Morris Chang

Letter to Shareholders

Dear Shareholders,
2017 was a solid year for TSMC as we delivered another year of record revenue, net income and earnings per share. TSMC’s technology leadership and manufacturing excellence, as well as our ongoing commitment to R&D and capacity investment, enabled us to capture opportunities in mobile devices, high-performance computing, the Internet of Things, and automotive semiconductors. Our continuing technological progress across the broad spectrum of advanced semiconductor process technologies lays a good foundation and builds a strong momentum for TSMC in the coming years...

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“Being everyone’s foundry” is at the heart of TSMC strategy. Through the expansion of our technology and services, we build an open platform that welcomes all innovators in the semiconductor industry to realize their innovations and see their products brought to market in volume quickly. TSMC’s ability to address the increasing needs for specific technology requirements, through the most comprehensive range of technology offerings and our vast and flexible manufacturing capacity, enable us to cast a wide net to capture the varying waves of product innovations in the semiconductor industry.

In 2017, we saw computation expanding in the cloud and on the edge; major mobile products with enriched features adopted advanced processes; the need for safer, smarter and greener vehicles drove strong automotive semiconductor demand; and the readiness of ubiquitous connectivity provided exciting growth in the Internet of Things (IoT). AI (artificial intelligence) is expected to be embedded in all the above applications. As “everyone’s foundry”, we were able to participate in these growing segments of the industry and continued to expand our foundry market segment share.

We continued to make significant advances in leading-edge process technologies in 2017. 10-namometer set a new record in terms of ramp-up speed, and represented 10% of our total wafer revenue in its first year. Our industry-first 7-nanometer was transferred from R&D to manufacturing in 2017, and will begin volume production in the second quarter of 2018. Our 7-nanometer+ will follow and enter risk production later in 2018. We broke ground for Fab 18 in January 2018 for 5-nanometer, which will see extensive use of EUV (extreme ultraviolet) lithography with volume production targeted to start in 2020. Our proprietary CoWoS® (Chip on Wafer on Substrate) and InFO (integrated fan-out) advanced packaging solutions also continue to see enthusiastic adoption by customers in HPC (high performance computing), mobile and other high speed applications.

Highlights of TSMC’s accomplishments in 2017:

  • Total wafer shipments increased 8.8 percent from 2016 to reach 10.5 million 12-inch equivalent wafers.
  • Advanced technologies (28-nanometer and beyond) accounted for 58 percent of total wafer revenue, up from 54 percent in 2016.
  • We deployed 258 distinct process technologies, and manufactured 9,920 products for 465 customers.
  • TSMC’s market share in the total semiconductor foundry segment rose successively during the last eight years and reached 56 percent in 2017.

2017 Financial Performance

In 2017, our consolidated revenue totaled NT$977.45 billion, an increase of 3.1 percent over NT$947.94 billion in 2016, despite a significant appreciation in the NT dollar in this period. Net income was NT$343.11 billion and diluted earnings per share were NT$13.23. Both increased 3 percent from the 2016 level of NT$334.25 billion net income and NT$12.89 diluted EPS.

Gross profit margin was 50.6 percent compared with 50.1 percent in 2016, while operating profit margin was 39.4 percent compared with 39.9 percent a year earlier as R&D spending ratio increased. Net profit margin was 35.1 percent, a decrease of 0.2 percentage points from the prior year’s 35.3 percent.

TSMC further raised its cash dividend payment to NT$7.0 per share for 2016 profit distribution from NT$6.0 a year ago.

Technological Developments

In 2017, we have increased our R&D expense by 13.5% over 2016, with a large number of new technology introduction, to meet our customer needs and to extend our technology leadership.

TSMC’s 28/22-nanometer technology saw a record number of product tape-outs in 2017, thanks to its differentiated and diverse offerings. To further enhance the technology performance, we have also developed 22ULP (ultra-low power) and 22ULL (ultra-low leakage) technologies to address IoT and RF-related applications. We are confident that our continued performance enhancement, strong manufacturing capability, and flexible capacity can further strengthen our position in 28/22-nanometer node for years to come.

TSMC’s 16-nanometer FinFET technology remains robust as it enters its fourth year of volume production in 2018. Strong tape-out activities covered a variety of mainstream smartphones, cryptocurrency, AI, GPU and RF products. We continued to expand the technology portfolio by developing 12FFC (FinFET Compact) in 2017, which drives die size and power efficiency to serve demand in mobile, consumer electronics, digital TV and IoT applications.

10-nanometer FinFET technology started high-volume shipments in early 2017 and successfully supported a major customer’s new mobile product launches. Thanks to its aggressive geometric shrinkage, this technology provides excellent density/cost benefits to support customer needs in performance-driven market segments, including application processors, cellular baseband and ASIC CPUs. As a result, we expect a continued growth of our 10-nanometer business in 2018.

We successfully introduced TSMC’s 7-nanometer technology in 2017. Customer adoption of 7-nanometer is very strong and we received more than ten product tape-outs in 2017. A total of more than 50 customer product tape-outs are expected by the end of 2018. TSMC’s 7-nanometer+ technology will be introduced in 2018. We have already demonstrated the same yield level of 256M bit SRAM as compared to 7-nanometer.

Furthermore, TSMC’s 5-nanometer technology development is well on track for risk production in the first quarter of 2019. Both device performance and SRAM development vehicle yield improvement are on our plan. Customer test chips are already running in our fab.

In advanced packaging, TSMC’s second generation InFO technology began volume production for advanced mobile products in 2017, while InFO_oS (Integrated Fan-Out on Substrate) technology is expected to complete qualification in 2018 for HPC (high performance computing) products. We also extended our interposer CoWoS® technology to 12-nanometer and are actively developing 7-nanometer solutions to further support the requirements of HPC applications, such as AI, data server, and networking.

TSMC’s ecosystem, the Open Innovation Platform® (OIP), is an important factor in empowering customers to unleash their innovations with fast time-to-market. We continued to work with our ecosystem partners to expand our libraries and silicon IP portfolio in 2017 to more than 16,000 items. More than 9,000 technology files and over 300 process design kits were available to customers via TSMC-Online which saw more than 100,000 customer downloads in 2017.

Corporate Developments

In October 2017, I, as TSMC Chairman for the last thirty years, announced my plan to retire from the Company immediately after the Annual Shareholders’ Meeting in early June, 2018. All present directors of the board, except myself, have unanimously agreed to be nominated, and if elected, will serve as directors of the board during the next term. They all have agreed to have TSMC under the dual leadership of Dr. Mark Liu and Dr. C.C. Wei, who are TSMC’s presidents and Co-CEOs currently. Dr. Liu will be the Chairman of the Board, and Dr. Wei will be the Chief Executive Officer.

Capacity Plan

Annual Growth Rate
Capacity: million 12-inch equivalent wafers

Wafer Sales Plan

> 28nm wafer revenue
≤ 28nm wafer revenue
2018 wafer shipment is expected to be 11-12 million
12-inch equivalent wafers.

Honors and Awards

TSMC received recognition for achievements in innovation, business information disclosure, corporate governance, sustainability, investor relations and overall excellence in management from organizations including Forbes, Fortune Magazine, Newsweek, CommonWealth Magazine, The Nikkei, PricewaterhouseCoopers, RobecoSAM and the Taiwan Stock Exchange. TSMC continued to receive multiple awards from Institutional Investor Magazine and was ranked among the top global companies by IR Magazine. TSMC was chosen once again as a component of the Dow Jones Sustainability Indices, becoming the only semiconductor company to be selected for 17 consecutive years. Meanwhile, we remained a major component in both MSCI ESG and FTSE4Good Emerging Index, reflecting our ongoing commitment to sustainability and corporate social responsibility.

Outlook

TSMC’s enduring business model, our ecosystem of partnerships across the industry, and our core values of integrity, commitment, innovation, and customer trust have well positioned us to serve as “everyone’s foundry” and enabled win-win partnership between TSMC and IC innovators. TSMC will continue to advance our semiconductor process technologies and strengthen our manufacturing capabilities to meet the ever-increasing requirements of our customers and stay at the forefront to unleash innovation.

As technology and end applications undergo unprecedented change for the new digital age, our dedicated foundry business model will remain the foundation of our success. Our business model will continue to lead our way in creating value and generating strong returns to our shareholders. I would like to personally thank our shareholders for your long-term support to TSMC. While we have come a long way over the past thirty years, there is still much more ahead of us to achieve, and I am ever more confident that the best is yet to come.

Morris Chang
Chairman

About TSMC

Established in 1987 and headquartered in Hsinchu Science Park, Taiwan, TSMC pioneered the pure-play foundry business model by focusing solely on manufacturing customers’ products. By choosing not to design, manufacture or market any semiconductor products under its own name, the Company ensures that it never competes directly with its customers. Today, TSMC is the world’s largest semiconductor foundry, manufacturing 9,920 different products using 258 distinct technologies for 465 different customers in 2017.

With a large and diverse global customer base, TSMC-manufactured semiconductors are used in a wide variety of applications covering many segments of the computer, communications, consumer, industrial and standard semiconductor markets. Strong diversification helps to smooth fluctuations in demand, which, in turn, helps TSMC maintain higher levels of capacity utilization and profitability.

Annual capacity of the manufacturing facilities managed by TSMC and its subsidiaries exceeded 11 million 12-inch equivalent wafers in 2017. These facilities include three 12-inch wafer GIGAFAB® fabs, four 8-inch wafer fabs, and one 6-inch wafer fab in Taiwan, as well as one 12-inch wafer fab at a wholly owned subsidiary: TSMC Nanjing Company Limited, and two 8-inch wafer fabs at wholly owned subsidiaries: WaferTech in the United States and TSMC China Company Limited. In 2016, TSMC Nanjing Company Limited was established, managing a 12-inch wafer fab and a design service center.

TSMC provides customer service through its account management and engineering services offices in North America, Europe, Japan, China, and South Korea. At the end of 2017, the Company employed more than 48,000 people.

The Company is listed on the Taiwan Stock Exchange (TWSE) under ticker number 2330, and its American Depositary Shares (ADSs) are traded on the New York Stock Exchange (NYSE) under the symbol TSM.

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  • Board
    Members
  • Management
    Team
  • Organization
  • Board Members Gender Nationality or
    Place of Registration
    Date Elected Term Expires Date First Elected
    Chairman
    Morris Chang
    Male U.S. 06/09/2015 06/08/2018 12/10/1986
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    125,137,914 0.48% 125,137,914 0.48% 135,217 0.00%
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor and Master Degrees in Mechanical Engineering, MIT
    Ph.D. in Electrical Engineering, Stanford University

    Former Group Vice-President, Texas Instruments Inc.
    Former President & COO, General Instrument Corp.
    Former Chairman, Industrial Technology Research Institute, R.O.C.
    Former CEO, TSMC

    Member of National Academy of Engineering, U.S.
    Life Member Emeritus of MIT Corporation
    Fellow of the Computer History Museum, U.S.
    Laureate of the Industrial Technology Research Institute, R.O.C.
    Honorary Chairman, Taiwan Semiconductor Industry Association (TSIA)
    None
    Vice Chairman
    F.C. Tseng
    Male R.O.C. 06/09/2015 06/08/2018 05/13/1997
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    34,472,675 0.13% 34,472,675 0.13% 132,855 0.00%
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor Degree in Electrical Engineering, National Chengkung University
    Master Degree in Electrical Engineering, National Chiao Tung University
    Ph.D. in Electrical Engineering, National Chengkung University
    Honorary Ph.D., National Chiao Tung University
    Honorary Ph.D., National Tsing Hua University

    Former President, Vanguard International Semiconductor Corp.
    Former President, TSMC
    Former Deputy CEO, TSMC
    Former Director, National Culture and Arts Foundation, R.O.C.

    Chairman, TSMC Education and Culture Foundation
    Chairman of:
    - TSMC China Company Ltd. (a privately held company)
    - Global UniChip Corp.
    Vice Chairman, Vanguard International Semiconductor Corp.
    Independent Director, Chairman of Audit Committee & Compensation Committee member, Acer Inc.
    Director National Development Fund, Executive Yuan
    Representatives:
    Mei-ling Chen
    Female R.O.C. 06/09/2015 06/08/2018 12/10/1986
    11/07/2017
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    1,653,709,980 6.38% 1,653,709,980 6.38% - -
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    LL.B., National Chengchi University
    LL.M., National Taiwan University
    LL.D., National Chengchi University

    Former Director General, Department of Legal Affairs, Ministry of Justice, R.O.C.
    Former Chairperson of Legal Affairs Committee & concurrently Chairperson of Petitions and Appeals Committee, Executive Yuan, R.O.C.
    Former Deputy Secretary-General, Executive Yuan, R.O.C.
    Former Secretary-General, Tainan City Government, R.O.C.
    Former Secretary-General, Executive Yuan, R.O.C.

    Former Associate Professor, Department of Law, Chinese Culture University

    Minister without Portfolio, Executive Yuan & concurrently Minister, National Development Council, R.O.C.
    None
    Director
    Mark Liu
    Male U.S. 06/08/2017 06/08/2018 06/08/2017
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    12,977,114 0.05% 12,913,114 0.05% - -
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor Degree in Electrical Engineering, National Taiwan University
    Master Degree and Ph.D. in Electrical Engineering & Computer Science, University of California, Berkeley

    Former President, Worldwide Semiconductor Manufacturing Corp.
    Former Senior Vice President, Advanced Technology Business, TSMC
    Former Senior Vice President, Operations, TSMC
    Former Executive Vice President and Co-Chief Operating Officer, TSMC
    President and Co-CEO, TSMC
    Director
    C.C. Wei
    Male R.O.C. 06/08/2017 06/08/2018 06/08/2017
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    7,179,207 0.03% 7,179,207 0.03% 261 0.00%
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor and Master Degrees in Electrical Engineering, National Chiao Tung University
    Ph.D. in Electrical Engineering, Yale University

    Former Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
    Former Senior Vice President, Mainstream Technology Business, TSMC
    Former Senior Vice President, Business Development, TSMC
    Former Executive Vice President and Co-Chief Operating Officer, TSMC

    Chairman, Taiwan Semiconductor Industry Association (TSIA)
    Director, TSMC Charity Foundation
    President and Co-CEO, TSMC
    Chairman, TSMC Nanjing Company Ltd. (a privately held company)
    Independent Director
    Sir Peter L. Bonfield
    Male UK 06/09/2015 06/08/2018 05/07/2002
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    - - - - - -
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor Degree in Engineering, Loughborough University
    Honours Degree in Engineering, Loughborough University

    Former Chairman and CEO, ICL Plc
    Former CEO and Chairman of the Executive Committee, British Telecommunications Plc
    Former Vice President, the British Quality Foundation
    Former Director, Mentor Graphics Corp., U.S.
    Former Director, Sony Corp., Japan
    Former Senior Advisor to G3 Good Governance Group, London

    Fellow of the Royal Academy of Engineering
    Chair of Council and Senior Pro-Chancellor, Loughborough University, UK
    Chairman of:
    - NXP Semiconductors N.V., the Netherlands
    - GlobalLogic Inc., U.S. (a privately held company)
    Member, The Longreach Group Advisory Board, HK
    Board Mentor, CMi, UK
    Senior Advisor to :
    - Alix Partners, London
    - Hampton Group, London
    Independent Director
    Stan Shih
    Male R.O.C. 06/09/2015 06/08/2018 04/14/2000
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    1,480,286 0.01% 1,480,286 0.01% 16,116 0.00%
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    BSEE & MSEE, National Chiao Tung University
    Honorary EE Ph.D., National Chiao Tung University
    Honorary Doctor of Technology, The Hong Kong Polytechnic University
    Honorary Fellowship, University of Wales, Cardiff, UK
    Honorary Doctor of International Law, Thunderbird, American Graduate School of International Management, U.S.

    Co-Founder, Chairman Emeritus, Acer Group
    Former Chairman & CEO, Acer Group
    Former Director, Qisda Corp.
    Former Chairman, National Culture and Arts Foundation, R.O.C.

    Director, Public Television Service Foundation, R.O.C.
    Council member of Asian Corporate Governance Associate (ACGA)
    Chairman of Stan Shih Foundation
    Director & Honorary Chairman, Acer Inc.
    Director of:
    - Wistron Corp.
    - Nan Shan Life Insurance Co., Ltd.
    - Egis Technology Inc.
    - Digitimes Inc. (a privately held company)
    - Chinese Television System Inc.
    Independent Director
    Thomas J. Engibous
    Male U.S. 06/09/2015 06/08/2018 06/10/2009
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    - - - - - -
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor and Master Degrees in Electrical Engineering, Purdue University
    Honorary Doctorate in Engineering, Purdue University

    Former Executive Vice President and President of the Semiconductor Group, Texas Instruments Inc.
    Former President and CEO, Texas Instruments Inc.
    Former Chairman of the Board, Texas Instruments Inc.
    Former Chairman of the Board of Catalyst
    Former Chairman of the Board of J. C. Penney Company, Inc.
    Former Lead Director, J. C. Penney Company, Inc.

    Member of National Academy of Engineering, U.S.
    Member of Texas Business Hall of Fame
    Honorary Director of Catalyst
    Honorary Trustee, Southwestern Medical Foundation
    None
    Independent Director
    Kok-Choo Chen
    Female R.O.C. 06/09/2015 06/08/2018 06/09/2011
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    - - - - 5,120 0.00%
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Inns of Court School of Law, England
    Barrister-at-law, England
    Advocate & Solicitor, Singapore
    Attorney-at-law, California, U.S.

    Lawyer, Tan, Rajah & Cheah, Singapore, 1969-1970
    Lawyer, Sullivan & Cromwell, New York, U.S., 1971-1974
    Lawyer, Heller, Erhman, White & McAuliffe, San Francisco, California, U.S., 1974-1975
    Partner, Ding & Ding Law Offices, Taiwan, 1975-1988
    Partner, Chen & Associates Law Offices, Taiwan, 1988-1992
    Vice-President, Echo Publishing, Taiwan, 1992-1995
    President, National Culture and Arts Foundation, R.O.C., 1995-1997
    Senior Vice-President & General Counsel, TSMC, 1997-2001
    Founder & Executive Director of Taipei Story House, 2003-2015
    Advisor, Executive Yuan, R.O.C., 2009-2016
    Director, National Culture and Arts Foundation, R.O.C., 2011-2016
    Chairman, National Performing Arts Center, 2014-January 2017

    Lecturer, Nanyang University, Singapore, 1970-1971
    Associate Professor, Soochow University, 1981-1998
    Chair Professor, National Tsing Hua University, 1999-2002
    Professor, National Chengchi University, 2001-2004
    Professor, Soochow University, 2001-2008

    Founder and Executive Director, Museum207 (located in Taipei)
    Director, Republic of China Female Cancer Foundation
    None
    Independent Director
    Michael R. Splinter
    Male U.S. 06/09/2015 06/08/2018 06/09/2015
    Shareholding When Elected Current Shareholding Spouse & Minor Shareholding
    - - - - - -
    Selected Education, Past Positions &
    Current Positions at Non-profit Organizations
    Selected Current Positions at TSMC and Other Companies
    Bachelor and Master Degrees in Electrical Engineering, University of Wisconsin Madison
    Honorary Ph.D in Engineering, University of Wisconsin Madison

    Former Executive Vice President of Technology and Manufacturing group, Intel Corp.
    Former Executive Vice President of Sales and Marketing, Intel Corp.
    Former CEO, Applied Materials, Inc.
    Former Chairman, Applied Materials, Inc.
    Former Director, The NASDAQ OMX Group, Inc.
    Former Director, Silicon Valley Leadership Group
    Former Director, Semiconductor Equipment and Materials International (SEMI)

    Director, University of Wisconsin Foundation
    Chairman of the Board, NASDAQ, Inc.
    Director of:
    - Pica8, Inc. (a privately held company)
    - Meyer Burger Technology Ltd.
    General Partner, WISC Partners LP
    Remarks:
    1. No member of the Board of Directors held TSMC shares by nominee arrangement.
    2. No member of the Board of Directors had a spouse or relative within two degrees of consanguinity serving as a manager or director at TSMC.
  • Title Name Gender Nationality On-board Date
    President and Co-Chief Executive Officer
    Mark Liu
    Male U.S. 11/15/1993
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    12,913,114 0.05% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering & Computer Science, University of California, Berkeley, U.S.
    Executive Vice President and Co-Chief Operating Officer, TSMC
    Senior Vice President, Operations, TSMC
    Senior Vice President, Advanced Technology Business, TSMC
    President, Worldwide Semiconductor Manufacturing Corp.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    President and Co-Chief Executive Officer
    C.C. Wei
    Male R.O.C. 02/01/1998
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    7,179,207 0.03% 261 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, Yale University, U.S.
    Executive Vice President and Co-Chief Operating Officer, TSMC
    Senior Vice President, Business Development, TSMC
    Senior Vice President, Mainstream Technology Business, TSMC
    Senior Vice President, Chartered Semiconductor Manufacturing Ltd.
    Director, TSMC subsidiary
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President and Chief Information Officer Information Technology, Materials Management and Risk Management
    Stephen T. Tso
    Male R.O.C. 12/16/1996
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    12,222,064 0.05% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Materials Science & Engineering, University of California, Berkeley, U.S.
    President, WaferTech, LLC
    Senior Vice President, Operations, TSMC
    General Manager of CVD Products, Applied Material
    Director, TSMC subsidiary
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President, Chief Financial Officer/Spokesperson Finance
    Lora Ho
    Female R.O.C. 06/01/1999
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    4,481,080 0.02% 2,230,268 0.01% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Master, Business Administration, National Taiwan University, Taiwan
    Senior Director, Accounting, TSMC
    Vice President & CFO, TI-Acer Semiconductor Manufacturing Corp.
    Director and/or Supervisor, TSMC subsidiaries
    Director, TSMC affiliates
    President, TSMC subsidiaries
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President Research and Development/Technology Development
    Wei-Jen Lo
    Male R.O.C. 07/01/2004
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    1,444,127 0.01% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Solid State Physics and Surface Chemistry, University of California, Berkeley, U.S.
    Vice President, Research and Development, TSMC
    Vice President, Manufacturing Technology Operations, TSMC
    Vice President, Advanced Technology Business, TSMC
    Vice President, Operation II, TSMC
    Director, Advanced Technology Development and CTM Plant Manager, Intel Corp.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President/Chief Executive Officer of TSMC North America
    Rick Cassidy
    Male U.S. 11/14/1997
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    - - - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Bachelor, Engineering Technology, United States Military Academy at West Point, U.S.
    President of TSMC North America
    Vice President of TSMC North America Account Management
    Director, TSMC subsidiary
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President Operations/Product Development
    Y.P. Chin
    Male R.O.C. 01/01/1987
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    6,922,122 0.03% 2,193,107 0.01% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Master, Electrical Engineering, National Cheng Kung University, Taiwan
    Vice President, Product Development Operations, TSMC
    Vice President, Advanced Technology and Business, TSMC
    Senior Director, Product Engineering & Services, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Senior Vice President Research and Development/Technology Development
    Y.J. Mii
    Male R.O.C. 11/14/1994
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    1,000,419 0.00% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, University of California, Los Angeles, U.S.
    Vice President, Technology Development, TSMC
    TSMCSenior Director, R&D Platform I Division, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    Director Wayne Yeh Brother in law
    Vice President Operations/Affiliate Fabs
    M.C. Tzeng
    Male R.O.C. 01/01/1987
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    7,145,595 0.03% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Master, Applied Chemistry, Chungyuan University, Taiwan
    Vice President, Mainstream Technology Business, TSMC
    Vice President, Operation I, TSMC
    Senior Director, Fab 2 Operations, TSMC
    Director, TSMC subsidiaries
    Director, TSMC affiliate
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    Deputy Director M.J. Tzeng Siblings
    Vice President and Chief Technology Officer Research and Development/Corporate Research
    Jack Sun
    Male R.O.C. 06/02/1997
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    3,913,831 0.02% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, University of Illinois at Urbana-Champaign, U.S.
    Vice President, Research and Development, TSMC
    Senior Director, Logic Technology Division, TSMC
    Senior Manager of R&D, International Business Machines (IBM)
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Quality and Reliability
    N.S. Tsai
    Male R.O.C. 03/01/2000
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    1,961,180 0.01% 1,103,253 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Material Science, Massachusetts Institute of Technology, U.S.
    Senior Director, Assembly Test Technology & Service, TSMC
    Vice President, Operations, Vanguard International Semiconductor Corp.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Operations/Mainstream Fabs and Manufacturing Technology
    J.K. Lin
    Male R.O.C. 01/01/1987
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    12,518,018 0.05% 1,073,387 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Bachelor, Science, National Changhua University of Education, Taiwan
    Senior Director, Mainstream Fabs, TSMC
    Director, TSMC subsidiary
    Director, TSMC affiliate
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Operations/300mm Fabs
    J.K. Wang
    Male R.O.C. 02/11/1987
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    2,553,947 0.01% 160,844 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Master, Chemical Engineering, National Cheng Kung University, Taiwan
    Senior Director, 300mm fabs Operations, TSMC
    Director, TSMC subsidiary
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Corporate Planning Organization
    Irene Sun
    Female R.O.C. 10/01/2003
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    420,709 0.00% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Materials Science and Engineering, Cornell University, U.S.
    Senior Director, Corporate Planning Organization, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Research and Development/Design and Technology Platform
    Cliff Hou
    Male R.O.C. 12/15/1997
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    352,532 0.00% 60,802 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, Syracuse University, U.S.
    Senior Director, Design and Technology Platform, TSMC
    Director, TSMC subsidiaries
    Director, TSMC affiliate
    President, TSMC subsidiaries
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Business Development
    Been-Jon Woo
    Female R.O.C. 04/30/2009
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    320,000 0.00% 53,000 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Chemistry, University of Southern California, U.S.
    Director of Business Development, TSMC
    Vice President of R&D, Grace Semiconductor Manufacturing Corp.
    Director of Technology Integration, Intel Corp.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President and General Counsel Legal
    Sylvia Fang
    Female R.O.C. 03/20/1995
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    700,285 0.00% 419,112 0.00% 34,000 0.00%
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Master of Comparative Law, School of Law, University of Iowa
    Attorney-at-law, Taiwan
    Associate General Counsel, TSMC
    Senior Associate, Taiwan International Patent and Law Office (TIPLO)
    Director and/or Supervisor, TSMC subsidiaries
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Human Resources
    Connie Ma
    Female R.O.C. 06/01/2014
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    80,000 0.00% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    EMBA, International Business Management, National Taiwan University
    Director of Human Resources, TSMC
    Senior Vice President of Global Human Resources, Trend Micro Inc.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Research and Development/Technology Development
    Y.L. Wang
    Male R.O.C. 06/01/1992
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    218,535 0.00% 1,135,529 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, National Chiao Tung University, Taiwan
    Vice President, Fab 14B Operations, TSMC
    Senior Director, Fab 14B Operations, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Research and Development/Integrated Interconnect & Packaging
    Doug Yu
    Male R.O.C. 12/28/1994
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    225,000 0.00% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Materials Engineering, Georgia Institute of Technology, U.S.
    Senior Director of Integrated Interconnect & Packaging Division in R&D, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President and TSMC Fellow Research and Development/More-than-Moore Technologies
    Alexander Kalnitsky
    Male U.S. 06/15/2009
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    - - - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, Carleton University, Canada
    Senior Director of More-than-Moore Technologies Division in R&D, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Business Development
    Kevin Zhang
    Male U.S. 11/01/2016
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    - - - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, Duke University, U.S.
    Vice President, Design and Technology Platform, TSMC
    Vice President, Technology and Manufacturing Group, Intel Corp.
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President and TSMC Fellow Operations/300mm Fabs/Fab 12B
    T.S. Chang
    Male R.O.C. 02/06/1995
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    200,781 0.00% - - - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, National Tsing Hua University
    Senior Director, Fab 12B Operations, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Research and Development/Technology Development/N3 Platform Development Division
    Michael Wu
    Male R.O.C. 12/09/1996
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    468,501 0.00% 176,943 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Electrical Engineering, University of Wisconsin-Madison, U.S.
    Senior Director of N3 Platform Development Division in R&D, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None
    Vice President Research and Development/Technology Development/Pathfinding
    Min Cao
    Male U.S. 07/29/2002
    Shareholding Spouse & Minor TSMC Shareholding by Nominee Arrangement (Shares)
    353,152 0.00% 4,470 0.00% - -
    Education and
    Selected Past Positions
    Selected Current Positions at Other Companies
    Ph.D., Physics, Stanford University, U.S.
    Senior Director of Pathfinding Division in R&D, TSMC
    None
    Managers Who are Spouses or within Second-degree Relative of Consanguinity to Each Other
    Title Name Relation
    None None None

Financial Highlight (Note 1)

Unit: NT$ thousands (Except EPS: NT$)

2017 2016 2015 2014(Adjusted) 2013
Net Revenue 977,447,241 947,938,344 843,497,368 762,806,465 597,024,197
Gross Profit 494,826,402 474,832,098 410,394,893 377,722,016 280,945,507
Income from Operations 385,559,223 377,957,778 320,047,775 295,870,309 209,429,363
Non-operating Income and Expenses 10,573,807 8,001,602 30,381,136 6,208,048 6,057,759
Income before Income Tax 396,133,030 385,959,380 350,428,911 302,078,357 215,487,122
Net Income 343,146,848 334,338,236 306,556,167 263,763,958 188,018,937
Other Comprehensive Income for the Year, Net of Income Tax (28,821,631) (11,067,189) (14,714,182) 11,805,021 16,352,248
Total Comprehensive Income for the Year 314,325,217 323,271,047 291,841,985 275,568,979 204,371,185
Net Income (Loss) Attributable to:
Shareholders of the Parent 343,111,476 334,247,180 306,573,837 263,881,771 188,146,790
Noncontrolling Interests 35,372 91,056 (17,670) (117,813) (127,853)
Total Comprehensive Income (Loss) Attributable to:
Shareholders of the Parent 314,294,993 323,186,736 291,867,757 275,670,991 204,505,782
Noncontrolling Interests 30,224 84,311 (25,772) (102,012) (134,597)
Basic Earnings Per Share (Note 2) 13.23 12.89 11.82 10.18 7.26
Note 1: The financial statements for 2013 were prepared in accordance with 2010 Taiwan-IFRSs version, and the financial statements for 2014-2017 were prepared in accordance with 2013 Taiwan-IFRSs version. The financial statements of 2014 were adjusted to retrospectively apply newly effected GAAP. Adjustments included a decrease of NT$12,359 thousand in gross profit, a decrease of NT$19,984 thousand in income from operations, a decrease of NT$16,911 thousand in net income and a decrease of NT$46,054 thousand in total comprehensive income for the year.
Note 2: Based on weighted average shares outstanding in each year.

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