TSMC 2021 Sustainability Report: Connecting Innovation with Sustainability

TSMC 2021
Sustainability
Report

Contents
Overview Sustainable Business
Practices AppendixESG Feature Stories Operations and
Governance
4 Letter from the ESG Steering
Committee Chairperson
5 Letter from the ESG Committee
Chairperson
6 About TSMC
7 Innovation Value
8 Sustainability at TSMC
9 Awards, Recognitions, and
Ratings
An Innovation Pioneer
41 Innovation Management
58 Product Quality and Safety
71 Customer Relations
A Practitioner of Green Power
91 Climate and Energy
105 Water Stewardship
113 Circular Resources
124 Air Pollution Control
A Responsible Purchaser
77 Sustainable Supply Chain
An Admired Employer
132 Diversity and Inclusion
136 Talent Attraction and Retention
142 Talent Development
146 Human Rights
152 Occupational Safety and Health
Power to Change Society
171 Social Impact
174 TSMC Education and Culture
Foundation
184 TSMC Charity Foundation
17 ESG Implementation
Framework
18 ESG Management Platform
22 Materiality Analysis and
Stakeholder Communication
34 Sustainability Impact
39 Carry Out the UN Sustainable
Development Goals
212 About this Report
216 Sustainability Information Disclosure
Framework
217 Participation in Industry Associations and
Non-Profit Organizations
219 ESG Performance Summary
226 Independent Third Party Assurance
Statement
227 Contact Information
11 First Semiconductor Company to
Adopt Energy-Efficient Measures in
Advanced Manufacturing Equipment
Worldwide
12 Launch Supplier Fire Protection
Personnel Project to Improve Supply
Chain Resilience
13 Build a Diverse and Inclusive
Workplace
14 Cultivate New-Generation STEAM
Talent
15 Relief Efforts for Global Pandemic
Prevention against COVID-19
199 Corporate Governance
204 Financial Performance
206 Tax
207 Information Security
Sustainability Roles
Global Reporting Initiative Index
United Nations Global Compact Index
Task Force on Climate-related Financial
Disclosures Index
Sustainability Accounting Standards
Board Index
WEF IBC Stakeholder Capitalism
Metrics Index

Innovation is the foundation that keeps TSMC growing.
High-performance computing propels humanity to a future with AI
Smartphones breaks the limitation of time and space and bridge us
with the cloud and to freedom
Advanced automotive electronics carry our imagination to the infinite
world of mobility
IoT ushers in the era of smart cities and industrial 4.0
ESG is in the DNA of every TSMC employee
TSMC uses concrete action to connect people with people and with
nature to welcome beautiful change
With an infinite stream of innovative technology solutions,
TSMC strives to achieve sustainability and connect to a future of
common good
Connect Sustainability
with Innovation
Overview

Letter from the ESG Steering Committee Chairperson
Over the past two years, COVID-19 has continued to impact our world while the
threat of extreme climate conditions has steadily increased. As a key player in the
global semiconductor supply chain, TSMC has the responsibility of working with
industry partners to take continuous action with regard to ESG (Environmental,
Social and Governance) issues.
Our vision is to uplift society and we link TSMC�s core advantages with the United
Nations� Sustainable Development Goals (SDG), integrating five ESG development
focal points including �Drive Green Manufacturing,� �Build a Responsible Supply
Chain,� �Create a Diverse and Inclusive Workplace,� �Develop Talent,� and �Care
for the Disadvantaged.� Since 2019, the ESG Steering Committee has integrated
cross-organizational resources and strengths, formulated long-term goals, and
reviewed the implementation of these goals. In 2021, in addition to focusing
on improving the industry�s core capabilities, we also continued to implement
corresponding sustainable practices. We now integrate sustainability target results
into the compensation structure for senior executives, integrate SDGs into both the
organizational culture and employees� daily tasks, and actively respond to concerns
raised by stakeholders both inside and outside the company.
We firmly believe that corporate growth and the natural environment can coexist
prosperously, and we implement green practices to ensure this. In 2021 TSMC further
committed to actively implement emission reduction measures and optimize related
sustainable actions. The Company set a short-term goal of achieving zero emission
growth by 2025, a medium-term goal of returning to 2020 emissions level by 2030
and a long-term goal of reaching net zero emissions by 2050. In 2021, we also
released our first Taskforce on Climate-Related Financial Disclosures (TCFD) Report,
promoting climate adaptation and mitigation management through governance,
strategies, risk management, metrics and targets, becoming an industry pioneer
in disclosing information in related fields. We hope that by expanding our green
influence, we will drive the industry to move towards low-carbon sustainability.
Over the past two years COVID-19 has continued to threaten our lives. Throughout
this time, TSMC has not only remained resilient in protecting employee health and
safety and maintaining normal operations, we have also extended our expertise and
resources to support global pandemic prevention efforts. In 2021, during a period
when the epidemic situation in Taiwan was deteriorating, we happily did our part to
support the country by successfully purchasing 5 million doses of BNT (BioNTech)
162b2 vaccine and donating them to the Center for Disease Control (CDC) of the
Ministry of Health and Welfare with the support of the government. At the same
time, we also continued to offer support overseas, including India, helping them
deal with overburdened local medical facilities.
At TSMC respect for human rights is regarded as a universal value. In 2021, in
order to provide migrant workers with a decent work environment and to create a
responsible supply chain, we issued the statement Supply Chain Partners Should
Ensure Protection of Human Rights During the COVID-19 Pandemic so that our
subsidiaries and supply chain partners carry out anti-pandemic measures in an
appropriate fashion. The statement addresses four major areas: personal freedoms,
how migrant workers are informed of anti-pandemic measures, handling of
accidents and casualties, and dormitory management.
At TSMC, ESG means driving positive environmental and societal change. We
work diligently to integrate the ESG ethos into our daily operations with the aim
of sustainable development, formulating systematic management strategies,
implementing related measures and reviewing action plans. We also rely on all our
employees to champion their work while having the courage to posit innovative
ideas. On our road to sustainability, TSMC not only strives to fulfill its role as a
responsible corporate citizen, we also look forward to working with partners and
stakeholders from all walks of life to create a sustainable future.
Mark Liu
Chairman and ESG Steering Committee Chairperson2021
Sustainability Report
ESG Feature StoriesOverview Sustainable Business Practices Operations and Governance
An Innovation Pioneer A Responsible Purchaser A Practitioner of Green Power An Admired Employer Power to Change Society
Appendix
4

The year 2021 was a year of global upheaval as the world faced the COVID-19 pandemic,
war, and political instability. As a global citizen, we have shared the impact of these
changes.
The year 2021 was also a year of growth for TSMC. Benefitting from the strong demand
for advanced process technologies from 5G mobile networks and high-performance
computing, TSMC was able to achieve record high revenue for the 12th consecutive
year. As COVID-19 continued to ravage the world, TSMC launched the COVID-19 global
epidemic prevention program to protect colleagues, suppliers and contractors working
in TSMC fabs and ensure normal operations at our global wafer fabs. In 2021, TSMC
shipped 14.2 million 12-inch equivalent wafers and realized 12,302 product innovations
for our customers, providing humanity a safer and more convenient lifestyle. TSMC also
supported the Sustainable Development Goals proposed by the United Nations with
tangible actions and has remained steadfast to our five ESG directions.
In terms of �Green Manufacturing�, in 2021, TSMC updated our Climate Change
Statement to include a commitment to Net Zero Emissions by 2050, invested
NT$28.9731 billion into environmental protection, and successfully promoted 780
innovative programs for energy conservation, water conservation, and waste reduction.
TSMC also achieved the target of net zero emissions from energy consumption at
all overseas subsidiaries for the fourth consecutive year and responded to Taiwan�s
drought in the first half of 2021 with outstanding water management capabilities,
ensuring that our production capacity was unaffected. In addition, we are currently
building a Zero Waste Manufacturing Center to realize a low-carbon business model and
circular economy.
As for �Build A Responsible Supply Chain,� in 2021, TSMC continued to strengthen
supplier sustainability through the Supply Online 360 global responsible supply chain
management platform and the TSMC Supplier Sustainability Academy, promoting
EP&L across the supply chain and uncovering opportunities to lower our impact on the
environment. In 2021, TSMC also became the first semiconductor company in Taiwan to
release the Supplier Transportation Management White Paper. Our efforts in the supply
chain also included safety and health support and training to all critical high-risk suppliers
and helping suppliers establish long-term sustainability targets. To increase climate
resiliency across the supply chain, TSMC also joined the CDP Supply Chain Program.
In terms of �Create a Diverse & Inclusive Workplace,� in 2021, TSMC introduced 8,536 job
opportunities across the world and drew on our Human Rights Policy and Diversity and
Inclusion Statement to develop Women@tsmc, an employee resource group aimed at
achieving equality in the workplace. Looking ahead, TSMC will continue to make timely
responses to employee needs and suggestions through the Engagement Survey and other
diverse reporting channels to support employee work-life balance . For �Develop Talent,�
TSMC adopted the 70-20-10 rule to empower employees and cultivate talents for the future.
TSMC also continued to expand university programs such as the Semiconductor Programs,
Advanced IC Design Program, and University Research Center as well as the TSMC Journeys
of Female Scientists Lectures for female high school students in an effort to cultivate the
next generation of STEAM professionals. In terms of �Care for the Disadvantaged,� the TSMC
Education and Culture Foundation and TSMC Charity Foundation have long been investing
in this area by tapping into the power of our employees� volunteer services. We consulted
the impact principles of the London Benchmark group and evaluated the impact of all
social participation programs along the two dimensions of �depth� and �type� to create a
strong foundation of common good for social progress.
As the Chairperson of the ESG Committee, I look forward to strengthening and expanding
our sustainable actions to bring about innovative breakthroughs. The Sustainability
Report that we compile each year keeps pace with global sustainability trends and has
become a guide for organizations to continue advancing their ESG efforts. We expanded
our information disclosure and external communications and continued to accumulate
our ESG intellectual property. In addition to the existing EP&L Report and TCFD Report,
TSMC also released, for the first time this year, Materiality Analysis Report and the UN
SDGs Action Report.
Sustainability is a journey without end. TSMC is the only semiconductor company in the
world to be selected for the Dow Jones Sustainability Index (DJSI) for 21 consecutive
years. As the company continues to grow, we find ourselves with growing responsibilities
as well. We will continue to hold true to our ESG vision to uplift society as we strive on
forward with steadfast resolve.
Letter from the ESG Committee Chairperson
Lora Ho
Senior Vice President
and ESG Committee
Chairperson2021
Sustainability Report
ESG Feature StoriesOverview Sustainable Business Practices Operations and Governance
An Innovation Pioneer A Responsible Purchaser A Practitioner of Green Power An Admired Employer Power to Change Society
Appendix 5

44% 37%
8%
4%
4%
3%
Headquarters
Hsinchu Science Park
Founded in
1987
Number of Employees
over 65,152
About TSMC
Facing global turmoil brought by the COVID-19 pandemic as well as developments in the semiconductor industry,
TSMC continues to strengthen services, R&D, and capacity while staying true to our four core values of Integrity,
Commitment, Innovation, and Customer Trust. As a trusted technology and capacity provider to the global logic
IC industry, TSMC also continues to invest in customer growth; in 2021, we increased capital expenditure to
US$30 billion. At the same time, strong customer demand for industry-leading advanced processes and specialty
process technologies helped TSMC achieve a consolidated income of NT$1,587.42 billion, a 18.5% increase from
2020. TSMC also remains committed to business philosophy and collaborates with employees, shareholders/
investors, customers, suppliers/ contractors, the government, and society to create sustainable value for the
economy, environment, and society.
Revenue Percentage by Customer
HQ Location
Revenue Percentage by Product
Platform
North America
Asia Pacific excluding Japan and Mainland China
Mainland China
Europe, Middle East, and Africa
Japan
Smart Phones
High Performance Computing
Internet of Things
Automotive Electronics
Consumer Electronics
Other Products
65%
14%
10%
6%
5%
30 billion
Capital expenditure, up from US$17
billion in 2020 (US$)
$596.54 billion
Net income; 15.2% increase from
2021 (NT$)
12Years
Record high revenues for 12
consecutive years
26%
Accounting for 26% of the
worldwide semiconductor
market excluding memory, up
2 percentage points from 2020
535 Customers
Used 291 distinct process technologies
and manufactured 12,302 different
products for 535 customers
50%
50% of TSMC's wafer revenue came from
advanced manufacturing processes ‒
defined as geometries of 7nm and smaller,
up 9 percentage points from 2020
TSMC has fabs, subsidiaries or offices throughout Taiwan, North America, Europe, Japan, Mainland China, South
Korea, and other countries to offer real-time services and technical support to customers around the world.2021
Sustainability Report
ESG Feature StoriesOverview Sustainable Business Practices Operations and Governance
An Innovation Pioneer A Responsible Purchaser A Practitioner of Green Power An Admired Employer Power to Change Society
Appendix
6

Innovation Value
Make communication more
effective and work, play, and learn
anytime and anywhere
● Application Processors (AP),
● Baseband
● RF Transceivers
● Wireless Local Area Networks (WLAN)
● CMOS Image Sensor (CIS)
● Near Field Communication (NFC)
● Bluetooth
● Global Positioning Systems (GPS), etc.
Enable 5G, Artificial Intelligence
(AI), cloud, and data centers for
transferring and processing vast
amounts of data anywhere and
anytime
● Central Processing Unit (CPU)
● Graphics Processor Unit (GPU)
● Field Programmable Gate Array (FPGA)
● Server CPU
● Artificial Intelligence/Machine
Learning (AI/ML) Accelerator
● Network Processing Unit (NPU)
● High-speed Networking Chip, etc.
Empower innovations for artificial
intelligence of things (AIoT) and
accelerate digital transformation to
make a more convenient and greener
living, and improve health care quality
● Microcontroller Unit (MCU)
● Application Processors (AP)
● Baseband
● RF Transceivers
● Wireless Local Area Networks (WLAN)
● CMOS Image Sensors (CIS)
● Near Field Communication (NFC)
● Bluetooth
● Embedded Flash Memory
● Radio Frequency Identification, (RFID) etc.
Make vehicles, including hybrid/
electrical cars, safer, smarter, and
greener
● Microcontroller Unit (MCU)
● Baseband
● RF Transceivers
● Wireless Local Area Networks (WLAN)
● CMOS Image Sensor (CIS)
● Near Field Communication (NFC)
● Radar
● Ethernet Switches
● Power Management ICs, etc.
TSMC continues to advance semiconductor manufacturing
technologies and services to enable our customers to unleash more
than 12,300 chip innovations in 2021. These innovations make
products more advanced, capable, intelligent, energy-efficient, and
safer, allowing us to greatly increase quality of life and move towards
a sustainable well-being society.
Innovations for Sustainability Technology Development Focuses
● Continue to drive semiconductor scaling for
both logic and specialty technologies
● Continue to expand specialty technology
offerings
● Continue to advance and expand
TSMC 3DFabricTM technology offerings
Benefits to Customer Product Innovation
● Boost product computing power
● Increase product energy efficiency
● Enable smaller form factor
● Provide greater chip design flexibility
Smartphone High Performance Computing Internet of Things (IoT) Automotive Digital Consumer Electronics
Technology
Platforms
Enable AI-powered smart
devices
● Microcontroller Unit (MCU)
● Baseband
● RF Transceivers
● Wireless Local Area Networks (WLAN)
● CMOS Image Sensor (CIS)
● Near Field Communication (NFC)
● Bluetooth
● Embedded Flash Memory
● Power Management ICs
● Timing Controllers (T-CON) for Smart
8K/4K Digital TV (DTV)
● 4K Streaming Set-top Box (STB) / Over-
the-top (OTT)
● Digital Single-lens Reflex (DSLR) Devices,
and so on.
Customer
Product/
Applications2021
Sustainability Report
ESG Feature StoriesOverview Sustainable Business Practices Operations and Governance
An Innovation Pioneer A Responsible Purchaser A Practitioner of Green Power An Admired Employer Power to Change Society
Appendix
7

Sustainability
at TSMC
$1.3trillion
Generated NT$1.3 trillion in output
value and 224,000 jobs in Taiwan
(NT$)
1
Leading the world in 3nm process
risk production to empower the next-
generation technology products
20％
Driving innovation by investing
US$4,465,000,000 in R&D, a 20%
increase from 2020
100％
100% patent approval rate in the
U.S., better than any other top 10
patent holder
$16.2trillion
Market capitalization (NT$)
Economic
0
Announced to reach Net Zero
Emissions by 2050
1
Number 1 in the global semiconductor
industry as well as in Taiwan with the
largest LEED-certified building area
1
Received the highest UL 2799
platinum rating for zero waste
to landfill
98.4％
98.4% reduction rate of volatile
organic gases
14.9%
Reduced unit water consumption by
14.9% (Base year: 2010)
Environmental
$164.9billion
Total compensation and welfare
handed out to TSMC employees
around the world, a 17% increase
from 2020 (NT$)
2.24million
Number of certificates awarded to
employees for completing TSMC
training programs
>6,500
Over 6,500 students from top
universities and graduate institutes
around the world that participated
in TSMC's diverse industry-academia
cooperation programs
$5.09billion
Invested into social engagement
(NT$)
891,962
Beneficiaries of social engagement
programs
Social2021
Sustainability Report
ESG Feature StoriesOverview Sustainable Business Practices Operations and Governance
An Innovation Pioneer A Responsible Purchaser A Practitioner of Green Power An Admired Employer Power to Change Society
Appendix
8