Letter from the CSR Committee Chairperson

Letter from the CSR Committee Chairperson

TSMC aims to be an action-taker in corporate social responsibility. Facing increasingly difficult challenges from our environment, we will continue to strive and do our duty.

This is an age where no one can be an exception.
Facing global climate change and an uncertain world, we are all in the same boat. Every person, every enterprise is part of the same whole.
The only path to sustainability is the common good.

QHow does TSMC define its role as a corporate citizen?

As the world's largest dedicated semiconductor foundry, TSMC accelerates the flow of innovation in IC design and product applications with a pioneering business model. We have enabled a world where semiconductors are ubiquitous and brought epoch-marking changes to the way we live, work, and play over the past 31 years.

As we move from the digital age to the intelligent age, we continue to expand the possibilities for innovation, and work hand in hand with our customers to take great strides forward in technology. We are ushering cities, medicine, and all the necessities of human daily life towards an intelligent future; using technology to serve people, and using innovation to bring prosperity and happiness.

Nonetheless, technological progress and corporate growth are only meaningful in a sustainable society and environment. That is why TSMC endeavors to be a force that uplifts society, and does its utmost to fulfill its responsibilities as a corporate citizen through its three missions of "Integrity, Strengthening Environmental Protection, and Caring for the Disadvantaged".

QWhy is integrity TSMC's foremost mission in corporate social responsibility?

Integrity is not only TSMC's foremost mission in corporate social responsibility, it is a fundamental part of our core values and business philosophy, and most of all our highest principle for doing business, because we believe transparent business operations are keys to initiating change in society. Thorough and healthy corporate governance is the foundation of corporate social responsibility, and for corporate governance to be successful, it must be guided by moral values and integrity, balance the interest of all stakeholders, and generate a positive cycle in order to continue creating value.

QHow important is carrying out corporate social responsibility to TSMC, and what are your priorities?

Corporate Social Responsibility requires a company to attend to corporate governance and pursue profitable growth, while also paying attention to environment, society, and other non-economic benchmarks. To TSMC, the most important is to "keep to the basics": to adhere to our 10 business principles, persist in building on our Trinity of Strengths – Technology Leadership, Manufacturing Excellence, and Customer Trust, make outstanding performances in business, and maintain our leadership position. In 2018, our market share increased for the ninth straight year to reach 56%, while revenues and profits reached a record high for the seventh consecutive year, firmly solidifying our position as the world's largest dedicated semiconductor foundry.

In addition to pursuing the highest accomplishments in our core business, TSMC uses its influence as an industry leader to fulfill its responsibilities in environmental protection and supply chain management.

In 2018, TSMC invested nearly NT$18.17 billion in environmental protection, carried out 667 projects in energy and water conservation, and continued to raise the efficiency of its energy consumption. We also set our action plan for renewable energy adoption: we committed to a target of 20% renewable energy for 3 nanometer production, and to gradually achieve a long-term target of 20% renewable energy for the entire company based on the availability of renewable energy in Taiwan. In 2018, all overseas sites now use 100% renewable energy, beginning from regions with comprehensive regulations and ample supply.

In terms of sustainable supply chain, we continued with our "Responsible Supply Chain Action Plan" proposed in 2017. In 2018, we systematically established a tier-based management system for suppliers based on size and frequency of transactions, supply availability, and related health and safety performance. Based on this system, we set corresponding measurement benchmarks and management goals, and brought their upstream suppliers and contractors into the scope of our sustainable action.

TSMC strives to be pro-active in corporate social responsibility, and connects with the "TSMC Education and Culture Foundation" and the "TSMC Charity Foundation" to form a network for social participation. We continue to cultivate artistic culture, support diverse education, promote filial piety, and care for the livelihood and education of the disadvantaged. In 2018, through our collaboration with suppliers in the Hualien Earthquake Relief Project, we deeply experienced how gathering love from all sides can make good things happen faster. I have always believed that changing the world is not one person doing many things, but many people committing to do their part. Looking ahead, we will not only bring together the resources of our company and our employees, but also cross boundaries to other companies and organizations with our charity activities and let the power of doing good continue to flow.

QHow does TSMC manage corporate social responsibility?

TSMC never stops improving the way it fulfills its corporate social responsibility. At present, we leverage the CSR Committee as a management platform for building consensus, communicating across organizations, and consolidating resources. We use disclosure of sustainability information as our tool for active management.

In 2018 we began publishing the monthly "CSR Newsletter" to regularly share TSMC's sustainability achievements, and also to let our first-line colleagues know how their efforts are bringing changes to the world. At the same time, the Corporate Social Responsibility Report we compile each year serves as a survey of the Company's sustainability status, and drives each organization to improve. This is because the process of preparing information for the CSR Report leads us to evaluate major issues of concern, benchmark against international practices, set our execution strategy as well as mid- to long-term goals, and propose plans for improvement. All of these actions eventually come back to one core question: what kind of company do we want to be?

We know that whether at home or abroad, people have high expectations for TSMC, and they look to us to make the first move to bring about positive change. It is both an honor and an obligation. Despite the challenges, we will continue to strive and do our duty.

QHow will TSMC's corporate social responsibility develop in the future?

As an important member of the global semiconductor industry, it is our responsibility to face up to the challenges of an increasing difficult environment. TSMC believes in and supports the United Nations' Sustainable Development Goals (SDGs). Through the operations of the CSR Committee, we have made a thorough survey of the ways that the SDGs align with TSMC's operations, and encourage employees to consider together how to take action on sustainability in their daily work. We hope that corporate social responsibility can help to drive our company's team spirit and build a challenging and fun workplace. Furthermore, we support our colleagues in their efforts to keep learning and keep innovating. If every one of our colleagues can always bear in mind how to bring more sustainability into their work, and take the initiative to care about the people around them, then I believe that the sustainable society we speak of will not just be a vision and an ideal, but a beautiful reality that you, I, and all future generations can enjoy.

Lora Ho Senior Vice President and Corporate Social Responsibility Committee Chairperson