Letter from the CSR Committee Chairperson

Letter from the CSR Committee Chairperson

We enable sustainability to take root in our corporate culture, pursue profitable and steady growth, and do our utmost to ensure that every TSMC stakeholder can benefit.

TSMC's market share has grown for eight consecutive years to reach 56% in 2017, and is the only semiconductor company to be included in the Dow Jones Sustainability Indices for 17 consecutive years, as well as the first company to be named Industry Group Leader for three consecutive years.

These achievements were not accomplished overnight, but are the results of long-term commitment from many like-minded colleagues. They are also the motivation that sustains us in continuing to cultivate corporate social responsibility.

Although we have been challenged along the way, we persist in working hard to make positive change. In the past few years, we have continued to expand research and development, leading the industry in launching new generations of process technology, making progress through innovation, and improving life and social welfare. At the same time, we have begun to link the company's operations with the United Nations' Sustainable Development Goals and adopt impact valuations to gain a better knowledge of the impact of our operations on the value chain and evaluate the connections between management decisions and sustainable value creation.

Change never stops. In 2017, TSMC focused on Ethical Management, Innovation and Service, Responsible Supply Chain, Green Manufacturing, Inclusive Workplace, and Common Good. We managed these six focuses, as well as 17 related material issues, through clear strategy, measurable and time-based goals, and quantifiable results. These six focuses are the realization of TSMC's CSR Policy of Integrity, Strengthening Environmental Protection, and Caring for the Disadvantaged. They provide the foundation for TSMC's 2020/2025 Goals, respond to the UN SDGs in the economic, environmental, and social dimensions, and support global sustainability through concrete action.

1
The largest green power buyer in Taiwan
2.37bn
Completed 719 environmental projects and generated economic value of NT$2.37 billion in 2017
330,677
Cumulative number of beneficiaries in 2017

In the face of issues such as extreme weather, natural disasters, and an aging society, we concentrate on our core business, strengthen foundations for sustainability, and proudly fulfill our responsibilities as a corporate citizen to seek any possible solution to society's problems. In 2017, we worked with our partners to propose a Responsible Supply Chain Action Plan. With our two-pronged strategy of "efficient management" and "resilient capability", we lead our suppliers towards sustainability and spread positive change. To fulfill our environmental responsibilities, we have purchased 400 GWh of green energy in the past three years, mitigating the impact of greenhouse gases on society. Internally, we demonstrated our "green power" by completing 719 environmental projects in 2017, generating economic value of NT$2.37 billion. It is also worth noting that our shareholders approved the revision of the Company's Articles of Incorporation to add four items to our business scope, enabling the recycled waste recovered from our manufacturing process to become products to be re-used internally or sold externally, taking action to implement circular economy.

We have also become closer and closer to the community over the past year. In addition to the TSMC Education and Culture Foundation's ongoing cultivation of arts, culture, and diverse education, we further integrated the Company's resources with employee initiatives in volunteer work to establish the TSMC Charity Foundation. This foundation gathers the strength of our employees to promote filial piety and promote an elder-friendly society, and helps the disadvantaged to gain resources for education, living and pursuing happiness. In 2017, volunteers served 24,612 times for 106,176 service hours, generating 330,677 cumulative beneficiaries.

In addition to taking action on sustainability, we also seek to understand the impact and change these investments make on society. We have adopted the Social Return on Investment (SROI) framework to calculate social value of projects in energy conservation and quality education, tangibly demostrating the results of TSMC’s investments in social participation and advancing with our stakeholders towards hope and mutual benefit.

Looking to the future, the challenges of industry competition, political and economic volatility, and the operational impact of climate change can not be avoided, and will only grow more difficult. From business model innovation, to unceasing technology breakthroughs, to serving as an enabler for sustainability, TSMC aspires to do the right thing, and invites everyone to stand with us.

Working together, we can move mountains. Let us join hands, and make positive change continue to happen.

Lora Ho Senior Vice President and Corporate Social Responsibility Committee Chairperson