002) | 31413998 | Bullet repayment (callable on the 5th anniversary of the <br>issue date and every anniversary thereafter)<br>Nil |
| Domestic unsecured bonds-110-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.03.30 | On 03.30 annually | 0.50 | 4800000 | - | 4800000 | (236) | 4799764 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.03.30 | On 03.30 annually | 0.55 | 11400000 | - | 11400000 | (3806) | 11396194 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.03.30 | On 03.30 annually | 0.60 | 4900000 | - | 4900000 | (2686) | 4897314 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-110-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.05.03 | On 05.03 annually | 0.50 | 5200000 | - | 5200000 | (347) | 5199653 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.05.03 | On 05.03 annually | 0.58 | 8400000 | - | 8400000 | (2915) | 8397085 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.05.03 | On 05.03 annually | 0.65 | 5600000 | - | 5600000 | (3123) | 5596877 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-110-3 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.06.25 | On 06.25 annually | 0.52 | 6900000 | - | 6900000 | (684) | 6899316 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.06.25 | On 06.25 annually | 0.58 | 7900000 | - | 7900000 | (2925) | 7897075 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.06.25 | On 06.25 annually | 0.65 | 4900000 | - | 4900000 | (2792) | 4897208 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-110-4 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.08.19 | On 08.19 annually | 0.485 | 4000000 | 4000000 | - | - | - | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.08.19 | On 08.19 annually | 0.50 | 8000000 | - | 8000000 | (1016) | 7998984 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.08.19 | On 08.19 annually | 0.55 | 5400000 | - | 5400000 | (2077) | 5397923 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-D | Taipei Fubon Commercial Bank Co., Ltd. | 2021.08.19 | On 08.19 annually | 0.62 | 4200000 | - | 4200000 | (2443) | 4197557 | Bullet repayment<br> Nil |
| Domestic US$ unsecured bonds-110-5 | Mega International Commercial Bank Co., Ltd. | 2021.09.23 | On 09.23 annually | 3.10 | 31444000 | - | 31444000 | (29387) | 31414613 | Bullet repayment (callable on the 5th anniversary of the <br>issue date and every anniversary thereafter)<br>Nil |
| Domestic unsecured bonds-110-6 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.10.05 | On 10.05 annually | 0.535 | 3200000 | - | 3200000 | (219) | 3199781 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.10.05 | On 10.05 annually | 0.54 | 6900000 | - | 6900000 | (1177) | 6898823 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.10.05 | On 10.05 annually | 0.60 | 4600000 | - | 4600000 | (1958) | 4598042 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-D | Taipei Fubon Commercial Bank Co., Ltd. | 2021.10.05 | On 10.05 annually | 0.62 | 1600000 | - | 1600000 | (980) | 1599020 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-110-7 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2021.12.09 | On 12.09 annually | 0.65 | 7700000 | - | 7700000 | (1596) | 7698404 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2021.12.09 | On 12.09 annually | 0.675 | 3500000 | - | 3500000 | (975) | 3499025 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2021.12.09 | On 12.09 annually | 0.72 | 5500000 | - | 5500000 | (2509) | 5497491 | Bullet repayment<br> Nil |

---

(Concluded)

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Amount** | **Amount** | **Amount** | **Amount** | **Amount** |  |
|  |  |  | **Interest**  | **Coupon**  |  | **Repayment** | **Balance,**  | **Premiums**  |  |  |
| **Bonds Name** | **Trustee** | **Issuance Date** | **Payment Date** | **Rate (%)** | **Total Amount** | **Paid** | **End of Year** | **(Discounts)** | **Carrying Value** | **Unamortized Repayment** |
| Domestic unsecured bonds-111-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2022.01.12 | On 01.12 annually | 0.63 | $2100000 | $- | $2100000 | $(534) | $2099466 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2022.01.12 | On 01.12 annually | 0.72 | 3300000 | - | 3300000 | (1775) | 3298225 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-111-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2022.03.29 | On 03.29 annually | 0.84 | 3000000 | - | 3000000 | (550) | 2999450 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2022.03.29 | On 03.29 annually | 0.85 | 9600000 | - | 9600000 | (2631) | 9597369 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2022.03.29 | On 03.29 annually | 0.90 | 1600000 | - | 1600000 | (817) | 1599183 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-111-3 | Taipei Fubon Commercial Bank Co., Ltd. | 2022.05.20 | On 05.20 annually | 1.50 | 6100000 | - | 6100000 | (1898) | 6098102 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-111-4 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2022.07.27 | On 07.27 annually | 1.60 | 1200000 | - | 1200000 | (175) | 1199825 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2022.07.27 | On 07.27 annually | 1.70 | 10100000 | - | 10100000 | (3342) | 10096658 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2022.07.27 | On 07.27 annually | 1.75 | 1200000 | - | 1200000 | (653) | 1199347 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-D | Taipei Fubon Commercial Bank Co., Ltd. | 2022.07.27 | On 07.27 annually | 1.95 | 1400000 | - | 1400000 | (987) | 1399013 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-111-5 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2022.08.25 | On 08.25 annually | 1.65 | 2000000 | - | 2000000 | (677) | 1999323 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2022.08.25 | On 08.25 annually | 1.65 | 8900000 | - | 8900000 | (3331) | 8896669 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2022.08.25 | On 08.25 annually | 1.65 | 2200000 | - | 2200000 | (1297) | 2198703 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-D | Taipei Fubon Commercial Bank Co., Ltd. | 2022.08.25 | On 08.25 annually | 1.82 | 2500000 | - | 2500000 | (1873) | 2498127 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-111-6 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2022.10.20 | On 10.20 annually | 1.75 | 5700000 | - | 5700000 | (2466) | 5697534 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2022.10.20 | On 10.20 annually | 1.80 | 1000000 | - | 1000000 | (655) | 999345 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2022.10.20 | On 10.20 annually | 2.00 | 3500000 | - | 3500000 | (2865) | 3497135 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-112-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2023.03.28 | On 03.28 annually | 1.54 | 12200000 | - | 12200000 | (6399) | 12193601 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2023.03.28 | On 03.28 annually | 1.60 | 2300000 | - | 2300000 | (1576) | 2298424 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2023.03.28 | On 03.28 annually | 1.78 | 4800000 | - | 4800000 | (3929) | 4796071 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-112-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2023.05.03 | On 05.03 annually | 1.60 | 13100000 | - | 13100000 | (7018) | 13092982 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2023.05.03 | On 05.03 annually | 1.65 | 2300000 | - | 2300000 | (1576) | 2298424 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2023.05.03 | On 05.03 annually | 1.82 | 5300000 | - | 5300000 | (4303) | 5295697 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-112-3 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2023.06.01 | On 06.01 annually | 1.60 | 11400000 | - | 11400000 | (6270) | 11393730 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2023.06.01 | On 06.01 annually | 1.65 | 2600000 | - | 2600000 | (1807) | 2598193 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2023.06.01 | On 06.01 annually | 1.80 | 6000000 | - | 6000000 | (4901) | 5995099 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-112-4 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2023.08.16 | On 08.16 annually | 1.60 | 7300000 | - | 7300000 | (4313) | 7295687 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2023.08.16 | On 08.16 annually | 1.65 | 700000 | - | 700000 | (510) | 699490 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2023.08.16 | On 08.16 annually | 1.76 | 7900000 | - | 7900000 | (6600) | 7893400 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-112-5 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2023.10.16 | On 10.16 annually | 1.62 | 4300000 | - | 4300000 | (2713) | 4297287 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2023.10.16 | On 10.16 annually | 1.76 | 5500000 | - | 5500000 | (4733) | 5495267 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-113-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2024.03.15 | On 03.15 annually | 1.64 | 12000000 | - | 12000000 | (8284) | 11991716 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2024.03.15 | On 03.15 annually | 1.76 | 10800000 | - | 10800000 | (9534) | 10790466 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-113-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2024.05.17 | On 05.17 annually | 1.98 | 4900000 | - | 4900000 | (3576) | 4896424 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2024.05.17 | On 05.17 annually | 2.10 | 6600000 | - | 6600000 | (5968) | 6594032 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-114-1 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2025.03.28 | On 03.28 annually | 1.90 | 12000000 | - | 12000000 | (10891) | 11989109 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2025.03.28 | On 03.28 annually | 2.05 | 7200000 | - | 7200000 | (7129) | 7192871 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-114-2 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2025.06.02 | On 06.02 annually | 1.92 | 12500000 | - | 12500000 | (11551) | 12488449 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2025.06.02 | On 06.02 annually | 2.05 | 1600000 | - | 1600000 | (1581) | 1598419 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-114-3 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2025.07.09 | On 07.09 annually | 1.92 | 8300000 | - | 8300000 | (7844) | 8292156 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2025.07.09 | On 07.09 annually | 2.05 | 4000000 | - | 4000000 | (3985) | 3996015 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-114-4 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2025.09.18 | On 09.18 annually | 1.66 | 13800000 | - | 13800000 | (13372) | 13786628 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2025.09.18 | On 09.18 annually | 1.73 | 4000000 | - | 4000000 | (3997) | 3996003 | Bullet repayment<br> Nil |
| Domestic unsecured bonds-114-5 |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;-A | Taipei Fubon Commercial Bank Co., Ltd. | 2025.11.20 | On 11.20 annually | 1.50 | 14000000 | - | 14000000 | (14320) | 13985680 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-B | Taipei Fubon Commercial Bank Co., Ltd. | 2025.11.20 | On 11.20 annually | 1.53 | 3000000 | - | 3000000 | (3094) | 2996906 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;-C | Taipei Fubon Commercial Bank Co., Ltd. | 2025.11.20 | On 11.20 annually | 1.58 | 6500000 | - | 6500000 | (6728) | 6493272 | Bullet repayment<br> Nil |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL |  |  |  |  | $569788000 | $31400000 | $538388000 | $(316672) | 538071328 |  |
| Less: Current portion |  |  |  |  |  |  |  |  | (61940126) |  |
|  |  |  |  |  |  |  |  |  | $476131202 |  |

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| |
|:---|
| **<u>STATEMENT</u> <u>12</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF LEASE LIABILITIES** |
| **DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

---

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| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Discount** | **Balance,** |
| **Item** | **Description** | **Lease Term** | **Rate (%)** | **End of Year** |
| Land | Mainly for the use of plants <br>and offices<br>| 1 to 22 years | 0.39~2.30 | $31051868 |
| Buildings | Mainly for the use of offices | 1 to 12 years | 0.40~2.04 | 2457301 |
| Office equipment | For operation use | 1 to 3 years | 0.28~1.80 | 21668 |
|  |  |  |  | 33530837 |
| Less: Current portion |  |  |  | (3241718) |
| Noncurrent portion |  |  |  | $30289119 |

---

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| |
|:---|
| **<u>STATEMENT</u> <u>13</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF NET REVENUE** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

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---

| | | |
|:---|:---|:---|
| **Item** | **Shipments**<br>**(Piece)(Note)**<br>| **Amount** |
| Wafer | 14833949 | $3255146998 |
| Other |  | 529241762 |
| Net revenue |  | $3784388760 |

---

Note:12-inch equivalent wafers.

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| |
|:---|
| **<u>STATEMENT</u> <u>14</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF COST OF REVENUE** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

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---

| | |
|:---|:---|
| **Item** | **Amount** |
| Raw materials used |  |
| Balance, beginning of year | $44017395 |
| Raw material purchased | 90912827 |
| Raw materials, end of year | (43318957) |
| Transferred to manufacturing or operating <br>expenses<br>| (23891976) |
| Others | (254061) |
| Subtotal | 67465228 |
| Direct labor | 32733556 |
| Manufacturing expenses | 1335140462 |
| Manufacturing cost | 1435339246 |
| Work in process, beginning of year | 178296363 |
| Work in process purchased | 65949003 |
| Work in process, end of year | (170000320) |
| Transferred to manufacturing or operating expenses | (65395343) |
| Cost of finished goods | 1444188949 |
| Finished goods, beginning of year | 33980459 |
| Finished goods purchased | 113982630 |
| Finished goods, end of year | (26782971) |
| Transferred to manufacturing or operating expenses | (32866260) |
| Scrapped | (477609) |
| Subtotal | 1532025198 |
| Others | 32287869 |
| Total | $1564313067 |

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| |
|:---|
| **<u>STATEMENT</u> <u>15</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF OPERATING EXPENSES** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025** |
| **(In Thousands of New Taiwan Dollars)** |

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---

| | | | |
|:---|:---|:---|:---|
| **Item** | **Research and**<br>**Development**<br>**Expenses**<br>| **General and**<br>**Administrative**<br>**Expenses**<br>| **Selling**<br>**Expenses**<br>|
| Payroll and related expense | $98093854 | $29384438 | $5926506 |
| Consumables | 60081024 | 2291590 | 62 |
| Depreciation expense | 36512090 | 2421062 | 24200 |
| Repair and maintenance expense | 13431843 | 4785914 | 5231 |
| Consulting expense | 14852 | 3902532 | 14520 |
| Management fees of the Science Park Administration | - | 7009413 | - |
| Commission | - | 200931 | 1454472 |
| Others (Note) | 28887048 | 18033234 | 446580 |
| Total | $237020711 | $68029114 | $7871571 |

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Note:The amount of each item in others does not exceed 5% of the account balance.

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| |
|:---|
| **<u>STATEMENT</u> <u>16</u>** |
| **Taiwan Semiconductor Manufacturing Company Limited** |
| **STATEMENT OF LABOR, DEPRECIATION AND AMORTIZATION BY FUNCTION** |
| **FOR THE YEAR ENDED DECEMBER 31, 2025 AND 2024** |
| **(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)** |

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---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2025** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** | **Year Ended December 31, 2024** |
|  | **Classified as**<br>**Cost of** <br>**Revenue**<br>| **Classified as**<br>**Operating**<br>**Expenses**<br>| **Classified as**<br>**Other**<br>**Operating**<br>**Income**<br>**and Expenses**<br>| **Total** | **Classified as**<br>**Cost of** <br>**Revenue**<br>| **Classified as**<br>**Operating**<br>**Expenses**<br>| **Classified as**<br>**Other**<br>**Operating**<br>**Income**<br>**and Expenses**<br>| **Total** |
| Labor cost |  |  |  |  |  |  |  |  |
| Salary and bonus | $190604680 | $124173907 | $- | $314778587 | $138658016 | $94485677 | $- | $233143693 |
| Labor and health insurance | 8224477 | 4819258 | - | 13043735 | 6527978 | 3993315 | - | 10521293 |
| Pension | 3577098 | 1854132 | - | 5431230 | 3116700 | 1696152 | - | 4812852 |
| Board compensation | - | 157366 | - | 157366 | - | 507110 | - | 507110 |
| Others | 4697091 | 2400135 | - | 7097226 | 3853797 | 2075869 | - | 5929666 |
|  | $207103346 | $133404798 | $- | $340508144 | $152156491 | $102758123 | $- | $254914614 |
| Depreciation | $574475240 | $38957352 | $4 | $613432596 | $590881553 | $34858056 | $7814 | $625747423 |
| Amortization | $4989782 | $2994470 | $- | $7984252 | $6320646 | $2808823 | $- | $9129469 |

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Note 1:For the year of 2025 and 2024, the Company had average 76,916 and 70,037 employees, respectively, which included 9 non-employee directors for both years.

Note 2:Average labor cost for the years ended December 31, 2025 and 2024 were NT$4,425 thousand and NT$3,633 thousand, respectively.

Note 3:Average salary and bonus for the years ended December 31, 2025 and 2024 were NT$4,093 thousand and NT$3,329 thousand, respectively. The average salary and bonus increased by 22.95% year over year.

Note 4:The Company did not have supervisors for the years ended December 31, 2025 and 2024. Therefore, there was no compensation to the supervisor.

Note 5:The Company's compensation policies: The Company's employees are entitled to a comprehensive compensation and benefits program above the industry average. The compensation program includes a monthly salary, business

performance bonuses based on quarterly business results, a profit sharing bonus based on annual profits, and a subsidy based on Employee Stock Purchase Plan. The Company determines the amount of the business performance bonus

and profit sharing based on operating results and industry practice in the R.O.C.. The amount and distribution of the bonus and profit sharing are recommended by the Compensation and People Development Committee to the Board of

Directors for approval. Individual rewards are based on each employee's job responsibility, contribution and performance.

Note 6:The total compensation paid to the executive officers is decided based on their job responsibility, contribution, company performance and projected future risks the Company will face. It is reviewed by the Compensation and People

Development Committee then submitted to the Board of Directors for approval.

Note 7:According to the Company's Articles of Incorporation, the Board of Directors is authorized to determine the salary for the Chairman, Vice Chairman and Directors, taking into account the extent and value of the services provided for the

management of the Company and the standards of the industry within the R.O.C. and overseas. The Articles of Incorporation also provide that the compensation to directors shall be no more than 0.3% of annual profits and directors who

also serve as executive officers of the Company are not entitled to receive compensation to directors. The distribution of compensation to directors shall be made in accordance with the Company's "Rules for Distribution of

Compensation to Directors" based on the following principles: (1) directors who also serve as executive officers of the Company are not entitled to receive compensation; (2) the compensation for independent directors may be higher than

the other directors, as all independent directors also serve as members of the Audit and Risk Committee and the Compensation and People Development Committee and thus participate in the discussions as well as resolutions of related

committee meetings in accordance with the charter of each committee; and (3) the compensation for overseas independent directors may be higher than domestic independent directors.